US, EU block negotiations on finance

The United States and its allies are blocking negotiations on finance at the Bonn UN climate change meeting. Developing countries want Annex I Parties to renew commitment to the three-year Fast Start Finance (FST) as a first step towards bridging the gaping funding gap. Little progress has been made in Long-term Finance.

At the AWG-LCA contact group meeting on finance on May 23, 2012, developing countries sought for clarifications on the nature and sources of finance to fill the gap that will emerge once the (FSF) ends later this year.

United States said the FST was a ‘one-time political commitment’ and therefore will not be renewed to set a precedent. The European Union was much less blunt. The EU said it will contribute its fair share of international public support but also noted that private and innovative finance will play a much bigger role. Discussions on Long-term Finance stalled. The EU said a workshop in July and another later this year will deal with the question of long-term finance.

But the US and EU also opposed calls by developing countries for a spin-off group on finance to concretely address the funding gap post 2012.

Developing countries pointed out the financing gap from 2013 to 2020 and the need for new, additional and predictable funding. Developing countries also want climate change finances to come from predictable and public sources rather than private and other less predictable sources.

Under the Copenhagen Accord and Cancun Decision Annex I (developed) countries are obliged to provide developing countries with Fast Start Finance of US$30 billion to mitigate the impacts of climate change for the three year period of 2010-2012. In addition to the FSF, Annex I Parties were committed to provide US$100 billion annually by 2020 to enable poor countries to tackle climate change.

The US said the 2020 target of mobilizing US$100 billion was linked to meaningful mitigation actions for 2020. For the US if developing countries want to have a mid-term finance target, as proposed by many developing countries, then they would have to take on mid-term mitigation targets. However Egypt remarked that the US$100 billion was not set with mitigation goals and that a mid-term goal for mitigation (for developing countries) was a new idea.

Developing country concerns about long-term finance borders on clarity of sources, access modalities, timeframe and pathway for scaling up finance and the adequacy of the US$100 billion.