CONTEXTUAUZACION DE LA INSTITUCIÓN
4. DIRECCIONAMIENTO ESTRATÉGICO INSTITUCIONAL
In the years after COP-7, the LDC Fund and SCCF were the first to be operationalised, with the Adaptation Fund taking longer because this had to wait until the Kyoto Protocol had come into force. This process took place in the context of developing countries continuing to articulate their needs and priorities, and criticise the operation and oversight of the GEF. The creation of the SCCF and LDC Fund did not halt the calls for greater attention to adaptation funding that have been part of negotiations since they began. For example, at COP-8 in 2002, ‘Kenya called for increased assistance for adaptation projects and the development of climate policies and strategies’ (ENB-203) and at SBSTA-20 (before COP- 10), Palau ‘expressed concern that GEF encourages Parties to obtain funding for adaptation from [GEF funding] areas other than climate change’ (ENB-234). Developed countries took a different perspective, for example when ‘Canada commended the GEF on its adaptation strategy’ (ENB-203). At SBI-17 (before COP-9), ‘the EU, US and Canada highlighted progress made’ on adaptation funding, ‘including the GEF’s third replenishment, the establishment of the LDC Fund, and development of guidelines for NAPAs’, but ‘the G-77/China, supported by Saudi Arabia, AOSIS, Kuwait and Libya, said that progress to date was insufficient’ (ENB- 214).
Finance recipients continued to raise concerns about access to funding. At COP-8 in 2002, ‘Tuvalu noted difficulty in seeking funding for NAPAs from the GEF’, and at SBI-18 (before COP-9), the G77/China and Ghana argued that small-scale projects should have expedited access to funding from the SCCF (ENB-216 & 217). At SBI-20 (before COP-10), ‘ongoing frustrations with the UNFCCC’s financial mechanism were expressed. For instance, developing countries articulated the difficulties in proving the “global benefit” of adaptation projects to access funds from the GEF’ (ENB-242) and at COP-10, ‘Micronesia emphasized SIDS’ difficulties in accessing funds’ (ENB-251). At COP-11 in 2006, the G- 77/China expressed concern ‘that co-financing requirements present a barrier to LDCs and SIDS accessing funds’ and the introduction of the GEF’s Resource Allocation Framework (RAF, a policy for allocating funding to projects) ‘also drew criticism from some, ‘who noted that the RAF would make it more difficult for developing countries to access funding’ (ENB- 282). At COP-12, ‘Niue appealed for improved modalities to access the GEF’ (ENB-317).
Developing countries were also vocal in this period about the lack of COP oversight and limitations in the guidance provided by the COP to the new funds. At COP-8 in 2002, the SBI Chair ‘cautioned against possible inconsistencies between COP guidance to the GEF and GEF decisions on modalities’ (ENB-203). At SBI-20 (before COP-10), ‘AOSIS, with others, cautioned that the COP’s role in providing guidance to the GEF is being “undermined” by
recent developments in the GEF Council’ (ENB-234). At COP-10, Samoa urged that ‘the COP, not the GEF, should determine eligibility criteria’ and ‘AOSIS underlined that the GEF must follow the guidance given by the COP’ (ENB-251). Developed countries often expressed support for the GEF, such as at COP-12 when ‘the EU, US and Switzerland said the GEF is performing effectively and welcomed its fourth replenishment’ (ENB-309), but occasionally developed and developing countries spoke together, such as at COP-11, when ‘the UK, Tuvalu and Canada noted that the COP gives direction to the GEF and not the reverse, and that the GEF’s responsibility is to operationalize this direction’ (ENB-265). However, such statements do not acknowledge the strong donor influence over the decisions and operations of the GEF, and thus how it operationalises COP guidance (Mace 2005).
7.6.1 Institutional constraints on operationalisation of the LDC Fund
Discussion about the priorities and procedures of the SCCF and LDC Fund began after COP- 7, in the context of ongoing criticism of the GEF and oversight by the COP, and with numerous developing countries highlighting the urgency of the COP providing guidance to the GEF (e.g. ENB-205). Initial guidance for the LDC Fund was produced at COP-8 in 2002, and developed countries quickly resisted more detailed COP guidance: Canada, Norway, the EU and Switzerland, ‘stressed the importance of a clear focus on NAPAs [National Adaptation Plans of Action] and policy level, rather than operational level, guidance to the GEF’ (ENB-205). In contrast, Samoa stressed language on ‘the operational guidance from the COP’ (ENB-206). Progress on operationalising the LDC Fund stalled at COP-10, where renegotiation of the terms of the LDC Fund meant ‘that progress made at COP-9 on funding for adaptation is essentially negligible’ (ENB-257). Consequently, ‘LDCs – some of the most vulnerable to the impacts of climate change – failed for the second consecutive year to secure a decision for full-cost funding of adaptation through GEF’ (ENB-260).
In the context of this challenging negotiating environment, developing countries also ‘expressed concern that the LDC Fund will be inaccessible to most LDCs’ (ENB-230). This stemmed partly from the GEF’s focus on global benefits from funded projects, which meant that the GEF required developing countries to provide or obtain some funding input to cover the local benefits of adaptation projects, known as co-financing (Rübbelke 2011, p. 1478). ‘The plea from LDCs, particularly the SIDS, lies precisely on this paradox, in that even if funds are available in the LDC Fund, their difficulty of finding adequate co-financing, and the costly and cumbersome calculation of the additional costs, renders the financial resources in the LDC Fund, in practice, almost inaccessible’ (ENB-260). This paradox was directly caused by the earlier decision to place the LDC Fund under GEF management and the limited influence of developing countries over governing the GEF: the GEF explained at
COP-10 ‘that the proportion of co-financing [required the LDC Fund to approve a project] is due to the GEF requirement to fund only incremental costs’ (ENB-251). LDCs and SIDS already ‘lack the bargaining power of oil-producing countries and large greenhouse gas emitters’ in negotiations (ENB-260) and had struggled to achieve their policy objectives in prior negotiation rounds. The institutional connection with the GEF exacerbated this power imbalance because it meant that LDCs would have to overcome not only their bargaining position but also the prevailing institutional structure, which gave advantages to developed countries in the form of influence over GEF and LDC Fund policy determining finance rules. Pierson (2004, p. 150) argues that complimentary institutions and interconnected policies place pressure on actors to adjust to the context. In this case, power imbalances and policy structures meant LDCs were constrained to the extent that they would have to ‘present feasible proposals [for adaptation funding] that fit, however loosely, in the existing financial architecture’ (ENB-260).
Guidance for the LDC Fund was adopted at COP-11 in 2005 (decision 3/CP.11), which addressed both co-financing and full-cost funding for adaptation. The GEF was instructed to ‘develop a co-financing scale for supporting activities identified in national adaptation programmes of action, taking into account the circumstances of least developed countries’ (paragraph 3). This had caused a degree of controversy in previous rounds of negotiation when developing countries objected to proposals put forward by the GEF (Mace 2005). Decision 3/CP.11 also decided ‘that full-cost funding shall be provided by the Least Developed Countries Fund to meet the additional costs of activities to adapt to the adverse effects of climate change’ identified in NAPAs (paragraph 2). While “additional costs” were defined in this context as costs imposed on vulnerable countries to meet their immediate adaptation needs, which had the potential to lead more readily to full funding than the GEF’s broader procedures, the guidance offered no more detail and explicitly ‘shall not set a precedent for other funding arrangements under the Convention’, so the improvement in the terms for developing countries more broadly would likely be negligible. Thus the governance of the LDC Fund remained largely subject to existing institutional structures that left significant operational authority with the GEF. Conveying the extent to which developing countries were constrained by these structures, the LDCs ‘noted that the final text was not LDCs’ preferred outcome, but that they had compromised. He said it is now up to the GEF to operationalize the guidance in a way that truly responds to the need to implement’ the national adaptation plans of action (ENB-269).
7.6.2 Institutional constraints on operationalisation of the SCCF
Despite agreement to the list of SCCF funding areas when the fund was created (decision 7/CP.7), negotiations over operational policy for the SCCF revealed significant resistance from donor countries to the breadth of these funding areas, while developing countries continued to prioritise adaptation. Very brief guidance was produced at COP-8 but broader disagreement led to negotiations continuing on to COP-9. North-South division was clear at SBI-18 (before COP-9): ‘non-Annex I countries sought to ensure that adaptation activities would be prioritized under the SCCF. Annex I countries, meanwhile, demanded that the SCCF fund mitigation projects as well as adaptation activities’ (ENB-219). Also at SBI-18, ‘the G-77/China and others said the SCCF should finance activities currently not supported by existing funds, and, with Micronesia, Tanzania and Kenya, stressed the importance of prioritizing adaptation activities’ (ENB-215) and ‘Argentina, supported by the G-77/China and others, said that adaptation projects are of global benefit and should be given the highest priority under the SCCF’, while ‘Canada, with the EU, Norway and Japan, and opposed by the G-77/China, proposed that the SCCF support adaptation and mitigation activities’ (both ENB-217).
Only limited guidance was agreed at COP-9, which led the GEF to convene side discussions with a small group of donor countries, who agreed that the SCCF should finance specific programmes and have distinct agreements with each donor that would allow them to specify which programmes their contributions could be channelled into. In November 2004 (before COP-10), developed countries pledged US$34 million to the SCCF, but this was made contingent on the guidance agreed by the group of donors being accepted by the GEF Council that managed the SCCF. This process demonstrates the extent of donor control over the GEF system, even when the funds themselves are new and purportedly responding to developing country concerns (Mace 2005). In addition to the guidance outlined above, the GEF Council adopted a sliding scale of financing for the SCCF, whereby larger projects would receive a smaller proportion of their funding from the SCCF. Developing countries articulated clearly their frustrations at the limited influence they had over how the COP governed the GEF: at COP-10, ‘AOSIS, supported by the African Group, LDCs, Namibia, Cuba and Uganda, expressed concern over the interpretation of COP guidance’ by the GEF, ‘underlining that the most vulnerable countries face difficulty in accessing GEF funds due to the burden of co-financing requirements, the existence of additional criteria and indicators not adopted by the COP, and the narrow scope of adaptation projects eligible under the GEF’ (ENB-251). In addition, the G-77/China ‘reiterated concerns on the GEF adding conditionalities to access the SCCF’ (ENB-252).
There was no decision concerning the SCCF at COP-11 due to continued lack of agreement about priority areas for the SCCF (ENB-285). At COP-12, decision 1/CP.12 noted ‘the concerns expressed by most Parties not included in Annex I to the Convention with regard to the operational criteria and policies’ of the SCCF, but it reinforced the fund’s remit across various areas of mitigation, and did not make reference to the fund’s original adaptation remit, which had been the key focus of developing countries. ‘Delegates were surprised at the relative speed with which the SCCF issue was concluded’ during COP-12 ‘and speculated that this might be linked to progress on the Adaptation Fund. Skeptics [sic], however, recalled the climate process is in the habit of collecting “empty funds”’ (ENB-315), reference to developed countries’ ongoing ability to obstruct new funds by simply refusing to actually contribute money to them. This outcome suggests that, as with the LDC Fund, existing institutional structures added to developed countries power, enabling them to further reinforce these structures and preserve the GEF’s significant operational authority and donors’ position as the most significant influence over the COP’s governance of the financial mechanism.