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Review of the financial mechanism
 

Introduction

The Conference of Parties (COP), at is fourth session, decided to review the financial mechanism of the Convention every four years in accordance with Article 11.4 of the Convention. The annex to pdf-icon decision 3/CP.4 (153 kB) containing the guidelines states that the objective of the review of the financial mechanism is to take appropriate measures regarding:

             (a) Its conformity with the provisions of Article 11 of the Convention;
             (b) Its conformity with the guidance of the COP;
             (c) The effectiveness of the activities it funds in implementing the Convention;
             (d) Its effectiveness in providing financial resources on a grant or concessional basis, including for the transfer of  
                   technology, for the implementation of the Convention's objective on the basis of the guidance provided by the COP; and
             (e) Its effectiveness in providing resources to developing country Parties under Article 4.3 of the Convention.

Three reviews of the financial mechanism of the Convention have been conducted in the past, and the fourth review is currently underway, to be completed at COP 16.
 
Recent Developments
 
At its 12th session, the COP requested the SBI to initiate the fourth review of the financial mechanism in order to complete it by COP 16. By its pdf-icon decision 6/CP.13 (265 kB) , the COP adopted additional guidelines for the review of the financial mechanism.  The annex to pdf-icon decision 6/CP.13 (265 kB) states that the additional objective of the review of the financial mechanism is to examine how to facilitate consistency in financing activities and improve the complementarity of the financial mechanism with other sources of investment and financial flows, including:

             (a) Examining relevant sources and means of financing, as indicated in Article 11, paragraph 5 of the Convention, that
                   would assist developing countries to contribute to the achievement of the objective of the Convention, in particular
                   innovative means of financing, such as for the development of endogenous technologies in developing countries;
             (b) Examining the role of the financial mechanism in scaling up the level of resources; and
             (c) Assessing enabling environments for catalysing investment in, and the transfer of, sustainable technologies that
                  mitigate greenhouse gas emissions, and for enhancing resilience to climate change.

By the same decision, the COP also requested the SBI to recommend a draft decision on the fourth review of the financial mechanism for adoption by COP 15. The SBI considered this request at its 30th and 31st sessions but was unable to complete its work on this matter.

The COP therefore, by its pdf-icon decision 6/CP.15 (391 kB) , requested the SBI to continue its consideration of this issue at its 32nd session, with a view to recommending a draft decision for adoption by COP 16. In line with this, the SBI considered this issue at the 32nd session where, in the context of the fourth review of the financial mechanism, it requested the secretariat to compile and synthesize the information contained in the reports of the eleven countries participating in the National Economic, Environment and Development Study (NEEDS) for Climate Change Project, for consideration by SBI 33.

At its 33rd session, the SBI continued its consideration of this item and recommended a draft decision completing the fourth review of the financial mechanism, which was subsequently adopted by COP 16 (pdf-icon decision 2/CP.16 (21 kB) ).

In their decision finalizing the fourth review, Parties decided, inter alia, the following:
  • Taking note of the Fourth Overall Performance Study of the Global Environment Facility (GEF);
  • Welcoming the successful negotiations of the fifth replenishment of the GEF and noting this is the largest increase in the climate change focal area since the GEF was established;
  • Requesting the GEF to continue improving its modalities to increase the responsiveness, effectiveness and efficiency of its support;
  • Deciding that the GEF should continue to provide and enhance support for the implementation of adaptation activities through the Least Developed Countries Fund and the Special Climate Change Fund;
  • Inviting Parties to submit to the secretariat annually their views and recommendations on elements to be taken into account in developing guidance to the GEF; and
  • Requesting SBI 37 to initiate the fifth review of the financial mechanism and to report on its outcome to COP 19.
 
 

 

 
Updated 4 April 2011
 
Latest Decisions

COP 16 decision

pdf-icon Decision 2/CP.16 (21 kB)

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Latest Documents

Synthesis report on the NEEDS Project. Note by the secretariat. 

pdf-icon FCCC/SBI/2010/INF.7

Submissions by Parties on the operation of funds under the Global Environment Facility as an operating entity of the financial mechanism, as well as the Special Climate Change Fund and the Least Developed Countries Fund.

pdf-icon FCCC/SBI/2009/MISC.10 andpdf-icon FCCC/SBI/2009/MISC.10/Add.1

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