Fast-start Finance: One more year to go

COP-17 marks the two-year point of the Fast-Start Finance period which was conceived out of the Copenhagen climate talks. Developed countries made the collective commitment to “provide new and additional resources, including forestry and investments through international institutions, approaching USD 30 billion for the period 2010–2012.” There is also recognition for a balanced approach between adaptation and mitigation initiatives.

Since there is no “official” repository to account and verify FSF funding, many NGOs have taken it upon themselves to track developed country pledges. Two of the most comprehensive sources include: World Resources Institute and www.faststartfinance.org, even the UNFCCC has created an interactive map illustrating contributions and projects.

However if the goal of climate finance is to prevent (catastrophic) climate change, what matters is not just the amount of funding that is pledged and distributed. While this information is sufficient to indicate whether a donor country has met its pledged amount, it is not enough to inform about the effectiveness of climate finance nor does it equip developing countries with the information they need to plan and implement climate actions. In order to spur ambitious and effective NAMAs, this information needs to be at a more granular level. Details such as the sectoral distribution of funds (division of mitigation funds amongst energy efficiency, renewable energy, buildings, and transportation etc.) and type of financial flows (grants, equity, debt, guarantees, etc.) are crucial to analyze the success of FSF.

Improved transparency and more detail in sector-based FSF reporting is necessary to streamline funding between contributors and recipients, measure the impact of FSF, and provide valuable information to developing countries on how to best attract FSF investments. According to Germany’s BMU, transparency and easier access to information about fast start funding has proved to be a key factor in the successful implementation of their initiative.

What’s in a number?

We have some idea of the financial burden climate change may have on developing countries as well as what sectors need to be prioritized. The UNEP identifies 8 sectors that should be targeted, and the amount of emissions reductions needed for each sector to ensure a global warming remains under 2° Celsius, under a GHG stabilization scenario of 450ppm CO2 eq (assuming existing government policies and the Copenhagen Accord and Cancun Agreements are implemented). The chart below outlines needed emissions reductions for the power, industrial, transport, aviation & shipping, buildings, waste, forestry, and agriculture sectors.  In effect, this provides a rough blueprint for where to invest climate finance dollars. However, without more clarity on where FSF funding is being spent, donor contributions seem uncoordinated and the impact difficult to discern.

Better sectoral reporting would improve our knowledge of the impact FSF is having on the ground in developing countries and how it is contributing to global strategies to combat climate change. A recent report by CCAP, “Climate Finance Works” is an example of how such information can be used to demonstrate the success of these efforts and garner support. Until better reporting is achieved for FSF, the climate change community will continue to be unsure about its effectiveness. Such uncertainty and opacity does not augur for generating support for all the good work being undertaken by both donor and recipient countries to meet global objectives.

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