Green Climate Fund
The Green Climate Fund was founded to assist the developing countries in adaptation and mitigation practices to counter the climate change. The headquarters are in Incheon, South Korea.
The Fund is a unique global initiative to respond to climate change by investing into low-emission and climate-resilient development. GCF was established by 194 governments to limit or reduce greenhouse gas emissions in developing countries, and to help adapt vulnerable societies to the unavoidable impacts of climate change. Given the urgency and seriousness of the challenge, the Fund is mandated to make an ambitious contribution to the united global response to climate change.
Efforts are in full swing to raise climate finance of $100 billion a year by the year 2020 and GCF is at the center of these efforts. High Level Advisory Group o Climate change Financing was setup by UN secretary-General Ban Ki-Moon to find out where the money would come from.
The Copenhagen Accord established during 15th Conference of Parties mentioned Copenhagen Green Fund and it was formally established during 2010 UNCCCC in Cacun and is under UNFCCC framework and World Bank was the chosen trustee. the ‘Transitional Committee for the Green Climate Fund’ was established as well to design the protocol for functioning of the fund. The lack of pledged funds and potential reliance on the private sector is controversial and has been criticized by developing countries as the pledges to the fund only reached $10.2 billion on May, 2015.
The process of designing GCF has proved to be challenging. The source of funds, the role of the private sector, the level of “country ownership” of resources, and the transparency of the Board itself are some of the obstacles which need to be addressed. In addition, questions have been raised about the need for yet another new international climate institution which may further fragment public dollars that are put toward mitigation and adaptation annually. There are also some reservations in the developing block that the funds which will be provided for adaptation which be inadequate.
- Private Sector – The creation of the Fund’s Private Sector Facility (PSF) has been an issue that refuses to wear off.
- Developed Countries – advocate a PSF that appeals to capital markets, in particular the pension funds and other institutional investors that control trillions of dollars that pass through Wall Street and other financial centers. They hope that the Fund will ultimately use a broad range of financial instruments.
- Developing Countries have suggested that the focus should be on “pro-poor climate finance” that addresses the difficulties faced by micro-, small-, and medium-sized enterprises in developing countries.
- Additionality of funds –
Cancun agreement unambiguously specified that the climate change funds provided to developing countries should be new and additional to the existing development. There is no strict definition provided as far as additionality is concerned. This has already led to a lot of misunderstanding in evaluating the emission reductions through CDM projects which has led to counterproductively and fraud.
- Many academics argue that a bottom-up approach needs to implemented to encourage more involvement of all the stakeholders.
- There is also a suggestion of forming National Implementing Entities in each country to facilitate the implementation of the sub national projects.