As reported in this blog last week, the Green Climate Fund (GCF) reached $9.95 billion of its $10 billion goal for 2014. Pledges over the weekend increased the total to $9.9 billion. Today, the Ministerial Dialogue on Climate Finance discussed how current institutions and tools are providing countries with reassurance that public finance is flowing internationally.
The Standing Committee on Finance estimated that total global climate finance ranges from $340-$650 billion per year. Of this, $40-$175 billion flows from developed countries to institutions. $35-$50 billion flows to developing countries via public institutions. The SCF projected that 47-78% of funds will be used for climate change mitigation, 11-24% for adaptation efforts, and the remaining will go to other climate change objectives.
The GCF noted that 74 countries have assigned a Nationally Designated Authority (NDA) or focal point designations. This will aid in climate finance efficiency and distribution of funds. Funds are becoming more easily accessible as entities seeking accreditation to receive funds from the GCF can apply online. The GCF stated that savings can be used to build a climate resilient future.
The Global Environmental Facility (GEF) reenforced the necessity for all parties to complete their intended nationally determined contributions (INDC). So far, the GEF has provided support for 18 countries’ INDCs. The GEF stressed that climate finance in both mitigation and adaptation is critical in order to have sustainable, low carbon development. Further, the public funding only makes up a small portion of the funds necessary to achieve such development.
When parties took the floor, more and more pledges rolled in for different climate finance entities. Germany pledged to contribute USD $55 million to the Adaptation Fund while Spain pledged EUR 20 million to the New York Declaration on Forests. Belgium will contribute EUR 50 million to the GCF. The Australian pledge of AUS $200 million to the GCF put the total over the $10 billion mark.
Despite achieving the goal, the Co-Chairs of the Ministerial Dialogue stated that more countries should still make pledges and become involved. This will spur more private entities to pledge so that adequate funds will be available to support global sustainable development.
The Green Climate Fund (GCF) is the largest and fastest-growing climate fund. It was the largest before Lima (US$9.3 billion, bringing the fund to $9.9b, just shy of the $10b goal for COP20) and now, with the new commitment of Norway, plays an even more protagonist role. However, in the first week at the COP20, experts have expressed their concern about how high the expectations are from the public and private sector in relation to the GCF. Thereby, before celebrating you will need to apply. The accreditation process opens in March 2015, and in June the GCF will start considering proposals. For more information visit: http://news.gcfund.org
On Monday China’s Chief Climate Negotiator, Mr. Su Wei, offered some interesting views at a COP20 side event on a significant and growing trend in the efforts to tackle climate change – South-South cooperation. The event, “Perspectives on the 2015 Paris Deal: Options on the road from Lima 2014 to Paris 2015,” was organized by the South Centre and the Third World Network and also featured representatives from the Africa Group on ADP and India. Mr. Su Wei stated that while China welcomes the announcements of pledges totaling $9.7 billion to the Green Climate Fund, the goal was to reach $10 billion by the time the Parties convened in Lima. Moreover, according to Su Wei, though we have heard many pledges that developed country Parties will contribute up to $100 billion per year by 2020, we still have no clear road map as to how those funds will be raised. On top of that, countries such as the United States and Japan, which have pledged a total of $4.5 billion between them, must still gain approval from their respective legislatures in order to actually live up to their pledges. This task will certainly be difficult in the United States, where the Congress has already vowed to block the US contribution.
Su Wei stated that developing countries can no longer continue to wait for developed countries to provide the climate funding they are legally required to provide. Therefore, China has begun to fill in where it perceives the developed world to be lagging behind and started providing financing of its own to developing countries. For example, at the 2012 Rio+20 UN Conference on Sustainable Development Premier Wen Jiabao announced that China would “make available 200 million yuan to help least developed countries and those in Africa tackle climate change.” More recently, China’s Vice Premier Zhang Gaoli announced at the September UN Climate Summit that China would pledge $6 million to support South-South cooperation on climate change. Finally, Chinese President Xi Jinping revealed at the G20 Summit in November that China would establish a South-South Cooperation Fund on Climate Change.
Su Wei’s remarks reflect the growing trend of South-South cooperation on climate change. The UK think tank Foreign Policy Centre has reported that in 2013 “there was $92.7 billion in new investment in renewable energy in developing countries and $121.7 billion in developed countries,” representing a very significant narrowing of the gap between the two since 2007. Additionally, FPC noted a Bloomberg New Energy Finance report that in 2012 “South-South development bank clean energy flows totaled $7.5 billion, up from $2.8 billion in 2008 and compared to 2012 North to South flows of $9.9 billion.” In a “break with tradition,” developing countries Mexico and Mongolia are also actually beginning to invest in the Green Climate Fund. Therefore, it seems that as the developed nations continue to drag their feet with respect to their pledges to provide climate financing and enhance the implementation of the Convention, developing countries are starting to pick up the slack and forge ahead.
On December 8 the National Development and Reform Commission of China, UNEP, and the UNDP are co-sponsoring a forum on South-South Cooperation on Climate Change in Lima. The forum will bring together ten leaders from various countries and international organizations to discuss strategies to enable a rapid scaling up of South-South cooperation initiatives. It should prove to be a very interesting event.
Today’s work by the VLS delegation at COP20/CMP10 walked the talk of the law school’s motto, Lex Pro Urbe et Orbe.
The 10 delegation students are engaged in a service learning project with the Myanmar State Party Delegation, one of around 50 Least Developed Country (LDC) parties who have signed the UNFCCC and its Kyoto Protocol. LDC delegations are typically very small. For example, while delegations like China, the EU, and the US each numbered over 100 members at COP19, Myanmar’s delegation counted only two. To effectively engage in the negotiations literally requires being in at least three places at once. Exhibit A: Today’s ADP contact group split into two concurrent sessions on adaptation and finance, while at the same time sessions took place in the SBI, SBSTA, and joint SBSTA/SBI – not to mention a half dozen side events.
To build capacity, the VLS delegation is supporting Myanmar in three key ways. First, we are tracking negotiation sessions on topics of interest (ADP, LDM, CDM, REDD+), taking notes when this small UNFCCC state party delegation cannot attend and thereby multiplying its presence at COP20. We are then briefing Myanmar on these meetings both in writing and orally. In addition, we prepared two rounds of pre-COP briefing memos. The first set focused on COP process and procedure, to help Myanmar more effectively navigate the UNFCCC negotiations. The second set presented research and analysis on these four issues of interest, to help this LDC delegation prepare for the COP20/CMP10 negotiation.
Shaula (center) briefs Myanmar delegates on LDM issues.
Today our first-week team’s LDM expert, Shaula Eakins, briefed the delegation on the first two days of negotiations and side events on point. Likewise Whitney Beckham, the first-week team’s expert on ADP Workstream 2, briefed our Myanmar colleagues on opportunities for funding under the Green Climate Fund (GCF). In this way, students learn while serving and serve while learning – and extend the reach of VLS beyond our Vermont and U.S. borders.
Today in Lima, Japan won Climate Action Network’s (CAN) Fossil of the Day Award. CAN gives this award to countries based on their performances during the past day’s negotiations at the United Nations (UN) climate change conferences. Japan won the Fossil of the Day Award for “getting busted for funding coal and gas power stations in developing countries, in particular Indonesia, with money meant for scaling up climate action.” This slightly sarcastic yet highly prestigious award brings to light current issues, and hopes to publicly motivate the named recipient into climate action.
Japan gave Indonesia $1 billion in loans to build three coal-fired power plants in the name of climate finance under the United Nations. Japan says these plants burn coal more efficiently and are therefore cleaner than old coal plants. However, they still emit twice as much heat-trapping carbon as plants running on natural gas, and are the biggest human source of carbon pollution.
Outside of naming the clear Fossil Day Award winner, CAN highlighted an overarching issue regarding climate finance. The UN Framework Convention on Climate Change (UNFCCC) has no definition of what climate finance is and there is no watchdog agency that ensures the climate finance funds are spent in the most effect way. Japan allocated the funding to Japanese companies under UN loans described as “thermal power plants,” with no indication that they were coal-fired projects.
There are no rules against counting such projects as climate finance under the United Nations. Christiana Figueres, Executive Secretary of the UNFCCC, unaware that the Japanese-funded coal plants in Indonesia were labeled as climate finance, stated “there is no argument” for supporting such projects with climate money. “Unabated coal has no room in the future energy system,” she told AP News.
CAN, a worldwide network of over 900 non-governmental organizations (NGOs) in more than 100 countries, continues to promote government action to limit human-induced climate change by bringing theses issues to light.
The Green Climate Fund, which has similar goals to help poorer nations adapt to the warming climate, also has no watchdog agency or formal definition of climate finance.The power of “public shaming” presented by CAN’s Fossil of the Day Award, not only galvanizes climate action commitments, but instills a new fire within climate activists.
The Green Climate Fund (GCF) received a lot of attention last week, with pledges announced at the Pacific Rim conference, the G20, and most recently, the GCF Pledging Conference. The Fund, which is managed by the World Bank, has been hailed as a “new international fund that aims to squeeze more from public dollars by attracting private investment in clean energy technologies and climate resiliency projects, such as storm surge barriers and more durable buildings.” But how does it accomplish this goal?
The GCF includes a unit, called the Private Sector Facility (PSF), whose sole mission is to seek out private money for investment in the clean energy and resiliency sectors. According to Gilbert Metcalf, an economics professor at Tufts University and a former U.S. Treasury official, the PSF could use a mix of loans, partial-risk guarantees, and venture capital dollars that would make it less risky and expensive to invest in fledgling technology projects in developing economies. Professor Metcalf serves on the Green Climate Fund’s advisory board, which is comprised of representatives of 24 nations, of which the United States is a permanent member. GCF activities include more than 190 participating countries.
An example of a risk-reduction financing technique that the GCF could use, according to Professor Metcalf, is a public-private investment in Oaxaca, Mexico in 2009, where climate financing was used to reduce investment and regulatory risks on several wind farm projects. “It helped provide a proof of concept that this really could work, and private investors followed with subsequent wind projects in Mexico,” he said. The Green Climate Fund would aim to do the same on a much broader scale.
At COP15 in Copenhagen in 2009, the U.S. announced that developed countries would raise $100 billion per year in public and private aid from 2020 onward to capitalize the GCF. Interestingly, the GCF builds on an earlier U.N. program, the Climate Investment Funds (CIF), which was a temporary program that raised $7.6 billion in 2008, including $2 billion from the George W. Bush administration. Over the past four fiscal years, Congress has approved nearly $1.4 billion for the CIF.