Background
The Adaptation Fund was established by decision 10/CP.7 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, as well as activities identified in paragraph 8 of decision 5/CP.7.
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.
Financing the Adaptation Fund
Upon its establishment, it was decided that the Adaptation Fund will be financed from the share of proceeds (SOP) on the clean development mechanism project activities and other sources of funding, including voluntary contributions. The SOP amounted to two per cent of certified emission reduction (CERs) issued from project activities under the clean development mechanism (CDM)
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.
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.
Through decision 4/CMP.20, Parties decided that all operations and processes under the CDM shall be discontinued by 31 December 2026. Parties also decided to authorize an additional transfer of USD 26.8 million from the trust fund for the clean development mechanism to the trust fund for the mechanism established by Article 6, paragraph 4, of the Paris Agreement with the aim of maximizing the long-term benefit for the Adaptation Fund. Under decision 20/CMA.7, Parties welcomed the authorization of this transfer and affirmed that this transfer has the aim of maximizing the long-term benefit for the Adaptation Fund. The CMA further agreed that, once it has been determined that the mechanism is self-financing, amounts shall be transferred annually from the trust fund for the mechanism established by Article 6, paragraph 4, to the Adaptation Fund until the total amount transferred reaches the amount specified in paragraph 18 in decision 2/CMP.16 and the amount specified in paragraph 18 of decision 4/CMP.20.
Recent Developments
As of July 2026, discussions on the arrangements of the Adaptation Fund to exclusively serve the Paris Agreement, the membership of the Board, and the initiation of the fifth review of the Fund are ongoing under the SBI, CMP and CMA. The draft text prepared at SBI 64 is available here (draft conclusions here).