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08/12/2016

Green Climate Fund meets amid cash problems

Development Policy

Green Climate Fund meets amid cash problems

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The board of the Green Climate Fund meets in Paris this week to help developing countries adapt to climate change and reduce emissions. EurActiv.fr reports.

Will the Green Climate Fund remain an empty shell? As the fifth board meeting of the Green Fund is being held in the Ministry of Finance this week (8-10 October), the operational implementation of the fund, announced three years ago, has struggled to materialise.

The multilateral fund established by the UN agreements in Copenhagen and Cancún aims to centralise finance for adaptation to climate change and reduce carbon dioxide emissions in developing countries. Developed countries have committed €100 billion by 2020 to this ambitious project, a significant part of which should transit through the new fund.

During this week's meeting, the twenty-four members of the Green Fund board, divided equally between developing countries and developed countries, will focus on the timing and implementation of the fund.

"The purpose of the meeting is to state that the Green Fund is ready to receive funding from various donor countries even if it is not yet operational for distribution to developing countries,” says Alix Mazounie from Climate Action Network, a green campaign group.

North-South disagreements

Today, the Green Fund only has a few million euros to ensure its functioning, mainly because of a lack of consensus between developed countries and their southern counterparts.

For rich countries, the objective is to involve the private sector in helping to meet their commitments, while developing countries expect the effort to come primarily from public funds.

Another bone of contention is the involvement of emerging powers such as China and India, whose financial support to the fund remains an open question.

A consensus is emerging however to implement the funding directly. Instead of using transit agencies and other intermediaries, payments could be granted directly to the recipient countries, which would be responsible for allocating it to individual projects.

This process should give beneficiary countries more control and reduce the transaction costs associated with intermediaries such as multilateral and bilateral development agencies.

Disagreement over the subject has slowed down the implementation of the Green Fund, but the political agenda could speed things up.

"The start of the Green Fund is an important issue for Paris, which hosts the 21st UN Conference on Climate Change (COP) in 2015," said Mazounie.

"We hope for an action plan which should allow us to enter the operational part in 2014," said the office of the French minister for development, Pascal Canfin.

But in France, the issue of financing the Green Climate Fund remains problematic.

Initially, €110 million were attributed to the fund for 2014 and 2015 under the draft 2013 finance law. The French contribution was to be derived from the country's tax on financial transactions, 10% of which was to be repaid to the development aid budget.

“But the French commitments are not confirmed in the draft finance law of 2014," said Alexander Neleu from Oxfam, the global anti-poverty group. Various NGOs have also criticised the French contribution as being insufficient to address the issue of climate change.

For France, the funding available hinges on the financial transactions tax, which has disappointed since its launch one year ago.

"On the other hand, countries such as Germany and the United Kingdom have already foreseen funding," said Mazounie.

The EU has also promised to contribute its share of the $100 billion a year that was committed to the Climate Fund, which should be operational in 2020. In 2011, the European Commission suggested in a working paper that the EU should pay a third of this amount. That objective is far from being reached.

Background

The Copenhagen Accord, agreed at in the Danish capital in December 2009, included a pledge by developed countries to raise $100 billion per year by 2020 to help poor countries fight climate change and adapt to its inevitable consequences.

Meeting the following year in Cancún, the 190 nations involved in the UN talks made progress on the establishment of a Green Fund to deliver climate cash to developing countries.

The fund will be governed by a board of 24 members, on which developed and developing countries will be equally represented.

Timeline

  • 8-10 Oct. 2013: Board meeting of the Green Clilmate Fund in Paris

Further Reading