Misses, shortfalls and passes - ECOFIN Conclusions on climate finance

17 May 2011

EU Finance Ministers agreed on text to further the EU’s position on its contributions towards international climate finance. CAN-Europe and its members welcome the conclusions and were pleased to see the endorsement of the AGF report which highlighted a number of innovative finance sources for climate finance. Its all on the IMO and ICAO to make decisive progress to raise revenues for bunker fuels.

The text does conclude on many important issues but doesn't elaborate on the most pertinent question - how it plans to raise the 100bn promised to finance mitigation and adaptation actions in developing countries? In addition it fails to mention what sources would be looked into and misses the opportunity to address the Financial Transaction Tax (FTT).

The conclusions place a seemingly heavy reliance on the fact that the EU’s financial commitments would depend on developing country actions and seems to disregard one of the assumptions within the o principle of Common but Differentiated Responsibility (CBDR), that is that fundingd provided should be unconditional. Ministers are unrealistically placing heavy emphasis  on the private sector to provide climate finance. Private finance will and should play an important role in climate protection activities in developing countries, particularly for mitigation.

However, Minister’s should remember that a large bulk of the finance would have to come  from the public sector especially for projects related to adaptation that too in the form of grants and not loans. Adaptation is key in order for vulnerable countries to survive the most catastrophic affects of climate change and will require predictable and direct access to funding. . With adaptation severely under- fundedCAN-E believes that the EU should redress the imbalance and prioritise the adaptation needs of developing countries.

 While the Ministers encouraged the Commission to bring forth new proposals on reporting long-term finance, the Fast-Start Finance (FSF)report delivered today fell short on providing the transparency needed on what finance is new and additional. Going forward, the EU should provide better and more transparent information on FSF, and learn lessons for reporting on climate finance delivery from 2013 onwards.We hope that these issues will be addressed in much more details in the June ECOFIN Council Conclusions.