Info Service on Finance and Development (Sep08/02)
Third World Network
DEBATES ON FINANCE AND TECHNOLOGY AT UNFCCC
debates took place in the group on financing and technology at the climate
talks under the UN Framework Convention on Climate Change (UNFCCC) which
ended in Accra last month. A large number of developing
countries responded to attempts by developed countries to distinguish
between or “differentiate” developing countries, and commented on the
historical responsibility of developed countries for causing climate
also debated the various financing proposals that had been presented
by countries. Many developing countries spoke out in support of the
G77 and China’s proposal on an enhanced financial
mechanism operating under the Conference of Parties, and highlighted
the urgent need for improved institutional arrangements to support technology,
finance and capacity building to developing countries.
is a report on the UNFCCC deliberations on finance and technology. It
was published in SUNS #6541, Wednesday 3 September 2008.
article is reproduced here with the permission of the SUNS.
Reproduction or recirculation requires permission of SUNS (email@example.com).
Debates on Finance and Technology at UNFCCC
By Lim Li Lin and Matthew
30 August 2008
climate talks under the UN Framework Convention on Climate Change (UNFCCC)
ended in Accra last week after an intense week (21-27
August) of discussion on key aspects of the Bali Action Plan.
discussions in the Ad Hoc Working Group on Long-term Cooperative Action
(AWG-LCA), which is tasked with reaching decisions on the Bali Action
Plan by December 2009, were structured in three “contact groups” on
mitigation, adaptation and delivering on finance and technology.
debates took place in the group on financing and technology. A large
number of developing countries responded to attempts by developed countries
to distinguish between or “differentiate” developing countries, and
commented on the historical responsibility of developed countries for
causing climate change.
also debated the various financing proposals that had been presented
by countries. Many developing countries spoke out in support of the
G77 and China’s
proposal on an enhanced financial mechanism operating under the Conference
of Parties, and highlighted the urgent need for improved institutional
arrangements to support technology, finance and capacity building to
countries including India, Qatar
spoke out against attempts by a few developed countries to divide developing
countries into different categories for the purposes of assigning them
new emission reduction obligations or establishing new obligations relating
to finance and technology.
pointed out that developed countries have so far largely failed to implement
their mitigation, technology and finance obligations under the Convention
and its Kyoto Protocol and that it is unfair to now attempt to pass
this onto those countries who have contributed little to causing climate
change and are most vulnerable to its impacts.
particular, they responded sharply to attempts to re-frame the principle
of “common but differentiated responsibilities and respective capabilities”
as a means to differentiate among developing countries, when the principle
was included in the Convention and Kyoto Protocol principally to distinguishing
between developed and developing countries according to their historical
responsibility for causing climate change.
for instance, noted that its historical contribution to climate change
since the industrial revolution is a mere 27 tonnes of CO2 per-capita,
whereas the United Kingdom
and United States have each contributed
around 1,100 tonnes per-capita.
also discussed proposals on financing and technology, with many countries
speaking out in support of the G77 and China’s proposal
for an enhanced financial mechanism operating under the Conference of
Parties. Developing countries also highlighted proposals for specific
funds, such as a Convention Adaptation Fund proposed by AOSIS. A number
of countries also asked questions and commented on the finance proposals
of Mexico, Norway,
South Korea and Switzerland.
Chair of the contact group, Luiz Machado of Brazil, opened the meeting by explaining
that this is the “how” part of the exercise - i. e., how to enhance
delivery of financing and technology for both adaptation and mitigation.
He summed up the discussion of the previous day as having touched on
issues of public funding, the role of the private sector, the role of
markets, links with other institutions and mechanisms that deliver finance,
and the issue of fragmentation of finances.
Barbados, on behalf of the Alliance
of Small Island States (AOSIS), highlighted the special and unique challenges
that they face. These include insufficient funding for adaptation and
mitigation technology, burdensome criteria to access the funding, limited
access to funding, difficulty in measuring the true economic cost associated
with adaptation. In addition, priority given to mitigation and adaptation
is seen as peripheral.
highlighted the Convention Adaptation Fund that AOSIS has proposed.
It supported the proposal by the LDCs and China
to set the level of contribution by Annex I Parties to a fixed percentage
of GNP, which is over and above the 0.7% ODA (overseas development assistance)
Convention Adaptation Fund proposed by AOSIS should complement the Kyoto
Protocol Adaptation Fund and should fall under the overall financial
mechanism that has been proposed by the G77 and China.
Indonesia posed three questions: how
to collect the funds, how to manage the funds (this relates to governance
and institutional arrangements), and how to associate the collected
funds with Parties’ obligations.
said that there are three tracks of funding sources: (1) Mandatory contributions
from Annex I Parties (this must be above and additional to ODA and the
level of contribution could be between 0.5-1% of GNP) which must be
measurable, reportable and verifiable to ensure adequacy and predictability;
(2) voluntary contributions by non-Annex I Parties; (3) the market,
by extending the scope of the Clean Development Mechanism (CDM).
South Africa stressed that finance,
technology and capacity building are all critical means of implementation,
and a coherent architecture should address them all. On public finance,
it stressed the importance of assessed contribution towards fulfilling
commitments of Annex I Parties to provide new and additional funds,
and that it was critical that this was under the COP. Commitments by
Annex 1 Parties can only be considered measurable, reportable and verifiable
if they are under the guidance and authority of the COP.
China stressed that the transfer of
financial resources is the responsibility of the developed countries,
and the resources should be “new and additional”. New financial and
technology transfer mechanisms should be an important part of the future
technology mechanism should include an executive board to develop strategies,
policies and an action plan. An effective technology mechanism and a
technology fund to support the technology transfer to developing countries
to ensure its affordability is essential. It should also cover costs
of technology diffusion in developing countries, joint research and
development for future technologies, and costs of capacity building
said that developed countries should show their political will to overcome
barriers to technology transfer such as intellectual property rights
and other policy constraints.
is a huge financing gap to implement the Convention, it said. In China,
for example, 2,000 billion RMB will be needed to meet its own targets
on renewable energies. It said that for the financial mechanism, a board
under the COP should be established, to support different activities
and actions, including mitigation, adaptation, technology transfer,
capacity building and so on.
financial mechanism must have a transparent governance system and a
reliable trustee. It emphasized that establishment of funds should follow
the principle of common but differentiated responsibilities, and the
funds should come from the public sector, and from developed countries.
They should be new and additional to ODA, sufficient, expandable, and
Argentina said that non-Annex I countries
could adopt sustainable development policies and measures to contribute
towards mitigation and adaptation. There needs to be full cost support
for capacity building to create the enabling environment, and full incremental
cost support for the commercialization of new and emerging technologies,
joint technology development and the acquisition of low emissions technology.
It stressed that the work of the Experts Group on Technology Transfer
(EGTT) can make an important contribution.
United States stated that we are in
a different world from 1990, when the financial architecture of the
Convention was first negotiated. Major economies and non-Annex I countries
have a level of technological capacity far greater than 20 years ago.
It also asked what national governments can be reasonably expected to
do with their own policies and measures, and at what point beyond that
does it become reasonable for other countries to share in that effort.
fully supported the G77 and China’s proposal
on financing and stressed that predictability, stability, transparency,
efficiency, and participation of all in the governance structure is
further on the financing proposal of the G77 and China. It said
that finance and technology transfer are lacking in implementation.
The most prominent problem is the multiple levels of governance, and
institutions that deal with financing as a donor/donee relationship,
whereas financing by developed countries is a legally binding commitment
under the Convention.
questioned the governance of the trustee of the existing operating entity
of the financial mechanism. (The Global Environment Facility is currently
the only operating entity of the financial mechanism under the Convention.
It is also the trustee). Currently, the implementation is handled by
implementing and executing agencies, all of them under different systems
of governance, guidance and authority, and this involves administrative
costs. Direct access to financing is necessary and possible, as ultimately,
it is the countries that implement these projects. It stressed the importance
of a country-driven exercise and that is not tied to loans, or otherwise
used as “bait”.
said that the Paris Declaration is a non-legally binding declaration
of principles, and it is being used as conditionalities for climate
change implementation projects. In the Philippines,
two renewable energy projects have been held up because of this.
“incremental costs”, it said that the Montreal Protocol’s Multilateral
Fund examined this concept and how to implement it in practice. “Agreed
full costs” in the Convention has never been really met, and neither
agreed full incremental cost.
said that it is very important to have less administrative costs. Every
layer of governance is associated with increased costs. There should
be open bidding for trustees, following the example of the Montreal
Protocol’s Multilateral Fund. There, the World Bank’s bid was four times
higher than what they went with.
Convention allows for developed countries to provide financial resources
through bilateral, regional and multilateral channels. According to
this was forced into the financial mechanism because developed countries
said that they had other sources for financing, but the language is
of voluntary support, and does not impose conditionalities. Decision
11/CP. 1, paragraph 2(a), stipulates that consistency should be ensured
between activities including funding outside the framework of the Convention,
and the guidance of the COP. It said that the Secretariat must report
this; it must not contain new conditionalities.
said that a Convention Adaptation Fund, venture capital and insurance
mechanisms are also needed. There is a need to involve host countries
in this, as in many current projects, there is host country participation.
France, on behalf of the European
Union, said we are underestimating the need for finding new innovative
ways of financing mitigation and adaptation and the huge amount of money
needed has to be generated in a new way. It agreed that so far these
multilateral funds have not served their purpose. It suggested a levy
from high carbon activity and a levy from carbon markets.
the financial mechanism, it said that the EU’s and G77 and China’s
positions were not that far from each other. However, it said that their
views might be different on which countries might be eligible for financing.
EU sees the need for an enhanced framework for technology cooperation,
but does not yet know what form such an enhanced framework should look
like. This issue is key to many of their constituencies and politicians,
and must be taken more seriously than ever.
Saudi Arabia said that technology
transfer is the main challenge, and has been a challenge for many decades.
There needs to be political momentum and will to design a system that
delivers, and that can break through government policies. The solution
is not just a fund that subsidizes intellectual property rights in different
countries. Technology transfer has not worked so far because of market
and institutional problems and constraints. It wanted an architecture
that brings in facilitative funding that helps break though the institutional
and IPR-like barriers, otherwise, no matter how much funds there are,
it will not be enough.
Bangladesh stressed the need for a
new financial and technology transfer architecture, under the framework
of the Convention, and under the absolute guidance of the COP. It should
be guided by the Executive Boards, which should be balanced geographically,
and regionally. It suggested that new funding can be set at the level
of 1% of GDP of Annex 1 Parties.
responded to comments that it has a high per-capita GDP and should therefore
be grouped with Annex I countries by saying that it is a small island
with few natural resources or rivers and is thus dependent on fossil
fuels and would have difficulty shifting to renewable alternatives.
It noted that larger resource-rich developed countries have exported
their energy-intensive industries abroad. If we are to agree a viable
climate agreement, it is unhelpful to introduce criteria that distinguish
between developing countries, it said.
New Zealand agreed that no single
criterion should be used for determining actions that should be taken.
On financing, it suggested that we will need to look to the private
sector for around 80% of funding for climate efforts.
Pakistan noted that there has been
very little practical transfer under the Convention - the operation
of principles, mechanisms and actual transfer has yet to be effected.
Barriers to transfer include intellectual property and monopoly pricing,
which must be addressed. Patents should not be a barrier and compulsory
licensing should be promoted to make technologies available. Jointly
planned research and development with patent sharing is also desirable.
Japan, proposing differentiation of
developing countries, cited the polluter pays principle and noted that
the contribution of Annex I and non-Annex I Parties to 2005 global emissions
levels is almost the same (one to one). It cited a number of studies
on the relative historical contribution of developed and developing
countries to climate change. According to Japan,
using per-capita emissions is unfair. It therefore seeks the right set
of criteria to differentiate between developing countries.
Australia welcomed the debate on differentiation.
On financing, it said that new and additional financing is “open to
India highlighted the importance of
research and development, and of mechanisms for effective technology
transfer. Clean technologies must be made affordable to fossil fuel-reliant
developing countries. India
said that the current intellectual property regime should be amended
to ensure availability on an affordable basis. Such an approach is already
taking place in the pharmaceutical industry.
address climate change, demand-driven research and development supported
by IPR sharing will play a key role. We also need a multilateral funding
mechanism that provides venture capital for research, and that procures
available technologies and makes them available to developing countries
to accelerate technology adaptation and diffusion. Multilateral mechanisms
must ensure that new resources are available without diluting overseas
development assistance and development funding.
India reiterated that discussions
on conditionalities and differentiation should not be pushed by developed
countries. The UNFCCC is not the place for a discussion of conditionalities.
Moreover, since the industrial revolution, India has contributed as
little as 23 tonnes of CO2 per capita, while the country that triggered
the industrial revolution (the UK), and the world’s richest country
today (the US), have each contributed 1,100 tonnes per-capita. Equality
of all people across all times and places suggests an equal right to
the benefits of the atmosphere.
said the EU has proposed a technology diffusion plan with four parts:
(1) institutional arrangements to support the delivery of national technology
needs assessments, capacity building, information and awareness building,
and measuring and monitoring actions; (2) enabling environments, in
terms of national policies and measures; (3) technology oriented agreements
to guide technology cooperation including country deployment schemes,
demonstration projects and energy programmes; and (4) financial mechanisms
for the G77 and China, said the
group has prepared a comprehensive proposal on technology under the
UNFCCC. The proposal sets out the rationale, criteria and institutional
arrangements for such a mechanism, which include an Executive Body on
Technology and a Multilateral Climate Technology Fund operating under
the Conference of Parties. The proposal also describes a Technology
Action Plan as well as the eligible activities and categories of costs
that would be covered by the mechanism. These elements build on a previous
proposal under the Convention by the G77 and China.
agreed that Article 11.5 says that funding “may” be provided through
bilateral, regional or multilateral institutions - but this is a conditional
phrase. Indeed, the Conference of Parties has decided that activities
outside the Convention, including those relating to funding, should
be reviewed for consistency with guidance by COP and should not introduce
the GEF and other implementing and executive agencies responsible for
climate funding have largely failed to follow this guidance. Problems
relating to access, disbursement, the project cycle, availability of
resources and so on remain. We need to overcome these problems to enhance
implementation of the Convention. How can we have a shared vision if
we are not sure we can deliver on implementation of the Convention?
Barbados said the selective use of
per-capita GDP should be examined carefully. Some Caribbean
countries have relatively high GDP per-capita. However, their economies
are really quite small. When a hurricane hit Grenada, for instance, the scale of
damages was twice its national GDP (90% of the housing stock was destroyed).
Viewed in this light, the use of per-capita GDP is grossly unfair and
really not appropriate.
Chair suggested that Parties should avoid focusing on issues that are
not covered by the Bali Action Plan. GDP per capita is one such extraneous
issue, and discussions of it are robbing our time. He suggested that
Parties focus on the Bali Action Plan and on delivering on what we have
to for 2009.
Cuba asked why the EU proposal focuses
so much on the market and so little on the public sector in financing
technology cooperation. Experience suggests that market-based approaches
have largely failed to deliver. We cannot afford to ignore the importance
of mobilizing public sector resources to implement the Convention.
supported the G77 and China and expressed
concern that some Parties are seeking to extend the Convention’s central
principle of common but differentiated responsibilities to differentiate
between developing countries on the basis of their relative economic
development. In Qatar’s
view, the principle was included in the Convention to draw the line
between those who have historical responsibility, and those who do not.
On differentiation, it said that developing countries, even those with
relatively high GDP, are still developing. Levels of development can
only be captured by an evaluation of human development, analysis of
infrastructure, and so on.
supported the G77 and China statement
on technology and finance. It responded to Japan
by noting that China
has 1.3 billion citizens - ten times Japan.
Its emissions per capita are below the world’s average level, which
is one quarter of Japan’s.
historical per capita emissions since 1970 is 92nd in the world. One
third of China’s emissions
results from products produced for consumption in other countries. As
a developing country, China
has done what it can to combat climate change. It will continue to make
new contributions. With effective technology transfer and financial
support, the developing countries can do even more. This, according
to China, is what
long term cooperative action means.
congratulated Japan on bringing
in the topic of historical emissions. Brazil
expressed interest in reading the studies cited by Japan and suggested that the time-frame
for considering historical emissions should extend to before 1900. We
need to consider the effective permanence of emissions in the atmosphere.
impact of emissions over time has a strong impact. According to one
study, the CO2 emissions of the transport and energy sector of industrialized
countries in 1888 are the same level as Brazil’s in 2004,
it said. Historical emissions can help to frame discussions in a way
that is equitable, but should not be used as a means of establishing
criteria for categorizing countries.
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