i
The UNFCCC adaptation finance obligations for developed country Parties
Olufemi Adeseluka 277197
Master’s Thesis
Supervisor: Prof. Harro van Asselt University of Eastern Finland Spring 2020
ii Abstract
Faculty
Faculty of Social Sciences and Business Studies
Department
Department of Law
Author
Olufemi Adeseluka Title
Topic: The UNFCCC adaptation finance obligations for developed Country Parties Major Subject
International
Environmental Law
Work type Master’s Thesis
Time
Spring 2020
Pages xx+ 82 Abstract
The problem with adaptation finance structure is embedded in the reporting of information by developed country Parties. The UNFCCC has failed or neglected to specifically state how to identify what counts as new and additional resources in the provision of adaptation finance by developed country Parties, they are left to decide on what counts as new and additional resources. The implication is that other financial aids flow may be reported as adaptation finance.
The thesis reveals that if Parties under the UNFCCC decides on what counts as new and additional resources, only then can Parties be sure of what developed countries are doing in terms of adaptation finance contribution. The aim of the thesis is to understand the obligations imposed on developed country Parties with regard to adaptation finance. Therefore, the thesis formulates these questions, (1) what are the legal obligations that Paris Agreement impose on developed countries with regard to adaptation finance for developing countries? (2) And how have these legal provisions departed or evolved from the earlier agreements i.e. UNFCCC and Kyoto Protocol?
In an attempt to answer these questions, the thesis studied the Convention, the Kyoto Protocol and the Paris Agreement. Furthermore, various COP/CMA decisions were examined including academic materials. The thesis finds that developed country Parties have the obligation to contribute and make available adaptation finance to developing country Parties. Furthermore, developed country Parties are obligated to report information on adaptation finance provided.
However, as mentioned above, the MPGs did not specify how developed country Parties will indicate new and additional resources provided.
Key words:
Climate Change, Adaptation Finance, Paris Agreement, UNFCCC, Kyoto Protocol, International Law, Sustainable Development.
iii Table of Contents
CHAPTER ONE - INTRODUCTION ... 1
1.1 Problem statement ... 1
1.2 Research objectives and questions ... 3
1.3 Research Methodology ... 3
1.4 Structure of the rest of the thesis ... 4
CHAPTER TWO - Adaptation finance under UNFCCC and Kyoto Protocol ... 5
2.1 Adaptation finance under UNFCCC ... 5
2.2 Adaptation finance under Kyoto Protocol ... 13
2.3 Adaptation finance following the Cancun Agreements ... 15
2.4 Interim conclusions ... 18
CHAPTER THREE - Adaptation finance under Paris Agreement ... 21
3.1 Introduction of the Paris Agreement ... 21
3.2 Adaptation finance obligations of developed countries under the Paris Agreement. ... 23
3.3 Reporting of adaptation finance for developing countries. ... 33
CHAPTER FOUR – Financing adaptation in developing countries in practice ... 51
4.1 Need for adaptation finance in developing countries ... 51
4.1.1 Overview of the costs of adaptation to climate change in developing countries ... 54
4.1.2 Overview of adaptation finance provided by developed countries ... 56
iv
4.1.3 Recipient of adaptation finance ... 58
4.2 Operation of adaptation finance for developing countries in practice ... 59
4.2.1 The Green Climate Fund ... 60
4.2.2 Operation of GCF... 65
4.2.3 The AF ... 68
4.2.4 Operation of AF ... 72
4.3 Challenges faced by developing countries to access adaptation finance ... 74
CHAPTER FIVE – Conclusions and Recommendations ... 79
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xix List of Abbreviations
AC Adaptation Committee
CDM Clean Development Mechanism
CMP Meeting of Parties
COP Conference of Parties
GAN Global Adaptation Network
GCF Green Climate Fund
GEF Global Environmental Facility
GHG Greenhouse Gas
IPCC Inter-governmental Panel on Climate Change LEG Least Developed Countries Expert Group LDCs Least Developed Countries
NAPA National Adaptation Programme of Action
ODA Official Development Assistance
PA Paris Agreement
PPCR Pilot Programme for Climate Resilience
SBSTA Subsidiary Body for Scientific and Technological Advice SIDS Small Island Developing States
xx
UNDP United Nations Development Programme
UNEP United Nations Environmental Programme
UNFCCC United Nations Framework on Climate Change Convention
1 CHAPTER ONE - INTRODUCTION
1.1 Problem statement
Climate change brings the need for various measures that should be put into place from mitigation to adaptation. Climate change is known to have manifest its impacts around the globe, this global impact may be severe across regions in a matter of century, if mitigation and adaptation efforts are not sufficient.1 The focus of this thesis is on adaptation finance for developing countries. Climate change impacts are already being felt by several vulnerable countries globally and most affected are the Least Developed Countries (LDCs), Small Island Developing States (SIDS) and African States.2 It is strongly and scientifically stated by Intergovernmental Panel on Climate Change (IPCC) reports that climate change resilience of developing countries will largely depend on the financial, technological and human resources.3
The IPCC in its first science assessment report noted changes in the earth’s atmosphere, and suggested that the changes were due to increased emissions of greenhouse gases (GHGs). Which could result in severe and extreme weather conditions and sea level rise.4 In 2001, the IPCC Third assessment report confirmed that changes in weather pattern are certain.5 Thereafter at the Fourth Assessment Report in 2007, it was confirmed that the increased GHG in the atmosphere is due to human activity.6 As it stands, even if the global community is successful in reducing greenhouse gas emissions more than it has so far promised, the climate will change, therefore the need for adaptation finance is inevitable for developing countries.7 In developing countries, heat waves, droughts and floods may become more common with increased climate change and oceans will rise, reducing the habitability of coastal environments which will adversely affect populations in such areas.8
1Magnan – Teresa – Sébastien 2015, p. 6.
2OECD, GEF 2015B, p. 45.
3IPCC WGII AR5 2014, p. 65.
4IPCC Scientific Assessment WG 1, p. 20.
5IPCC WGI 3AR 2001.
6IPCC WGII 4AR 2007.
7US EPA 2016.
8Ibid.
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The impacts of climate change requires adaptation measures. According to the United Nations Environment Programme (UNEP), the adaptation needs are likely to be greater in LDCs and SIDS than in developed countries and hence the failure to implement early adaptation in such countries will have disproportionate impacts on their vulnerability in the period after 2020.9 The impacts will be felt most by developing countries, particularly the most vulnerable. Climate change adaptation involves activities by governments and non-government parties to assist developing countries to adjust to their natural environment to reduce harm or take advantage of opportunities.10 The IPCC 2014 Assessment confirmed the necessity for institutional and social measures towards adaptation, and the report noted the most vulnerable.11
These adaptive measures require funds, this is what is known as adaptation finance for developing countries. The report of IPCC WGII AR5, is a clear indication that these developing countries will require more financial and technological capacity to deal with the impacts of climate change and hence the need to ensure that provisions in international climate change agreements are tuned to reflect this reality.12 The issue of adaptation finance in relation to climate change has been given more attention in the UNFCCC negotiations due to explicit scientific evidence that countries are already facing dire impacts of climate change and such impacts are set to increase in the future.13 Although developed countries have a mandate to deliver adaptation finance to developing countries, the delivery of funds fall short of expectations from recipient countries because financial pledges from developed countries are never met.14 Developing countries continue to lament about availability of adaptation funds. This thesis looks into adaptation finance mechanism and identifies a major problem. There is lack of adaptation finance for developing countries, the non- performance of developed countries in their financial obligations and failure to have a detailed report on adaptation finance provided through new and additional resources. The availability of adaptation fund is low, in addition, funds are practically difficult to access by developing countries.
9Feenstra et al. (eds.) 1998, p. 359.
10IPCC, synthesis report 2007.
11IPCC 2014.
12IPCC WGII AR5 2014, p. 65.
13IPCC 2014.
14Oxfam 2016, p. 3.
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The reporting of information on adaptation finance needs to be sophisticated, the current provision on reporting of information on what is new and additional is left in the hands of developed countries. More so, it is difficult to ensure that developed countries comply with their financial obligations and hence the need for a more cohesive reporting system in issues related to climate change adaptation finance.
1.2 Research objectives and questions
The objective of the thesis is to examine the legal provisions directed towards climate change adaptation finance. Consequently, the thesis appraises the legal provision on who should provide adaptation finance and what type of information should be reported by those providing adaptation finance.
This thesis does a study of earlier international agreements such as UNFCCC and Kyoto Protocol, and gives an insight on adaptation finance development within the UNFCCC. The thesis examines the legal provisions contained in the Paris Agreement (PA) with regards to adaptation finance for developing countries and the obligations imposed on developed countries. The thesis formulates these questions, (1) what are the legal obligations that Paris Agreement impose on developed countries with regard to adaptation finance for developing countries? (2) And how have these legal provisions departed or evolved from the earlier agreements i.e. UNFCCC and Kyoto Protocol?
1.3 Research Methodology
The research methodology for this thesis involves a thorough examination of existing works, such as articles, journals, books and official documents from different jurisdictions with relevant information, especially the legal documents that have been utilized in ensuring efficiency of adaptation finance.
To find answers to the questions, the thesis examines adaptation finance from inception, and also studies the financial mechanism and institutional arrangements for adaptation finance; how adaptation finance operates in practice; the legal documents that have been utilized in ensuring efficiency of adaptation finance, such as the UNFCCC, Kyoto Protocol and the Paris Agreement,
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are critically examined to get answers to these questions. The essence of examining these relevant materials is to dig into the above mentioned questions and find what developed countries are doing in terms of their obligation to provide adaptation finance for developing countries. The research method would have been extended to attending seminars, conferences and conducting interviews, but due to lack of funds, this thesis research is restricted to the above mentioned sources.
1.4 Structure of the rest of the thesis
The second chapter, literature review used for this research includes climate change agreements excluding the PA; Decisions of COPs and CMAs; IPCC various reports; reports of subsidiary bodies under the UNFCCC; articles and journals; and books. The relevance of the above mentioned literature gives a proper insight into the birth and significance of adaptation finance for developing countries. The thesis examines adaptation finance right from its inception in the UNFCCC, which gives an understanding of how adaptation finance came into discussions at climate change negotiations. The focus here is on the UNFCCC and Kyoto Protocol as they relate to adaptation finance.
Chapter three answers both questions, i.e. what are the obligations imposed on developed countries as regards adaptation finance? And how have these legal provisions departed or evolved from the earlier agreements i.e. UNFCCC and Kyoto Protocol? The focus here is on the PA, with a thorough dig into various provisions on adaptation finance in the PA. Chapter four, narrates the information on impacts and costs of adaptation. The chapter also studies how adaptation finance is being provided and how it operates in practice. The thesis then looks at how accessible adaptation finance is for developing countries. While the concluding chapter, summarizes the findings of the research combined with possible recommendations derived from the outcome of the research.
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CHAPTER TWO - Adaptation finance under UNFCCC and Kyoto Protocol
The thesis in this chapter looks at the history of adaptation finance and how it was regulated from inception in the UNFCCC and the Kyoto Protocol. Climate change is agreed by all parties as a global problem, to summarize this, the UNFCCC referred to it as the common concern of humanity. In an attempt to proffer solution, two major multilateral environmental agreements were negotiated by the international community, i.e. the UNFCCC and the Kyoto Protocol. The legal provisions for adaptation finance for developing countries are examined in both agreements, and also the relevant COP decisions are discussed in this chapter. The goal of this chapter is to understand the rule development of adaptation finance in the UNFCCC prior to the PA.
As noted by a scholar who asserts that climate change regime evolve around different phases. The first phase concerns the establishment of UNFCCC in 1992, which is the framework of climate change governance. The second phase relates to the negotiation and elaboration of the Kyoto Protocol between 1995- 2001. Then the third phase deals with the era after the Kyoto Protocol’s first commitment period ends, the period after 2012.15
2.1 Adaptation finance under UNFCCC
The United Nations General Assembly (UNGA) agreed to incorporate an international climate change convention, and in 1992 the final text for the UNFCCC was agreed in New York. The UNFCCC entered into force in 1994. The UNFCCC operates with the assistance of some institutions such as, the Conference of Parties (COPs) “which is the supreme body of the Convention”,16 The Parties to the UNFCCC are referred to as the COPs, and COPs are responsible for making decisions in relation to climate change. Decisions are recommended through the COPs to the CMA for consideration and adoption. Other institutions includes, a permanent secretariat;17
15Bodansky AJIL 2010, p. 2.
16UNFCCC 1992, Art. 7.
17Ibid, Art. 8.
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and two subsidiary bodies, i.e. Subsidiary Body for Scientific and Technological Advice (SBSTA)18 and Subsidiary Body for Implementation (SBI).19
Article 2 of the Convention passively mentions adaptation.20 However, the Convention under Article 3 states that Parties should protect the climate system for generations unborn, in line with common but differentiated responsibilities and respective capabilities (CBDRRC).21 The Convention further states that, consideration should be given to the needs of developing parties that are vulnerable to adverse effects of climate change caused by humans.22 Under the UNFCCC, adaptation finance is recognized in Article 4 of the Convention, which provides that “developed country Parties and other developed Parties included in Annex II shall provide new and additional financial resources to meet the agreed full costs incurred by developing country Parties in complying with their obligations under Article 12, paragraph 1. They shall also provide such financial resources, including for the transfer of technology, needed by the developing country Parties to meet the agreed full incremental costs of implementing measures that are covered by paragraph 1 of this Article and that are agreed between a developing country Party and the international entity or entities referred to in Article 11, in accordance with that Article”. The provision goes on to state that “implementation of these commitments shall take into account the need for adequacy and predictability in the flow of funds and the importance of appropriate burden sharing among the developed country Parties”.23 Furthermore the provisions contained in Article 4 provides that “developed country parties shall financially assist developing country parties that are particularly vulnerable to adverse effects of climate change in meeting costs to adapt those effects”.24
The Convention states that “the extent to which developing country Parties will effectively implement their commitments under the Convention will depend on the effective implementation by developed country Parties of their commitments under the Convention related to financial
18Ibid, Art. 9.
19Ibid, Art. 10.
20Ibid, Art. 2.
21Ibid, Art. 3 para. 1.
22Ibid, para. 2.
23Ibid, Art. 4 para. 3.
24Ibid, para. 4.
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resources and transfer of technology”.25 The Convention under Article 4, calls on Parties to “give full consideration to what actions are necessary under the Convention, including actions related to funding, insurance and the transfer of technology, to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change and/or the impact of the implementation of response measures”.26 Article 4, further calls on Parties to “take full account of the specific needs and special situations of the least developed countries in their actions with regard to funding and transfer of technology”.27
To facilitate this financial assistance for developing country Parties, Article 11 of the Convention, provides for “a mechanism for the provision of financial resources on a grant or concessional basis, including for the transfer of technology, is hereby defined. It shall function under the guidance of and be accountable to the COP, which shall decide on its policies, programme priorities and eligibility criteria related to this Convention. Its operation shall be entrusted to one or more existing international entities”.28 The Article further provides that the representation of all parties must be ensured, whereby developing country Parties are well represented in the governance of the financial mechanism.29 The UNFCCC provides that developed country Parties shall provide information on adaptation finance provided to developing country Parties.30 The Convention under Article 21, appoints the Global Environmental Facility (GEF) as the operator of the sole financial mechanism and required to restructure its operations and membership to suit the requirement of Article 11.31 The Convention provides for dispute settlement that could arise from the interpretation or application of the Convention amongst Parties.32
The Convention mainly attempts to tackle climate change through mitigation, adaptation is watered-down in the Convention. The Convention embraces the principle of CBDRRC in Article 3. In terms of adaptation finance, this principle is particularly relied upon. The study of Article 4
25Ibid, para. 7.
26Ibid, para. 8.
27Ibid, para. 9.
28Ibid, Art. 11.
29Ibid, para. 2.
30Ibid, Art. 12, para. 3.
31Ibid, Art. 21 para. 3.
32Ibid, Art. 14.
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of the Convention, shows that developed country Parties accepts the responsibility to provide adaptation finance to developing country Parties. This is a legal obligation for developed country Parties and other developed Parties. Considering the use of “shall”, the obligation becomes mandatory. The Convention in Article 4, para. 3 mandates developed country Parties to provide financial resources to meet the “agreed full incremental costs” of implementing measures under para. 1(e), Article 4. The legal implication is that only the incremental cost is the obligation, as opposed to full cost. The provisions of Article 4, para. 3, which refers to Article 12, para. 1 covers only mitigation finance and provision of agreed full cost. The portion in Article 4, para. 3 that deals on adaptation finance requests developed country Parties to provide agreed full incremental cost.
Going by the provision contained in Article 4, para. 7, the thesis finds that the condition for developing country Parties to perform their duties under the Convention will be determined by how developed country Parties perform on their obligation to provide finance. Parties to the Convention agrees that developed countries should lead on mitigating GHG emissions and provide adaptation finance to developing countries. Consequent upon the legal obligation to provide financial assistance, Article 11 of the Convention provides a mechanism for the financial resources. Going by the provision under Article 11, para.2, the legal composition for membership of the financial mechanism requires representation of developing country Parties. While the Convention urges developed country Parties to provide financial assistance to developing countries, there is no stringent rules for non-compliance of adaptation finance contribution in the Convention.
Having highlighted and discussed the various adaptation finance provisions in the UNFCCC, the thesis discusses relevant COP decisions. The COP had its first session in 1995, the Berlin Mandate which reviewed the adequacy of Article 4, para. 2(a) and (b) of the Convention. The review concluded that Article 4, para. 2(a) and (b) are not adequate, the COP agrees to commence a process for appropriate action beyond year 2000 and increase commitment of developed country Parties through the adoption of a protocol or another legal instrument. The COP directs that the process shall be guided by the provisions of the Convention, particularly the principles of Article
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3, para. 1.33 This increased commitment for developed country Parties, includes provision for adaptation finance for developing countries. Discussions of COP began to reflect on adaptation in developing countries. The COP decides that the operating entity of the financial mechanism should take account of the needs of developing countries, and also funds allocation should be on a grant basis. The COP agrees that only developing country Parties will be eligible to receive funding.34 In July 2001, COP6-bis was held in Bonn. It was at this conference that parties agreed to set up financial assistance for adaptation in developing countries. The COP decides to establish the Special Climate Change Fund (SCCF) and Least Developed Countries Fund (LDCF),35 which was a major land mark for developing nations and adaptation finance. The Marrakesh Accord was held later in 2001, the COP at this meeting decides that the SCCF and LDCF will be managed by the GEF.36 The Bali Action Plan in 2007 attempted to set up a long term plan for the Convention.37 The COP during this Conference decides on additional guidelines for the review of the financial mechanism.38 Furthermore, the COP decides on the additional guidance to the GEF.39
The COP at Copenhagen conference in 2009, accepts climate change as “one of the greatest challenges of our time and the scientific view that global increases in temperature should be kept below 2°C to prevent dangerous anthropogenic interference with the climate system”.40 Parties recognize the impacts of climate change and its response measures, while stressing the need to have adaptation programme and international support for developing countries. COP decides that, there is need for urgent action on adaptation and agrees that developed countries need to “provide adequate predictable and sustainable financial resources, technology and capacity building to support implementation of adaptation action in developing countries”.41
33Decision 1/CP. 1.
34Decision 11/CP.1 para. 1.
35Decision 5/CP. 6. Annex.
36Decision 7/CP. 7.
37Decision 1/CP. 13.
38Decision 6/CP. 13. Annex.
39Decision 7/CP. 13.
40Decision 2/CP. 15, para 1.
41Ibid, para. 3.
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In terms of climate finance, the COP decides that a “scaled up, new and additional predictable and adequate funding” be provided by developed country Parties to enable support to developing country Parties. Developed countries agrees to provide USD 30 billion a year for 2010 to 2012 with balanced allocation between adaptation and mitigation, while they further pledged USD 100 billion a year to commence in 2020 to address the needs of developing countries. The COP agrees that climate finance will come from public and private sources.42 The COP, further decides that a high level panel should be set up to draw up plans to source for the USD 100 billion target.43 At the Copenhagen Summit in 2009, a proposal was raised for the creation of Green Climate Fund (GCF), a financial mechanism under the Convention.44 However, the agreements reached at the Copenhagen Accord were only taken note of and does not form a legal instrument, because the COP refused to adopt it as an UNFCCC decision.45
A study of the literature shows that Article 3 of UNFCCC requires party states to apply the principle of CBDR in achieving the objectives of the convention, which also relates to the provision of adaptation finance for developing countries.46 The UNFCCC explicitly provides that parties ought to ensure the climate framework for the advantage of present and future generations, based on equity and as per their participation however differentiated duties and particular abilities.
In like manner, the developed nation Parties should lead the pack in fighting climate change and its impacts.47
The background for adaptation finance in the UNFCCC has basically been anchored upon an ambivalent principle of common but differentiated responsibilities (CBDRs).48 Under the UNFCCC 1992, the principle of CBDR is pronounced, which requires developed countries to bear the burden of combating the adverse effects of climate change. This is directly in relation to the responsibility of adaptation finance contribution by developed countries.49 The UNFCCC as part
42Ibid, para. 8.
43Ibid, para. 9.
44Ibid, para 10.
45Decision 2/CP.15.
46Wilkinson 2002, p. 102.
47Flam – Skjaerseth Climate Policy 2009, p. 104.
48Prudential Regulation Authority, UK Bank of England London 2015.
49Brunnee – Streck Climate Policy 2013, p. 590.
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of its objective, recognizes the position of developed nations to provide adaptation finance to developing nations.50 The existence of adaptation finance for developing countries originates from the UNFCCC Convention.51 The UNFCCC perceives that developed nations have made the most commitment to the worldwide collection of GHG outflows, while developing nations bear less recorded emissions contribution to this impact. This acknowledgment has accordingly prompted a dedication from developed nations to prepare finance to enable developing nations to react to climate change, and such climate finance has turned into an important discuss in climate change negotiations.52
Upon the provision contained in Article 21 of the Convention, the GEF was appointed on an interim basis to carry out the functions of the UNFCCC financial mechanism provided by Article 11 of the Convention. The initial start sum of the GEF was in the range of USD 1.2 billion. The World Bank was appointed as Trustee and an Implementing Entity along with UNEP and UNDP.53 The restructured GEF was completed in 1994 with a replenishment of USD 1 billion for the next 4 years.54 The governance of LDCF and SCCF was in dispute, so COP 7 required the Trustee and Secretariat to recommend solutions. The recommendations were that the GEF secretariat will manage mobilization of resources and it will not be a four year replenishment period as in the GEF.
The GEF council meets as LDCF/SCCF councils.55
Finance has always been a key issue in climate negotiations right from inception, with disagreements between developed and developing countries. These disagreements were on issues such as, “institutional arrangements for managing climate finance (including its governance); and the amount of funding made available (including commitments, sources, accounting, balancing mitigation and adaptation finance, adequacy, predictability, additionality, etc.”.56 In 1992, developing country Parties wanted a financial mechanism with same voting power amongst Parties, and an obligatory contribution from developed country Parties. However, the GEF was
50Koivurova 2014, p. 125.
51Islam – Mekhilef – Saidur 2013, p. 458.
52Lifshitz UCLA Journal of Environmental Law & Policy 2011, p. 442.
53Freestone 2016, p. 102.
54Ibid, p. 103.
55Ibid, p. 111.
56Sharma – Venturini ECBI 2019, p. 38.
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appointed as the operating entity of the financial mechanism, notwithstanding the fact that the governance structure of the GEF was one-sided towards donors.57
Developing country Parties reiterates that the GEF had a complicated criteria in accessing its funds, which approves “funds for only global environmental benefit” and had complex methodologies for working out the incremental cost of such global benefits”. In addition adaptation was considered a national issue, therefore it cannot benefit from the GEF. However, in 2004, the “GEF received a one-time contribution of USD 50 million for a strategic priority on adaptation to end in 2010, for a programme to reduce vulnerability and increase resilience to the adverse effects of climate change. After this programme ended, adaptation is addressed only as a cross-cutting issue for its thematic areas”.58
At COP 13, in 2007, even though mitigation continued to enjoy all the attention as usual at the Conference, Parties began to deliberate on how climate change will affect development.
Developed county Parties were called upon to “fund implementation of NAPAs and support enhanced action on adaptation in all developing countries”.59 This was the first time Parties will agree to set a long term goal for emissions reduction, adaptation and other aspects.60 Climate change adaptation got due recognition in climate discussions from 2007 at Bali, while climate finance gathered momentum at COP15, in 2009.61 The Ad hoc Working Group on the Kyoto Protocol amendment (AWG-KP) and the Longer-term Cooperative Action (AWG-LCA) were given the mandate to examine the future of the Kyoto Protocol and develop measures to involve developing countries in active participation.62 The Copenhagen Accord in 2009 was generally regarded a failure, however, in terms of adaptation finance there was significant improvement.
Discussions in Copenhagen touched on financial assistance from developed countries. The key questions on climate finance were how much to be contributed, what sources would count, and how to govern funds. The Accord provides answer to the first question while the other two are to
57Ibid.
58Ibid, p. 39.
59Ibid, p.19.
60Ibid.
61Nhamo – Nhamo IJARS 2016, p. 121.
62Freestone 2016, p. 112.
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be considered by subsequent agreements.63 Developed countries argues that financial assistance for developing countries is attached to the extent of developing countries emission reduction target.
Developing countries on the other hand, submit in their argument that financial assistance from developed countries is based on their historical emissions.64
Developing countries observed that the funds were limited, in addition it was difficult to access funds. The introduction of the LDCF and SCCF was a step in the right direction for adaptation finance. However, developing countries were uncomfortable with the governance of the Funds by the GEF, because it is donor-controlled. In addition, developing countries believe that the GEF’s criteria of global benefits will deprive them of receiving resources for adaptation. The dispute between developed and developing countries over the management of the LDCF and SCCF was laid to rest with Decision 7/CP 7, which states that the GEF shall manage both Funds. The legal implication is that largest donors have more votes than recipients when it comes to decision making through votes.
The estimate of adaptation needs of developing countries is not mentioned in the Copenhagen Accord, however, the Accord states that adequate funding should be provided by developed countries. The UNFCCC decision to have a balanced allocation between mitigation and adaptation, failed or neglected to describe what a balanced allocation meant.
2.2 Adaptation finance under Kyoto Protocol
Article 11 of the KP provides that developed country Parties shall provide financial resources needed by developing country Parties to meet the agreed full incremental costs of advancing the implementation of existing commitments under Article 4, para. 1 of the Convention.65 In furtherance to adaptation finance provision in the KP, Article 12 provides that, “the Conference of the Parties serving as the meeting of the Parties to this Protocol shall ensure that a share of the proceeds from certified project activities is used to cover administrative expenses as well as to assist developing country Parties that are particularly vulnerable to the adverse effects of climate
63Bodansky AJIL 2010, p. 7.
64Ibid.
65Kyoto Protocol, Art. 11 para. 2(b).
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change to meet the costs of adaptation”.66 Article 12 also provides that, “the clean development mechanism shall be subject to the authority and guidance of the Conference of the Parties serving as the meeting of the Parties to this Protocol and be supervised by an executive board of the clean development mechanism”.67
The provision under Article 11, para. 2(b) KP, relates to provision of financial resources needed by developing country Parties to meet “agreed full incremental costs” of existing commitments under Article 4, para.1 (e) of the Convention. Therefore the legal obligation here is “agreed full incremental costs”, like the obligation under the Convention. The provision under Article 12 connotes a mandatory duty for the CMP to make available proceeds from CDM to assist developing country Parties to meet cost of adaptation.
The COP decides that an Adaptation Fund (AF) shall be established and 2% of proceeds from the Clean Development Mechanism (CDM) will be contributed towards the adaptation fund.68 In 2006, a further set of guiding principles for the AF was adopted. Parties to the Protocol decides to have a “balanced and equitable access for eligible countries, transparency and accountability in fund governance, and funding on full adaptation cost basis”.69 The AF was officially launched in 2007, the CMP decides “that developing country Parties to the KP that are particularly vulnerable to the adverse effects of climate change are eligible for funding from the AF to assist them in meeting the costs of adaptation”.70 The CMP further decides that “the AF shall finance concrete adaptation projects and programmes that are country driven and are based on the needs, views and priorities of eligible Parties”.71
Decision 5/CMP. 2 para. 1, empowers the AF to allocate full funding on adaptation cost, which is quite different from the provision under Article 11, KP that grants incremental cost. Decision 5/CMP. 2 para. 1 also requires that proceeds from CDM should be used to assist developing countries, this reflects the provision contained in Article 12 of the KP. In addition, Decision
66Ibid, Art. 12 para. 8.
67Ibid, Art. 12 para. 4.
68Decision 10/CP. 7.
69Decision 5/CMP.2 para. 1.
70Decision 1/CMP.3 para. 1.
71Ibid, para. 2.
