The Adaptation Fund’s mandate is to finance projects and programmes that help developing countries adapt to climate change. Takudzwa Chihambakwe speaks to Washington Zhakata, the Adaptation Fund’s Vice Board Chair on its activities, the state of climate finance in the wake of development aid cuts, its relationship to loss and damage finance, and the role of carbon credit proceeds and Article 6.
Since 2010, the Adaptation Fund has dispersed US$1.25 billion for climate change adaptation and resilience projects and programmes. This includes 183 localised projects involving the most vulnerable communities in developing countries around the world. To date approximately 45.8 million people have benefitted. It also pioneered Direct Access and Enhanced Direct Access, empowering countries to access funding more easily and develop local projects directly through accredited national implementing entities.
In the wake of a disappointing climate finance outcome at COP29, and a changing climate finance geopolitical landscape, Vice board Chairperson of the Adaptation Fund Washington Zhakata shares his thoughts on the Fund’s mechanisms, climate finance gaps and the way forward for developing countries. Our exchange has been edited for length and clarity.
How does the Adaptation Fund differ from other climate funds like the Green Climate Fund and The Least Developed Countries Fund?
The various climate Funds were established for different purposes. The vision for each, however, is the same, it is either to address adaptation or mitigation. The sources of finance also determine how it is to be used. The Adaptation Fund was created to address adaptation issues in developing countries. It does not differentiate on the nature of the developing country, for example if it is a least developed country or small island state, rather any developing country can access resources for adaptation.
Apart from the 2% proceeds generated from carbon credit projects, does the Fund also benefit from other pledges?.
The Fund was created in 2001, with clear instructions for it not to have any bottlenecks that would limit access to its resources. As a result, it has a simplified mechanism for beneficiaries to apply, be assessed, and have the application reviewed, similar to the Least Developed Countries Fund. But the Least Developed Countries Fund is resourced in a different way, mainly from pledges by philanthropists and companies who feel they can help. Meanwhile, the Green Climate Fund (GCF), which was established in principle in 2009 at COP15 in Copenhagen, Denmark, is primarily resourced by developed countries. At the time, developed countries wanted to see their counterparts pledge to reduce their GHGs under what was then called Nationally Appropriate Mitigation Actions (NAMAs). In turn developing countries would be able to access a fund which was initially supposed to be US$30 billion and accessed over a period of three years. US$10 billion was supposed to be availed every year, but it never came. It was at the same COP that developed countries pledged and advocated for the development of another fund, the GCF, that would be resourced to the tune of a US$100 billion annually from 2020. Initially developed countries pushed for this fund to go towards mitigation projects. Unfortunately, the funds were never availed.
The adaptation component was never specific under the GCF?
The GCF is a highly political and very large fund, however, its resourcing is unclear. In 2023, it was announced that this Fund had finally achieved its US$100 billion target. However, when people questioned where the money was coming from and what it was used for, they were told these were funds loaned to companies in developing nations, or given to civil society organisations or NGOs in developing countries. They tried to aggregate these small funds and labelled them their overall contribution to the GCF.
Given the Adaptation Fund’s primary source of funding comes from the proceeds of the sale of certain types of carbon credits (Certified Emission Reductions under the now defunct Kyoto Protocol), what are the implications of the Paris Agreement’s Article 6 carbon market rules for the Fund?
The Article 6 rules agreed at COP29 directly support the resourcing of the Adaptation Fund, as a portion of sales (known as the share of proceeds), get channeled to the fund. As a result, we simply need to implement these projects globally. However, the prices of carbon credits themselves vary based on multiple factors. These include the political and economic environment, location and the relationship between the two countries transacting. This leaves carbon trading vulnerable to manipulation by those who may want to get more credits for what they did not do at home, but are buying from elsewhere for a very small fee. This may reduce the inflow of resources into the Adaptation Fund. All this means we need more robust and concrete decisions to avoid any manipulations, to a level where substantial resources can flow into the Adaptation Fund.
In recent years, several countries including Germany, France and the Netherlands have cut funding to developing nations for climate finance. The gap has widened in recent weeks with the withdrawal of the United States from the Paris Agreement. Will the Adaptation Fund remain functional?
We are yet to see the impact on the fund, because some of the cuts by these global forces are directed to civil society organisations and governments the United States are not friendly with. But nothing has yet been specifically outlined that would affect the Adaptation Fund. We are watching the political landscape and we will need to see how best we could defend the position of the fund as we move into the future. Shrinking funding streams calls for the integration of existing funding mechanisms to address the growing challenges caused by climate change.
The Adaptation Fund recently announced collaboration and cooperation with the Fund for Responding to Loss and Damage (FRLD) and the European Space Agency. Does this signal a new approach for the Fund going forward, and what is the significance of these partnerships for the Fund’s approach?
As the adverse impacts of climate change are projected to increase in the future, the only way to adapt is to have insurance. Hence the Loss and Damage Fund resembles an insurance fund, which, if aligned to the Adaptation Fund, will see a more resilient and robust system. The Adaptation Fund informs projects to build resilience before communities are struck by disasters. If a community is afflicted, there is better understanding of the resilience in that area as well as vulnerability and loss and damage finance goes towards rebuilding. Therefore, loss and damage finance will be integrated as a component of adaptation, insuring the resilience of those communities. Accordingly there is a direct link between these funds because you cannot split hair. In principle, these two forms of finance should be together.
Are there still some areas that need attention with the Adaptation Fund?
The Adaptation Fund currently does not have a standalone resource mobilisation unit. We wait to receive pledges at every COP where little is happening. As a result , we need to be proactive, to knock on the doors of the financiers such as the private sector, philanthropists and governments to mobilise resources.
What lessons can the newly created Loss and Damage Fund learn from other funds which have long been in existence?
The simplicity of the Fund, to ensure easy access by those in need, is important. We need bottlenecks to be removed. It needs to be a fund that is well-resourced, accessible and dependable. The access modalities should be clearly outlined as is the case with the Adaptation Fund which is apolitical. There is a danger in screening projects that could qualify to get loss and damage finance because physical planning requirements do not take human needs and realities into account, where communities may be settled on steep slopes, wetlands and river confluents that are naturally disaster prone. If communities in such areas are hit by disasters, accessing funds becomes problematic.
With extreme weather conditions set to become more frequent and more intense and a persistent funding gap, what does the future look like for the Adaptation Fund?
We want to see the Adaptation Fund grow because it directly addresses the challenges that developing countries face. This is a fund sponsoring livelihood projects. These projects address water issues, agriculture, health, as well as abstraction and use of underground resources for resilience. We should also see the promotion of Article 6 of the Paris Agreement by all countries to ensure that, while it helps to address mitigation, it should also be seen as a resource mobilization strategy for adaptation.
Funding remains a bone of contention in global climate discussions. There is a need for urgent action to address its gaps. Developing nations are demanding that funding comes in the form of grants and not loans. Given the delays in the release of the funds, it may be time for countries in the Global South to mobilise funds amongst themselves. Will this cause the developed nations to further cut funding? Only time will tell.
