European Climate and Development Financing Before Cancun

By Imme Scholz, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

No. 7 . December 2010

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Official development assistance finances climate-relevant activities in developing countries to a much larger extent than the funds under the UNFCCC. Pledges for new and additional fast start and long-term finance in the Copenhagen Accord made in December 2009 aim at increasing funding available for mitigation and adaptation activities in developing countries. Nearly 12 months later, the relationship between climate and development finance remains a controversial issue. While the overlaps and possible synergies between development-oriented and climate-related investments are largely acknowledged, concerns on the definition of newness and additionality at international level are still large.

These concerns are justified, for three main reasons: first, as long as development budgets don’t grow the risk increases that – under the pressure of the Copenhagen pledge – large shares of ODA are diverted from poverty reduction to emissions reduction. Second, this risk increases as long as there is no agreed definition of additionality. And third, in the absence of agreed and transparent procedures and criteria for reporting on climate funding, there is a high degree of uncertainty on how much funds were really invested in climate-related activities.
This opinion paper focuses on these three issues and analyses what Europe has to offer in order to reduce these concerns and risks and promote trust at international level. Read more.