ISSN 1831-0834
EUROPEAN
COURT  OF AUDITORS
2013
EN
Special  Report  No 17
EU CLIMATE FINANCE  IN THE CONTEXT 
OF EXTERNAL AID

EU CLIMATE FINANCE IN THE 
CONTEXT OF EXTERNAL AIDSpecial  Report  No 17  2013
(pursuant to Article 287(4), second subparagraph, TFEU )
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Special  Report  No 17  2013
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Luxembourg : Publications  Office  of the European  Union , 2014
ISBN 978-92-9241-589-1
doi:10.2865/17954
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Printed  in Luxembourg
CONTENTS
Paragraph
 ABBREVIATIONS AND ACRONYMS
I–VI EXECUTIVE SUMMARY
1–14  INTRODUCTION
1–2  CLIMATE CHANGE CHALLENGES
3–6  INTERNATIONAL AGENDA ON CLIMATE CHANGE AND CLIMATE FINANCE
7–9  EU POLICY ON CLIMATE FINANCE IN THE CONTEXT OF EXTERNAL AID
10–14  EU AND MEMBER STATES CLIMATE FINANCE IN THE CONTEXT OF EXTERNAL AID
15–16  AUDIT SCOPE AND APPROACH
17–64  OBSERVATIONS
17–25   THE COMMISSION MANAGED CLIMATE‑RELATED SUPPORT FUNDED FROM THE EU BUDGET AND THE EDF 
WELL
18–20  THE COMMISSION INCREASED THE PRIORITY GIVEN TO CLIMATE FINANCE
21–25  THE COMMISSION TAILORED ITS CLIMATE FINANCE TO PARTNER COUNTRY SPECIFIC CIRCUMSTANCES
26–64   COORDINATION BETWEEN THE COMMISSION AND MEMBER STATES TO ASSIST DEVELOPING COUNTRIES IN 
RESPONDING TO CLIMATE CHANGE IS INADEQUATE
28–39  COORDINATION OF EU AND MEMBER STATES COUNTRY PROGRAMMES NEEDS IMPROVEMENT
40–41  THE COMMISSION AND MEMBER STATES HAVE NOT AGREED HOW TO SCALE UP LONG‑TERM CLIMATE FINANCE
42–51  AN EFFECTIVE MONITORING, REPORTING AND VERIFICATION SYSTEM IS NOT YET IN PLACE
52–55  THE EXTENT TO WHICH THE FSF PLEDGE HAS BEEN FULFILLED IS UNCLEAR
56–64   THE COMMISSION AND MEMBER STATES DID NOT ACT JOINTLY TO REDUCE THE FRAGMENTATION OF CLIMATE 
FUNDS3
Special Report No 17/2013 – EU climate finance in the context of external aid
65–69  CONCLUSIONS AND RECOMMENDATIONS
 ANNEX I  — LEAST DEVELOPED COUNTRIES, SMALL ISLAND DEVELOPING STATES AND 
AFRICA
 ANNEX II  — EUROPEAID’S CLIMATE FINANCE 2003–12
 ANNEX III  — 2007–13 CLIMATE FINANCE FLOWS OF EU FUNDING FOR DEVELOPING 
COUNTRIES
 ANNEX IV  — AUDIT METHODOLOGY AND EVIDENCE COLLECTION
 ANNEX V  — MAIN POTENTIAL SOURCES OF REVENUE IDENTIFIED BY THE COMMISSION FOR 
SCALING UP CLIMATE FINANCE
 ANNEX VI  — DEFINITIONS USED FOR ‘NEW AND ADDITIONAL ’ BY THE COMMISSION AND 
FOUR EU MEMBER STATES SELECTED FOR THE AUDIT
REPLIES OF THE COMMISSION AND THE EEAS4
Special Report No 17/2013 – EU climate finance in the context of external aid
ACP : African, Caribbean and Pacific states
CCW : Climate Change Window
CTF : Clean Technology Fund
COP : Conference of Parties
DCI : Development Cooperation Instrument
DIPECHO : Disaster Preparedness Programme of ECHO
DRR : Disaster Risk Reduction
ECHO : Directorate -General for Humanitarian Aid and Civil Protection
EDF : European Development Fund
EEAS : European External Action Service
EFC : Economic and Financial Committee
ENPI : European Neighbourhood and Partnership Instrument
ENRTP : Thematic Programme for Environment and Sustainable Management of Natural Resources including 
Energy
EPC : Economic Policy Committee
ETS : Emissions Trading System
FCPF : Forest Carbon Partnership Facility
FLEGT : Forest Law Enforcement, Governance and Trade Programme
FSF : Fast Start Finance
FTI: Fast Track Initiative
GCCA : Global Climate Change Alliance
GCF : Green Climate Fund
Geeref : Global Energy Efficiency and Renewable Energy Fund
GEF : Global Environment Facility
GFDRR : Global Facility for Disaster Reduction and Recovery
IMF : International Monetary Fund
LDC : Least developed countryABBREVIATIONS AND ACRONYMS5
Special Report No 17/2013 – EU climate finance in the context of external aid
MMR : Mechanism for monitoring and reporting greenhouse gas emissions
MFF : Multiannual Finance Framework
MRV : Measurement, reporting and verification
NGO : Non- governmental organisations
ODA : Official development assistance
OECD : Organisation for Economic Cooperation and Development 
REDD : Reducing Emissions from Deforestation and forest Degradation
SIDS : Small island developing states
UNDP : United Nations Development Programme
UNEP : United Nations Environment Programme
UNFCCC : United Nations Framework Convention on Climate Change
USD : United States dollar6
Special Report No 17/2013 – EU climate finance in the context of external aid
EXECUTIVE SUMMARY
I.
Climate change is one of the greatest environmen -
tal, social and economic threats facing the planet. 
Millions of people in developing countries could be 
pushed back into poverty by climate change which 
poses a fundamental threat to economic development 
and the achievement of the Millennium Development 
Goals. Developed countries have pledged to increase 
their support to assist developing countries in their 
efforts to adapt to and mitigate the impact of climate 
change. Collectively, the EU and its Member States are 
the largest contributor of climate finance to develop -
ing countries.
II.
The Court audited the provision of climate finance for 
developing countries by the EU. It examined whether 
the Commission has managed climate related spend -
ing from the EU budget and the European Devel -
opment Fund (EDF) well. The Court also examined 
whether the Commission has taken appropriate steps 
to promote coordination with EU Member States in 
respect of climate finance for developing countries, 
and whether such coordination has been adequate.
III.
As regards its management of climate -related sup -
port funded from the EU budget and the EDF, the 
Commission has performed well. In line with policy 
commitments, the Commission steadily increased cli -
mate -related spending funded from the EU budget 
and EDF. It focused on appropriate priorities and tail-  
ored its programmes to the specific circumstances of 
individual partner countries.7
Special Report No 17/2013 – EU climate finance in the context of external aid
IV.
Coordination between the Commission and Member 
States in respect of climate finance for developing 
countries is inadequate. The Commission has not 
exercised sufficient leadership in some areas and the 
Member States have not been sufficiently responsive 
to some of its initiatives. Significant further efforts 
are needed to ensure complementarity between the 
EU’s and Member States’ country programmes. The 
Commission and Member States have not agreed how 
to meet the commitment to scale up climate finance 
by 2020. A robust monitoring, reporting and verifi -
cation system providing comprehensive and reliable 
information on the Commission’s and Member States’  
climate -related spending to monitor compliance with 
commitments made has not yet been established, and 
the extent to which the FSF pledge has been fulfilled 
is unclear. No attempt has been made to reduce the 
proliferation of climate funds. Significant further coor -
dination between the Commission and Member States 
is needed to prevent and combat corruption.
V.
The Court concludes that the Commission has man -
aged EU climate -related spending from the EU budget 
and the EDF well. However, for the EU to maximise 
its international impact, coordination between the 
Commission and Member States in climate finance 
for developing countries should be considerably 
improved.EXECUTIVE SUMMARY
VI.
The Court recommends that:
(a) The Commission should:
 — propose a roadmap for the scaling-up of cli -
mate finance towards the Copenhagen Accord 
2020 target;
 — have an independent evaluation made of the 
Global Climate Change Alliance;
(b) the Commission and the EEAS should:
 — report on the extent to which the target of 
spending 20 % of the EU budget and the EDF 
over 2014 to 2020 on climate-related action is 
implemented in development aid;
(c) the Commission and Member States should:
 — in the framework of the Monitoring Mech-  
anism Regulation, agree common standards 
for monitoring, reporting and verification of 
climate finance for developing countries;
 — intensify their cooperation to implement the 
EU Code of Conduct on Division of Labour in 
the field of climate finance.8
Special Report No 17/2013 – EU climate finance in the context of external aid
CLIMATE CHANGE CHALLENGES
1. It is widely acknowledged that human activity is having an increasingly 
adverse influence on the Earth’s climate through the burning of fossil 
fuels, deforestation, and livestock farming. Average global temperatures 
are rising, and extreme weather events such as hurricanes, floods and 
droughts are becoming increasingly common. Climate change directly 
impacts human health, lives and livelihoods and indirectly impacts food 
security and the viability of economies based on natural resources.
2. The United Nations Framework Convention on Climate Change (UNFCCC) 
notes that climate change ‘has the potential to undermine sustainable 
development, increase poverty and delay or prevent the realisation of 
the Millennium Development Goals1’ . Many developing countries are 
vulnerable to climate change: they often lack sufficient resources to cope 
with the accelerating threats to water, energy, soil, forests, wetlands, 
wildlife and fish stocks, on which they are directly dependent for their 
livelihoods.
INTERNATIONAL AGENDA ON CLIMATE CHANGE AND 
CLIMATE FINANCE
3. The UNFCCC is the global forum for concerted international action to 
mitigate climate change and adapt to its impact. A key UNFCCC principle 
is that of ‘common but differentiated responsibility’: developed countries 
should take the lead in fighting climate change and supporting develop -
ing countries in their adaptation and mitigation efforts, since the latter 
have contributed the least to the accumulation of greenhouse gases in 
the atmosphere but will be the most affected. In other words, the pol -
luter should pay.
4. Parties to the UNFCCC have met annually since 1995 to assess progress 
in dealing with climate change. These meetings are known as COPs, or 
Conferences of Parties. The most recent COPs were held in Doha in Nov-  
ember 2012 (COP 18) and in Warsaw in November 2013 (COP 19).INTRODUCTION
1 UNFCCC, Climate Change: 
Impacts, vulnerabilities and 
adaptation in developing 
countries , 2007, p. 42.9
Special Report No 17/2013 – EU climate finance in the context of external aid
5. At COP 15 (Copenhagen 2009), developed countries agreed to a vol -
untary commitment (the Copenhagen Accord) to ‘new and additional’  
financing to support developing countries in dealing with the challenges 
of climate change, through mitigation, adaptation, technology devel -
opment and transfer as well as capacity-building actions. The accord 
comprised:
(a) a short -term commitment, called ‘Fast Start Finance’ (FSF) of about 
30 billion USD for the 2010 to 2012 period. The aim of FSF was to 
help developing countries implement immediate, urgent action to 
tackle climate change and enable them to absorb a larger amount 
of finance in the longer term;
(b) a longer -term commitment to raise the amount of climate finance 
to 100 billion USD per year by 2020 from a wide range of funding 
sources, public and private, bilateral and multilateral, including in -
novative sources of finance.
6. COP 16 (Cancún 2010) built on the Copenhagen Accord by approving 
the establishment of a global Green Climate Fund (GCF), to channel most 
of this funding. COP 16 reaffirmed previous commitments that funding 
for adaptation to climate change is a priority for the most vulnerable 
developing countries, namely the least developed countries (LDCs), small 
island developing states (SIDS) and Africa (see Annex I ).
EU POLICY ON CLIMATE FINANCE IN THE CONTEXT 
OF EXTERNAL AID
7. The EU’s climate change policy for developing countries dates back to 
20032. The policy has since been updated to incorporate and emphasise 
certain areas, namely adaptation3 (2004), disaster risk reduction4 (2009) 
and supporting capacity development and technology transfer in the 
sustainable agriculture and energy sectors, including adaptation to cli -
mate change and mitigation strategies5 (2011).2 COM(2003) 85 final of 
11 March 2003.
3 Council Conclusions 
No 15164/04 of 
24 November 2004 on 
Climate Change in the 
Context of Development 
Cooperation ( http://
consilium.europa.eu ).
4 COM(2009) 84 final of 
23 February 2009.
5 COM(2011) 637 final of 
13 October 2011.10
Special Report No 17/2013 – EU climate finance in the context of external aid
8. Climate change is an important priority of EU foreign policy. The 2011 
joint paper prepared by the EEAS and the Commission warned that 
climate change has important security implications. It recognised the 
important role that the High Representative, the Commission and the 
EEAS can play in working collaboratively with Member States on climate 
diplomacy and encouraged joint programming of aid aimed at maximis -
ing synergies and avoiding duplication6. The Council set up an EU Green 
Diplomacy Network in 2003 and called for ‘a more proactive and targeted 
EU climate diplomacy agenda aimed at maximising our collective efforts 
and further enhancing the EU climate voice internationally’7.
9. The coordination of development aid is a shared responsibility between 
the EU and the Member States. Article 210 of the Treaty on the Function -
ing of the European Union stipulates that this is ‘in order to promote 
complementarity and efficiency’ and the Commission ‘may take any ini -
tiative for this purpose’8. To ensure such coordination, the Commission 
subscribed to the Paris Declaration on Aid Effectiveness (2005) and the 
Council adopted the European Consensus on Development (2006): the 
EU and its Member States are committed to promoting better donor 
coordination and complementarity and should take a lead role in imple -
menting the Paris Declaration. In 2008, the Commission and the Member 
States launched the EU Fast Track Initiative (FTI) on Division of Labour 
to improve aid effectiveness by implementing the ‘EU Code of Conduct 
on Division of Labour’9.
EU AND MEMBER STATES CLIMATE FINANCE IN THE 
CONTEXT OF EXTERNAL AID
10.  The EU and its Member States pledged to contribute 7,2 billion euro 
(10 billion USD) to the FSF initiative (see paragraph 5), with a balanced 
allocation between adaptation and mitigation measures, as required 
by the Cancún agreement. The Commission’s share of the total pledge 
amounted to 150 million euro for the 2010–12 period.
11.  The Copenhagen Accord longer -term commitment was to mobilise 
100 billion USD per year by 2020, but its allocation between developed 
countries was not determined. The Commission estimates, however, that 
the EU and Member States’ share in this global effort lies between 29 % 
and 38 % of the total (i.e. between 22 billion and 29 billion euro)10.6 http://eeas.europa.eu/
environment/docs/2011_
joint_paper_euclimate_
diplomacy_en.pdf
7 http://consilium.europa.
eu/uedocs/cms_data/docs/
pressdata/EN/foraff/137587.
pdf
8 Article 210(1): In 
order to promote the 
complementarity and 
efficiency of their action, the 
Union and the Member States 
shall coordinate their policies 
on development cooperation 
and shall consult each other 
on their aid programmes, 
including in international 
organisations and during 
international conferences. 
They may undertake joint 
action. Member States shall 
contribute if necessary to the 
implementation of Union aid 
programmes.  
Article 210(2): The 
Commission may take any 
useful initiative to promote 
the coordination referred to 
in paragraph 1.
9 Council of Ministers of 
15 May 2007, document 
No 9558/07.
10 SEC(2011) 487 final 
of 8 April 2011, p. 18. 
(http://ec.europa.eu/
economy_finance/articles/
financial_operations/pdf/
sec_2011_487_final_en.pdf ).11
Special Report No 17/2013 – EU climate finance in the context of external aid
12.  The Commission funds climate finance in the context of external aid from 
the EU budget and the European Development Funds (EDF). Over the 
2003–12 period EuropeAid committed approximately 4 650 million euro 
in climate finance and ECHO committed 155 million euro to fund cli -
mate -related disaster preparedness. See Annex II  for further details.
13.  Climate finance is provided under both thematic programmes11 and 
geographic programmes. The Commission’s climate finance is mainly 
channelled through bilateral programmes with partner countries and 
regional organisations. Annex III  provides an overview of these delivery 
channels.
14.  Support for adaptation aims to help partner countries build resilience to 
the adverse effects of climate change. Programmes focus on the protec -
tion of infrastructure, industry and agriculture against changing weather 
patterns and rising sea levels, as well as investment in water manage -
ment and drought -resistant crops. Support for mitigation aims to speed 
up the transition to a low- carbon global economy. Programmes focus on 
the development of clean energy technologies, energy efficiency and 
reducing greenhouse gas emissions through the sustainable manage -
ment and conservation of forests and carbon stocks.11 Chiefly the thematic 
programme for Environment 
and Sustainable Management 
of Natural Resources 
including Energy (ENRTP) and 
the Food Security Thematic 
Programme (FSTP).12
Special Report No 17/2013 – EU climate finance in the context of external aid
15.  This audit examines the provision of climate finance for developing coun -
tries by the EU. The report focuses on the following two questions:
(a) Has the Commission managed climate -related support funded from 
the EU budget and the EDF well?
(b) Has the Commission taken appropriate steps to promote coord-  
ination with EU Member States in respect of climate finance for 
developing countries; and has such coordination been adequate?
16.  The audit covered the Commission’s climate change finance initiatives 
taken in the 2007–13 period with an impact up to 2020. It involved docu -
mentary reviews, desk reviews of programmes in 16 countries and two 
regions, interviews and on-the -spot audit visits to four countries: Bang -
ladesh, Indonesia, Tanzania and Uganda. The audit criteria and the audit 
evidence collection methods are described in more detail in Annex IV .AUDIT SCOPE AND APPROACH13
Special Report No 17/2013 – EU climate finance in the context of external aid
THE COMMISSION MANAGED CLIMATE‑RELATED 
SUPPORT FUNDED FROM THE EU BUDGET AND THE 
EDF WELL
17.  This section examines whether financial resources allocated by the Com -
mission to address the challenges of climate change: 
(a) adequately reflected policy commitments; and 
(b) were tailored to the specific circumstances of partner countries 
and regions.
THE COMMISSION INCREASED THE PRIORITY GIVEN TO CLIMATE 
FINANCE
18.  The Commission steadily increased climate -related spending for devel -
oping countries through the EU general budget and EDF during the 
ten- year period ended 2012 (see Figure 1 ), which included a supplemen -
tary contribution of 155 million euro provided under the FSF initiative. 
Over the 2007-2013 programming period, approximately 3,7 billion euro 
was committed to climate -related programmes until the end of 2012, 
i.e. about 8 % of the total EU budget and EDF development funding (see 
Annex II , Table 1 ).
19.  For the 2014–20 period, the European Council12 has endorsed targeting 
at least 20 % of total EU spending on climate -related action, reflecting 
the EU’s strategic priority of addressing climate change. This 20 % target 
is included in the draft Development Cooperation Instrument (DCI) regu -
lation for the 2014 to 2020 period13, and in the 11th EDF programming 
instructions14. Assuming that the 20 % target were applied to all external 
aid, this would represent an estimated amount of 11,6 billion euro for 
climate change under external aid, that is to say more than a threefold 
increase compared to the amount committed over the 2007–13 period.
20.  Implementing such a policy commitment will require a considerable 
effort on the part of the Commission, the European External Action Ser -
vice (EEAS) and partner countries. However, discussions with the EU 
delegations in the four countries visited revealed that the need to take 
account of climate change objectives in future programming was not 
being systematically considered: in Bangladesh, the delegation had no 
plans to scale up climate change in the cooperation strategy and pro -
grammes, whereas in Uganda and Tanzania this was confirmed to be the 
case15.OBSERVATIONS
12 European Council 
Conclusions of 
7/8 February 2013 on the 
MFF 2014–20 (EUCO 37/13) 
paragraph 10: ‘[…] Climate 
action objectives will 
represent at least 20 % of 
EU spending in the period 
2014–20 […]’ .
13 COM(2011) 840 final of 
7 December 2011.
14 ‘Instructions for the 
programming of the 11th 
EDF and the DCI 2014–20’ 
issued by the EEAS and 
the European Commission, 
dated 15 May 2012 (see p. 3, 
footnote 2).
15 Indonesia is one of the 
19 emerging economies 
that will fall under the 
newly created Partnership 
Instrument and will therefore 
no longer be eligible for 
bilateral aid under the DCI 
from 2014 onwards.14
Special Report No 17/2013 – EU climate finance in the context of external aid
EUROPEAID’S CLIMATE FINANCE COMMITMENTS 2003–12
Source : European Commission.
THE COMMISSION TAILORED ITS CLIMATE FINANCE TO PARTNER 
COUNTRY SPECIFIC CIRCUMSTANCES
21.  During 2007–13 the Commission’s programming guidelines required 
analyses of climate change -related risks and opportunities for each part -
ner country16 to be carried out. In 2009 it issued guidelines to the EU 
delegations indicating how climate change should be taken into account 
in specific sectors17.
22.  As noted in paragraph 6, the Copenhagen Accord and COP 16 in Cancún 
have emphasised the need to give priority to climate change adapta -
tion measures, particularly in respect of LDCs, SIDS and African coun -
tries18. The Council endorsed these priorities although without setting 
any quantified targets19. Nevertheless, the Commission’s climate finance 
commitments reflect these priorities.FIGURE 1
900
800
700
600
500
400
300
200
 0100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
million euro16 Country Environmental 
Profiles and Regional 
Environmental Profiles.
17 Guidelines for 
mainstreaming environment 
and climate change into 
development aid were 
adopted. Guidelines were 
also issued for eight sectors 
of intervention: health, 
infrastructure, agricultural and 
rural development, energy 
supply, education, water 
supply and sanitation, trade 
and investment, and solid 
waste management.
18 http://unfccc.int/
cooperation_support/
financial_mechanism/fast_
start _ finance/items/5646.
php
19 Council Conclusions 
No 15265/1/09 REV1 
of 1 December 2009, 
9437/1/10 REV1 of 
12 May 2010, 14957/10 
of 14 October 2010 and 
15353/11 of 10 October 2011 
(http://consilium.europa.eu ).15
Special Report No 17/2013 – EU climate finance in the context of external aid
23.  Over the 2003–12 period, adaptation funding represented slightly less 
than half of the Commission’s climate finance commitments (see Fig -
ure 2 ) and its share has been higher since 2010. During the whole period, 
half of the adaptation commitments under its country programmes20 
supported adaptation efforts in LDCs, SIDS and African countries (see 
Table 4  in Annex II ).
ESTIMATED SPLIT BETWEEN EUROPEAID’S ADAPTATION AND 
MITIGATION CLIMATE FINANCE ALLOCATIONS 
Source : European Commission. The Court has estimated the split by directly applying the respective 
percentages to the total amount (see Table 3  in Annex II ).900
800700
600
500400300200100
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Mitigation
Adapta tionmillion euroFIGURE 220 The Commission’s data do 
not enable the share for LDCs, 
SIDS and African countries in 
regional programmes to be 
determined.16
Special Report No 17/2013 – EU climate finance in the context of external aid
24.  For the sample of 16 countries and two regions reviewed, the Court 
found that the Commission adequately reflected the climate change 
priorities identified for most of them in its 2007–13 programming21:
(a) the Commission gave particular consideration to climate change 
in 13 countries and the Asian region, where it was addressed either 
as a specific priority sector of its cooperation strategy22 or under 
another priority sector related to environment, management of nat -
ural resources, rural development or even trade and investment23;
(b) in five countries24, the mid-term review of the 2007–13 programmes 
resulted in decisions to strengthen climate change-related support 
by adding new areas of intervention or increasing the amount of 
funding allocated.
25.  Taking the 16 countries in its sample, the Court analysed in detail a fur -
ther sub -sample of eight countries and two regions25 as to whether 
the Commission’s climate -related interventions addressed the priorities 
identified by partner countries themselves. The Court found that pro -
grammes were appropriately targeted.
COORDINATION BETWEEN THE COMMISSION 
AND MEMBER STATES TO ASSIST DEVELOPING 
COUNTRIES IN RESPONDING TO CLIMATE CHANGE IS 
INADEQUATE
26.  Article 210 of the Treaty on the Functioning of the European Union gives 
the Commission a role in optimising coordination between the Union 
and the Member States. Climate change is an important priority of EU 
foreign policy and the Commission has subscribed to the Paris Declar-  
ation on Aid Effectiveness (see paragraphs 8 and 9).
27.  This section assesses progress made in a number of areas in ensuring that 
the actions of the EU and the Member States are indeed complementary 
and efficient. In particular it looks at:
(a) whether the Commission coordinated its country programmes with 
those of Member States;
(b) whether the Commission promoted coordination with Member 
States to comply with international climate finance long -term com -
mitments as agreed in the 2009 Copenhagen Accord;21 See Annex IV .
22 In China, Ukraine and the 
regional programming for 
Asia.
23 In Bangladesh, Bolivia, 
Brazil, Ethiopia, Guyana, 
Indonesia, Mali, Morocco and 
Uganda.
24 Indonesia, Bolivia, China, 
Ukraine and Morocco.
25 Bangladesh, Ethiopia, 
Indonesia, Mauritius, 
Nicaragua, Tanzania, Ukraine 
and Uganda, East Africa and 
Asian regions.17
Special Report No 17/2013 – EU climate finance in the context of external aid
(c) what has been achieved in respect of monitoring, verifying and 
reporting on climate finance pledged and paid;
(d) to what extent progress made in these areas makes it possible to 
verify and analyse the contributions made by the EU and the Mem -
ber States to the FSF; and
(e) whether the EU has contributed to simplifying the mechanisms for 
delivery of climate finance (‘reducing fragmentation’).
COORDINATION OF EU AND MEMBER STATES COUNTRY PROGRAMMES 
NEEDS IMPROVEMENT
28.  The need for coordination in external aid between the EU and its Member 
States has been regularly stressed over the years in Council conclusions26. 
According to the Paris Declaration and the European Consensus on De -
velopment, aid should be concentrated in those areas where a donor 
has a comparative advantage.
29.  The Commission and EEAS believe that the division of labour and iden -
tification of comparative advantages can only be determined at partner 
country and context -specific levels. EU delegations are expected to ex -
plore division of labour. No specific analysis is carried out: comparative 
advantages are usually measured by a donor’s capacity to ‘mainstream’  
climate change in a particular sector, and human resources at the re -
gional or central levels are not taken into account. The Commission 
and the Member States do not exchange information on allocations by 
country under their climate finance initiatives, in particular to identify 
countries in which there are substantial overlaps (‘darling countries’) or 
gaps (‘aid orphans’) in terms of donor activity and/or in the level of aid 
allocations. The EU Code of Conduct encourages complementarity and 
division of labour in development policy27.
30.  The third monitoring report and progress review of the FTI (see para -
graph 9) found mixed results28. A pilot scheme involving EU delegations 
and Member State embassies for a select number of countries (including 
Bangladesh) was launched, but the results were disappointing for rea -
sons linked to both donors and partner countries29. The Court’s findings 
concur with the OECD–DAC’s conclusions in its European Union Peer 
Review (2012) that a combination of technical and political obstacles 
has meant that the EU institutions have not made as much progress as 
they had hoped in joint programming30.26 See, for example, the 
Council Conclusions of 
14.10.2010 (Preparations 
for the 16th session of 
the Conference of the 
Parties (COP 16) to the 
United Nations Framework 
Convention on Climate 
Change (UNFCCC) and 
the 6th session of the 
Meeting of the Parties 
to the Kyoto Protocol 
(Cancun, 29 November to 
10 December 2010)).
27 See the EU Code of 
Conduct on Complementarity 
and the Division of Labour in 
Development Policy http://
register.consilium.europa.eu/
pdf/en/07/st09/st09558.en07.
pdf 
See also Council Conclusions 
of the 3166th Foreign 
Affairs Council meeting of 
14 May 2012.
28 SEC(2011) 502 final of 
19 April 2011, Annex 5.
29 Including: lack of partner 
country capacity or interest; 
lack of proper governance 
rules; complex circumstances 
in the country; the existence 
of other coordination 
mechanisms; lack of 
synchronisation of donors’ 
agendas or programming 
cycles; lack of transparency 
on the part of some donors; 
strong bilateral interests; 
and, in some cases, clear 
predominance of the EU as 
the main donor.
30 http://www.oecd.org/dac/
peer -reviews/50155818.pdf  
(p. 22).18
Special Report No 17/2013 – EU climate finance in the context of external aid
31.  The effective division of labour and complementarity of donor actions 
are dependent on several factors. These include:
 ο donor willingness to cooperate on aid effectiveness and the fight against 
corruption;
 ο national authority willingness to cooperate;
 ο the presence of a national climate strategy.
 These are examined in more detail in paragraphs 33 to 39.
32.  The quality of donor coordination on climate change varied in the four 
countries visited by the Court. It was better in Bangladesh, Tanzania and 
Uganda than in Indonesia, but the Court found that there remains scope 
for improved action by the EU delegations to strengthen EU donor coord-  
ination in all four countries. Box 1  illustrates an example of inadequate 
coordination found during the Court’s field inspection in Bangladesh.
BANGLADESH: AN EXAMPLE OF UNCOORDINATED PROGRAMMES
In Bainpara, two water supply programmes were implemented almost simultaneously. One, funded by UNICEF, 
UK and Oxfam was completed in 2011. The other one, funded by the EU and UK through the Comprehensive 
Disaster Management Programme and the German development agency31 was completed in 2012. Inadequate 
coordination meant that the possibility to combine support from various donors in one programme for a more 
cost -effective approach was not considered.
31 Deutsche Gesellschaft für Technische Zusammenarbeit.BOX 119
Special Report No 17/2013 – EU climate finance in the context of external aid
33.  Donor willingness to coordinate their efforts varies greatly between the 
four countries visited:
(a) in Bangladesh, Tanzania and Uganda, climate finance is discussed in 
thematic working groups but the implementation of programmes 
is not always well coordinated (see paragraph 32)32. EU Heads of 
Mission in Bangladesh expressed doubts about the joint program -
ming as set out in the Council Conclusions33;
(b) in Indonesia, donor competition exists and government roles and 
responsibilities with regard to climate change are unclear. Other 
factors pose additional challenges: the country’s size, its consider -
able natural resources and a financial capacity that attracts many 
donors34 with different national agendas; a few donor countries 
dominate as ‘natural leaders’ by providing very substantial amounts 
of funding35.
34.  Like other forms of foreign aid, climate finance is vulnerable to cor -
ruption36. Bangladesh, Indonesia, Tanzania and Uganda are all strongly 
affected by this problem37. Donor cooperation is essential to minimise 
the risks of corruption.
35.  In Uganda, international donors developed the Joint Response to Cor -
ruption in 2009. Following the discovery by Uganda’s Auditor -General 
in 2012 that millions of USD in donor money had disappeared, several 
donors suspended aid to Uganda, including the Commission and Mem -
ber States. In Tanzania, there was a high level dialogue on corruption in 
the framework of the Global Budget Support Partnership.
36.  In Bangladesh, where corruption was described to the Court as ‘egre -
gious’ by a major donor, two trust funds have been set up  — one by the 
government (Bangladesh Climate Change Trust Fund), and the other by 
international donors, including the EU, to limit fiduciary risks (Bangladesh 
Climate Change Resilience Fund). In Indonesia, most donors, including 
the EU, have opted not to participate in the Indonesia Climate Change 
Trust Fund due to weak governance arrangements.32 For example, in Uganda 
the World Bank intends to 
fund a new water supply 
and sanitation programme 
although there is already 
a programme co -financed by 
other donors, including the 
EU, which works well.
33 Council conclusions 
No 16773/11 of 
14 November 2011.
34 There are around 
50 donors in place, according 
to the EU delegation.
35 For example, while EU 
ODA to Indonesia in 2009–10 
amounted on average to 
109 million USD, Japan 
provided 1 505 million USD, 
France 326 million USD, the 
USA 269 million USD and 
Germany 172 million USD  
(Source:  http://www.oecd.
org/dac/stats/IDN.gif ).
36 Transparency International, 
Global Corruption Report: 
Climate Change (2011).
37 According to Transparency 
International’s Corruption 
Perception Index, all four rank 
low among 176 countries 
and territories: Tanzania (102); 
Indonesia (118); 
Uganda (130); and 
Bangladesh (144)  
(Source: http://cpi.
transparency.org/cpi2012/
results/ ).20
Special Report No 17/2013 – EU climate finance in the context of external aid
37.  However, institutionalised dialogue similar to what is in place in Uganda 
and Tanzania has not been established in Bangladesh and Indonesia, nor 
has it been proposed by the Commission. Donors in these countries need 
to intensify their coordination in the fight against corruption38.
38.  National governments’ willingness to play an important role in support -
ing donor coordination and division of labour greatly influences aid 
effectiveness. A mixed picture was found in the four countries visited:
(a) the government of Bangladesh participates actively in develop -
ment partner groups and their subsidiary working parties. Bang -
ladesh was the first country in the world to publish a Joint Coop -
eration Strategy in response to the Paris Declaration and Accra 
Agenda which helped ensure greater complementarity of donor 
programmes39;
(b) the governments of Uganda and Tanzania participate in joint the -
matic working groups with development partners, although some 
ministries prefer to maintain bilateral contacts so as to take advan -
tage of potential differences of view among development partners;
(c) in Indonesia, responsibility for coordination in the area of climate 
change is shared by a range of bodies40, and coordination account -
ability is unclear to donors.
39.  A single clear national climate strategy can bolster national ownership 
and facilitate donor coordination. Bangladesh serves as an example of 
good practice, whereas Indonesia has several purported strategies and 
policies. Nonetheless, a strategy alone is not sufficient to ensure better 
results41. The Court found that, in all four countries visited, the lack of 
prioritisation within government weakened climate change strategies 
and action plans.38 The Court has pointed out 
on several previous occasions 
that the Commission needs 
to be more attentive to the 
risks of corruption in external 
aid. See, for example, Special 
Report No 11/2010 on the 
Commission’s management 
of general budget support 
in ACP , Latin American and 
Asian countries and Special 
Report No 4/2013 on EU 
cooperation with Egypt in the 
field of governance ( http://
eca.europa.eu ).
39 However, the Joint 
Cooperation Strategy was 
suspended in 2011 following 
allegations of corruption 
relating to a major World 
Bank -financed programme.
40 Such as the Bappenas 
(Ministry of National 
Development Planning), the 
National Council on Climate 
Change or the REDD Task 
Force.
41 For example, since 2007 
Indonesia has produced 
several national action plans 
and roadmaps for climate 
change, but they do not 
facilitate donor coordination.21
Special Report No 17/2013 – EU climate finance in the context of external aid
THE COMMISSION AND MEMBER STATES HAVE NOT AGREED HOW TO 
SCALE UP LONG‑TERM CLIMATE FINANCE
40.  The Commission stepped up efforts after the Copenhagen Accord to 
scale up total EU and Member States’ climate finance by identifying po -
tential innovative sources in order to meet the 2020 commitment (see 
paragraphs 5 and 11)42:
 ο auction revenues under the EU Emissions Trading System (EU ETS);
 ο carbon pricing of international aviation and maritime transport;
 ο a new Carbon Market Mechanism;
 ο a financial sector levy; and
 ο access to climate finance through multilateral and other development 
banks.
41.  The Commission has taken several initiatives to tap these potential in -
novative sources of finance in coordination with Member States with 
varying degrees of success (see Annex V ), but significant challenges 
remain:
(a) private finance is expected to form the largest source of climate 
finance towards meeting the commitments under the Copenhagen 
Accord. However, there is no agreement globally on what types of 
spending will count as private finance43. In spite of repeated Coun -
cil conclusions44 and several Commission initiatives45, the Commis -
sion and Member States have not adopted a common position;
(b) notwithstanding the Council’s commitment ‘to work towards 
the identification of a path for scaling up climate funding from 
2013 to 2020’46, the Commission has not yet proposed a road -
map. How much funding could be used for developing countries 
and what Member States’ respective contributions has not been 
decided.42 SEC(2010) 409 final 
of 1 April 2010 and 
SEC(2011) 487 final of 
8 April 2011.
43 OECD, Comparing 
Definitions and Methods to 
Estimate Mobilised Climate 
Finance , May 2013.
44 See 3167th Economic 
and Financial Affairs 
Council conclusions of 
15 May 2012 or 3198th 
Economic and Financial 
Affairs Council conclusions of 
13 November 2012.
45 In August 2011, the 
Commission launched 
a questionnaire for Member 
States on the definition 
and role of private climate 
finance, but fewer than half 
the Member States (plus 
the EIB) replied. Discussions 
are ongoing at Council 
working party and expert 
group levels. In spite of some 
progress through the sharing 
of lessons learned between 
Member States on mobilising 
private finance, an agreement 
is still outstanding.
46 Press release from the 
3088th Economic and 
Financial Affairs Council 
meeting of 17 May 2011 
and Council conclusions on 
climate finance of the 3115th 
Economic and Financial 
Affairs Council meeting of 
4 October 2011.22
Special Report No 17/2013 – EU climate finance in the context of external aid
AN EFFECTIVE MONITORING, REPORTING AND VERIFICATION SYSTEM 
IS NOT YET IN PLACE
42.  An effective monitoring, reporting and verification framework can 
enhance the effective use of public and private funds. Good report -
ing is critical to building confidence and trust between donor and re -
cipient countries through strengthened accountability, credibility and 
transparency.
43.  The entry into force in June 2013 of a mechanism47 for monitoring and 
reporting greenhouse gas emissions (MMR) followed on the heels of the 
UNFCCC framework for the biennial reporting adopted in February 201348. 
The MMR goes further than the UNFCCC reporting framework insofar as it 
requires Member States to report on their use of ETS revenue for climate 
finance as well as all public (i.e. not private) climate finance provided to 
developing countries.
44.  However, while common reporting formats have been agreed, common 
standards and definitions have not. Consequently, the new mechanism 
still falls short of ensuring sufficient comparability of data. In particular, 
divergent national definitions of ‘new and additional’ , the application of 
the Rio Markers and the distinction between promises and payments are 
matters that have not yet been resolved — all of which may impinge 
on the extent to which international climate finance is genuinely being 
scaled up.
‘NEW AND ADDITIONAL ’
45.  The 2009 Copenhagen Accord stressed the need for ‘new and additional 
resources’ , although this was not defined. The European Parliament has 
called for EU resources for adaptation and mitigation to come on top of 
the 0,7 % official development assistance target49. To date, there is no 
commonly agreed definition of ‘new and additional’ , and donors (includ -
ing individual Member States) have followed their own approaches50.47 Regulation (EU) 
No 525/2013 of the European 
Parliament and of the 
Council of 21 May 2013 on 
a mechanism for monitoring 
and reporting greenhouse 
gas emissions and for 
reporting other information 
at national and Union level 
relevant to climate change 
and repealing Decision 
No 280/2004/EC (OJ L 165, 
18.6.2013, p. 13).
48 http://unfccc.int/resource/
docs/2012/cop18/eng/08a03.
pdf
49 European Parliament 
resolution on the climate 
change conference in 
Durban, P7_TA(2011)0504 
(16.11.2011).
50 EU Accountability 
Report 2011 on Financing 
for Development: Review of 
progress of the EU and its 
Member States, p. 44 ( http://
eur-lex.europa.eu/LexUriServ/
LexUriServ.do?uri=SEC:2011
:0500:FIN:EN:PDF ). See also, 
for example, OECD’s report 
‘Development Perspectives 
for a Post-2012 Climate 
Financing Architecture’ , p. 8.23
Special Report No 17/2013 – EU climate finance in the context of external aid
46.  In June 2010 the Commission proposed a common approach on the 
definition of ‘additional’ funding. However, some Member States were 
opposed to this. A 2011 Commission survey of Member States revealed 
the diversity of definitions used. The Court can confirm that, for four 
Member States examined51, very divergent approaches to what is con -
sidered ‘new and additional’ were used (see Annex VI ).
47.  Some significant FSF contributions reported by Member States include 
commitments previously made52. Some Member States (for example Bel -
gium, Spain and Sweden) consider funding for the GEF to be part of their 
FSF pledges, others (such as France, Finland and the United Kingdom) 
only partially count it, while Denmark and Germany do not count it at 
all53.
RIO MARKERS
48.  Climate change is usually an element integrated into aid programmes 
that also address other development objectives54. Identifying climate 
change -related programmes therefore involves a margin of judgement: 
the most widely accepted method for tracking climate change spending 
is the OECD–DAC methodology of ‘Rio Markers’ 55.
49.  Although nearly all EU FSF funding is provided by Member States that 
are bound to apply Rio Markers in their reports to the OECD–DAC56, the 
Commission and the Member States have not agreed on a common set 
of parameters to quantify the climate finance component of ‘Rio -marked’  
programmes. As a result, while the Commission applies its own classifi -
cation of the Rio Markers, it has limited insight into the Member States’  
practices and therefore cannot know whether the reported data are 
comparable and the totals can be reconciled.51 Germany, France, Italy 
and the United Kingdom. 
The Court selected these 
four Member States on the 
basis of the higher amounts 
provided for the EU FSF.
52 For example, the EU 
FSF list of programmes 
includes contributions from 
Member States to the Clean 
Technology Fund, the Pilot 
Programme for Climate 
Resilience or the Global 
Environment Facility (GEF). 
However the trustee reports 
of these funds do not reflect 
these increases.
53 J. Brown, M. Stadelmann, 
L. Hörnlein, Fast‑start 
finance to address climate 
change: what we know at 
the mid‑point , Overseas 
Development Institute, 2011.
54 Such as agriculture, energy 
or education.
55 Since 2007, the Rio Markers 
have been mandatory for 
OECD–DAC members, 
making them the most widely 
accepted methodology.
56 Fourteen Member 
States are not OECD–DAC 
members: Bulgaria, Czech 
Republic, Estonia, Croatia, 
Cyprus, Latvia, Lithuania, 
Luxembourg, Hungary, Malta, 
Poland, Romania, Slovenia 
and Slovakia.24
Special Report No 17/2013 – EU climate finance in the context of external aid
PLEDGES, PROMISES AND PAYMENTS
50.  The Copenhagen Accord did not specify what donors’ pledges to raise 
climate finance should actually mean. As a result, donors (including 
Member States) have reported their FSF amounts on the basis of prom -
ises (allocations) rather than actual cash payments (disbursements). This 
problem is not limited to the EU57. Many of the dedicated multilateral 
funds through which the Commission and Member States channel cli -
mate finance do not consistently report on the disbursement of funding. 
The OECD reported in May 2013 on the uncertainty over what the term 
‘mobilise’ means in the context of international climate finance and the 
implications that this may have on trust and transparency58.
51.  For the FSF, based on its own analysis, the Court estimates that, as at 
mid-2013, 155 million euro had been committed and 38 million euro had 
been paid by the Commission.
THE EXTENT TO WHICH THE FSF PLEDGE HAS BEEN FULFILLED IS 
UNCLEAR
52.  The EU and its Member States reported annually to the UNFCCC on their 
contribution for each of the 3 years of the FSF initiative. The Commission 
compiled the data, which covered the Commission and Member State 
contributions. Each report was then adopted by the Council and submit -
ted jointly by the EU Presidency and the Commission to the UNFCCC.
53.  The final report59, submitted to the UNFCCC on 29 May 2013, states that 
the EU and its Member States mobilised 7,34 billion euro during the 
2010 to 2012 period. This exceeds the overall commitment of 7,2 bil-
lion  euro made in 2009 (see Figure 3 ). The Council concluded that the 
overall commitment had been achieved.57 Between 2003 and 2011, 
the total value of climate 
funds pledged, approved 
for spending and disbursed 
for global climate funds 
at a worldwide level 
was 30,88 billion USD, 
9,34 billion USD, and 
1,92 billion USD respectively.  
Source:  ‘The Atlas of Climate 
Change’ , Dow & Downing, 
2011. Figures obtained from 
www.ClimateFundsUpdate.
org
58 ‘The lack of clarity 
regarding ‘mobilised’ climate 
finance and what could 
constitute appropriate 
guidelines for measurement, 
reporting and verification 
(MRV) has important political 
implications in the UNFCCC 
context, as such clarity is 
required for building trust 
and transparency, as well 
as for improving mutual 
accountability’ . OECD Climate 
Change Expert Group Paper 
No 2013(2), May 2013.
59 Each report is based on 
aggregated data with an 
annex comprising a detailed 
list of individual actions (‘list 
of interventions’) supported 
by the Commission and 
Member States. The list of 
interventions does not, 
however, include the sum of 
the individual actions  
(http://ec.europa.eu/
clima/policies/finance/
international/faststart/
documentation _ en.htm).25
Special Report No 17/2013 – EU climate finance in the context of external aid
54.  The Court could not reconcile the reported amount of 7,34 billion euro 
with the data in the ‘list of interventions’59. The Court estimated that 
the sum of interventions amounted to approximately 5,48 billion euro, 
resulting in a difference of 1,86 billion euro (25 % of the reported total). 
The Commission did not review the accuracy of the submissions by 
Member States and is unable to explain the differences.
55.  Given these differences and the lack of common definitions and methods 
to identify climate -related spending, the extent to which the FSF com -
mitment was fulfilled by the EU and its Member States is unclear.
FSF PLEDGES BY DONOR
(million euro1)
1 The developed countries’ pledges amounted to 31,2 billion USD. This amount was calculated in euro on the basis of the exchange rate 
used by the EU and its Member States to convert their pledge of 10 billion USD to 7,2 billion euro.
Source:  http://climateanalytics.org/sites/default/files/attachments/news/20101005_FastStartFinance_update.pdfFIGURE  3
360
274
257
9410 800
7 200
3 4567 050
150Australia
Canada
Norway
Switzerland
US
Japan
EU
EU Member States
EU Commission26
Special Report No 17/2013 – EU climate finance in the context of external aid
THE COMMISSION AND MEMBER STATES DID NOT ACT JOINTLY TO 
REDUCE THE FRAGMENTATION OF CLIMATE FUNDS
56.  Recent years have seen a worldwide profusion of climate change -related 
funds. This proliferation of funding mechanisms is creating a highly frag -
mented system which poses significant coordination, ownership and 
accountability challenges.
57.  The United Nations Development Programme (UNDP) has estimated that 
there are more than 50 international public funds, 45 carbon markets 
and 6 000 private equity funds providing climate change finance60, each 
with its own governance structure. As the World Bank notes, fragmenta -
tion of this sort threatens to reduce the overall effectiveness of climate 
finance61. The Paris Declaration states62 that donors should aim to apply 
common and simplified procedures to avoid duplication and to reduce 
transaction costs, and the Organisation for Economic Cooperation and 
Development (OECD) has warned that clearer definition of the respec -
tive roles of multilateral funds, better coordination, or consolidation of 
some of the funds, might be appropriate63.
58.  The Commission and Member States use both bilateral and multilateral 
channels to disburse climate finance. In 2010 they used no less than 
22 multilateral channels64.
59.  The Commission did not consider reducing the fragmentation of climate 
funds as a priority when designing its own programmes. It also did not 
discuss the issue with Member States.
60.  The Commission proposed to create the Global Climate Change Alli -
ance (GCCA) as the ‘EU answer to the development dimension of cli -
mate change’65. The Council endorsed this proposal in November 2007, 
although it noted the need to make ‘optimal use’ of mechanisms already 
existing at both EU and global level, and stressed the ‘strictly comple -
mentary’ nature of the GCCA to ongoing processes and frameworks66. 
Only five Member States have made (mostly modest) contributions to the 
GCCA67, and despite several attempts to encourage greater participation, 
the Commission has not succeeded in widening the base of EU support 
for its flagship initiative.60 UNDP , Blending Climate 
Finance through National 
Climate Funds , 2011, p. 6. For 
an analysis of multilateral 
funding mechanisms, 
see OECD, Development 
Perspectives for a Post‑2010 
Climate Financing Architecture , 
(http://www.oecd.org/
dataoecd/47/52/47115936.
pdf).
61 World Bank, World 
Development Report 2010: 
Development and Climate 
Change , 2009.
62 OECD, The Paris Declaration 
on Aid Effectiveness , 2005, p. 6.
63 OECD, Development 
Perspectives for a Post‑2012 
Climate Financing Architecture , 
2011, p. 23.
64 EU Fast start finance 
Report for Cancún, Council 
document No 15889/10.
65 European Commission 
(2008): ‘Commission Staff 
Working Document: 
Implementation Framework 
of the Global Climate Change 
Alliance’ , p. 4.
66 See General Affairs 
and External Relations 
Council Conclusions of 
20 November 2007 ( http://
register.consilium.europa.eu/
pdf/en/07/st15/st15103.en07.
pdf).
67 The GCCA combines 
contributions from the EU 
budget (166 million euro), 
the EDF (40 million euro) 
and Member States: 
Ireland (31 million euro), 
Sweden (5,1 million euro), 
Estonia (0,8 million euro), 
Cyprus (0,6 million euro) 
and the Czech Republic 
(0,2 million euro).27
Special Report No 17/2013 – EU climate finance in the context of external aid
61.  The GCCA has not been integrated either into the work of the Member 
States or into the Commission’s own programming. The Commission has 
struggled to convince the Member States of the added value of the ini -
tiative. The Member States’ inconsistency in endorsing the Commission’s 
proposal to launch the GCCA, while subsequently showing reluctance to 
actively support the initiative, has also contributed to a significant gap 
between the GCCA’s original ambitions and actual achievements.
62.  The establishment of the GCCA in 2007–08 predated both the conclu -
sions by the Commission on Climate Change and Development in 2009 
that no further vertical funds should be created for adaptation, and the 
COP 16 agreement in Cancún in 2010 to establish the GCF. However the 
Commission did not seek to reappraise the necessity of maintaining 
the GCCA in the light of these developments. The Member States have 
also been reluctant to merge or close their national climate funds, or to 
obtain greater synergies among them, as a way of reducing transaction 
costs and the administrative burden for developing countries.
63.  The Green Climate Fund (GCF) was established to help meet the aims of 
the Copenhagen Accord through raising international climate finance 
to 100 billion USD per year by 2020. A Transitional Committee prepared 
the launch of the GCF. Some Member States made joint contributions 
(e.g. Denmark and the Netherlands); the Commission and other Member 
States contributed separately (e.g. Germany and the United Kingdom). 
The EU and the Member States did not act jointly.
64.  The GCF Governing Board is responsible for funding decisions, includ -
ing the arrangements for delivery. When the appointment of developed 
countries’ representatives to the Board was agreed in May 2012, seven 
out of 12 seats were allocated to Member States. Although the Council 
expressed support for allocating one seat to the Commission as the EU 
representative68, the Member States did not agree to do so in practice69. 
The Commission is the EU’s lead negotiator at COPs, and the promoter 
of coordination in accordance with the Treaty and the European Con -
sensus on Development, but is absent from the table in the largest fund 
designed to address climate change.68 3167th Council meeting, 
Economic and Financial 
Affairs, 15 May 2012.
69 The Russian Federation 
and the United States 
opposed a seat for the EU, 
arguing that this would imply 
double representation for 
some of the Member States.28
Special Report No 17/2013 – EU climate finance in the context of external aid
65.  The Court concludes that the Commission has managed EU climate -re-
lated spending from the EU budget and the EDF well. However, for the 
EU to maximise its international impact, coordination between the Com -
mission and Member States in climate finance for developing countries 
should be considerably improved.
66.  As regards its management of climate -related support funded from the 
EU budget and the EDF, the Commission has performed well. In line 
with policy commitments it steadily increased climate -related spending 
since 2007 and intends to scale up this funding considerably during the 
2014–20 period (see paragraphs 18 to 20). It has focused on appropriate 
global priorities and tailored its programmes to the specific circum -
stances of individual partner countries (see paragraphs 21 to 25).
67.  Coordination between the Commission and Member States in respect of 
climate finance for developing countries is inadequate. The Commission 
has not exercised sufficient leadership in some areas and the Member 
States have not been sufficiently responsive to some of its initiatives. 
Notwithstanding some improvements in coordination between the 
Commission and Member States during the period examined, significant 
further efforts are needed to ensure that the EU’s and Member States’  
country programmes are complementary, and to prevent and combat 
corruption (see paragraphs 28 to 39). Common positions and practices 
on a number of key issues have not emerged. They have not agreed how 
to meet the commitments to scale up climate finance to 2020; there is 
no common definition of ‘new and additional’ climate finance and ‘pri -
vate finance’ , nor a common application of the Rio Markers to identify 
climate -related programmes (see paragraphs 40 and 41).
68.  A robust reporting system providing comprehensive and reliable inform-  
ation on the Commission’s and Member States’ climate -related spending 
with which to monitor compliance with climate finance commitments 
has not yet been established (see paragraphs 42 to 51) and the extent 
to which the FSF pledge has been fulfilled is unclear (see paragraphs 52 
to 55). No attempt has been made to reduce the proliferation of climate 
funds, which involves serious risks of inefficiencies, inadequate account -
ability and fragmentation of aid (see paragraphs 56 to 64).CONCLUSIONS AND RECOMMENDATIONS29
Special Report No 17/2013 – EU climate finance in the context of external aid
69.  The Court makes the following recommendations:
The Commission should propose a roadmap to the Council for the scal -
ing-up of climate finance towards the Copenhagen Accord 2020 target, 
including a definition of private finance.
The Commission and the EEAS should report on the extent to which 
the EU target of spending 20 % of the EU budget and EDF between 
2014 and 2020 on climate -related action is implemented in develop -
ment aid, specifying what has been committed and disbursed.
The Commission should have an independent evaluation made of the 
Global Climate Change Alliance, including an examination of why most 
Member States did not choose to co -finance it.To improve the transparency and accountability of the EU’s climate 
finance, the Commission and the Member States should, in the frame -
work of the Monitoring Mechanism Regulation, agree common stand -
ards for monitoring, reporting and verification, notably with respect to 
the definition of ‘new and additional’, the application of the Rio Markers 
and reporting on the disbursement of climate finance.RECOMMENDATION 1
RECOMMENDATION 3
RECOMMENDATION 4RECOMMENDATION 230
Special Report No 17/2013 – EU climate finance in the context of external aid
The Commission and Member States should intensify their cooperation 
to implement the EU Code of Conduct on Division of Labour in the field 
of climate finance, notably with respect to the exchange of information 
on allocations by countries, joint programming and preventing and 
combating corruption in climate finance.RECOMMENDATION 5
This report was adopted by Chamber III, headed by Mr Karel PINXTEN, 
Member of the Court of Auditors, in Luxembourg at its meeting of 
10 December  2013.
For  the  Court  of Auditors
Vítor  Manuel  da SILVA  CALDEIRA
President
31
Special Report No 17/2013 – EU climate finance in the context of external aid
1 Only UN members.
Sources:  http://www.un.org/special-rep/ohrlls/ohrlls/allcountries-regions.pdf  and  
http://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_in_AfricaLEAST DEVELOPED COUNTRIES, SMALL ISLAND DEVELOPING STATES AND AFRICAANNEX I
LDCs
AFRIC ASIDS¹
Afghanistan
Bangladesh
Buthan
Cambodia
Lao
Myanmar
Nepal
YemenHaiti
Kiriba ti
Maldiv es
Samoa
Solomon I slands
Timor-L este
Tuvalu
Vanua tu
Cape Verde
Comor os
Guinea-B issau
São Tomé and P rincipe
SeychellesMauritiusAntigua and B arbuda Dominic an Republic
Bahamas  Fiji
Barbados  Grenada
Belize   Guyana
Cuba   Jamaic a
Dominic a  Marshall I slands
   M icronesia
   Naur u
   P alau
   P apua N ew G uinea
   S aint Kitts and N evis
   S aint Lucia
   S aint Vincent and the G renadines
   S ingapor e
   S uriname
   T onga
   T rinidad and Tobago
Eritrea
Ethiopia
Gambia
Guinea
Lesotho
Liberia
Madagasc ar
Mala wi
MaliMauritaniaMozambique
NigerRwanda
Senegal  
Angola
Benin
Burkina F aso
Burundi
Central African Republic
Chad
Democr atic Republic 
 of the C ongo
Djibouti Equatorial G uinea  enoeL arreiS 
ailamoS 
naduS 
Tanzania
ogoT 
Uganda
Zambia
 
Algeria
Botsw ana
Camer oon
Côté d’Ivoire
Egypt
Gabon
Ghana
KenyaLibya
Mor occo
Namibia
NigeriaRepublic of the C ongo
South A frica
South S udan
Swaziland
Tunisia
Zimbab we32
Special Report No 17/2013 – EU climate finance in the context of external aid
EUROPEAID’S CLIMATE FINANCE 2003–12
The Commission funds climate finance in the context of external aid from the following main sources:
(a) the European Development Fund (EDF), which is the main development cooperation instrument 
with African, Caribbean and Pacific States (ACP) and overseas countries and territories;
(b) the Development Cooperation Instrument (DCI), covering Latin America, Asia and Central Asia, the 
Middle East and the Republic of South Africa, as well as thematic programmes;
(c) the European Neighbourhood Partnership Instrument (ENPI)1 covering ENP countries2 and Russia;
(d) humanitarian aid following natural disasters, such as flooding in Pakistan or the Indian Ocean 
tsunami.
Over the 2003–12 period, commitments made for climate finance under external aid managed by 
EuropeAid amounted to an estimated 4 650 million euro. A more detailed breakdown of this amount 
is provided in the tables  below.
TABLE 1 — BREAKDOWN OF EUROPEAID’S CLIMATE FINANCE BY FUNDING INSTRUMENT 
FOR THE 2003–12 PERIOD
(million euro)
Years DCI ENPI EDF Total
2003 82 5 33 120
2004 247 27 26 300
2005 118 5 74 196
2006 147 20 94 261
2007 125 162 205 492
2008 283 63 56 402
2009 269 39 436 745
2010 267 163 245 675
2011 337 123 166 626
2012 341 258 234 833
Total 2 216 864 1 570 4 650
Note:  Detail may not sum to totals because of rounding.
1 From 2014 this will become the European Neighbourhood Instrument (ENI).
2 Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Occupied Palestinian Territories, 
Syria, Tunisia and Ukraine.ANNEX II33
Special Report No 17/2013 – EU climate finance in the context of external aid
TABLE 2 — BREAKDOWN OF EUROPEAID’S CLIMATE FINANCE BY GEOGRAPHICAL AREA
(million euro)
Year  Africa  Asia  Latin 
America  Caribbean  Eastern 
Europe 
and 
Russia Mediterranean  
and Middle 
East  Oceania 
and 
Pacific  Multi 
region  Total 
2003 22 22 31 17 5 - 4 19 120
2004 24 82 152 3 4 22 7 6 300
2005 88 41 27 1 5 - 15 20 196
2006 103 25 67 10 15 7 6 28 261
2007 118 18 14 62 101 86 19 74 492
2008 98 85 13 0 114 41 3 47 402
2009 117 55 45 32 1 48 27 419 745
2010 204 104 32 9 45 126 32 123 675
2011 186 101 28 28 72 47 4 160 626
2012 236 100 96 26 98 160 27 90 833
Total 1 197 633 504 189 460 537 145 986 4 650
TABLE 3 — ESTIMATED SPLIT BETWEEN ADAPTATION AND MITIGATION IN EUROPEAID’S 
CLIMATE FINANCE ALLOCATIONS FOR DEVELOPING COUNTRIES
(million euro)
YearsAdaptation Mitigation Total1
Amount % Amount % Amount
2003 68 41 % 100 59 % 120
2004 205 41 % 289 59 % 300
2005 117 42 % 160 58 % 196
2006 117 33 % 233 67 % 261
2007 279 39 % 433 61 % 492
2008 103 21 % 388 79 % 402
2009 269 31 % 588 69 % 745
2010 424 54 % 366 46 % 675
2011 401 45 % 490 55 % 626
2012 621 50 % 618 50 % 833
Total 2 603 42 % 3 664 58 % 4 650
1 Some interventions qualify for both mitigation and adaptation. For this reason, the total amount is not the sum of the two columns.
Note: Detail may not sum to totals because of rounding.
Source:  EuropeAid’s database.ANNEX II34
Special Report No 17/2013 – EU climate finance in the context of external aid
ANNEX II
TABLE 4 — WEIGHT OF LDCS, SIDS AND AFRICAN COUNTRIES IN EUROPEAID’S CLIMATE 
FINANCE ALLOCATIONS IN COUNTRY PROGRAMMES
(million euro)
YearsAdaptation Climate Finance
LDCs, SIDS, 
African countriesOther countries TotalLDCs, SIDS, 
African countriesOther countries Total1
Amount % Amount % Amount Amount % Amount % Amount
2003 15 38 % 24 62 % 39 24 32 % 51 68 % 75
2004 13 7 % 175 93 % 188 27 10 % 235 90 % 262
2005 50 78 % 14 22 % 64 64 71 % 26 29 % 90
2006 40 56 % 32 44 % 72 66 52 % 62 48 % 128
2007 69 67 % 34 33 % 104 160 65 % 87 35 % 247
2008 41 60 % 28 40 % 69 97 33 % 195 67 % 291
2009 93 93 % 6 7 % 99 179 87 % 26 13 % 206
2010 142 58 % 105 42 % 248 148 40 % 225 60 % 373
2011 87 67 % 42 33 % 129 127 57 % 94 43 % 221
2012 149 69 % 68 31 % 217 162 56 % 125 44 % 287
Total 701 57 % 529 43 % 1 230 1 054 48 % 1 125 52 % 2 179
1 Some interventions qualify for both mitigation and adaptation. For this reason, the total amount is not the sum of the two columns.
Note:  Detail may not sum to totals because of rounding.
Source:  EuropeAid’s database.35
Special Report No 17/2013 – EU climate finance in the context of external aid
ANNEX III
2007–13 CLIMATE FINANCE FLOWS OF EU FUNDING FOR DEVELOPING COUNTRIES
European D evelopmen t FundGener al Budget Lines
(Heading 4)
Humanitarian
AidDCI ENPI Policy Instruments ProgrammesGeogr aphic
Programmes (5)
Coun try
ProgrammesRegional
ProgrammesENR TPThema tic
Programmes (8)Thema tic
Programmes Geogr aphic
Programmes
Coun try
ProgrammesRegional
ProgrammesIntra-ACP
Priority 1
(Climate change and
sustainable energy) Priorit y 2
(Environmen t for
developmen t)Priority 3
(Strengthening
environment and
climate go vernance)
Facilities under
establismen t:
Caribbean
Investmen t Facilit y
Paciﬁc Investment
Facilit yACP
Investmen t
Facilit y 
EU-Africa
Infrastructure
Trust F und Water
Facilities
Energy
Facilities
EU-ACP
Natural Disaster
Facility
DRR
Programme
GFDRRGCCAInvestmen t
Facilit y
for Central Asia
Investmen t
Facilit y
for A sia 
Latin Americ a
Investm ent
Facilit y FAST-START
FINA NCEFacility for Euro-
Mediterranean
Investment 
and Partnership
Neighbourhood
Investmen t
Facilit y
Deliver y appr oaches:
REDD , FLEGT ,
Clean Technology
Fund P artnership
for Mark et
Readiness , etc.GEEREF
Regional F unds
in dev eloping
coun triesDeliver y appr oaches:
Join t managemen t
with the UN
(UNEP , FCPF), OECD ,
IMF etc. or C entralised
managemen t Deliver y appr oaches:
UNFCCC oper ational
 funding
Capacit y dev elopmen t,
interna tional
negotia tions , 
MRV eﬀorts Great Horn of
Africa (DRR)
DIPECHO
ProgrammeFacilities  Project level
Blending Facilities 
managed by
the ECBlending Facilities 
managed by the 
EIBProgramme 
managed by DG 
ECHO36
Special Report No 17/2013 – EU climate finance in the context of external aid
ANNEX IV
AUDIT METHODOLOGY AND EVIDENCE COLLECTION
A schematic overview of the audit approach is included below.
PRELIMINARY STUDY
1. Prior to undertaking the audit, a preliminary study was conducted to identify the key risks 
related to the EU’s climate finance. This exploratory work was based on desk research and 
interviews with staff involved in the main areas of climate finance to developing countries 
from the Commission, EEAS, NGOs and the Council Secretariat.
INTERVIEWS
2. The auditors conducted interviews with the managers of the administrative and/or finan -
cial units and country desk officers of 17 departments and with senior staff from six non-
governmental organisations. The Commission’s departments were selected for their specific 
responsibilities in the audit scope areas, while the NGOs were selected with the objective of 
obtaining external views from other parties involved in climate finance.
 ο From the Commission:
Directorate-General for Development and Cooperation (DEVCO1) 
Directorate C — Sustainable Growth and Development
Directorate-General for Climate Action (CLIMA)
Directorate A — International and Climate Strategy
Directorate B — European and International Carbon Markets
Directorate C — Mainstreaming Adaptation and Low Carbon Technology
Directorate-General for Humanitarian Aid and Civil Protection (ECHO)
Directorate A Unit 4 — Specific Thematic Policies
Directorate B Unit 5 — Asia, Latin America, Caribbean, Pacific
Directorate C Unit 2 — Budget, External Audit, Informatics
Directorate-General for Economic and Financial Affairs (ECFIN)
DG ECFIN Directorate D Unit 4 — Globalisation — Trade — Development
1 Also known as ‘EuropeAid’ .37
Special Report No 17/2013 – EU climate finance in the context of external aid
 ο From the European External Action Service (EEAS):
Managing Directorate I — Horizontal Issues — Asia and the Pacific
Managing Directorate I.B.1 — China, Hong Kong, Macao, Taiwan, Mongolia
Managing Directorate V.A.4 — Mercosur countries
Managing Directorate VI.B1 — Global Issues and Counter-Terrorism
Managing Directorate Resources A — Finance and Corporate Support
 ο From the European Investment Bank (EIB):
Projects Directorate — Environment, Climate and Social Office 
Directorate for Operations outside the European Union and Candidate Countries
Directorate — Financial Control
 ο From the Council Secretariat:
Directorate E, Unit 1B — Climate Change, Coordination and Horizontal Affairs
 ο From non-governmental organisations (NGOs):
Oxfam International (Brussels) and Oxfam offices in Bangladesh and Uganda
CAN Europe and CAN Tanzania (Tanzania Civil Society Forum on Climate Change and 
Climate Action Network)
WWF (Brussels offices)
Concern Worldwide (Bangladesh)
Shushilan (Bangladesh)
World Agroforestry Centre (Indonesia)
QUESTIONNAIRE
3. A written questionnaire was sent to four EU Member States to obtain information and their 
views.ANNEX IV38
Special Report No 17/2013 – EU climate finance in the context of external aid
SELECTION OF COUNTRIES AND REGIONS
4. A selection of 16 countries and two regions was made for desk review. The criteria for the 
selection were:
 ο Coordination: countries where enough donors exist to assess the division of labour among them;
 ο Level of climate finance: countries that have received substantial amounts in climate finance from 
the Commission since 2002;
 ο Development characteristics and vulnerability to climate change: countries in a variety of situ-  
ations, such as LDCs, SIDS, the BRICS2 and a country receiving substantial climate finance despite 
a relatively high Human Development Index (HDI) ranking;
 ο Geographical distribution: countries from different geographical zones: Africa, Asia and the Pacific, 
Latin America and the European neighbourhood.
5. The countries selected were Bangladesh, Bolivia, Brazil, Central African Republic, China, Ethio -
pia, Guyana, Indonesia, Mali, Morocco, Mauritius, Nicaragua, Tanzania, Uganda, Ukraine and 
Vanuatu. 
6. East Africa and Asia were selected as the regions to be analysed as they received the highest 
levels of climate finance from the Commission.
SAMPLING
7. In order to test the application of the Rio Markers in compliance with the Commission’s FSF 
commitment, a random sample of 10 (out of a total of 19) programmes were analysed.
8. The Commission’s choice of delivery channels was tested on the basis of a random sample 
of 20 climate-related programmes (including bilateral and multilateral delivery channels).
 2 Brasil, Russia, India, China, South Africa.ANNEX IV39
Special Report No 17/2013 – EU climate finance in the context of external aid
VISITS TO FOUR PARTNER COUNTRIES
9. Of the 16 countries, four (Bangladesh, Indonesia, Tanzania and Uganda) were selected for 
visits on the basis of high amounts of funding and different kinds of climate change impacts 
and needs.
10.  During the visits, from 13 to 25  January 2013, the audit team interviewed EU delegation 
staff, representatives of the relevant national authorities, main development partners (EU 
and non-EU) and representatives of non-governmental organisations and civil society. Field 
visits were made to selected programmes.ANNEX IV
The audit examined the provision of EU climate ﬁnance for developing countries.
This was addressed by the following questions:
Has the Commission managed climate-related support
funded from the EU budget and the EDF well?Has the Commission taken appropriate steps to
promote coordination with EU Member States in
respect of climate ﬁnance for developing countries;
and has such coordination been adequate?
- The Commission had scale-up its climate ﬁnance,
   including FSF - The Commission identiﬁed the global climate change   challenges, vulnerabilities and opportunities in   developing countries- The Commission allocated its climate ﬁnance   according to these and policy priorities and in   coordination with the EU Member States- The Commission coordinated with the EU Member
   States and other donors to ensure complementarity
   and division of labour in the partner countries- The Commission and the EU Member States   identiﬁed innovative sources- The Commission and the EU Member States are   prepared to signiﬁcanty scale-up climate ﬁnance   between  2014 and 2020- The Commission and the EU Member States FSF   reporting  is accurate and comparable- EU FSF amounts pledged were delivered- The Commission and the Member States acted jointly   to streamline the climate ﬁnance architecture
- Interviews with the Commission services
   (EuropeAid, CLlMA, ECFIN) and the EEAS
- Documentary review
- Analythical review- Questionnaire to selected EU Member States- Interviews with the Commission services
   (EuropeAid, CLlMA, ECFIN) and the EEAS- Field missions- Interviews with representatives from the EU   delegations (EEAS, EuropeAid, ECHO), EU Member   States, other donors, national authorities and civil society
   organisations from the four countries visited
- Inspection of climate change programmes and   interviews with promoters and beneﬁciaries- Documentary review- Analythical review- Testing (sample)- Internet researchAudit
objectives
Audit
criteria
Evidence 
collection 
methods40
Special Report No 17/2013 – EU climate finance in the context of external aid
MAIN POTENTIAL SOURCES OF REVENUE IDENTIFIED BY THE COMMISSION FOR SCALING 
UP CLIMATE FINANCEANNEX V
Source of 
incomeDescription ProgressEstimated 
annual 
revenue
Auction 
revenue 
under the 
EU Emissions 
Trading System 
(ETS)-  EU ETS is one of the most advanced market-based 
schemes developed to date1 and the largest easily 
quantifiable source, derived from carbon pricing.
-  EU ETS was launched in 2005 and since 1 January 2013 it 
entered in phase III, with auctions becoming the default 
method for distributing CO2 allowances.
-  The idea is that, by 2020, almost 1 billion European Union 
allowances will be sold every year and generate income 
for Member States.
-  Revenue from the auction of aviation allowances has been 
included in the EU ETS since 1 January 2012 (see below).The third phase of the ETS started on 1 January 2013. It is 
stipulated that Member States must allocate at least 50 % 
of revenues from the auctions of emissions to addressing 
climate change objectives, including in developing countries. 
According to the Commission’s estimates, this source could 
generate 20 billion euro per year. However, a valid and 
reliable estimate is not possible given the recent nature of 
the initiative, the recent decline in carbon prices and the 
European Parliament’s rejection of a Commission proposal to 
stabilise the price level. Further, as the use of this revenue 
depends on Member States, the share that would be allocated 
to long-term climate finance in developing countries is not 
known.20 to 
30 billion euro
Carbon 
pricing of 
international 
maritime 
and aviation 
transport-  Putting a price (tax) on international aviation and 
maritime emissions to efficiently achieve more emission 
reductions. 
-  The idea is that pricing the negative impact of emissions 
allows for the correction of market failure and creates 
appropriate and cost-effective incentives for further 
abatement of these emissions.Carbon penalties on flights were included in EU legislation in 
20082 with effect from 2013. This triggered firm opposition 
from non-EU countries, such as the US and China, which 
challenged the legality of this action. In November 2012, 
following the International Civil Aviation Organisation’s 
(ICAO) declaration of its intention to start working towards 
a common solution, the EU decided to postpone the 
enforcement of the EU ETS scheme for international air 
travel for 1 year while a comprehensive agreement under 
the auspices of the International Civil Aviation Organisation 
(ICAO) is sought. If no satisfactory progress is achieved on 
a global agreement, the EU would reintroduce the penalties. 
It will be for each Member State to determine how to use 
their revenue from the aviation scheme.
Regarding carbon pricing in maritime transportation, the 
process has been slower. In June 2013 the Commission 
proposed measures to bring maritime transport emissions 
into the scope of the ETS from 2018 onwards, if possible 
under the umbrella of the International Maritime 
Organisation (IMO). No decision has been taken to date 
regarding the use of revenue from the maritime scheme. 
There is therefore no assurance as to the amounts that may 
be earmarked for climate finance for developing countries. Up to 
24 billion USD3 
New Carbon 
Market 
Mechanism -  Reduction in greenhouse gases in order to offset 
emissions made elsewhere.
-  A carbon market is already in place and generates 
important financial flows to developing countries through 
the Clean Development Mechanism (CDM).
-  The idea is to provide a new and more ambitious carbon 
market mechanism based on explicit carbon pricing, thus 
providing a new source of public revenue especially in the 
economically more advanced developing countries and 
internationally competitive sectors.In November 2012, the Commission published a study on 
the design options for the new carbon market mechanism 
agreed under the UNFCCC as a basis for the negotiations at 
the Doha conference (COP 18 in November 2012), as well 
as a discussion paper on scaling up results-based REDD+ 
finance. n/a 
1 See studies from OECD ( http://www.oecd.org/environment/cc/39725657.pdf ) and NGOs ( http://www.mcc-berlin.net/fileadmin/data/pdf/Publikationen/
Tuerk_Sterk_Haites_Mehling_Flachsland_Kimura_Betz_Jotzo_2009_Linking_Emissions_Trading_Schemes.pdf ).
2 Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities 
in the scheme for greenhouse gas emission allowance trading within the Community (OJ L 8, 13.1.2009, p. 3).
3 Based on the Report of the UN Secretary-General’s High-level Advisory Group on Climate Change Financing, 5 November 2010.41
Special Report No 17/2013 – EU climate finance in the context of external aid
Source of 
incomeDescription ProgressEstimated 
annual 
revenue
Financial 
sector taxation-  Various options for the taxation of the financial sector 
are under consideration (e.g. transaction taxes with or 
without a focus on foreign exchange trading), and some 
are already being applied in certain Member States.On 28 September 2011, the European Commission proposed 
a Council directive on a harmonised Financial Transaction 
Tax for the EU. The Council did not adopt the proposal, and 
on 22 January 2013 11 Member States asked the Commission 
to make a new proposal to levy share, bond and derivative 
trades under the ‘enhanced cooperation’ procedure. The new 
Commission proposal was presented on 14 February 2013. 
The levy is expected to generate 30 to 35 billion euro per 
year, but there is no indication whether any of the revenues 
raised under this tax would be directed towards addressing 
developing countries’ needs4. 30 to 
35 billion euro
Further scaling 
up of private 
finance-  Leveraging private finance from developed countries 
to complement domestic private finance in developing 
countries.
-  A leverage effect could come from making the general 
business environment more attractive for domestic and 
international investment.
-  Interest rate subsidies could also help to improve the 
risk–return profile of investments.
-  Public–private partnerships to spread the costs and risks 
of financing.
-  Provision of guarantees to support the issuance of debt 
for climate projects.
-  Technical assistance to provide the project information 
and preparation needed to attract the interest of private 
investors.There is currently no internationally agreed approach 
to monitoring and accounting for the net benefits of 
international financial flows from the private sector 
to climate actions in developing countries. In May and 
November 2012 the Council asked the Commission and 
Member States to reach a common understanding on the 
definition of private climate finance. According to EPC/EFC 
staff, a sub-group of the climate working group (Working 
Party on International Environment Issues) has volunteered 
to look at the concept of ‘private finance’ , but they are still at 
a very early stage. Consequently there is not yet any estimate 
of the potential revenue from this source and the share 
that could be allocated to climate finance for developing 
countries. n/a
Access to 
climate finance 
through 
multilateral 
and other 
development 
banks-  The catalyst for channelling funds from public and private 
sources to important investment projects.
-  Multilateral and other development banks include the 
European Investment Bank (EIB) and larger bilateral 
financial institutions (BFIs), such as the French Agence 
Française de Développement (AFD), the German 
Kreditanstalt für Wiederaufbau (KfW) and the Nordic 
Environment Finance Corporation (NEFCO).The Commission and EU Member States have set up seven 
EU regional investment facilities5 covering all countries 
in the EU’s area of external cooperation and all sectors of 
activity. The aim is to combine (’blend’) grants from the 
EU budget, EDF and Member States’ contributions with 
additional non-grant resources (equity funds, guarantees, 
loans, etc.), mostly from the EIB and other development 
banks. In November 2010, the Commission announced the 
creation of Climate Change Windows (CCWs) within the seven 
EU regional investment facilities, with the aim of boosting 
developing countries’ programmes to adapt to the effects of 
climate change and invest in a low carbon future6.
There are no objectives or references to targets for scaling 
up climate finance to developing countries in respect of the 
investment facilities managed by the EIB. Moreover, it is still 
too early to establish a trend in climate financing within 
investment facilities, as the CCWs were only created at the 
end of 2010 and a number of investment facilities were 
launched very recently. n/a
4 http: //ec.europa.eu/taxation_customs/taxation/other_taxes/financial_sector/
5 EU–Africa Infrastructure Trust Fund (ITF) in 2007; Neighbourhood Investment Facility (NIF) in 2008; Western Balkans Investment Framework (WBIF) in 2010; Latin 
America Investment Facility (LAIF) in 2010; Investment Facility for Central Asia (IFCA) in 2010; Caribbean Investment Facility (CIF) in 2012; Asian Investment Facility 
(AIF) in 2012; Investment Facility for the Pacific (IFP) in 2012.
6 See Commission press release of 29.11.2010. ( http://europa.eu/rapid/press-release_IP-10-1621_en.htm ), which states: ‘This initiative will also increase the report -
ing and transparency of EU climate finance’ .
Source:  SEC(2011) 487 final and SEC(2010) 409 final.ANNEX V42
Special Report No 17/2013 – EU climate finance in the context of external aid
DEFINITIONS USED FOR ‘NEW AND ADDITIONAL ’ BY THE COMMISSION AND FOUR EU 
MEMBER STATES SELECTED FOR THE AUDIT
Definition used for FSF reporting
European Commission- new: comes on top of already agreed support for climate-relevant actions (1,2,4)
-  additional: comes from the unallocated margin under the ceiling for external EU budget 
expenditure and, therefore, does not reduce or replace any other programmed development 
financing (additional to funding originally programmed for development cooperation and 
climate actions in 2010–12) (1,4)
Germany-  new: funding from innovative sources of financing (e.g. auctioning emissions allowances in the 
EU Emissions Trading System (ETS)) (1)
-  additional: funding which is additional to climate-related funding compared with reference 
year 2009 (1,2,4)
France-  integration of development and climate change financing, no specification of target levels or 
additionality (4)
-  part of the increased commitment to climate finance in France; partly counts towards the 
national ODA (2,4)
Italy-  No precise information given (a combination of several definitions, e.g. additional to climate-
related funding in a specific reference year and/or to the average annual climate-related 
funding over a specific reference period) (1,4)
United Kingdom-  The commitment is drawn from the UK’s rising ODA budget, planned to reach 0,7 % of gross 
national income by 2013 (1,4)
Sources:
(1)  EU Member States questionnaire for the 2011 Accountability Report  
(http://ec.europa.eu/europeaid/how/accountability/eu-annual-accountability-reports/country_answers_en.htm ).
(2) Report ‘Has the EU kept its Fast-start Climate Finance promises?’ , May 2010, CAN Europe and others.
(3)  Information from the website launched by the Netherlands Minister for the Environment and Spatial Planning ( www.faststartfinance.
org/home ).
(4)  European Parliament study by the Directorate-General for External Policies — Briefing on Climate Change Financing: The concept of 
additionality in the light of the Commission proposal for a development cooperation instrument (DCI) for 2014–20, June 2012.ANNEX VI43
Special Report No 17/2013 – EU climate finance in the context of external aid
THE REPLIES OF  
THE COMMISSION  
AND THE EEAS
EXECUTIVE SUMMARY
IV.
The Commission and Member States have submitted in 
September 2013 to the United Nations Framework Con -
vention on Climate Change (UNFCCC) their views on the 
strategies and approaches for mobilising scaled-up climate 
finance, as a contribution to the commitments made by all 
developed countries for 2020. In the same context of the 
Economic Policy Committee Working Group on energy and 
climate change, the Commission has made several efforts 
to include a definition of private climate finance in the May 
and October Council conclusions.
From the point of view of the Commission, the FSF com -
mitment was met within the parameters given in the rele-
vant UNFCCC documents. We agree however that certain 
methodological concepts need further work and agree -
ment at international as well as at EU level in order for the 
system to become more robust.
The Commission has made attempts to reduce the prolif -
eration of climate funds, e.g. through playing an active role 
in the initial work to set up the Green Climate Fund and 
has jointly with Member States backed the position that 
this should become the main financing delivery channel 
under the Convention.
V.
The Commission and the EEAS agree and will take initia -
tives to improve coordination as outlined below.
VI. (a) — First indent
The Commission agrees to initiate a discussion with Mem -
ber States on the launch of a roadmap, but the final deci -
sion will depend on the Member States. 
VI. (a) — Second indent
The Commission agrees: An independent evaluation of 
the Global Climate Change Alliance is planned to start in 
December 2013.44
Special Report No 17/2013 – EU climate finance in the context of external aid
THE REPLIES OF  
THE COMMISSION  
AND THE EEASVI. (b)
The Commission and the EEAS agree with the recommen -
dation. A basic system is already in place for reporting on 
commitments against the 20 % target. 
Further, the Commission will include data on climate rel -
evant commitment in the Annual Reports.
VI. (c) First indent
The Commission agrees with this recommendation and will 
work with Member States towards agreeing on a common 
EU standard for Monitoring, Reporting and Verification 
(MRV) of public climate finance in time for the 2014 Moni -
toring Mechanism Regulation reporting.
Furthermore, the Commission will work jointly with Mem -
ber States to implement recent decisions of the UNFCCC 
COP 19 (November 2013) on climate finance reporting as 
well as in the context of OECD DAC.
VI. (c) Second indent
The Commission agrees. The Commission will seek to put 
EU-level exchange of information on support and strength -
ened coordination on the agendas of the Expert Group 
on means of Implementation and the Green Diplomacy 
network.
The Commission will also propose to launch the debate in 
the Expert group on Multilateral Environment Agreements, 
subgroup climate change.OBSERVATIONS
29.
The Commission and EEAS agree that the coordination of 
aid allocations at the global level is weak. The Commission 
and EEAS will seek to improve EU level coordination of cli -
mate finance in relevant expert groups to increase comple -
mentarity of efforts. 
30.
The Commission and the EEAS agree that by end 2011, the 
EU had not made as much progress in joint programming 
as hoped. Since then, a commitment to Joint Programming 
has been made in some 40 countries.
32.
The Commission clarifies that, while coordination can cer -
tainly be improved, there have been initiatives in Indonesia 
such as bi-monthly EU coordination meetings on climate 
change, so there has in fact been a lot of efforts put into 
coordination.
Box 1 
The initial proposed solution (funded by UK and OXFAM) 
already under implementation was insufficient to cover the 
entire demand of potable water in Bainpara and surround -
ings, a circumstance that pushed all stakeholders, includ -
ing final beneficiaries, government and donor agencies, to 
find a broader solution (co-funded by the EU). After this 
experience, the stakeholder’s coordination has been defi -
nitely enhanced.
33. (a)
From mid-2015, EU aid will synchronise with Bangladesh 
7th Five Year Plan 2015–20 and the EU is committed to 
launch joint programming in selected areas with inter -
ested EU+ Member States. This will require a review of the 
MIP 2014–20 for the remaining 5 years, including possible 
amendments.45
Special Report No 17/2013 – EU climate finance in the context of external aid
THE REPLIES OF  
THE COMMISSION  
AND THE EEAS34.
The Commission and the EEAS underline that it is the 
number of donors — rather than competition between 
them — which makes coordination difficult, besides the 
primary challenge which is the lack of government-led 
coordination.
35.
Precisely for this reason most climate financing in Bang -
ladesh is handled separately (i.e. either through donor-
managed projects or through World Bank-managed trust 
funds, see below).
37.
In Indonesia, there is a concerted effort by development 
partners on anti-corruption issues through the PNPM Sup -
port Facility (PSF), a multidonor trust fund administered by 
the World Bank.
39.
The Commission supports governments to address the 
issue of prioritisation and coordination e.g. through the 
Global Climate Change Alliance (GCCA). Examples of coun -
tries where the GCCA supports the set-up of government 
coordination mechanism are: Nepal, Cambodia, Guyana, 
Seychelles and Solomon Islands, Bhutan, Chad, Lesotho, 
Gambia.
41.
ECOFIN Council Conclusions of 15.10.2013 state ‘that the 
EU and its Member States have committed to scaling up 
the mobilisation of climate finance in the context of mean -
ingful mitigation actions and transparency of implementa -
tion, in order to contribute their share of the developed 
countries' goal to jointly mobilise USD 100 billion per year 
by 2020 from a wide variety of sources …’ . The Commission 
is already developing an EU vision on scaling up of climate 
finance by 2020. EU and Member States have submitted 
to UNFCCC in September 2013 their views on strategies 
and approaches for mobilising scaled-up climate finance. 
The submission is available at: http://unfccc.int/files/docu -
mentation/submissions_from_parties/application/pdf/
cop_suf_eu_02092013.pdf41. (a)
As regards a definition for private climate finance, dis -
cussions took place in the context of the Economic Pol -
icy Committee and will be continued on the basis of the 
results of the UNFCCC Conference of Parties that took 
place between 11 and 22 November 2013 in Warsaw.
41. (b)
Each developed EU Member State has committed to scale 
up climate finance. Moreover, the USD 100 billion commit -
ment concerns all developed countries in the world. The 
EU roadmap is hence neither a condition for the scaling up 
of climate finance by individual Member States nor can it 
be seen separately from the contributions by other devel -
oped countries. 
A final decision on a roadmap will depend on Member 
States. 
44.
There is a difference between ‘promises ’ and ‘commit -
ments ’. The Commission applies Rio markers to committed 
funds, meaning once the financial decision has been taken. 
This is therefore a guarantee that disbursement will follow. 
Furthermore, the Common Relex Information System (CRIS) 
allows the Commission also to provide disbursements if 
requested by the reporting framework.
49.
The Commission agrees that Member States use different 
approaches to quantify climate spending based on Rio 
markers. Efforts to analyse the different approaches in view 
of future harmonisation is ongoing within OECD DAC and 
EU.
54.
The aggregate number of 7,34 billion euro has been calcu -
lated by the Commission based on the annual aggregate 
figure as reported by each Member State, fully in line with 
the Commission’s mandate in shared competences. 
As the list of examples of interventions used by the Court 
was not supposed to be exhaustive, it can obviously not be 
reconciled to the total amount reported. 
The list of examples of interventions is compiled by the 
Commission on the basis of Member States’ data and pro -
vides a wealth of examples of projects  as clearly indi -
cated on the Commission website and in the title of the 
table. 46
Special Report No 17/2013 – EU climate finance in the context of external aid
THE REPLIES OF  
THE COMMISSION  
AND THE EEAS55.
The FSF commitment was met within the parameters given 
in the relevant UNFCCC documents.
59.
The Commission has made attempts to reduce the prolif -
eration of climate funds, e.g. through playing an active role 
in the initial work to set up the Green Climate Fund and 
has jointly with Member States backed the position that 
this should become the main financing delivery channel 
under the Convention. There is a regular expert dialogue 
and cooperation between Commission and Member States 
on climate finance in a number of permanent EU working 
groups. 
61.
The Commission has integrated GCCA into its own pro -
gramming. The interventions under the GCCA including 
support to the overall initiative are committed, approved 
and reported under the thematic programme for Environ -
ment and Sustainable Management of Natural Resources 
including Energy (ENRTP) and 10th European Development 
Fund. 
Five EU Member States have co-financed the Commission-
initiated GCCA. The GCCA has provided an effective chan -
nel for fast start finance delivery for a number of EU Mem -
ber States (31 million euro from Ireland, 1,2 million euro 
from Cyprus and 0,8 million euro from Estonia). 
In addition, the GCCA co-finances individual interventions 
with seven EU Member States.62.
The Commission did maintain the GCCA for the following 
reasons: 
1. In addition to providing financial support, the GCCA provides 
technical support and a platform for dialogue and exchange 
of experience. 
2. The GCCA also serves as a catalyst to further integrate climate 
change into EU regular development aid. Its nature is thus 
different from other vertical funds.
3. The Green Climate Fund is not yet operational.
To address the administrative burden for developing coun -
tries the GCCA was adapted, e.g. by aligning GCCA pro -
grammes with national strategies and programmes and by 
focusing on climate change mainstreaming into national 
development processes.47
Special Report No 17/2013 – EU climate finance in the context of external aid
THE REPLIES OF  
THE COMMISSION  
AND THE EEASCONCLUSIONS AND RECOMMENDATIONS
65.
The Commission and the EEAS agree and will take initia -
tives to improve coordination as outlined below.
67.
The Commission and the EEAS will further strengthen 
efforts to improve coordination on climate finance with 
Member States, in the context of existing expert groups 
(e.g. Economic Policy Committee (EPC), Expert Group on 
means of Implementation (EGI), Expert Group on Adapta -
tion (EGA)).
68.
The Commission has made attempts to reduce the prolif -
eration of climate funds, e.g. through playing an active role 
in the initial work to set-up the Green Climate Fund and 
has jointly with Member States backed the position that 
this should become the main financing delivery channel 
under the Convention.
Recommendation 1
The Commission agrees to initiate a discussion with Mem -
ber States on the launch of a roadmap, but the final deci -
sion will depend on the Member States.
Recommendation 2
The Commission agrees with this recommendation and will 
work with Member States towards agreeing on a common 
EU standard for MRV of public climate finance in time for 
the 2014 Monitoring Mechanism Regulation reporting.
Furthermore, the Commission will work jointly with Mem -
ber States to implement recent decisions of the UNFCCC 
COP 19 (November 2013) on climate finance reporting as 
well as in the context of OECD DAC.Recommendation 3
The Commission and the EEAS agree with the recommen -
dation. A basic system is already in place for reporting on 
commitments against the 20 % target. The Commission will 
within the coming 12 months conduct a review of the Rio 
marker system in view of identifying weaknesses and pro -
posing actions for improving the application of the system. 
Further, the Commission will include data on climate rele-  
vant commitments in the Annual Reports.
Recommendation 4
The Commission agrees with the recommendation. An 
independent evaluation of the Global Climate Change Alli -
ance is planned to start in December 2013. 
Recommendation 5
The Commission agrees with the recommendation and 
will seek to put EU level exchange of information on sup -
port and strengthened coordination on the agendas of the 
Expert Group on means of implementation (EGI) and the 
Green Diplomacy network.
The Commission will also propose to launch the debate in 
the Expert group on Multilateral Environment Agreements, 
subgroup climate change.48
Special Report No 17/2013 – EU climate finance in the context of external aid
European  Court  of Auditors
Special  Report  No 17/2013
EU climate finance in the context of external aid
Luxembourg : Publications  Office  of the European  Union
2014 — 48 pp. — 21 × 29 .7 cm
ISBN 978-92-9241-589-1
doi:10.2865/17954

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QJ-AB-13-018-EN-C
EUROPEAN  COURT  OF AUDITORS
CLIMATE CHANGE POSES A  FUNDAMENTAL THREAT TO DEVELOPING COUNTRIES’  
ECONOMIC DEVELOPMENT AND THEIR ACHIEVEMENT OF THE MILLENNIUM DEVEL-
OPMENT GOALS. THE EU AND ITS MEMBER STATES ARE AMONG THE LEADING 
PROVIDERS OF INTERNATIONAL CLIMATE FINANCE. THIS REPORT CONCLUDES THAT 
THE COMMISSION MANAGED CLIMATE-RELATED SUPPORT FUNDED FROM THE EU 
BUDGET AND THE EDF TO DEVELOPING COUNTRIES WELL. HOWEVER, CONSID-  
ERABLE IMPROVEMENT IN THE COORDINATION BETWEEN THE COMMISSION AND 
EU MEMBER STATES IS NEEDED TO MAXIMISE THE IMPACT OF THE EU’S CLIMATE 
FINANCE: IMPROVING THE COMPLEMENTARITY OF PROGRAMMES; AGREEING HOW 
TO SCALE UP CLIMATE FINANCE BY 2020; STRENGTHENING MONITORING, VERI -
FICATION AND REPORTING SYSTEMS; AND REDUCING THE FRAGMENTATION OF 
CLIMATE FUNDS.