Background
The Adaptation Fund was established in 2001 to finance concrete adaptation projects and programmes in developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change.
Through decisions 13/CMA.1 and 1/CMP.14, Parties decided that the Adaptation Fund shall serve the Paris Agreement under the CMA with respect to all Paris Agreement matters, effective 1 January 2019. Parties also decided that once the share of proceeds becomes available under Article 6, paragraph 4 of the Paris Agreement, the Adaptation Fund shall no longer serve the Kyoto Protocol.
The Adaptation Fund was initially financed with the share of proceeds amounting to two per cent of certified emission reductions (CERs) issued from activities under the clean development mechanism (CDM) of the Kyoto Protocol, and other sources of funding.
In decision 1/CMP.8 (the Doha Amendment of the Kyoto Protocol), Parties decided that for the second commitment period of the Kyoto Protocol, the Adaptation Fund shall be further augmented through a two per cent share of the proceeds levied on the first international transfers of assigned amount units (AAUs) and the issuance of emission reduction units (ERUs) for projects under Article 6 of the Kyoto Protocol, immediately upon the conversion of AAUs or removal units (RMUs) to ERUs previously held by Parties.
Furthermore, Parties decided through decisions 13/CMA.1 and 1/CMP.14 that the Adaptation Fund shall continue to receive the share of proceeds, if available, from activities under Articles 6, 12 and 17 of the Kyoto Protocol.
Voluntary contributions represent an increasing share of the Fund’s resources. As of 30 June 2023, cumulative receipts into the AF Trust Fund comprised USD 214.92 million from the monetization of CERs, USD 1,232.96 million from contributions and USD 69.31 million from investment income earned on the Trust Fund balance.
The Parties to the Paris Agreement decided in CMA 3 that, under the mechanism established by Article 6, paragraph 4, of the Paris Agreement (Article 6.4 mechanism), the share of proceeds that is levied to assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation shall be delivered to the Adaptation Fund. This will comprise:
- A levy of five per cent of Article 6, paragraph 4, emission reduction (A6.4ERs) at issuance;
- A monetary contribution to be set by the Supervisory Body of the Article 6.4 mechanism related to the scale of the Article 6, paragraph 4 activity or to the number of A6.4ERs issued;
- A periodic monetary contribution from the remaining funds received from administrative expenses after the Article 6.4 mechanism becomes self-financing.
CMA 4 noted that the Supervisory Body agreed to deduct three per cent of the issuance fee paid for each request for issuance of Article 6, paragraph 4, emission reductions and collectively transfer them annually to the Adaptation Fund. With regard to the periodic monetary contribution from the remaining funds, the Supervisory Body shall review annually the state of the remaining funds as a result of the income from fees and the expenditure for operating the Article 6.4 mechanism, and decide on the timing and the amount of funds to be transferred to the Adaptation Fund after setting aside the operational reserve for at least three years. Furthermore, CMA 4 decided that CDM issuance requests with provision status that transition to the Article 6.4 mechanism shall be subject to the share of proceeds for adaptation applicable under the Article 6.4 mechanism.
The Adaptation Fund is supervised and managed by the Adaptation Fund Board (AFB). The AFB is composed of 16 members and 16 alternates and meets at least twice a year (Membership of the AFB).
Recent Developments
Forty second meeting of the Adaptation Fund Board
Date: 16- 19 April 2024
Venue: Bonn, Germany
Adaptation Fund High-level Contributor Dialogue
Date: 4 December 2023
Venue: Dubai, UAE
Event page
Adaptation Fund Board membership
More information on the Board is available here.