The Road to the Green Climate Fund

This post originally appeared on the World Bank blog Development in a Changing Climate

The UN Climate Talks in December 2010 concluded with a set of decisions known as the Cancun Agreements, which included the establishment of the Green Climate Fund (GCF). Having been involved in many of the negotiating sessions, I know that this fund is seen by many, particularly developing countries, as an opportunity to create a ‘legitimate’ institution for delivering scaled-up finance to address climate change.

However, there remains significant skepticism on whether or not this Fund could deliver adequate and predictable resources in a timely manner. Much work has yet to be done before the Green Climate Fund could become a reality.

Getting organized

In Cancun, the COP decided to set up a Transitional Committee (TransComm) and entrusted it with the task of developing the operational documents for the GCF and making recommendations to the COP in Durban. The Transitional Committee will include representatives from 25 developing countries and 15 developed countries. Some countries have announced their nominations, while others are still in the process of finalizing.

The delay comes as no surprise of course. Nominations within regional groups remain a highly contentious and political issue. With limited seats countries are grappling to ensure they have a voice in the body that will design the Fund. I’ve heard the mix of skills and expertise on finance, climate and, development represented in the individuals nominated and they vary from country to country.

The initial meeting of the committee will be jointly convened by the Government of Mexico and the Executive Secretary of the UN Framework Convention on Climate Change in March 2011. That first meeting will have to decide the rules of the road for the Transitional Committee, everything from its terms of reference to the participation of observers to the design of a new registry that will record actions taken by developing countries, and the financial support provided by developed countries.

Already civil society organizations are asking for mechanisms to ensure participation. This is important to ensure transparency in Transcomm’s processes. The private sector and representatives of international organizations, MDBs and UN agencies all want to be involved. The question is how Mexico and the UNFCCC secretariat will manage the process of selecting observers since the TransComm is yet to develop guidelines and operational procedures at its initial meeting.

Expectations for Durban

In developing its recommendations for COP-17 in Durban, the TransComm will develop the operational documents of the GCF that address a range of different issues (see box). By Durban, it is unlikely that the TransComm will be able to address all these issues in full detail. Neither should it attempt to do so. One of my main concerns is determining who eventually gets to elect the GCF Board.

The TransComm can make sufficient progress by Durban if it focuses its work on:

1. developing a shared vision of the GCF’s objectives, scale and scope,

2. putting in place the institutions that will manage the GCF, such as the GCF Board and the secretariat, and

3. defining the relationship between the GCF and the COP.

For other questions, such as how countries can directly access funds, the financial instruments and models to be used, and mechanisms to ensure environmental and social standards – all important issues - the TransComm may only manage to agree on principles and develop guidelines for the Board to further develop the detailed rules after Durban.

If the GCF is to have adequate and predictable resources to carry out its mandate, then countries will need to commit to long-term and scaled-up finance to the Fund. Unfortunately, we’ve lost all other text pertaining to sources. In the Cancun Agreements, Parties noted the report of the High Level Advisory Group on Climate Change Financing, established by the UN to explore options for innovative sources for long-term finance.

I believe it is important to set realistic expectations and anticipate that designing and making the GCF operational will take some time. Funds won’t start flowing immediately. The international community therefore needs to find a way to finance the gap as many of the vulnerable developing countries and those least able to cope are already suffering from the devastating impacts of climate change.