Expectations and the emerging picture of the GCF are creeping apart (source: UNclimatechange)

In advance of COP 17, the Green Climate Fund’s (GCF) Transitional Committee (TC) have passed the Parties a report, recommending it “take note” of the report’s findings. It is worth analysing this report since it  brings in to clearer focus the contrast between the expectations that some have for the fund – largely the private sector – and the the emerging picture of the fund.

Specifically, the overarching sentiment from the report is that the GCF will be a vehicle for aid-based disbursement. This is not necessarily consistent with the guiding principle of “catalyzing climate finance.” It is this apparent confliction – between the guiding principle of acting as a catalyst for climate finance, supposedly inclusive of the private sector, and the emerging picture of aid-based finance – that has recently attracted criticism from figures such as Yvo de Boer, and the frame in which we should view the suggested design of the GCF given to Parties at COP 17.

Sourcing the money

The report states that the finance will be delivered at a country level. This means that finance delivered by the GCF could, for example, be delivered to a sovereign-administered fund that lends to projects or programmes that aim to execute a particular objective arising from a national policy.

A natural consequence is that the GCF can be expected to deliver finance in much the same way as existing multilateral funds. Notably, it will place far more importance on public rather than privately sourced finance, since private investors would find it more difficult to contribute to a fund that’s lending criteria focus on promoting a particular national or regional policy, first and foremost, delivering returns as a somewhat more ancillary benefit.

The report, however, does state that the GCF should have a private sector facility that employs the private sector in fund contributions. It is unclear if the reference to a separate “facility” should be interpreted to mean that the privately sourced finance will be disbursed through mechanisms separate to those for public sector finance, nor if such a distinction should emerge, how the private finance will be delivered.

Disbursing the money

Inspecting the financial instruments recommended for disbursement of the funds gives perhaps no clearer demonstration of an aid-based picture. Disbursal will be focussed on grants and concessional lending. The instruments will be used to finance the additionality gap – taking the risky investments that the private won’t take alone in order to get a programme or project off the ground.

Clearly, grant-based disbursal limits the involvement of the private sector in the fund’s capitalisation. This also extends the earlier question: will concessional lending on a country level attract private investors to the fund, and if not, will the private sector facility employ delivery mechanisms that are different to grants and concessional lending.

A stark contrast

In contrast to the emerging picture of the GCF, the Green Climate Finance Framework (GCFF) suggested by BNEF is a manifestation of the expectations of the private sector. In this proposal the public sector contributions make up around 10% of the fund, are delivered by aid-based finance and used to leverage the remaining 90% from the private sector, i.e. fulfilling the mandate of catalysing finance for climate change from the outset.

It could be argued that the difference between the GCF and the GCFF is based largely on the level of the involvement of the private sector, and that both can catalyse finance by funding the additionality gap. This is true, but a design like the GCFF does far more catalysing from the outset, precisely because it is leveraging nine times more private than public sector capital.

The GCF, as it stands now, is the inverse of the GCFF – predominantly aid-based delivery of finance at a country level, with a small, but “non-negligible,” role for the private sector. This set-up, if justified properly, is not in-and-of itself objectionable. It is, however, of concern that the emerging picture of the GCF seems to contrast sharply with the expectations of the private sector, whilst also limiting the fund’s ability to catalyse private sector finance from the outset.

UNFCCC Bonn conference – June 2011. (Image by: Adopt a Negotiator)

The UN Climate Change Conference kicks off this week in Bonn, Germany as governments continue framework discussions in preparation for the Seventeenth Conference of Parties (COP17) to be held in Durban, South Africa, at the end of the year. Over three thousand participants representing 183 countries are attending the conference in Bonn from June 6-17, including government delegates, business and industry representatives, environmental organizations, and research bodies.

Speaking on the first day of the conference, UNFCCC Executive Secretary Christiana Figueres reminded governments that they hold an unavoidable responsibility to make clear progress towards the 2011 climate objectives agreed to at COP16 in Cancun.

“Governments lit a beacon in Cancun towards a low-emission world which is resilient to climate change. They committed themselves to a maximum global average temperature rise of 2 degrees Celsius, with further consideration of a 1.5 degree maximum. Now, more than ever, it is critical that all efforts are mobilized towards living up to this commitment.”

Ms. Figueres expects that the meeting in Bonn should provide clarity on the architecture of the future international climate change regime to reduce global emissions. In addition, negotiators will focus on the design of the finance, technology and adaptation institutions agreed to in Cancun which will allow developing countries to successfully adapt to climate change while still building their own sustainable futures.

The conference comes amid a backdrop of new warnings from the International Energy Agency (IEA) of a sharp rise in the volume and concentration of greenhouse gas emissions in the atmosphere. The IEA announced last week that 2010 emissions from global energy generation have returned to record highs, marking an unexpectedly sharp rebound from the reduced emission levels caused by the financial crisis. Reports now show that carbon dioxide concentrations have once again peaked at just under 395 parts per million (ppm).

The two week conference includes the thirty-fourth sessions of the Subsidiary Body for Scientific and Technological Advice (SBSTA 34) and the Subsidiary Body for Implementation (SBI 34), the sixteenth session of the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto Protocol (AWG-KP 16), and the fourteenth session of the Ad Hoc Working Group on Long-term Cooperative Action under the Convention (AWG-LCA 14).

New items under discussion include: SBI’s consideration of proposed items on work programmes relating to reporting by Annex I and non-Annex I countries, adaptation, and response measures, as well as SBSTA’s consideration of the work programme on agriculture, the impacts of climate change on water and water resource management, and the initiation of a new work programme on issues regarding reducing emissions from deforestation and forest degradation in developing countries (REDD+) identified within the Cancun Agreements.

Article by Guest Contributor: Veronika Shirokova

MSU solar refrigerator being installed during a Spring 2009 Workshop in Guatemala. Hosted by ATC at AIDG in Xela. (Image by: jsbarrie)

COP16 saw a modest advancement in negotiations on Technology Transfer, guided by a framework established during an earlier meeting in New Delhi. Participants agreed upon the preliminary structure of a Technology Mechanism, creating a Technology Executive Committee (TEC) and a Climate Technology Centre and Network (CTCN).

The TEC will have an advisory and administrative role, identifying technology needs and priorities, coordinating efforts, and providing recommendations for improvement. It will consist of a panel of 20 experts, 11 from developed countries and 9 from developing countries. Parties have yet to nominate, or establish the qualification criteria for, committee members.  The framework is sufficiently rigorous for the TEC to begin its activities immediately after suitable candidates are found.

The CTCN, consisting of a centre and a large network, will serve an operative role in technology transfer on an international to regional scale. It will function mainly to carry out the TEC’s directives, as well as to facilitate and improve upon existing initiatives. The interactions between the Centre and within the Network are still ill-defined, and will be subject to negotiation over the following year. As a consequence, the CTCN is still far from being a working arm of the Technology Mechanism. Further, the relationship between the TEC and the CTCN is unclear, as is how the Technology Mechanism will relate to the Financial Mechanism.

Due to strong resistance from developed countries, participants deliberately omitted discussion on the contentious issue of Intellectual Property Rights (IPR).  Developing countries are frustrated by the mutually conflicting conditions of the Cancun Agreements; they are being told to stop or skip over the usage of fossil fuels in favour of green energy, but are unable to access the necessary technology due to restrictive IPR. Companies may reach concessions on practical pricing and conditions, but are concerned that their patents will not be upheld in countries with weak IPR enforcement.

Overall, the climate talks in Cancun represent significant progress in the design of a new Technology Mechanism. However, technology transfer will face significant barriers due to difficulties with financing and IPR, and is unlikely to succeed until these issues are resolved.

Article by Guest Contributor: Veronika Shirokova

Spate irrigation, an example of an adaptation technology (Image by: The AgriCultures Network)

On November 9th and 10th, representatives from 35 countries and various UN organizations met in New Delhi to discuss the establishment of a new Technology Mechanism, based on the recommendations of the Expert Group on Technology Transfer (EGTT). The new Technology Mechanism includes the creation of two key bodies: a Technology Executive Committee (TEC) and a Climate Technology Centre and Network (CTCN).

The TEC would function on an international level, providing advice to the Conference of Parties (COP) and setting overall policy directives for technology development and transfer. There was disagreement among participants regarding the nature of the TEC’s advisory role. Some felt the TEC should serve as a research group, while others felt that it should help assess activities eligible for funding by the COP.

The CTCN would operate on technology transfer initiatives across all levels of governance and all sectors of the economy. The meeting in Delhi identified four main functions for this operative arm of the new Technology Mechanism:

1. To assist governments to identifying technology needs and priorities.
2. To support governments in the preparation and implementation of technology transition. This includes the provision of in-country technical assistance and training.
3. To facilitate technological innovation and diffusion.
4. To foster national capacity-building for technological development, support, and cooperation.

Participants also discussed the challenges for technology development and transfer, most importantly finance and intellectual property rights. They recalled the commitment of Parties to generate US $100 billion per annum by 2020, and noted that finance remains the main barrier to technology transfer in developing countries. Many felt that the new Technology Mechanism should advise the Finance Mechanism on resource allocation, through the TEC’s research, and consideration of proposals developed by the CTCN.

Intellectual property rights (IPR), proved to be an issue at the meeting, and in-depth discussion was postponed until Cancun. India’s Minister of Environment and Forests, Jairam Ramesh, commented that differences of scale make IPR less problematic in the transfer of adaptation technology than mitigation technology. Participants agreed that public domain technologies should be considered while a resolution on IPR is being reached.

According to a report by The Energy and Resources Institute (TERI), IPR’s role in technology transfer is contentious because of a disparity between opinions held by developed and developing countries. Annex I countries, comprised of industrialized nations that are members of the OECD and have economies in transition, claim that IPR facilitate technology transfer. Non-Annex I countries, comprised mostly of developing countries, feel that strong IPR and their associated costs act as a barrier to access, and prevent modifications that would make the technology more suitable for local needs. TERI recommends measures that would bind both governments and companies in developed countries to transferring climate relevant technologies. This can include legal enforcement, incentives, and compulsory licensing.

Overall, participants were satisfied with the framework established for the new Technology Mechanism and looked forward to continuing discussion in technology transfer at the COP16. While the meeting represents considerable progress on the issue of technology transfer, the chair’s summary and subsequent press releases failed to outline the specific positions taken by participants and negotiating parties. Information on which states send delegates to the meeting was also unavailable. This calls into question the transparency of the negotiation process and leads to a subsequent disconnect between citizens and their representatives.

Authors: Sabrina Chesterman & Nyla Sarwar.

As the climate talks gain pace in Bonn, progress is being made on a new text, designed to resurrect chances of a global agreement in Cancun in December. Many, including outgoing UNFCCC Executive Secretary, Yvo de Boer, are still hesitant about Cancun being able to achieve a deal, which was originally supposed to have been reached at Copenhagen last December. One of the Mexican negotiators, Luis Alfonso de Albo, has used the coverage at Bonn to try and instill confidence in what may be achieved there, stating a climate deal is still ‘positive’.

The Bonn meetings have brought together key negotiating groups, including;

(I)              AWG-KP – to focus on further commitments by Annex I parties, based on text prepared by the Chair

(II)            AWG-LCA – to focus on preparation of an outcome to be presented to at COP 16, based on a new text by the Chair

(III)           Subsidiary Body for Implementation (SBI) – which will consider issues including national communications and reporting, the financial mechanism and capacity building.

(IV)          Subsidiary Body for Scientific and Technological Advice (SBSTA) – which will consider methodological issues, technology transfer and the Nairobi Work Programme on impacts, vulnerability and adaptation to climate change.

The Bonn discussions have entered their second week with many fundamental questions still remaining regarding the legality of the proposed agreement, emission levels and temperature goals.  The big white elephant in Hotel Maritim where the discussions are being held, lingering from Copenhagen, centres on the scale of commitments by developed and developing countries. The new text aims to ameliorate the huge bridge that exist between these groups and integrate the Copenhagen Accord with the 2009 versions of the AWG-LCA and AWG-KP texts.

In regards to finance, the new text states that that all finance will be new, additional, adequate and predictable. Whilst developed countries have committed to a goal of mobilising USD$100bn/pa by 2020, there is still uncertainty about which countries will contribute towards this and how much. Discussions regarding the generation of private funds have seen suggestions of a potential international cap-and-trade system with auctioned permits. There have also been references to the creation of a Finance Board within the UNFCCC to manage the operators of the agency’s financial mechanisms (i.e the GEF and the Climate Fund), including the Copenhagen Green Climate Fund (CGCF). Disillusionment regarding funding is also created due to the texts reference to the Copenhagen Adaptation Framework (CAF), implemented through international collaboration. The CAF aims to undertake 11 activities (e.g. planning, vulnerability assessments, strengthening institutional capacities, building resilience, disaster risk reduction etc.) all of which require extensive funding.  Worryingly the text remains sparse on new market mechanisms, likely to be critical to galvanise funding, especially from private and public sector partnerships.  In addition, as the EU Commissioner for Climate Change, Connie Hedegaard, made clear last week discussing the monetary agreements in lieu of the destabilised Euro does not come at an easy time, especially with money having to be drawn from the public purse.  Therefore funding remains a sensitive yet pivotal topic, especially if alliances are to be bridged between different negotiating groups.

Some aspects of the text being prepared at Bonn remain unchanged from the text prepared at Copenhagen. An example includes the issues surrounding REDD and REDD+, which was hailed as one of Copenhagen’s successes. In addition, the text regarding technology transfer remains unchanged from last year, and this section is considered to deliver a major outcome. The text suggests that establishment of a Climate Technology Centre and Network – the mechanism to support and organise the transfer of technology, encourage collaborative innovation, and skills development for developing countries. It is expected to be funded by the overarching funding mechanism and could begin as early as January 2011. Leading on from technology transfer, discussions so far at Bonn regarding capacity building have been largely inconclusive with additional brackets added to the text, and wide disagreement concerning its funding, delivery mechanism and reporting. With key uncertainties remaining, negotiators at Bonn have a lot of talking to do this week if success is to be achieved in any of these areas and a clear path to Cancun is to be laid.

Author: Dafydd Elis

On Wednesday at COP15, a side event packed with high-profile representatives of intergovernmental agencies and national governments discussed the prospects for technology transfer over the coming decades.

The session was opened by the chair, UN-DESA‘s Sha Zukang. He outlined a vision for technology transfer in three parts.

The issues

First, he said, technology transfer arrangements should adhere to four principles: timeliness (we need to use technologies that are available now, and we must accelerate their diffusion); equity (technology can contribute to inequality if legal or economic barriers prevent it from being used by poor nations); transparency (opacity will only slow the process); and safety (all technologies entail risks and these will need to managed as we move ahead).

Second, he pointed to the Marshall Plan, the Green Revolution and the child immunisation programme as programmes that succeeded because they were underpinned by good strategies. He called for a similarly strategic, integrated, approach to technology transfer in order to achieve the same effect.

Third, he called for the technology transfer debate to be specific: focussing on the critical sectors of renewable energy, energy efficiency, forests and food & agriculture.

The approach

Jairam Ramesh, India’s Minister of Environment and Forests, then shared his thoughts on the important issues in the technology transfer debate. He argued that the architecture for technology transfer will need to include a diversity of approaches for different contexts. This could include both publicly financed initiatives, public-private initiatives or new frameworks. He also suggested that some kind of change would be required to Intellectual Property regimes, perhaps along the lines of the amendments made to the WTO’s TRIPS to allow the use of generic drugs for AIDS, malaria and TB. Finally, he underlined the importance of capacity building, and enhancing developing countries’ ability to absorb and use new climate technologies.

The organisations

The rest of the speakers at the event represented intergovernmental organisations – UNEP, UNDP, UNIDO, IRENA, GEF and WIPO. They outlined the work that the UN is doing in energy: a discussion that made it clear that across the UN agencies working in this area there is an awareness of the interaction between social and economic issues and the climate change agenda – particularly the ‘bottom billion’ who do not have any access to electricity. While there are tensions between the agenda of poverty alleviation and reducing emissions, a few of the commentators expressed optimism about the opportunities to combine strategies to provide access to energy and simultaneously move developing countries’ development to a low-carbon pathway.

The presentations from GEF and IRENA highlighted the action that is already under way to develop and implement technology transfer initiatives. The GEF’s work in developing the Pozna? Strategic Program on Technology Transfer has already resulted in funding being made available to develop national Technology Needs Assessment for developing countries and a number of technology transfer initiatives. IRENA, a new organisation dedicated to renewable energy, will be working on providing support to developing countries as they seek to increase their share of energy delivered from renewable sources.

Side events at COP15 don’t directly contribute to the negotiation of a new treaty on climate change. But they often provide an opportunity to look beneath the language of negotiating texts and think about the challenges of turning the words on paper into action on the ground. Whatever agreement is eventually reached by national leaders through the UNFCCC, the challenge of implementation will be even greater than the challenge of reaching agreement in the first place.

Even while the climate deal is hanging in the balance, then, it’s good to know that the institutional architecture for technology transfer is already beginning to take shape.

Author: Dafydd Elis

Windmills located between Malmo and Copenhagen (Image by: nosha)

It’s crunch time in Copenhagen: the governmental leaders are here and they will have to find an agreement during the next two days if they are to leave with their credibility intact. Having now seen two official drafts of the text being discussed by AWG-LCA, it’s possible to glean some insights into the direction in which negotiations over technology transfer are moving.

Technology transfer is one of the five negotiating themes that have been under negotiation for the last two years as part of the Bali Road Map. There are two key questions surrounding technology transfer. The first is architecture: what institutional framework will be in place after 2012 to govern technology transfer activity? The second is financing: how much money will be available for technology transfer and who will decide where this money is spent?

In the period leading to COP15, the Contact Group on Enhanced Action on Development and Transfer of Technology debated a range of possibilities for both these issues.

On architecture, there is broad consensus that some kind of central entity will be required – perhaps an Executive Board for Technology – that would play a coordinating role in the new technology transfer arrangements. There is also a good level of support for technology-specific and regionally-specific co-ordination and planning.

But there were also a number of areas of disagreement between the negotiating blocks, particularly on the issue of funding. Not all the negotiating groups agreed that a specific financing fund for technology transfer would be required, or what form that fund should take. The question of intellectual property rights has also created divisions across the board.

The first official draft text produced during COP15, which was issued last Friday, did little more than to formally articulate these areas of agreement and disagreement. It proposed an Executive Body on Technology or a Technology Action Committee with overall responsibility for accelerating the development and transfer of climate-related technologies. This would be accompanied by a Consultative Network for Climate Technology, supported by regional technology centres, to provide technical assistance to developing countries

On finance, Friday’s text left all the options – including a separate mechanism for technology transfer – on the table. Given the sensitivity of the financing issue this wasn’t surprising.

Today’s new draft text reflects progress in the negotiations over an institutional framework. In what appears at the surface to be a classic semantic compromise, the two competing options of an Executive Body or an Action Committee have been amalgamated into a ‘Technology Executive Committee’.

Behind these semantic changes in the high-level text, there lies a considerable amount of detail, which is elaborated in one of the draft Addenda published yesterday by the AWG-LCA. The addendum proposes that the Technology Executive Committee will be responsible for directing technology transfer activities (including developing technology road maps, performing policy analysis, and developing criteria for financial support capacity building), while the Technology Network will be used to deliver the support and advise developing countries on their use and development of new technologies.

There are a number of square brackets in the text, and the section on intellectual property rights is particularly heavily punctuated with the all-too-familiar [s and ]s. And the financing arrangements still appear decidedly unclear: the draft high-level text contains proposals for Finance Board, a Finance Fund, a Finance Facility, as well as a review or reform of the GEF.

Today’s fundamental disagreements over the content of the draft texts shows that nothing is certain in these negotiations, so any or all of these proposals may of course change over the remainder of COP15. But it appears that some form of agreement is solidifying over technology transfer: of all the issues on the table, it is perhaps the one that looks most hopeful.

Author: Dafydd Elis

Steven Chu in Copenhagen (Image by: Andy Revkin)

The US’s Energy Secretary Steven Chu announced a new stream of funding for low-energy technologies here in Copenhagen yesterday.

The money is being offered as the result of discussions at the Major Economies Forum (MEF) at L’Aquila, Italy, earlier this year.

The money is for five years, and will be distributed over four different programmes. One will focus on solar-powered lighting using LEDs; another will provide practical and economic support to low-income countries to deploy renewable energy technologies. The other two programmes focus on improving energy efficiency in developed countries’ products and on providing information about clean technology potential globally.

Of these, the bulk of the funding will go to the renewable energy funding – $250m of the $350m announced. In fact, much of this money is not new. $200m of it had already been pledged by the United Kingdom, Netherlands, Norway and Switzerland.

While this funding might go a little way to filling a near-term gap in financing for technology transfer and development, the short five-year duration of the programme announced and the relatively small sums involved ($70m a year between more than seven major economies) is small fry even compared to the $10billion per year committed by the EU to adaptation funding last week.

More fundamentally, a long-term and economically sizable mechanism for supporting technology transfer will need to be developed as part of a post-Kyoto agreement. This has been under discussion over the last two years as part of the Bali agreement, and featured in the draft negotiation text issued last week.

Exactly how this will look once this week’s negotiations are done remains to be seen.