WARSAW (Thomson Reuters Foundation) - The U.N.'s Adaptation Fund has met a goal of raising $100 million from donor governments, with the board welcoming pledges made this week at the Warsaw climate talks, largely by European countries.
The money for the cash-strapped fund is a bright spot at the U.N. negotiations, where progress has been slow. Ahead of the meeting, the Adaptation Fund was facing a bleak financial future because of rock-bottom prices on the carbon market, its main source of income.
Eight adaptation projects managed by intergovernmental agencies, including the U.N. Development Programme, are awaiting funding. The new money means that five of these - in Cuba, the Seychelles, Myanmar, Uzbekistan and Belize - can now go ahead.
"I am very pleased to see that our plea for support has resulted in significant commitments," said Hans Olav Ibrekk, chair of the Adaptation Fund Board. "This will partly address the pipeline issue and bring short-term relief. The challenge in the mid-to-longer term will be to ensure sustainable and predictable support to the fund."
The Adaptation Fund was meant to be financed mostly from a 2 percent levy on the value of certified emission reduction (CER) credits issued under the U.N. Clean Development Mechanism (CDM) each year. The credits are earned by projects in developing nations that cut greenhouse gas emissions, and can be traded and sold by industrialised countries to meet part of their emission reduction targets under the Kyoto Protocol.
But due to oversupply and uncertainty about future global caps on emissions, prices for the credits have plunged to around 35 euro cents per tonne of carbon dioxide, slashing the Adaptation Fund's income.
Nina-Beata Jacewska, head of the Polish delegation in Warsaw, welcomed the pledges for the fund. "We have managed to collect more than expected - around $100 million, which is very good," she told journalists.
The fund has managed to raise $104 million since it decided to seek voluntary contributions in 2012, and $72.5 million of that was pledged at the climate talks. In Warsaw, Germany gave around $40.5 million, Switzerland $11 million, Finland $6.8 million, France $6.8 million, Belgium and its regions $4.4 million, Norway $2.5 million and Austria $676,700.
'DROP IN THE BUCKET'
The Adaptation Fund did still have some money left in its fast-depleting coffers before the U.N. climate talks started on Nov. 11, but this was only available for climate change projects developed and led by national and regional agencies, such as government ministries and research institutes. A rule reserves half of the fund's resources for these bodies, and half for multilateral agencies.
In order to channel money to all the projects in its pipeline, the Adaptation Fund needed $111 million overall, meaning that three projects - in Ghana, Mali, and Nepal – will remain unfunded for the time being, the board said.
Since 2011, the Adaptation Fund Board has approved some $184 million for initiatives to strengthen resilience to droughts, floods, storms and rising seas in 28 countries.
Alden Meyer, director of strategy and policy for the Union of Concerned Scientists, said the Adaptation Fund donations at Warsaw should be put in the wider context of much larger climate financing needs.
Developed nations agreed in 2009 to raise climate finance for developing nations to $100 billion a year from 2020 from an annual $10 billion for 2010-12. But rich countries have yet to make clear how they will boost their aid from 2013 through 2019.
"It was incremental progress that they met a very low goal they had set for themselves (in Warsaw). It would have been an outrage if they hadn't met the $100 million here this week," Meyer said. "But put that in context of the hundreds of billions of dollars that are going to be needed to deal with adaptation over time - it's just a drop in the bucket, and we have to do much more next year and beyond."