The Copenhagen Accord acknowledged that supporting developing countries’ efforts to reduce emissions and adapt to the impacts of climate change will be essential to any new climate agreement. To make these financial commitments a reality, the next two UNFCCC Conferences of the Parties (COP) will need to settle on a financial architecture to manage and distribute these funds.
In a series of steps from COP-16 in Cancun (2010) to COP-17 South Africa (2011), the COP must achieve three goals: ensure that developed countries deliver on their financial pledges from Copenhagen; set criteria and priorities to guide the distribution and allocation of climate funds; and establish the financial architecture to channel and deliver this support.
The financial architecture must address the following elements:
- short-term and long-term funding commitments;
- bilateral and multilateral delivery channels for these funds; and
- international institutional arrangements for measuring, reporting and verifying both the delivery and the spending of these funds in order to build trust and ensure accountability.
Finance in the Copenhagen Accord
The Copenhagen Accord, which has been supported by over 120 countries since Copenhagen, outlined two significant funding commitments from developed countries to the developing world, which together include finance for adaptation, forest loss prevention (REDD+), and technology development and transfer. The first is a “fast start” investment of US$30 billion over three years; the other is a long-term commitment of US$100 billion per year by 2020. Countries that supported the Accord agreed that the funding would be “new and additional” and come from a “wide variety of sources,” including public and private, bilateral and multilateral, and alternative sources.
Given the challenge of raising $100 billion annually, the Accord called for a high-level advisory panel to study innovative sources of funding, including levies on airplane fuels and redirecting fossil fuel subsidies.
The Copenhagen Accord also called for the establishment of a Green Climate Fund to support developing countries, but it provides no details on the fund’s governance structure and how it should operate. Climate-specific funds already exist both within and outside the UNFCCC that support projects in developing countries. These funds include the Global Environment Facility, the Adaptation Fund, the Least Developed Country (LDC) fund, the World Bank’s Forest Carbon Partnership Facility (FCPF), and the Multilateral Development Bank (MDB)–administered Climate Investment Funds (CIFs), among others. In addition, bilateral agencies and MDBs have started to take climate change into account as they funnel significant resources toward energy projects in developing countries.
While the Copenhagen Accord set some important political priorities and directions, it remains controversial, particularly for countries that feel it falls far short of the scale and ambition necessary. Formalizing and clarifying Accord provisions through the UNFCCC process will be a struggle that will require trust and goodwill.