Developing countries constrained by conflicting priorities

Developing countries continued to highlight developed countries’ responsibilities and articulate concerns that these would be shifted onto the private sector. For example, at COP- 17 in 2011, ‘Nigeria, Tanzania and Zambia warned against overreliance on the private sector’ for GCF funding (ENB-529), and at the AWG-LCA intercessional meeting before COP-18, Algeria, for the G-77/China, highlighted ‘public long-term finance’, and ‘many developing countries stressed that the role of the private sector in financing REDD+ cannot replace Annex I parties’ financing obligations, nor public funding’ (ENB-549). At COP-19, ‘Ecuador highlighted the need to ensure finance from parties, not only the private sector’ (ENB-592) and at ADP 2-5 (before COP-20), ‘Venezuela stressed that developed countries’ responsibility cannot be transferred to the private sector’ (ENB-598). At COP-20, the African Group ‘said that commitments should not shift responsibility from developed to developing countries, nor encourage private over public support’ (ENB-613) and ‘Brazil noted that including private sector involvement in the new agreement does not ensure climate finance’ (ENB- 617). In addition, some developing countries called for clarity on which sources developed countries proposed to use to fulfil their finance commitments: at COP-20, ‘Ethiopia called for clear communication by developed countries on the amount and sources of their finance commitments’ (ENB-616). Sometimes these concerns led to calls for clarity on provision of

public finance, such as at ADP 2-8 (before COP-21), when ‘China urged a clear road map with targets for public funding from developed countries and progressively scaled up finance’ (ENB-622).

Just as in previous rounds of negotiation, many developing countries also continued to express consistently their preference for prioritising public finance. At COP-17, ‘Malawi underlined the role of public finance’ (ENB-534), at AWG-LCA-15 (before COP-18), AOSIS ‘emphasized that small island developing States (SIDS) have high adaptation needs for which private sources of financing are not generally available’ (ENB-538). At COP-19, ‘many developing countries called for…public finance to be the main source of climate finance’ (ENB-587), and at ADP 2-6 (before COP-20), ‘the LMDCs said public finance should be the major source of climate finance’ (ENB-601) and ‘Algeria, China, Iran and India stressed public sources of finance, with China, Iran, Ecuador, Palau and Tanzania saying that private sector finance should be complementary’ (ENB-602). At COP-20, Egypt and Paraguay emphasised that ‘finance should come mainly from public sources’ (ENB-611), at ADP 2-9 (before COP-21), ‘India and Saudi Arabia, for the Arab Group, stressed public sources as the main source’ (ENB-637), and at ADP 2-10 (before COP-21), ‘AILAC underlined public funds as the primary source, supplemented with private and alternative sources’ (ENB-641). These calls were complemented by a letter sent in advance of COP-20 by 118 NGO groups from 37 countries, which urged UN Secretary-General Ban Ki-moon to ‘ensure that private finance is not counted as international climate finance’ (Friends of the Earth 2014).

At the same time as warning about shifting responsibilities and highlighting a preference for public finance, a wide range of developing countries and blocs continued to refer to the need for multiple finance sources. At AWG-LCA-15 (before COP-18), Guyana, ‘with many others’, ‘underscored that a variety of sources will be required to achieve the necessary scale of financing’ (ENB-541) and at the intercessional meeting between ADP 1 and COP-20, the African Group ‘said any future legal outcome should be a further articulation of commitments reflected in the Convention, such as…acceptance of all sources of finance’ (ENB-550), showing a key developing country bloc reinforcing the Convention’s openness. At ADP 2-2 (before COP-19), regarding REDD+ financing, Ghana stressed the need ‘for the GCF to catalyze [sic] finance from public and private sources’ and Guyana stressed that ‘payments need to come from a variety of sources’ (ENB-576), and then at COP- 19 the African Group called for ‘Annex I countries to leverage private-sector support’ (ENB- 588). Demonstrating the necessity that some developing countries saw in openness to all sources for maximising levels of climate finance, at COP-20, the African Group ‘called for discussing a strategic approach to finance, including addressing sources, predictability, adequacy and stability, and ways to deliver the necessary scale of finance needed to stay

below 2°C’ (ENB-611). Also at COP-20, ‘India called for greater creativity from developed countries to mobilize innovative sources of finance, such as pension funds’ (ENB-616). At ADP 2-8 (before COP-21), the LDCs called for ‘new sources of finance’ (ENB-622), at ADP 2- 9, ‘Mexico identified need for all sources’ (ENB-637), and at COP-21, the King of Cambodia called for ‘stimulating private investments in renewable energy and energy efficiency’ (ENB- 653).

It is clear that developing countries remained caught in a difficult position, as they had been throughout previous rounds of negotiations. Another NGO letter, this time from 112 groups to OECD finance ministers in 2015, stated that ‘private investment in climate- friendly activities is vital and efforts to increase the transparency of these financial flows are welcome. However, private finance should not be substituted for public funding or counted towards the $100 billion’ (Orenstein 2015). Trying to navigate the evolving landscape of climate finance with multiple sources and channels, while holding developed countries to account for their ethical obligation to provide funding, developing countries were constrained by the entrenched institutional rule structure that underpinned openness to all sources of finance throughout policy. A clear definition of climate finance based on ethical principles, backed up with standardised accounting procedures, could have given developing countries confidence that the UNFCCC system would hold developed countries to account, and provided a foundation from which to encourage private and innovative sources with less concern that responsibility would be shifted onto them and away from public finance. Instead, developing countries’ expectations within the UNFCCC have been shaped by the institutional structure so firmly reinforced by successive layers of policy, and developed countries’ failure to provide adequate climate finance and live up to their pledges. This left no solid footing for developing countries to pursue their twin aims within this policy area of stimulating as much finance as possible and ensuring developed countries meet their responsibilities.