1. european capacity building initiativeecbi Lessons learnt and next steps in the negotiations presented Benito Müller East and Southern African Regional Workshop Hilton Hotel Nairobi 3 March 2010 european capacity building initiative initiative européenne de renforcement des capacités ecbi for sustained capacity building in support of international climate change negotiations pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques

2. european capacity building initiativeecbi The Issue of Distributive Justice and Thematic Balance Distributive Justice Traditional ODA neither involves obligations to pay, not entitlements to receive. Hence, strictly speaking, there is no issue of contributing or receiving ‘a fair share’ The nature of financial payments for climate change activities, particularly in the case of adaptation and response to climate impacts is one of restitution. Hence there are both obligations to pay and entitlements to receive, which implies that equity, in these sense of either shouldering a fair share of the payment burden, or receiving a fair share of the revenue is an issue. At present, the focus really has only been of the former (e.g. Mexican and Swiss proposals). Few have raised the issue of how to distribute climate finance equitably. Thematic Balance Climate change finance involves a number of different themes (mitigation, adaptation,technology transfer, etc. ), and the issue of ‘thematic balance’ is whether each of these themes receives an appropriate share of the revenue.

3. european capacity building initiativeecbi National Level International Level (a) Retained, Fragmented, Decentralized(b) Devolved, Consolidated, Decentralized(c) Retained, Consolidated, Centralized International Consolidated Fund Country A Country B Country C International Sources Recipient Country D National (Consolidated) Fund Funded Activities Fragmented v. Consolidated Centralized v. Decentralized Devolved v. Retained International Consolidated Fund Country A Country B Country C International Sources Recipient Country D Funded Activities Recipient Country D Country A Funded Activities International Sources IFIs/IGOs/Funds Country B Country C Three Fundamental Dichotomies

4. european capacity building initiativeecbi Multilateral Fund (0.19 people/$m) Global Fund (0.21 people/$m) Expected Size (0.2 people/$m) Centralized Decision Making: The Problem of Administrative Size

5. european capacity building initiativeecbi Operating Entity Administrative Services RFM Trustee Thematic Assessment Units (one per disbursement window) Secretariat Services Expert Advisory Panel(s) (as required) Funded Activities Domestic Level International Level Legend: Governance Relation (‘under the authority of’)Contractual Relation (MOU or contract) Designated Funding Entities Executive Board External Audit Internal Audit UNFCCC Conference of Parties (COP) Direct Access RFM Core: Consolidation and Decentralization through Devolution

6. european capacity building initiativeecbi Funding versus Disbursement Disbursements to Designated (National) Funding Entities Funding is financing (incl. approval and evaluation) of activities such as projects, programmes) Disbursements are dependent on the disbursement criteria for each theme, as well as the thematic allocations (both approved by the COP on recommendation by the EB). They do NOT rely on evaluations of projects, plans or strategies. Disbursement Criteria Disbursement criteria will vary from theme to theme. For example Mitigation disbursements could be on a performance basis, with an flat per country component: x million + y million for the MRV reduction in the previous period Adaptation disbursements should be carried out by a very simple disbursement formula, e.g. a flat per country component + a component proportional to the number of poor inhabitants.

7. european capacity building initiativeecbi The bulk of the transactions in terms of size of the RFM is (ultimately) meant to be carried out through ‘money-in-money-out’ disbursements to designated (national) funding entities. However, there will still be a need for international funding in the more traditional sense, such as currently developed under the Adaptation Fund. For one, not all funding purposes lend themselves naturally to be devolved to the country level. While mitigation and adaptation per se would seem to be prime candidates for such a devolution, funding decisions for certain types of capacity building and technology transfer activities may be better kept at the international level. Even with respect to the other themes, there will for some time to be the need to retain a more traditional international funding capacity, for it may take some time before all countries will be able to participate in the devolved disbursement regime. RFM International Funding

8. european capacity building initiativeecbi UNFCCC COP Finance Board The LCA Draft Decision Climate Fund/Facility

9. european capacity building initiativeecbi RFM Administration International Level Legend: Governance Relation (‘under the authority of’) : ‘Contractual’ Relation (MOU or contract) : Oversight and governance/contractual: RFM Operating Entity Disbursement/Certification : International funding/Coordination: UNFCCC COP Funded Activities Designated Funding Entity Finance Board Funded Activities Operating Funding Entity I (Mitigation) Operating Funding Entity 2 (Adaptation) National Level Coordination or Consolidation: Potential for Compromise? Climate Fund/Facility Administrative Services, incl. Thematic Assessment Units

10. european capacity building initiativeecbi Thank you!