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Transparency of Climate Finance: Did Durban Show Us the Money?

In the recent UN climate negotiations (COP 17) in Durban, South Africa, the issue of transparency of climate finance appeared in a variety of contexts in the final agreement on long-term cooperative action. From the sections on reporting and review for developed and developing countries, to the Standing Committee, to the registry, and to fast-start finance, making sense of this multitude of provisions on climate finance transparency is a challenge.

However, what's clear is that the moderate progress made in Durban fell short of what is needed to achieve a transparent and effective climate finance regime. This post aims to summarize where we stand on this issue following the Durban COP.

Why is the transparency of climate finance important?

Since 1992, developed countries have repeatedly pledged to help developing countries meet their climate mitigation and adaptation needs, including by providing $30 billion in ‘fast-start’ funds for the years 2010-2012 and $100 billion annually by 2020.

Transparent and accurate reporting of this finance – often referred to as the measurement, reporting, and verification (MRV) of finance – is important to building a robust climate regime. For example, through sound MRV of finance, developed countries can gain international recognition for their support and developing countries can gain assurance that the money pledged is actually delivered. Furthermore, increased transparency can help governments and other stakeholders assess the scale and type of support provided, identify trends, and pinpoint possible gaps in sectors or regions.

Don’t countries already report international climate finance?

The current UNFCCC system for developed countries to report on climate finance faces several challenges which limit the utility of available data. Countries currently only report every four years, use multiple methods for reporting, and often provide insufficient information even where requested.

What did Cancun do to improve on the status quo?

The Cancun Agreements of December 2010:

  • Mandated more frequent (i.e., biennial) reporting of actions and finance for developed and developing countries.
  • For developed countries, mandated creation of common reporting formats and methodologies for finance, as well as enhanced review of the reported information.
  • Invited developed countries to report on the resources provided to fulfill their fast-start finance commitment in May each year until 2013.
  • Called for developing countries to report on “support received.”
  • Called for information on developing country climate finance needs and on climate finance provided by developed countries to also be captured in the then-newly-formed registry.
  • Established a Standing Committee to better coordinate delivery and MRV of climate finance.

The Cancun Agreements represented a major step forward by creating the processes and institutions for improving transparency of climate finance. However, Parties were far from finished. For example, the Agreements did not provide detail on what information the fast-start finance reports should include. Detailed guidelines for biennial reports were not agreed. And the Standing Committee’s specific role in the MRV of climate finance was left ambiguous. The success of the Cancun Agreements in improving transparency of climate finance depended on their operationalization over the course of 2011 and in Durban at COP 17.

How did Durban move forward on this issue, and where did it fall short?

Durban had a mixed outcome for transparency of finance, with areas of moderate progress and areas in which Parties still have significant work to do in the coming year.

Progress Made in Durban

  • Developed country reporting: The Durban outcome provides more detail on what information developed countries should include in their biennial reports on provision of climate finance – information that will subsequently be subject to a process of international assessment and review (IAR).
  • The registry: Parties provided additional specificity on the information developed countries should submit to the Secretariat for inclusion in the registry on support available for developing country Nationally Appropriate Mitigation Actions (NAMAs).
  • Developing country reporting: The Durban outcome reiterates that developed countries should provide financial support to developing counties for preparing biennial reports and participating in international consultation and analysis (ICA), both of which include in their scope information on the receipt of climate finance.

2012 To-Do List

  • Developed country reporting: Parties did not adopt a common reporting format for finance in Durban, meaning that information provided under these reporting guidelines will likely be limited in completeness, comparability, transparency, and accuracy. Parties can improve on these guidelines in the future through the work of the Subsidiary Body for Scientific and Technical Advice (SBSTA).
  • Fast-start finance: Durban fell short in detailing what information developed countries should provide in their fast-start finance reports. Parties independently can improve the transparency of their reports in May of this year and next, in particular by reporting on seven elements outlined by WRI.
  • Developing country reporting: Based on the individual capacities of developing countries, Parties should develop more detailed guidance for what information to report on the receipt of climate finance. This could better enable, for example, cross-checking of information reported between developed and developing countries. In addition, as mandated in the Durban outcome, developed countries should ensure financial support is available for developing country reporting on climate finance received.
  • Other institutions: In the Durban outcome, both the Standing Committee and Adaptation Committee include provisions relating to transparency of climate finance. Over the coming year, it will be essential to clarify these Committees’ roles in tracking, considering, and reviewing climate finance, and to ensure coordination and coherence with MRV institutions and processes.
  • Reporting by multilateral development banks (MDBs): A significant portion of international climate finance is channeled through multilateral institutions. For example, 56% of the EU’s fast-start finance, as of November 2011, is being channeled through multilateral institutions. However, detailed, accurate, and comparable information on this finance is not available because the multilateral institutions do not report this information to the UNFCCC. Thus, Parties should request that MDBs report to the UNFCCC, and should include information from MDBs to be considered during IAR and ICA processes.

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