Page last updated at 18:28 GMT, Thursday, 17 December 2009

Fight to control Copenhagen climate change fund

Delegates at Copenhagen summit

By Navin Singh Khadka
BBC News, Copenhagen

The deadlock over who should cut carbon emissions and by how much may be dominating the headlines here in Copenhagen but behind the scenes an equally big issue is being thrashed out. It's a fight for control of the massive new fund that will challenge our changing climate.

So far there has been no agreement regarding how this money should be managed and where it should be channelled as negotiating bodies from the developed and developing worlds hold fast to their polarised positions.

"So far, we have no agreement on the new climate fund or the body that will oversee it" Jukka Uosukainen, a co-facilitator representing the developed countries in the financial negotiations told the BBC.

"But if we have an overall agreement in this summit, I think we can still reach into an agreement."

Shaping the fund

US negotiators are backing the idea of a new climate fund which, insiders say, would have the Washington-based World Bank as its trustee.

However, the developing world groupings at Copenhagen want a new body to control the fund which would be under the direct control of the Conference of Parties. The COP brings together all 192 countries that have signed the United Nations Convention Framework Convention on Climate Change (UNFCCC).

"We have made it clear that we want the COP to have the authority over the new body that will control finance," said Farrukh Khan of Pakistan, a co-chair representing developing countries in the financial negotiations.

But the word around Copenhagen is that the developed world doesn't like this idea and is suggesting that the COP provide guidance to the new body.

It certainly is a big power game ... the fund will run into billions and getting to control it will mean you will be powerful in the world order
Senior European Representative

Meanwhile, it's understood that the EU is insisting that existing institutions should be allowed to do the job as it believes that creating new ones will only cause delay, as has happened with the Climate Adaptation Fund that was formed two years ago to help developing countries adapt, but has yet to come online.

Sources say there is a difference of opinion within the European bloc as some member countries want to continue providing climate change funds through bilateral channels.

Accessing the fund

Developing countries are stressing that they need to have direct access to the fund as, they argue, their experience to date of trying to access funds from existing agencies has not been a pleasant one.

The Global Environment Facility in Washington comes in for particular criticism. It handles the Least Developed Countries Fund for Climate Adaptation and the Special Climate Change Fund.

Saleemul Huq, adaptation expert with the International Institute for Environment & Development says, "The tradition has been that funds like the LDCF have never had adequate money and they have remained under the control of donors and that has often delayed the process of accessing the money."

NGOs protest at lack of progress in Copenhagen
NGOs protest at the lack of progress in climate talks

But insiders here at Copenhagen say the developed world is in no mood to give up this kind of "control". An expert observer tells me that at a recent meeting a Western politician said that his parliament would not allow him to give away money just like that, without knowing how much is being spent, who is getting it and what is it being used for.

The expert went on to tell me that as "it also involves the issue of legislation, they would prefer either a bilateral aid mechanism or their preferred international institutions to channel their money."

But Farrukh Khan says that the problem is that financing the fight against climate change is being viewed by the developed world as overseas development assistance as usual.

"It is not like giving aid to poor countries, it is basically compensating the poor for making them so vulnerable and exposed to the impacts of climate change," Mr Khan told the BBC. "It's a completely different issue."

Another issue many donor countries raise is the "absorptive" capacity of the developing world. They say that they are not always able to use all the funds allocated to certain projects within a stipulated time-frame. They also draw attention to the issue of rampant corruption throughout the developing world.

Controlling the fund

However, those closely following the financial negotiations say that the big game is all about controlling resources and securing power.

"It certainly is a big power game," said a senior European representative actively involved in negotiations. "The fund will run into billions and getting to control it will mean you will be powerful in the world order."

Given the high stakes and the conflicting positions and passions involved, devising a mechanism, to which all parties agree, to manage and channel the new climate fund is surely the hardest task of all.

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