Name of Fund

The Kyoto Protocol Adaptation Fund

Date created

Date fund proposed: At the seventh session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC), held in Marrakech, Morocco, from October 29 to November 10, 2001 (COP7), the Parties agreed to the establishment of the Adaptation Fund.

Date fund made operational: The Fund has become operational in 2009.

Administrating organisation

Adaptation Fund Board (AFB) with World Bank as Trustee

Objectives

The Adaptation Fund has been established to finance adaptation projects and programmes in developing countries that are Parties to the Kyoto Protocol. The Fund is to be financed with a share of proceeds from clean development mechanism (CDM) project activities and receive funds from other sources. The share of proceeds amounts to 2% of certified emission reductions (CERs) issued for a CDM project activity.

The overall goal of all adaptation projects and programmes financed under the Fund will be to support concrete adaptation activities that reduce the adverse effects of climate change facing communities, countries, and sectors.

Donor contributions

Pledged and Deposited: 

As of January 2012, the total amount pledged to the Adaptation Fund, including CERs, is USD 273.87 million and the total amount deposited, including CERs, is USD 258.25 million.

The Adaptation Fund was originally comprised of two main funds: the Administrative Trust Fund and the Adaptation Fund Trust Fund.

1. Administrative Trust Fund:

The Administrative Trust Fund was set up to cover the administrative costs and expenses of the AF Board and the AF Secretariat. The fund was composed by donations from various countries, amounting to a total of USD 3.287 million, as shown in the table below. The table also shows which donors required their funds to be reimbursed:

For further information see the Financial Status of the 'Adaptation Fund trust Fund 30 September 2011'

Activities supported

Activities that will be supported by the adaptation fund include the following:

(a) Adaptation activities, where sufficient information is available to warrant such activities, in the areas of water resources management, land management, agriculture, health, infrastructure development, fragile ecosystems, including mountainous ecosystems, and integrated coastal zone management.

(b) Improving the monitoring of diseases and vectors affected by climate change, and
related forecasting and early-warning systems, and in this context improving disease control and prevention;

(c) Supporting capacity building, including institutional capacity, for preventive measures, planning, preparedness and management of disasters relating to climate change, including contingency planning, in particular, for droughts and floods in areas prone to extreme weather events;

(d) Strengthening existing and, where needed, establishing national and regional centres and information networks for rapid response to extreme weather events, utilizing information technology as much as possible.

Conditions and eligibility requirements

Eligible Parties to receive funding from the Adaptation Fund are understood as developing country Parties to the Kyoto Protocol that are particularly vulnerable to the adverse effects of climate change including low-lying and other small island countries, countries with low-lying coastal, arid and semi-arid areas or areas liable to floods, drought and desertification, and developing countries with fragile mountainous ecosystems.

Decisions on the allocation of resources of the Fund shall take into account the criteria outlined in the Strategic Priorities, Policies and Guidelines of the Adaptation Fund document, specifically:

(a) Level of vulnerability;

(b) Level of urgency and risks arising from delay;

(c) Ensuring access to the fund in a balanced and equitable manner;

(d) Lessons learned in project and programme design and implementation to be captured;

(e) Securing regional co-benefits to the extent possible, where applicable;

(f) Maximizing multi-sectoral or cross-sectoral benefits;

(g) Adaptive capacity to the adverse effects of climate change.

Funds disbursed to date

As of January 2012, the total amount approved is USD 123.94 million. Of this, USD 14.72 million is approved for administrative fees, which represents 12% of the total approved budget, with the remainder allocated to project implementation. The total amount disbursed to date is USD 30.13 million. Of this, USD 13.21 million has been disbursed to date for administrative fees, which represents 44% of the total amount disbursed.

Uptake and projects supported

A full list of projects approved and disbursed by the Adaptation Fund can be found here: http://www.climatefundsupdate.org/projects

Issues have been raised about the transparency of the project approval process (see 'Issues raised by public", below). In its 13th meeting, the AFB considered a draft guidance document produced to help put together project proposals "PROJECT LEVEL RESULTS FRAMEWORK AND BASELINE GUIDANCE DOCUMENT" 

In the same meeting, a draft "EVALUATION FRAMEWORK" was reviewed, for evaluating the implementation of projects funded.

Also at the 13th meeting of the Adaptation Trust Fund Board, the Board approved a cap of US $10 million for each country funded for support by the Adaptation Fund.

For information about NIEs and MIEs, including a summary of all such bodies approved by the AFB, see 'Nature of Recipient Country Involvement', below.

Proposed life of fund

Indefinite.

Further information

1. Adaptation Fund official website: http://adaptation-fund.org/

2. Adaptation site on the UNFCCC domain, containing all key decisions: http://unfccc.int/cooperation_and_support/financial_mechanism/adaptation_fund/items/3659.php

3. Draft Role and Responsibilities of the Adaptation Fund Board

4. Press release on Kyoto Protocol’s Adaptation Fund Board Inaugural Meeting: http://unfccc.int/files/press/releases/application/pdf/af_board_press_release.pdf

5. Financial Status of the Adaptation Fund Trust Fund as at 30 September 2011 

Decision-making structure for fund disbursement

Upon invitation from Parties, the Global Environment Facility (GEF) provides secretariat services to the AFB and the World Bank serves as trustee of the Adaptation Fund, both on an interim basis. Following the sixth meeting of the Parties to the Kyoto Protocol (CMP6) in December 2010, the World Bank's role as interim trusteee was extended for a further 3 years (to now terminate 3 months after CMP9). Also during CMP6, the German Government signed a Memorandum of Understanding confering legal recognition to the AFB in German law.

The Adaptation Fund Board is comprised of 16 members representing Parties to the Kyoto Protocol, taking into account fair and balanced representation among these groups as follows:

(a) Two representatives from each of the five United Nations regional groups;
(b) One representative of the Small Island Developing States;
(c) One representative of the Least Developed Country Parties;
(d) Two other representatives from the Parties included in Annex I to the Convention
(Annex I Parties);
(e) Two other representatives from the Parties not included in Annex I to the Convention (non-Annex I Parties).

The Adaptation Fund Board is established to supervise and manage the Adaptation Fund, under the authority and guidance of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol, and is fully accountable to the Conference of the Parties, which decides its overall policies in line with relevant decisions.

Decisions of the Adaptation Fund Board are taken by consensus.  If all efforts at reaching a consensus have been exhausted, and no agreement has been reached, decisions are then taken by a two-thirds majority of the members present at the meeting on the basis of one member, one vote.

At the 8th Adaptation Fund Board meeting, which took place on 16th-18th November 2009, the board has decided to accept the offer of Germany to confer legal capacity and to host the Board.

In addition to the acceptance of the German offer, the Adaptation Fund Board appointed an Accreditation Panel to review applications from developing countries and accredit their organizations for receiving and managing Adaptation Fund monies. Using such accredited National Implementing Entities makes the groundbreaking direct access feature of the Adaptation Fund operational.

The Adaptation Fund Board also established a Results Based Management and Evaluation framework to help ensure the coherence and quality of projects.

Consultations with non-government stakeholders

Level of consultation with civil society prior to the establishment of the fund is not known. In January 2011, the Adaptation Fund Board secretariat gave the opportunity to civil society representatives and other interested stakeholders to comment on five project proposals on its website.

How fund disbursement is reported

Unknown.

Issues raised by the public

At the Adaptation Fund Board's 12th meeting in December 2010, concerns were raised over the lack of transparency in project decisions (source: http://www.germanwatch.org/klima/afb2011-01r.pdf).

Fund shortage has also been an issue. In September 2010, Marcia Levaggi, manager of the Adaptation Fund’s board secretariat, told the press that the Fund had about $150 million - far short of the sum required, according to various estimates.

UNFCCC reckons that by 2030 poor countries would need $28-59 billion a year to adapt; the World Bank $20-100 billion; the European Union Commission $10-24 billion a year by 2020; and the African Group of climate change negotiators more than $67 billion a year by 2020.

Saleemul Huq, from IIED, has noted that while "money is available in the short term for initial projects", there could be bottlenecks “as more countries get their national implementing entities approved and submit project proposals". 

Source: http://irinnews.org/Report.aspx?ReportID=90571

Is donor funding considered part of official development assistance?

No.

The fund is not reliant on donor funding or overseas development assistance. The Fund will be financed from 2% of the Certified Emission Reductions (CERs) issued for projects of the Clean Development Mechanism (CDM) and with funds from other sources, including private donations.

Financial instrument/ delivery mechanism used (e.g. grant, loan)

Nature of recipient country involvement

Projects are expected to be country driven. They should be based on the needs, views and priorities of eligible Parties, taking into account, inter alia, national sustainable development strategies, poverty reduction strategies, national communications and national adaptation programmes of action.

The Adaptation Fund Board established under the Kyoto Protocol of the UN Climate Change Convention was assigned by the Conference of Parties to the Kyoto Protocol to develop modalities for countries to access financial resources from the Fund directly without having to involve Multilateral Implementing Entities (MIE). 

At the 7th Adaptation Fund Board meeting in September 2009, the board took important decisions to operationalize the Direct Access Modality, which allows recipient countries to have direct access to its funds through National Implementing Entities (NIE). The Adaptation Fund Board approved the creation of a standing Accreditation Panel to accredit the proposed National Implementing Entities (NIE) and Multilateral Implementing Entities (MIE); It also issued a call for experts to serve on the Panel and invited the Kyoto Protocol parties to submit nomination for National Implementing Entities (NIEs). 

These landmark decisions established a new modality and global institutional arrangement to provide finances for adaptation projects and programmes. Keeping in view that certain countries might need to enhance their institutional capacity to meet the requirements for accessing resources by the National Implementing Entities (NIE), the Board also decided to include an option for countries to access the fund's resources through international development agencies.

As of the 16th Board meeting in December 2011, the following NIEs have been approved by the AF Board:

As of the 16th Board meeting, the approved Multilateral Implementing Entities (MIEs) include the International Fund for Agricultural Development (IFAD), the Asian Development Bank (ADB), the United Nations Development Program (UNDP), the United Nations Environment Program (UNEP), the World Food Program (WFP), the World Meteorological Organization (WMO), the United Nations Educational Scientific and Cultural Organization (UNESCO), the World Bank (International Bank for Reconstruction and Development), the Inter-American Development Bank (IDB) and the African Development Bank (AfDB).

In general there has been very limited progress in terms of the number of NIEs that have been accredited and this has raised concerns amongst committee members that the Adaptation Fund is favouring multi-lateral organisations to serve as implementing entities. The board discussed whether there should be a limit to the amount of funding going to MIEs, for example 50% of the total funds available at the beginning of each board meeting to be allocated to MIEs, with the other 50% to be allocated to NIEs. No decision has yet been taken, but the trustee has the task to provide an update of the costs for all approved projects at every meeting.  

In the 13th AFB meeting, the possibility of issuing 'Conditional Accreditation' was discussed (excerpt from meeting report below).

Conditional accreditation

36. The Chair of the Accreditation Panel said that the Panel had taken note of the increasing difficulty to accredit NIEs and had therefore considered the use of conditional accreditation to facilitate that process. Although conditional accreditation is contained within the Terms of Reference of the Accreditation Panel, the issue had been brought before the Board as it raised concerns about the additional impact it would have on the secretariat and its resources, especially if the conditional accreditation entailed additional reporting requirements. The proposal by the AP was that if conditional accreditation was applied, it could be granted for the period of five years, but at any time during this period the IE can provide additional information that allows the deletion of the conditionality.

Overall consistency with the aid effectiveness agenda (i.e. the Paris Declaration)

One of the decisions regarding the AF (Decision 5/CMP.2), available at: http://unfccc.int/resource/docs/2006/cmp2/eng/10a01.pdf), outlines the guiding principles of the fund. These include equitable and balanced access to the fund; transparency and openness in the governance of the fund; accountability in management, operation and use of the funds; no duplication with other sources of funding; and efficiency and effectiveness in the management, operation and governance of the fund.

Furthermore, the AF Board has agreed that countries will decide their own priorities on how funding will be spent.