Green Climate Fund: on the road to success in 2013?

The Board of the Green Climate Fund (GCF) gathered in Berlin on March 12-15 at the invitation of the German government for its third meeting. This was the first meeting since the 18th United Nations Climate Change Conference in Doha, and the decision last October that the GCF should permanently be based in Korea rather than Bonn. It is hoped that the GCF will venture into a new dimension of climate finance. While the international funds to date have indeed promoted a number of useful projects, they were not sufficiently able to accelerate the necessary paradigm shift to low-carbon and climate-resilient development.

Central issues were on the agenda during the discussions in Berlin: How can the Fund support the necessary paradigm shift to development with reduced emissions in developing countries? How can these countries’ access to the resources of the Fund be regulated? How can the private sector become involved? Further regulations for the involvement of civil society and decisions related to the establishment of the GCF in Korea were also covered.

Discussion of and decision on the Business Model Framework (BMF)

The discussion of the “Business Model Framework” encompassed the currently most relevant aspects in terms of content, such as how the ambitious goals of the fund are to be implemented, the conditions of access for developing countries, and the question of including the private sector. The meeting involved far-ranging and sometimes controversial discussions. In the end, four areas were identified in which a convergence of discussions was officially noted:

1. It was acknowledged that developing countries themselves should have the lead responsibility for the identified activities, and this should be a key principle for the Business Model Framework.
2. The Fund should start as an instrument that acts through accredited national, regional and international intermediaries and implementing organizations.
3. The initial focus should be placed on grants and concessionary loans, and the use of other financial instruments if necessary.
4. Transparency and accountability must be strengthened.

As a process, it was agreed that papers proposing decision options on various aspects of the BMF would be developed by the Secretariat with the assistance of consultants in time for the next meeting in June. The position papers of the countries and observers that were produced in advance of the meeting, or are still being submitted, will also be incorporated here. Whether the fund can agree on such a BMF this year will also depend on the quality of the papers.

Procedural rules relating to the participation of observers

While the topic may sound dry and bureaucratic, the procedural rules for the GCF were a major point of contention in recent months, also from the civil society perspective. The decisions taken in Berlin represent slight improvements of the existing drafts, but overall remain well behind the proposals of civil society. It was decided among other things that interested organizations must re-register to gain observer status at GCF meetings (the proposal that all those organizations already registered with the UNFCCC would automatically be accredited was not accepted). These rules involve some risk of arbitrarily excluding organizations whose work may not be in line with the political views of individual Board members. It will be necessary to observe how this is implemented in practice. It was also agreed that a comprehensive review of observer participation opportunities will be carried out in two years. Finally, the fact that future board meetings will leave more room for closer communication with civil society is also welcome. The two active observers nominated by civil society helped through their interventions to highlight the importance of stronger civil society involvement.

Resource mobilization

Intense discussions took place on the question of when and how to specifically talk about the mobilization of (financial) resources for the GCF. The developing countries rightly point out that it will be difficult to develop the BMF without any idea of how much money will flow into the Fund. On the side of the industrialized countries, the United States in particular vigorously fought any timetable that would lead to a concrete discussion as early as this year. So far, no decision has been made.

Arrangements for preparatory support

The overall view is that efforts to prepare developing countries for GCF funding flows through capacity building measures and the like should be moved forward as soon as possible. An event took place on the sidelines of the meeting that presented ongoing support measures by other instruments. The Secretariat was asked to identify measures to make progress in the short term – including the dialog with ongoing programs by other actors – by the next meeting.

Agreements between the GCF and COP

It still remains to be seen how the relationship between the GCF and the Conference of the Parties to the UNFCCC (COP) will be structured. At COP18 in Doha, it was decided that the new Standing Committee on Finance under the UNFCCC will act on behalf of COP to develop these rules with the Board of the GCF. In Berlin, it was only agreed to commission the Chairman of the GCF with preparing an initial proposal together with the Chairman of the Standing Committee on Finance by the end of June.

Preparation of the permanent headquarters of the GCF in Korea

As of early 2014, the GCF is set to have its permanent headquarters in Korea. The transition process until then will require various steps. Key intermediate steps to this end were agreed in Berlin.

Under the supervision of the Chairman of the GCF Board, the Secretariat held intensive negotiations with the government of South Korea in recent weeks on a headquarters agreement that would govern labor relations, privileges and immunities of the Secretariat staff and legal security by the government of Korea. This agreement is crucial to the genuine independence of the Fund from the Korean government in Korea, and also to ensure the legal autonomy of the GCF. The Board also gave its blessing to the Terms of Reference for the position of the future Executive Director of the permanent GCF Secretariat, so that a selection committee (chaired by the German GCF representative) can now search for candidates with the aid of a professional recruiting organization and the publication of the vacancy. The GCF hopes to be able to present the future Executive Director at the meeting in late June.

GCF logo

A logo can help draw attention and raise awareness for the GCF. An international logo contest will be announced, with June 30 as the deadline for submissions. The aim of the competition will be to present a winner at the third meeting this year in September.

Upcoming meetings

The next meeting of the GCF Board will take place on June 25-28 in Korea, at the future headquarters of the Fund. A third meeting has been scheduled for the 4th to the 6th of September of this year; the venue has not yet been set. Germany or Europe would be an obvious choice, however, since a UNFCCC negotiating session will be held in Bonn a week later, and at least some of the GCF members will be present for it.

Summary

Overall, the GCF Board reached all of its formal goals for this meeting. Important decisions were made to further the development of the independent fund in Korea, as the GCF Secretariat will be located there by the end of the year. At the content level, the BMF was central to the discussions. While there was controversy, points of substantive convergence were identified and agreement was reached on the further process. Overall, the meeting can therefore be described as fairly successful relative to expectations. Whether the GCF will have reached the point this year that truly substantial sums of money will be pledged to it remains to be seen, but after this meeting, it at least seems in the realm of possibility.

– Sven Harmeling / Germanwatch