Two years after the UN Climate Change Conference that resulted in the historic Paris Agreement, French President Emmanuel Macron invited international leaders and committed citizens back to the city. At the One Planet Summit on December 12th, they addressed the urgency of taking collective action against climate change and the means of financing this action.
The centrepiece of climate finance under the Paris Agreement is the Green Climate Fund (GCF), which is committed to raise a staggering $100 billion per year from 2020 on. This money will support the efforts of developing countries to respond and adapt to climate change, deliver innovative solutions and strengthen low emission and climate resilient development. At the UN Climate Change Conference in Bonn last month (COP 23), the GCF reported that the Fund is now “truly operational and delivering on its mandate”, although there are still challenges for developing countries to access funding and the need to streamline and improve the accreditation process.
Leading up to the One Planet Summit, the GCF presented its current $2.65 billion project portfolio, which comprises 54 projects relating to mitigation and adaptation in developing countries.
While a hundred billion dollars per year from 2020 on is a significant sum, government spending alone might not be enough to achieve the goals set out in Paris in 2015. The GCF’s Executive Director, Howard Bamsey, stressed the pivotal role that investments from the private sector are expected and required to play in stopping climate change. They will be necessary to deal with climate change effectively, both in reducing greenhouse gas emissions and in helping countries and communities adapt and improve resilience.
As the GCF is a fund, not a bank, it has more flexibility and the ability to take risks and support ideas on the frontier of climate finance: by investing into climate resilient development, renewable energy, energy efficiency, sustainable agriculture, green buildings and other climate-friendly projects.
To this end, the GCF signed an agreement with the International Finance Corporation (IFC), the largest global development institution focused on the private sector in developing countries, to pool resources and expertise. In addition to the partnership with the GCF, the IFC committed itself to increase its climate financing to 28% of its portfolio by 2020 from the current 25%.
The GCF’s Private Sector Facility already manages roughly half of its project portfolio, and the GCF aims to mobilise more and more funds from the private sector. After a recent $500 million request for proposals, the GCF shortlisted 30 concepts which could potentially leverage over three dollars of private capital for every dollar of public fund investment.
The GCF also reported on its efforts regarding readiness support in developing countries—where it approved more than 130 applications with over $41 million value to build capacities and consciousness and help countries access climate finance—as well as supporting and incentivizing climate mainstreaming, which integrates environmental concerns into the general planning process and activities of countries and institutions.
The One Planet Summit provided an opportunity for the GCF to further emphasise the importance and power of climate finance for transformation toward low emission and climate resilient development while ensuring that funded projects are country-owned and managed in close cooperation with the accredited entities that carry them out on the ground.
Green Climate Fund (http://www.greenclimate.fund/home)
Dennis Mombauer currently lives in Colombo as a freelance writer and researcher on climate change and education. He focuses on ecosystem-based adaptation and sustainable urban development as well as on autism spectrum disorder in the field of education. Besides articles and research, he has published numerous works of fiction in German and English.