There are two main funding mechanisms to provide finance for projects in developing countries that will help fight climate change effects — the Global Environment Facility (GEF) and the Green Climate Fund (GCF). And, there is not-so-good news from both of them.
Last week, a board meeting of the GCF ended without a decision on how to pool in more money into the fund. Curiously, the Executive Director of the Fund, Howard Bamsey, resigned citing “personal reasons”.
Earlier, at the end of April, the GEF concluded negotiations on its next (seventh) funding cycle, but the amounts pledged totalled $4.1 billion, nearly $300 million less than in the sixth cycle. (The $4.1-billion will be used to fund projects in developing countries between 2018 and 2022.) This was primarily because the US pared its contribution to the facility.
The GEF was founded in 1992 at the Rio Earth Summit to finance measures that tackle environmental challenges such as climate change, biodiversity, forests, land degradation and oceans.
The GCF was set up in 2010, soon after the 2009 climate talks in Copenhagen, by 194 countries that are parties to the United Nations Framework Convention on Climate Change, to address climate change.
Fund inflow trickles
The GCF is regarded to be a totem of global climate finance co-operation, the chief instrument of fulfilling developed countries’ collective promise to put $100 billion annually (not enough) into the hat by 2020. The fund has pledges worth $10.3 billion from its “initial resource mobilisation”, and is fast running out of money.
Therefore, the board’s immediate task was to decide on a “replenishment policy” that will facilitate inflow of funds from donor countries. And, as expected, the developed and the developing countries bickered.
The former wanted a say in how the contributions were used; the latter insisted that the Fund was premised on balanced governance and both the rich and poor have equal say. The chasm could not be bridged and the board meeting ended, on July 4, inconclusive.
“This has been a very difficult and disappointing board meeting, but most importantly for those people who are most vulnerable to climate change impacts, and who depend on the activities of the Fund,” said the Chair of the meeting, Lennart Bage, in a press release.
Setback to Indian projects
This is seen as a setback to climate finance, because much is expected of the GCF. A background note to the board meeting says that the Fund “is seeing a growing demand from developing countries to support their low-emission, climate-resilient development goals” and “the increasing pace of requests for funding and recent scaling up of funding approvals by the Board lends urgency to a successful replenishment, ensuring the ongoing adequacy and predictability of GCF resources.”
Stakeholders are taking due note of the failure of the board meeting. “Temperatures are at record highs and climate impacts are worsening around the world,” notes ActionAid, an NGO, in a statement.
The GCF has approved funding for two projects in India. In April 2017, it approved $34 million for a groundwater recharge and solar micro-irrigation project in Odisha. And in February this year, it okayed $100 million for solar roof-top projects. No disbursement has happened for either of the projects as yet.
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