It’s a been a while since we’ve written about the Green Climate Fund (GCF), but given its recent popularity in the media stemming from Trump’s complete mischaracterization of it when declaring his intent to withdraw the US from the Paris Agreement, we wanted to give you a refresher on it.
What it does.
Contrary to what the current administration would have you believe, the GCF was not created by the Paris Agreement, but five years earlier in Cancun by the United Nations Framework Convention on Climate Change at the Conference of the Parties. The fund promised to channel the billions of dollars earmarked for climate adaptation and mitigation that developed countries, including the US, pledged a year earlier in Copenhagen, and to do so with policies and guidelines that CIEL and partners have been pushing for. Since then the GCF has established a permanent secretariat in Songdo, South Korea, received some of the money pledged, developed some policies, designated who could receive the funds, and approved some projects.
How it works.
Recognizing the need for more funding for mitigation and adaptation to climate change, countries (not just the US) pledged and actually deposited money in the fund. However, this is far from the scale that is needed. In Paris, all countries promised to reduce emissions ideally keeping global temperature rise to 1.5 degrees, which not only requires action but also funds. Also, FACT, the Paris Agreement does not mandate or obligate each country to give a specific amount.
So with money in its coffers (though not enough policies), the GCF Board started approving projects. While 45 projects have been approved, money has only recently started to flow to these projects.
Who gets the funds?
Not to get too far ahead of ourselves, the GCF doesn’t do its own projects, instead the Board gets to approve or “accredit” institutions that then work with countries to design projects to present to the GCF. Accredited Entities, which have been identified as meeting the GCF’s standards, work with countries to develop projects for Board approval. The goal is to have a balance between adaptation and mitigation projects, however, there continues to be a misunderstanding about whether adaptation projects are indeed leading to adaptation for climate change or are just traditional development projects.
Early on the GCF Board accredited all of the big multilateral development banks such as the World Bank, and then started authorizing commercial banks from around the world. Unfortunately, it is taking much longer for institutions and organizations in countries who are the ones that will actually work on these projects to be authorized to even request funds from the GCF.
In its rush to accredit new commercial banks without proper policy review, just last week in Songdo, Korea the GCF Board decided to approve the Bank of Tokyo-Mitsubishi, which funds the Dakota Access Pipeline among other projects, allowing it to do high risk projects. Commercial banks such as this have different policies, oversight and monitoring that should have left them out of the running for this type of venture.
Much work remains for the GCF. The policies needed to ensure that these funds are used in a responsible way should already be in place. That way the projects funded could actually provide benefits and solutions for communities around the world who are facing the direct impacts from droughts and wildfires leading to water scarcity or perhaps sea level rise and loss of livelihoods, or the many other effects of climate change. Yet we are still waiting.
This and other urgent matters need solving as the GCF-funded projects begin and more projects are approved. We will be bringing you more on CIEL’s role in the evolution of this fund in the coming weeks.
By Erika Lennon, Senior Attorney
Originally posted July 11, 2017