The fund to help developing countries adapt to global warming has been approved at the United Nations climate change conference in Bali and will become operational in early 2008, a senior UN official announced on 11 December.
Despite resistance from the Least Developed Countries (LDCs), the Adaptation Fund will be controlled by the Global Environment Facility (GEF), a 178-member international financing body that helps developing countries fund projects and programmes to protect the global environment.
Yvo de Boer, executive secretary of the UN Framework Convention on Climate Change (UNFCCC) said the Adaptation Fund's decisions would be made by a representative board of 16 members, drawn from various regional groupings.
Control of the fund has been one of the major sticking points dividing the developed and the developing countries at the climate change conference.
Antonio Hill, a climate change policy advisor to the UK-based development agency, Oxfam, explained the developing countries' objections: "[GEF] operates on the one-dollar, one-vote principle - like the World Bank, where the developed countries are in control."
Nasimul Haque, Communication Expert of the climate-change cell of Bangladesh's Comprehensive Disaster Management Programme, commented, "LDCs are extremely upset [over the decision], as we [LDCs] would have liked to have at least 50 percent representation on the board - we should decide what we need to do with our money, which we need now."
He accused the GEF of dragging its feet in handing out money to the LDCs in the past. "Bangladesh and other LDCs, like Kenya, have been suffering from weather-related extreme events every year; the developed world has to realise the urgency of the situation."
Bangladesh serves as the LDC secretariat. "The GEF, which also controls the Least Developed Countries Fund (LDCF), operates the funds like any organisation would handle donations. What it has to realise is that the money being pledged to the fund is our [the LDCs'] right; we are paying the price for the luxuries citizens of the developed world have been indulging in," Haque said.
Historic emissions amount to around 1,100 tonnes of carbon dioxide per capita for Britain and America, compared with Bangladesh's 0.14 tonnes per capita, one of the lowest in the world.
Show me the money
The Adaptation Fund is expected to raise money from a levy of about two percent on credits generated by the Clean Development Mechanism (CDM) set up under the Kyoto Protocol, a commitment made in 1997 by 36 industrialised countries to reduce greenhouse gas emissions by at least five percent against a 1990 baseline. The protocol's first commitment phase expires in 2012, and the Bali conference is negotiating a new deal to be put in place after that.
The CDM allows industrialised countries to earn and trade emission reduction credits by implementing projects in other developed countries or developing countries, and put the credits towards meeting their targets for reducing greenhouse gases. The UNFCCC estimates that the fund will raise up to US$300 million a year by 2030, depending on the level of demand in the carbon market, but the amount is still too small to make a real difference.
The LDCs and other developing countries were willing to their part in reducing greenhouse gas emissions. "But we don't have the technology to do that," pointed out Haque. The transfer of clean technology has been another sticking point in the climate change negotiations in Bali.
"There has been no agreement on how it should be financed - we cannot afford to pay for the patents for the technology that the developed countries want us to," he added.
Besides the general lack of financing, NGOs like Oxfam have also cited problems that poor countries experience in obtaining money from the LDCF, one of two funds set up by the UNFCCC to help the poor countries adapt to global warming. Of the $163 million pledged to the LDCF, about half - $67 million - has been received, but less than $10 million has been dispensed.
"This year alone, as a result of the cyclone [in October] we have suffered damages worth between $4 and $5 billion," Bangladesh's Haque pointed out.
Abu Kamal Uddin, the adaptation expert in Bangladesh's climate-change cell, said, "The World Bank and other financial institutions have already made the rounds, handing us loans. We tell them, 'How are we going to repay them when we know we could be struck by yet another disaster next year?'".
He said a new Bali mandate should take into account "that we are living in a global world order and draw up the amount of greenhouse gas emissions per capita that could be allowed, then we could sell our share of unused emission points to the residents of the developed world; we could use the money to survive."
ECO, a daily newsletter published by the environmental non-governmental organisations participating in the Bali summit, pointed out that decisions by the new Adaptation Fund Board would be taken by consensus and if consensus was not reached, then by a two-thirds majority.
The newsletter noted that the Board has the power of review over all matters relating to the Fund, including institutional arrangements handled by GEF and the World Bank, which will act as its trustee on a three-year basis, "but will this be enough authority to weaken the GEF if necessary?" the publishers wondered.
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