G-77 agrees on funding plan

Abdul Khalik and Evi Mariani, The Jakarta Post, Nusa Dua, Bali

Senior officials from the developing countries grouped under the G-77 have agreed to propose the establishment of an adaptation fund mechanism that is transparent, accountable and easy to access, officials said Friday.

The agreement was reached during a meeting of senior officials ahead of the opening of the UN Bali climate conference here Friday.

The officials also agreed on the principles of the fund mechanism and the formation of a two-layer management system, which comprises a governing body and a day-to-day management body.

Both proposals will be submitted to the 13th UN Conference of Parties (COP) to the Kyoto Protocol, which will be opened by President Susilo Bambang Yudhoyono on Monday. At least five heads of state and governments, plus Australian prime minister-elect Kevin Rudd, have confirmed their presence at the meeting, which will last until Dec. 14.

Adaptation is one of the core issues to be discussed at the conference, besides mitigation, transfer of technology from developed to developing countries, and a financing scheme to curb the impacts of climate change.

The conference, which will be attended by more than 10,000 officials, representatives of non-government organizations and the media, is also expected to create a roadmap to establish a new commitment to the Kyoto agreement, the first phase of which will expire in 2012.

"Indonesia insists that whoever governs and manages the adaptation fund, we and other developing countries must have easy access to it, and the management of fund must be transparent," Sulistyowati, an Indonesian delegate at the meeting, told The Jakarta Post.

Aree Wattana Tummakiri of Thailand said the flexibility and accountability of the institution as well access to the fund for developing countries were all that the G-77 members are demanding in the fund's management.

"We will establish a governing body, which consist of parties to the protocol, because we want to have a pro-developing countries institution to manage the fund. Currently, we have difficulties accessing the money and an explanation on how the fund is managed," she told the Post.

The Kyoto Protocol has ruled that the adaptation fund will be raised from a 2 percent levy deducted from carbon credits given to the private sector both in developing and developed countries through clean development mechanism (CDM) projects. The current size of the fund is estimated at US$100 million per year, but is expected to reach billions as the value of CDM projects increases.

According to the Climate Action Network, a group of international NGOs, developing countries need at least $50 billion per year to adapt to the impact of climate change.

Currently, the fund is managed by GEF, a multilateral environmental financing mechanism set up under a 1994 international agreement, which is currently the only institution handling financial matters for the UNFCCC and other environmental agreements.

The organization is handling around $1 billion for climate change projects during the 2007 to 2010 period.

GEF projects are implemented by the World Bank, UN agencies, regional development banks, the International Fund for Agricultural Development and the Food and Agriculture Organization.

Most developed countries, including members of the European Union, have expressed support for the GEF to handle the adaptation funds, saying the organization already has the experience, infrastructure and expertise.

But most developing and least-developed countries have rejected the GEF, saying in the past it has been difficult for these countries to get money under GEF management. They also accuse the GEF of not being transparent in its operations.

Apart from discussing the adaptation fund, the officials also talked about the choice of technology developed countries can transfer to the developing countries to help the latter cope with climate change. They also discussed a fairer mechanism of carbon trading.

"We want a more transparent executive board for the carbon trading regime so that we know why our projects don't qualify for carbon credits and how to select consultants who will verify certain carbon projects," Upik Sitti Aslia Kamil, an Indonesian delegate at the talks, told the Post.