GCF WTF? In other words, What’s the Green Climate Fund?

(Photo: Rob Fish)

By Keith Brunner

Dec 7th, 2011

Durban, SA: Here in Durban, it looks like the piece of the negotiations which has the greatest chance of moving forward is an agreement on climate finance, and in particular, the design of the Green Climate Fund.  What is this fund?  How much money will be in it, who’s putting cash into it, and how is this related to climate change?  As this will be a major negotiating point over this final week of the COP17 here in Durban, we’d like to provide some background information below, in this rough sketch-up below.

Climate + Finance

Here at the UN Framework Convention on Climate Change, negotiations move forward on different ‘tracks,’ and cover a number of different topics that have been deemed important in past COPs (Conferences of the Parties; this is the 17th…COP17).  Some of those topics include: Mitigation (methods for actually reducing the amount of greenhouse gases being released into the atmosphere), Adaptation (how countries are adapting to a toasted planet), Technology Transfer (Issues around enabling Global South countries to access patents and designs of cleaner technologies), and, as we’ve mentioned, Climate Finance.

There are multiple approaches to the field of climate finance, which inform the discussions- and disagreements- about how it should be raised and administered.  Within the UN talks, there is a consensus that if all of the regions of the world followed the industrialization patterns of Europe, the US, and the other highest-polluting countries, we’d be in big trouble.  So there’s a push for money to be made available to Global South countries (with some groups pushing for grants, and others for low-income loans), which these countries can apply towards alternative, less fossil-fuel intensive development paths.  In other words, they can access this cash to mitigate their carbon emissions, preventing further climate destabilization, which is essentially a global public good.

There’s also a large push, coming most strongly from civil society and countries such as Bolivia who are most vulnerable to shifts in climatic behavior, to view climate finance through the lens of a climate debt.  The argument goes like this: Rich countries have industrialized at the expense of the poorest countries- regions which, due to the way the climate system works, are now feeling the strongest effects of climate chaos.  Therefore, the countries most responsible for historical climate-changing emissions owe a debt to those countries most affected by the crisis.  It’s based on a familiar principle: that the polluter pays.

From the Cancun Agreements to the Durban Mandate?

The idea of providing a fund which would disburse money related to climate change is not a new one.  From the Global Environment Facility (GEF) established in the 90’s, to the Adaptation Fund under the UNFCCC (which fills its pot through a 2% levy on transactions in the CDM market), to the growing portfolio of Climate Investment Funds managed by the World Bank, there’s already an array of bilateral and multilateral funding mechanisms designed to finance climate change-related activities in the Global South.  However, this array of funding mechanisms has been largely disjointed and uncoordinated, leading civil society and policy-makers to call for the creation of a new global fund, which would distribute new and additional money, and ideally be structured so that communities and regions most affected by climate change will have easy access to the fund.

Enter the Green Climate Fund.  Built last year off of a proposal put forth by the Mexican delegation, the Green Climate Fund (GCF) was passed in the COP16 Cancun texts, and a 24-member Transitional Committee for the Design of the GCF was established and charged with the task of fleshing out the details over the course of 2011.  As the Cancun Agreements were largely based on the Copenhagen Accord- a document which was crafted in secret by a few industrialized countries and which was ‘noted’, but not adopted, at COP15-, the GCF is working with the Copenhagen Accord goal of mobilizing $100 billion a year in climate finance by 2020, with “fast start” financing hitting $30 billion by 2012.  The World Bank, which had taken an early interest in the fund and has already been operating its Climate Investment Fund portfolio for 12 years, was named the Interim Trustee of the GCF, a position it will hold for three years until a formal review.

Over the course of 2011, the Transitional Committee (TC) met four times, attempting to work out such issues as private sector engagement with the fund, the question of whether the fund would have “legal personality”, whether it would be situated under and accountable to the COP, and a whole slough of questions surrounding the procurement of funds and their distribution.  At the final TC meeting in Cape Town, South Africa this October, where the TC was supposed to come to consensus and finalize a document on the GCF to forward to the COP17 in Durban, the US and Saudi Arabia blocked its passing, citing concerns in the text.  This meant that the delegates in Durban for COP17 would be dealing with an unfinalized text related to the design of the GCF, and raised the question of whether countries at the COP would seek to “open” the text for amendment- a move which would mean beginning a whole new round of political wrangling around the design of the fund.

According to the US, Norwegian, and other negotiators, it looks like the GCF document will not be opened here in Durban, however, it appears that a short “cover sheet” or “appendix” will be drafted and attached to it, which will have influence over the fund as it continues to be developed.  The word on Tuesday was that a separate, “informal” working group had been convened by the South African government, to develop an “alternative” text to the report from the Transitional Committee- raising the prospects that, similar to COP’s 15 and 16, an alternative text would be presented by the most powerful countries, and synthesized into the negotiating document at the last minute.

As we are covering World Bank side events, attending briefings, and reading reports of the negotiations, it’s becoming clear that the GCF here in Durban is moving further and further away from being a fund to address historical injustices and climate debt, and is fast becoming a trojan horse for a new “green” global free-market economic agenda.  Look for more on this issue soon.

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