Getting the ball rolling: resource mobilization for the Green Climate Fund (GCF)

The missing peace of the puzzle: pledges for the first replenishment of the Green Climate Fund © Oxfam

Since the last meeting of the Green Climate Fund (GCF) Board, all of the pieces have been put in place for contributor countries to mobilize their pledges to this new multilateral climate fund.

The GCF is designed to promote climate protection and adaptation in developing countries to a far greater degree than previous funds. Since its establishment at the UN World Climate Conference in 2010, governments have been working on its specific structure. The key decisions have now been made, for example with regard to the fund’s operational business model and its funding priorities. Before the GCF can begin its real work, the final piece of the puzzle is still needed: the fund’s initial resources.

At least $15 billion shall be put in later this year in the form of pledges by donor countries – these are the expectations clearly stated by the developing countries during the last UN climate talks in Bonn. That would amount to roughly twice the financial assets of the World Bank’s Climate Investment Fund, which, incidentally, was only intended to be transitional from the outset. Since the GCF was conceived as the heart of international climate finance architecture and intended to manage a substantial portion of the $100 billion promise, the expectations of developing countries are certainly not exaggerated. That promise, in fact, also represents a compromise – many countries initially put forth significantly higher figures in discussions within the group of developing countries.

Germany’s fair share: ten percent

And Germany? With the adoption of the federal budget in 2014, provisions were made (in the form of an appropriation in the budget of the Development Ministry) that will allow the government to make a pledge of €750 million over several years on behalf of Germany. While the amount appears impressive, it will be distributed over nine years, and the initial contribution will be less than €20 million in 2015.

Ten percent is generally considered to be Germany’s fair share of the GCF’s initial resources based on considerations of Germany’s relative economic performance and the scope of Germany’s contributions to other multilateral financing activities such as development cooperation. The following table illustrates this:

Table: Distribution key for contributions to various financing activities

Based on the demands of the developing countries, a commitment of €750 million would not cover Germany’s fair share. The commitment is nevertheless important, and it should be accompanied by the assurance that this initial commitment will be topped up over the next two to three years, and that annual payments to the GCF will increase continuously.

The same goes for the rest of the industrialized countries – France, Great Britain, Norway, Sweden, Japan and the U.S. have publicly announced that they too will be making commitments. Some newly industrialized countries, including Mexico and South Korea, are reportedly also planning commitments – they are most welcome, even though formal commitments to climate finance are the responsibility of the industrialized countries.

Pledges: a milestone on the way to Paris

“We will only get a meaningful deal in Paris in 2015 with a solid Green Climate Fund. The first resource mobilization will be viewed as proof of how committed we are to this Fund.”
Tine Sundtoft, Norwegian Climate and Environment Minister

The commitments of the industrialized countries should be made before the UN climate change conference (COP20) in Lima at the end of this year to ensure that the conference does not revolve solely around that topic. Valuable time needed to negotiate the new agreement would be lost if the focus were entirely on the issue of GCF resources. The upcoming climate summit in September to which UN Secretary-General Ban Ki-moon invited the heads of state and government would be an appropriate moment for such commitments. Another option would be a donors’ conference in November.

Timing plays a major role here. A number of hurdles must still be overcome before a new, comprehensive agreement on climate change can be signed – one that will also commit the developing countries to greater climate protection efforts – in the final hours of the UN climate change summit in Paris in 2015. One of them would be a vital sign of confidence vis-à-vis developing countries and thus key to the successful conclusion of the negotiations: visible progress by the rich countries in meeting their existing commitments and pledges to provide financial support for developing countries in tackling climate change.

The commitments of the industrialized countries are thus an important milestone, but one that will only have an impact once the remaining milestones of climate finance have been reached – including evidence that climate finance resources are growing steadily as promised (and not declining as in Germany), the presentation of plans of how that growth will progress until 2020, and adequate consideration of the topic of climate finance in the Paris agreement for the period after 2020.

Jan Kowalzig / Oxfam