本文簡要的針對目前國際間有關氣候變遷之減緩與調適措施的財務機制，就其定義、分類、以及 制度設計的三大要素做一簡要的說明，並介紹三個運作較成熟、又具有高度之國際關注的財務機制
（GEF、CDM、EU ETS）。此一研究課題對我國有以下兩個重要之啟示：第一、對內而言，參考國際 間不同類型之財務機制運作的經驗，擷取運作良好且有效之經驗，以據此設計適合於我國引進之氣候 變遷減緩與調適措施之財務機制，第二、對外而言，為更有效參與氣候變遷之國際事務，於瞭解各類 型之財務機制的參與所需付出之成本、以及參與可獲得的利益，方得選擇適合且法律上有空間允許我 國參與的國際、區域、或雙邊財務機制。
但欲深度瞭解氣候變遷之財務機制，有必要針對不同類型之財務機制，於實務上運作的案例一一 加以介紹，以據此修正或驗證制度設計要素的指導原則，此需要更為詳細之分析，此將為本研究者將 陸續進行之研究對象，也希望本文粗淺地針對此一研究課題所提出的初步觀察，引發其他更優秀之研 究者對此一研究課題的研究興趣。此外，以私部門為主的財務機制，例如保險機制，亦相當重要，此
部分於本研究中並未著墨，請參考本書中由汪信君教授所著之「氣候變遷減緩與保險機制」。最後，各
類財務機制的運作，均需有大方向之政策與法制之調整等大環境配套措施，為因應氣候變遷議題，我 國於此面向之應對，就決策層次，請參考葉俊榮教授所著之「氣候變遷的治理模式—法律典範的衝擊
與轉變」、以及張文貞教授所著之「氣候變遷下的環境及政策影響評估—思考面向的提出」等文，就法
制層面，則請參考李建良教授所著之「氣候變遷的法律對策與規範模式：系列研究總說」、以及許耀明
教授所著之「氣候變遷的跨國規範模式—巨災風險、跨國規範及其國際法意涵」等文。
附件二：
Title: Financial mechanisms for climate change: what lessons can be learned from the reform experiences of the IMF?＊
I. Introduction
Financial mechanism has always been an important, yet controversial institutional pillar under the
＊ 本部分之計畫研究成果已於「Law in a Sustainable Asia（ Kyushu University & Asian Law Institute主辦, 2011.5.26-27, Kyushu, Japan）」研討會中口頭發表，會後已完成改寫並投稿至TSSCI，現正審查中。
international climate change regime. The negotiation leading up to the United Nation Framework Convention on Climate Change (UNFCCC) has already demonstrated the controversies surrounding the design and
governance structure of the financial mechanism under the Convention.46 Article 11 of the UNFCCC requires that the financial mechanism “shall function under the guidance of and be accountable to the Conference of the Parties…”, and “shall have an equitable and balanced representation of all Parties within a transparent system of governance”. When developed country parties (Annex I parties) undertook concrete legal obligations to reduce six types of greenhouse gases (GHGs) under the Kyoto Protocol, the concept of
‘financial mechanism’ broadened and the types of such mechanism became extremely diversified. In the current post-2012 climate change negotiation, financial mechanism again became one of the crucial
negotiation agenda. The “Copenhagen Accord” issued after COP 15 to the UN FCCC, albeit not unanimously adopted, is nevertheless an important decision relating to further development of the climate change regime.
In this 12—paragraph document, there are seven paragraphs that touch upon issues relating to financial resource and financial mechanism. Furthermore, COP 16 to the UNFCCC adopted the so-called “Cancun Agreements”. The Cancun Agreements also lay down various significant provisions on financial mechanisms, including the newly-created Green Climate Fund. This illustrates the importance of financial mechanisms in adopting and implementing policies on climate change mitigation and adaptation. Amongst the mostly debated issues concerning the design of financial mechanism, the governance structure has always been a crucial one. The design and effectiveness of such financial mechanisms, especially their governance structure in ensuring the democratic quality of producing a fair and equitable resources generating and allocation process will determine whether any financial mechanism can achieve its goal of assisting developing countries to implement climate change mitigation and adaptation policies.
Meanwhile, international financial mechanisms for development assistance have been in operation since the establishment of the Bretton Woods institutions —the International Monetary Fund (IMF) and the World Bank Group in 1947. The governance structure of the IMF has been under constant scrutiny for the past five decades and has finally resulted in a series of governance reforms starting in 2008. Can the reform
experiences in the IMF provide valuable lessons on the design of governance structure of the existing or new financial mechanisms for climate change mitigation and adaptation? This will be the main research question this article seeks to answer. This article begins with an introduction on financial mechanisms for climate change, followed by an overview of the IMF governance reformed. With the experiences of the IMF reform in mind, Part IV provide an analysis on how the IMF reform experiences can provide some lessons for the financial mechanism for climate change, with particular focus on the governance structure.
II. Financial mechanism for climate change
1. Definition and functions of financial mechanisms for climate change
Financial mechanism can be defined as: “Method or source through which funding is made available, such as bank loans, bond or share issue, reserves or savings, sales revenue.”47 In the “Glossary of climate
46 This refers to the debate and negotiation on whether the then-World Bank operated Global Environmental Facility (GEF) at its pilot phase should be designated as the financial mechanism under the Convention. The ultimate result was to designate the GEF as the ‘interim’ financial mechanism, with the condition that the GEF “should be appropriately restructured and its
membership made universal to enable it to fulfil the requirements of Article 11”. UNFCCC, Article 21.3.
47 “Method or source through which funding is made available, such as bank loans, bond or share issue, reserves or savings, sales revenue.” Available from: http://www.businessdictionary.com/definition/financial-mechanism.html (last visited: 2011/5/21).
change acronyms” from the UNFCCC website, financial mechanism is defined as “Developed country Parties (Annex II Parties) are required to provide financial resources to assist developing country Parties implement the Convention. To facilitate this, the Convention established a financial mechanism to provide funds to developing country Parties. The Parties to the Convention assigned operation of the financial mechanism to the Global Environment Facility (GEF) on an on-going basis, subject to review every four years. The financial mechanism is accountable to the COP.”48 From these two definitions, financial mechanisms for climate change will be defined in this article as follows: “A pre-determined standards and procedures set by an
institution through which funding is mobilized and disbursed for the purpose of climate change mitigation and adaptation.” Noted that, similar terms such as “climate finance” 49 or “carbon finance” 50 are also used in the relevant literature.
The main function of the financial mechanisms for climate change is to assist countries to adopt and implement policies for climate change adaptation and mitigation. According to the World Resources Institute, the typical functions of such mechanisms include: oversight, resource mobilization, resource allocation, project cycle management, standard setting, scientific and technical advice, and accountability. The corresponding roles for such mechanisms are illustrated in Table 1.51
Table 1: Functions and roles of financial mechanisms for climate change Function Roles
Oversight z Setting policies, program priorities and eligibility criteria Resource
mobilization
z Replenishment of trust fund
z Leveraging of additional sources of funding from Implementing Agencies, private sector
Resource allocation
z Allocation of resources between multiple focal areas (e.g. mitigation, adaptation, forestry)
z Prioritization between eligible recipients Project cycle
management
z Preparation and approval of projects
z Financial management of loan and grant agreements Standard setting z Development and approval of performance metrics
z Development and approval of environmental and social safeguards Scientific and
technical advice
z Advice on appropriate policies and best available technologies z Advice on scientific trends ad risk assessment
48 “Developed country Parties (Annex II Parties) are required to provide financial resources to assist developing country Parties implement the Convention. To facilitate this, the Convention established a financial mechanism to provide funds to
developing country Parties. The Parties to the Convention assigned operation of the financial mechanism to the Global Environment Facility (GEF) on an on-going basis, subject to review every four years. The financial mechanism is accountable to the COP.” From the Glossary of climate change acronyms, available from: http://unfccc.int/essential_background/glossary/items/3666.php#F (last visited: 2011/5/21).
49 For example, Steward, R.B., Kingsbury, B. & Rudyk, B., 2009, Climate Finance: Regulatory and Funding Strategies for Climate Change and Global Development, NYU Press.
50 This term is used by the World Bank Group, for example, its “Carbon Finance Unit”:
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/ENVIRONMENT/EXTCARBONFINANCE/0,,menuPK:4125909~page PK:64168427~piPK:64168435~theSitePK:4125853,00.html (last visited: 2011/5/21)
51 Ballesteros, A. et al, November 2009, Power, responsibility, and accountability: re-thinking the legitimacy of institutions for climate finance, figure 1 at p.7.
Accountability z Monitoring and evaluation of project and portfolio performance z Review and inspection of problematic projects
From: Ballesteros, A. et al Five out of the seven functions of the financial mechanisms for climate change relate to the governance of the mechanisms. This clearly illustrates the importance of institutional design and governance structure of any financial mechanism for climate change.
2. Different types of climate change financial mechanisms by different yardsticks
There are a variety of financial mechanisms for climate change. Different types of financial mechanisms for climate change can be categorised by using different yardsticks such as the purpose of the mechanisms, the scale of the mechanisms, sources of funding, and the types of activities funded by the mechanisms. The
following will briefly introduce the broad range of financial mechanisms for climate change by using these four different yardsticks.
2.1 purpose of the financial mechanisms
Depending on the purpose of setting up such a mechanism, financial mechanisms for climate change can be categorised as: financial mechanisms for climate change adaptation, for climate change adaptation, and for both purposes. The Emissions Trading Scheme of the European Union (EU ETS) is a type of financial
mechanism for mitigation, as the main purpose of the scheme is to reduce the emissions of GHGs within the EU.52 Under the international climate change regime, the Adaptation Fund set up under the Kyoto Protocol at its third meetings of the parties53 is a financial mechanism for climate change adaptation. The GEF mainly funded projects for mitigation purposes, although adaptation projects are funded as well from the “Least Developed Countries Fund” and the “Special Climate Change Fund”, both of which are established at COP 7 of the UNFCCC and are administered by the GEF. At the same COP, on the other hand, Parties to the
UNFCCC also instructed the GEF to support pilot and demonstration projects for certain adaptation programmes.54
2.2 scale
Depending on the scale or platform where a financial mechanism operates, there are international/multilateral, regional, bilateral and unilateral financial mechanisms for climate change. For example, all of the financial mechanisms under the international climate change regime are international/multilateral financial mechanisms. The EU ETS, as well as certain financial mechanisms supported or administered by regional development banks (e.g. the Asian Development Bank operates three
52 However, the revised EU ETS will become a type of financial mechanism for both climate change mitigation and
adaptation. According to the revised ETS Directive adopted on 23 April 2009, member states can determine how to use the proceeds from the auction of allowances. Nevertheless, 50% of the proceeds must be used according to Article 10.3 of the revised Directive, which include funding for both mitigation and adaptation measures.
53 Decision 1/CMP.3 “Adaptation Fund”, FCCC/KP/CMP/2007/9/Add.1.
54 http://www.thegef.org/gef/adaptation (last visited: 2011/5/21).
different types of carbon finance mechanisms55) are regional financial mechanisms. Bilateral financial mechanisms often involve funding provided by one country (usually developed countries) that supports a particular types of projects or activities for climate change mitigation or adaptation undertaken by eligible country (usually developing countries). For example, the “International Climate Initiative” set up by Germany56 in 2008 and the “Environmental Transformation Fund” set up by the UK57 in 2008 are two such type of bilateral financial mechanisms. Unilateral financial mechanisms are mostly established domestically, such as the “Brazil Amazon Fund” set up by Brazil in 200858 and the “Indonesia Climate Change Trust Fund”
set up by Indonesia59 in 2009.
2.3 sources of fund
The sources of funding for a financial mechanism can come from the pubic sector and the private sector.60 At the international scale, public sources can come from the traditional Overseas Development Aid (ODA), concessional debt, loan guarantee, or technology transfer arrangements. At the domestic level, funding from the public sources might include government budgets (for example, carbon tax), special levy (for example, or air pollution control fee. Funding from the private sector might include credit offsets in developed countries (for example, the EU ETS), insurance, or foreign direct investment. Currently, most of the financial mechanisms for climate change have their funding sources from the public sectors, including all of the financial mechanisms under the international climate change regime. However, some financial mechanisms have their funding sources from both the public and the private sectors, such as most of the carbon funds administered by the World Bank Group. For example, the “Prototype Carbon Fund” raises its fund from seven private companies and six governments.61
2.4 types of activities funded by financial mechanisms
Financial mechanisms for climate change can support a wide range of activities, including project lending, program or policy lending, and for investment only. Financial mechanisms for project lending refer to providing funding and/or technologies for a specific project (for example, a solar power plant). Financial mechanisms for program or policy lending support a program of action or a set of policies (for example, a set of subsidy programs to support renewable energy sector). Financial mechanisms for investment only use their fund to purchase offsets generated from emissions reduction projects, such as the certified emissions
55 http://www.adb.org/Climate-Change/funds.asp (last visited: 2011/5/21)
56 http://www.bmu-klimaschutzinitiative.de/en/home_i (last visited: 2011/5/21)
57 http://www.decc.gov.uk/en/content/cms/what_we_do/change_energy/tackling_clima/intl_strat/ietf/ietf.aspx (last visited:
2011/5/21)
58 http://www.amazonfund.org/ (last visited: 2011/5/21)
59 http://www.icctf.org/site/ (last visited: 2011/5/21)
60 Stewart, R.B., Kingsbury, B. & Rudyk, B., December 2, 2009, Climate Finance: Key Concepts and Ways Forward, Harvard Project on International Climate Agreements, available from: http://belfercenter.ksg.harvard.edu/files/Stewart%20Final.pdf (last visited: 2011/5/21).
61
http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/ENVIRONMENT/EXTCARBONFINANCE/0,,contentMDK:21630008
~menuPK:5216148~pagePK:64168445~piPK:64168309~theSitePK:4125853,00.html (last visited: 2011/5/21)
reductions (CERs) generated from the Clean Development Mechanism (CDM) projects). The CDM under the Kyoto Protocol is a typical financial mechanism for project lending. The GEF started as a financial mechanism for project lending as well. However, the GEF picked up the practices of program/policy lending in 2008 when it began to provide “a long-term and strategic arrangement of individual yet interlinked projects that aim at achieving large-scale impacts on the global environment.”62 Some of the carbon funds administered by the World Bank Group are the type of financial mechanism for investment purposes.
3. Design elements and guiding principles of financial mechanism for climate change, with particular focus on the governance structure
Based on the definition given to financial mechanisms for climate change previously, as well as drawing from some research works in the relevant field,63 a financial mechanism for climate change should comprise the following three key elements: resource mobilization (generation), resource disbursement (delivery), and governance of institutional arrangements (administration). The guiding principles in each element will be briefly introduced as follows.
3.1 Generation: resource mobilization
This element refers to how the resources/funding of a financial mechanism are generated. As the previous section indicated, the sources of funding can derived broadly from the public and the private sectors.
According to Article 4.3 of the UNFCCC and paragraph 1(e) of the so-called Bali Action Plan adopted at the 13th Conferences of the Parties, the following five principles are crucial for resources mobilisation: adequacy, predictability, sustainability, equity and common but differentiated responsibilities and respective capabilities, and, measurability.64
These five guiding principles are equally important when designing the method of how resources will be generated under the financial mechanism for climate change. However, depending on the time-frame, sources of funding, and objective and purpose, the importance and roles of each of these guiding principles will be different. For example, if the source of funding comes from the ODA through the governments’ annual budgets, this can satisfy the principles of measurability and predictability in that particular year when the budget is approved. But from a long-term perspective, such a source of funding might be incompatible with
These five guiding principles are equally important when designing the method of how resources will be generated under the financial mechanism for climate change. However, depending on the time-frame, sources of funding, and objective and purpose, the importance and roles of each of these guiding principles will be different. For example, if the source of funding comes from the ODA through the governments’ annual budgets, this can satisfy the principles of measurability and predictability in that particular year when the budget is approved. But from a long-term perspective, such a source of funding might be incompatible with