Brussels European Council – Presidency Conclusions, October 2009

Sectors : Climate change - general, International partnerships and support for Pan-African institutions, Financial Institutions, markets, services and microfinance
Organisation : EU
Date made: 
2009
Level: 
Heads Of State
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Commitments in: Climate Change - Climate change - general

“ANNEX II

Guidelines for the EU position on international climate finance

1. The EU STRESSES that addressing climate change by building greenhouse gas efficient and climate resilient economies is in the mutual interest of all countries and will underpin sustainable development as well as energy security. Success will require strong commitments and efforts by all countries.

2. The EU REITERATES that all countries, except the least developed, should cover their fair share of the costs of tackling climate change. RECALLING the March 2009 Council conclusions, developed countries should demonstrate their leadership and commit to ambitious emission reductions and step up their current pledges. Developing countries, especially the economically more advanced, should commit to appropriate mitigation action, reflecting their common but differentiated responsibilities and respective capabilities.

Promoting additional efforts these commitments should be assisted by an effective and efficient international architecture for cooperation and appropriate support. International support should also assist adaptation to climate change.

Appropriate governance of climate finance
3. The EU RECALLS that the purpose of carbon market financing and international public support is to contribute to the objective of the Copenhagen agreement in full by ensuring effective and efficient mitigation and adaptation action in developing countries. This requires an effective and efficient institutional framework for governance which has to be developed at the forefront of financing. The overall basis for efforts should be comprehensive national strategies.

... 7. The EU STRESSES that international public finance should also assist adaptation to climate change in the developing countries especially for the poorest and the most vulnerable countries with limited national capabilities. Adaptation concerns should be effectively integrated with development strategies and national planning via country led processes and coordination. Financial support for adaptation would be based on these national strategies and plans. The international level should provide general guidance as well as analysis and sharing of good practices. Development cooperation and delivery of ODA-based investments should be fully consistent with the building of climate-resilient economies and all key players in development cooperation should as appropriate integrate climate concerns in their actions. Synergies in the implementation of international climate finance and other assistance in developing countries should be fully exploited, and implementation of international climate finance should respect agreed standards on aid effectiveness. The experience of existing institutions in delivering support to developing countries should be fully used. Reporting on progress on adaptation should also be country led via improved National Communications.

Covering incremental cost and private financing
8. The EU UNDERLINES that available financial support should be scaled up over time in line with absorptive capacity, the overall scale of efforts and the development and implementation of the effective framework for governance. Developing countries’ own efforts should increase with their level of development, also reflecting available mitigation potential. Mitigation support will be delivered against specific action anchored in an ambitious overall strategy of the recipient country.

9. The Commission estimate of mitigation financing requirements assumes implementation of the most cost efficient measures. The EU STRESSES that choosing measures other than the most cost efficient should not reduce the ambition of mitigation efforts and the extra costs entailed should be borne by the authorities making such choices. All developing countries are expected over the medium term to implement such own efforts mitigation action that deliver direct economic benefits and directly assist sustainable development, including by removing fossil fuel subsidies and other incentives to select overly emission-intensive patterns of production and consumption. Support for capacity building to facilitate such policy changes may be necessary.

10. All countries will have to generate private financing by pursuing appropriate policies that drive inter alia incentives for investment. In this context, the EU RECOGNISES the importance of well-functioning financial markets and an appropriate business environment in developing countries in enabling lending for low-carbon investments and ACKNOWLEDGES that lending from international institutions can also play a catalysing role.

11. Private financing will also be stimulated by developing a broad and liquid carbon market based on robust cap-and-trade systems in developed countries, a reformed CDM and sectoral crediting and trading mechanisms for action in developing countries.

12. The EU ACKNOWLEDGES that development and delivery of a robust carbon market relies on the ambition of mitigation targets and respective emission reduction paths in developed countries.

International public finance over the medium term
13. Financing through the carbon market should be monitored and recognised separately and cannot be counted towards fulfilment of commitments to public financial support, except for procurement of offset credits that are not used for compliance with quantified emission targets.

14. A global distribution key would increase the overall amount of financing raised including by ensuring trust in the fair distribution of financing, and it would increase global ownership and take into account developments in the world economy. At the same time it would ensure more stable levels of support and a benchmark against which financing deliveries can be verified. Developing countries would be net beneficiaries with magnitudes depending inter alia on their capabilities and mitigation potential.

15. Countries should finance their contributions based on national priorities and in accordance with budgetary frameworks and national budgetary principles. Countries may want to consider the use of revenues from specific sources. Revenues from specific sources should be recognised as contributions under the global distribution key to the extent such contributions unambiguously can be referred back to a country of origin.

16. Robust MRV for mitigation and monitoring and review for adaptation and regular review should enhance compliance with international financing commitments.

17. Contributions from global sources could complement other public finance contributions and could be directed through global accounts. Financing flows through global accounts should be channelled through existing institutions to implement support, maximise synergies and limit administrative costs. Such financing could focus on closing gaps in international financing.

18. To maximise global mitigation efforts and a level playing field vis-à-vis other emission sources the EU STRESSES there is a strong need for appropriate global regulation of otherwise unregulated emissions from international aviation and maritime transport. The International Civil Aviation Organisation (ICAO) and International Maritime Organisation (IMO) respectively are the appropriate forums to develop global frameworks, based on global sectoral targets set by UNFCCC, which should provide a flag-neutral, un-distortive coverage of each sector to avoid carbon-leakage, while building on market-based measures and observing national fiscal responsibilities. Moreover, to reflect different circumstances and respective capabilities, part of potential revenues could be directed to the benefit of climate change purposes in developing countries.

19. A comprehensive set of statistics for climate financing and support should be established, preferably by building on existing reporting mechanisms such as the OECD-DAC system for monitoring financial flows to developing countries, including ODA, based on proper engagement of developing countries. The statistics should be fully consistent and transparent and thus able to assist identifying any risk to poverty reduction efforts and efforts towards the Millennium Development Goals.
 

Scope: 
International