Politics of Poverty

Talking dollars and cents: Big questions about the Green Climate Fund

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Indigenous women marched for food security and climate justice in the streets of Lima, Peru in 2013. The next UN COP on climate change will take place in Lima in December. Photo: Percy Ramírez/Oxfam America

Which countries will contribute, and how much? What will it take to get to the $15 billion target?

Annaka Peterson Carvalho is the Senior Program Officer of the Adaptation Finance Accountability Initiative, led by World Resources InstituteOverseas Development Institute, and Oxfam.

As children, many of us were probably taught that it is rude to discuss money in polite company. But sometimes the time comes to actually start talking dollars and cents. For the Green Climate Fund, that time is now.

The progress made at the 7th meeting of the Board of the Green Climate Fund last month – completion of the 8 essential requirements to commence resource mobilization – left many board members and active observers with a renewed sense of optimism about the Fund. But as the conversation turns to focus on pledging to the Fund by the end of the year, will all the talk of money sour the mood?

Those who have followed the climate negotiations will be watching country governments closely for the mileposts along the way to a fair and ambitious climate deal in in 2015:

  • Fall 2014: Pledging to the Green Climate Fund to ease concerns about lack of progress on pre-2020 climate finance and provide developing countries with some assurance that there will be  money available to help them implement their contributions to the global effort to address climate change;
  • December 2014: Agreeing on the components of the 2015 deal at the COP in Lima, Peru;
  • By March 2015: Announcing intended nationally determined contributions to the 2015 deal

Thus the first test of political will—pledging to the Green Climate Fund—is quickly approaching.

In a recent interview, the executive director of the Fund, Hela Cheikhrouhou, said she is hoping to raise as much as $15 billion to fund climate actions in developing countries by the end of this year, an amount she believes could be easily spent over three years. But who will contribute and how much? What will it take to get to the $15 billion target?

The Fund will welcome contributions from all countries, the private sector, and foundations. But from both a practical and political perspective the onus will be on developed countries, like the US, to put forward substantial pledges.

Ultimately, it will be up to each country to determine how much money it can contribute. However, in order to collectively reach the $15 billion target each country will need to contribute something. Which begs the question, what should each country’s share of the $15 billion be?

In 2007, Oxfam published the Adaptation Funding Index (AFI) to contribute to debates about which countries should pay for adaptation and how much. The AFI complements other efforts, such as the Greenhouse Development Rights equity reference calculator that deals with sharing out the costs of mitigation. Both of these approaches consider countries’ responsibilities for contributing to climate change and their capacity to finance climate actions. In addition to the two approaches mentioned, there are many other ways to think about divvying up the obligations to contribute the GCF, including relative contributions to Official Development Assistance (ODA), the Global Environment Facility (GEF), Fast Start Finance (FSF), or the share of the United Nations (UN) budget, each with its relative merits and deficiencies.

Let’s kick off the discussion. If we take the average of the different approaches mentioned above (instead of choosing one) for Annex II countries, we get the following contributions to the $15 billion goal:

Country Average of different approaches to determine country shares Share of $15 billion
United States 32.31% 4,846,500,000
European Union 40.10% 6,015,000,000
–          Denmark .08% 12,000,000
–          France 7% 1,050,000,000
–          Germany 8.8% 1,320,000,000
–          Italy 5.2% 780,000,000
–          Netherlands 2% 300,000,000
–          Spain 3.6% 540,000,000
–          Sweden 1.2% 180,000,000
–          UK 6% 900,000,000
Japan 15.6% 2,340,000,000
Canada 4.06% 609,000,000
Australia 2.71% 406,500,000
Others 5.22% 783,000,000
Total 100% 15,000,000,000

 *Share for select EU countries is based on share of EU budget for EU countries that are Annex II parties to the UNFCCC

In reality, a fair shares approach like this may not lead to $15 billion in initial pledges, because not all developed countries will make contributions. The public debate on the initial resource mobilization for the Fund is focused on the collective goal. However, you can be sure that major contributors have started to talk about their forthcoming pledges. For the US, our $4.8 billion share is roughly equivalent to the $4.7 billion of congressionally appropriated climate finance contributed during the three-year Fast Start Finance (FSF) period. Given that the two figures and time frames are roughly the same, the US should have the capacity to deliver if we can muster  the political will.

Even if pledges total $15 billion before December, there will still be lots of questions about the $100 billion a year by 2020 goal and role of the Green Climate Fund in channeling that money. Nonetheless, it’s an important step along the way to a 2015 deal.  For now, let’s hope countries come to the table with ambitious pledges that they can actually deliver.

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