India demands transparency from rich countries on finance

NEW DELHI: India has taken the leadership role in exposing the industrialized countries on their failure to provide funds to the vulnerable developing countries under the fast start finance.

While industrialized countries maintain that they pledged most of the promised $30billion, nothing has been disbursed to Africa, less developed countries and small island states.

At the recently concluded Berlin ministerial, India drew attention to the "huge lack of clarity" on fast start finance and made an informal submission suggesting a reporting format that would ensure transparency and multilateral monitoring. The proposed format is on the lines of the transparency requirements that industrialized countries set for developing countries on emission reduction.


Addressing the Petersberg Dialogue, organized jointly by Germany and South Africa, environment minister Jairam Ramesh said, "there is a huge lack of clarity on fast start finance...I am leaving aside the issue of whether the $28 billion is "new and additional"--that is a vexed issue in itself. But the fact that there has been no disbursement so far is extremely disappointing and is not designed to build confidence in the run up to Durban."

India and the other BASIC countries—China, South Africa, and Brazil—have consistently maintained that finance, and the speedy dispersal of the $30 billion fund, is key to ensuring trust between the developed and developing countries.

"The fact that there has been no disbursement so far is extremely disappointing and is not designed to build confidence in the run up to Durban. There must be some multilateral monitoring of fast start finance," Ramesh said at the Petersberg Dialogue attended by environment ministers from nearly 50 countries representing the entire spectrum of interests in the climate negotiations.


The informal submission made by Ramesh at Berlin details a format that will allow for the measurement, reporting and verification of the financial commitments of the industrialized countries. This is a follow up to the Cancun Agreements, which called for fast start funds to be disbursed by 2012.

Agreements forged at the UN climate conference in Mexico in December stated that the fast start finance should have a "balanced allocation between adaptation and mitigation", to include "forestry and investments through international institutions".

The funds should be "new and additional", and be "prioritized" to the less developed countries (LDCs), small island states (SIDs) and Africa. While in an attempt to increase transparency, the Cancun agreements ask all countries to submit information on resources provided to the UNFCCC, but no format is specified.


The proposed format seeks to take into account the need for standardized reporting procedures, transparency, fund flow, differentiation between "new" and "additional", clarity in nature of finance, differentiation in allocation.

India's suggested format seeks to establish standardized reporting procedures, which would indicate status of pledged fund, ensure funding is new and additional, specify investments through international institutions, avoid double counting. The fast start finance was meant to the "new" and "additional".

New Delhi recognizes the need to develop a method of determining whether funding is ‘new' and ‘additional'. At present, there is no internationally-agreed baseline and each donor country uses its own definition. As a result, many countries are re-packaging existing other development aid (ODA) or previous pledges as fast start finance.

India's informal note defines "new" as "an increase over past and existing climate related funds" while additional funds as those that "substitute or divert funding from other objectives, in particular ODA for economic and social development?". It calls for specifying the nature of finance--loan, grant, export credit. Finally, it has called for specifying allocations, that is, whether funds are being used for mitigation, adaptation or forestry.

India's submission also raises the critical issue of routing of funds. Its proposal calls for specifying whether funds are being given through bilateral, multilateral or other channels. The issue of channeling of funds, especially the choice of World Bank, has been a bone of contention for developing countries.

India's call for clearly specifying the channel could encourage developed countries to route their funding through multilateral institutions like the Green Climate Fund. This is something that developing countries would prefer and it would ensure that the Fund gets of the ground at the earliest.

Till May this year, 21 developed countries and the European Commission have publicly announced individual fast-start finance pledges totaling nearly $28.14 billion to meet the $30 billion commitment of the 2009 Copenhagen Accord. However, many countries have not yet made public the resources that they have actually delivered or sanctioned either for 2009, or for 2010.

While $28 billion of the total target has been pledged, only $12.4 billion has been "budgeted". What is unclear is whether these have actually been delivered, or still have to go through national approval processes. There is no standard reporting procedure that will ensure transparency, or allow easy monitoring of progress.