By John Parnell
The UN’s main climate finance initiative concluded its latest board meeting last week with initial progress overshadowed by lingering questions over transparency, deadlock on a timeline for donations and the long running debate on the role of the private sector.
The third board meeting of the Green Climate Fund, which aims to raise $100bn a year by 2020, offered early signs that controversy over civil society and business groups’ participation at previous sittings would ease.
Unfortunately, money continues to be a subject too controversial for the fund to discuss. A failure to resolve these issues could jeopardise future financial support for climate vulnerable nations, a fundamental pillar of the UN’s talks toward a 2015 global deal on emission reductions.
The GCF board members represent 24 countries including Egypt, India, UK and the USA with a consensus needed on all decisions. Much of the board’s first two meetings were taken up with housekeeping and logistical issues as it found its feet.
The USA led efforts at the latest sit-down, hosted by the German government in Berlin, to delay the conversation about when the schedule and size of donations should be specified.
Unsurprisingly though, it was the transparency issue that dominated early proceedings.
“It’s 2013, you wouldn’t think we’d have to fight just to get into the room,” said Karen Orenstien, international policy campaigner, Friends of the Earth US.
“The fund’s best friend could be civil society, if they wanted it to be. We’ll be the ones lobbying governments to put money in the fund…or lobbying them not to put money in it.
The Green Climate Fund’s objective is to help those most vulnerable to the effects of climate change (UN Photo/Marco Dormino)
“We’ve done that on the World Bank. They put money into fossil fuels and have invested in projects with human rights violations. We’re nowhere near that yet [with the GCF] and hopefully we won’t get there.”
Steve Herz, Sierra Club felt that the situation with NGO participation had improved more than he anticipated but the slow going of the process as a whole, remained a concern.
“At the next board meeting in June, it will be three and half years since the GCF was first announced in Copenhagen. No one can be happy with that. Three and a half years on and we still won’t have decided what it is we want this thing to fund. That’s pretty poor,” said Herz, who was one of several people charged with filling one of two observer’s seats during each sitting of the board.
‘Foot dragging’
This frustration has seeped into board members too, who are typically civil servants in overseas aid departments or national treasuries.
“For a lot of board members this was a make or break meeting. Things had been moving so slowly and there was so much foot dragging, some board members said ‘if things continue at this pace I am going to disengage and send my deputy instead’,” Herz told RTCC.
“Some of the people on the board are quite senior in their own governments and they were struggling to justify the commitment [to the GCF meetings]”.
One of the principle components of the Berlin meeting was the discussion around the Business Model Framework, essentially how the GCF will distribute the funds that it receives.
Options include directly funding projects to cut carbon emissions and help vulnerable nations adapt to climate change.
It could hand the funds to national governments and allow them to decide how best to utilise the money or it can use existing organisations like the African Development Bank and the Asian Development Bank.
A hybrid is likely but the US has said until this issue is settled, it won’t allow a conversation on the timeline for gathering funds.
Chicken and egg
Developing countries say they won’t talk about the level of their climate action ambitions until there are guarantees that the financial support to back them is in place.
Herz says this is pretty much “a chicken and egg scenario” but that domestic political issues are also holding back the US.
“It is a very difficult thing for the US to have to do. The longer the delay the better given the current [Republican held] Congress,” said Herz.
Orenstein agrees. “It’s not like they didn’t know the fund was coming. The politics around it has been disappointing,” she said.
“There’s a real lack of certainty as to if the USA is going to put money in the fund under any conditions at all. I don’t agree with the idea myself but there’s still an atmosphere of climate denial in Congress and there’s still a dislike of multilateralism.”
Public v private
The role of the private sector has been hotly contested with the UK calling for as much involvement as possible and developing countries hoping to avoid it all together.
Orenstein fears private money would only focus on projects cutting carbon emissions, where there are more straight forward ways to make money back from energy savings, the carbon markets and so on.
“You’re probably only talking about big mitigation projects in big countries, so you miss out a lot of the world, which is what happened with the World Bank and the Global Environment Facility,” she said.
“We’re not learning lessons from these other development funds. We should start with the question of how to reach the most vulnerable.”
Even the administrative structure of the GCF and its payscales proved highly evocative as Brandon Wu of ActionAid US explains.
“It was clear in Berlin that some Board members envision the GCF as a purely financial institution that needs to draw staff from the financial sector. Other Board members and civil society groups see it as absolutely necessary that the Fund attract staff with a much broader range of expertise in development, resilience, participatory processes, gender and so on.”
Salary
Matching this financial expertise with salaries comparative with the sector at large also proved controversial with some board members calling for a minimum pay packet for its future chief of around $450,000, in line with a World Bank VP as a document circulated on twitter during the meeting demonstrated.
“The debate over what kind of staff the Fund seeks is a proxy for the much more fundamental debate about what the Fund is and who it will serve.
If the GCF will truly serve the poorest and most vulnerable, in a way other climate funds do not, it must approach climate finance with an eye towards the myriad ways that climate projects intersect with development and global poverty,” said Wu.
Filling the Fund’s management exclusively with financial executives is not the way to do that.
Another disagreement on the GCF’s eventual logo surfaced briefly. The Climate Markets & Investment Association (CMIA) offered a cash prize to incentivise a logo design competition.
As with previous GCF meetings, money proved too controversial to discuss, and the idea was shelved.