|
||
|
TWN
Info Service on Climate Change (Apr24/01) UNFCCC’s Standing Committee on Finance meeting discuss mandates from COP 28 Delhi, 3 April (Indrajit Bose)- The UNFCCC’s Standing Committee on Finance (SCF) held its 33rd meeting in Bonn from 19-20 March, 2024. The SCF discussed a host of issues which included mandates received from the 28th session of the Conference of the Parties (COP 28) and 5th session of the Conference of the Parties to the Paris Agreement (CMA 5); report on common practices regarding climate finance definitions, reporting and accounting methods; report on the 6th biennial assessment and overview of climate finance flows (6th BA); second report on the determination of needs of developing countries related to implementing the Convention and the Paris Agreement (2nd NDR); second report on progress towards achieving the goal of mobilizing jointly USD100 billion per year (2nd progress report on USD100 billion); draft arrangements between the COP, CMA and the Board of the Loss and Damage Fund (LDF); and the SCF’s 2024 Forum, among other issues . (See details of the discussions on each of the topics below). The issue of climate finance definitions saw divergences among the SCF members on how to approach the report. For the remaining reports, members provided guidance for the preparation of the zero-order draft of the reports, which will be considered by the SCF at its next meeting. Diann Black-Layne (Antigua and Barbuda) and Apollonia Miola (European Union) were elected Co-Chairs of the SCF for 2024. The meeting started off on a rocky note with UNFCCC’s Executive Secretary Simon Stiell referring to “developing countries except China” as requiring climate finance, which drew a sharp response from the SCF member from China. In his remarks, Stiell reflected on the outcomes of COP 28 and said COP 28 had signaled the beginning of the end of fossil fuels and set the stage for a just, swift transition towards clean energy, growth and resilience. He also said that none of the outcomes would work without the necessary finance and that “finance is how we turn climate ambition into reality”. He added that the required investment reaches into the trillions and that some experts are of the view that “developing countries excluding China will need USD 2.4 trillion by 2030 and obviously there are other estimates too…”. Responding to Stiell’s intervention, Liucai Zhu, the Chinese SCF member, expressed discomfort about the term “developing countries excluding China” and asked Stiell what it meant. Zhu asserted that there is nothing called “developing countries except China” in the context of the UNFCCC and reminded the Executive Secretary that the two categories (under the UNFCCC) are Annex I and Non-Annex I countries. “This is an error…(we) do not want such errors in the context of the UNFCCCC,” stressed Zhu. Stiell responded that there was no intention to cause offence and that the number quoted had come from a specific report. Report on climate finance definitions, reporting and accounting methods On the issue of definitions, the exchange among SCF members saw divergences on how the SCF should go about the mandate received from the COP as well as on the outline of the report. (COP 28 requested the SCF to prepare a report on common practices, regarding climate finance definitions, reporting and accounting methods, building on the clustering report for consideration of COP 29. The clustering report was done by the SCF in 2023.) Some developing country SCF members stressed the importance of the report especially for clarity around transparency arrangements and for tracking climate finance. They suggested having a “way forward” section, comprising information on how reporting can be improved. Developed country SCF members however, said they were unclear about the mandate and that they must just build on existing work. On the outline of the report, some of them did not agree with having a section on “the way forward”. A compromise was reached with members agreeing to include a “Conclusions” section in the outline. During the discussions, Mohammad Ayoub (Saudi Arabia) said the issue of climate finance definitions was not a developed versus developing country issue, but an issue that was important for the global community in relation to tracking progress. He said there is a distinct need that was not being fulfilled, which is why developing countries keep coming back to the issue. He pointed to decisions that noted the different estimates in climate finance due to lack of common climate finance definition and said that this was linked to the SCF’s lack of ability or of any other institution to track progress on delivery of climate finance commitments. He said the report provides an opportunity to establish why there has been a challenge in tracking progress, what are the common elements of reporting and accounting so that that the information can be useful for Parties negotiating the transparency arrangements of the new collective quantified goal on climate finance (NCQG). He further added that there are differences in climate finance definitions, accounting methodologies, as well as in reporting. Giving the example of forward-looking information, Ayoub said, “We see partners report pledges, sometimes amounts of finance approved by regulators, and sometimes what is reported is merely an intention to work with Parliaments or Congress to approve a certain amount or number. There is a difference in reporting. Through this report, we have a chance to say what are the differences and common areas and those common areas can form the basis of the new transparency approach for climate finance moving forward. This is a very important, timely report and unlike the reports in the past, which were exploratory in nature,” he said. Zaheer Fakir (South Africa) said the most controversial issue in the climate finance area is the issue of definition. He quoted reports which stated that 20 per cent of what a reputable multilateral development bank (MDB) reports as climate finance is not actually for climate related activities and that over USD343 billion of what was reported between 2013 and 2021 as climate finance was not actually climate action that was financed. He said the SCF should be doing something about such greenwashing. He further asked that on Article 2.1 (c) of the Paris Agreement, how would Parties define financial flows if each Party decided what they consider to be consistent with low greenhouse gas and climate resilient development. He said the report is simple, on common practices which the SCF must deliver. Ali Waqas Malik (Pakistan) said for developing countries, a globally agreed climate finance definition under the UN system was important but which is not acceptable to developed countries. Explaining the intent behind the report request, Malik said the idea was to move from clustering to common elements. Patriciah Roy Akullo (Uganda) asked at what point would they arrive at a singular definition of climate finance, which the Least Developed Countries (LDCs) have been asking for. Apollonia Miola (EU) said at COP 28, the mandate had stemmed from a request by the LDCs in particular who had expressed that the clustering of definitions was not useful at the national level. (At COP 28, Ali Waqas Malik and Apollonia Miola had co-facilitated discussions on the issue which had turned contentious. See related TWN update.) Vicky Noens (Belgium) said she was surprised with this request for the report. Responding to some of the comments by developing country SCF members, she said the enhanced transparency framework of the Paris Agreement is a bottom-up approach. If there are common elements, that is because some Parties have agreed to use that common approach, but it will never be top-down in terms of what is accounting methodology and what it is not, she said. “If that is the goal, we will have a lot of issues. Providing climate finance, we need to have flexibility from a bottom-up approach. We can look for common practices, but we won’t be supportive of going beyond that at all,” she added. Highlighting the irony in positions, Ivan Zambrana Flores (Bolivia) said for somethings such as phasing out fossil fuels or coal, the approach is top down, even though the spirit of bottom-up climate action is embedded in the PA. Referring to COP 28 discussions, Gabriela Blatter (Switzerland) said the decision text had just appeared at some point, without negotiations and that they are trying to digest the mandate. She added that the report must build on existing work and a criticism of the existing work (on clustering) had been that it was not digestible; so this report was an opportunity to do better. She further said that Switzerland does not consider investments in fossil fuel improvements as climate finance. That is why the Paris Agreement (approach) is bottom-up, she said, adding that Parties have fundamental differences in that they have not been able to agree even on improving the operational definition. She said she was open to clustering information and display common practices in accounting methodologies as well as in reflecting new sources of information. Ian Naumkin (Russian Federation) said that it is very puzzling to people outside of the climate finance realm that there is no definition of climate finance. Responding to Blatter, he said they consider investments in technologies that help in emissions reductions necessary and as part of the process, adding that viewing climate finance in a restrictive sense is not helpful for developing countries. “We have just recognized in the Global Stocktake (decision at COP 28) the role of transitional fuels, (and) recognised the role of various technologies. It is puzzling to hear that nothing related to fossil fuels could be attributable as climate finance,” he said. Kevin Adams (US) referred to the mandate as “most unusual” and “unclear what the SCF is expected to deliver”. He suggested that the most expedient way to do it would be to take as a basis the work done last year and distill it and make it shorter and more comprehensible for Parties to use. He said he would be happy to take on new information from the transparency report or how Parties are updating their own definition, but wondered if the basis for the work should be a new report. Responding to developed country members’ comments, Ayoub said that it was not about enforcing a top-down classification of what constitutes climate action per se, but that it was about creating a system that enhances transparency within the delivery of climate finance support. “Currently, how the system is operating is it is bottom-up for the providers and top- down for the recipients. The recipients have defined their climate action plans, their nationally determined contributions (NDCs), their national adaptation plans (NAPs). But providers are putting a climate finance definition and that is imposed on the recipients. Recipients are unable to specifically say how the support that is coming in is advancing their national plans and it is making it difficult to track,” explained Ayoub. He added that it was not about making a universal classification system, but was about how to ensure the support that is going is advancing NDCs and this is the purpose of Article 9 of the Paris Agreement. “It should be bottom-up for us. Whatever we define as our priorities is where the support must go. Currently that’s not the case,” he said. He added further that there were a lot of articles stating that ice cream shops and factories that have nothing to do with climate action were being counted as climate finance. “This is really a challenge we can improve,” he stressed. Discussions were also deadlocked on the outline of the report as well. Ayoub suggested adding a section on “ways to enhance climate finance mobilized and provided” and gave the rationale that there should be a section on a forward looking approach comprising information on how reporting can be improved. However, there was no agreement on this proposal and developed country members led by Belgium and Switzerland said this was outside of the scope. The proposal changed to ‘Conclusions and lessons learned’, which too was bracketed by Belgium. Following deliberations, the compromise reached was to name the section, “Conclusions”. (The other sections in the report’s outline as approved are: introduction [background and objectives; Scope; Approach; Challenges and limitations; Structure]; Common practices in climate finance definitions in use; Common practices in accounting methods; Common practices in reporting climate finance). The SCF also agreed to prepare a zero-order draft of the report taking into account the comments made at SCF 33, for consideration at SCF 34. Mandates from COP 28 and CMA 5 The SCF received a host of mandates from COP 28 and CMA 5 held in Dubai last year, which it discussed in the context of updating its workplan. Apart from the report on common practices referred to above, the mandates include developing arrangements to be concluded between the COP, CMA and the Board of the LDF; considering Article 4.5 of the Paris Agreement in implementing its relevant mandates and workplan; taking into account the UAE framework for global climate resilience in the context of its workplan; including information reported in biennial communications on Article 9.5 of the PA, as appropriate, in the 6th BA; including available data and information relevant for implementation of UAE framework for global climate resilience in the 2nd NDR; among others. (Finance issues at COP 28 in Dubai were heavily contested. For the background on some of the mandates, see related TWN update.) While the next SCF meeting is expected to see delivery of the zero-order drafts of the technical reports, the delivery depends on availability of funding. During the discussions, Vicky Noens (Belgium) sought clarification from the secretariat in relation to budgetary implication and why funding for the SCF had moved from the core budget of the UNFCCC to its supplementary budget. Similar concerns were echoed by Ayoub, Fakir, Diann Black-Layne and Malik. The secretariat responded highlighting budgetary constraints and its likelihood of impacting the organisation of not just mandated events, but also delivery of reports such as the 2nd NDR and the USD100 billion progress report. The secretariat representative also said that resources for consultancies in the core budget have been reduced and that the work of the SCF on technical papers heavily depend on supplementary budget. The SCF was also informed that there were resources for the 6th BA, but not for the 2nd NDR report nor the USD100 billion progress report. The secretariat also informed the SCF that a fundraising letter had gone out and they had received informal indications of interest to provide resources to the SCF; however, there had been no formal pledges in this regard. 6th Biennial Assessment The SCF is expected to produce its 6th BA this year. During the meeting, members provided guidance in preparing the zero-order draft and discussed the outreach and stakeholder engagement activities. (COP 28 had endorsed the general outline of the 6th BA and requested the SCF to consider updating, its operational definition of climate finance, and to include information reported in biennial communications under Article 9.5 of the PA.)
Ayoub (Saudi Arabia) said that in the chapter on Article 2.1 (c) of the Paris Agreement, the 6th BA must acknowledge the recent developments and take into account the findings of the Sharm el-Sheikh dialogue on Article 2.1 (c), which clearly states that there is no common interpretation of the Article. Ayoub also suggested that the outcome on the Global Goal on Adaptation (GGA) must be reflected in the BA, as well as mandates on Articles 9.5 and 4.5 of the PA. Blatter (Switzerland) said it is important to stick to the outline agreed by the SCF and endorsed by the COP and CMA, adding that if new reports on Article 2.1 (c) are out, those should be displayed and aggregated. She also said that while some of them do not like the report by United Nations Conference on Trade and Development (UNCTAD) on Article 2.1 (c), but it is a source of information and data from the report must be included. Following further discussions, the SCF agreed to prepare a zero-order draft of the report factoring in the comments made at SCF 33 and any written comments received from members by 3 April, for consideration at SCF 34. The SCF also agreed to advance stakeholder and outreach work intersessionally to support the preparation of the report. 2nd Needs determination report The SCF is expected to deliver its 2nd needs determination report (NDR) this year. During the meeting members provided guidance in preparing the zero-order draft of the 2nd NDR and discussed the outreach and stakeholder engagement activities. (SCF 31 had agreed on a general outline of the 2nd NDR and COP 28 had endorsed the general outline. CMA 5 had invited the SCF to consider including available data and information relevant for the implementation of the UAE Framework for Global Climate Resilience in the report.) Since the first report, there are 210 new or updated national reports submitted to the UNFCCC that have to be considered, said Ayoub (Saudi Arabia) who is co-facilitating the issue with Adams (US). Blatter (Switzerland) suggested getting more information on regional webinars since some Parties had felt their needs were not covered during the 1st NDR. She also said that mandates on Article 4.5, Global Stocktake and GGA need to be reflected in the context of the product. Black-Layne (Antigua and Barbuda) said there should be more information and analyses of the differentiation of needs for the LDCs and Small Island Developing States (SIDS) in the 2nd NDR. She also suggested elaborating the loss and damage needs and the instruments for loss and damage financing in the report. Malik (Pakistan) said the report would be very relevant for the NCQG discussions and suggested that loss and damage needs must feature in the report. Referring to the 1st NDR wherein it was mentioned that several developing countries had been unable to cost their needs, Malik said the 2nd NDR should not cast developing countries in a negative light. He suggested reaching out to developing countries directly and the importance of regional webinars. Gertraud Wollansky (Austria) said there were a lot of political expectations attached to the report and advised caution on the messages that the report could provide and what all it could include. She also said that if the report was overloaded with data on loss and damage, “which we may or may not have”, there is the risk of having “a very chaotic data collection and maybe a chaotic report which does not serve anybody”. She further said they should not put things “which we don’t have proof of”. Following discussions, the SCF agreed to prepare a zero-order draft of the report taking into account the comments made at SCF 33 and any written comments received by 3 April 2024, for consideration at SCF 34. The SCF also agreed to advance work on stakeholder engagement and outreach, taking into account the discussion at SCF 33, including preparing three regional stakeholder engagement webinars and a technical expert meeting during SCF 34. 2nd report on progress towards achieving the goal of mobilizing USD100 billion per year The SCF discussed guidance in preparing the zero-order draft of the 2nd progress report on USD100 billion goal as well as outreach and stakeholder engagement and intersessional work. (SCF 31 had agreed on a general outline of the report, which was endorsed by COP 28.) During the discussions, Ayoub (Saudi Arabia) said some elements such as the investments section in the report need to be improved. He also said it was unclear why the focus overwhelmingly was on mitigation, in particular the energy sector. He suggested including information from the Intergovernmental Panel on Climate Change’s (IPCC) Sixth Assessment’s synthesis report. Adams (US) said that in the previous edition of the report, mitigation action and transparency were underwhelming and that he would like the focus on these. He said he would like to see information on how meaningful mitigation action has progressed and how countries have been reporting transparently on their progress in implementing that mitigation action. Following discussions, the SCF agreed to prepare a zero-order draft of the report taking into account the comments made at SCF 33 and any written comments received from members, for consideration at SCF 34. The SCF also agreed to advance stakeholder and outreach work intersessionally to support the preparation of the report. Arrangements between the COP, CMA and the Board of the LDF The SCF considered the elements of the arrangements and a workplan to prepare draft arrangements. During the discussions members reflected that using the arrangements between the COP and Green Climate Fund (GCF) could be an inspiration for the arrangements between the COP, CMA and the Board of the LDF. Some of the developed country SCF members said that the new arrangements must be fit for purpose and highlighted that these arrangements were being developed in the “post-Paris Agreement”. (At COP 28, Parties requested the SCF to develop the arrangements between the COP, CMA and the Board of the Fund, consistent with the Governing Instrument of the Fund, for the consideration and approval by the Board and subsequent consideration and approval by the CMA6 and COP 29.) During the discussions, Zambrana Flores (Bolivia) said the term “post-Paris Agreement” was not clear since they are in the middle of implementing the PA. Ayoub (Saudi Arabia) said that the arrangements between the COP and the Board of the Fund, and the CMA and the Board, should not be the same, especially in relation to the review of the Financial Mechanism, since the CMA does not have a role in reviewing the Financial Mechanism. Ayoub further expressed his concern on the term “post-Paris” and added the climate regime is from 1992. He suggested sticking to the Governing Instrument (GI) of the Fund. “The language in the GI does not reference anything related to the review of the Financial Mechanism. GCF on the other hand, did. He added that the arrangements should be limited to Article 11.3 of the Convention, which outlines the necessary elements of the Financial Mechanism, and which applies mutatis mutandis to the Paris Agreement. Malik (Pakistan) said governance had been a key sticky issue in the transitional committee (of the Loss and Damage Fund), but Parties had decided that the Fund would serve both the COP and CMA. He suggested building on the GCF guidance model and to stick to the GI and to not get into pre or post-Paris eras. The mandate is clear that the LDF will receive guidance from both COP and CMA and it will respond and report back to both the bodies and this should be reflected, said Malik. Black-Layne (Antigua and Barbuda) said the SCF must focus on the technical and not political issues and that there is a need to have very strong language for gender and social inclusion, for Indigenous Peoples and their participation. Akullo (Uganda) said the LDF Board should be more responsive to Parties, especially the LDCs and suggested the guidance includes specifying timeframe for loss and damage response. She also said that reporting on allocation needs to take into account LDCs and SIDS and there should be no overconcentration of resources to specific regions or countries. Responding to Ayoub, Blatter (Switzerland) said it was the heart of a political matter which must be resolved. This is the first time we have an operating entity of the Paris Agreement and the Convention being created after both have entered into force. Referring to the GCF, she said that the Paris Agreement had not entered into force when GCF was formed. “There lies the core of the political divergence we have to look at. I would clearly see a full role for the CMA in this context,” she said. Adams (US) said that while the GCF-COP arrangements are a good place to start for inspiration for the LDF-COP and LDF-CMA arrangements, it must be recognized that the LDF’s relationship to the Paris Agreement and the Convention are quite different. He said there is no debate on the governance and agreed that they should be fully consistent with the GI. Following further discussions, the SCF agreed on the workplan to prepare draft arrangements and that further work would be undertaken based on the deliberations at SCF 33 and in accordance with the GI, and mandates provided. Among the next steps agreed included the co-facilitators handling the item, Fakir (South Africa) and Brittany Young (Australia), with the support of the secretariat, would circulate an initial draft for intersessional consideration and feedback by members in April, and the Co-Chairs of the SCF, in consultation with the co-facilitators, would communicate with the Board regarding the initiation off the work by the SCF, including information on the workplan for coordination and consultations on the matter, as appropriate. SCF Forum The SCF, in 2023, had decided that the topic of its 2024 Forum would be, “Accelerating climate action and resilience through gender responsive finance”. During the meeting, the SCF discussed sub-themes for the forum and potential dates and venue of the Forum. Following discussions, it agreed on “possible sub-themes” as an initial basis to design the Forum’s programme. The possible sub themes include: “What is gender responsive financing for climate action and resilience; challenges and opportunities to advancing gender-responsive climate financing in the context of delivering on the SDGs, including a focus on economic diversification and development and financing sectoral climate actions and resilience; and gender responsive climate financing as a means to advancing social and economic empowerment of women”. The SCF is expected to issue a call for inputs on information, sub themes and case studies relating to the SCF Forum the deadline of which is 15 April. The draft programme for the Forum will be considered at the next meeting of the SCF and a recommendation on the venue and dates of the Forum would be proposed by 1 May. The next SCF meeting will be held from 29-31st May in Bonn.
|
||
