Latest meeting of Fund’s board ends with no deadline for contributions, meaning September 2014 likely date for pledges
By Ed King
The viability of the UNâs Green Climate Fund could be sealed at Ban Ki-moonâs climate leader summit next September, when its sources of funding are expected to be revealed.
A meeting of the GCFâs board in Paris this week ended without setting a date for raising new funds, after the USA and Australia blocked any specific timeline.
In a statement the Board said fundraising will start âwithin three months of the adoption of a set of key policies and procedures that enable the fund to receive, manage and disburse funds.â
These are set to be discussed at meetings scheduled for February and May 2014, leaving four months before world leaders gather in New York for the Secretary Generalâs planned summit.
âI would hope heads of government heading to the Ban Ki Moon summit would be prepared to make pledges,â said Amal-Lee Amin from consultancy E3G, who has been participating in the talks.
Earlier contributions are unlikely. Speaking from Paris, ActionAidâs Brandon Wu said many diplomats from rich nations are wary of any type of deadline: âthere is no legally binding language requiring countries to contribute, and the timeline is not explicit and could very easily be delayedâ.
There is intense interest in the fundâs future around the world, particularly in developing countries. It is expected to channel a significant proportion of the $100 billion rich countries promised to provide by 2020 to help develop low carbon infrastructure and cut global emissions.
Speaking after the meeting concluded, Executive Director Hela Cheikhrouhou said: âWe are getting ready to open for businessâ.
Other observers are not so optimistic. Also speaking from Paris, veteran climate finance analyst Karen Orenstein said the lack of urgency to get funds agreed was causing increased levels of tension between delegates.
âOne board member from Africa suggested the next meeting be held in a developing country already experiencing the devastating impacts of climate change, so the board could get a reality check,â she said.
Finance remains one of the most contentious issues at the UN climate talks, lying at the heart of many grievances between the Global North and South.
Some countries are expected to make further voluntary pledges at the UN climate summit in Warsaw next month, although these are unlikely to come close to what the GCF needs to get started.
âEveryone knows finance has to come for the UNFCCC process to go anywhere,â Wu said.
There have been signs that China may become a GCF donor, although it is coming under pressure from countries like Saudi Arabia not to set a precedent, meaning other developing nations may have to contribute.
âIf money from developed countries does not materialize for the GCF, then I think that already fragile trust between developed and developing countries will be further eroded,â said Orenstein.
âThe lack of anything concrete on resource mobilization could lead to funding for the GCF becoming a bargaining chip at the 2015 COP in Paris. This would be wrong and should be avoided.â
But clarifying what sources of finance – aside from public funds – can be drawn on for the GCF is apparently proving challenging.
Various alternative sources including using money from aviationâs inclusion in the EU emissions trading scheme, a tax on OPEC oil exports and using funds for fossil fuel subsidies have been suggested.
Observers in Paris noted âa lot of unpleasant politicsâ at stages, with Saudi Arabia in particular blamed for opposing innovative sources, perhaps fearing it will hit the country’s oil revenues.
Strong support from the USA and Australia for a private sector facility also created tensions with some developing nations.
Another contentious issue surrounds social and environmental âsafeguardsâ to ensure funds are not misused and local communities are consulted on potential projects.
Wu argues this is âabsolutely key for the GCFâs credibilityâ, warning that talks in Paris on this subject âhavenât been promisingâ.
Despite the lack of headline success, progress appears to have been made on building the GCFâs capacity to absorb and distribute funds when it starts work next year.
Orenstein welcomes a decision on readiness and preparatory support. The agreement says it will “allow all eligible countries to programme, access and use Fund resources in a transformational manner, in accordance with the objectives of the Fund.”
Yesterdayâs announcement added that the fund will âstart supporting developing countries in prioritizing their efforts to get ready to access financing by the Fundâ.
Amin says âthere are enough signalsâ for countries to start preparing themselves to apply for support when the GCF opens for business at the end of 2014.
And while there is still considerable unease about the slothlike negotiations and architecture of the fund, she says it has the potential to play a âcatalytic roleâ in accelerating low carbon investment in the next year.
âThere are some elements of the fund that will continue to evolve, and I think itâs clear the fund will develop in a phased approach and evolve over time.
âWe donât have to do everything now but have enough in place to ensure the fund can be operational next year, and thatâs pretty significant, because in the past that has not always been the case.â