Climate Fund left looking for greenbacks

M Ramesh Chennai | Updated on May 15, 2018

The target-reality mismatch in the GCF underscores the poor progress the world is making in terms of mobilising finance for fighting climate change   -  Getty Images/iStockphoto

With rich nations not pitching in, Fund has collected just a tenth of 2020 target of $100 b

Back in 2009, a group of well-meaning climate negotiators went into a huddle in Copenhagen and came up with the idea of creating a grand fund that would pay small, poor and developing countries to build bulwarks against the effects of climate change.

Since it is the developed countries that are primarily responsible (even if unwittingly) for creating world-warming greenhouse gases, it was agreed that they would contribute much to the proposed fund.

They called it the ‘Green Climate Fund’. They said the money collected will progressively grow in size and, by 2020, reach $100 billion a year — in other words, by 2020, the GCF would have mopped up at least $100 billion, and would collect as much every year thereafter.

Today, just two years to the deadline, all that the GCF has is $10.3 billion. Of this, $3.7 billion has been committed for 76 projects across the world, including two in India — a $34-million grant to a ‘groundwater recharge and solar micro irrigation’ project in Odisha and a $100-million loan for rooftop solar projects, both routed through Nabard. No funds have been disbursed to these two projects till date.

The next round of replenishment is now due and the GCF is expected to put out a call after its two-day board meeting starting October 30. However, there is a big concern that the US, which was to be a major provider of funds, is leaving the Paris Agreement. Developing countries want the rich to give more to make good the hole left by the US, but chances of that happening appears slim.

Different definitions

What counts as climate finance? Apart from the funding down to a trickle, there is the issue of what counts as climate finance. In the past, lending bodies such as the World Bank have counted loans given to, say, a railway project as climate finance on the ground that the project would take vehicles off the roads and reduce consumption of fossil fuels. In December 2015, the OECD, a body of developed countries, outraged the collective consciousness of the world by estimating that as much as $62 billion was mobilised from public and private institutions as ‘climate finance’.

“The methodology presented by developed countries in 2016 to claim they were on track to deliver the promised $100 billion has been problematic, as it contained dodgy numbers through the counting of loans and guarantees as climate finance,” notes Harjeet Singh, Global Lead on Climate Change for ActionAid International, the Johannesburg-headquartered activist body which works in many countries, including India. “However, developing countries do not agree that those elements should count towards the $100-billion commitment,” Singh told BusinessLine in an emailed response.

Bonn conference

The target-reality mismatch in the GCF underscores the poor progress the world is making in terms of mobilising finance for fighting climate change.

Another round of negotiations has just been wrapped up in Bonn, and the aim is to come up with a set of rules that countries will follow in order to meet their voluntary commitments at the Paris conference of December 2015. The sticky part of the negotiations has been finance.

The next major (annual) climate talks — the COP24 (or the 24th Conference of Parties to the United Nations Framework Convention on Climate Change) — will be held in Katowice, Poland, in December, and the COP is expected to come up with a “rulebook” for countries to follow. The talks in Bonn that just got over and those that will begin in September in Bangkok work towards the consummation of the rulebook in Poland.

Call for clarity

“At COP24, we expect countries to agree to a fair definition of climate finance, and a clear process for providing ex-ante information on how much public finance developed countries will provide to developing countries,” said Singh. “This is so that there is predictability for developing countries to plan their actions.”

The big gap between the need and availability of climate finance means the poor countries are “wrongly pressured” to increase their emission reduction targets without knowing if they will receive finance to fund their previous climate plans, let alone any increased action, he added.

Published on May 15, 2018

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