Rich countries will raid existing aid budgets, double-count promises and convert grants to loans to avoid paying the $30bn (£21bn) they pledged last year to poor countries to help them adapt immediately to the climate change they did not cause, a leading international watchdog group has warned.

In a new paper, the London-based International Institute for Environment and Development (IIED) says the mistrust which has built up between rich and poor countries over money for climate change now threatens to undermine the UN talks and must be resolved quickly. The negotiations resumed in Bonn this week.

Rich countries have promised a ‘fast start’ package of $30bn in ‘new and additional funds’ to be delivered by 2012, with the expectation of a further $100bn a year from 2020.

But, say the paper’s authors, the pledge was made in the non-binding deal that came out of the contested Copenhagen summit last December, and it is impossible to accurately count how much they are planning to give in new money because there are no agreed baselines to measure it by.

The authors call for a UN-based system to define baselines and monitor pledges and payments. They say this must happen if developed nations are to regain the trust of developing nations that is essential for a global climate deal.

‘Funding from developed countries to help developing countries tackle climate change has the potential to rebuild the lost trust between the two sets of countries – but only if it is done properly,’ said Saleemul Huq, lead climate officer at the IIED.

‘When is a promise not a promise? When there’s no specified baseline that would allow anyone to know if the promise has been fulfilled,’ said co-author J Timmons Roberts, director of the Centre for Environmental Studies at Brown University.

Least developed countries today said they feared that the fast start money would never materialise.

‘The money is in a bubble. It will never be on the ground, that is my hunch,’ said Quamrul Chowdhury, principal negotiator for the G77 block of 132 developing countries.

Collin Beck, vice chair of the Alliance of Small Island States (Aosis), said: ‘We still do not know where the money is. We need to see it. Our people need to touch it. It remains in the air.’

The EU, which is expected to provide up to €7.5bn (£6.2bn) of the collective money, said today that it was on track to meet its pledges though it is weathering a recession.

It confirmed that member states had agreed €2.39bn for 2010 and €7.5bn for the entire 2010-2012 period.

But the EU has refused to reveal details of each member state’s contribution, and insisted that the money pledged would be ‘fresh’ rather than ‘new and additional’.

Critics say that the language does not exclude previously committed development aid from being double-counted as climate finance.

Antonio Hill, Oxfam’s senior policy adviser, said: ‘At a time of economic emergency, when several poor countries are slashing critical health and education budgets to avoid a debt crisis, rich countries are considering saddling them with climate debt for a situation they did not cause and are worst affected by.’

But EU ambassador Laurent Graffe said: ‘The money is on track. We are liaising with developing countries. It is fully underway.’


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