1. european capacity building initiativeecbi ADAPTATION FUNDING Ambassador Enele Sopoaga european capacity building initiative initiative européenne de renforcement des capacités ecbi for sustained capacity building in support of international climate change negotiations pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques

2. european capacity building initiativeecbi Recognising that: Adaptation to the impacts of climate change is key to poverty eradication and sustainable development; Assisting developing countries, particularly the poor and the most vulnerable countries, cope with their adaptation needs due to the impacts of climate change is an obligation under the UNFCCC and its Kyoto Protocol. The devastations already impacted and predicted on developing countries, due to climate change are serious and life threatening;

3. european capacity building initiativeecbi Recognising that: There is a genuine need to urgently explore means of adequately addressing the adaptation funding needs of developing countries in a sustainable long term basis. There is also a need to carefully and timely consider issues of governance of adaptation funding and particularly that of the Adaptation Fund to ensure equitable representation of developing countries in its governance, expediency of project approvals, and effective implementation of real adaptation on the ground.

4. european capacity building initiativeecbi Adaptation Funding Needs On recent assessments, adaptation funding needs of developing countries will amount to tens of billions of dollars a year (World Bank, Oxfam and UNFCCC); So far only a few hundred million dollars is available from “voluntary” funding sources – (LDCF, SCCF, SGP/GEF, SPA/GEF and bilateral); A huge gap exists between the adaptation funding needs and the actual funding available – means to fill this huge gap needs to be explored in earnest;

5. european capacity building initiativeecbi Sources for Adaptation Funding Contributions from developed countries to honour their obligations to assist meet the adaptation needs of developing countries, based on responsibility but without creating rights or pressure on how or where funding is spent; Adaptation funding needs to be de-linked from “aid/charity” thinking and linked to “polluter- pays/obligations” paradigm – adaptation assistance is not ODA;

6. european capacity building initiativeecbi Sources for Adaptation Funding The “Adaptation Levy” can be the basis of such de-linking and can be used to be applied to other flexible mechanisms (JI and ET) as well as to other emission activities – including levy on airfares, and aviation and maritime freight; Levy higher than 2% on JI and ET activities should be considered as source for adaptation funding; The “Adaptation Fund” can be the vehicle for such an expanded levy-based adaptation funding mechanism;

7. european capacity building initiativeecbi Sources for Adaptation Funding Adaptation (including funding) needs to be a “top-level” negotiating issue in the dialogues/negotiations between Annex I and NAI – the upcoming UN High Level Event on Climate Change, the G8 Summit, and others need to be taken advantage of to advocate strongly the issue of adaptation funding;

8. european capacity building initiativeecbi OPS3: Progressing Toward Environmental Results: Third Overall Performance Study of the GEF (June 2005):p.135 The Status Quo Model

9. european capacity building initiativeecbi A ‘democratic deficit’ & ‘substantive shortcoming Primacy of consensus: Voting Mechanism, no votes Only GEF Council members can request a vote Constituency: GEF Assembly/GEF Focal Points World Bank Foreign Affairs Donor Agencies Environment Others Economics (a) Annex I (b) non-Annex I GEF Council Composition GEF Trust Fund China 20% India 10% Russia 10% Brazil 5% Poland 5% Mexico 4% S. Africa 3% Ukraine 3% Turkey 2% Iran 2% Total: 64% LDCs: 1%

10. european capacity building initiativeecbi Institution (in alphabetical order) managed by… Executive Body under the authority of… Governing Body Global Environment Facility (GEF) GEF CouncilGEF General Assembly Multilateral Fund for the Implementation of the Montreal Protocol (MLF) MLF Executive CommitteeMontreal Protocol COP United Nations Development Programme (UNDP) UNDP Executive Board UN Economic and Social Council Some Recent Developments Pre Nairobi Institution (in alphabetical order) managed by… Executive Body under the authority of… Governing Body Global Environment Facility (GEF) GEF CouncilGEF General Assembly Post Nairobi

11. european capacity building initiativeecbi Some Recent Developments The Nairobi Adaptation Fund Decision 5/CMP.2 Art. 1 (e): The Adaptation Fund should operate under the authority and guidance of and be accountable to the COP/MOP Art. 3. Decides that membership of the governing body of the Adaptation Fund shall [i] be from Parties to the Kyoto Protocol, [ii] follow a one-country-one-vote rule and [iii] have a majority of Parties not included in Annex I to the Convention;

12. european capacity building initiativeecbi Governance of the Adaptation Fund Recognising that the AF has to be seen as a substantial mechanism considering its scopes and potentials, ensuring its proper Governance is of critical importance The Nairobi COP/MOP2 decision (5/CMP2) must not be compromised n particular Para 1 (e) on the “authority of the COP/MOP”, and Para 3 on the membership of the governing body; The COP/MOP should constitute the voting constituency for the Adaptation Fund; Parties should have the right to request a vote ;

13. european capacity building initiativeecbi Governance of the Adaptation Fund The governing body of the Adaptation Fund should be responsible for making available information relevant to its decisions in a timely and transparent manner, in particular to UNFCCC focal points; Taking into account the importance of expeditious approval of projects and complementarity of funding sources, a dedicated new body and structure should be created the Multilateral Fund of the Montreal Protocol could be taken as a good example (Some developing countries are considering proposals)