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FINANCIAL MECHANISM
ISSUES IN THE NEGOTIATING PROCESS
FINANCIAL MECHANISM
| Background |
| Article 11 defines a mechanism for the provision of financial resources on a grant or concessional basis, including for the transfer of technology for the implementation of the Convention. The Article also specifies that the financial mechanism would function under the guidance and be accountable to the Conference of the Parties (COP), which would decide its policies, programme priorities, and eligibility criteria related to the Convention.
At the second session of the Conference of the Parties (COP 2), decision 12/CP.2 was adopted which brought into force a Memorandum of Understanding (MOU) between the COP and the Council of the Global Environment Facility (GEF), which is the international entity entrusted on an interim basis with the operation of the financial mechanism as mentioned in Article 11 of the Convention (FCCC/CP/1996/15/Add.1). Among other elements, the MOU requires that annual reports of the GEF be made available to the COP through its secretariat, and that the COP after each of its sessions will communicate to the GEF any policy guidance approved by the COP regarding the financial mechanism.
In regard to its role as an operating entity of the financial mechanism of the Convention, the GEF has provided about US$ 1.125 billion in the form of grants from the GEF Trust Fund for climate change projects in non-Annex I countries.
The discussions on the third replenishment of the GEF Trust Fund which would take a couple of months to conclude commenced on October 30th 2000. These discussions would benefit from the adoption of a decision on additional guidance to the operating entity of the financial mechanism, which would address the financial needs related to capacity building, technology transfer, adaptation, etc.
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| Latest developments |
| In Lyon, at the thirteenth session of the Subsidiary Body for Implementation (SBI), the Chairman of SBI, Mr John Ashe (Antigua and Barbuda), and Mr Kerry Groves (Australia) initiated informal consultations on the subject of additional guidance to the Global Environment Facility, the operating entity of the financial mechanism. These consultations led to the preparation of a Co-Chairmen's text contained in the first Annex of the SBI Report of the Session (see annex I of FCCC/SBI/2000/10). Additional submissions on the subject were also invited from the Parties, with a view to recommending a COP decision at its sixth session. |
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| Next steps |
| Parties will continue their negotiations on the draft Co-Chairmen's text in The Hague, first during the SBI 13, part II (in the first week) and later at COP 6 (in the second week), with the aim of taking a decision on additional guidance to the GEF as the operating entity of the financial mechanism. |
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| Documents prepared for the upcoming session |
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Annex I of the FCCC/SBI/2000/10
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Report of the Subsidiary Body for Implementation on the work of its thirteenth session (Part One) Lyon, 11-15 September 2000
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FCCC/CP/2000/3
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Review of the implementation of commitments and of other provisions of the Convention
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FCCC/CP/2000/3/Add.1 (part1)
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Review of the implementation of commitments and of other provisions of the Convention Report of the Global Environment Facility to the Conference Addendum Review by the GEF of its climate change enabling activities
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FCCC/CP/2000/3/Add.1 (part2)
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Review of the implementation of commitments and of other provisions of the Convention Report of the Global Environment Facility to the Conference Addendum Review by the GEF of its climate change enabling activities
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| Relevant COP decisions |
| Decision 10/CP.1 |
Arrangements between the Conference of the Parties and the operating entity or entities of the financial mechanism. |
| Decision 11/CP.1 |
Initial guidance on policies, programme priorities and eligibility criteria to the operating entity or entities of the financial mechanism |
| Decision 12/CP.1 |
Report of the Global Environment Facility to the Conference of the Parties on the development of an operational strategy and on initial activities in the field of climate change. |
| Decision 11/CP.2 |
Guidance to the Global Environment Facility. |
| Decision 12/CP.2 |
Memorandum of Understanding between the Conference of the Parties and the Council of the Global Environment Facility. |
| Decision 2/CP.4 |
Additional guidance to the operating entity of the financial mechanism. |
| Decision 12/CP.4 |
Initial national communications from Parties not included in Annex I to the Convention. |
| Decision 8/CP.5 |
Other matters related to communications from Parties not included in Annex I to the Convention. |
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This agenda item is supported by the Non Annex I Sub-Programme
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© UNFCCC
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