Landmark Decision in Bali on Adaptation Fund

A decision was reached yesterday, 11 December, at the UNFCC summit in Bali on the composition of the Adaptation Fund Board, which will become operational with the start of the Kyoto Protocol’s first commitment period in 2008. This follows DEFRA’s announcement yesterday that the UK will be contributing to a £3 million fund for a climate change adaptation study for developing countries, along with the Netherlands and the World Bank.

Following yesterday’s decision, the Adaptation Fund Board will be composed of 16 members coming from both developed and developing countries around the world. The Global Environment Facility and the World Bank have also been invited to act as secretariat and trustee, respectively.

Established in 2001, the Adaptation Fund aims to support “concrete” climate change adaptation projects and programmes in developing countries that are parties to the Kyoto Protocol. The Adaptation Fund is financed by a share of the Certified Emission Reduction credits (CERs) which are generated from the UNFCCC’s Clean Development Mechanism (CDM) projects. This share, which is currently set at 2% of the total number of CERs generated under the CDM until 2012, is levied by the CDM Executive Board and currently totals just under 2 million CERs according to the UNFCCC. Studies indicate that the value of this could be up to ~ USD 1 billion.

Many critics have argued that in its current state, the current carbon market was not developed enough to provide sufficient funding for the Adaptation Fund’s projects. However, yesterday’s decision has now provided the Fund with a clear management structure which should encourage investment in the National Adaption Programmes of Action and in funds being more readily available to support such projects.