Norway expresses reservation on OECD decision on development assistance and climate measures

On 16 April, the OECD DAC High Level Meeting decided to allow public funds invested in Clean Development Mechanism (CDM) projects in developing countries to be reported as Official Development Assistance (ODA). CDM projects are projects under the Kyoto Protocol where the investor can receive Certified Emission Reductions (CERs) in return for investment. These CERs may be used to meet the investor’s country’s legally binding emission commitments under the Protocol. The value of the CERs is to be deducted from the amount reported as ODA. However, ODA may not be used for the direct purchase of CERs.

Norway, as represented by Minister of International Development Hilde F. Johnson, expressed a reservation on the decision, but did not oppose the decision being adopted by consensus. The reservation will be recorded in the form of a footnote.

In the Norwegian statement, the Minister noted that the CDM was included in the Kyoto Protocol to assist industrialised countries to fulfil their legally binding emission commitments. Thus the use of development funds to finance CDM projects could make it easier for donors to fulfil their commitment to increase their ODA percentage and undermine the industrialised countries’ credibility in the climate change negotiations. Ms Johnson also underscored the principle underlying the Kyoto Protocol that investments in CDM projects must not be allowed to undermine the fight against poverty and divert ODA away from the poorest countries. There are many indications that CDM investments mainly take place in larger developing countries that are experiencing rapid growth. Thus, there is a real danger that the poorest people in the least developed countries would be the losers if this practice were followed.

The Minister also emphasised that in order to ensure broad-based, effective co-operation in the efforts to combat climate change, it is vital that the developing countries themselves have an active influence on any decisions that affect their interests. This was not the case at the High Level Meeting.

In the further work on this issue in the OECD, Norway will advocate the establishment of a system where each donor country must document that its CDM investments in developing countries will not result in a diversion of ODA.