1. european capacity building initiativeecbi 1 Finance and Adaptation Finance Reflections from the Oxford Fellowship Colloquium Oxford Seminar, 3-5 September 2008 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 2 Structure of Presentation Framing the Issue Features of the Funding Foreseen The Financial Gap/ Challenge Potential Sources of Funding Institutional Base/Governance Principals of the Financial Architecture Eligibility of Countries & Investments Definition of Adaptation Priorities

3. european capacity building initiativeecbi 3 Framing the Issue Commitments in UNFCCC (under Art 4) -4.3 ‘new and additional financial resources’ to meet agreed full incremental outlays of developing countries -4.4 ‘assistance to meet costs of adaptation’ -4.5 ‘promotion facilitation and financing of the transfer of, or access to,environmentally sound technologies and know-how -4.8 ‘funding in vulnerable dev countries’ -4.9 ‘funding for LDCs’

4. european capacity building initiativeecbi 4 Framing the Issue (cont’d) Foregoing commitments at the core of the balance under 4.7: Developing country performance under the convention only to the extent that developed countries deliver on their commitments. The overriding priority for developing countries social development and poverty reduction. The forgoing balance reflected in 1b(ii). Performance of developing countries MRVd to the extent supported by MRVd technology transfer, finance and capacity building (for both adaptation and mitigation) delivered by developed countries

5. european capacity building initiativeecbi 5 Features of the Funding Foreseen New and additional Adequate Predictable Incremental investment costs and incremental lifetime costs Difference between 11.5 and 4.7

6. european capacity building initiativeecbi 6 The financial gap/challenge Amounts required: tens of billions of $, amounts available so far millions thus gap is a 1000 times Challenge is to finance: –Adaptation –REDD –Technology Transfer –Capacity Building Carbon markets delivering a few billions for mitigation but future uncertain.

7. european capacity building initiativeecbi 7 Potential Sources of Funding Mandatory assessments, e.g. - China proposal - Mexico proposal Levies e.g. - 2% on CDM - IAPAL proposal - Maritime Voluntary e.g - LDCF - SCCF

8. european capacity building initiativeecbi 8 Possible principles for governance structure* Article 11.1 requires that financial architecture be: under the guidance of and accountable to Cop. In Nairobi it was decided that AF should in addition be under the authority of COP. Equitable and Balanced representation of all parties Transparent. One Country One Vote. Relevant representation Direct Access to funding through multiple verticals * see diagram

9. european capacity building initiativeecbi 9 Eligibility of Countries/Investments All developing country parties with emphasis on vulnerable and least developed Parties Differentiated criteria to match differing needs and vulnerabilities Incremental costs of mitigation and building capacity and institutional infrastructure Full costs of adaptation, low carbon technologies & NAPs/National Communications

10. european capacity building initiativeecbi 10 Definition of Adaptation Priorities Bottom up: from National Adaptation Plans and Programmes –Priority Sectors identified, e.g. Flood proofing –Drought proofing –Coastal management Regions –Coastal, semi arid, mountainous etc. Most vulnerable Countries; LDCs, SIDS Agriculture management etc.

11. european capacity building initiativeecbi 11 Diagram to be inserted here Towards to new financial architecture under the UNFCCC and its Protocol.

12. european capacity building initiativeecbi 12 Towards to new financial architecture under the UNFCCC and its Protocol