The international climate talks taking place in Bonn are the first UNFCCC session after the Board of the Green Climate Fund (GCF) agreed in May on eight essential requirements, making the fund ready to start receiving and disbursing money. The capitalization of the GCF is a crucial element of the construction of the 2015 deal, it is important for increasing short-term ambition, and, last but not least, it is necessary to rebuild undermined trust between countries.
The Green Climate Fund was established in 2010 at the United Nations Climate Change Conference in Cancún to
promote the paradigm shift towards low-emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change, taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change.
That year, rich nations committed themselves to provide USD 10 billion per year in climate finance over 2011 to 2013, and at least USD 100 billion per annum by 2020. The GCF is expected to be the most important channel to deliver money on the long-term. It is governed and supervised by the GCF Board, and composed of an equal number of representatives from both developing and developed countries*. In Cancún parties also decided that the GCF will be designed by a Transitional Committee (TC) of 40 members – 25 from developing countries and 15 from developed.
But that is not the whole story. The fund is ready, but funds are not flowing in. As Meena Rahman of the Third World Network argues, “the Green Climate Fund remains an empty shell.”
This has worried a lot of negotiators here in Bonn, and Seyni Nafo, spokesperson of the African Group of Negotiators (AGN), noted at the beginning of the Bonn session:
If this thing is not capitalized before the end of the year, Paris is going to be under a lot of pressure.
The GCF Executive Director Hela Cheikhrouhou has called for an initial amount of USD 10 to 15 billion by the end of this year. However, the fund is sitting on a fragile and unfortunately weak USD 37 million for startup and operational costs.
And that is not the only rattlesnake in the finance discussions. Here is an overview of some of the most important issues the GCF will have to deal with.
One critical aspect of the fund is the need to ensure its integrity. There is a lot anxiety floating around with rumours that it might be used to fund “pseudo-climate friendly” projects such as funding coal power plants equipped with carbon capture and storage technologies or supporting shale gas extraction using hydraulic fracturing (fracking).
Alex Scrivener, the World Development Movement’s climate campaigner, notes that
We need the Green Climate Fund to help developing countries transition to clean energy, and build their resilience to climate change. Coal, oil and gas have no place in the fund.
Asad Rehman, head of International Climate at Friends of the Earth EWNI, supported his statement:
Financing any fossil fuels and harmful energy through the Green Climate Fund is fundamentally in conflict with what people the world over are demanding, what the mandate of the founding document of Green Climate Fund actually says, and with climate science and common sense.
There are also fears that developed countries are trying to use the rhetoric of “encouraging contributions from the private sector” as a passive way of excusing their own lack of engagement. The private sector can provide additional resources for the GCF, it may even become an inevitability, but it is vital that the core of the funds have to rest on public contributions, as Friends of the Earth US and Pan African Climate Justice Alliance (PACJA) point out:
Private climate finance cannot be a substitute for direct public support, and adaptation in particular is likely to offer few commercially profitable opportunities for private financiers. Private finance will be especially difficult to deploy responsibly in low and lower-middle income countries, as well as in marginalized communities in all developing countries.
The World Bank (WB) is serving as the temporary trustee of the GCF, and there are many parties and observers who are worried that it may try to make it a permanent role. The Institute for Security Studies (ISS) & Earthlife Africa Johannesburg (ELA Jhb) emphasize that:
There is a risk that the World Bank could have conflicting interests in the GCF given its many roles in the GCF. (…) The other danger is that the Bank will also encourage the expansion of carbon markets and other private sector financing instruments. The Bank has been criticised for continuing to finance environmentally destructive industries and promotion of dirty energy projects.
Gender equality principles have to be included in climate finance mechanisms. In doing so, the GCF could become an unique model for similar institutions, as UNFCCC observer constituency of women and gender NGOs has noticed:
The Green Climate Fund has an opportunity to distinguish itself from existing funds by being the first to integrate a gender perspective from the outset. (…) The Green Climate Fund must be created as a gender-responsive climate finance mechanism by mainstreaming a gender perspective across all funding windows and funding instruments.
Civil society should play an important role in GCF planning. So far, it has not been the case.
We are not satisfied with the way the GCF Board is engaging the civil society and the lack of accessibility and availability to documents is an issue of grave concern,
says Janet Redman from the Institute of Policy Studies.
Prof. Shaddad Mauwa from the Pan African Climate Justice Alliance (PACJA) supported Redman’s statement, agreeing that we need far greater accountability measures within the fund. Here, he sees civil society playing a critical role in ensuring that the fund remains accountable to those it is designed to support:
We need to have greater accountability built on the GCF; structures, processes, consultations and participations, programs, finance and project cycles at the global and national levels. This should be from the start to ensure its success, transparency and building of confidence.
Trust is a tricky commodity at the UNFCCC. With no signs that countries will make any real commitments to increase their funding goals set out in Cancún, the confidence clock is certainly ticking closer and closer to what might be an alarming exchange in Lima at the end of the year.
* I use the controversial terms developing/developed countries only to keep to the official phrasing within the UNFCCC.
Photo Credit: photosteve101 via Flickr
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