Governments are considering expanding the Partnership for Market Readiness (PMR) to more developing nations despite mounting concerns over slow cash distribution to the 17 countries already enrolled.

Just three of the 17 nations have completed all the necessary steps to receive cash under the four-year-old World Bank-led programme to promote carbon pricing in emerging economies, PMR meeting documents show.

“One of the issues under consideration at the next PMR meeting will be whether to expand the PMR to more participants,” said Xueman Wang, the World Bank’s lead PMR official, speaking to Carbon Pulse after the 11th PMR meeting held in London last week.

At the meeting, South Africa became the 13th of the 17 developing nation members to submit a plan approved to receive PMR cash. It was cleared to get $5 million to help it impose a carbon tax in mid-2016.

Among the 13 approvals, only Chile, China and Turkey have completed the required work to be ready to receive payments and only Turkey has started to carry out its plans.

MAJOR CONCERN

The PMR’s 13 donor nations – western European governments plus Australia, Japan and the US – have collectively allocated $127 million to the programme.

Despite broad support, several of the nations have flagged concerns about the rate the PMR was channelling cash and the issue was also identified in an independent evaluation of the body which was presented at last week’s meeting.

One donor, the UK, said the PMR was overachieving on most of its objectives and gave the programme its second highest of five possible success rankings in its annual review last month.

Yet, it said a major concern was the “significant delay” in channelling the cash, which, it said, could take two years or longer.

“Overall the process takes too long and is insufficiently transparent. This risks causing delays to the disbursement of funding and eroding good will between the PMR and its participants,” the report said.

VALUED KNOWLEDGE

The World Bank’s Wang said one of the main sticking points with funding was that it was environment ministries, rather than treasuries, that were often applying for the money and they often lacked the insfrastructure to channel international payments.

“We are looking for ways to speed up the process,” she said, adding that Mexico was aiming to avoid potential delays by establishing its own climate fund where the government will be able to channel international funding.

Wang said that despite the disbursement concerns the recipient members valued the PMR. The presidents of Chile and Colombia both mentioned its work in their addresses to UN chief Ban Ki-moon’s climate summit in New York last September.

“All the implementing countries recognise the value of the PMR, not just as a funding source but as a very important knowledge platform, where there has been a lot of positive impact,” said Wang.

She said Chinese officials had also described the PMR as playing a central role in helping to design the country’s national emissions trading system.

CREDITING SYSTEMS

The PMR was established in 2012 as industrialised countries were shifting their efforts for encouraging mitigation in the developing world. Up to then, European nations and Japan had used hundreds of millions of UN carbon credits from poorer nations to help meet their Kyoto Protocol emissions targets.

Japan has not taken on a post-2012 Kyoto goal and European nations are increasingly focusing their carbon credit-buying towards projects located in only the poorest nations to encourage emerging economies to pay for more of their own emission cuts.

Despite this, eight of the 17 PMR recipient countries are seeking funding for planned crediting activities.

“We do have a number of countries that originally developed crediting programmes expecting international demand but that is disappearing rather quickly,” said Wang.

She said some of these countries have had to change tack and are considering how their programmes could be altered to channel other forms of low carbon investment.

“A number of countries are looking at options for generating domestic demand and countries have put forward their own targets,” she added.

Costa Rica, Colombia, Mexico, Peru and Thailand are either designing or considering policies that would generate domestic demand for credits. The crediting plans of Morocco, Tunisia and Vietnam only currently forsee international demand, PMR meeting documents show.

The next PMR meeting is scheduled to be held May 28-30 in Barcelona.

By Ben Garside – ben@carbon-pulse.com