Agreement on United Oda Credits Transparency

The predominant disciplines of tied aid are set out in Chapter III of the Convention and the transparency requirements for tied aid (e.g. B, notifications, requests and prior/prompt consultations) are set out in Chapter IV of the Convention. For operational purposes: In addition to public financing, OECD estimates included $15 billion in private co-financing related to public climate finance, mobilised through mechanisms such as guarantees, syndicated loans, fund shares, direct investments in companies and lines of credit. The remaining $2 billion credited to meet the target comes from climate-related export credits. The arrangement provides for disciplines for tied aid. These disciplines are also known as „Helsinki” disciplines and were agreed by participants in 1991 with the aim of limiting the use of concessional financing for projects that could be supported by commercial financing. These rules were also designed to redirect tied aid from rich countries that should be able to attract trade credit to less prosperous developing countries. The aim of the agreement is to create more effective competition in the use of development aid loans by ensuring that they are used for the purchase of goods and services from any country and not just from the country granting the loan. This agreement also aims to prevent the Helsinki disciplines (or aid-related disciplines) from being circumvented by the use of unconsolidated aid.

The text of the Copenhagen Accord states that funding for the $100 billion target should come from „a variety of sources: public and private, bilateral and multilateral, including other sources of funding.” This broad definition has given rise to disputes over what should be included in the list of progress towards this goal. According to the methodology developed by the OECD to inform discussions on the Paris Agreement, $71.2 billion1 was mobilized for the $100 billion in 2017, an increase of 21% since 2016. These estimates show encouraging progress towards the $100 billion target. There is also evidence that official development assistance is channelled into activities that directly contradict the objectives of the Paris Agreement. The OECD has estimated that in 2016 and 2017, $3.9 billion in ODA was injected annually into upstream and downstream fossil fuel activities. Although it is small relative to total attributable bilateral flows, it still represents a significant investment applicable to ODA in activities that exacerbate the climate crisis. This is part of a broader problem of government subsidies for fossil fuel production and consumption, which the OECD says cost $478 billion in 77 economies in 2019, far more than annual development finance flows or international climate finance. In 2015, countries around the world came together to agree on the first universal climate agreement. The treaty, known as the Paris Agreement, aims to limit global warming to „well below” 2°C above pre-industrial levels – and ideally below 1.5°C. Under the agreement, countries committed to work together to build resilience to the impacts of climate change, ensure that financial flows are compatible with low-carbon development, and improve the transparency of national policies in support of climate action. The Arrangement on Officially Supported Export Credits provides for disciplines for tied development assistance as well as transparency requirements for non-trade-related aid. In addition, the Agreement on the Transparency of Unconsolidated ODA Appropriations approved by the Participants (`the Agreement`) provides for disciplines and transparency measures for uncommitted official development assistance (ODA).

The Agreement provides transparency disciplines for non-trade-related assistance (see Chapter IV of the Agreement). Over the past century, governments have sought ways to reach a global agreement on reducing military spending. Various proposals were discussed at the League of Nations and later at the UN. The first proposals to the United Nations focused on reducing spending on states with large armies and releasing funds for development assistance. In order to achieve this objective, the Agreement provides that, when allocating unconsolidated ODA credits, participants will communicate with each other and provide the public with information on projects for which ODA credits are granted and comply with internationally recognized tendering procedures. The global efforts launched in Paris recognize that reducing global emissions requires truly global action. It sets ambitious climate protection targets for all countries, regardless of their level of development. However, like previous international climate agreements, it recognizes that countries have „common but differentiated responsibilities and appropriate capacities” to address the challenges of climate change. One of the main ways in which donor countries are expected to assume additional responsibilities is to provide transparent and predictable financial flows to support low-carbon and carbon-resilient development in low- and middle-income countries (LMICs). As part of the Paris Agreement, donor countries reaffirmed their commitment, initially agreed in Copenhagen in 2009, to jointly mobilize $100 billion in new and additional funds for climate change mitigation and adaptation by 2020. MilEx`s original goal of facilitating the reduction of military spending has gradually given way to another important objective: to increase transparency and build trust between states. When States submit reports annually, MilEx will provide an overview of trends in military spending and help build international confidence and security.

The political commitments of other donors indicate a certain integration that is not yet visible in the OECD data: in 2017, for example, the French Development Agency (AFD) committed to making its entire portfolio 100% compatible with the Paris Agreement. This is a big promise, given that in 2018, only 18% of France`s bilateral ODA was focused on climate (although this figure is up from the peak of 52% reached in 2017). In June 2019, the UK government committed to ensuring that all its ODA spending, regardless of sector, is aligned with climate targets. Again, this will mean a significant shift in the UK`s ODA portfolios, with only 29% being marked as climate-focused in 2018. The fact that very little funding for social sectors is marked as climate-related suggests that there are significant unexplored opportunities to align projects in these sectors with the objectives of the Paris Agreement. Of particular concern is the large share of funds paid to sectors such as non-climate-related infrastructure, as the transition to a more climate-friendly development model means that all ODA activities in these productive sectors should be carried out taking into account climate change mitigation objectives. Of the total funds invested in infrastructure, 42% are not marked with one of the two climate markers. Similarly, in 2018, only 16% of funds allocated to industry, construction and mining activities were marked as climate-related. Climate change has been disproportionately influenced by the actions of donor countries, which have had the advantage of being able to expand without restricting their energy consumption.

As a result, they have an obligation to subsidize some of the higher costs that LMICs face when trying to mitigate and adapt to climate change. In addition, in partner countries where access to project finance may be difficult, there is a need for donors or multilateral support to mobilise sufficient resources, including through assistance to mitigate risks and attract private investment. The Rio Climate Markers (Climate Change Mitigation and Adaptation) in the OECD/DAC CRS are an important source of information on the extent to which ODA and other official flows between sectors target climate action. In addition, new challenges have emerged: just as the global community was finally beginning to develop new impulses for climate protection, the current COVID-19 crisis emerged, diverting attention from the climate emergency. .