WRI Publications Feed: Governance & Access

Map of SBSTA Submissions: REDD+ Safeguard Information System

Kevin Lustig — Tue, 07 Feb 2012 09:27:01 -0500

Summary

In December 2010, the 16th Conference of the Parties (COP 16) to the United Nations Framework Convention on Climate Change (UNFCCC) requested the Subsidiary Body for Scientific and Technical Advice (SBSTA) to develop guidance relating to paragraph 71(d) of the Cancun Agreements in time for COP 17 in Durban, December 2011.

Paragraph 71(d) speaks to a system to provide information on how the safeguards in Annex 1 of the Cancun Agreements are being addressed and respected (termed the “safeguard information system” or SIS).¹

In June 2011, SBSTA discussed the development of a guidance document on the SIS, and invited Parties and accredited Observers to submit their views on such guidance.² Submissions were welcomed on: characteristics; design; provision of information; potential barriers, if any, to providing information on addressing and respecting safeguards; and other relevant issues.

SBSTA received 26 submissions in total, 14 from Parties and 12 from Observers. Several submissions represent the view of more than one Party or Observer. While most submissions followed the structure suggested by SBSTA in June, they often covered substantively different topics under each heading. In an effort to bring greater clarity to discussions surrounding the SIS, ClientEarth and the World Resources Institute (WRI) have divided the information in the submissions into four categories:

The Role of the Safeguard Information System
The Type of Information that Parties Should Provide
How to Collect and Provide Information
Other Elements of the International Safeguard System

A summary of our key findings for each category is provided below. Tables of the specific language from Party submissions make up the rest of the document. In some cases it was difficult to be certain of the exact meaning of the language included in the submissions.³ Every effort has been made to accurately reflect, in this abbreviated format, the views contained in the submissions. ClientEarth and WRI regret any misrepresentation of those views that may have occurred in an effort to achieve brevity, clarity and comparability.

This paragraph speaks to “a system for providing information on how the safeguards referred to in appendix I to [the Cancun] decision are being addressed and respected throughout the implementation of the activities referred to in paragraph 70 above, while respecting sovereignty.” ↩
SBSTA also invited input on other elements of REDD, including reference levels and MRV. Please note that document only reviews submissions related to the safeguard information system. ↩
For example, it was sometimes difficult to know when reading the submission if Parties/observers envisaged activities (like reviews) happening at the national and/or the international level. ↩

Summary of Developed Country ‘Fast-Start’ Climate Finance Pledges

Maggie Barron — Wed, 23 Nov 2011 15:41:50 -0500

Reiterating a pledge made in Copenhagen in 2009, the Cancun Agreements of December 2010 formally commit developed countries to collectively provide resources “approaching USD 30 billion for the period 2010 - 2012” to support developing countries’ climate efforts. This so-called “fast-start” finance will help developing countries, particularly the poorest and most vulnerable, mitigate (reduce) their greenhouse gas emissions, and adapt and cope with the effects of climate change. These pledges also present an opportunity to build trust between developed and developing countries in the international climate arena, in turn fostering progress towards a comprehensive post-2012 international climate agreement.

WRI has carried out a preliminary analysis based on available information on countries’ immediate pledges announced thus far. The accompanying table sets out both the amounts and the mechanisms by which funding would be delivered. WRI has also looked at how countries indicate whether their pledges will provide “new and additional” funds compared to what they provide as official development assistance.

This table will be continuously updated as more information becomes available.

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Q&A on this Analysis

(Updated on November 23, 2011)

Have developed countries met their fast-start finance pledge?

Based on our research, as of November 18, 2011, 23 developed countries and the European Commission have publicly announced their individual fast-start finance pledges, in addition to the European Union’s collective pledge. These pledges total USD 28.22 billion.

While this represents a significant step in the right direction, developed countries still have much to do in meeting the fast-start pledge. The Cancun Agreements mandate that fast-start funds have a “balanced allocation between adaptation and mitigation,” are “new and additional,” are “prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa,” and include “forestry and investments through international institutions.” It is not clear that developed countries’ fast-start finance contributions fulfill these criteria.

Finally, ensuring that pledges are actually delivered will be essential. Though the pledges are clear, their delivery is uncertain. According to reported information, of the pledged funds, USD 16.23 billion has been requested and/or budgeted by the executive bodies of the countries during the fast-start period. In some cases, the legislative bodies have also approved these requests. Some of the requested or budgeted funds may have even been delivered, yet the actual delivery and implementation of the finance is often not clear in countries’ fast-start finance reports.

Do the funds have a “balanced allocation between adaptation and mitigation”?

Countries often specify the general objective that their fast-start funds will support. For example of the EUR 4.68 billion mobilized for fast-start by the EU, 39% will support mitigation, 31% will support adaptation, 12% will support REDD+, and 18% will support multipurpose activities. While Germany has pledged that one-third of its 2010-2012 fast-start funds will support adaptation, only 21% of its 2010 reported funds do so. In its 2010 fast-start finance report, Germany highlighted the challenges of identifying suitable adaptation projects as the reason for this, and recognized the remaining need to adjust the allocation of funds across the three areas of mitigation, adaptation and REDD+. Several countries involved in the Interim REDD+ Partnership — a process created parallel to the UNFCCC to ensure effective and sustainable REDD-plus (reduced emissions from deforestation and forest degradation) actions over the next few years — have also specified that at least 20% of their funds will support REDD-plus. However, without an agreed-upon definition among countries of what constitutes a “balanced allocation,” we cannot answer this question.

Are the pledged funds “new and additional”?

“New” funding represents an increase relative to pledges or allocations from previous years. However, a number of pledges include commitments already made in the past. For example, Japan’s USD 15 billion fast start pledge announced in December 2009 as the Hatoyama Initiative includes USD 10 billion announced previously in 2008, while the fast start pledges of the United Kingdom and the United States also include their 2008 commitments to the Climate Investment Funds (CIFs) of roughly USD 1.4 billion and USD 2 billion respectively.

Funds that are “additional” ensure that their delivery does not result in the diversion of funds from other important development objectives. In other words, climate mitigation and adaptation funds should be additional to development aid. Parties to the UNFCCC have not yet achieved consensus on a clear and specific definition of ‘additionality’ that can be applied uniformly to developed country financial pledges. As a result, countries have proposed a variety of methods for defining the additionality of their fast-start finance.

Do the pledges include “investments through international institutions”?

Countries are channeling investments through a mix of multilateral, bilateral, and public-private institutions. Several countries, including Japan and the United States, are channeling a considerable amount of their funds through export credit agencies and other public-private channels. The Climate Investment Funds (CIFs) and the Global Environment Facility (GEF) are the primary multilateral institutions of choice through which other funds will be channeled. Still, a significant portion of this funding, particularly for 2011 and 2012, has not been specified by the countries. The governance of the funds has implications for the effectiveness and perceived legitimacy of the overall climate finance architecture. Developing countries generally prefer that institutions governing finance ensure developing country ownership of funded activities and prioritize funding for climate vulnerable countries. Developed countries tend to emphasize the need to minimize bureaucratic costs and ensure the effective use of resources.

Why is fast-start finance “prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa”?

Countries under the Convention recognize that developing countries are highly vulnerable to climate change impacts because they have fewer resources to adapt to the effects of climate change, which can include increased droughts and floods, rising sea levels, and greater uncertainty in the agricultural sector. Least developed countries (LDCs) and small island developing States (SIDS) in particular are recognized as needing special consideration due to their extreme vulnerability. For these reasons, developed countries have pledged to prioritize fast start funds for the “most vulnerable countries.” Several countries are channeling their fast start finance through the Least Developed Countries Fund or the Adaptation Fund, many are channeling finance directly to SIDS and LDCs. Australia in particular states that it will channel at least 25% of its fast-start finance to SIDS. Japan has specified that over 50% of it is grant aid to vulnerable countries, including Africa and the LDCs, is devoted to the area of adaptation.

What types of financial instruments are countries using?

There are several different types of financial instruments countries are using to deliver their fast-start finance, including grants, loans, equity, loan guarantees, insurance, and private investments. Many countries have provided some information on the type of financial instruments used. For example, the EU’s internal reporting process for fast-start finance distinguishes between “grants” — which made up about 45% of EU Member State contributions in 2010 — and “loans, equities or others” — which constituted 55%. Norway reports that all of its fast-start finance will be grants. Meanwhile, Japan’s fast-start finance includes grants and loans that meet ODA standards, finance in the form of ‘other official flows’, and private finance. However, reporting on the type of financial instrument used is neither comprehensive nor consistent. For example, no information is reported on the concessionality of the loans when used, save for by the United Kingdom.

What are the next steps to ensure clarity on the delivery of climate finance pledges in the future?

The UNFCCC system for developed countries to report on the delivery of climate finance faces several challenges, which limit the utility of available data. For example, countries currently use multiple methods for reporting and often provided insufficient information even where requested. To address this, the Cancun Agreements mandate more frequent reporting by developed countries using an enhanced common reporting format.

While these enhanced reporting provisions will be essential for successful tracking of developed country climate financial flows, they will not be ready in time to provide guidance for reporting on the short-term, fast-start finance. In the meantime, the Cancun Agreements invited developed country Parties to submit information to the UNFCCC secretariat, for compilation, on the resources provided to fulfill their fast-start finance commitment by May 2011, 2012, and 2013. Nine developed countries and the EU¹ submitted their reports on or around the May 2011 deadline. While the Cancun Agreements include reporting provisions for fast-start finance, it does not provide guidance on what these reports should include, resulting in reported information that is neither fully comparable, transparent, nor complete, as is demonstrated by the gaps in information in WRI’s fast-start table and in a report by IIED assessing the transparency of the May 2011 fast-start finance reports. The UNFCCC secretariat recently launched a fast-start finance module on its finance portal that enhances the comparability of the May 2011 reports but it remains limited to information provided by developed country Parties. It also does not capture information available on the faststartfinance.org website or on individual donor or recipient websites, or other sources such as NGOs, the private sector or multilateral development banks.

To build trust with developing country counterparts, developed countries should improve their fast-start finance reporting in the future, for example, by including more comprehensive, comparable and transparent information on the following seven elements in their annual fast-start finance reports: scale, method for determining that the money is “new and additional,” channeling institutions, objective, geographic distribution, status of the pledge, and type of financial instrument.

While the EU does not report comprehensively on individual Member State pledges that fulfill the EU EUR 7.2 billion collective pledge, some Member States provide information on a voluntary basis on their individual pledge, for example, on faststartfinance.org, or on their bilateral donor institution websites. ↩

Getting Ready: A Review of the World Bank Forest Carbon Partnership Facility Readiness Preparation Proposals

admin — Wed, 19 Oct 2011 12:04:10 -0400

The World Bank administered Forest Carbon Partnership Facility (FCPF) and the UN Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD Programme) are two leading multilateral efforts currently supporting developing countries to become ―ready‖ to reduce emissions from deforestation and forest degradation and enhance carbon stocks (REDD+).

This working paper is the eighth in a series of regular updates reviewing the Readiness Preparation Proposals (R-PPs) submitted by REDD+ Country Participants to the FCPF and the National Programme Documents (NPDs) submitted by UN-REDD Programme countries to the UN-REDD Programme. The analysis is based on a desktop review of each R-PP and NPD in order to understand how countries are considering fundamental issues of forest governance during the readiness phase. We assess whether the documents identify major governance challenges contributing to forest loss, and whether principles of transparency, accountability, participation, and coordination are being applied in the development of REDD+ institutions, systems, and plans.

The 7th meeting of the UN REDD Programme Policy Board and the 10th meeting of the FCPF Participants Committee will be held in Berlin, Germany, from 13-14 October and 17-19 October, respectively. This paper evaluates R-PPs from Central African Republic and Colombia submitted for formal consideration by the FCPF Participants Committee. Draft R-PPs from Guatemala and Mozambique were submitted for informal review, but are not analyzed in this paper. We also review Nigeria’s NPD, which will be considered for funding by the Policy Board.

Grounding Green Power: Bottom-Up Perspectives on Smart Renewable Energy Policy in Developing Countries

Maggie Barron — Tue, 24 May 2011 12:51:13 -0400

Watch the summary interview with Lead Author Lutz Weischer

This paper was published by the German Marshall Fund of the United States in cooperation with the Heinrich Boell Foundation and the World Resources Institute.

Developing Countries in the Renewable Energy Transformation

In order to meet the intensifying climate challenge, the global energy system must undergo a fundamental transformation, with a rapid increase of renewable energy worldwide. Developing countries are at the forefront of this challenge, since they are expected to add around 80 percent of all new electric generation capacity worldwide in the next two decades.

The deployment of energy from renewable sources is accelerating in developing countries, and already accounts for a higher percentage of electricity generation than in the developed world. In 2008, non-OECD nations generated 21 percent of their electricity from renewable sources including large-scale hydroelectric power (compared with 17 percent in OECD countries), according to International Energy Agency (IEA) statistics. However, this figure must more than double by 2035, to 46 percent, in order to meet the IEA’s “450 scenario,” which outlines a climate friendly pathway for meeting global energy demands.

Transforming the energy system on this scale will require significantly increased support from developed countries, channeled through both bilateral assistance and multilateral institutions, as well as philanthropic initiatives. Our conclusions, derived from a series of case studies and a comprehensive review of existing literature, suggest that donors should deploy financial support more effectively by moving beyond a project-by-project approach to one that creates the right environment for investments in scaled-up, nationwide deployment.

This working paper seeks to assist in this process, by identifying key components of smart renewable energy policy in developing countries, focusing on the power sector. It also provides recommendations for maximizing the effectiveness of international support for deployment of renewable energies, drawn from these on-the-ground experiences in developing countries.

About this Working Paper

Chapter 1 introduces the approach and methodology taken in this paper and describes the key concepts we address. The second chapter discusses what developing countries are already doing to deploy renewable energy sources, and how they can be supported in scaling up such efforts. It also introduces a set of principles of smart renewable energy policy to propel such a transformation, developed by the World Resources Institute. These are based on insights drawn from case studies of existing renewable energy policies in 12 countries in Africa, Asia, and Latin America as well as from existing literature.

The following five chapters each examine one key element of smart renewable energy policy, discuss lessons learned, and identify needs for international support. These cover planning and strategy (Chapter 3), well-designed generation-based incentives (Chapter 4), an enabling policy and regulatory framework (Chapter 5), attractive financing conditions (Chapter 6), and the necessary technical environment (Chapter 7). Our findings and recommendations are summarized in Chapter 8.

Principles of Smart Renewable Energy Policy

We define smart renewable energy policy as the set of rules, regulations, and government actions that lead to an increased share of renewables in total electricity consumption in line with a country’s development objectives. Smart renewable energy policy encourages private investment, achieves its objectives in a cost-effective way, promotes continuous innovation, and is designed through transparent, accountable, and participatory processes.

Presentation

Download Slides (PDF, 16 pages, 839 Kb)

In Deep Water: Weak Governance and the Gulf Oil Spill, a 30-Year Timeline

Maggie Barron — Fri, 11 Feb 2011 11:19:28 -0500

Summary

The Deepwater Horizon Blowout last April in the Gulf of Mexico is the largest oil spill in U.S. history. It will be many years before we know the full extent of the disaster in terms of its impact on the environment and the economy.

Regardless of the final damage tally, the system put in place to avoid these types of disasters has proven inadequate. This is evident from the investigations and recommendations of the National Oil Spill Commission, established by President Obama, whose report was published on January 11, 2011. It was also implicit in the immediate response by the federal government to restructure and rename the agency responsible for regulating the oil and gas industry – formerly the Minerals Management Service, now the Bureau of Ocean Energy Management, Regulation and Enforcement.

How did we reach this point? As a new timeline of events from WRI shows, the governance problems that allowed the spill to happen began long before the blowout, and long before the Deepwater Horizon well was authorized.

A Thematic Timeline

The World Resources Institute (WRI) has conducted a wide-ranging review of the decisions, policies, participants and events that formed the backdrop to the April 2010 oil spill in the Gulf. This timeline is intended to serve as a resource and reference tool for policymakers, academics and journalists interested in a larger accounting of the oil drilling governance and regulatory system, going back to 1978. The research draws from, and references, a broad range of primary sources including congressional testimony, federal agency and commission reports, documents released through Freedom of Information Act requests, and secondary news sources.

Key recurring governance failures highlighted over the 30-year timeline include:

Efforts by government agencies to keep pace with the risks associated with new drilling technologies were undermined as new guidelines were not adopted or enforced.
Lack of transparency and accountability over the collection and expenditure of oil revenues led to mismanagement of royalty fees owed to the American people.
A revolving door culture between the public and private sector coincided with the failure of the U.S. Attorney’s Office to prosecute ethical breaches.

Key Policy Issues

The timeline is accompanied by thematic icons to highlight specific streams of influence and decision-making areas that contributed to the complex system failure.

Moving Forward

This timeline seeks to shed light on the circumstances, policies and decisions that helped enable America’s worst oil spill. It does not provide recommendations, but rather highlights key governance issues that need to be addressed if the U.S. is to avoid another such disaster. The National Oil Spill Commission Report, released early January 2011, clearly states the extent of governance reform required:

To assure human safety and environmental protection, regulatory oversight of leasing, energy exploration, and production require reforms even beyond those significant reforms already initiated since the Deepwater Horizon disaster. Fundamental reform will be needed in both the structure of those in charge of regulatory oversight and their internal decision-making process to ensure their political autonomy, technical expertise, and their full consideration of environmental protection concerns.

The report goes on to make detailed recommendations ranging from technical standards to auditing and permitting requirements. These recommendations will take time and resources to integrate and, as the new 112th Congress settles into office, proposed budget cuts and calls for regulatory reform may pose a challenge. It is therefore critical that non-governmental organizations play an active role in ensuring that environmental resources are managed safely and fairly and that the lessons of the last 30 years regarding U.S. deepwater oil extraction are learned and acted upon.

Avoiding the Resource Curse: Spotlight on Oil in Uganda

Maggie Barron — Mon, 24 Jan 2011 16:49:34 -0500

Uganda has made significant progress in codifying the rights of access to information (ATI) and participation, and toward putting in place the institutional infrastructure, including a regulatory framework, for the oil sector. Political roll-backs that are re-concentrating power in the executive branch of government and the growing scale of known oil reserves, however, may jeopardize these advances.

In this context, the passage of a new law in the United States requiring companies that file annual reports with the U.S. Securities and Exchange Commission (SEC) to disclose the payments they make to host governments for the extraction of oil, natural gas and minerals, could help shore up transparency around investment in Uganda’s extractives industry and avoid the failures in governance that have exposed other countries to the “resource curse.”

Download WRI’s Comments on Uganda’s Access to Information Regulations

Update: On 21 April 2011, the government of Uganda signed into law new regulations for implementing Uganda’s Access to Information (ATI) Act of 2005. The ATI Regulations were long awaited and widely welcomed, since many local and international advocates believed their absence had hindered full implementation of the Act, and stymied efforts to increase transparency and accountability. The Regulations support implementation of the ATI Act in a number of important ways. For example, they establish procedures for citizens to request government-held information and for government to respond to citizen requests. But the Regulations also include a number of burdensome provisions that make access unnecessarily costly and difficult and, as such, they are not in the spirit of the strong right to information provision found in Uganda’s Constitution. Read WRI’s full comments on the Regulations (PDF, 3 pages, 211 Kb)

Power, Responsibility, and Accountability: Re-Thinking the Legitimacy of Institutions for Climate Finance

Maggie Barron — Tue, 14 Dec 2010 12:27:05 -0500

Executive Summary

The 2009 Copenhagen Climate Summit left unresolved major questions about how to fund lowcarbon development in developing countries. In a high-level political declaration—the “Copenhagen Accord”—developed countries agreed to “provide new and additional resources … approaching USD 30 billion for the period 2010–2012” and to a goal of jointly mobilizing USD 100 billion a year by 2020 from both public and private sources, to address the needs of developing countries. As the negotiations on a global climate deal continue, disagreement remains on how much of these funds will come from public or private sources and whether these billions should be delivered through new or existing institutions. There is also heated debate over whether a single centralized institution or a decentralized approach that coordinates international, regional, and national institutions would be more effective.

Although there are many variations in government positions, broadly speaking, developed countries favor a substantial role for existing institutions, such as the multilateral development banks (MDBs) that they have funded and led for the past 60 years. Developing countries prefer new institutions, arguing that existing ones favor the interests of contributor countries and have failed to deliver on promises to support poverty alleviation and sustainable development. The ongoing negotiations on a global climate deal reflect this “northsouth” gulf. Despite these differences, one thing is clear: if the institutional arrangements entrusted with managing new flows of climate finance are to succeed in raising the required resources and in investing these resources effectively, they will need to be perceived as legitimate by both contributors and recipients.

Institutional Arrangements for Climate Finance: Power, Responsibility, and Accountability

Box A. Dimensions of Power, Responsibility, and Accountability in the Design of a Climate Finance Mechanism

Power: The capacity—both formal and informal—to determine outcomes

How will the financial mechanism’s governance structure distribute voice and vote between and among contributors and recipients?
What role will the United Nations Framework Convention on Climate Change’s (UNFCCC) institutions, including the Conference of the Parties, play in guiding the financial mechanism?
To what extent will contributors be able to determine funding priorities by placing conditions on the resource mobilization and allocation process?
How influential will the secretariat and management staff of the financial mechanism be in determining project design and selection?
Will advisory groups, civil society observers, and local communities play a role in determining how the financial mechanism operates?

Responsibility: The exercise of power for its intended purpose

Are the financial mechanism’s standards, program priorities, and eligibility criteria strong enough to ensure its resources are invested fairly and effectively?
How do cost-sharing formulas (e.g., incremental, marginal, transformative costs) allocate responsibilities between contributor and recipient countries, and between the financial mechanisms and recipient countries?
To what extent are national institutions and local civil society entrusted with ensuring the effective design and implementation of investments?

Accountability: The standards and systems that ensure power is exercised responsibly

How does the financial mechanism measure, evaluate, and incentivize results?
Are effective environmental and social safeguards in place to ensure the investments do no harm?
How are fiduciary duties and financial management standards supported and enforced?
Are grievance and inspection mechanisms in place to ensure that standards are followed?

The full report seeks to ground the debate on the future of climate finance in an objective analysis of existing efforts to finance climate mitigation and adaptation in developing countries. The authors step back from the question of which institutions should be entrusted with new flows of climate finance to examine instead how governments can design a climate financial mechanism in a way that is widely perceived as legitimate. We identify three crucial dimensions of legitimacy: power, responsibility, and accountability (see Box A). While these three dimensions interrelate and overlap, we have found them to provide a useful analytical framework to analyze and guide choices in institutional design.

We review the governance structures, operational procedures, and records to date of 10 international and national financial mechanisms, with reference to these core dimensions of legitimacy, to draw lessons for future institutional arrangements (see Box B). We place special emphasis on the experiences with the Global Environment Facility (GEF), which, in operation since 1994, is the longest serving operating entity of the United Nations Framework Covention on Climate Change (UNFCCC) financial mechanism. In addition to the GEF, we review experiences from the Multilateral Fund for the Implementation of the Montreal Protocol, in operation since 1990, which is often referred to as a model for future funds. The remaining funds reviewed are much newer and yield more insights with regard to design, rather than operation.

We recognize that perceptions of the legitimacy of a financial mechanism are inherently subjective and that this subjectivity is revealed in the very different preferences expressed by contributor and recipient countries. We believe, however, that if governments were to discuss the dimensions of legitimacy more explicitly, the stakes and the trade-offs would become more apparent, and a more shared understanding on how to design a legitimate financial mechanism would emerge. We believe that the failure, thus far, to address the distribution of power, responsibility, and accountability more explicitly has led to a proliferation of financial mechanisms that are underfunded, which in turn leads to calls to create new mechanisms.

We recognize that perceptions of a financial mechanism’s legitimacy will also depend upon an institution’s performance—its demonstrated capacity to commit funding to investments that reduce greenhouse gas emissions and build resilience to climate change. Most of the climate financial mechanisms studied have not been operating at a scale or for a time period that would allow a full assessment of their performance. We nonetheless seek to make recommendations that could improve the design and the performance of new and existing climate financial mechanisms.

We conclude that a new global deal on climate finance is likely to significantly redistribute power, responsibility, and accountability between traditional contributor and recipient countries. Most significantly, the power of emerging economies to control climate finance mechanisms will grow, as will their responsibility and accountability for the performance of these institutions. In light of the dramatic changes in global politics and the global economy in past decades, this redistribution seems both long overdue and necessary to provide the basis for a successful global partnership on climate finance.

Conclusions and Recommendations

This is a dynamic time for climate finance, as the international community struggles to craft mechanisms that are perceived to be legitimate by all UNFCCC Parties and that are capable of funding climate-related activities efficiently and at scale. Our analysis of established and new climate financial mechanisms and the current UNFCCC negotiations leads us to conclude the following:

Change is coming. A new global deal on climate finance will likely reinterpret the principles that in the past have guided the design of climate finance mechanisms in a way that significantly redistributes power, responsibility, and accountability between traditional contributor and recipient countries.
A new balance of power, responsibility, and accountability could enhance recipient country ownership. Greater representation of developing countries on the governing bodies of international financial institutions more generally, and climate finance mechanisms more specifically, should help ensure greater emphasis on the national and local “ownership”—and thus the effectiveness—of climate finance investments.
A new understanding of how to balance national interests with global responsibility and accountability is required. This will require assurance that nationally driven investments contribute to global benefits in the form of net emission reductions and that investments protect the most vulnerable countries and communities.
New financial mechanisms—at both the global and the national level—are necessary. If the international community raises the scale of public finance necessary to move developing countries onto a low-carbon, climate-resilient pathway, the capacity and the creativity to spend these resources well will necessitate the creation of one or more new financial mechanisms at the global level and multiple nationallevel institutions.
Existing institutions must also be reformed. The scale of the climate change challenge and of the scale of the funding necessary to respond to that challenge will also necessitate the reform of existing financial institutions, many of which have been supporting fossil fuel–led growth and have yet to mainstream concerns about the impacts of climate change into their strategies.
Current negotiating positions reflect deep historical and ideological divisions—particularly between developed and developing countries—that will need to be overcome by building trust and experimenting with new kinds of relationships. Developed countries have been keen to build on existing financial institutions they have shaped and traditionally controlled. Developing countries are wary of these same institutions, which they see as historically having advanced contributor interests and theories of development, through both the formal and informal exercise of donor power.
At the international level, the choice between reforming traditional development agencies, such as the GEF, U.N. Development Programme (UNDP), the U.N. Environment Programme (UNEP), and MDBs, and creating new financial mechanisms will raise issues of institutional economy and effectiveness. In order to generate a greater sense of trust and ownership, backers of existing agencies may have to accept a degree of duplication of existing capacity through the creation of new mechanisms—particularly where significant gaps in capacity are identified—and to accept strengthened lines of accountability of climate finance mechanisms to the UNFCCC Conference of the Parties (COP). On the other hand, those calling for the creation of new institutions may need to concede that it may waste precious resources to replicate the staff and services provided by existing agencies.
Balancing the roles of international and national institutions will also involve trade-offs. Traditional development agencies have gained the trust of contributors by putting in place systems to both measure and manage impacts of their investments. Developing country recipients, however, have been frustrated by the bureaucracy and the focus on generic rather than country-specific concerns that these systems can generate. Many developing countries will likely struggle to convince contributors that their national institutions have the capacity to manage large-scale development finance without the support of development agencies. Notably, a number of developing countries are taking steps to build and strengthen this capacity and will need support to do so.
Delivering climate finance at scale, at least in the short term, will likely involve multiple mechanisms, both new and reformed. This is true because of the complex politics of the international negotiations and the differing views of legitimacy held by contributors and donors. The urgency and complexity of delivering funds at scale argues for moving forward, at least in the near term, with the institutions that we have, and investing in the strength and quality of COP guidance and national planning processes to ensure coordination and coherence. This experience should then guide the design and operation of the new institutions that will become necessary as the scale of resources grows.
Low-carbon, climate-resilient development is an unexplored frontier for all countries and has potential risks as well as benefits. While high standards will have to be developed and maintained to ensure emissions fall and the vulnerable are protected, climate finance will necessarily entail experiments with new policies and technologies that will need to be watched closely for unintended environmental and social impacts.
Policymakers must agree on ways to diversify the sources of climate finance and to de-link them from the levers of informal power. If existing institutions are to meet evolving standards of legitimacy, then their fundamental governance structures, as well as their operational procedures, will need to be reformed to give greater voice to developing country recipients. If formal grants of power are to lead to the effective exercise of that power, the international community must also make greater efforts to identify sources of revenue, such as new levies or longterm commitments, that are independent from the discretion of contributor governments.
It is necessary to build the capacity of non-state actors and civil society to monitor climate finance governance. Civil society groups at all levels can and are playing an important role in monitoring and influencing decision-making within climate finance funds. But they need to occupy such spaces more effectively than they have to date by monitoring and engaging in more inclusive decision-making processes with technical rigor and authority. However, “representation” of nonstate actors can be a very difficult issue—civil society is diverse with widely differing views.
Near- and medium-term climate finance should focus on strengthening national institutions. A next generation of climate investments should promote the responsibility of recipient countries by strengthening the national institutions that will implement mitigation and adaptation activities and by ensuring their transparency and accountability to citizens within countries, as well as to the international community. While it is important that development agencies provide technical support to national institutions, they should work in closer partnership with national stakeholders. It will be particularly important to engage with stakeholders outside of government, including the private sector, independent research institutions, and civil society. Such collaborations can help ensure climate finance proposals more appropriately reflect national circumstances and priorities.
It is important to draw from the lessons learned from decades of development finance to build national institutions that reflect universally accepted principles of good governance. Traditional finance and development institutions have decades of experience—both good and bad—in translating internationally agreed upon agendas into national and local investments. National institutions should draw from these experiences and be designed and supported to operate in accordance with universal principles of good governance. Strong provisions for accountability should be put in place, including sound fiduciary management, anticorruption measures, and grievance mechanisms and inspection procedures that ensure compliance with environmental and social standards and safeguards.

Investing in Results: Enhancing Coordination for More Effective Interim REDD+ Financing

Maggie Barron — Mon, 29 Nov 2010 14:17:55 -0500

Executive Summary

In 2007, the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) placed efforts to reduce emissions from deforestation and forest degradation in developing countries (REDD+) at the center of the international negotiations for a new global climate agreement. Three years later, the outcome of these negotiations remains uncertain, but political and stakeholder interest in REDD+ continues to be high. Developed countries have pledged approximately US$4.5 billion for REDD+ from 2010 to 2012 to support developing country capacity building, planning, and implementation. It is expected that these “interim” actions will encourage the learning, consensus building and trust necessary for an eventual international agreement.

Early experiments with interim REDD+ financing are already generating valuable lessons and experiences. However, a failure to coordinate a growing number of REDD+ donors and actors could jeopardize progress made thus far. Decisions on the allocation and use of interim financing have been ad hoc, fragmented and donor-driven. A plethora of bilateral and multilateral donors have emerged, each pursuing its own vision of REDD+ and operating in accordance with its own procedures, standards, and safeguards.

To date, REDD+ finance has focused on a relatively small subset of countries, raising the risk that large amounts of money driven by multiple donors could overwhelm the capacity of national institutions to manage resources effectively and efficiently, lead to duplicative or conflicting investments, and diminish the potential for these countries to mainstream REDD+ activities into national planning processes. If early investments in REDD+ do not deliver expected results or lead to an erosion of stakeholder confidence and trust, it will be more difficult to scale-up future financing and to maintain political momentum for an international agreement.

This working paper proposes several options for improved coordination at the national, bilateral and multilateral level. It also suggests potential roles that Parties to the UNFCCC, the Interim REDD+ Partnership, and the major multilateral REDD+ initiatives (the Forest Carbon Partnership Facility, the Forest Investment Program, and the UN-REDD Programme) can play in taking these options forward.

Overall, our analysis identifies a need to balance improvements coordination and coherence at the global level with the equal importance of promoting flexibility, experimentation and learning, and country-led approaches. More specifically, we recommend:

Improving the quality and coordination of bilateral and multilateral support for REDD+ actions so as to be more responsive to countries’ demands.
Focusing REDD+ financing on significant and sustained investments in national and subnational capacity to generate nationally driven demand for REDD+ finance, and to more effectively coordinate activities and support.
Developing better performance metrics and monitoring systems that go beyond measuring emission reductions, to enable results-based support for capacity building and policy implementation.

Summary of UNFCCC Submissions

Tue, 23 Nov 2010 15:30:57 -0500

The following is a summary of Party submissions to the AWG-LCA from April 2010 through November 2010 (it does not include country submissions on the Copenhagen Accord). These tables summarize various aspects of Party submissions and categorize them into two main sections. Section I captures proposals on the transparency and review of actions and Section II outlines views on the MRV, governance and sources of finance. The dates in parentheses indicate the date of the submissions reviewed by the authors. The final page lists the acronyms used in the tables. Please note that these tables represent WRI’s interpretation of a selection of Party submissions, and do not necessarily reflect the complete views of the Parties.

The Clean Technology Fund: Insights for Development and Climate Finance

admin — Fri, 12 Nov 2010 14:15:11 -0500

Over the past year, the Clean Technology Fund (CTF) administered by the World Bank in partnership with Regional Development Banks has begun financing clean technology deployment projects in fast growing developing countries. The objective of the CTF is to use the minimum level of concessional finance necessary to realize investment opportunities that will have transformative effects on the greenhouse gas (GHG) emissions of the recipient country over the long term. As of March 2010, US$4.35 billion –nearly the entirety of the $4.405 billion in funds pledged to the Clean Technology Fund (CTF)– have been earmarked to support investment plans in 12 countries, and a regional concentrating solar program in North Africa. $888 million dollars in financing for 15 projects in 8 countries has been approved to date.

This working paper reviews recent developments at the CTF, including the status of contributions to the fund, its governance structure, and evolving results framework. Its focus is on the projects for which CTF financing has been approved to date. It analyzes the Mexico and South Africa investment plans and projects as case studies to illustrate some of the challenges and opportunities of addressing policy, regulatory and governance issues in project design and implementation. It is part of a series of working papers WRI has produced analyzing evolving developments at the CTF. Our March 2010 Working Paper, The Clean Technology Fund: Insights for Development and Climate Finance, reviewed the basic mechanics of the Fund and the Clean Technology Investment Plans approved.

Note: This version of the Working Paper was updated on 30 November 2010 from the version posted on 11 November 2010. Corrections were made on page 4 regarding the role of private sector observers, and on pages 9 and 13 regarding the implementing modalities of the Turkey Commercializing Sustainable Energy Financing Program. A revised paper reflecting on developments at the November 2010 meeting of the CTF governing committee will be released in early 2011.