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New institution

Time pressure on the Green Climate Fund

by Liane Schalatek
Sceptics have little trust in the Green Climate Fund: activists demonstrating in Durban during the UN climate summit last December

Sceptics have little trust in the Green Climate Fund: activists demonstrating in Durban during the UN climate summit last December

At the UN climate summit in Durban last year, the international community agreed to opera­tionalise the Green Climate Fund as soon as possible. The establishment of the Fund was agreed a year earlier at Cancún. This new multilateral agency could soon be the most important financier for climate action in developing countries. Its mandate explicitly includes adaptation to global warming as well as mitigation efforts. In any case, with the new Green Climate Fund the global architecture of climate finance is being re-designed and, hopefully, consolidated. By Liane Schalatek

The Durban summit defined the role of the Green Climate Fund in rather broad terms. ­However, the governing instrument, which defines the Fund as part of the UN Framework ­Convention on Climate Change (UNFCCC), leaves important ­issues unresolved. Among them are the questions of
– where the Fund will be based (six nations have applied, and Germany is one of them), and
– who will supervise the Fund (developing countries want to put the UNFCCC member countries in charge, whereas industrialised countries argue that informing members on a regular basis should do).
The Fund’s newly established managing board must deal with these and other questions fast. It has 24 members; 12 are from developing countries and 12 from rich nations. Final decisions are to be taken at the UN climate summit in Qatar in December.

The managing board has to tackle many challenges as quickly as possible. The governing instrument lists over 50 separate issues that must be dealt with to make the Green Climate Fund operational. Some of them are tricky and will probably re-trigger polarised debates of the past. Points of controversy include:
– the arrangement that makes the World Bank, which – in contrast to the UN – is dominated by donor countries, the new institution’s initial trustee,
– the establishment of a private-sector facility within the Green Climate Fund and
– ensuring adequate funding from donors.

In view of many sensitive issues, the Green Climate Fund is unlikely to start disbursing money before the end of 2013. It is a bad omen that the managing board’s first meeting had to be postponed three times because some regional constituencies could not agree on who should represent them. The managing board is now set to meet for the first time in late August.

It is still absolutely unclear how much money the Fund will have at its disposal in the mid and long term (see interview with Saleemul Huq in this edition). To date, only little more than € 55 million have been committed; the major contributors are Germany and Denmark. It is enough money for the secretariat and managing board to work at full force over the next 18 months, but way too little to demonstrate the international community’s faith in the new institution.

Nevertheless, a provisional secretariat was set up this spring and has started working for the Green Climate Fund. Its staff is seconded by the UNFCCC and the Global Environment Facility and will support the new managing board until the board sets up its own secretariat and appoints the Fund’s first executive director.

Liane Schalatek