Who's fighting for the Adaptation Fund?

The Adaptation Fund — which has financed $358 million of mostly small-scale projects to help developing countries adapt to climate change — faces an uncertain future. Attached to an international treaty that has been replaced, and underwritten by a carbon credit exchange that saw its floor drop out, the fund is waiting on negotiators during the final hours at the 22nd Conference of Parties in Morocco to agree what its role will be in the post-Paris agreement era. Developing countries laud the Adaptation Fund’s direct access structure, which eliminates some of the red tape required to access funding and allows accredited countries to manage their projects instead of relying on multilateral organizations. Developing countries also enjoy a majority share of the fund’s governing board seats — and even though the board has never voted on anything, there is a sense of developing country ownership unique among climate finance mechanisms. “It’s a small fund, but it’s of high symbolic value to the developing countries,” said Jan Kowalzig, climate change adviser at Oxfam Germany. Negotiations about this specific fund also come at a time when broader questions about whether developed countries will commit adaptation finance anywhere close to the amounts developing countries hope to see threaten to sour the negotiations for some Marrakech delegates. Donald Trump’s election has only heightened the tension, since the American president-elect has vowed to cut U.S. contributions to anything climate-related. As with many of the topics under negotiation at COP22, the Adaptation Fund’s outlook is clouded by a combination of technical issues, politics and money. The fund was established under the Kyoto Protocol, but if it’s going to serve the purposes of the Paris agreement — Kyoto’s successor — it has to be formally transferred from one framework to the other. The Adaptation Fund launched with a financing model that drew from credits earned by carbon emissions reductions through the U.N. Clean Development Mechanism, an innovative approach that has since collapsed after the price of those carbon credits bottomed out. Coming into these climate talks, the fund sought $80 million to replenish its budget and finance projects already in its pipeline. On Thursday, a flurry of commitments from European countries — including $55 million from Germany — pushed the Adaptation Fund over that $80 million goal. The U.S. has never donated to the Adaptation Fund since it’s not a party to the Kyoto Protocol under which the fund was established. That has also been an obstacle to transferring the fund into the new Paris framework, according to Kowalzig. “There’s a big hesitation on the U.S. side to copy and paste anything from the Kyoto Protocol into the Paris agreement,” he said. “They had no role in crafting it, designing it, so they’re a bit wary.” Some developed countries also worry about contributing to a proliferation of different funding streams, which might compete for resources with each other and add to the administrative and oversights costs of delivering much-needed money for climate change projects. “We need to first assess how a fund that has very specific features can be best fit to the Paris agreement and if there won’t be other mechanisms to provide for the similar type of resourcing of adaptation action,” said Elina Bardram, head of the European Union delegation, at a briefing Thursday. The fund’s supporters say it does play a unique role — with its direct access model and by funding smaller projects than what the Green Climate Fund would consider. And they argue there is a clear case for giving it a new home under the framework of the Paris agreement, where it can serve the international community’s commitment to help countries adapt to the rapidly increasing impacts of climate change. Many also see this Adaptation Fund debate as a test of how sincere donors are in their commitment to an aid effectiveness agenda they agreed to in Paris, which stresses country ownership of the development process. “The biggest change that [developing countries] are reporting is that when they saw their role earlier as facilitating something that was actually done by a multilateral bank or a U.N. agency, now they are really in the driver’s seat and driving the adaptation activities in their country,” said Mikko Ollikainen, the Adaptation Fund’s interim manager and senior climate change specialist. Now that the Adaptation Fund has new commitments from a number of donors, it will move forward with projects already planned, regardless of the outcome of the discussions, which may be handed off to a different group of negotiators who will meet again next year before COP23. “Whatever the outcome is, there will always be a need for a funding stream that does the work that the Adaptation Fund does,” Kowalzig said. “This has a niche that no other fund is covering.” Devex Senior Correspondent Michael Igoe attended the COP22 in Marrakech, Morocco. Follow our coverage. Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.