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) which was established as the multilateral fund to implement a large share of international climate finance and therefore to 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 2018, Sweden and Nicaragua 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. The board decided on other important rules in 2016, including an accreditation strategy, the terms for three fund-wide pilot programs (for enhanced direct access, the promotion of local SMEs and the development of new sources of finance) and guidelines for a simplified process for activities with a modest financial budget.

As of July 2016, the GCF had accredited a total of 59 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, 48 projects have been approved, of which eight projects were provided with initial payments to start implementation.

Funding volume and Germany’s contribution

In late 2014 the GCF finalized its initial resource mobilization of just over $10 billion for the fund by donor countries successfully. The fund’s goal is to mobilize $100 billion per year by 2020 from pledges from donor countries and investment income benefits.

Germany has pledged €750 million to the fund to date, making it the fifth-largest donor in absolute terms after the US, Japan, the UK and France. The German government has made payments amounting to €375 million to the GCF as of late 2017. (December 2017)