Abstract
As part of a multilateral climate change treaty, the parties to the United Nations Framework Convention on Climate Change (UNFCCC) have discussed establishing an international aid mechanism, or fund, to support low-carbon energy generation and energy efficiency projects in developing countries. The selection of a fund administrator has been particularly contentious. Many developed countries believe that, rather than creating a new fund, the COP should use an already established one—the World Bank’s Clean Technology Fund (CTF)—and select the World Bank as fund administrator. However, many developing countries believe the Conference of the Parties (COP) to the UNFCCC should create a new fund with administrative control retained by the COP. This Note first uses a public choice economic analysis to examine why different countries support different fund administrators. Second, it evaluates the arguments for and against the World Bank’s CTF and concludes that the World Bank must make several important changes for the COP to select its fund and give it administrative control. Lastly, this Note discusses how conflict may arise between the World Bank and the United Nations if the COP does not select the World Bank as fund administrator. The United Nations does not have any direct control over the World Bank’s decision to continue to operate its fund, but the countries that are parties to the UNFCCC may have a legal obligation to support whichever fund the COP selects.
Highlights
Since the 1970s, public international political and financial institutionsi have increasingly taken center stage in the debate over international environmental law
International institutions play a central role in the climate change debate, and divisions between developed and developing countries perennially affect international negotiations of the Conference of the Parties[6] (COP) to the United Nations Framework Convention on Climate Change (UNFCCC). 7 The root of the division is how developed and developing countries want to allocate responsibility for past and future greenhouse gas (GHG) emissions, but
Developing countries are more likely to agree to emissions reductions in a multilateral climate change agreement if they have a voice in what institution becomes the clean technology fund administrator
Summary
Since the 1970s, public international political and financial institutionsi have increasingly taken center stage in the debate over international environmental law. International institutions play a central role in the climate change debate, and divisions between developed and developing countries perennially affect international negotiations of the Conference of the Parties[6] (COP) to the UNFCCC. The World Bank, the Global Environment Facility (GEF), and a new (currently hypothetical) institution created by the COP are the three most likely choices for clean technology fund administrator. The World Bank's CTF suffers from several important problems, and this section concludes that, without reformation of the Bank's CTF, a new COP-created fund would be a better alternative This Note explores the legal connection between the World Bank and the United Nations. Without the support of developing countries for a clean technology fund administrator, it is unlikely that the COP process will result in a climate change treaty. While the COP is not without problems of its own, the UNFCCC currently seems to be the most likely process through which the world will develop a comprehensive climate change treaty
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