Major news from Bali climate conference: Victory for the vulnerable with decision on climate-change adaptation fund

Years of tense climate-change talks ended this week with victory for the most vulnerable countries, which won a key decision at the UN conference in Bali.

It means these nations will be represented fairly in a new body that funds efforts to adapt to climate change, and that this body will be under the authority of the Kyoto Protocol of the United Nations Framework Convention on Climate Change and not a US-based organisation.

The outcome represents a major victory for the countries that have contributed least to climate change but are set to suffer most from its impacts – the least developed countries, small island developing states and Africa.

The decision concerns the Kyoto Protocol's Adaptation Fund, which has been accumulating money for several years but which has not yet been activated because countries could not agree what body would administer it.

Until the decision, the only contender on the Bali agenda was the Global Environment Facility, a multilateral environmental funding agency based in Washington DC.

The developing countries opposed this as, among other reasons, they have struggled to obtain funding from the GEF before and because the GEF council is dominated by the United States – which has not ratified the Kyoto Protocol.

They also felt that the potential size of the fund meant it should have its own board and governance system.

The fund is unique and could, in time, be massive. Unlike foreign aid, it is generated through a 2% levy on transactions between companies under one of the Kyoto Protocol's flexible mechanism– the Clean Development Mechanism.

This means the funding automatically replenishes and does not depend on aid budgets. If, as some negotiators desire, the fund is expanded to include other flexible mechanisms under the Kyoto Protocol, it could soon be bringing in billions of dollars per year.

The few hundred million dollars of funding currently available for adaptation to climate change is a tiny fraction of the tens of billions that experts say will be needed to help the world's most vulnerable countries to adapt to the inevitable changes ahead.

As time ran out to negotiate how the fund should be run, however, it seemed certain it would be given to the GEF to run.

But some of the most vulnerable countries including Bangladesh, Tuvalu and the Maldives – held out, despite intense pressure from the GEF itself.

The decision means that the GEF will temporarily act as the Adaptation Fund's secretariat but that it will sit under the authority of the Conference of Parties to the Kyoto Protocol, which is based in Bonn, Germany, rather than being based in Washington DC.

The secretariat would report to a board composed of representatives of all major world regions with addition special seats for representatives of the Least Developed Countries and the Small Island Developing States - the countries most vulnerable to climate change. The GEF's status as secretariat will be reviewed after three years.

"This is a major victory," says Amjad Abdullah, lead negotiator for the Maldives and chair of the Least Developing Countries negotiating block, which gathers 49 nations.

"The African countries, small island states and least developed countries stuck together and fought for a dedicated secretariat with a representative governance board that has special places for the most vulnerable nations."

The decision will be passed to government ministers this week to be endorsed by ministers from the 175 countries that have ratified the Kyoto Protocol.

Notes to editors:

The Adaptation Fund was created under the Kyoto Protocol to support adaptation measures on the ground, particularly in very vulnerable countries. It is unique both in the way it is financed and in the potential scale of money generated. As such, we believe it will be best served with a 'stand-alone' operating entity and a decision-making format that genuinely guarantees the authority of the Protocol's Meeting of Parties over the Fund. This may mean a delay in setting up and running the Fund – but given the importance of getting its governance and management right, we feel this is an acceptable risk.

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Well over a billion people in 100 countries face a bleak future. In these, the nations most vulnerable to climate change, resilience has already been eroded by entrenched poverty, degraded or threatened environments and other problems. The harsher, more frequent natural disasters that are predicted could tip them over the edge into chronic famine or forced migration. Yet these are also the countries that have contributed least to climate change. It is vital that their voices and views be heard in the negotiations to determine the post-Kyoto climate regime. Equally importantly, the countries emitting the most greenhouse gases must redress the balance by establishing robust mitigation programmes.

Read more in this IIED 2-pager