At a time when a series of international meetings on the climate is beginning, the funding tool for climate projects between the North and the South is facing governance problems. EURACTIV France reports.
As the San Francisco Summit opens on 12 September, a series of high-level meetings on climate also begins.
Following on from action by the local authorities and civil society in California, New York will be hosting “Climate Week”, in parallel with the General Assembly of the United Nations where the heads of state will be assembled.
In late November, the COP24 in Katowice is supposed to translate the theoretical commitments of the Paris Agreement (COP21) into a concrete roadmap. However, two crucial steps for the planet’s future are squeezed in between these great conferences. Firstly, the IMF and World Bank Annual Meeting in Bali in mid-October, which comes just before a Green Climate Fund board meeting in Bahrain on 17 October.
However, the Green Climate Fund, which organises transfers between the North and South and as such is a major cog in climate negotiations, is on hold.
At its last meeting in Korea early in July, the board was unable to adopt any of the points on the agenda. The executive director of the secretariat, Howard Bamsey, resigned in the aftermath. The United States’ withdrawal from the Paris agreement is only partly the cause of the deadlock.
The meeting was to decide on the replenishment of the fund reserves. Initially provided with $10 billion, the fund must indeed be replenished when 60% of its assets are pledged.
However, with the United States’ departure, the total funding only reaches $8 billion. Since $3.8 billion has already been pledged, it is about time to fill the coffers.
“This should have occurred in July but no decision was approved. The problem is that the Green Fund is becoming a focal point for tensions between in the South and the North,” explained Audrey Rojkoff, deputy head of the climate division at AFD (Agence Française de Développement).
Should the governance be reconsidered?
The fund’s board has a novel structure as it is composed of 12 representatives from Southern countries and 12 from Northern ones, contrary to traditional funders, such as the World Bank and the IMF, where the integration of developing countries is minimal.
The structure was a great idea which soon showed its limits because decisions have to be adopted by consensus in accordance with the fund’s statutes, which proves complicated. Some Northern countries would therefore like to review the governance rules before investing more money. However, for the Southern countries, the priority is rather the influx of new capital.
“We must absolutely resolve this situation, the Green Fund is essential to climate finance,” said Rémy Rioux, the chief executive of AFD.
This agency has just such an ambitious project which is awaiting funding by the international structure. The project involves $300 million, which is intended to open credit lines to banks in Southern countries to fund adaptation projects. This is one example of a project being delayed because of the current deadlock.
Germany and France mobilised to shake things up
“The countries of the North tend to say that it is the South that is blocking, but it’s more complicated. Some African countries are very constructive and some countries of the North are not at all,” Rojkoff noted.
During the fund’s discussions, which are available online, the delegates from South Africa, Egypt and Saudi Arabia often appeared to be the troublemakers. The United States, who will remain present on the board for as long as their quota remains, were clearly not helping either. Germany is currently trying to bring all its diplomatic weight to bear in an attempt to restore the functioning of the fund, which is also desired by France.
“The Green Fund and the funding commitments of developed countries opened the door to the Paris Agreement on the climate. We would never have had the commitments of all of the countries of the South if they hadn’t had the assurance that they would receive assistance,” Laurence Tubiana, CEO of the European Climate Foundation, underlined in a column in July.
The tensions should subside with the complete renewal of the board, which is expected in early 2019. However, uncertainty exists with regard to the board meeting in October.
“The problem is that countries tend to think the Green Fund is a re-run of the climate negotiations, whereas it is a tool. That’s why we absolutely have to defuse tensions before the COP24,” said a regular attendant of climate negotiations.