Norway demands monitoring to avoid diversion of funds from poor

Norway’s reservation will be made in the form of a footnote.

During the discussion at the High-Level Meeting of the DAC in Paris, the EU representative shared Norway’s concern. But no written comments were added by the EU to the decision. The actual text of Norway’s reservation has not yet been formulated.

In an e-mail to Development Today, the Norwegian Development Minister Hilde Frafjord Johnson writes that in the OECD/DAC’s continued work with this matter, Norway supports a system where each donor country must provide documentation showing that its climate investments in developing countries do not result in a diversion of aid.

“It must be efficient, clear and transparent, and valid for all OECD countries," Frafjord Johnson states.

MONITORING SYSTEM

She points out to DT that CDMs function best in large developing countries with high economic growth and energy efficient sectors that generate a high level of CO2 emissions. Most countries in Africa have small emissions and low growth.

She notes that an important premise for the Kyoto Protocol is that climate investments must not result in diversions of aid such that the poorest in the least developed countries become the losers.

A monitoring system has to be established based on this premise, she writes.

“The decision [about CDM reporting] in the OECD represents a softening of this premise and was decided without our partners in developing countries being present."

Frafjord Johnson is very critical of the fact that developing countries have not had influence on the decision-making process. The OECD is, for example, now initiating a process to decide on reference prices for so-called certified emission reduction units. Without a real market for such credits there is a danger that the price setting could become unfavourable for the countries hosting the CDM projects.

PRE-EMPTING DEBATES

She says in her e-mail that it is “unwise" to push forward such a process without the participation of the developing countries. Frafjord Johnson says it is crucial that developing countries take an active part in the decisions concerning their future and that the OECD/DAC not pre-empt debates and processes in other climate fora where developing countries are participating.

The Minister also indicates that Norway does not plan to report CDM projects under the Kyoto agreement as ODA. However, aid projects and programmes financed by aid, which are considered to have favourable climate effects, will still be reported as aid as the practice is today.

This practice includes the Norwegian aid-financed risk capital fund NORFUND