Tiempo Climate Cyberlibrary

Adaptation to climate change featured very prominently on the agenda of the United Nations climate change conference held in Bali in December 2007. In terms of the rhetoric of the Parties, it has reached an equal footing with mitigation. The Bali conference ended with the adoption of the so-called Bali Roadmap with its key document, the Bali Action Plan, which outlines the negotiation framework for the adoption of a new global post-2012 climate treaty, hopefully by no later than 2009. The negotiation structure has developed into four so-called Building Blocks: Mitigation; Adaptation; Technologies; and Finance. A fifth part seeks agreement on a "shared vision on long-term co-operative action".

This article analyses the key implications of the agreement made in Bali with regard to the adaptation challenge in developing countries, and the key questions that arose from the negotiations. It is based on a recent paper published by Germanwatch (0.5Mb download), which will also provide input to the negotiations on the work programme of the Ad Hoc Working Group on Long-term Co-operative Action whose task is to structure the negotiations until the 2009 climate negotiations in Copenhagen.

Tipping elements in the climate system and a long-term mitigation vision

Both adaptation and mitigation are inextricably linked: if global greenhouse gas emissions are not reduced drastically with the objective to limit global warming to below 2 degrees Celsius above pre-industrial levels, many countries' adaptive capacities will be strained. The probability of triggering large-scale risks in the climate system, the so-called tipping elements, increases dramatically beyond this temperature threshold.

Policy-relevant tipping elements, such as the dieback of the Amazon forest, the collapse of the Greenland and the West-Antarctic ice sheets or the chaotic multistability of the Indian Monsoon, will have impacts at least on a sub-continental scale and, if triggered, will irreversibly affect the livelihoods and development prospects of millions of people. Their policy-relevance comes from the fact that these tipping elements could emerge as "consequences of decisions enacted within this century that trigger a qualitative change within this millennium," according to Tim Lenton and colleagues writing in the Proceedings of the National Academy of Sciences. These large-scale risks, therefore, increasingly enter the policy debate.

Several Parties to the United Nations Framework Convention on Climate Change (UNFCCC) highlighted the threat arising from these tipping elements in their submissions on the work programme of the Ad-hoc Working Group on Long-term Co-operative Action under the Convention (AWG-LCA), in particular, Small Island Developing States (SIDS) such as Mauritius and the Maldives on behalf of the Least Developed Countries (LDCs). It is against this background that urgent action on mitigation is needed to ensure that the adaptive capacity of millions, if not billions of people, will not be strained by too rapid changes in the climate system.

Whatever the urgency with which emissions reduction is addressed, short-term impacts of climate change can no longer be avoided. Immediate adaptation is a pressing necessity rather than a voluntary choice in many developing countries. The negotiations over a post-2012 treaty will provide the major international framework to support adaptation activities in developing countries. Although the key purpose of the Bali Action Plan is to agree on a post-2012 framework, ensuring a smooth and immediate extension of international climate policies after the first commitment period of the Kyoto Protocol ends, the Action Plan addresses international climate change policy "now, up to, and beyond 2012". In particular, in the case of adaptation, many countries have underlined the need for immediate action and international support.

Building Block Adaptation: how to define priorities for streamlining action?

The language of the Bali Action Plan on the Building Block Adaptation (paragraph 1c) contains a very broad definition of the issue, which has to be further contextualized to meet the varying needs of different nations. Only thus could the Bali Action Plan be effectively implemented. Future adaptation actions need to focus on those developing countries particularly vulnerable to climate change, as defined in the Plan. There are, however, other countries which view themselves as very vulnerable, such as Egypt and Venezuela due to their low-lying delta regions. Being viewed as vulnerable will very likely lead to increased opportunities to receive adaptation funding. Thus, there exists the need for a more specific definition of vulnerability, and of the policy benefits attendant thereto such as preferential access to adaptation funds. Solutions such as developing indices are being proposed by some countries in their submissions to the work programme.

The role of the Convention in relation to its scope and its limitations in supporting effective adaptation has to be clarified, since it alone cannot do everything, and inefficient duplication of activities is not desirable given constrained resources. Effective co-ordination with other initiatives and organizations relevant to the related processes of vulnerability reduction and adaptation is absolutely necessary, be it with United Nations conventions, the World Bank, the Global Environment Facility or any other. The particular relevance of the Millennium Development Goals agenda (including Financing for Development) and the International Strategy for Disaster Reduction is worth noting.

Building block Finance: generating the means to cover huge additional costs

One key negotiation issue raised by the Bali Action Plan is the need for "improved access to adequate, predictable and sustainable financial resources and financial and technical support, and the provision of new and additional resources" (paragraph 1e)i). Numerous estimates of the costs of adaptation to climate change in developing countries undertaken by well-known organizations have shown that the scale of costs is much higher than the adaptation financing provided thus far, despite scientific uncertainties. While the costs may amount annually to US$50 billion or more within the next two decades (see table below), present financing available through international mechanisms like UNFCCC funds and official development assistance is less than US$400 million. The Adaptation Fund under the Kyoto Protocol, which will be financed by a levy on emission reductions under the Clean Development Mechanism (CDM) and has been operationalized in Bali, will have some US$150 to 900 million available by 2012, according to recent estimates. It is no exaggeration to speak of an "adaptation financing rift".

Estimates of adaptation costs in developing countries

Source	Annual cost estimate
Oxfam	At least US$50 billion
UNDP	US$86 billion by 2015
UNFCCC	US$28-67 billion by 2030

Combined with means to incentivize mitigation in developing countries (including curtailing deforestation), there is a need to channel funding to developing countries perhaps of the order of some 0.5 per cent of the developed countries' GDP, according to China's estimate in its submission on the AWG-LCA work programme. This would amount to some US$175 billion annually.

Present funding is not sufficiently reliable since it primarily relies on voluntary contributions by Annex-I countries. Filling up this adaptation financing rift will be crucial if an equitable climate change agreement is to be reached that addresses the situation of those affected by the adverse consequences of climate change. A number of financing instruments are being discussed, such as the auctioning of emission allowances in existing emission trading schemes or in sectors presently not covered by the Kyoto Protocol (such as international aviation and maritime transport), levies in these sectors, and the extension of the Adaptation Fund levy of the Clean Development Mechanism to other flexible mechanisms under the Kyoto Protocol. In sum, these instruments would have the potential to generate financing in the order of tens of billions of dollars and could meet the estimated costs of adaptation in developing countries. However, at this stage of the negotiations, it is not foreseeable which if any of these instruments may be eventually implemented. The Parties' submissions give only limited concrete indications of which instruments are preferred.

The extension of the Adaptation Fund levy to the other flexible mechanisms - Joint Implementation and emission trading - seems to be the most likely option at the moment. Pakistan suggests increasing the Adaptation Fund levy on the CDM from the present 2 per cent to 3-5 per cent. Norway suggests holding back a certain share of Annex-I national emission budgets and auctioning the certificates in order to generate financing for adaptation or other purposes. The European Union (EU), as part of the review of the EU Emission Trading Scheme, has seriously discussed taking a certain share (20 per cent) of the auctioning revenues for international climate change activities, in particular, for adaptation. This was the proposal of the European Commission presented on January 23rd 2008, and in the mid-term it could generate some 10 billion Euros annually. The EU submission on the AWG-LCA work programme does not, however, mention this approach, perhaps because many national finance ministers are reluctant to accept the Commission's idea of obliging Member States to use part of the revenues for this purpose. Fundamentally, Member States want to conserve in full their budget sovereignty.

There is no doubt that, based on the principle of common but differentiated responsibilities, developed countries will have to bear a large share of the investments needed for adaptation in developing countries. How the share will be distributed to countries according to their capabilities and historic responsibilities for anthropogenic climate change remains a point of debate in different burden sharing concepts. This must be seen against the background of the instruments being discussed, some of which could also generate financing independent of national budgets and thus can hardly be accounted as fulfilling a certain nation's responsibility. One could also argue that some developing countries need to be expected to contribute to international adaptation financing, since an increasing share of their population is becoming part of the global consumer class.

Closely related to the question of the Parties' financial contribution is the clarification of what "additional resources" are supposed to be. Since many adaptation activities can hardly be distinguished from "classical" development work, adaptation financing is mostly calculated into Official Development Assistance (ODA). But isn't this a diversion of urgently needed resources for fighting poverty to cover climate costs for which many developing countries have no responsibility? The term "additionality" is not further defined in the Bali Action Plan. It could be additional to existing adaptation financing or to existing ODA. Many non-governmental organizations call for adaptation financing additional to the developed countries' current commitment of 0.7 per cent of their Gross National Income for ODA. However, those countries which are struggling hard to reach this target, such as Germany, welcome the instruments discussed in the adaptation financing context to fill up the gap to 0.7 per cent. Those Parties that address the issue of additionality in their submissions - for example, China - define it as additional to ODA (not ODA commitments).

Even if the necessary means were to be generated, there is still the question of decision-making structures and priorities for spending the money. The Adaptation Fund decision-making structure, agreed on in Bali, gives much weight to the developing world and has to be judged as one of the most democratic international decision-making structures. But there is still uncertainty as to whether the Adaptation Fund will be the primary channel to finance adaptation in developing countries or if, for example, developed countries will choose to bypass this new structure and instead favour donor-dominated structures such as the World Bank. The recent discussions about the proposed World Bank Climate Investment Funds raised this concern.

Finally, the following question must be raised: how will communities most affected by climate change be prioritized in a regime overwhelmingly negotiated among governments that often marginalize the poor. Increasing their adaptive, but also absorptive capacity, remains an important challenge. "Vulnerable communities" do not appear in the Bali Action Plan, but adaptation for them has to be delivered. This can be done through national adaptation strategies, but the question is whether a post-2012 agreement will set any incentives, or regulations, to make developing countries' governments focus on those most vulnerable to climate change. There is good reason to claim this focus from a human rights-based perspective.

Building Block Technologies

The dissemination of technologies relevant for adaptation is hampered by barriers related to resource constraints and scientific and technical aspects. Improving the identification of technology needs and the effectiveness of technology, as well as tools and methods to assess the quality of technological co-operation, are important issues to support technology implementation for adaptation, which will be on the post-Bali agenda. In addition to the Bali Roadmap, some more relevant decisions were being taken in Bali, like the extension of the mandate of the Least Developed Countries Expert Group, a new five-year mandate for the Expert Group on Technology Transfer and, last but not least, the operationalization of the Adaptation Fund under the Kyoto Protocol.

Bangkok and beyond

The Bali Roadmap is only a framework for the negotiations until the Copenhagen Conference of the Parties to the Framework Convetion on Climate Change in December 2009, and thus most of the questions raised have not been answered by the Bali outcomes. A first step for the concretization of answers to these questions will be the Bangkok Climate Change Talks in early April 2008, which have the objective of agreeing on a work programme among Parties regarding how, when and in which sequence the numerous issues are to be negotiated. Different suggestions are being made for submissions and in-session workshops.

For example, with regard to adaptation, Climate Action Network International in its submission suggests proposals and in-session workshops on:

• the adaptation strategies only broadly defined in the Bali Action Plan;
• how adaptation by the most vulnerable groups of the population, in particular, can be most effectively supported;
• potential pilot projects for risk sharing and risk transfer mechanisms (including insurance) for adaptation; and,
• innovative financing instruments that could deliver the magnitude of finance required, including the provision of new and additional resources and funding for adaptation in the particularly vulnerable parties.

Such submissions are important tools to clarify open questions and reveal the Parties' positions.

From a strategic point of view, it is important that there is a sound potential for building new alliances between certain countries. For example, limiting global warming to 2 degrees Celsius above pre-industrial levels (or even below that threshold) is a vision shared by the EU and Norway, but also by the LDCs and the SIDS. Looking at the financing instruments being discussed, most of them are linked to mitigating emissions in one way or the other. This indicates that the scale of financing generated will - at least to an important extent - depend on how deep emission cuts will be in developed countries. But it is also very likely that the Annex I countries emission reductions offered will be much higher if emerging economies engage in serious decarbonization, which is undoubtedly needed in order to stay below 2 degrees Celsius. Thus, the LDCs and SIDS, which are negotiating jointly with the emerging economies in the G77/China block, should also have a clear interest in urging these emerging economies to intensify their efforts to combine development policies with accelerated decarbonization. All these aspects will impact on the extent to which a post-2012 agreement will be able to support developing countries' adaptation efforts.

Bangkok will not give answers to these questions, but rather concretize the structure of the upcoming negotiations. This is not a trivial task, and views on how to start with the work seem to differ. For example, the proposed negotiating schedule of the EU suggests parallel negotiations on all the building blocks, which might make sense since all the issues are closely connected. It is also worth, in thinking about the structure, considering the suggestion of Michael Zammit Cutajar, who was elected in Bali as one of the two chairs of the AWG-LCA: "It is better to put adaptation first. All countries have to adapt; this is the message unifying us against our common threat. We cannot save the biosphere in its present form, too much change is already built into the system - an estimated +0.7 degrees Celsius over pre-industrial levels so far, and as much another +1 degree Celsius to come. (The EU has supported a +2 degrees Celsius maximum target since 1996.) Having absorbed that message, we can then understand mitigation as what needs to be done to keep the adaptation challenge manageable."

Tackling the climate issue was only begun in Bali, and reaching an agreement on the Bali Action Plan was easy work compared to what lies before the international community in combating climate change both in mitigation and adaptation. Clarifying questions raised in this article will be crucial in order to reach an equitable agreement that supports the most vulnerable in adapting and avoids as far as possible dangerous climate change. Climate change is the first great challenge to confront the whole of humanity, not only now, but for all generations to come. Bali has awakened awareness and charted a course for the next few years: Copenhagen will have to deliver humanity's response to this challenge. On the road from Bali to Copenhagen the work continues in Bangkok.