Perspectives on the Green Climate Fund: possible compromises on capitalization and balanced allocation

Abstract

Finance is at the heart of UN climate diplomacy. Through the long-term finance pledge, developed countries have committed to mobilize USD 100 billion annually from 2020 onwards to support climate action in developing countries. The Green Climate Fund (GCF) is also expected to become a key player in the climate finance landscape. This viewpoint presents the views of representatives of developed and developing countries’ governments on how the annual sum of USD 100 billion should be dispensed by the GCF, based on a survey conducted at the 2013 UN Climate Change Conference in Warsaw. Respondents’ give their views on (1) the mitigation/adaptation ratio in GCF support and (2) the public/private ratio in financial sources. Respondents from developing countries would prefer to channel a substantially higher amount of the long-term finance pledge through the GCF. The extent to which the long-term finance pledge should be governed by the GCF is contentious, because governments pledge long-term finance without specifying the mitigation/adaptation ratio, whereas the GCF Board is tasked with balancing the allocation of its funds between adaptation and mitigation. This contention is fuelled by the fact that developing countries have a greater say in the allocation of funds from the GCF than from alternative sources of finance for the long-term finance pledge. We suggest that it is time to (1) reformulate the pledge to clarify its mitigation/adaptation ratio and (2) agree to definitions of key concepts such as “climate finance” and “private finance” to allow for more distinct negotiating positions on sources of finance.