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Climate Change: International Cooperation

Volume 488: debated on Friday 27 February 2009

To ask the Secretary of State for Energy and Climate Change (1) what proposals his Department has put forward for an international financing mechanism to fund the UN Climate Change Adaptation Fund; what discussions he has had with the Prime Minister and Chancellor of the Exchequer on these proposals; and if he will make a statement; (255731)

(2) what discussions he has had with the Chancellor of the Exchequer on the UK’s level of financial support for the UN Climate Change Adaptation Fund; and if he will make a statement.

Discussions were held across Whitehall in preparation for the agreement by parties that 2 per cent. of the share of proceeds from the Certified Emissions Reductions issued for the Clean Development Mechanism will go towards the Adaptation Fund. This international financing mechanism is now in place. The UK Government are working with others on the Adaptation Fund Board to establish sound operational procedures for the Adaptation Fund to ensure that it will meet international fiduciary standards and be an effective mechanism for delivering increased finance where it is needed. The UK Government take the subject of adaptation finance extremely seriously and recognise that the process will be complex and will take time to get right.

The board’s approach to making the fund operational was approved by parties in Poznan, thus enabling it to start operations in 2009. The board is now working to put in place the mechanisms it set out in the approach submitted to parties in Poznan, and the UK continues to play a key role in assisting the board to find innovative ways to enable the fund to become operational this year. The UK was the board’s biggest financial supporter in 2008 (£500,000) and has set aside an additional £500,000 for 2009 to assist the board in its work to set up the necessary operational structures to enable direct access.

Discussions by parties in Poznan revealed weaknesses in the governance structure of the Adaptation Fund, which have restricted the authority and operational efficacy of the board. These will need to be addressed to ensure that the fund will be able to make decisions on allocation of funding that are not affected by political considerations. This process has been particularly challenging as parties have requested access to funding without the assistance of intermediaries. The international community has thus far relied on these to provide sound fiduciary risk management for international assistance to developing countries. The UK has been playing a key role in the board to find ways to facilitate such direct access to funding.

The UK Government will be considering options for scaling up the movement of international financial assistance through the Adaptation Fund after consideration of the adequacy of the implementation structures the fund will have put in place this year, and in line with our wider objectives on the international financial architecture. It is clear that a blend of options will offer the best prospects of raising the level of funding required. Our vision is of a climate ‘compact’ between developed and developing countries whereby funds are disbursed at scale on the basis of national plans that integrate mitigation and adaptation needs alongside development priorities.