TWN Info Service on Climate Change (Apr19/01)
5 April 2019
Third World Network

UNFCCC finance body discusses report on determining needs of developing countries to implement climate actions

Bonn, 5 April (Indrajit Bose) — The UNFCCC’s Standing Committee on Finance (SCF) had an interesting exchange on the preparation of a report on the determination of the needs of developing countries in implementing their climate actions.

The discussions took place at the SCF’s 20th meeting held in Bonn, Germany from 21-22 March 2019.

The mandate to the SCF to discuss the needs of developing countries comes from the 24th session of the Conference of the Parties (COP24) held in Katowice, Poland last year that tasked the SCF to prepare a report every four years on the determination of needs of developing countries to implement the Convention and the Paris Agreement (PA), starting in 2020.

Discussions at the SCF meeting were focused on initiating work on the first report on the determination of needs of developing countries, including to deliberate on the objectives and scope, possible activities, outputs, structure and format; to discuss and reach an agreement on the overall approach for organizing and implementing the work; and to elect co-facilitators to guide the work on the matter.

The SCF Co-chairs for 2019 are Ismo Ulvila (European Union) and Ayman Shasly (Saudi Arabia).

The SCF agreed that Zaheer Fakir (South Africa) and Mattias Frumerie (Sweden) will co-facilitate discussions on the determination of needs report.

During the deliberations, various issues arose, that ranged from members espousing the importance of the needs report, some calling the mandate “historic”, to some cautioning that the COP 24 mandate should not be reinterpreted. Some said that the SCF must build on the experience of the Biennial Assessment and Overview of Climate Finance Flows Report (BA), a “flagship” report of the SCF. Some spoke about challenges in accessing climate finance to be included in the report as well. (See highlights of exchanges below).

Meanwhile, contentious issues also arose at the meeting. Among them included policy reforms, enabling environments and good governance issues in developing countries, which were raised by the European Union (EU). Issues that saw disagreements included whether the needs determination is restricted to it being about a process only, as raised by the United States (US) or if it is forward-looking and resulting in a quantification of the needs, as espoused by several SCF members.

On the issue of policy reforms, enabling environments and good governance, Ismo Ulvila (EU) said policy reform issues and enabling environments should be part of the framing of the report and the report should include the bigger picture of what are the needs of governments to engage in the building of enabling environment and policy reforms over a longer period. “We are not able to have a full understanding of the needs of developing countries unless we also have a look at the underpinning assumptions of good governance and how planning should be linked to other development agenda items,” said Ulvila.

Randy Caruso (US) said the report should look at developing countries’ starting points in relation to what they want to achieve, how much do options cost them and what are some of the domestic policy reforms that would be needed. He also said that at the same time, it would be inappropriate for the report to provide normative guidance that these are the policy reforms that need to be taken or these are the correct steps for determining the needs. A balance has to be struck, he said. He added that determining needs is about a process of what goes into it, how a country determines cost-effective solutions and how it ultimately goes on to finance those needs. He also said that needs are not just financial in nature and that technology needs, capacity building needs and perhaps policy and regulatory reform needs should also be part of the scope.

Seyni Nafo (Mali) said that members were discussing a report on needs and going into how enabling environments can attract investment was unclear for the report, and going into policy reforms would not be helpful. “Policy reform can be infringing on countries, and we would have difficulty in going along with that. In this process, whenever there is talk of needs, there is talk of enabling environment, and I won’t be able to accept this,” countered Nafo. Nafo also said that a country may have mitigation needs, adaptation needs, loss and damage needs and means of implementation needs, but not policy needs. “A country may come at a point where it needs policy reform but the two should not be conflated. Policy is an incentive, but it is not a need,” said Nafo. On the good governance comment, he expressed surprise and asked, “good governance?” and stopped midway through his intervention in exasperation.

Mohamed Nasr (Egypt) said that there is the BA which is well structured, with clear content and logical thinking. The BA has numbers, regions, sub regions but the focus is not on policies. On the good governance comment, Nasr also expressed surprise and said, “If you want to bring in good governance, this will be a different place then. Let’s not go there. It is sad to see the SCF shift from doing technical work and go to good governance,” he added.

Ayman Shasly (Saudi Arabia) responded that members should not be trying to fix the world’s problems through the report and added, “Policy issues are not our business here”. He added that the objective of the report is that it is going to be a forward-looking report on mitigation and adaptation (needs) and that it would be different from a BA in the sense that the BA only takes stock of what has happened in the past. “If we do not deliver something substantive, it will send a negative signal to Parties. We need to agree on methodologies under which we can put a forward-looking report. National level inputs of nationally determined contributions (NDCs) could be translated into financial, technology and capacity building needs. Many of the technology needs cannot materialize without finance. The objective is forward-looking information to implement the PA,” said Shasly.

Fakir said he found it striking to hear Caruso talk about his understanding of determining the needs as a process. “Are we looking at a report that looks at a process where developing countries determine the needs, or are we looking at quantifying the needs?” he asked.

Following initial discussions on the needs report, the co-facilitators presented a summary of the discussions during the meeting, which comprised the overall approach and context; content of the report; objectives of the report; scope of the report; and a section titled “for continued discussion”. Under the “for continued discussion” section, was a bullet that read: “Output: A report that looks at the process of determining developing country needs or a report that focuses on determining the developing country needs in a quantified manner or both?”

Several developing country SCF members and some developed country SCF members responded to the bullet and said why should it even be a question whether a report on needs would have numbers or not.

Some even referred to an understanding reached at COP 24 that both the needs determination processes and information on Article 2(1)(c) of the PA (on making finance flows consistent with a low greenhouse gas emissions and climate-resilient development pathway) would proceed in a balanced manner.

(Developed countries in the negotiations at COPs in the past, have been opposed to reflecting any language on the needs of developing countries in decisions, which was a key demand of developing countries. During COP 24, developed countries wanted text on Article 2(1)(c) of the PA in the decision text on the finance flows to developing countries. After intense deliberations, the agreement last year was to have the issue of the needs and finance flows given the same treatment. In relation to Article 2(1)(c), the COP last year (through decision 4/CP.24, para 10), requested the SCF to map, every 4 years, as part of its biennial assessment and overview of climate finance flows…”. Developing country members of the SCF wanted the needs determination report to be quantitative, just like the BA, which measures finance flows.)

Nasr said that he could not help but compare the contents of the co-facilitators’ report with the contents for the BA, with a focus on Article 2(1)(c) of the PA and reminded the SCF about the understanding reached at COP 24. (The SCF meeting also discussed the 2020 BA and Article 2(1)(c) at the meeting. See separate TWN update on that.)

Nasr said that he had noted the question regarding quantifiable numbers and suggested that both the reports [the needs determination and Article 2(1)(c)] should have similar formats. “If there are numbers here, then there would be numbers there. If you focus only on methodology here, it will be the same for Article 2(1)(c)”, he stressed, adding that “the outcome (of the needs determination) will have a quantification.” H also said that any report should have data and methodologies and that he would like these to be included.

Responding to Nasr, Gabriela Blatter (Switzerland) said that there was “no tit for tat deal” to her knowledge and that the SCF is to get the best of each of the products. She said that several SCF members have been stating from the beginning that the same approach be used for BA and needs determination.

Pieter Trepstra (Netherlands) also said that if Parties went in for “tit-for-tat”, they would lose all logic. He also said that all the reports have a qualitative and a quantitative part and that the report on needs should have both, while realizing that a lot of different methodologies exist. He also said that they must look into the needs report under the UNFCCC prior to the 5th replenishment of the Global Environment Facility (GEF) for reference.

Ivan Zambrana Flores (Bolivia) said that as the delegate co-chairing the needs and BA discussions at COP 24, he clearly remembers the compromises made and the understanding reached and said that the balance agreed to in Poland must be reflected in the decisions at the SCF.

In response, Caruso (US) said that “negotiation history is irrelevant” and what matters is what is on paper. “Our task is to have a framework and map the approaches. We are not doing original research. We will look at the existing determination of needs. Regarding numbers, it will be strange if we excluded the findings of the numbers from the report,” he said.

Fakir (South Africa) said that at COP 24, there was a recognition that there are elements of importance to Parties, both Article 2(1)(c) (on finance flows) and needs. “The issue of needs is a core element that we have not been able to deliver in 25 years. At COP 24, there was recognition by all that this was needed to be done, but also recognition that Article 2(1)(c) needed to be done,” he said, adding that “the important thing is as we move forward, there is balance in moving forward in the areas of work.”

After further discussions, the SCF agreed on the next steps, where the co-facilitators, with the Secretariat’s support will work on the following:

  • “Develop a draft outline of the report, with a view to finalize it by SCF 21 (likely to be held in Oct 2019);
  • Prepare a workplan, including plan for outreach;
  • Initiate technical work on information gathering for the mapping and analysis of available information on developing countries’ needs (data collection from reports and databases; data gaps and analysis);
  • Reach out to developing countries and organisations and stakeholders that have undertaken work on methodological issues;
  • Issue a call for inputs on views and suggestions for further sources;
  • Note a workshop on methodologies and processes for determining and assessing the needs of developing countries on 11-12 July 2019 in Manila, Philippines;
  • Organise events during the 50th Session of the Subsidiary Bodies (June 2019) and 25th Session of the COP (Dec 2019)”.

Highlights of some interventions

Below are some highlights of interventions from some members of the SCF.

Fakir (South Africa) said the SCF must begin to explore ideas and come up with something concrete which would allow them to map out the work, adding that that since it’s a new area of work, there should be no misunderstanding of the task ahead of looking at the needs. He also said that other constituted bodies under the UNFCCC, such as the Adaptation Committee, were dealing with the issue of needs and that the SCF needs to coordinate with the other bodies too. Fakir said that the SCF should come up with draft terms of reference and ideas about the timelines in relation to the production of the report. He also said that it would be useful to not “reinterpret the mandate” from COP 24.

Nasr (Egypt) suggested to build on the experience of the BA, a flagship report of the SCF.

Nafo (Mali) referred to the needs determination mandate as historic, as developing countries had been waiting for the moment for the past 20 years. If the BA is the SCF’s flagship, the needs determination report will be the “mother of flagships”, he said. He said further that developing countries have their NDCs, national adaptation plans (NAPs) and country programmes and added that he would be interested in understanding the methodologies that are there, compare the methodologies and see what numbers emerge from there.

He also hoped that the report would go beyond the addition of figures and get a better sense of the methodologies. “Countries have to be ambitious but it is very important that we have assessment methodologies that are robust and can be replicated. At some point you have to aggregate and you cannot do that unless methodologies are comparable, if not common. The output of the work will be an extremely important input in the sustainable funding of the Adaptation Fund, setting the new collective goal and the replenishment of the GCF,” said Nafo.

Nafo also said that having the needs related to loss and damage would be quite interesting. “One of the functions of the SCF is resource mobilisation but we have not had an activity to fulfill that. For any resource mobilisation, you need to understand needs. This is the first step on working on resource mobilization,” he added. He also said that the report should discuss sources and the difficulties in accessing resources, adding that the needs determination is in the context of implementing the Convention and the PA, the objectives of which are laid out in the relevant areas, be it the temperature goal, mitigation goal or adaptation goal.

Trepstra (Netherlands) said that there is no room for reinterpretation (of the COP 24 decision) as it was amply clear that it is a report on the determination of needs. He also said that the SCF needs to think about how to make the report useful for a country to raise funding or to show what is needed, and that would be the litmus test of whether the report would be useful.

Blatter (Switzerland) said she would approach the report the way the BA had been approached, which is to build on existing data and reports, have a better understanding of the methodologies, and try to understand which methodologies work and how, and make recommendations and improve methodology and give guidance to countries to do this kind of work.

Fiona Gilbert (Australia) said that it would be a good idea to focus on how to make the report useful and that the report should focus on challenges in relation to accessing finance and deciding on investment allocations. She also said that it would be useful to have a broader scope than a narrow one.

Delphine Eyraud (France) also said that they could build on the approach of the BA and the scope should be broad. She said there should be a process of submissions and inputs. On the outline, Eyraud said that it should be a mix of top-down approach addressing a macro-economic dimension, and a bottom up approach on work done by countries, methodologies, challenges and comparability issues.