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Developing world concerned over climate fund

November 13, 2006 By Kimani Chege This article courtesy of Nature News.

Kenyan talks stall over how to manage aid for coping with change.

Delegates at the United Nations climate talks in Nairobi are arguing over how to manage a fund meant to help developing countries cope with climate change.

The European Union (EU), Canada and Japan are pitted against developing nations concerned that countries that have not signed the Kyoto Protocol, such as the United States, will have a say in how the fund is managed, and that the money will come with too many strings attached.

The Adaptation Fund is linked to the Kyoto Protocol's Clean Development Mechanism, which allows polluters to offset some of their greenhouse-gas emissions by investing in emissions-reducing projects in developing countries.

In 2003 it was agreed that 2% of the proceeds from such projects would go into the fund. The fund is not yet operational, and contains only US$3 million, but it is expected to eventually be worth US$750 million.

If the delegates fail to agree it will mean more time will be lost without countries benefiting from the fund.
Saleemul Huq, International Institute for Environment and Development
The EU and many other industrialized nations want the fund to be administered by the Global Environment Facility (GEF), which is managed by the United Nations and the World Bank. But many developing nations oppose this, as the GEF is influenced by countries that are not party to the Kyoto Protocol.

Wasting time

"Countries who give funds to the GEF decide how it is used," says Saleemul Huq, head of climate-change research at the International Institute for Environment and Development in London. "This however is not the GEF's fund it comes from levies from Clean Development Mechanism projects. If the GEF is authorized to manage the fund, then we bring countries not party to Kyoto in through the back door."

"If the delegates fail to agree," says Huq, "time will be lost without countries benefiting from the fund."

Developing nations also fear that funding will come with conditions similar to those commonly imposed by other multilateral funding agencies, such as the International Monetary Fund and the World Bank. Typically, such conditions demand that recipients meet certain standards on good governance and human rights.

Kivutha Kibwana, Kenya's environment minister and chair of this week's Conference of the Parties to the UN Framework Convention on Climate Change (UNFCCC), notes that procedures for the fund should be simple, clear and not subject countries to unnecessary conditions.

The EU delegation has compromised by agreeing to developing countries' demands to discuss the governance structure of the fund and its implementing agency. Lars Müller, a senior EU delegate from Germany, says that progress has been made since the talks began a week ago, and that Europe is willing to reach an agreement on the fund's management.

Conference conveners hope that the arrival of UN secretary-general Kofi Annan on Wednesday will encourage a final agreement on the contentious clauses. The UNFCCC's deputy executive secretary Halldor Thorgeirsson says that delegates are likely to reach a consensus before the talks close on Friday.

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