Two weeks of climate talks in the former German capital, which are set to conclude on Friday, are seeking to make progress towards a new climate treaty, but discussions have been riven by divides between poor and industrialised countries.
Making good on international climate finance to help developing countries cope with a changing climate and more frequent extreme weather conditions is seen as key to building trust.
The non-binding Copenhagen Accord, agreed in December 2010, states that developed countries will provide "new and additional" funding, including $30 billion for the period 2010-2012, for mitigation and adaptation activities in developing countries.
The EU filled the room when it presented a report on its pledged "fast-start" funding of €2.4bn annually, which amounts to about a third of the collective commitment. It said it was on track to meeting its pledge, with confirmed sums from member states to date adding up to €2.39 billion for 2010 and €7.55bn for the entire 2010-2012 period, topping the EU's own commitment of €7.2bn.
Again, the EU neglected to reveal details of each member state's contribution, which came as no surprise after EU finance ministers last month endorsed a report that neither produced a breakdown of country pledges nor what areas the money would finance (EurActiv 19/05/10).
Moreover, questions were raised regarding the EU's silence over whether the money would come in addition to existing aid commitments. NGOs have been calling for all climate financing to come on top of rich countries' existing target to allocate 0.7% of their gross national product to development assistance.
Although the Copenhagen Accord states that the financing should be "new and additional," the EU has not adopted a common position on what the baseline for additionality should be, allowing each member state to come up with its own definition.
Quizzed by NGOs, representatives of the seven member states present at the event in Bonn, as well as the European Commission, came clean about what they regard as 'new and additional'.
The UK said the money was part of a rising overseas development aid budget, while Spain vaguely referred to "fresh money". Only Sweden and the Netherlands, which have already reached the 0.7% aid target, were talking about climate cash over and above that.
The Commission offered reassurances that funding would come from its budget reserves rather than money that had originally been programmed for 2010-2020.
The International Institute for Environment and Development (IIED) published a paper warning that the billions promised by industrialised countries would meaningless without a baseline from which to count the new funds.
"Funding from developed countries to help developing countries tackle climate change has the potential to re-build the lost trust between the two sets of countries - but only if it is done properly," said Saleemul Huq, senior follow in the climate change group at the IIED.
The paper suggested that a short-term solution could be to count climate aid as money above business-as-usual development assistance. In the longer term, however, only funding from 'new' sources like auctioning of emission allowances or international air transport levies could be counted as new and additional, it added.
Mitigation or adaptation?
The EU's presentation shed more light on what areas the pledged money will fund, saying that about two-thirds of the money so far allocated will go to mitigation and only one third to adaptation. The announcement triggered criticism that the EU was failing to honour the Copenhagen Accord, which calls for a balance between mitigation and adaptation.
"Every time we negotiate finance under the UNFCCC, it seems like the poorest countries are losing out. That's why this is so concerning that once again the tendency is to prioritise mitigation over adaptation, and therefore it's more likely that the more rapidly industrialising countries will benefit to a greater extent than the most vulnerable countries on Earth," said Tim Gore, Oxfam International's climate change policy advisor.
The European Commission stressed that about a third of this year's pledges are yet to be allocated. But there are no guarantees that the funding will be distributed to balance the equation.
