GCF Board Meets to Launch Yet Another Climate Finance Vehicle

The 24-member board of the United Nations Framework Convention on Climate Change’s (UNFCCC) Green Climate Fund (GCF) is meeting at its recently established headquarters in Songdo, South Korea this week to hammer out the details that will see the climate fund become fully operational.

GCF proposes yet another climate finance program. Is this really what is needed?Over four years in the making and with a goal of raising $100 billion in capital by 2020, the GCF is intended to serve as the primary multilateral vehicle for climate change finance, its guiding mission to channel investment capital from developed to developing nations for the purposes of climate change mitigation, adaptation and sustainable development.

Gathering amid the backdrop of the recent release of the International Panel on Climate Change (IPCC) Fifth Assessment Report (AR-5) and the U.S.’ Third National Climate Assessment, the need to channel investment capital away from climate-warming fossil fuel production and consumption and toward alternatives that are emissions-free and ecologically sustainable appears clearer than ever.

Financing climate change mitigation and adaptation

Some of those involved and carefully observing developments in climate change finance question the need for yet another international climate fund, however. They argue that further fragmentation of an already fragmented climate finance landscape will only add to the confusion, debate and controversy as to how best to promote and foster rapid development of clean, renewable energy resources and accelerate growth in projects that enhance climate resiliency across developing nations.

Rather than further fragmentation, what’s needed, they say, is consolidation and unification of climate finance funds along with a streamlining process that results in a simpler, more effective funding application process that affords more open, inclusive access to investment capital for small developers of climate change mitigation and adaptation projects at the local level.

Also essential, they assert, is an intensified effort on the part of all 195 national governments party to the UNFCCC to eliminate fossil-fuel subsidies, which they note dwarf the $100 billion in capital for climate finance the GCF is still to looking to raise from member nations and the private sector.

Non-governmental, as well as U.N.-member nation, participants in and close observers of international climate change treaties and fund negotiations also worry that multinational fossil fuel, nuclear and large-scale hydro power interests will co-opt the funding process, and that, as a result, climate funds such as the GCF will wind up allocating large amounts of scarce capital in large-scale projects diametrically opposed to its stated mission of reducing greenhouse gas emissions and enhancing climate change adaptation and resiliency in developing nations.

Raising an alarm

In a May 16 news release, environmental NGO Friends of the Earth joined with the Institute for Policy Studies, International Rivers and “nearly 300 civil society organizations mainly from developing countries in raising an alarm that the Green Climate Fund could be used to finance projects that are just a little less dirty than ‘business as usual,’ including fossil fuels, dams, nuclear energy and biomass, among others.”

As Janet Redman, director of the Institute for Policy Studies’ Climate Policy Program, explained, 195 countries came together to create the Green Climate Fund in order to help finance the transition in developing countries from dirty energy development to clean energy, climate-resilient economies.

“Common sense says that financing any fossil fuels or harmful energy through the Green Climate Fund is totally inconsistent with what climate scientists say we need to do to avoid runaway climate change. This fund is so important precisely because itÆs meant to support a paradigm shift to sustainable development.”

The GCF process may well be perverted and used to achieve ends diametrically opposed to its stated mission and goals, however, Zachary Hurwitz, Global Standards coordinator at International Rivers, cautioned.

“There’s nothing — yet — in the Fund’s rules to stop it from financing false solutions like “clean” coal, natural gas fracking, destructive dams or even nuclear power in the name of “low-emissions” energy. We need to make sure there is — and we need the U.S. to be a champion.”

“President Obama has already promised to wind down support for dirty coal projects overseas. And Congress recently limited support for the types of destructive hydro power dams that often displace communities and decimate whole ecosystems. Saying no to harmful energy in the Green Climate Fund is a logical next step for the United States.”

Where climate finance funds are allocated

Do we need another multilateral climate fund?

From an even broader perspective, some are questioning the need for the GCF in the first place. In a November, 2013 article in the U.K.’s The Independent, Assaad W. Razzouk says that “it’s not more climate organizations we need, it’s more effective ones.” Elaborating, Razzouk writes,

“The GCF joins a cacophony of parallel climate support vehicles, including the Global Environment Facility (GEF), the Climate Investment Funds (CIF), the World Bank Group, the UN climate talks Adaptation Fund and another thirty five organizations listed as ‘UN partners on climate change,’ none of which are decisively tackling climate risks.”

Moreover, the GCF is having an extremely hard time establishing itself, as well as raising capital, Razzouk highlights, even though the $100 billion-by-2020 GCF target “is peanuts” compared to a global GDP of $70 trillion and the $2 billion a year being spent on fossil-fuel subsidies.

What’s needed, Razzouk contends, “is the courage to kill the Green Climate Fund and the leadership to get climate action decisively underway.ö He proposes that the GCF be merged with one or more already operational U.N. climate finance vehicles, such as the GEF, the CIF and/or the Adaptation Fund, and that minor changes could be made to make the GEF and/or CIF accountable to the UNFCCC. ôCollectively,” Razzouk asserts, “these could form an effective ‘Climate Change Action Bank’ able to mobilize $100 billion a year or more.”

For more, check out the article in The Indepedent’s news archive.

Image credit: Green Climate Fund
Graph courtesy of  Heinrich Boll Foundation North America’s Climate Funds Update

Andrew Burger
Andrew Burger
A product of the New York City public school system, Andrew Burger went on to study geology at the University of Colorado, Boulder, work in the wholesale money and capital markets for a major Japanese bank and earn an MBA in finance.

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