Bali climate talks find focus in fund for poor nations

With UN climate talks here so far largely deadlocked, an agreement this week to breathe new life into a fund to help poor countries cope with a warming climate is set to be the big breakthrough of the conference.
The issue of adapting to climate change, despite the conference's primary goal of preventing further climate change, has gained new prominence at the Bali talks. Protecting the neediest countries from the effects of a warming world has now become a central theme of the gathering.
"Climate change affects us all, but it does not affect us all equally," Ban Ki Moon, secretary general of the United Nations, said Wednesday to a room of newly arrived ministers and heads of state at the opening of high-level sessions. "Those who are least able to cope are being hit hardest. Those who have done the least to cause the problem bear the gravest consequences."
The meeting in Bali is part of negotiations on how to invigorate a faltering 1992 treaty, the Framework Convention on Climate Change, and to replace the Kyoto Protocol, a 1997 addendum that requires three dozen industrialized countries to cut greenhouse gas emissions below 1990 levels by 2012.
The adaptation fund, which is managed by the Global Environment Facility, an independent financial organization, was established in Kyoto in 1997, but had been criticized for being too difficult to access and for raising only paltry sums of money.
Under an agreement reached by delegates Tuesday, developing countries and other institutions will have direct access to the fund, which is expected to streamline the funding of crucial projects in the developing world. The fund will be overseen by a 16-member board of representatives from both rich and poor countries.
The adaptation fund is to be maintained using a 2 percent tax on transactions within the Clean Development Mechanism, under which rich nations receive carbon credits for investing in sustainable projects in developing countries. The aim of the fund is to help protect those most vulnerable to the adverse effects of climate change, like drought, flooding and severe storms.
"For the poor, this is clearly a recognition that participants here in Bali are serious about their concerns," said Monique Barbut, chief executive officer of the Global Environment Fund. "They can see that there has been a shift at the conference. It is not all about who is emitting, but it is also about the ones who are suffering from those emissions."
Indeed, in the past few years, negotiations over a global climate treaty have developed a dual focus - mitigating climate change and also adapting to it.
Some analysts, however, are skeptical about just how significant the establishment of the adaptation fund will be for the world's defense against environmental disasters associated with rising temperatures.
A recent United Nations Human Development Report detailed how the poor, especially along the equator, are the most vulnerable to climate hazards and lashed out at rich countries for not following through on their original financial commitments to help.
The report said that an additional 600 million people would be hungry, 200 million more displaced by floods and 400 million more exposed to diseases like malaria and dengue, if the world's temperature rises just two degrees Celsius.
Kevin Watkins, lead author of the report, said a lot of uncertainty remained about the level of actual resources that will be mobilized under the new agreement.
"This is not a final solution," he said on the sidelines of the Bali conference. "But we can see how the issue is starting to force its way up the climate change agenda."
Carbon trading is expected to become a $70 billion a year industry by the time the adaptation fund goes into effect in 2008. Still, garnering only 2 percent of that amount means it will fall well short of projected needs in the developing world. The Human Development Report called for $86 billion annually in new and additional financing for pro-poor adaptation.
Although not included in this week's agreement, the idea of extending the two percent tax to other financial mechanisms was discussed and could be included in later drafts. But until then, analysts hope that spending the money correctly will make up for not having enough. "It is not simply a question of additional money, it is using the money you already have in a smart way," said Hans Verlome, director of the Global Climate Change Program for WWF. "You will get more bang for your buck by investing in climate smart projects."