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Climate Change

As Green Climate Fund Finally Meets, Funding Remains Uncertain

WASHINGTON, Aug 21 2012 (IPS) - Five months behind schedule, the board of the newest and largest international financing mechanism aimed at dealing with the effects of climate change, the Green Climate Fund, is finally slated to meet this week, just ahead of a late-summer deadline.

On Monday, however, insiders admitted that funding plans for the ambitious initiative – 100 billion dollars a year after 2020, in addition to dealing with a massive shortfall until then – remain unclear.

“We are expecting no serious discussion about the 100 billion dollars at this meeting,” Omar El-Arini, an Egyptian member of the Green Climate Fund (GCF) Board, told journalists Monday, speaking from Geneva.

“We have had very little time to discuss the architecture of funding.”

Given that the board’s responsibility lies in figuring out how to disburse, not raise, the eventual cash, El-Arini said that the upcoming meet, scheduled for August 23-25 in Geneva, would most likely focus on procedural issues. These would include rules for board meetings, the budget for a secretariat and a host country in which to house it.

When the GCF was proposed, under the United Nations Framework Convention on Climate Change (UNFCCC) in 2009, its aim was to steer money towards the world’s poorest countries to deal with the effects and causes of climate change. At the time, developing countries were asking for 400 billion dollars per year, but eventually settled on a quarter of that.

Still, such a pot of money would dwarf current such efforts. A 2010 report by the United Nations suggested that raising the money would be difficult but doable.

Meanwhile, in the current environment of fiscal austerity, particularly in the United States and the European Union, coupled with a general international erosion in political support for climate-related projects, the question of where the GCF will get enough money to make its mandate realistic remains a pressing one.

Washington has already expressed dissatisfaction over the idea of financing so-called “middle income” countries, such as India and Brazil.

Representation and equity

One issue expected to be decided upon this week – that of the GCF’s host country – could serve as motivation for figuring out the longer-term financing options. Six countries are currently in contention – Germany, Mexico, Namibia, Poland, South Korea and Switzerland – and analysts suggest that the winner would be expected to make the first substantial contribution.

With the GCF made up of just 24 full members (as well as 24 alternates) from across the globe, overarching conversations about representation and equity have reportedly been to blame for the three delays since the board’s scheduled first meeting.

“It is quite unfortunate that we ended up with equal representation for developed and developing countries, meaning that there is place for just 12 developing countries,” Meena Raman, of the Third World Network, an umbrella of international NGOs, said Monday from Geneva, noting that the decision over the host country will be one of the most important facets of this week’s talks.

“If you talk about equitable representation, there should have been more seats for developing countries.”

Indeed, increasing recrimination between developing and developed countries have been considered central to the failure of the UNFCCC process to yield substantive agreement in recent years, a pattern that many involved are eager to avoid early on in the creation of the GCF.

The GCF is now said to be under massive pressure to sort out its ideological issues and financing framework before November, when the next international climate summit is set to begin in Qatar.

Public and private roles

Meanwhile, environmentalists and rights activists are warning that developed countries appear to be steering the GCF towards an overreliance on the private sector while marginalising the input of international civil society.

In this context, the procedural discussions this week in Geneva could do much to shape how the fund ultimately functions. Already, for instance, there are discrepancies over the extent to which input from civil society will play a part in the initial rules creation.

“It’s troubling that we might have to fight for civil society observers to be allowed in the room,” Karen Orenstein, an international policy campaigner at Friends of the Earth, an environment watchdog based here in Washington, said on Monday. “This meeting should be open, broadcast on the Internet, and those broadcasts should be archived.”

The framework that may emerge from this week’s discussions could also have a direct impact on the eventual funding decision by some of the largest donors. According to Orenstein, “The U.S. and the U.K. say they won’t commit substantial funding until they ‘see what the fund looks like’.”

At this point, it is unclear exactly what these countries would like to see in the fund’s final outlines.

“There is no clear idea what’s on their mind, what kind of fund they foresee,” El-Arini says.

Yet, Orenstein notes, “in private conversations, representatives of these countries have placed emphasis on a fund that leverages private finance as much as possible.”

No rubber stamps

A report released Monday, of which Orenstein is a lead author, urges the GCF board to follow through on a UNFCCC request that the fund develop procedures that would require close alignment with a host country’s needs before a project can go forward, particularly carving out a substantial space for civil society.

While similar mechanisms do exist in three exiting related multinational initiatives – the Clean Development Mechanism, the Global Environment Facility and the International Finance Corporation, the latter being the World Bank Group’s private-sector arm – the report suggests that these have often become toothless safeguards reduced to little more than rubber stamps.

It also warns that the role of the private sector in the GCF has shaped up as a new fight between the developed and developing worlds.

“Throughout the development of the Green Climate Fund…developed countries…have insisted that the private sector be given direct access to finances from the GCF…[meaning that] firms would not have to clear their activities with national climate agencies,” the report states.

“Many developing countries, in contrast, have objected to direct access…because it could place the private sector in a position of creating de facto climate policies and programs, thus usurping the rightful role of government.”

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