Page last updated at 00:00 GMT, Wednesday, 25 November 2009

Q&A: Climate cash controversy

Significant amounts of money pledged after the Kyoto Protocol to help countries deal with climate change cannot be accounted for, a BBC investigation has found.

What is the background to this story?

UN General Secretary Bam ki-moon
The UN General Secretary wants 'verifiable' agreements in Copenhagen

Finance is key to any new global deal on climate change. Hundreds of billions of dollars are needed to help countries adapt to the effects of climate change.

But over the past few years, a deep level of mistrust has built up in developing nations about financial pledges made by rich countries.

After the United Nations brokered the Kyoto Protocol with most countries in the world, the United States said it would not ratify it.

The deal was at risk of failing, so those rich nations which still believed in the Protocol decided a financial commitment from rich nations was needed to keep Kyoto alive.

What is the Bonn Declaration?

In 2001 in Bonn, Germany, 20 industrialised nations made a declaration to provide climate change cash.

The countries of the European Union, Canada, Iceland, New Zealand, Norway and Switzerland said they would contribute $410m a year to the cause of climate change adaptation until 2008.

The money would be made available in a variety of ways including through special UN climate change funds. This statement became known as the Bonn Declaration.

What are these funds?

At the same meeting, a number of special bank accounts were set up for the purpose of transferring money from rich countries to poor nations.

The Least Developed Countries Fund and the Special Climate Change Fund were to be administered by the UN.

The idea was that countries responsible for emitting the most climate change-causing gases would use the funds to give cash to those that historically have not been major polluters but are vulnerable to the changing climate.

How much has been paid in to the special climate change funds?

UN figures show that as of 30 September 2009, $260m has been paid in to the two funds.

Developing countries say there should be much more in there. According to a BBC calculation, if $410m a year had been paid into the UN funds from 2001 to 2008, a total of $2.87bn could have passed through them.

There is an argument however, over the start and end dates. At the very least, according to another calculation, there could have been $1.6bn.

Boni Biagini from the Global Environment Facility, which runs the UN funds, says: "If you put $410m per year times four (2005-2008) you should have $1.6bn in hand. This is not the figure we have."

So does that mean rich countries have failed to keep their promise?

That depends on where you stand. Poor nations say that rich countries have failed to keep their word.

Developing countries say they thought all of the $410m every year would go into the special climate change funds.

Little Mermaid
Many people are sceptical that a deal will be reached in Copenhagen

Rich governments say that was never their intention; they had always planned to spend a lot of the money outside the funds.

The small print of the Bonn Declaration allowed them to contribute money through "bilateral and multilateral funding".

The European Union for instance, says it has met its end of the bargain.

Artur Runge-Metzger from the EU says they were clear from the outset that they would spend the money in several different ways. "We can say we met the promise, climate finance has really been stepped up."

However, he could not provide figures to verify this. A recent study by the Institute for European Environmental Policy has tried to track EU funding to poor countries for climate change adaptation.

Its report concludes: "It is very surprising that there is not a single official document issued by the EU with reliable and verifiable information on the total level of financial support to developing countries for climate change mitigation and adaptation purposes provided by the Union and its Member States.

"This lack of transparency is clearly inconsistent with the EU's claim to global leadership in the climate change process."

So did poor countries not read the small print?

They say they were misled. Richard Myungi, a climate change negotiator for the least developing countries, says "we feel frustrated, we feel betrayed".

Bernarditas Muller, a negotiator for the Philippines, says the issue is bigger than just the Bonn Declaration. She says rich countries "have not fulfilled their commitments".

Even the UN Secretary General, Ban Ki-moon, acknowledges: "There have been promises which have not fully materialised".

Interestingly, the man who drafted the Bonn Declaration, Marc Pallemaerts, the EU's chief negotiator on climate change in 2001, says that the text itself was not clear.

He agrees that some poor nations: "May have been genuinely misled, but other knew it was deliberate ambiguity". Marc Pallemaerts now runs the IEEP.

What does this mean for any agreement in Copenhagen?

Confusion and disagreement have led to an atmosphere of mistrust between negotiators trying to hammer out a deal in Copenhagen.

Richard Myungi says he wants an agreement from rich countries that is "legally-binding" and where a failure to pay up can lead to sanctions.

Artur Runge-Metzger agrees things need tightening up: "You need to have clear reporting and monitoring guidelines and these were never established after the Bonn Declaration."

The man who's trying to get a deal in Copenhagen acknowledges that Bonn has been messy. Yvo de Boer, the head of the UN climate change talks, says in future the finances have to be "crystal clear". "We mustn't fudge that again," he says.

The UN Secretary General, Ban Ki-moon, warns that any agreement at Copenhagen must be "measurable, reportable and verifiable".

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