Green Climate Fund feels the heat

It’s just three months since world leaders reached an agreement in Paris to commit billions of dollars towards curbing and adapting to climate change. But the UN body responsible for ensuring the money is spent effectively is facing some critical questions.

The Green Climate Fund (GCF) has so far focused on building a framework to approve its first batch of projects. The fund set itself the tough goal of distributing $2.5 billion by the end of 2016, a quarter of the $10 billion currently pledged by countries in support of the climate cause.

See: The good, the bad… and the OK

But with December’s summit over and with a pipeline of only eight investments totalling $168 million, the GCF also finds itself without a clear vision or long-term strategy – and faces criticism from partners as well as developing countries struggling with its red tape.

At the beginning of February, a meeting was held in Cape Town, South Africa, to address some of the most pressing issues. Labelled by some as a “crisis” gathering, the event was only open to board members and four external observers.

Liane Schalatek, an international trade expert with the Heinrich Böll Foundation North America, who attended as a civil society observer, believes the crisis label was a “misrepresentation”. But, “there are certainly a number of essential strategic policies that have been overlooked in the run-up to Paris and now have to be discussed.”

See: Briefing on climate financing

The GCF vowed to have a transformative impact, enabling a “paradigm shift” in the way global climate finance is organised, but has yet to clarify what “transformation” means in practice.

This is particularly important because it will determine the way in which funds are managed, how potential partners are approached, and the GCF’s risk appetite – namely, to what extent donors and project implementers are willing to absorb the risk of investment failure.

One major challenge the GCF faces is a perceived north-south divide.

The projects currently in the pipeline range from resilience-building in Peru’s wetlands to a new energy efficiency green bond in Latin America and the Caribbean. But the list is short of the locally driven, small-scale initiatives that are key to building grassroots resilience.

Although the majority of projects are located within least developed countries or small island states, programme selection still suggests a top-down approach to climate financing.

“Large scale projects are obviously important, but there is a need for more national and subnational based initiatives,” said Neha Rai, a climate change researcher with the International Institute for Environment and Development.

“Ultimately, local people know better what works and what doesn’t in a given community, and their involvement is important to design successful interventions.”

One reason why no small-scale, subnational-led projects appear in the list so far – and this may not change in the immediate future – lies in the structure and accreditation process of the GCF.

“Getting accredited to the Green Climate Fund is a tough challenge,” said Nira Amerasinghe, climate finance expert at the World Resources Institute. “You have to demonstrate that you have the right policies and the commitment to manage money in an effective and socially appropriate way. And that’s a tall order.”

The GCF channels money only to accredited “partners” who are invited to pitch projects on behalf of developing countries. The partners are typically established international, regional and national institutions such as development banks or NGOs. They are evaluated in terms of their track record on project management and financial stability. They are also expected to have some core funding of their own to enable a quick project start up.

Some of the most vulnerable countries, such as Kiribati and other small islands, struggle with the complex bureaucracy that comes with a project pitch.

“There remains the challenge of accessibility and the translation of these pledges into what and to where it matters the most,” Makurita Baaro, Kiribati’s UN permanent representative, said ahead of the Paris summit.

See: Think big to save small islands

The UN Environment Programme, the UN Development Programme and the World Resources Institute have started a “readiness programme” to help countries access funding and transition to a new climate economy.

“Readiness encompasses three main phases,” said Amerasinghe. “First, the planning stage, then the accreditation, and finally the project design and implementation.” This should help countries develop their own local initiatives in accordance with international standards and their own internal needs.

But Schalatek of the Heinrich Böll Foundation believes that the readiness programme is far from up to speed. “There has been a lot of project development on readiness, but the disbursement of finance and implementation has been really slow,” she noted.

Civil society organisations complain about a lack of transparency and engagement with local activists at the national level, which they believe hinders the programme.

See: Counting the money

The GCF is overseen by a board made up of representatives from developed and developing countries, and operates independently from the UN. It receives the bulk of its donations from developed countries, but also involves the private sector in supporting and scaling up the investments it helps roll out.

Its objective is to transform the way countries and investors engage in the climate economy – providing support for the reduction of greenhouse gas emissions and adaptation to the impacts of climate change. The current agreed overall financing target is $100 billion a year from public and private sources by 2020.

Climate action is related to each country’s broader development goals, like poverty alleviation and economic growth. But Audrey Rojkoff, GCF coordinator at the African Development Bank, believes an “important point to clarify is the difference between adaptation measures and the fight against poverty”.

Clear definitions and priorities are needed for both objectives, as muddling the two makes it harder to design effective programming.

“If you want to meet the temperature goals [approved in Paris] you will need a real change in how you look at sustainable development and how economies are run,” said Amerasinghe. “And that’s going to require thinking outside the box.”

See: IRIN’s full COP21 coverage