Submission
The inadequacy of financing for adaptation activities in vulnerable developing countries particularly Small Island Developing States (SIDS) and Least Developed Countries (LDC) is a major failing of the entire international system as well as the Convention process. UNDP estimates that that new additional adaptation finance of at least US$86 billion a year will be required by 2015 to meet the most basic and pressing adaptation needs of developing countries. Despite the clear language of Convention Articles 4.3 and 4.4, funding for adaptation has eroded almost completely under the Convention’s financial mechanism, in the climate change focal area. The LDC Fund, Special Climate Change Fund and Adaptation Fund were created in part to respond to these shortcomings but these funds are clearly insufficient, and many pledges of support for projects through these processes remain unfulfilled. Even when the Adaptation Fund is fully operational, new sources of funding will clearly be needed in addition to existing funding under the Convention. The full cost of adaptation measures must be provided to SIDS given that they are being forced to react to the adverse impacts of a phenomenon to which they have a miniscule contribution and which have been caused by the carbon intensive production patterns and lifestyles of others. In the consideration of enhanced action on financing under the Convention there is a need to differentiate between financing secured for adaptation and financing secured for mitigation. Although securing financing for mitigation is a major challenge, financing for mitigation is more readily available and easier to access than financing for adaptation. Furthermore it is easier to attract private investment for mitigation activities and projects, since they can generate revenue, while adaptation projects in SIDS (e.g. shoreline protection, coral reef restoration, protection of coastal infrastructure, protection against saline intrusion, food security etc.) are generally considered public goods to be provided and protected by the State. 146. On characterizing the provision of new and additional resources 1) New and additional – A significant injection of new money is required separate and apart from traditional ODA and the 0.7% target, and specifically devoted to adaptation. 2) Predictability – The sources of this new financing must be stable and predictable including from mandatory or assessed contributions from developed countries and levies on the market based mechanisms 3) Grant-based – Consistent with the polluter-pays-principle financing to developing countries for adaptation should be in the form of grants rather than loans. SIDS are being forced to react to the adverse impacts of a phenomenon to which they have a miniscule contribution and which have been caused by the carbon intensive production patterns and lifestyles of others. 4) Priority access for the most vulnerable – Particularly vulnerable developing countries especially the SIDS and LDCs should be given priority access to any financing for adaptation given their unique vulnerability, limited capacity to adapt and negligible contribution to the problem. 5) A New Approach to Governance – Any new financing should be channeled through the Convention and any new Fund(s) for addressing climate change should be under the guidance and supreme authority of Parties to the Convention. The governance arrangements of the international financial institutions places small countries at a distinct disadvantage and more often the priorities of these institutions mirror the priorities of those in control. 6) Coherence – Coherence and coordination at the international level among all actors and utilizing the Convention as the fulcrum for action. 147. On provision of new and additional: (a) Provision should be based on: o For adaptation, provision of new and additional financing should be towards the implementation of Articles 4.3 and 4.4 of the Convention, consistent with the polluter pays principle and should be directed at addressing the urgent and priority needs of the most vulnerable. (b) Resources should be generated by: o For adaptation resources should be generated from assessed contributions from developed country Parties as well as market-based mechanisms and private sector sources. (c) Resources should be provided by Parties on the basis of, or taking into account, the following criteria and indicators: o The level of countries GHG emissions, taking into account their historical contribution, respective levels of development and ability to pay. (d) On contributions o To guarantee a stable, predictable source of financing to support adaptation in particularly vulnerable developing countries, assessed contributions from developed countries should form the core revenue stream into the Convention Adaptation Fund 148. On the generation of resources: For Adaptation: o Assessed contributions based on the level of countries’ GHG emissions, taking into account their respective levels of development and ability to pay as well as historical responsibilities o International revenue generation schemes including: o Auctioning of a percentage of national mitigation allocation schemes o International Levies o Voluntary contributions from developed and developing countries and philanthropic organizations over and above assessed contributions For Mitigation o Developed country Parties should pledge funding for mitigation action in developing countries based on a formula calculated two criteria: (i) based on cumulative historical emissions and (ii) ability to pay (GDP). Contributions should be reported, measured and verified using a central register of funding for mitigation action. o Developing country Parties may also wish to make contributions to a central fund for mitigation action established under the Convention. 149. On generation of new and additional resources from fiscal measures For Adaptation: o International revenue generation schemes o Auctioning of a percentage of national mitigation allocation schemes o International Levies For Mitigation: o New and innovative source of funding should be developed under the Convention for mitigation action. Developed countries Parties should pledge a certain percentage of revenue generated from national mitigation allocation schemes undertaken under the Convention. Such revenue could be generated through the auctioning of a percentage of national mitigation allocation schemes. o A global levy on the use of fossil fuels in developed country Parties should be established as a means of generating finance for supporting NAMAs. 150. On mobilization of the public-sector funding and investment, For Adaptation: o To guarantee a stable and predictable source of financing to support adaptation in particularly vulnerable developing countries, assessed contributions from developed countries should form the core revenue stream into the Convention Adaptation Fund: 151. On the mobilization of public-sector funding outside the Convention, The following are required: o Coherence and coordination at the international level among all actors and utilizing the Convention as the fulcrum for action o Additional funding from multilateral financial institutions, under bilateral or multilateral development programmes, should be brought into line with the principles and objectives of the Convention o International financial institutions should prioritize funding for renewable energy and energy efficiency technologies. Current support for fossil fuel technologies should be eliminated. 152. On the mobilization of private-sector funding and investment, o All countries should pledge to remove barriers to the import of renewable energy and efficiency technologies. o The Insurance Component of the Multi-Window Mechanism would mobilize private sector funding for adaptation through support for new and innovative risk sharing and risk transfer schemes. 153. On positive incentives for developing countries: o Positive incentives should be given to developing country Parties for enhanced implementation of national mitigation actions o Major emitting developing countries should take the lead and make a significant contribution to reducing their emissions below business as usual projections. Actions by major emitting developing countries could be based on key sectors. Emissions reductions below measured, reported and verified business as usual baselines could be eligible for trading under a trading mechanism established under the Convention. o For SIDS and LDC, developing NAMAs is seen as a matter of national energy security and as a means of meeting sustainable development aspirations. Appropriate financing will be required to support national energy security needs of SIDS and LDCs; 155. On generating financial resources specifically for technology cooperation, o Funding should be provided to support the diffusion and deployment of renewable energy and energy efficiency technologies in developing countries. Support should be provided to assist in encouraging the private sector to release intellectual property protection on renewable energy and energy efficiency technologies so that they can be readily reproduced in developing countries. o Equal priority should be given to technologies for mitigation and adaptation 156. On the role of enabling environments in mobilizing funding and investment o The Paris Declaration on Aid Effectiveness is not relevant to the Convention process as financing for addressing climate change is a separate obligation from ODA, therefore the Paris Declaration principles do not apply in the climate change context. 157. On guiding the disbursement of, and access to, financial resources for mitigation and adaptation and technology cooperation o For adaptation access should be direct and simplified o Priority access should be given to particularly vulnerable developing countries SIDS and LDCs o The disbursement of, and access to, funding for mitigation, adaptation and technology transfer should be based on country-driven priorities - 20 - o Funding for mitigation actions should also be provided to all developing countries. Funding should contribute to global emissions reductions and achieving sustainable development objectives through the use of renewable energy and energy efficiency technologies. 158. On guiding access and disbursement for adaptation o Funding should be provided in the form of grants rather than loans o Direct, simplified access and expeditious disbursement should be ensured for SIDS and LDCs 160. On priority access to funds for adaptation o Funding should be provided as a priority to particularly vulnerable developing countries, especially LDCs and SIDS 163. On the disbursement of funds for adaptation (a) On criteria for disbursing funds for adaptation: o Funding should respond to the urgent, immediate and pressing needs of the most vulnerable, particularly the LDCs and SIDS o Funding should also respond to progressive negative impacts in particularly vulnerable countries, SIDS and LDCs (b) Allocations of funds for adaptation should be based on o The implementation of adaptation planning, concrete projects and activities, including priorities identified through a structured approach to adaptation under the Convention. o A Multi-Window Mechanism to Address Loss and Damage from Climate Change Impacts, which includes Insurance, Rehabilitation/Compensatory and Risk Management Components. o The disbursement of, and access to, funding for adaptation and adaptive technologies should be based on country-driven priorities. 164. On other activities to be supported through the provision of financial resources and investment o Funding for national climate change focal points o Funding for national capacity self-assessment and capacity-building in particularly vulnerable developing countries 168. On financing for adaptation / differentiated from financing for mitigation, There is a need to differentiate between securing financing for adaptation and securing financing for mitigation. Although securing financing for mitigation is a major challenge, financing for mitigation is more readily available and easier to access than financing for adaptation. Furthermore it is easier to attract private investment for mitigation activities and projects, since they can generate revenue, while adaptation projects in SIDS (e.g. shoreline protection .coral reef restoration, protection of coastal infrastructure, protection against saline intrusion, food security etc.) are generally considered public goods to be provided and protected by the State 169. On innovative means of funding to assist developing country Parties in meeting the cost of adaptation o Convention Adaptation Fund o International revenue generation schemes o Auctioning of a percentage of national mitigation allocation schemes o International Levies o Multi-Window Mechanism to Address Loss and Damage from Climate Change Impacts, with an Insurance Component, Rehabilitation/Compensatory Component and a Risk Management Component 170. On funding, o Convention Adaptation Fund o Mandatory or assessed contributions from developed countries o Auctioning of a percentage of national mitigation allocation schemes - 21- o A structured approach/process to identify and fund the most urgent and immediate adaptation needs of SIDS and LDCs and a mechanism for delivering resources and technical support o A Multi-Window Mechanism to Address Loss and Damage from Climate Change Impacts 171. On means to incentivize adaptation actions on the basis of sustainable development: o A Permanent Adaptation Committee, as an adaptation support mechanism to assist in strategic planning, as well as the development of policy and legal frameworks to enable climate-resistant development o A Convention Adaptation Fund o A Multi-Window Mechanism to Address Loss and Damage from Climate Change Impacts which has three components : o An Insurance Component, to help SIDS manage financial risks from increasingly frequent and severe weather events o A Rehabilitation and Compensatory Component to address loss and damage from the progressive negative impacts of climate change, such as sea level rise, increasing sea and land temperatures and ocean acidification, and o A Risk Management and Risk Reduction Component to support risk assessment and risk reduction C. Institutional arrangements for the provision of financial resources and investments 175. On the overall institutional framework under the Convention, (a) The goal is to bring about coherence in the global financial architecture for financing under the authority and governance of the COP. The financial mechanism would facilitate links between the various funding sources and separate funds in order to promote access to the variety of available funding sources and reduce fragmentation (b) The Convention should be utilized as a fulcrum to ensure coherence and coordination at the international level among all actors 176. On the governance of financial resources, o Any new financing should be channeled through the Convention and any new fund(s) for addressing climate change should be under the guidance and supreme authority of the COP. 177. On existing and potential new institutional arrangements o Alternate governance arrangements are required, recognizing that existing international financial institutions places small countries at a distinct disadvantage and more often the priorities of these institutions mirror the priorities of those in control, rather than the priorities of particularly vulnerable developing countries. 178. On financial mechanism under the Convention For adaptation funding, a Convention Adaptation Fund should be created (for specific institutional arrangements, see below) 179. On general institutional arrangements to support action on mitigation, adaptation and technology cooperation. 181. On specific institutional arrangements to support adaptation Convention Adaptation Fund AOSIS believes that Parties should agree to create a Convention Adaptation Fund to: o Generate a substantial new, additional and predictable funding source to address developing country adaptation needs o Implement Articles 4.3 and 4.4 of the Convention as well as the Polluter Pays Principle o Link GHG emissions to adaptation funding o Complement and not replace the Adaptation Fund under the Kyoto Protocol The Convention Adaptation Fund would fund: o The implementation of adaptation planning, concrete projects and activities, including priorities identified through a structured approach to adaptation under the Convention. o A Multi-Window Mechanism to Address Loss and Damage from Climate Change Impacts, which includes Insurance, Rehabilitation/Compensatory and Risk Management Components o Country-driven adaptation activities Contributions To guarantee a stable, predictable source of financing to support adaptation in particularly vulnerable developing countries, assessed contributions from developed countries should form the core revenue stream into the Convention Adaptation Fund. AOSIS believes that the three main categories of contributions should be as follows: 1. Assessed contributions based on the level of countries’ GHG emissions, taking into account their respective levels of development and ability to pay as well as historical responsibilities. 2. International revenue generation schemes a. Auctioning of a percentage of national mitigation allocation schemes b. International Levies 3. Voluntary contributions from developed and developing countries and philanthropic organizations over and above assessed contributions Access Access should be: o Direct and simplified o With priority access for particularly vulnerable developing countries SIDS and LDCs Governance and Institutional Arrangements o The Convention Adaptation fund would operate under the guidance and supreme authority of the COP Multi-Window Mechanism to Address Loss and Damage from Climate Impacts AOSIS believes that Parties should agree to create a Multi-Window Mechanism to Address Loss and Damage from Climate Change Impacts. This Multi-Window Mechanism would consist of three interdependent components: • An Insurance Component that would help SIDS and other particularly vulnerable developing countries manage financial risk from increasingly frequent and severe extreme weather events • A Rehabilitation/Compensatory Component that would address the progressive negative impacts of climate change, such as sea level rise, increasing land and sea surface temperatures, and ocean acidification, which result in loss and damage • A Risk Management Component that would support and promote risk assessment and risk management tools On Institutional Arrangements: • The Multi-Window Mechanism would be situated under the umbrella of the Convention and housed within the UNFCCC Secretariat. • A Multi-Window Mechanism Board would provide oversight and have a transparent governance structure. • A Technical Advisory Facility and a Financial Vehicle/Facility would provide support to all three components, providing different services to different components. • The Technical Advisory Facility would provide advice and assistance, and receive input from the insurance and reinsurance sectors, the disaster risk reduction community, UN agencies and other organizations. • The Financial Vehicle/Facility would manage funds held by the Multi-Window Mechanism. It would be created inside the UNFCCC, but could be housed in a financial institution outside the UNFCCC. • The UNFCCC Secretariat would provide administrative support. 182. On specific institutional arrangements to support technology cooperation o An international fund to fast-track development of renewable energy technologies.
