U.N. climate adaptation fund running out of cash

POZNAN, Poland (Reuters) - The U.N.’s main fund to help poor nations adapt to climate change is so short of cash it may not be able to hold meetings next year, the head of its board said on Saturday.

Richard Muyungi, a Tanzanian government official who chairs the Adaptation Fund Board, told Reuters on the sidelines of December 1-12 U.N. climate talks in Poznan that donors must stump up several million dollars urgently just to keep it running.

“We need money as soon as possible now, because we cannot even hold a meeting in March,” Muyungi said.

He called on rich countries to make larger donations to pay for poor nations to implement measures to cope with the impacts of global warming, including more droughts and floods, falling food production and rising seas.

The Adaptation Fund has yet to disburse any cash because the board has spent the past year working out legal and technical issues. Governments are trying to hammer out final details so concrete projects can start in 2009.

Negotiators at Poznan have also clashed over how to manage the fund’s resources, although Muyungi said he believed agreement could be reached by the end of next week.

The fund’s main source of finance will be a 2 percent levy on projects in the Clean Development Mechanism, a U.N. scheme that allows wealthy states to invest in clean energy projects in the developing world in return for offsetting carbon emissions.

“Adaptation is really becoming an issue now -- impacts are increasing, countries are becoming more vulnerable,” Muyungi said. The fund’s secretariat has not received all of an almost $4 million budget it is seeking to cover 2008 and half of 2009.

“Estimates say (the fund) will barely reach $900 million by 2012, but this is not enough in terms of the needs of countries for adaptation, so it’s high time for (governments) to put money in.”


The United Nations has said $86 billion per year will be needed by 2015 for poor countries to adapt to global warming, and aid groups are calling for at least $50 billion.

“It is my understanding that we cannot have $50 billion tomorrow, but we must put money in the fund consistent with developing countries’ needs,” Muyungi said.

Experts warned that failure to agree in Poznan to start launching projects could set back efforts to agree a new broad climate pact by the end of 2009 in Copenhagen to succeed the Kyoto Protocol.

“If that (launch) doesn’t go ahead, it will be very bad for the process toward (Copenhagen),” said Maria Netto Schneider, climate change policy adviser for the U.N. Development Program.

The main sticking points are whether the World Bank - the fund’s trustee - should be in charge of turning emissions credits into cash and how to monitor the process through which governments access the money.

These procedural issues are judged to be important because the fund is likely to serve as a model for other U.N. climate financing mechanisms. It has an innovative structure, including strong representation for developing nations.

Yvo de Boer, the U.N.’s top climate change official, said he was encouraged by recognition in Poznan that future climate adaptation funds should be governed in a democratic way.

“The largest group of countries - the developing countries - need to have the majority voice in how financial resources are spent,” he said.

Reporting by Megan Rowling, editing by Matthew Jones