Fast start finance: call for transparency and trust

Wanting Zhang

Fast start finance (FSF) is no doubt a popular topic in Cancun at COP16. During the first week of negotiations, the EU, Marshall Islands, US and UK all held side events to present their actions and positions on this issue. FSF was initiated in the Copenhagen Accord, where the developed countries collectively committed to provide new and additional financial support to developing countries amounting to USD 30 billion for the period between 2010 and 2012. The Accord explicitly states that funding for adaptation should be prioritized for the most vulnerable developing countries, such as the least developed countries (LDCs), small island developing states (SIDS), and Africa.

According to the reports issued by countries, the fulfillment of the commitment put forth by developed countries has been promising: in 2010, the EU has committed USD 2.9 billion (EUR 2.2 billion), including $886.5million (£568 million) from UK; the US has committed USD 1.3 billion Congressionally appropriated assistance and $400 million of development finance and export credit.

However, despite what the good-looking reports say about their commitments, a few key issues still remain in the shade. For example, when asked about how much of the US’s FSF is “new and additional,” the speaker was unwilling to provide much detail, and provided only diplomatic answers. Both developed countries and developing countries admit that “new and additional” is extremely hard to define. Similarly, there is debate over (1) whether FSF should be given through grants or loans; (2) through what channel the money should arrive to developing countries; and (3) how FSF should be allocated.

Given the complexity and limitation of time, it might be more practical and effective to put these controversial issues aside and focus on actually securing the funding SOON and ensuring that projects in their county are EFFECTIVE, especially for those countires that could not get sufficient support through other machanism.

The transparency of the delivery of FSF is essential to build trust among the countries and to foster coorporation on the continuing implementing of FSF in the next two years. Information sharing and disclosure need to be taken into consideration. There have been efforts to make the FSF transparent: the reports issued by the EU, the US, and Japan are a good start. Also, an online platform, “Climate Finance Options” launched collectively by the UNFCCC, UNDP, World Bank and GEF is a useful gateway to climate finance information. However, these efforts are not sufficient. Clearer guidence, more detailed reporting, and more effective communication is needed. In sum, for FSF to be a success, countries must deliver and spend their FSF funds with the greatest transparency as possible.