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Governing Climate Finance: The Importance of Reporting Guidelines and Review Mechanisms to Ensure Transparency & Accountability

This "Budget Brief" originally appeared on the International Budget Partnership website. You can read the entire text, and download a PDF of the brief, here.

The international community has come together to address the challenge of global climate change. Through the United Nations Framework Convention on Climate Change (UNFCCC), participating governments have established a goal of stabilizing the global average temperature within 2 degrees C and are engaged in an ongoing process of negotiating what needs to be done, who needs to do it, what it will cost, and who will pay for it. The next round of negotiations, the COP-16 (Conference of Parties), will be from 29 November-10 December 2010 in Cancun, Mexico. One of the most critical – and contentious – issues that will be addressed will be reaching agreement on financing climate change mitigation (actions to reduce emissions and stabilize temperatures) and adaptation (actions to reduce impact of current climate shifts and increase resilience to future impacts).

The COP-16 follows the last round of negotiations that took place in Copenhagen in December 2009. In Copenhagen countries committed to short-term, ―fast start financing and to coming to agreement on a long-term ―balanced package that provides adequate and equitable funds for mitigation and adaptation. In addition to decisions about how climate change finance will be implemented at the international and national level, whether through existing agencies and processes or new institutions and mechanisms, agreement must be reached on how to ensure that finance flows are completely transparent in order to enable sound decision making about distribution and use of resources, public participation, and adequate oversight. Thus parties to the COP-16 must decide on the format and review process for reporting financial data from donor and recipient countries and guarantee that the public within countries has full access to this information.

Agreements reached in Cancun can lay the foundation for a more robust climate regime in the long run. It will be critical for negotiators to reach decisions on key finance building blocks that can be implemented immediately and not fall back into a ―nothing is agreed till everything is agreed position. There is simply no time for that; the latest science tells us we need to accelerate actions if we are to stabilize temperatures at a safe level.

This brief looks at climate finance over the past year and how the current level of reporting is inadequate to the task of ensuring that funding commitments are fulfilled and funds are used effectively. It touches on the important role that civil society and public participation within countries receiving climate funds can play in decision making and oversight and presents recommendations for reporting mechanisms and public participation for the COP-16 and future negotiating sessions to consider.

This Brief was prepared by Athena Ballesteros, a senior associate for Institutions and Governance at the World Resources Institute, and Vivek Ramkumar, manager of the Open Budget Initiative at the International Budget Partnership.

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