Large developing countries such as China, India, Brazil and South Africa have informally decided not to seek further inflows from the Green Climate Fund till there is clarity over the situation

Agriculture in emerging nations needs funding to adapt to climate change. (Photo by Justin Kernoghan)

Agriculture in emerging nations needs funding to adapt to climate change. (Photo by Justin Kernoghan)

The disagreement between the US and the other 19 countries at the recent G20 summit at Hamburg has put a question mark over the sustainability of the Green Climate Fund (GCF), the primary tool to help developing countries move away from fossil fuels and adapt to climate change impacts.

Now that the US has walked out of the Paris Climate Agreement, it is not clear if other developed countries will continue to give USD 100 billion to the GCF every year from 2020, as they had pledged to do way back in 2009. The USD 100 billion per year figure is unlikely to be reached anyway, because the US part of that commitment, USD 3 billion per year, now stands withdrawn.

German Chancellor Angela Merkel made it clear during the G20 summit that her country would continue to meet its financing commitment. In the official communiqué released after the summit, these 19 countries reiterated “the importance of fulfilling the UNFCCC (United Nations Framework Convention on Climate Change) commitment by developed countries in providing means of implementation including financial resources to assist developing countries with respect to both mitigation and adaptation actions in line with Paris outcomes.”

The G20 Hamburg Climate and Energy Action Plan for Growth that was launched by these 19 countries at the summit also emphasised “the commitment by developed countries to the goal of mobilising jointly USD 100 billion per year by 2020, and their intention to continue this through 2025.”

Question marks

Despite this, there are question marks over the financial support that may be forthcoming from at least some other developed countries such Australia, New Zealand and Japan. These countries have consistently aligned with the US position in past climate negotiations since the Rio de Janeiro Earth Summit in 1992. Now there are strong voices within these countries, warning that the US would effectively become a “free rider” if everybody else paid to combat climate change.

On their part, large developing countries including China, India, Brazil and South Africa made an informal decision not to seek further GCF funding, at least till the situation becomes clearer. This was not a part of any communiqué, but climate negotiators confirmed the development, saying these emerging economies had left the field open for Less Developed Countries (LDCs) to apply for the bulk of GCF funding. That will be a big help, and the GCF does have the money in its account to fund the current round of project proposals it is receiving, but not for a long time beyond that.

The Hamburg Climate and Energy Action Plan for Growth makes it clear that developed country governments are not in a position to provide anything close to USD 100 billion a year through public financing. The commitments are based largely on the hope of raising finances through public-private mechanisms and on multilateral development banks such as the World Bank, Asian Development Bank and so on.

Worries in GCF

Not surprisingly, this worry about long term financing as well as the gap between pledges and actual payments by developed countries figured prominently at the GCF board meeting, held at its headquarters in Songdo, South Korea, just a couple of days before the G20 summit.

The gap between a pledge and actual payment is most glaring in the case of the US, which has so far signed up to actually pay USD 0.5 billion out of the USD 3 billion it had pledged in 2016. Even that pledge had said the money would be paid “subject to the availability of funds”. Larry McDonald, the US member of the GCF board, clarified that the US had actually paid USD 1 billion so far.

But other developed countries are not innocent either. There are huge differences between publicly stated pledges and privately provided “signed amounts”, which is the money that actually reaches the GCF bank account. Current signed amounts total USD 10.1 billion, a far cry from the USD 100 billion pledge.

Many of the GCF board members from developing countries are worried because it is not very clear if the secretariat is counting the pledges as money that will be in the bank. Most observers feel there is an urgent need for the entire international climate financing process to become more transparent.

 

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