Severe budget crisis sparks concerns over future of UN-led climate dialogue

The UN body is facing budget shortfall of at least €57 million, threatening its ability to conduct climate negotiations and implement agreements; despite some countries exceeding their payment obligations, major contributors have not yet fulfilled their commitments, exacerbating the crisis

The leading UN body on climate change is experiencing a severe budget shortfall, according to an analysis of documents from the world body. This funding gap, diplomats said, could impair international climate dialogue.

The analysis found a budget hole of at least 57 million euros for 2024 — or nearly half of the funding needed for the UN Framework Convention on Climate Change (UNFCCC) secretariat to run annual climate negotiations among almost 200 countries and to help implement any agreements that are made.

The budgets set out for the UNFCCC span two years. Its total 2024-25 budget — the body’s three main budget lines combined — is 240 million euros, with about half of that expected to be allocated for this year.

The UNFCCC’s member countries signed off on the budget and are expected to contribute the funds. The budget includes a core fund to which these countries are obligated to contribute, a supplementary fund drawing voluntary donations, and another voluntary fund to help diplomats from poorer countries attend UN climate negotiations. While countries such as Japan and Germany have exceeded their payment obligations, others, notably the U.S. and China have not yet met theirs. Contributions are due on January 1 each year. The secretariat, set up under the 1992 UNFCCC treaty, is the world’s key body for coordinating international efforts to reduce climate-warming emissions and staging summits where countries can hold one another accountable.

The budget shortfall has forced it to curtail activities — from reducing operating hours at its headquarters in Bonn, Germany, to cancelling regional “climate week” events this year. Those regional summits in countries such as Kenya and Malaysia last year raised billions of dollars in investment pledges from governments, investors and philanthropies for renewable energy, reforestation and other climate-focused projects.

“We continue to work relentlessly, but our resources are increasingly over-stretched,” said a UNFCCC spokesperson.

Germany’s climate envoy Jennifer Morgan urged countries to find a solution. “We need a climate secretariat that can perform its functions,” she said.

Record payment delays

As of this month, the UNFCCC had received 63 million euros ($68 million) in contributions for 2024.

Officials in the U.S. and China said the countries would make their payments this year but did not specify when. State Department spokesperson Melvin Felix said the U.S. “still intends to provide a substantial contribution” to support the secretariat this year. The Chinese Foreign Ministry said China “will fulfil its obligations as always.” As of October, the U.S. still owed 7.3 million euros to the UNFCCC’s 2024 core budget, though it has contributed 2.5 million euros to its supplementary budget. China still owed 5.6 million euros to the core budget, though it has contributed 497,000 euros to the supplementary fund.

Even if both countries meet their obligations this year, it would not be enough to cover the hole in the UNFCCC’s overall budget.

Countries can be delayed in meeting the payment deadline for logistical reasons. National elections also can cause delays.

The analysis showed that, in past years, these issues typically were resolved before October and that this year’s delays are by far the worst in UNFCCC history.

Eight diplomats involved in U.N. climate negotiations, and with UNFCCC representatives expressed concern that the funding gap could undermine UN climate negotiations at a time when national governments are seeking trillions of dollars in climate investments.

The diplomats listed examples, not previously reported, of how the cash crunch was already affecting UNFCCC operations, such as forcing the secretariat to extend employment contracts for only months at a time or hampering its ability to fund the travel of representatives from poor nations to climate talks.

The UNFCCC confirmed exclusively that there is a 2.04 million euros shortfall in the fund meant to pay for hundreds of diplomats to attend climate talks, including its COP-29 summit next month in Baku, Azerbaijan.

Egypt’s lead climate negotiator Mohamed Nasr said that any weakening of the work done by the UNFCCC by failing to fund its budget would mean “creating space for weakening climate change action globally.”

“This process is not only about negotiating the decisions but also about the global pressure being put on the leaders to deliver,” Mr. Nasr said.

As countries have voted over the years to approve more climate negotiations and events for the UNFCCC to run, they have steadily increased the UNFCCC’s budget needs while resisting increases in their own funding obligations. As a result, the UNFCCC has come to rely increasingly on voluntary donations.

The split budget — combining obligatory and voluntary contributions by nations — allows some countries to channel UNFCCC payments through different government Ministries or approval processes. Countries paying into the supplementary budget also can specify how they would like the money to be spent, though these requests are not made public and are not always binding.

One diplomat said the UNFCCC could strengthen its case for a bigger core budget by being more frugal. Others noted that the body has not yet fully implemented recommendations made by UN auditors covering areas such as staff selection and employee benefits.

Asked about criticisms, the UNFCCC spokesperson said the fact that nations are asking the body to do more work represents a “vote of confidence.” “However, when funding is not increased to match, and many existing funding pledges are not fulfilled on time, this itself causes major inefficiencies, as more time needs to be spent on stretching and re-allocating existing resources at a time when many staff are already working literally around the clock,” the spokesperson said.

Published - October 26, 2024 11:02 am IST