Adaptation Fund

The Adaptation Fund completed its two first sales of certified emission reductions (CERs). The first sale occurred during the third week of May 2009. 600,000 tons of CERs were sold at an average price of €12.17 per ton, totalling € 7.3 million. The second sale, which occurred during the second week of June 2009, comprised of 500,000 tons of CERs sold at an average price of € 11.46 per ton, totalling € 5.7 million. Barclays Capital was appointed as the dealer for the first sale and Bank of America Merrill Lynch for the second sale. The two sales raised a total amount of € 13 million (equivalent to US$ 18.4 millionⁱ). The end buyers of the CERs were widely diversified across sectors and regions and included corporate carbon off-setters as well as entities complying with the European Union Emissions Trading Scheme (EU ETS).

The Adaptation Fund, which is financed by a 2% levy on CDM proceeds, may offer some lessons on the effectiveness of carbon market levies as a method for generating revenue. Different projections have been made as to the amount of revenue the Adaptation Fund is likely to receive in the first Kyoto commitment period (2008-2012). According to the UNFCCC, World Bank and UNDP, the total proceeds from the 2% levy on CERs would be between US$ 80-300 million, US$ 100-500 million, and US$ 160-950 million per year, respectivelyⁱⁱ. These figures vary based on price and volume assumptions (for example, the UNFCCC figure assumes 2% of total annual sales of 300-450 million CERs and a market price of US$ 24ⁱⁱⁱ).

GEF Least Developed Countries Fund (LDCF) and Special Climate Change Fund (SCCF)

The LDCF/SCCF Council held its sixth meeting on June 24, 2009, and published the meeting documents at http://www.gefweb.org/interior.aspx?id=25480. The pledged contributions to the LDCF decreased US$ eq. 5.96 million (from US$ eq. 182.43 million as of October 2008 to US$ eq. 176.47 million as of May 2009). For full details on pledged and deposited amounts, visit the LDCF page.
The pledged contributions to the SCCF increased US$ eq. 14.49 million (from US$ eq. 106.57 million as of October 2008 to US$ eq. 121.07 million as of May 2009). For full details on pledged and deposited amounts, visit the SCCF page.

Climate Investment Funds (CIFs)

The CIF meetings were held in May 2009, with an SREP consultation meeting in Paris on April 29. The main outcomes were:


Since CIF is a pooled multi-donor trust fund managed by the World Bank, an international development institution recognized as such by the DAC for the purpose of ODA eligibility, these contributions can be scored as multilateral ODA. The outgoing use of all CIF resources as concessional loans, grants, and guarantees through the MDBs can be reported by each MDB as ODA if: (a) it meets the criterion of promoting economic development and welfare; b) the grant element is at least 25 percent; and c) funds are to be used in a country included in DAC list of ODA eligible countries.


As reported at the CTF meeting in May, the Fund has moved into implementation phase. The investment plans for Turkey, Egypt and Mexico have been signed and endorsed, and one project has been approved.  Further joint missions are underway.

• Funding commitments to the CTF: The total amount pledged by eight countries to the CTF is US$ eq. 4.7 billion as of April 15, 2009. Since the last meeting of the CTF Trust Fund Committee in January 2009, there have been no new pledged resources to the CTF. 

• While the US originally pledged $2 billion to the CTF under the Bush administration, the U.S. Congress and Senate did not approve this appropriation in the US FY2009 budget. The new administration under Obama has indicated that it wants to fulfil the commitment of $2 billion dollars, but have framed it as a commitment to the Clean Investment Funds as a whole, rather than to the CTF. The Obama administration has asked for $500 million towards the CTF and $100 million for the SCF in the US FY2010 budget. However, this is subject to authorization from the Senate and the House. As of August 2009, the Senate and the House have appropriated different amounts for the CIFs in the 2010 spending bill (the legislation is called ‘the Department of State, Foreign Operations, and Related Programs Appropriations Bill, 2010’):

• Pilot Program for Climate Resilience (PPCR): Pledged: US$ eq. 546 Mn. Deposited: US$ eq. 95.8 million. The total funds available to support PPCR Sub-Committe’s funding decisions amount to US$ eq. 90.9 million.
• Scaling Up of Renewable Energy Program (SREP): Pledged: USD eq. 107 million. Deposited: There has been a countersigned contribution agreement with the UK - 5 million GBP has been received, with an outstanding balance of 20 million GBP.
• Forest Investment Program (FIP): Pledged: As of April 15, 2009, Australia, Norway, and the United Kingdom have made pledges to the FIP, totalling $217 Mn. Deposited: UK has deposited 88 Mn GBP out of their pledged 100 Mn GPB as of April 2009. This equates to roughly $141 Mn.
• Unallocated within SCF: Japan has pledged USD 150 which is unallocated. Not yet deposited
• Other programs: UK has pledged a capital contribution of 450 million GBP. A countersigned contribution agreement has been made, with 65.5 million GBP received and 384.5 million GBP outstanding.
• Overall SCF Funding Decisions : The cumulative funding decisions made by the SCF Trust Fund Committee amount to about USD 5 million, of which USD 1.2 million represents the strategic plan preparation budget for the PPCR approved in November 2008.
• The representative from Denmark announced that Denmark will be contributing 130 million Danish krone to the SCF over a two year period. These resources will be contributed to the Pilot Program for Climate Resilience and the Forest Investment Program.

• 8 countries offered participation. Of those, Bangladesh, Bolivia, Nepal, Niger and Zambia submitted final acceptance of the offer; templates have been approved by sub-committee. Mozambique just submitted final acceptance. Waiting for final templates from Tajikistan and Cambodia. Expert group will make proposals for final countries to be involved in Caribbean and Pacific region pilot; proposal for a country in MENA to be included.
• 50-50 loan/grant composition of pot at the moment. Phase 1 activities will all be funded by grants. Loans will be available on request from recipient countries. A couple of countries mentioned loans and grants issue in their acceptance templates, but given PPCR timelines we don’t except countries to take decisions on the loan element until further into Phase 1.

 

UN-REDD Programme