TWN
Info Service on Climate Change (Jun13/03)
20 June 2013
Third World Network
UNFCCC’s
Finance Committee tussles over Green Climate Fund arrangements
Bonn,
20 June (Marjorie Williams) – After working two whole days and nights
on a draft decision on arrangements to be concluded between the UNFCCC’s
Conference of the Parties and the Green Climate Fund (GCF), the Standing
Committee on Finance ended its fourth meeting in a tense stand-off
between developed and developing country members of the Committee
due to fundamental differences over key elements of the arrangements.
The
meeting of the UNFCCC Standing Committee on Finance (SCF) took place
on 15-17 June 2013, in Bonn, Germany.
The
elements included the purpose of the draft arrangements between the
UNFCCC Conference of Parties (COP) and the GCF, the role of the COP
in the reconsideration of funding decisions/independent redress mechanism
to be created by the GCF and the necessity and content of termination
clause in the arrangements between the COP and the GCF.
(The
governing instrument of the GCF mandates its Board to establish an
independent redress mechanism that will report to the Board. The mechanism
will receive complaints related to the operation of the Fund and will
evaluate and make recommendations.)
At the 18th meeting of the COP in Doha, Qatar in 2012, Parties agreed
to request the SCF and the GCF Board to develop the arrangements between
the COP and the GCF. The arrangements are to be agreed by the GCF
Board and the COP, by COP 19 in Warsaw this November.
The
issue was discussed by the SCF at its third meeting and a proposal
which listed the elements of the arrangements, procedural options
and a timeline for the joint work was presented to the GCF Board which
mandated its co-chairs to work on the arrangement with the SCF. A
draft of the arrangements concluded by the SCF at this fourth meeting
was to be presented to the GCF board for consideration in their upcoming
meeting in late June 2013.
The
members of the SCF deliberated on a revised co-chair’s text on the
arrangements between the COP and the GCF that reflected inter-sessional
work (via teleconference) by some members of the committee and which
drew on submissions and discussions between the co-chairs of the SCF,
Ms. Diann Black Layne (Antigua and Barbuda) and Mr. Stefan Schwager
(Switzerland) and the co-chairs of the GCF, on the basis of elements
submitted by the SCF.
The SCF members’ preparatory work on the draft arrangements included
submissions from members (Ms. Outi Honkatukia (Finland), Mr. Paul
Bodnar (US), Mr. Gregory Andrews (Australia) and Mr. Paul Oquist (Nicragua)
and Ms. Bernaditas Muller (Philippines) which seemed to have some
common grounds on the arrangements. During the initial discussions
at the meeting there seemed to be much give and take on the draft
arrangements with developing countries showing flexibility in seeking
to arrive at a final text.
However,
ultimately, the SCF members could not reach a consensus on the draft
arrangements and there was no consensus either on sending the document
with options to the GCF for consideration. In fact, developing country
members of the SCF strongly objected to any such text being forwarded
to the GCF. Developed countries members on the other hand were
comfortable with sending a non-consensus, text with options to the
co-chairs of the GCF (who had indicated to the co-chairs of the SCF
that they would like to receive a clean text, not a text with options).
Developing
country members resisted attempts by developed country members, led
by the United States and supported by Australia, to engage in what
many saw as a de facto renegotiation of the GCF’s governing instrument,
with the specific intent of narrowly circumscribing the role of the
COP as well as ensuring as wide as possible latitude for the involvement
of the private sector in the GCF.
Some
developing country members expressed the view that they were being
faced with a last minute package and explicit threats of the GCF not
being funded, if the dictates of developed countries were not met.
This
was in part a reaction to the triple stipulations by Mr. Gregory Andrews
(Australia) that Australia could not accept: (i) anything that undermines
the independence of the board of the GCF or asserts the authority
of the COP over the GCF, (ii) pre-empting decision on things the GCF
Board have not decided yet, and (iii) any role for the COP in determining
GCF funding especially language about needs assessment and mobilization.
Later in the discussion, he also made specific remarks that his government
could not put money in the Fund unless it was consistent with Australian
law.
Developing country members of the SCF argued that the purpose of the
arrangements between the COP and the GCF was specifically laid down
in the governing instrument of the GCF, which was agreed language
viz that: “the purpose of the arrangements is to ensure that the
GCF is accountable to and functions under the guidance of the COP
to support projects, programmes, policies and other activities in
the developing countries Parties…”.
Developed countries, however, in particular, the US and Australia,
sought to qualify this with ambiguous references to the roles and
responsibilities of the COP and the GCF. They also did
not want reference to ‘thematic funding windows’ in the section on
the purpose of the arrangements. The US and Australia, in particular,
argued that this would constrain the GCF.
In the section of the draft arrangements dealing with an independent
redress mechanism, both countries also objected to reference to the
COP having a role in reviewing (on the request of an affected Party)
a particular funding decision after it had progressed through the
independent redress mechanism and reported to the COP.
While upholding the understanding that funding decisions are the responsibility
of the GCF and its board, developing countries favored inclusion of
a provision that allowed a Party that availed itself of the independent
redress mechanism and was not satisfied that its concerns were addressed
in an open and transparent manner, to appeal to the COP to review
the matter on its behalf [on the basis of Article 11, paragraph 3(b)
of the Convention]. It further stipulated that the COP, after
considering the request of the Party, may then take appropriate measures
via the provision of further guidance to the GCF. However, the US
and Australia raised objections to this provision, arguing that this
would adversely impact investor rights, create political risks for
investors and detract from investors investing in the Fund.
On this issue of the independent redress mechanism and the role of
the COP, Mr. Paul Oquist (Nicaragua) noted that this ‘is not a north-south
issue’. He said that in a world of audits and compliance and professional
standards, it was not good practice to have a mechanism that is entirely
formed and control by a board of directors as a redress mechanism.
Such a mechanism, he argued, is not an independent mechanism; rather
it is an internal compliance audit. He said that while an internal
compliance mechanism is useful for CEOs and managing directors, for
example, to optimize the performance of organization, this must be
bolstered by an independent external mechanism. Mr. Oquist further
noted that the policies that the GCF are implementing and applying
emanate from the COP so the COP must be in the picture as to whether
there is compliance with its directives.
The
other two high priority items on the agenda of the SCF were briefly
discussed: the fifth review of the financial mechanism and draft guidance
to the operating entity of the Convention’s financial mechanism, the
Global Environment Facility (GEF):
- The
matter of the review of the financial mechanism had some preliminary
airing of views. The COP at Doha also requested the SCF to amend
the guidelines for the review of the financial mechanism and to
provide draft updated guidelines for consideration and adoption
by COP 19, with a view to finalizing the fifth review by COP 20
(2014).
- Draft
guidance to the operating entity of the financial mechanism will
be more substantively discussed in a future SCF meeting. COP
17 had requested the SCF to provide to the COP starting in 2013,
draft guidance for the GEF, based on the annual report of that entity
to the COP and views submitted by Parties as well as to provide
initial guidance to the GCF at COP 19.
The
SCF also deliberated on issues arising from its third meeting, including
measurement, reporting and verification (MRV) of support, expert input
into the work programme on Long-term Finance, the Code of Conduct
for the SFC, and linkages with the UNFCCC Subsidiary Body for Implementation
(SBI) and the thematic bodies of the convention.
- The
SCF is mandated to tackle the issue of MRV of support provided to
developing countries through preparing a biennial assessment, overview
of the climate finance flows, including information on the geographical
and thematic balance of such flows, drawing on available sources
of information. COP 18 requested the SCF in its initiation of the
first biennial assessment and overview of climate finance flow to
take into account other works by other bodies and entities on MRV
of support and the tracking of finance, and to consider ways to
strengthen methodologies for reporting climate finance. At this
meeting the SCF was to initiate consideration of the modality of
work regarding MRV of support. There was some initial discussion
on this item which will be taken up more substantially in future
meetings.
- The
co-chair of the work programme on Long-term Finance, Mr. Naderev
Sano (he Philippines), gave a brief update on the programme and
participated in small group discussions of the SCF on the issue.
The SCF also held discussion on its mandate to support the work
programme on Long-term Finance by providing expert inputs on the
design and conduct of the work programme through 2013.The extended
work programme on Long-term Finance is aimed at informing developed
country Parties in their effort to identify path ways for mobilizing
the scaling up of climate finance to USD 100 billion per year by
2020 form public, private and alternative sources, and informing
Parties in enhancing their enabling environments and policy framework
to facilitate the mobilization and effective development of climate
finance in developing countries.
The
SCF also had discussions and a report back on the first forum of the
Committee which was held in Barcelona, Spain, 28 May, 2013. Members
of the Committee felt that the forum had been a successful event.
It was noted that there was need for further discussion to draw on
lessons learned in planning for the 2014 forum.
The next SCF meeting will be held in August 2013 coinciding with the
GCF meeting in Songdo, the Republic of Korea.
