analysis

MARKET WATCH:
Cash flow
The Green Climate Fund needs more contributions if it is to become the world’s main source of climate finance.
Anna Petherick considers an upcoming effort to make that happen.

M
uch of the skeleton of the Green
Climate Fund has been assembled
in the past couple of years.
Incheon City, South Korea, now hosts its
shiny headquarters. Hela Cheikhrouhou, a
Tunisian who previously directed the African
Development Bank’s department of energy,
environment and climate change, now serves
as the fund’s first executive director. As of
mid-August, 46 countries had nominated
an internal authority to be the focal point
of their interactions with the fund. The
responsibilities of the secretariat, trustee and
investigating bodies are taking shape. And
three thematic funding windows have been
established so far, one for mitigation, another
for adaptation and a third to engage the
private sector, and further subdivision of the
first two is expected. Yet, despite this progress,
there is little flesh on the bones: for a fund
that is supposed to dispense around US$100
billion annually starting in just six years’ time,
today’s sum of the promised contributions
amounts to US$1.083 billion, which is feeble.
This is why the fund’s board has
voted to hold a one-off, ad hoc pledging
conference, to be held at an as yet undecided
location in the second half of November.
Sandwiched between two other high-level
climate meetings — September’s climate
summit organized by United Nations
Secretary-General Ban Ki-moon and
December’s Conference of the Parties, this
year in Lima, Peru — the pledging conference
is intended to jump-start initial contributions
to the fund and simultaneously create space
for matters other than its dearth of cash to
be discussed in Lima. Wisely, it will also take
place after the US midterm elections. The US
is highly unlikely to propose any contribution
before these — meanwhile other parties have
incentives to keep their cards to their chest
until the scale of the US pledge is known.
Developing countries, in a show of
solidarity, have been forthright about what
would constitute a successful meeting. They
hope to finish the year with $15 billion
committed to the fund, to be spent over
three or four years. That would be roughly
double the amount pledged to the Climate
Investment Funds, which have ‘sunset’ clauses
anticipating the day when the Green Climate
Fund can take over. It would also signal that
Annex I countries view the fund in a way
that is commensurate with its agreed global
role — in a recent internal document by
the fund, the grand phrase ‘paradigm shift’
(in the context of the carbon intensity of
development pathways) appears no less often
than every third page.
How to get to $15 billion is far from
straightforward (Table 1). Indeed,
discussions behind the scenes suggest that
some amount shy of $10 billion looks more
likely. And many of those watching the
process have concerns about the broader
timescale and the structure of November’s
meeting. Germany is so far, and by far, the
biggest pledger to the fund with a promise
of €750 million (US$1 billion). “I know that
in Germany there was a lengthy discussion
between the ministries, and between the
government and parliament about this
pledge,” says Jan Kowalzig, Oxfam Germany’s
climate adviser. “The earlier these pledges
come, the more pressure there is on other
countries that haven’t made pledges.” Norway
and France are well into the process of
putting the necessary ducks in order to make
announcements — and France, if the history
of multilateral donations is any guide, does
not like to appear less generous, capable
or willing than Germany. But with the US
midterms on 4 November, the build up to the
pledging conference may be a scramble.
Of course, international climate
negotiations tend to go that way. But in
this case, rushed and clumsy reckoning of
a country’s fair contribution, relative to its
competitors and geographical neighbours,
seems unlikely to grease the wheels of
climate finance commitments. An effective
pledging conference held in July for the
Global Partnership for Education was,
by comparison, a remarkably predictable
and ceremonial affair, mostly scripted

Table 1 | Suggestions for determining fair shares of contributions in the initial pledging round of the Green Climate Fund.
Willingness Capability Capability and responsibility 50:50 Responsibility Average Indicative
share of
$15 billion ($)
Official Global Fast-start United Adaptation Greenhouse European Ecological
development Environment finance Nations Funding Development Commission footprint
assistance Facility budget Index Rights calculation
United States 23.5 16.9 22.0 27.9 44.6 45.3 44.0 34.3 32.3 4.8 billion
European Union 55.5 55.0 28.4 46.7 34.0 33.5 33.5 34.2 40.1 6.0 billion
Japan 8.2 14.9 43.1 15.9 11.2 11.5 11.8 8.2 15.6 2.3 billion
Canada 3.8 6.1 1.2 4.1 4.7 4.6 4.7 3.3 4.0 600 million
Australia 3.0 1.8 1.8 2.5 3.7 3.0 3.8 2.1 2.7 407 million
Others 6.0 5.3 3.5 2.9 1.8 2.2 2.2 17.9 5.3 893 million
Unless otherwise indicated, all numbers are percentages. Statistics compiled by Oxfam and published with permission. The relative contribution to the ODA is the 2008-2011 average; the Global Environment Facility
figure is the share of Annex II contributions to GEF-5; the UN budget proportion is for 2011 amongst Annex II countries; the Greenhouse Development Rights figures are from 2012; the Adaptation Funding Index is by
Oxfam; the European Commission’s suggestion was put forward in 2011; and Ecological Footprint refers to relative shares of Annex I emissions.

858 NATURE CLIMATE CHANGE | VOL 4 | OCTOBER 2014 | www.nature.com/natureclimatechange

© 2014 Macmillan Publishers Limited. All rights reserved


weeks in advance. Only those countries
that were going to pledge were allowed in
the main room — a face-saving strategy,
understood by all, explains Global
Partnership for Education spokesperson
Alexandra Humme  — and no pledging
party was allowed to speak for more than
three minutes. In this behavioural setting,
developing nations pledged to increase their
education budgets by $26 billion, a 25%
increase on the previous pledging round.
Moreover, in flurry mode, the powerful
members of the BASIC bloc (Brazil, South
Africa, India and China) are probably more
liable to seek to entrench the outdated
rhetoric of developing versus developed
nations, to lock shoulders with the rest
of the G77 group of developing countries
and horns with the Organisation for
Economic Co-operation and Development
(two international clubs that are entirely
mutually exclusive, with the exception of
Chile’s peculiar dual membership). But
if there were space to massage the fund’s
diplomatic language referring to expected
donors — towards something akin to
‘capable countries with appropriate national
circumstances’ — and potentially even to
NATURE CLIMATE CHANGE | VOL 4 | OCTOBER 2014 | www.nature.com/natureclimatechange
develop the architecture of some kind of
southern solidarity fund, separate from but
administered by the Green Climate Fund,
perhaps broader contributions would be
forthcoming1. “A southern solidarity fund
would get around the accusation that these
countries are not doing anything, without
the question of a pledge tacitly indicating
that they are ready to join the Annex 1
group,” suggests Benito Müller, executive
director of Oxford Climate Policy, a think
tank that seeks to build capacity in United
Nations climate negotiations.
In truth, the fund does not yet have close
to the capacity to administer $15 billion.
There will be only 48 full-time employees
by the end of this year, a number that will
probably rise quickly, but also one far below
the 25 staff per $100 million that Müller and
colleagues2 calculate is necessary to properly
manage development work. There are also
many unanswered questions about how
the fund’s financing will work, with helpful
suggestions of debt relief swaps3 and the
possibility of loaned money that has formed
part of the Climate Investment Funds
being repaid to the fund rather than to the
country of origin.
© 2014 Macmillan Publishers Limited. All rights reserved
analysis
But stickier still are questions about
the nature of the projects that the fund
will support. Some prominent developing
countries are holding the door open for
the funding of oxymoronic ‘clean coal’
and other contentious projects. They must
realize that it is a sizeable political demand
to ask countries whose parliaments have
self-consciously taken bold steps away from
spending on dirty energy to give them the
cash for a half-hearted mitigation effort. ❐
Anna Petherick is a freelance news writer based in
Oxford, UK. 
e-mail: annajpetherick@gmail.com
References
1. Müller, B. South-South Solidarity in Climate Finance: A GCF
operated Southern Solidarity Fund (Oxford Climate Policy
Concept Note, April 2014); http://www.oxfordclimatepolicy.org/
publications/documents/GCFSSFfinal.pdf
2. Ciplet, D., Müller, B. & Roberts, J. T. How Many People Does
It Take to Administer Long-Term Climate Finance? (European
Capacity Building Initiative Policy Report, 2010);
http://www.oxfordclimatepolicy.org/publications/documents/
StaffingIntensityOctober2010.pdf
3. Fenton, A., Wright, H., Afionis, S., Paavola, J. & Huq, S.
Nature Clim. Change 4, 650–653 (2014).
Corrected online: 3 October 2014
859
ADDENDUM

Market Watch: Cash flow

Anna Petherick

Nature Climate Change 4, 858–859 (2014); published online 25 September 2014; corrected online 03 October 2014.

In the United Nations Climate Summit in New York in September, the Green Climate Fund (GCF) primarily raised awareness, but it
also raised the total that has been promised to it from the $1.083 billion I originally reported to $2.325 billion by adding new pledges
from eight more countries.
“The summit… was certainly a prime moment to increase understanding about the fund, its impact and benefits to both advanced
and developing economies,” said GCF executive director Hela Cheikhrouhou, as she journeyed back from the meeting. “I fully concur
with Secretary-General Ban Ki-moon that we should expect much higher contributions in the future.”
Cheikhrouhou is upbeat regarding the fund’s earlier plan to raise roughly $15 billion by the end of the year, pointing out that these
new pledges from countries like France, Luxemburg and Switzerland are “enormously important” for trust-building. “And the pledges
from the Republic of Korea and Mexico are sending very strong signals to other non-Annex I countries whose economies are highly
advanced, to step forward and make significant contributions.”
Such developments matter in the context of another climate meeting scheduled before December’s United Nations Framework
Convention on Climate Change Conference of the Parties. The GCF aims to draw political leaders to a special pledging conference in
mid-November, where it hopes to push for initial contributions by key Annex I members like the United States, Australia, Japan and
Canada. France’s pledge in New York was in line with behind-the-scenes expectations, but it remains unclear how much the political
climate in some of the big historical polluters — primarily the US and Australia — will hamper the fund’s ability to reach its near-term
goal. Ban Ki-moon’s celebrity enlistments, the brightly coloured banners in the streets of Manhattan, Sydney and about 160 other
locations across the globe, are certainly good signs. But it is also notable that the deliberately fuzzy diplomatic rhetoric around the
fund’s 2014 ambitions has slipped from ‘up to $15 billion’ to ‘at least $10 billion’ in just a few months.

© 2014 Macmillan Publishers Limited. All rights reserved