ECO notes that there are some signs of progress in the negotiations on climate finance accounting. SBSTA started the week with a 62-page document and is now down to two competing and polarised submissions of 9 and 4 pages respectively. At the time of writing, the co-facilitators were boiling the submissions down into a new (presumably shorter) text.
With this new text in hand, ECO hopes that negotiators will not be as drastic with their scissors, as the 4-page submission made by Australia, the US and Japan might indicate. Their proposal on accounting modalities basically brings us back to square one, where each developed country is more or less allowed to report climate finance on their own terms. The submission offers very little by way of ENHANCED transparency, comparability and accuracy, which the provision of climate finance desperately needs.
Based on their proposal, it seems that Australia, the US and Japan are not up for reporting the grant equivalent value of any loans and other non-grant instruments – which is a key element in the 9-pager from the G77 and China. They would rather continue to inflate their numbers by reporting the full face value of loans, despite the fact
that on average, developing countries are likely to have to pay back about half of the value of these loans. When ECO did the math on this for the last set of biennial reports, it discovered that this inflated the numbers by around US$20 billion per year!
Australia, the US and Japan have all committed to report their headline aid figures on a grant equivalent basis from next year, and at ‘no cost’, they could do so for climate finance too. ECO is confused: if it’s possible to do this for aid, why is it not also possible to be done for climate finance?
ECO is also aghast at the proposal by Australia, the US and Japan to count non-concessional instruments. Lending at a profit should not be touted as climate finance and this practice needs to end once and for all with an agreement on accounting rules at COP24.
Finally, Australia, the US and Japan overlooked the need to report on loss and damage. Have they not seen the news? Do they not face losses and damages in their own countries?
Accounting rules may sound dull, but they are important. They have a huge bearing on the extent to which developing countries are really getting the money they have been promised.