Developed country governments have repeatedly committed to provide new and additional finance to help developing countries transition to low-carbon and climate-resilient growth. This assessment considers U.S. efforts to provide “fast start finance” (FSF) in fiscal years 2010 and 2011 in the context of the pledge by developed countries to mobilize $30 billion1 from 2010 to 2012 under the United Nations Framework Convention on Climate Change (UNFCCC). It is part of a series scrutinizing how developed countries are defining, delivering, and reporting FSF.
Given the size of its economy and its historic responsibility as a top emitter of greenhouse gases, the United States has a major role to play in delivering FSF. Key characteristics of the U.S. FSF contribution are quantified in Figure 1.
The U.S. FSF contribution of $5.1B reflects a positive effort made in challenging political and economic circumstances, but there is more to be done. Congress and key agencies have increased funding for climate change objectives relative to the pre-FSF period, and have begun to integrate climate considerations into ongoing portfolios. The global economic recession and the resulting pressure to cut spending, however, combined with an active subset of policy-makers who oppose U.S. action on climate change, have impeded further increases to climate finance.
The US does not count private finance toward its FSF contribution, but it does count non-grant instruments as well as development assistance. Loans, loan guarantees, and insurance constitute one-third of the U.S. contribution; grants and related instruments (including contracts and grant contributions to multilateral climate funds) account for the rest. Only a minority of the funds examined – 40% for adaptation and 29% for mitigation – support projects that clearly target climate change as a principal objective, although the remainder can in most cases still be expected to deliver climate benefits. (A greater share may principally target climate change, but adequate information was not available to support this conclusion.)
While the FSF contribution reflects some new effort to address climate change, it is unclear that the contribution as a whole can be considered “new and additional.” Since the start of the FSF period, the United States has substantially increased international finance that explicitly targets climate change. Some U.S. government agencies have also begun integrating climate change into aspects of development assistance and development finance. The United States is also counting as FSF projects and programs that it was funding – and that were likely delivering climate benefits – prior to the FSF period. Furthermore, the United States has distanced itself from targets and timetables to increase development assistance, and climate finance appears to be increasing at a significantly faster rate than development assistance.
There is a need for additional transparency and harmonization in reporting. The United States has made significant efforts over the past several years to improve monitoring and reporting on climate finance, as well as on foreign assistance. However, there is room for improvement.
We recommend that the United States:
- Publish the criteria it uses to program and identify FSF.
- Publish a detailed list of the projects and programs that constitute FSF, including, for each project, the amount, the administering agency, the financial instrument, the recipient country (where relevant) and institution, whether it is supported by core or non-core climate finance, and, to the extent feasible,information on disbursement status.
- Identify and explain any discrepancies between such a project list and the total reported FSF sum, and explain how non-grant instruments are counted.
- Provide complete information on U.S. FSF in a single document, so that users can avoid the need to download and reconcile over 240 documents to access this information.
- Harmonize reporting between the FSF reports and the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) by ensuring that relevant FSF projects are tagged with the appropriate DAC Rio Markers and using consistent project titles between the two reporting systems.
- Work in cooperation with other contributor countries and multilateral institutions to strengthen and harmonize bilateral and multilateral reporting on climate finance.