MRV: Clearing the Finance Fog

When $30 billion is not $30 billion – As many delegates will have imagined, ECO has had a close look at the delivery of Fast Start Finance as that period comes to a close this year. Apart from the fact that the large majority of finance is not new or additional, ECO also noted that countries pretty much made up their own rules in terms of what to include in their reporting. The US, for instance, included money for food security programmes as adaptation, and they also included export credit finance (which has an air of subsidies to US companies). Japan included billions of dollars in private finance towards their pledge. In a situation like this, ECO finds it really hard to meaningfully compare countries’ performance based on their reporting. ECO now understands how developing countries must feel in their search for trust (and money), which this process is both in such short supply of. As the finance period post-2012 is about to start, the finance fog needs to be cleared.

How to ensure $100 billion is indeed $100 billion – Luckily, ECO sees light at the end of the tunnel. Progress can be made on two fronts in Doha. On the one hand, the LCA could agree on what finance flows can be legitimately reported as support to action on mitigation and adaptation in developing countries. This discussion has been cleverly avoided for several years. As we break into a new era of finance (ECO hopes everyone agrees), only finance that is additional to efforts to meet existing aid promises should count. To reflect the true contribution of developed countries underpinning repayable loans, only their grant equivalent should count, and in any case only the climate specific support within a financed programme. In the case of leveraged private finance, only the demonstrable effort made by developed countries should count. If our MRV delegates find it too difficult to sort all this out in detail in Doha, the Standing Committee should be tasked to look at what climate finance meets the agreements made under the Convention.

Also at this COP, SBSTA is considering a Common Tabular Format for reporting (CTF), including reporting finance. While not precluding agreement eventually made on what counts as climate finance, the tables provide opportunity to improve transparency. ECO has gained a bit of experience from looking at Fast Start Finance and would conclude that any CTF tables agreed in Doha need to be robust enough to set us on the right footing to create greater trust between Parties, make sure that finance flows in more transparent ways, and that actions supported can be verified by both developed and developing countries. To do this, the CTF tables for finance need to include listings of financed actions, what their relation is to existing 0.7% aid commitments, what the climate specific amount is and should also request clarification on the grant equivalent of finance in the case of loans, guarantees or other non-grant financial instruments. By the way, private finance should not be included alongside public finance reporting. Developing countries need predictability on finance flows in the coming years. Fast Start Finance has shown us that big commitments alone do not deliver. Reassuring us that there will be no more accounting tricks is also a crucial step towards filling the finance gap.