Will some be left behind? The significance of climate finance

amanjumpsove For countries on the front lines of climate change, access, availability, and urgency of funding needs are significant. As an example, rising sea levels in Senegal and Gambia have already impacted agricultural production. Saltwater intrusion into agriculturally productive lands has reduced food production. Further, warming temperatures and resulting increased length of seasons have heightened health risks associated with vector borne diseases. The impoverished state of these countries does not position them to to enter world markets to offset domestic deficiencies through imports. The conditions they face cannot be attributed to a random occurrence, though. Instead the plight of Senegal and Gambia and many other least developed countries (LDCs), as well as small island developing states (SIDS), and landlocked developing countries (LLDCs) is one of significant challenges.

In spite of not being large emitters, the effects of climate change are disproportionately high for these countries; unlike developed countries, these countries have made negligible contributions to the increased speed of climate change, as presently observed. They are the poor, vulnerable, low-emitter nations that are negotiating for the right for climate finance from the developed world. However, funding for mitigation and adaptation projects has been limited. Recent commitments for funding, though on the surface robust to the casual observer, have not inspired confidence across all LDCs, SIDS, or LLDCs.


On Monday, the starting day of COP21, eleven developed countries made commitments to the Least Developed Country Fund (LDCF). Total pledges to the LDCF totaled $248 million. The sum was an auspicious signal, a numeric gesture in parallel with the phrase “no one left behind.” However, at a side event on the same day of the announcement, LDCs commented on the difficulty of accessing funding, the rigorous nature of the application process, and the limited appearance of urgency from funding bodies. Two days later, on Wednesday, at another side venue, other LDCs commented on the difficulty of access to funding and the need to develop national climate finance strategies. Cambodia noted that the prospects of international financing are good but the modes of financing remain uncertain and the process is slow. The Gambia noted that demand for LDCF resources exceed the funds available for approved projects.

Some observers have voiced that funding is perceived by the developed world as financial aid when it should be viewed as the promotion of the common good. A communal perception could foster access and availability of funding provided from developed countries to developing countries in a more expeditious manner.

Mary Robinson, the former President of Ireland, noted in her remarks in Monday, following the LDCF funding announcement, that climate change is a global problem, stating, “Climate change is a problem for all.” She went on to advocate, “The agreement itself needs to be people-centered. The needs of LDCs need to be heard.” At the close of the third negotiating day, it was not clear whether the needs of LDCs were being considered under no one left behind.

In the remaining twenty-four hours of the first phase of COP21, discussion will continue with respect to language that would expedite funding. Additionally, the amount of aggregate funding available to developing countries from 2020 onward remains outstanding. In a few more days the group work of COP21 will set the trajectory for climate finance as the world sets its course to recalibrate its relationship with the planet. The decision will be significant and will send a strong signal with respect to the balance of developing country needs and developed country committment.

The Private Sector in the GCF

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?

GCF logoThe 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 GCF turbineconcept 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.