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The

Climate Finance Group for Latin America and the Caribbean


(Grupo de Financiamiento Climtico para Amrica Latina y el Caribe, GFLAC)1

Submission on the modalities for the accounting of financial resources provided and
mobilized through public interventions in accordance with article 9, paragraph 7 of the
Paris Agreement

The Climate Finance Group for Latin America and the Caribbean (GFLAC, in Spanish)
welcomes the invitation of the Subsidiary Body for Scientific and Technological Advice
(SBSTA) to submit proposals for the modalities for the accounting of financial resources
provided and mobilized through public interventions (Paragraph 57 of Decision 1/CP.21).

This document presents a proposal based on the empirical work conducted by GFLAC. The
Group has developed a methodology to track climate finance flows from the perspective of
recipient countries. The methodology covers both international finance flows received from
multilateral and bilateral sources and public finance allocations from national public budgets
to deal with climate change. The methodology which has been applied in nine countries in
Latin America where GFLAC has identified areas for improvement on the modalities for
accounting at the international and national levels, which will be presented in this
submission.

The present submission addresses eight areas: 1) the mandate, 2) the purpose, 3) the
principles, 4) existing methodologies, challenges and gaps, 5) elements that Parties should
take into consideration to create the adequate modalities for accounting climate finance,
challenges and ways to address them, 6) who has to use the modalities, 7) proposed
timeframe for the approval and implementation of the modalities, and 8) conclusions.

1.
The mandate: Paragraph 58 of the Decision document of the Paris Agreement
requests the Subsidiary Body for Scientific and Technological Advice to develop modalities
for the accounting of financial resources provided and mobilized though public interventions
in accordance with Article 9, paragraph 7 of the Agreement for consideration by the
Conference of the Parties at its twenty-fourth session (November 2018), with the view to
making a recommendation for consideration and adoption by the Conference of the Parties
serving as the meeting of the Parties to the Paris Agreement at is first session.

2.
The purpose: one of the main challenges for the climate finance agenda is the lack
of consensus among Parties regarding the definition of climate finance. The creation of
modalities for accounting climate finance, provided and mobilized, should be the basis for a
comprehensive and robust framework to measure, report and verify climate finance in the
context of the future transparency framework. Furthermore, it is important to differentiate

Elaborated by the following GFLAC members: Sandra Guzman (Coordinator), Tania Guillen, (Nicaragua), Andrea
Rodriguez, (Bolivia), Marcela Jaramillo, (Colombia), Nella Canales (Peru), Alejandra Sobenes (Guatemala), Yvette
Aguilar (El Salvador), Suyana Huamani (Peru), Natalie Unterstall (Brasil), Mariana Castillo, (Mexico), Beatriz
Olivera (Mexico). We thank the support of Guy Edwards (UK). Contact: sguzman@gflac.org, mcastillo@gflac.org

the existing mandates related to the creation of these modalities, in order to distinguish the
purposes that they should have:

For developed countries:

a) The developed country Parties and other developed Parties included in Annex II shall
provide new and additional financial resources to meet the agreed full costs
incurred by developing country Parties in complying with their obligations under
Article 12, paragraph 1 (UNFCCC, Article 4, paragraph 3).
b) In the context of meaningful mitigation actions and transparency on
implementation, developed countries commit to a goal of mobilizing jointly USD 100
billion dollars a year by 2020 to address the needs of developing countries (Cancun
agreement, paragraph 98).
c) Developed countries Parties shall provide transparent and consistent information on
support for developing country Parties provided and mobilized through public
interventions biennially (Article 9, paragraph 7, Paris Agreement).
d) Developed country Parties shall, and other parties that provide support should,
provide information on financial, technology transfer and capacity building support
provided to developing country Parties under Article 9, 10 and 11 (Article 13,
paragraph 9, Paris Agreement).

Questions to be answered:

1.
How to measure new and additional climate finance?
2.
What finance can be accounted towards the USD100 billions goal?
3.
What is the difference between the climate finance provided and climate
finance mobilized?

For developing countries:
e) Other Parties are encourage to do so (provide transparent and consistent
information on support for developing country Parties provided and mobilized
through public interventions biennially) (Article 9, paragraph 7, Paris Agreement)
f) Developing country Parties should provide information on financial, technology
transfer and capacity building supported needed and received under Articles 9, 10
and 11 (Article 13, paragraph 10, Paris Agreement)
g) Developing country Parties shall develop, adopt and implement national climate
strategies and plans, in order to take advantage of efficient access to financial
resources in institutions serving the Paris Agreement, through simplified approval
procedures and enhanced readiness support (Article 9, paragraph 9, Paris
Agreement).

Questions to be answered:
1.
Should the other Parties use the same modalities to provide information?
2.
How to account for the climate finance received in relation to the
information provided by developed countries?

All parties:
h) Making finance flows consistent with a pathway towards low greenhouse gas
emissions and climate- resilient development (Article 2, Paris Agreement)


Questions to be answered:
1. How could the accounting modalities support the evaluation (and recognition) of
progress towards this broader goal?
2. What is the relationship of this goal to the 100 billions goal?

Taking into account these multiple questions and existing mandates, we propose to use the
following modalities to guide all of these processes in the short, medium and long term. The
modalities should provide criteria to define what can be counted towards the USD100billion
commitment, providing guidance to both donors and recipients of finance and inform the
progress for the long-term goal defined in Article 2 of the Paris Agreement. The modalities
should also provide tools to differentiate new and additional finance from the traditional
ODA support, among other characteristics that will be discussed in the next sections.
Although this submission focuses on the mandate of article 9.7, we encourage Parties to
start building the bridges with the transparency framework established in the Article 13.


3. Principles: In order to comply with the purpose it is required to set and follow the
principles of completeness, transparency, coherence, consistency, comparability,
accuracy, efficiency, accountability and flexibility. These principles have already been
discussed in the climate finance agenda, however, they need further clarification and
precision to put them into practice:
a) Completeness: Include all information from different and relevant sources of
finance, including public, private, national and international.
b) Transparency and publicity: Ensure open and accessible information about financial
flows provided and mobilized. At the same time the principle encourage Parties and
other institutions to provide in a transparent way all the information about how
they are measuring and classifying the financial support provided and mobilized;
c) Coherence: Incorporation of financial flows that respond to climate change
objectives and avoid actions that exacerbate the problem (e.g. fossil fuel subsidies).
A tendency to increase the numbers in climate related activities and decrease
coherence of financial flows has been observed, for instance, the inclusion of fossil
fuel investments in coal and gas have been counted as activities to deal with climate
change. It does not matter if Parties report trillions of dollars of finance if the
evidence reveals that such contributions are not consistent with achieving the Paris
Agreements goals.
d) Consistency: Use methods that could be consistent over time to create benchmarks.
The methods to account climate finance could be re calculate in order to improve,
but it is important to start with a baseline. This principle seeks to prevent some
funding lines that eventually could counteract other funding lines goals (e.g.
funding mitigation outcomes that produce maladaptation)
e) Comparability: Generate estimations that could be comparable among Parties and
other institutions, to ensure that the numbers can be aggregated in an accurate
manner.
f) Accuracy: Ensure the provision of information that reflects real numbers to avoid
inaccurate estimations or double counting.
g) Effectiveness: Include climate finance flows that demonstrate their effectiveness
towards achieving the goals of the Paris Agreement. This is, ensure that the climate
finance flows accounted are reducing emissions and vulnerability and are increasing
resilience and enhancing adaptive capacity (Art. 7 Paris Agreement).

h) Accountability: The existence of a system to allow for the continued study and
evaluation of the information, which could support the creation and operation of
the modalities.
i) Flexibility: This principle is particularly useful for vulnerable countries, taking into
account its capabilities, this flexibility will be reflected in the modalities, procedures
and guidelines for monitoring, reporting and verification of finance.

In addition, the Paris Declaration on aid effectiveness to development, is an
international agreement that establishes global commitments from donor and recipient
countries to improve the delivery and management of aid in order to make it more
effective and transparent. The Paris Declaration is a roadmap to increase the impact of
development aid on key objectives.

The Paris Declaration outlines five key principles:
a) The appropriation of the implementation of aid by recipient countries: the
developing countries exercise effective leadership over their development
policies and strategies, and coordinate development actions;
b) Alignment of donor countries to the strategies of recipient countries: Donor
countries will base their aid in development strategies, institutions and
procedures of recipient countries;
c) Harmonization of the approach and actions among donor countries: donor
countries coordinate among themselves, simplify procedures and share
information to avoid duplication and lack of coordination.
d) The focus on results: donors and recipient countries focus aid on the results
themselves, which will be measured by established evaluation frameworks.
e) Mutual accountability: donor countries and developing countries commit
themselves mutually accountable about the results of development aid.
One of the most important components of the Paris declaration is the inclusion
of indicators and measurable goals to ensure the quality and effectiveness of
aid.

4. Existing methodologies, challenges and gaps:

GFLAC has identified a number of initiatives and actors that track climate finance while using
different methodologies. The most common methodologies used are those created by the
OCDE and the MDBs. As a result, this this submission also draws on them.

Entity
Type of methodologies
Gaps and challenges
UNFCCC
The UNFCCC has provided general There
are
inconsistent
and
guidance for the creation of insufficient modalities and guidance
instruments to be presented by to include information about climate
parties such as the National finance provided and mobilized, and
Communications, the Biennial it is left to the Parties discretion to
Reports, the Biennial Updated provide
such
information.
reports, and the intended national Consequently, estimations are often
determined contributions. In some inaccurate and lack of consistency.
of them parties are invited to
provide information about means
of implementation, such as finance
flows. However they do not provide

modalities for accounting climate


finance provided and mobilized.
OECD
(bilateral
cooperation)

The OECD has developed the Rio


Markers that aim to classify the
financial support provided to the
Conventions created in 1992
including the UNFCCC. Today many
donor countries which report to
the OECD information regarding
climate
finance
flows
for
adaptation and mitigation make
use of the Rio Markers. The Rio
Markers use a system to
differentiate climate principle
activities of those that are climate
significant. It has a positive list and
some criteria to characterize the
activities.

MDBs
(Multilateral
Development
Banks)

The MDBs have developed a join


report to track climate finance that
has established a methodology to
identify what component of the
projects they invest in are climate
related. The identification of
specific components could reduce
the risk of over estimating the
flows of climate finance. The MDBs
also have a positive list of actions
for the mitigation activities and
they developed criteria for the
identification of adaptation actions.

GLFAC

Uses a methodology to track


climate finance received from
national and international sources
as well as tracking climate finance
allocated
through
public
expenditure to deal with climate
change. It also included a positive
list base in international criteria
such as the OECD and MDBs. It also
incorporates a national component,
since it looks for information about

The Rio Markers are not used by all


Parties. Since it does not indicate how
to measure climate finance, countries
use the Rio Markers at their own
discretion ensuring there is little
consistency between how Parties
account for their respective activities
or instruments. This produces a lack
of consistency and incoherence in the
use of the Markers. In this regard the
estimations produced by the OECD
through the use of Rio Markers could
be inaccurate.


The positive list that the MDBs
provide also includes activities that
have high impacts on the climate
system and on the environment in
general, such as fossil fuel activities,
nuclear power, among others.
The method to identify the climate
component of the projects is not
clear, nor is it known to what extent
all the banks use the same method to
quantify such components. This could
be producing an overestimation of
the investments.
The MDBs receive important
contributions from bilateral donors;
the current system used by the MDBs
does not allow to differentiate those
bilateral contributions from the banks
own resources, creating a problem in
regards to double counting.
GFLACs methodology builds on the
work done by OECD and the MDBs,
which mean that also could have
gaps. But two key elements of the
methodology of GFLAC are:
The major gaps of the application of
the methodology are due the lack of
disaggregation
of
information
provided for donors and recipients.
Which makes very difficult to
estimate accurately the climate

what has been considered as


climate finance in each of the
countries analysed. This top down
and bottom up approach aims to
better characterize the climate
finance ecosystem.

components of the projects. In that


sense, the methodology includes
criteria to differentiate between
climate specific activities from climate
related activities.
Climate specific activities are those
that where created strictly to deal
with climate change including,
climate change policies, climate
change offices and institutions,
climate change laws, among others.
Climate related activities are those
that have certain relationship with
climate change but are not directly
created for that purpose. The
differentiation does not necessarily
ensure accurateness in the sums but
is still a way to reduce
overestimations.
Furthermore, GFLAC analysis shows
that around 70% of the financial
support provided to developing
countries is in form of loans, thus a
major challenge of the modalities is to
specify how to account for that; and
relationship
and
arrangements
between, donors and recipients to
repay the loans. The challenge is how
to count in an accurate way the
different type of instruments.


Key gaps: As part of the analysis done by GFLAC we have identified major gaps:

a) The modalities that exist do not provide a clear definition of what constitutes climate
finance.
b) Guidance is currently missing to accurately estimate the flows of climate finance.
c) There is not a clear definition about which financial instruments should be counted
as climate finance.
d) There is insufficient guidance in how to specify the level of detail of information that
has to be reported in regards to the climate finance provided and mobilized.
e) Lack of strength and coherence in national institutional frameworks, especially in the
case of the recipient country of aid.

Based on these gaps, GFLAC proposes the following elements to be considered in the
creation of the modalities to account for existing levels of climate finance.

5. Modalities for the accounting:

a) Climate finance definition (Climate specific and climate related): The modalities for
accounting have to be able to differentiate between what is climate finance and

what is climate related finance. The OECD uses two categories: principal and
significant. Climate specific actions are those that were created to deal with climate
change specifically and that they are additional to business- as- usual activities,
Climate related activities are those that have a relationship with the problem but
that were not created specifically to deal with it. These activities could be those that
are part of the business-as-usual scenario, but that have positive impact on tackling
the climate change. We propose the following criteria to differentiate climate
finance activities:

1. Climate specific / Climate labelled actions: Actions that were created
specifically to deal with climate change (e.g. climate policies, climate
institutions, climate laws, etc.). In the case of climate measures they should be
based either on impacts/emission studies and related adaptation/mitigation
potential analysis.
2. Climate related / Mitigation related actions: Actions that are related to the
reduction of emissions but that were not created to deal with climate change
specifically (e.g. energy efficiency).
3. Climate related / Adaptation related actions: Actions that are related to the
reduction of vulnerability of people and ecosystems, and increase their
resilience capacity to climate change but that were not created to deal with the
problem specifically (e.g. water sanitation, reduction of risk).
4. Climate related / Both impacts actions: Actions that have both components of
adaptation and mitigation.

Climate change is a problem that will intensify existing challenges such as poverty,
inequality, health provision and others. Therefore, the main difference between specific and
related climate finance activities can be determined as follows:
a) Specific: Activities that have the purpose of mainstreaming climate change specific
policies, institutions and regulations to deal with the problem through mitigation
and adaptation.
b) Related: Activities that have a benefit to the climate system in terms of reducing
emissions or enhancing the adaptive capacity and resilience of people and
ecosystems but were not created for that purpose.

c) Mitigation and adaptation related activities: The identification of climate related
activities is challenging. This is why it is important to have criteria to define which type
of activities are going to be considered as mitigation and what type of activities are
going to be considered as adaptation. Some institutions do that through a positive list,
which is useful to certain extent, but it is necessary to consider criteria to avoid the
inclusion of activities that could increase the problem such as clean coal or GMOs. A
criteria system that operates under the UNFCCC must include only the activities where
consensus exists. The rest of the activities where disagreement exists should not be
accounted for or should be accounted separately under the UNFCCC system.

d) Method to measure the financial flows: Parties have to make their contributions in a
common manner to avoid under or over estimations. The proposal is to create specific
measuring system where activities could be valued by their relationship with the
climate goals, considering if the relationship with the activity is high, medium or low
and then quantify accordingly, 100, 50, and 0. This is particularly relevant for activities
related to climate change, since activities created specifically to deal with climate

change should count as 100%. In the next chart we summarize this proposal,
considering the criteria of the point 5, a on the definition of climate finance.

Type of activity
How much it counts?
Climate specific / Climate labelled actions: Actions 100
that were created specifically do deal with
climate change (e.g. climate policies, climate
institutions, climate laws, etc.)
Climate related / Mitigation related actions: high, medium or low (100,
Actions that are related to the reduction of 50 or 0%)
emissions but that were not created to deal with
climate change specifically (e.g. energy
efficiency).
Climate related / Adaptation related actions: high, medium or low
Actions that are related to the reduction of (100, 50 or 0%)
vulnerability of people and ecosystems, and to
increase their resilience and enhance their
adaptive capacity to climate change but that
were not created to deal with the problem
specifically (e.g. water sanitation, reduction of
risk).
Climate related / Both impacts actions: Actions high, medium or low
that have both components of adaptation and (100, 50 or 0%)
mitigation.

The level of detail could vary between 100, 75, 50, 25 and 0% but in order to simplify the
system we propose the use of three dimensions, 100, 50 and 0%. This could be a complex
way to measure, but is a way to avoid over estimations that can jeopardize the goal of
establishing an accurate tracking system. The idea of the tracking process is to identify gaps
and opportunities of financial support. If countries count 100% of their activities that will
show that the financial needs are covered when it is not the case in practice.

e) Exclusion criteria: It is necessary to avoid activities that will increase the negative
impacts, not only in the climate system but the environment as a whole. Climate
finance should not count actions that are increasing the emissions of GHGs and other
gases that contribute to global warming, such as those generated by fossil fuel
production and resource exploitation. Or actions that have irreversible environmental
and social impacts, such as nuclear power, GMOs or large hydroelectric systems.

f) Type of instruments: Studies show (GFLAC, 2014, 2015, 2016)2 that an important part
of the climate finance provision is in form of loans, which is a debt for recipient
countries. In that context it is necessary to provide detailed information regarding the
type of instruments to be used and it is necessary to set a target for the provision of
grants and other type of instruments. Climate finance cannot be composed of 70% of
loans, since vulnerable countries cannot afford to service more loans to reduce the risks
of a problem not caused by them. Climate finance should aim to count for loans and
grants based in the capacity of recipient countries. For instance least development
countries could receive mainly grants (70/30), middle-income countries can receive
50/50 and major emerging economies can receive mainly loans (70/30).
2

GFLAC reports could be found in www.gflac.org


g) Financial cycle project Report: Donors have to account for climate finance taking into
considerations the cycle of the support, including clarity of the commitment and the
disbursement; as well as emphasizing who the recipient is and the actual executant of
the financial support. In the Annex 1 we propose some amendment to the Common
Tabular to report financial support provided.

h) Information at project level: Donors should provide information at the project level in
order to have as much detailed information as possible about the project. This will
facilitate the analysis of the effectiveness, which is critical for both recipient and
provider of the support. Provide detailed information is necessary to identify when a
project is climate related. In addition, the information should be organized in term of
countries, even though some projects could be regional.

i)

Intermediaries and administrative costs: Donors parties have to include information


about finance provided through intermediaries and the finance provided to cover
administrative costs. GFLAC studies show that the main difference in terms of
understanding between donors and recipients is related to the information included as
part of the administrative cost used by donors.

j)

Equitable support: Studies show that the distribution of climate finance support has
been inequitable among regions and countries. It is true that certain regions present
major problems and levels of vulnerability, but in Latin America for instance the
financial contribution is highly centralized in two countries such as Mexico and Brazil
with most of finance designated to mitigation activities not adaptation (ODI, 2015). The
provision of financial support therefore should be divided equitably among and within
regions to ensure a better attention of the problem. This should also encourage
recipient countries to prepare better national plans for the reception of support.


k) Recipients: climate finance should support not only the action of the governments but
also the action of other stakeholders and communities within countries. In that sense, it
is necessary that there is transparency regarding the final recipient of the support to
ensure a better accountability framework. The accounting modalities have to offer a
way to differentiate when the support goes to governments, civil society, private
sector, grassroots groups and others.

l)

Private finance: Since the objective of the Convention and the Paris Agreement is to
support the climate action of the countries, there is a debate about the role of private
sector as donors, particularly in regards to financial flows. The participation of the
private sector in the climate finance agenda is important, however their contributions
should only count if their work is directly related to mitigation efforts and climate
adaptation goals of the countries. Otherwise, contributions by the private sector should
not be accounted as part of the UNFCCC system but as an independent framework.


m) Climate finance and finance for development: Climate change has to be mainstreamed
in the development agenda, but not in the development cooperation (Gutpa, 2015). It is
needed that the donors separate what they provide as climate finance within the
traditional ODA and what represent additional flows. If donors will use the same
channel to transfer the support it is necessary to increase the amount of money,
beyond the 0.7%, since this number is not enough to cover both agendas.

Since climate change is the goal number 13 of the sustainable development goal, the
new climate finance goal to be set in 2025 has to consider both agendas. We propose
the creation of a Global climate finance and development committee to identify the
overlaps and the areas where both agendas could work in collaboration. The work done
by the OCDE is relevant and could serve as guidance, but this target has to be set under
the UN bodies.

6) How to ensure that accounting modalities are developed in time to be integrated into
the transparency framework established under the Paris Agreement?

1) Common modalities: In order to increase the understanding among parties and to promote
comparability, the development of common guidance to provide the information is required.
The level of detail could differ taking into consideration the principle of common but
differentiated responsibilities. Annex I and Annex II countries have to provide more
desegregated information, while Non-Annex I countries can provide at least basic, but
comparable information, as it shows in Annex 1, Table 1. This could be provided through the
use of consistent tabular formats. Based on that the Table 1 shows the amendment that we
propose to the existent CTF.

2) Common criteria in NC, BURs and INDCs: The modalities for accounting have to be
applicable for the different instruments that require financial information such as the
Biannual Updated Reports and the National Communications. It also has to be considered in
the tracking of financial contributions for the implementation of the NDCs. In future years,
these modalities have to be consistent with the Biannual Report done by the Standing
Committee on Finance.

3) Global MRV system: The modalities for accounting are the first step to build measuring,
reporting and verification systems for climate finance. The definition of common guidance
will allow countries to start talking the same language about what each actor considers as
climate finance; and then to provide a common ground with parties can adjust, but under
overseen by the UN system. Complete mutual understanding will take time, and the
modalities will improve over time, but its provision is a necessary starting point.

The information provided by different actors should be transferred to a global platform that
can concentrate and analyse the information based in the modalities provided to ensure the
coherence and comparability. The actual climate finance website, that the UNFCCC has
developed, could serve as a good starting point but it requires major investments to make the
tool more accessible and user friendly and link it to the principles of transparency and
publicity.

The major challenge is to ensure that the accounting modalities allow to track not only the
amount of financial support, but also and more importantly, the actual effects, impacts and
effectiveness of the financial support. It is crucial to ensure that the financial support is
contributing towards achieving the goal of the Convention and the objectives of the Paris
Agreement, in particular Article 2.(c).

The report on World Balance must be an instrument that feed back in time to the monitoring
and accounting and promote the necessary adjustments. Article 14 states that must be taken
into account relevant information provided by the parties on efforts related to climate
financing under the principle of equity and the available scientific information. It will also

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examine the adequacy and effectiveness of adaptation support. (Art. 7 paragraph 14) in
developing countries, especially those particularly vulnerable.

The information communicated must undergo technical review by experts. According to
decision 1, chapter 21. Each party will participate in a multilateral facilitator examination of
progress in its efforts. (Article 13, paragraph 11.)

The technical examination of experts shall be consideration of support provided by each
party concerned and in the implementation of its compliance with this contribution
determined nationally. The examination will pay special attention to the respective national
capacities and circumstances of the parties that are developing countries ... especially the
particularly vulnerable (article 12 paragraph 12).

4) Who has to use the modalities? So far the modalities for accounting have been targeting
the work of the Annex II countries. However countries have not been able to provide
information in a comparable and accurate way, producing double counting and in many
cases, overestimation of financial flows. This issue has to be tackle by improving the tools to
estimate and provide information from donors.

Successful guidance could work later for non- Annex I countries, since it is necessary the
participation of these countries to have the full picture about climate finance support
provided and received. The participation of these countries in the accounting process will
allow a better understanding of the climate finance landscape. Furthermore the Paris
Agreement, Article 9, has called for the provision of information of financial support
provided and mobilized by other parties referring to these non-Annex I countries. This is
also an opportunity to provide information about the effort that developing countries are
doing domestically to deal with climate change trough national interventions. For that
reason the modalities of accounting have to guide also the work of the non - Annex I
countries in the coming years as part of the broader transparency framework. The openness
of recipient countries does not have to be an obstacle to stop receiving financial support; in
the contrary it should be a way to attract more.

7) Timeline

In the next table we present a timeline for the discussion, approval and use of the modalities
taking into account the long-term goal.
Date

Action

a) SeptemberThe UNFCCC secretariat compile the proposals submitted and


October:
integrate a document with at least the next elements:
compilation
Mandate, Purpose, Principles, Criteria to define climate
under
the finance, Criteria to measure/estimate climate finance, Format
UNFCCC
to present information, Considerations of use for Annex I and
non Annex I, Conclusions.
b) October - Inputs The BA could provide recommendations to be integrated in
from the BA
the proposal
c) November
workshop

The document is discussed in the Workshop to produce a new


in version to be discussed in the first meeting after COP22.

11

COP22
d) COP22- Working During the COP22 countries agreed in the working plan
plan as result
e) SBSTA
Firsts SBSTA creates and discuss a draft to be presented and
meetings in 2017 approved in COP23

f)

COP23

g) BA 2018

Countries agree to start the implementation of the modalities


The new modalities are used for the creation of the biannual
assessment 2018 as a way to prove its effectiveness. At this
stage, the modalities are also shared with developing
countries in the context of the transparency framework to
propose its use.

h) Paris Agreement The modalities are used to build the transparency framework
implementation of the Paris Agreement, regarding climate finance.
i)

New
climate Based in the modalities and the climate finance tracking
finance
goal analysis, the new climate finance goal is set.
2025


8. Conclusions and key recommendations for creating effective modalities.

Effective modalities are those that allow Parties to speak the same language regarding what
climate finance is, to analyze the climate finance landscape and the opportunities to close
any information gaps.

The modalities should guide developed countries towards a more transparent framework to
ensure effective actions to deal with climate change, and at the same time the modalities
should encourage developing countries to do so too.

The accounting modalities for climate finance are an opportunity to increase trust among
Country Parties. Therefore, GFLAC concludes that the modalities for accounting should
comply with the following points in order to be effective:

Respond to the mandate established in the Article 9.7 of the Paris Agreement and be the
basis for the creation of a transparency framework, established in the Article 13 of the
Agreement. This is the first step to create a comprehensive system to measuring,
reporting and verifying climate finance.
Be based in principles of Completeness, Transparency and publicity, Coherence,
Consistency, Comparability, Accuracy, Effectiveness, Accountability and Flexibility. The
modalities also have to be based in the principles set in the Paris Declaration: the
appropriation of the implementation of aid by recipient countries, alignment of donor
countries to the strategies of recipient countries, harmonization of the approach and
actions among donor countries, the focus on results and mutual accountability.
Learn from the lessons of existent methodologies to create universal guidance to be use
by developed countries in an obligatory way and by developing countries according to
the common but differentiated responsibilities and capabilities principle. Guide
developing countries (other parties called in the Paris Agreement) not only as recipient
of financial flows in which case the modalities will give recipient countries the

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opportunity to say their truth about what is climate finance according to their realities
and necessities. Developing countries can also use the modalities as donors since southsouth cooperation is playing a major role in recent years. These modalities will provide
the opportunity to developing countries to show the efforts that is countries are doing
as well as the gaps that is necessary to count.
Define what activities will count as climate finance. Effective modalities will be able to
characterize the activities that are strictly created to deal with climate change of those
that are related to the problem but which purpose is not the climate change as such.
That should require a better definition of the relationship of those activities in order to
count them differently. Is not the same create a wind power farm than changing from
coal to gas, since the last activity is still based in fossil fuels that are carbon lock in the
economies.
Provide effective ways to measure climate finance in a more accurate way to avoid
under or overestimations. Studies done by OCDE and the Standing Committee on
Finance show that the amount of climate finance is increasing but the numbers are not
accurate due the lack of clear measuring systems.
Track the achievement of the 100 billions goal but also to support the establishment of a
long-term goal, particularly the one to be set in 2025.
Guide donor countries to the definition of what is climate finance in relation of the
traditional ODA, in order to comply with the new and additional requirement set under
the UNFCCC.
Define what type of instruments will be counted as climate finance. According to the
Cancun Agreement paragraph 98, developed countries compromised to mobilize jointly
100 billions per year by 2020. According to paragraph 99 sources may come from a
wide variety of sources, public, private, bilateral and multilateral, including alternative
sources. Nevertheless there is not clear definition of what type of activities will count it
as climate finance. Furthermore there is not clear definition about what type of
instrument should be use to mobilize this financial support.
Define what is the difference between climate finance provided and mobilized.
According to the Cancun Agreement the compromise to transfer 30 billions refer to
provided sources while when they refer to the 100 billions they referred to the
mobilization of financial support. There is an assumption that the first refers to the
direct developed countries provision while the second refers to all sorts of sources
public, private, bilateral and multilateral transferred to support the developing
countries. Since the Paris Agreement demands the provision of information from both
types of sources it is necessary to define what are the differences.
Provide guidance for the provision of detailed information. Recipient countries can
provide simplify information in comparison with the detailed information that
developed countries should provide, the goal is to show were the major gaps of
information are.
Be used in the different reporting systems such as National Communications, BURs, and
INDCs in order to harmonize the information about climate finance provided, mobilized
and received.
Provide clear guidance to avoid the inclusion of activities that could be harmful to the
society and the environment. The exclusion criteria is necessary to ensure an adequate
shifting the trillions process.
Be the base of a comprehensive measuring, reporting and verifying (MRV) system at the
international level.


GFLAC thanks this opportunity and as a network we want to provide support for the
effective design and implementation of these modalities.

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Annex 1.

Table 1. Proposal to amend the common tabular format for UNFCCC biennial reporting
guidelines for developed country parties vr. December 2012.3 Amendments in red
Name of the
project

Country

Region

Recipient

Impleme
ntation
entity

Total
amount

Total
amount

Government
,
civil
society,
private
sector

Name of
the entity

Climate
specific

Climate
related

DC:

USD

DC: USD

Additional
finance
/administra
tive cost
Yes/No
How much
or %

j)

Year
of
implement
ation

Status

Funding
source

Financial
instrument

Type of
support

Sector

Single or
multi-year

Provided,
committe
d,
pledged,
disbursed

ODA/
other

Grant,
Concession
al
loan,
Nonconcession
al
loan,
equity,
other

Mitigatio
n,
Adaptatio
n, Crosscutting,
Other

Energy
Transport,
Industry,
Agriculture,
Forestry,
Water
and
Sanitation,
Cross-cutting,
Other.

http://unfccc.int/resource/docs/2012/cop18/eng/l12.pdf

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