The Green Climate Fund: Ready, set, go?

The Green Climate Fund: Ready, set, go?

Smita Nakhooda (ODI) and Liane Schalatek (HBF)

Climate finance was a hot topic at the UNFCCC COP in Durban, South Africa last year, and the adoption of the governing instrument of the Green Climate Fund (GCF) was a key outcome of the negotiations. This was a great relief: failure to reach agreement would have been read as a failure of the ‘African COP’.

There are high expectations for the GCF … 

Some hope that it will add order and coherence to the increasingly complex global climate finance architecture, which now includes a proliferation of actors and initiatives that are monitored on Climate Funds Update. Others hope that it will balance the distribution of climate finance, both geographically and thematically, by channelling substantially higher volumes of finance for adaptation. Climate Funds Update data shows that less than a third of dedicated climate finance spent to date has gone to adaptation.  There has been some discussion of the potential role of the GCF in supporting more effective interventions to build national capacities, as well as institutional frameworks, to spend climate finance well.

… but much remains undecided.

The role of the GCF will be shaped by a transitional process through 2013 to get the Fund up and running as quickly as possible. An intermediary secretariat, staffed jointly by the Convention secretariat and the Global Environment Facility has already started its work, planning the first meeting of the new GCF Board for late April in Geneva, Switzerland. Regional groups are negotiating who will represent them on the governing board of the GCF, which includes 12 seats for developing countries, and 12 seats for developed countries. A second Board Meeting is scheduled tentatively for early July in South Korea.

The board will be accountable to the UNFCCC COP, and include seats for active private sector and civil society observers from both developed and developing countries. A Standing Committee under the UNFCCC, once established, will review and provide independent guidance on the impact of the GCF, and could play an evaluation role. The GCF will start out with windows to fund adaptation and mitigation, but the board will be able to create windows to fund other programmes – for example to reduce emissions from deforestation and forest degradation, or to support technology transfer — over time.

Like the Adaptation Fund, the GCF will allow recipient countries direct access through accredited national implementing entities, but also work through multilateral agencies such as the multilateral development banks (MDBs) as implementers. A private sector facility that can provide financing directly to private business will also be created – although this has been controversial throughout the GCF negotiations. Recipient countries will designate national authorities to review proposed projects on a ‘no objections’ basis to ensure consistency with national priorities.

What role will the GCF really play?

While allusions are made in the adopted text to the evolution of the GCF to become the channel through which most climate finance flows over time, the actual volume of finance that will be available through the GCF remains very uncertain. The Durban COP did not secure commitments to sustained financial contributions: potential long-term sources of finance are still addressed only in very general terms even though this was the focus of the High Level Advisory Group on Climate Finance convened in 2010 by the UN secretary General. The Durban agreement does not create any obligations for developed countries to contribute funding. Denmark, Switzerland and Germany, have pledged more than EUR 55 million in contributions to the start-up costs of the fund, which is an important gesture. However, if the issue of how to source new, additional, adequate and predictable long term funding for the GCF cannot be resolved, there may be little to distinguish it from the many other dedicated multilateral climate funds that already exist that are financed through voluntary pledges from developed countries.

What will it take to keep the GCF from being a beautifully constructed, but largely empty shell?

The constitution of the board, and the creativity and competence of the secretariat, are paramount. The individuals nominated, and the secretariat that supports them, must mobilize the expertise and will to focus on establishing the GCF as an entity that can be trusted by both contributor and recipient countries to get to work, instead of getting stuck on political issues. In the meantime, it is vital to monitor the multitude of climate finance initiatives that already exist, as Climate Funds Update does, and learn lessons from each of their experiences to make climate finance more effective, efficient and equitable.

We have recently updated our Climate Finance Fundamental 11 on the Green Climate Fund to reflect developments since the Durban COP 17.