Presentation

This paper was originally written just after the Copenhagen Accord in 2009. In the following COP16, the word "Copenhagen" was dropped and the decision to nominate a Transitional Committee for the Design of the Green Climate Fund was taken, while recognizing the work done by the High Level Panel on Climate Finance. In COP 17 in December 2012, the Parties welcomed the report by the Transitional Committee - based on Parties submissions and common meetings - and launched the Green Climate Fund with a decision downloadable here.

Although much time and decisions have passed, we reproduce here the original text of the paper.

1. Legal basis

The Copenhagen Accord - with all its strengths and weaknesses - includes 30 billion dollars to be spent in 2010, 2011, and 2012 for tackling climate change.

More precisely, it states that: "We decide that the Copenhagen Green Climate Fund shall be established as an operating entity of the financial mechanism of the Convention to support projects, programme, policies and other activities in developing countries related to mitigation including REDD-plus, adaptation, capacity-building, technology development and transfer".

"The collective commitment by developed countries is to provide new and additional resources, including forestry and investments through international institutions, approaching USD 30 billion for the period 2010 - 2012 with balanced allocation between adaptation and mitigation".

"This funding will come from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of finance. New multilateral funding for adaptation will be delivered through effective and efficient fund arrangements, with a governance structure providing for equal representation of developed and developing countries. A significant portion of such funding should flow through the Copenhagen Green Climate Fund".

In few lines, a very long discussion is summarized, several conflicting positions have been put together, some heterogeneous wording sprungs here and there, even certain punctuation is doubtful.

The interpretation of those lines and the specific actions that will follow, both in terms of governance and in terms of decisions, can widely vary.

However, if there is political will, steering, and consensus, a boost for the badly-needed paradigm shift towards a low-emissions world economy can now be injected in the spontaneous dynamics of the system.

2. Some history

This fund, and its fragile localization among other well-established financial entities, such as the bilateral and multilateral aid agencies, can be rooted, among other possible sources, in the EU communication of September 2009 that affirmed: "Between 2010–2012, assuming a successful agreement in Copenhagen, fast-start financing will be needed for adaptation, mitigation, research and capacity building in developing countries in the range of € 5 to 7 billion per year. The EU should consider making an immediate contribution of at least € 500 million to 2.1 billion per year, starting in 2010".

During the Commonwealth Summit of November 2009, Gordon Brown proposed a 10-billion Pounds Launch fund to "deliver funds to poorer states on a payment by results system, under which those which showed they were taking action to halt climate change would receive more cash".

Other countries, in their turn, had anticipated, initiated and cooperated to the concept with various statements and national proposals and perspectives, as for instance Japan, USA, France.

During COP15, a joint appeal of France and Ethiopia called for "the adoption of a 'fast-start' fund of 10 billion dollars per year covering the next 3 years, 2010, 2011 and 2012. It will be dedicated to adaptation and mitigation actions, including the fight against deforestation, in developing countries, mainly the poor and vulnerable ones. 40% of the fund should be dedicated to adaptation in Africa. 20% of it should be dedicated to early action on 'REDD +', in order to reach the objective of halving deforestation by 2020 and halting it by 2030. A high-level group, mandated by the UNFCCC, composed of developed and developing countries’ experts will work out details as soon as possible, with a view to launching the fund by the next G20 Summit in Canada after consideration and approval by the UNFCCC".

After COP15, EU President Barroso stated on the 19th December 2010: "This accord is better than no accord. This was a positive step but clearly below our ambition. We have to be honest when we analyse this result, there are good things and not so good things… The European Union's commitments will be delivered - that will not change - our commitments are not just words in press releases, they are binding for all European Union Member States and we reiterated during the conference that we are even ready to go further if we see some more movement from other partners. Especially important was the fact that we kept our commitment regarding the support to developing countries".

The EU Environmental Ministers Council, on 22nd December 2009, stated: "The EU and its member states are ready to contribute with fast-start funding of EUR 2.4 billion annually for the years 2010 to 2012 in the context of implementing the agreement".

On 10th February 2010, the EU Parliament passed a resolution that "stresses the need for the EUR 7.2 billion 'fast-start' financial support for developing countries, as pledged by the EU Member States, to be, new and additional to ODA budgets, coordinated at EU level and made operational as soon as possible and in any case before the June 2010 meeting in Bonn; considers this to be a key factor in building confidence for a successful meeting in Mexico; calls also on the Commission to report on the use of the pledged fast-start funding and its additionality to existing ODA before the aforementioned Bonn meeting".

3. The key features: small but additional and immediate

The exact amount of the Copenhagen Green Climate Fund out of the promised 10 billions in 2010 is matter of discussion, and probably of disagreement. Even if it were 100% of that, it would still far too small to address its broad range of chapters of expenditure. As for adaptation, to give an order of magnitude, defending one specific town in one specific country (Venice) from sea-level rise and tides costs about that full ammount (one year). The economic damage of Katrina was around 150 billions USD (i.e. fifteen times more than the yearly fund). The fiscal stimulus package adopted under the Obama administration in early 2009 was about 787 billion USD.

As for mitigation, the NAMAs presented on 31st January 2010 give a broad indication of the mitigation actions that will be undertaken. They usually do not often computes how much they would require in international support, although it's possible that, unless innovative approaches are taken, the cost would be much larger than the Fund.

However, headlines figures much bigger than 10 billions might have hidden relabelling and diversion of funds from other key chapters (e.g. international aid), putting the developing countries in the untolerable condition of choosing between e.g. hospitals and adaptation measures.

If the money will be really additional, as many are promising, the fund could be instrumental to support the process, pilot experiments and the transfer of existing best practices.

Indeed, in a non-paper issued by the UK and other countries states that "activities that could be supported by fast-start include: drafting or finalizing national low carbon growth and adaptation plans; improving in-country capacity to design and implement national climate change actions; supporting urgent and priority adaptation needs; supporting mitigation activities, including forestry. Funding could also be used to help prepare developing countries to take full advantage of post-2012 financing arrangements".

On 15th December 2009, the final draft of AWG-LCA on NAMAs, facilitated by Margaret Mukahanana-Sangarwe, who was soon to be nominated the new chair of the whole AWG-LCA, contained the following article:

"Pursuant to Article 12, paragraph 4, of the Convention, developing country Parties [may] [shall] submit to the mechanism [, on a voluntary basis,] proposals for nationally appropriate mitigation actionsfor which they are seeking support, along with an estimate of all related incremental costs, indication of type of support, an estimate of mitigation benefits and the anticipated time frame for implementation. Support sought for specific nationally appropriate mitigation actions may include support related to enhancing capacity for the design, preparation and implementation of such actions".

All this might mean that the redaction of NAMAs (Nationally Appropriate Mitigation Actions) and low-emission development strategy (considered indispensible by art. 2) might be supported by the early funding instrument, especially in those countries that have difficulties in laying down sufficiently detailed proposals.

Policies aimed at speed up the diffusion of clean energy production method might play an important role, as Ban Ki Moon has declared: "The so-called Copenhagen Green Climate Fund, aimed at helping poor countries adapt to and mitigate the effects of climate change, must be launched as soon as possible so it can start providing assistance to those in need and kick-start clean energy projects".

In another vein, since programs of adaptation in least developed countries have already been laid down (with the support of GEF - LDC Fund) there is already a prioritized list of adaptation actions on the table to be funded.

Achim Steiner, Executive Director of the UN Environment Programme (UNEP), said the deal was “perhaps not the big breakthrough some had hoped for, but neither was it a breakdown, which at times seemed a possibility. The litmus test of developed countries' ambitions will, in a sense, come immediately. If the funds promised in the Accord start flowing swiftly and to the levels announced, then a new international climate change policy may have been born."

In short, a quick start financing mechanisms has been launched in Copenhagen for 2010 and subsequent years and its success will be one of the key issues of the emerging climate regime.

4. Some possible guidelines for utilization

The fast and immediate activation of the Copenhagen Green Fund is the key to its "meaningfulness". The Accord states that: "Scaled up, new and additional, predictable and adequate funding as well as improved access shall be provided to developing countries".

In order to spend quickly in something that triggers wider effects, one has to cut red tape, bureaucratic procedures and simplify the rules for decisions.

The process might be to immediately disburse very little money, to enable a vast variety of subjects to make experiments with those funds, to establish a deadline for them to measure and report on results, to provide enough time for bottom-up and international analysis, to "ensure that national sovereignty is respected", and to scale up finance especially to those countries that have demostrated to be able to use intelligently the funds and offer remedial windows of opportunities for those lagging behind.

By offering each country the same amount, the small states (such as the AOSIS countries), which are quicker and simpler in their operations, will receive a more than proportional boost, whereas larger countries will use the money probably mainly for the coordination, focalization and synergy of national efforts.

This could be achieved by the following decisions for 2010 [1]:

1. direct access of, say, 1 million USD per each country to support the process of laying down Climate Action Plans and low-emissions development strategies in consultation with the various stakeholders at the different levels (national, sub-national, city and rural areas) by upscaling the level of details of NAMAs and by embedding them in a more comprehensive framework;

2. direct access - for each country - of, say, 10 millions USD for pilot example of mitigation action (such as those enlisted in Nationally Appropriate Mitigation Actions - NAMAs) plus 10 millions USD for pilot example of adaptation (such as the existing NAPAs in LDCs).

3. direct access - for each country - of, say, 2 millions USD for capacity-building, and of, say, 2 millions USD for technology development and transfer.

Countries having already presented NAMAs would then be capable of kick start some of them in a very short period of time. The long and frustrating debate on technology would receive some fresh inputs about the actual priorities of countries and offer a hint for finding compromises about the thorny issue of Intellectual Property Rights.

This first package would lead to an expenditure of about 3.6 billion USD, by considering as "developing" the 144 countries classified by World Bank as low and middle income countries (some country might resign from taking this opportunity or additional criteria might be included - as for prioritization of adaptation measures to "developing countries, especially in those that are particularly vulnerable, especially least developed countries, small island developing States and Africa").

In addition, there might be:

4. direct access for each continental organization (such as the African Union, the European Union, etc.) of, say, 50 millions euro each to be used according to the Accord mandate for multi-country projects boosting international co-operation;

4. direct access for each intergovernmental organization engaged in climate change issues (such as the World Bank, UNDP, UNEP, UNIDO, ILO, UNESCO, FAO, IFAD, etc.) of, for instance, 100 millions euro each to be used according to the Accord mandate and in the special perspective that each agency brings.

The total fells short of 10 billions USD in order to leave room to further uses that we did not consider.

This perspective allows each subject to show what is capable to do by building on, or deviating from, its previous track record.

This approach can be implemented in 2010 even before a full-fledged fund (with established and working board membership, rules, etc.) is totally detailed, which might perhaps require a full COP (thus we would lose one more crucial year, in contrast with the commitment that "this Copenhagen Accord [...] is operational immediately").

It would be perhaps enough that in a political meeting (a G-20 plus X) the countries agree on the framework, ask the key donor governments to increase their commitments to be disbursed to all developing countries and obtain from the non-participants a positive appreciation.

Right or wrong as they were, the disagreements voiced in Copenhagen about the content and the method of the Accord were all directed to underline its low level of ambition and to express the opinion that it is a document that could have been written in any of the several G-8, G-20, ... meeting held in 2009. Thus a quick and fair implementation of fund disbursement would probably not encounter strong resistances.

Substantial scaling-up and institutional consolidation of the Copenhagen climate fund must happen in the subsequent years. In particular, it is expected that COP16 in Mexico will take key decisions about the sources and the structure of the allocation of funds, also thanks to the "High Level Panel [that] will be established under the guidance of and accountable to the Conference of the Parties to study the contribution of the potential sources of revenue, including alternative sources of finance, towards meeting this goal".

Since the Copenhagen Accord fixed 31st January 2010 as the deadline for earliest NAMAs, the donors should begin to react to NAPAs and NAMAs, looking at what to finance, keeping into account the overall balance and the Accord emphasis given to country-driven actions.

In this learning process, in which some of the features of the emerging climate regime will be tested, the main mechanism will be the reputation built by the beneficiary in front of the world public and domestic opinion. The increased reliance on voluntary actions should in fact be coupled with stronger reputational mechanisms, to which politicians could be particularly sensitive.

By giving equal or at least comparable amounts to countries, the comparison of results will be faciliatated and would help identify best and good practices, laying down some foundation to "Benchmarking Club of Nations" to exchange good practices and effective policy lessons.

Countries should reflect on which are the most immediate steps for their strategies to be unfolded and perhaps some of them will try to be bold and consider some innovative policies to be included in the evaluation.

In this vein, the 32 countries that by the beginning of February have already presented their NAMAs should all receive a first wave of funds, with the only exception of countries that explicitly consider them unilateral domestic actions that do not require international support.

It is recommendable, meanwhile, that UNFCCC explicits a number of criteria for judging the outcome of the pilot experiments whatever their label (bilateral aid, multilateral aid, copenhagen green climate fund,...).

In this way, the (US-election year) 2010 can end with a COP16 building on the momentum of the experiments' results with favourable conditions for the scaling up of funds, channels and effects.

5. Conclusions

In Italy, there is an old say that sounds "Pochi, maledetti ma subito" - which is a very syntetic way to express that (money is always too) little, dammed (because achieved with heavy and disproportionate work) but (at least should be) immediate.

COP15 can be remembered as the place where world leaders failed or where the damned urgent birth of a new era began to take shape.

Data

To have an idea of the present effort by Annex I countries in projects in non-Annex I countries (e.g. the REDD funding breakdown by recipient country and donor country) see: www.faststartfinance.org updated after COP17.

Notes

[1] Needless to say, all figures should be considered as totally preliminary (in brackets).