One of the key achievements of the Copenhagen Climate Change Conference in December 2009 was a pledge by rich countries to provide USD 30 billion by 2012 - known as ‘fast-start funding’ - to help developing countries reduce carbon emissions and adapt to climate change impacts, with the commitment to increase to USD100 billion per year by 2020.

This move to address the current gap between existing financing and what is needed is important, as finance is one of the most urgent issues that must be addressed in order to achieve a comprehensive agreed outcome on climate change. In Focus addresses some questions surrounding this fast-start funding.

Why ”fast-start” funding? There is a strong feeling on the part of developing countries that developed countries have not met their financial commitments in the past . Channelling funds speedily to developing countries is therefore a priority in order to reassure them that support for their engagement in tackling climate change is forthcoming. The funds must address the urgent needs of developing countries with regard to both mitigation and adaptation, with the money to be allocated in a balanced fashion between both activities.

The European Union (EU) has already come forward with proposals on fast-track financing, pledging EUR 2.4 billion per year over the period 2010-2012. The EU is ready to present a preliminary state of play on this funding at the next UN climate change talks in Bonn in June, and to submit EU-coordinated reports on the implementation of this commitment at COP 16 in Cancún in November, and thereafter on an annual basis. In Copenhagen, Japan also announced its pledge of USD 11 billion in public finance and USD 4 billion in private finance for the period 2010-2012, and the USA has promised USD 1.2 billon for the year 2010.

How should this money be distributed?

There is convergence among Parties that preferred access to these funds should be given to least developed countries, small island states and African countries. The issue of maintaining geographical balance is important, along with the need to address a concern among developing countries that the finance will indeed be provided in line with their needs and priorities .

Given the amount of time it would take to create and set up new delivery channels, it may be necessary to channel this funding through the financial mechanism of the Convention, which includes the Climate Change focal area of the Trust Fund of the Global Environment Facility (GEF), the Least Developed Countries Fund (LDCF), the Special Climate Change Fund (SCCF) and the Adaptation Fund (AF) under the Kyoto Protocol. This  funding may also be delivered through bilateral, regional and multilateral channels.

How do you ensure the “additionality” of financing?

There is already a huge concern on the part of developing countries that the USD 30 billion pledged in fast-start financing will not be new and additional to what has been promised before. Good accounting will therefore be needed to make sure that fear is addressed.

This could be done through robust monitoring, reporting and verification of the financial resources provided to developing countries. The Bali Action Plan says that developing countries should take real, measurable and verifiable action in exchange for real, measurable and verifiable financial support, and one of the ways to do this is to create a mechanism that will do the tracking.

What about measurement, reporting and verification (MRV) of short-term funding?

Under existing reporting requirements under the Convention, Annex II countries are obliged to report through national communications “new and additional” financial resources provided over the reporting period. They also have to provide information on any financial resources related to the implementation of the Convention provided through bilateral, regional and other multilateral channels.

An evaluation of fast-start funding should be given to the inter-governmental process during 2010-2012. While some countries have indicated a willingness to report back, the question remains how often and to whom. It still has to be determined how this can be linked to the review of the financial mechanism.