Green climate fund: Reality or rhetoric

(This article was originally published here)

The Green Climate Fund (GCF) is an international climate finance mechanism that developed countries pledge funds into for climate related activities in developing countries. It is established under the United Nations Framework Convention on Climate Change (UNFCCC). The GCF is accountable to and functions under the guidance of the annual Conference of Parties (COP).

Governing structure of GCF

The headquarter for the Fund sits in Songdo, South Korea and it is governed and supervised by a Board that has full authority for funding decisions. The World Bank has been appointed as the interim trustee responsible for administrative and management of financial assets of the fund initially for three years.

The GCF Board has 24 members, composed of an equal number of members from developing and developed countries. Each board member has an alternate member who are entitled to participate in the meetings of the Board only through or in the absence of the principal member, without the right to vote, unless they are serving as the member. Bangladesh is alternate member of the GCF Board representing the Least Developed Countries (LDCs). 

Mobilisation of resources  

The GCF aims to support developing countries in their national efforts to address climate change by leveraging finance as grants and/or other form of concessional financing for mitigation and adaptation measures. It was agreed that developed countries will contribute significantly to this fund — $100bn per year by 2020 to address the needs of developing countries. Public and private, bilateral and multilateral, and alternative sources provisions are planned to mobilise resources for the fund. Commitment does not necessarily mean actual contributions from developed countries due to the complex nature of international climate change negotiations.

While developed countries emphasise mitigation measures to address climate change, developing countries are asking for support for urgent and immediate needs for adaptation actions to save the lives and livelihoods of millions. The GCF is trying hard to mobilise resources for supporting developing countries deal with the impacts of climate change. Efforts are going on to convert pledges of developed countries into actual contributions into the fund. The total amount pledged to date by developed countries is $10.2bn of which $4bn  is confirmed by contribution agreement. It is only 42% of total amount pledged by developed countries which is a concern for developing countries to access funds from the GCF before COP 21 in 2015.

While developing countries are expecting developed countries to contribute more resources to the GCF to take action on the real cause of climate change, developed countries are failing to show their responsibility in this process. However, without new pledges/commitments and converting all pledges and commitments into contributions before COP21 in Paris this year, it will be very hard to agree on the Paris Agreement to address the global climate change challenge.        

Access to the GCF

The GCF, as a global climate finance mechanism, is moving forward to provide financial support to adaptation and mitigation actions in developing countries. In general, there are two different ways to directly access resources from the GCF. Multilateral Implementing Entity (MIE) that includes multilateral development banks and the United Nations agencies that are accredited by the GCF. Another form of direct access is through a National Implementing Entity (NIE) that includes any national institution accredited by the GCF. The Board of the GCF has already accredited seven institutions to access resources directly from the GCF such as the Asian Development Bank (ADB), the German Development Bank (KfW), the United Nations Development Program (UNDP), the Secretariat of the Pacific Regional Environment (SPREP), Centre de Suivi Ecologique (CSE), Peruvian Trust Fund for National Parks and Protected Areas (PROFONANPE) and Acumen. These organisations, as MIEs and NIEs, have been accredited by showing a specific level of standards and criteria that are required by the GCF.

Direct access of resources from any international climate finance mechanism is of particular interest to all developing countries. However, due to lack of institutional capacity in climate finance governance, developing countries are unable to get accreditation of NIE to ensure direct access of resources from international climate finance mechanisms such as the GCF. Most of the developing countries are now relying on MIEs for accessing resources from any international climate finance mechanisms including the GCF.

Opportunity for Bangladesh

The GCF is the main vehicle for securing and facilitating finance for adaptation and mitigation actions in developing countries. All developing countries, including Bangladesh must draw on the GCF to receive support for addressing climate change impacts. It is crucial for developing countries to start readiness programs to identify potential national institution to become NIE for direct access of finance. It is worth mentioning that the above list of accredited organisations will provide a good judgment to all developing countries to identify potential national institutions to become NIEs. Bangladesh can also identify public, non-profit and private institutions within the country to nominate as NIEs for the GCF. 

The government of Bangladesh has identified Economic Relations Division (ERD) of the Ministry of Finance as the National Designated Authority (NDA) to communicate with the GCF which is the first step towards directly accessing the fund. However, accreditation of NIE is a real challenge for the country to ensure direct access of funds from the GCF. It is true for all developing countries that MIEs are interested to facilitate direct access of funds from the GCF. This can not be taken as long-term approach for Bangladesh to access funds from the GCF. Hence, it is imperative for Bangladesh to access funds from the GCF through NIEs to ensure a sustainable and reliable climate finance institutional framework and governance in the country.

Written by: Dr. SM Munjurul Hannan Khan, Joint Secretary, Govt. of Bangladesh and Lead Negotiator, LDC Group, UNFCCC.