Green Climate Fund (GCF)

One of the few highlights at the Copenhagen climate conference in 2009 was the announcement of the Green Climate Fund (GCF). It was established as the multilateral fund to implement a large share of international climate finance and in particular the $100 billion promise. Since then it has become a central pillar of the international climate finance architecture.

Objectives

The fund is supposed to disburse an equal share of its funding for mitigation and adaptation to climate change. Within the adaptation window half of the funds shall go to those countries which are the poorest and most affected by climate change. The fund should be used strategically to not only fund isolated projects, but that these projects should also have a positive impact on whole sectors (e.g. the energy sector). The fund is headed by a Board of 24 members, half of which are coming from industrialized and developing countries, respectively. In 2019, the United Kingdom (UK) and Sudan are Co-Chairs of the GCF Board.

Key developments

The GCF has made major progress toward its operationalization since early 2014. A number of key regulations, procedures and eligibility criteria in its comprehensive set of rules have been established at its regular board meetings. The initial resource mobilization of just over $10 billion for the fund by donor countries in late 2014 and the approval of the first projects in late 2015 were major milestones. Since then, the board decided on a comprehensive Readiness and Preparatory Support Programme, the terms for four fund-wide pilot programs (for enhanced direct access, the promotion of local SMEs, the development of new sources of finance and REDD+ results-based payments), guidelines for a simplified process for activities with a modest financial budget (Simplified Approval Process, SAP). guidelines for the protection of the interests of indigenous people, guidelines for Environmental and Social Standards as well as several ethical guidelines (e.g. against fraud and avoiding the funding of terrorism as well as sexual exploitation, abuse and sexual harrassment).

As of July 2019, the GCF has accredited a total of 88 implementing entities that can submit project proposals. These include not only traditional actors such as regional development banks and UN institutions, but also Kreditanstalt für Wiederaufbau (KfW) and private entities such as Deutsche Bank, HSBC and Crédit Agricole. So far, 111 projects have been approved with a total volume of $5.2 billion of which $2.4 billion have been disbursed. Of the approved projects 51 projects (as of 30 April 2019) have started with their implementation.

Funding volume and Germany’s contribution

The GCF is funded through voluntary commitments, mainly from industrialized countries, but also from developing countries. In late 2014 the GCF finalized its initial resource mobilization of just over $10 billion for the fund by donor countries successfully. In 2019 the first replenishment has started.

For the initial resource mobilization Germany pledged €750 million to the fund in 2014, making it the fifth-largest donor in absolute terms after the US, Japan, the UK and France. For the replenishment Germany together with Norway was among the first countries to announce their new pledges in December 2018. It has commited to €1.5 billion which is a doubling of its contribution to the GCF. (July 2019)