Green Climate Fund Meeting Results Prompt Questions Over Climate Finance Challenges
The Green Climate Fund (GCF) board concluded its meetings last week in Songdo, South Korea, without being able to reach decisions on Fund replenishment, approve new projects, or add new Accredited Entities through which projects are implemented, prompting questions on how to ensure climate finance goals are met.
According to a GCF press release, the meeting consisted of “four days of challenging and difficult discussions between Board members” on these issues.
The GCF is the flagship fund of the UN Framework Convention on Climate Change (UNFCCC). It was established in Cancún, Mexico, in 2010 at the 16th Conference of the Parties (COP). The fund is part of the Convention’s financial mechanism, and it is meant to provide balanced funding for climate change mitigation and adaptation projects in developing countries.
The GCF aims to help deliver on a 2009 pledge from developed countries to mobilise US$100 billion per year by 2020 for climate mitigation and adaptation activities. (See BioRes, 21 May 2014) The GCF itself is not meant to secure US$100 billion per year, but rather to help “leverage and crowd in additional financing” from the private sector or development banks, and both developed and developing countries have affirmed the GCF's role “as a key institution for global climate finance,” according to the organisation.
The GCF became operational in 2014. Its initial resource mobilisation period is 2015-2018, and it has raised US$10.3 billion in pledges to date. The Fund has 76 projects in its portfolio, with 43 percent of its current funding aimed at mitigation, 29 percent at adaptation, and 28 percent meant to be cross-cutting.
Last week’s board meeting was led by co-chair Lennart Båge from Sweden, with co-chair Paul Oquist of Nicaragua unable to attend due to the domestic political crisis. Reports from multiple outlets indicated that much of the meeting was spent addressing procedural issues, such as finalising the agenda, leaving little time for substantive work.
As the GCF approaches a new resource mobilisation period, Fund replenishment proved to be a major point of contention. US representative Geoffrey Okamoto reportedly suggested that the process should be “donor-driven,” according to comments reported by Climate Home News. Some board members and other experts have characterised this as potentially running counter to the GCF’s intended shared power division between economies of different levels of development.
The comments from Okamoto drew particular scrutiny given that US President Donald Trump’s administration has decided not to meet the US’ remaining US$2 billion commitment to the Fund. The US contributed US$1 billion into the Fund during the administration of former President Barack Obama.
The board was ultimately unable to approve any of 11 proposed projects, which were aiming to secure nearly US$1 billion in funding. The next opportunity for approval of these projects will be at the board’s next meeting in October.
As the meeting came to a close, Executive Director Howard Bamsey resigned with immediate effect, and the board has now started the process to select a new chief.
Expressing his regret to observer organisations and other stakeholders who attended the meeting, co-chair Båge said that “this has been a very difficult and disappointing Board meeting for all of us, but most importantly for those people who are most vulnerable to climate change impacts, and who depend on the activities of the Fund.”
The state of climate finance ahead of COP 24
This year is an important one for climate negotiations, with a deadline of early December at COP24 in Katowice, Poland, to finalise a “rulebook” to operationalise the UN’s Paris Agreement on climate change. Mid-year negotiating meetings in Bonn, Germany, failed to produce a draft negotiating text, so a special session will be held in Bangkok, Thailand, from 3-8 September in a bid to lay the groundwork for the Katowice meetings. (See Bridges Weekly, 17 May 2018)
Climate finance is an important and difficult point as negotiators seek to develop the operational guidelines for the Paris Agreement. As the GCF has noted, many developing countries have said that they hope the GCF can help support their efforts to fulfil their domestic climate pledges, known as Nationally Determined Contributions (NDCs), under the Paris Agreement.
Excluding the US, developed countries who have made past finance pledges have reconfirmed their commitments, although UN negotiators are still grappling with technical questions such as how climate finance is defined under the Paris Agreement, accounting methods, and ensuring that these financial flows are predictable and can be improved. These discussions are expected to resume in Katowice, where ministers are also due to hold a biennial review on the state of climate finance.
While GCF officials and many climate watchers have expressed their disappointment in being unable to meet their climate finance objectives for last week’s meetings, they have also noted the Fund’s past successes, and highlighted future opportunities to advance their work this year.
In a statement, co-chair Båge said that “whilst the results of the meeting are disappointing, we should not overlook that the Fund has a strong portfolio of transformational projects, with many already under implementation in support of the climate ambition of developing countries.”
As part of the COP24 process, the UNFCCC Standing Committee on Finance (SCF) is due to deliver its Biennial Assessment and Overview of Climate Finance Flows, which should help clarify the current state of climate finance. The SCF’s last assessment, produced in 2016 for COP22 in Marrakech, identified challenges with data collection and analysis across a wide variety of sources, as well as noting that funding for mitigation efforts well exceeded funding for adaptation. (See Bridges Special Update (COP 22), 13 November 2016)
ICTSD reporting; “Green Climate Fund meeting 'disappointing', chief quits,” REUTERS, 4 July 2018; “Board meeting turns ‘toxic’ as UN climate fund runs low,” CLIMATE HOME NEWS, 3 July 2018; “UN climate fund chief resigns for personal reasons while board meeting collapses,” CLIMATE HOME NEWS, 4 July 2018; “8 takeaways from the Green Climate Fund meltdown,” CLIMATE HOME NEWS, 6 July 2018.