Page last updated at 11:01 GMT, Wednesday, 9 December 2009

UN Kyoto climate change fund still to help poor nations

By Rob Young
Business reporter, BBC World Service

Locals on Gabura Island reinforce mud clay sea defences, south Bangladesh
Bangladesh is among poor countries most vulnerable to climate change

Poor countries suffering from the effects of climate change are yet to receive a penny from a flagship United Nations fund, the BBC has learnt.

In 2001, Kyoto Protocol signatories decided to establish the Adaptation Fund, to transfer cash to countries vulnerable to the changing climate.

However, it has taken years to set up the Adaptation Fund's structure and appoint the required staff.

It was eventually established in December 2007.

According to the World Bank, $33.7m is in the fund's bank account.

The latest set of accounts for the Adaptation Fund show no projects in developing countries have received any money from the Fund. However, $7m has been spent on establishing the programme and paying for administration.

"We knew there would be quite a long lead time but nobody expected it would take eight years to set up," says Artur Runge-Metzger, the European Commission's chief climate change negotiator.

Marcia Levaggi, the general manager of the fund, says the length of time it has taken is justified.

"You need to take time to put in place the right structures. It is still in the making in some senses."

She says the Adaptation Fund is expected to start disbursing money in the middle of 2010.

It is controlled by representatives of developing countries, something which is "unique", says Marcia Levaggi.

Similar global programmes are dominated by industrialised nations.

Carbon credits

"The Adaptation Fund is a major victory for developing countries in terms of governance and what it's supposed to do," says Yvo de Boer, the executive secretary for the United Nations Framework Convention on Climate Change (UNFCCC).

The idea is that poor nations under threat from climate change have "direct access" to the Adaptation Fund's money, instead of having to rely on large global institutions to bid for cash for them.

That is why Dr Benito Muller from the Oxford Institute for Energy Studies describes it as "a very special beast".

But that is not enough for all countries under threat from climate change.

The Alliance of Small Islands States wants a new Adaptation Fund to be set up. It has described the money available from the fund and two other other UN climate funds as "clearly insufficient".

The Adaptation Fund gets its money from a 2% levy on the sale of carbon credits issued by the UN Clean Development Mechanism (CDM).

It could raise another $65m by selling the remaining CDM credits it has, but has not yet sold, according to a BBC calculation, based on the current market price for carbon.

Any deal reached at the Copenhagen climate summit could lead to an increase in the price of carbon and rising demand for these CDM carbon permits in future.

If that happens, the UN estimates the Adaptation Fund could receive up to $5bn.

But before the fund has paid for even a single project, some at the Copenhagen summit are discussing whether it should be replaced.

"There is a threat to the Adaptation Fund as some people want to get rid of the Kyoto Protocol," says Dr Benito Muller, who is attending the Copenhagen talks.

Marcia Levaggi says, "There's talk of creating a new fund for adaptation. It would not be wise to erase the work that has been done."

UK seeks rebate

In another development, the British government has asked for £500,000 it gave to the UN's flagship climate change fund to be paid back.

UK Prime Minister Gordon Brown has spoken of the need for developed countries to provide more financial help to those nations vulnerable to the effects of the changing climate.

But in the minutes of its most recent meeting, the Adaptation Fund says the UK and Australia have "requested to be reimbursed for their contributions".

Liberal Democrat environment spokesman Simon Hughes said: "The fact that the government is now asking for its modest investment back will give no confidence to the poorer countries seeking a deal at Copenhagen over the next two weeks."

Britain's Department for International Development says it gave the Adaptation Fund the money as a loan to help it establish itself and now wants to divert the cash to another climate change-related cause.

"Now that the Adaptation Fund is receiving sufficient revenue from carbon credits, we will reallocate the funding to other adaptation projects in the developing world," it says.



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