EU admits double-counting climate finance and development aid

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SPECIAL REPORT / EU officials have admitted for the first time that member state donations to the developing world can simultaneously count towards meeting climate change obligations and development commitments, such as providing 0.7% of gross income for overseas aid.

The lines between EU-funded projects for development and climate mitigation and adaptation often overlap and ODA (overseas development aid) funding to, for instance, renewable energy projects can “clearly contribute to more than one objective,” an EU official told EurActiv, on condition of anonymity.

“It is totally normal that such amounts of money could be counted against ODA commitments, since their primary objective is to contribute to poverty alleviation and also partly or fully contribute to climate change objectives,” the official said.

In 2005, EU states pledged to meet the 0.7% spending target by 2015, after the UN Millennium Project said that such a sum, raised across the rich world, would allow the UN’s eight Millennium Development Goals (MDGs) to be met.

But Europe also pledged €7.2 billion of ‘fast start’ climate finance over the 2010-2012 period - a promise it over-delivered on by €100 million - and agreed to help raise the $100 billion a year needed for a global Green Climate Fund due to begin operating in 2020. A Commission working document says that the EU should pay a third of it.

But it now appears that some of the same monies may have been counted towards the meeting of both sets of targets at the same time.

The EU’s development commissioner, Andris Piebalgs, told EurActiv that “some of these resources [raised for the Green Climate Fund] fall into the ODA definition due to their concessional character.”

“I am not in favour of artificial boundaries between financing for different policy goals,” he added. “On the contrary, the available financing from all sources should be used in a way that allows reaching the various policy objectives with the same resources and sometimes through the same programmes.”

A synergy between development, sustainability, and the fight against climate change was needed, he said. By attempting to merge the Rio+20 agenda with the Millennium Development Goals after 2015, this is what international institutions hope to achieve.

Double-counting

But development NGOs say that if the same revenues from rich countries are counted twice in the process – for climate and development purposes – they should not be considered as ‘new’ or ‘additional’ to what would have happened anyway.

Lies Craeynest, a spokeswoman for Oxfam, said that the 0.7% aid commitment was made long before the huge costs of climate change – such as coastal erosion, soil degradation, storm damage, losses to agricultural production and decreases in food security – became apparent.  

“Using the same money to report in different fora that you’ve achieved different objectives is double-counting and unfair to developing countries,” she told EurActiv. “And it will not help them build confidence that we’re in here for a fair deal towards 2015,” she added.

Previous conclusions by the Council of the EU had appeared to point towards a demarcation of funds. The 29 October 2009 document said that: “In parallel with deliveries of climate financing all international parties should commit that such financing would not undermine or jeopardize the fight against poverty and continued progress towards the Millennium Development Goals.”

The Monterrey report

But four years of economic crisis and austerity since then have changed the equation. The EU’s 2013 Monterrey Aid Accountability report earlier this year found that, for the first time, climate finance in 2012 had been taken from existing aid funds. NGOs suspect that aid flows to health and education have been affected to some degree, though EU officials deny this.

The criteria for assessing the ‘additionality’ of monies given to 'Fast Start' financing “seems to have been met in 2010 and 2011, but may not have been met for 2012,” the EU report said.

But it noted the difficulties in getting an overview of total climate-related financial flows from the EU to the developing world, due to the lack of a comprehensive system to track private sector cash flows, or an agreed methodology for measuring government aid.

“There is a danger that we could use the ODA for environmental purposes,” said Eva Joly, the French Green MEP and chair of the European Parliament’s development committee. “You cannot solve the development problem by putting all your money into energy production for instance, because you still need to fund health, education and all the other objectives in the MDGs.”

In 2010, the World Bank estimated the cost of adapting to a world 2 degrees Celsius warmer than today by 2050 at between €54 and €78 billion a year, or between €2.2-€3.1 trillion for the whole period.

“There is however no guarantee that adaptation to a 4°C world would even be possible,” the Monterrey report said.

Positions: 

Alexandre Polack, a spokesman for the EU development commissioner, Andris Piebalgs, told EurActiv: "ODA funds have not been diverted from other priorities. ODA Funds can indeed contribute towards different objectives and serve different purposes at the same time. And such synergies are actually beneficial: a sustainable forest management project can contribute to climate change mitigation objectives, biodiversity conservation and poverty alleviation. Hence the tracking put in place by OECD/DAC through Rio-markers."

Timeline: 
  • 23 Sept 2013: UN Millennium Development Goal review summit opens in New York
  • 2015: Deadline for 0.7% aid target to be met
  • 2015: Deadline for Millennium Development Goals to be reached
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