The first meeting of the Transitional Committee (TC), the 40-member body of negotiators tasked by the UN Climate Framework Convention to design a new Green Climate Fund (GCF), was characteristic of the entire design process to date, in that it was delayed. Almost two months later than the Cancun Agreement had mandated, the TC delegates and close to 100 observers from multilateral and bilateral financial institutions, international organisations, academia, the private sector and other civil society groups convened in Mexico City on 28 April for the first time. However, this meeting was delayed when the 40 countries representing the full UNFCCC membership of 194 (with 15 members from developed and 25 from developing countries) haggled for several hours in a private ‘non-session’ over which countries should chair the process from now on. In the end, a ‘troika’ of countries was confirmed, with Mexico (the current COP presidency), South Africa (the future COP presidency) and Norway sharing the TC leadership as co-chairs.
The election of officers was of course one of the items on the tentative agenda for the two-day meeting. That it was dealt with behind closed doors, excluding all observers – whose right to attend was explicitly confirmed in Cancun – and before the actual meeting began suggests at least two important (and likely recurring) themes for the six-months long process: First, this seemingly technical exercise cannot be divorced from climate negotiation politics. Second, full transparency will be crucial in order to help ease political suspicions and minimise political arm-wrestling and thus contribute to building the trust and partnership necessary among the 40 TC members if they are to succeed in creating a fundamentally different and better global climate fund for the benefit of developing countries.
The task before the 40 TC members and their advisors, selected by countries and regions for their experience and skills with respect to climate change and finance, is indeed a trying one: come up with a “robust, transparent, flexible design”, - so said UNFCCC Executive Secretary Christiana Figueres - which allows for a significant scaling up of current financial flows from developed to developing countries for urgently needed action in mitigation and adaptation. In Cancun, the global community reaffirmed that by 2020, developed countries plan to raise US$100 billion per year. How much of this sum should come respectively from public, private and innovative sources of financing is still up in the air, as is the percentage of this sum that should flow through a future GCF.
In the first TC meeting in Mexico City, the long-standing differences in opinion in this matter between many developing and developed countries were reiterated. Whereas many industrialised countries in their interventions on the purpose of the fund equated its success with the new Fund’s future capacity to leverage private sector investments, G77 countries and China underscored developed countries’ obligation under the Convention to provide for the bulk of the future GCF funding via new and additional public resources as well as innovative financing, with private and carbon market financing serving only a complementary role.
Developing countries stressed the financial responsibility of industrialised countries to respond to a demand-driven articulation of needs by developing countries with adequate and predictable funds that are easily and directly accessible and transformational in purpose. While they emphasised the notion of equity and climate justice as an important guideline for operationalising the GCF, developed countries avoided any reference to a financial obligation and focused instead on efficiency, effectiveness and results-orientation as the guiding principles for the new global fund, expressing their expectation that it would streamline and reduce the fragmentation in climate funding and provide the scalability and speed needed to support low-carbon development.
Developed and developing countries also showed a differing appreciation of how pragmatic and flexible the rules of engagement in the TC should be. While the United States and other industrialised countries argued that existing procedural rules under the UNFCCC Conference of Parties should be adjusted and modified as needed in the workings of the TC, developing countries stressed that the TC, including its officers, is to operate “under the authority” of the UNFCCC and thus obligated to follow its rules. This is of course in contrast to the future GCF, which will follow only COP guidance, and not its authority.
A number of international organisations, including all regional development banks, the World Bank and the European Investment Bank, as well as the GEF Secretariat, the Adaptation Fund Board, UNEP and UNDP, have agreed to second a staff person to the TC process, which will form the resident team of a Technical Support Unit (TSU) to be located with a newly formed TC Secretariat in Bonn, Germany. The TSU will be important in preparing design options for the new fund and organising and providing all expert input into the TC. It is still unclear if and how private sector institutions and civil society experts can be engaged, for example in a proposed roster of non-resident expertise. Non-resident experts should be drawn from academia, independent research institutions, labour unions, human rights and women’s rights organisations, as well as groups representing climate-affected communities and indigenous peoples, taking into account gender and regional balance. However, there was also worry that a powerful TSU, if not given clear instructions by the TC, could become a non-transparently operating black box, setting the TC’s agenda rather than following the Committee’s working orders and thereby predetermining outcomes, for example by constricting the design choices presented to the TC. A proposed composition of the TSU, which would have clearly assigned the important role of the funds design specialist to an expert seconded from a multilateral development bank, most likely the World Bank, raised eyebrows. In the view of several TC members, such an assignment would clearly constitute a conflict of interest as it would give seconded World Bank staff a role in designing the fund and its governance structures, which the World Bank is meant to oversee as interim trustee with fiduciary responsibilities.
For the few months prior to Durban, TC members have settled on a draft work plan. Three more meetings of the full TC are planned, with the first one likely to be held in Tokyo, Japan, in the second week of July. Given the short period of time available for the TC to do its work, the Committee decided to organise its work in four separate work streams or working groups that are to convene and prepare proposals for consideration by the full TC simultaneously. Additionally, several technical workshops will be convened. Following UNFCCC rules of procedure, each of the four work streams will be headed by a pair of co-facilitators chosen from an Annex I and Non-Annex I country respectively.
- Spain and Barbados will facilitate Work Stream I, which is to deal with the scope, guiding principles and cross-cutting issues of the future GCF, looking at its size and scalability, its complementarity and value-added to existing funds, and country-led and results-based processes.
- Switzerland and the Democratic Republic of Congo (representing the African group in the negotiations) will look at governance and institutional arrangements in Work Stream II, which will give suggestions on procedures for the board, the selection and establishing of an independent GCF secretariat, and the trustee arrangements, as well as define the relationship of the GCF with national entities and other Convention bodies, including the yet to be formed Standing Committee.
- Australia and Pakistan are jointly responsible for guiding the work in Work Stream III dealing with operational modalities, potentially the most controversial of the four working groups. It will deal with methods to manage scaled-up financial resources from a number of sources, look at ways to leverage private sector finance, devise methods for a balanced allocation between mitigation and adaptation, make sure that appropriate non-binding expert and technical advice is provided to the GCF and ensure stakeholder input and participation.
- Sweden and Bangladesh will organise the work in Work Stream IV, which will address monitoring and evaluation by suggesting mechanisms for periodic independent evaluation of the Fund’s performance as well as the performance of the activities supported by the fund, and propose mechanisms to ensure both the financial accountability of the Fund as well as the application of internationally accepted fiduciary standards, sound financial management, and – last but not least – the application of environmental and social safeguards.
Although the Cancun Agreements stipulated that the TC be open to all accredited observers of the UNFCCC, it is not yet clear if civil society participants can be “active observers” (following established practice at the World Bank’s Climate Investment Funds, for example). This would mean that civil society representatives in any full TC meeting, in the work streams, workshops or other sessions could (a) take the floor and make an intervention, (b) suggest agenda items and (c) be active participants in all drafting groups or executive sessions. Civil society groups are hoping that, as a minimum, each of the nine formal UNFCCC constituencies (including labour, the business sector, women and gender groups, indigenous peoples, environmental groups, research institutions and youth groups, among others) will be allowed to have an intervention at each TC meeting. They are keeping their fingers crossed for a positive formal confirmation of their important role as expert contributors to the design of the new GCF at the next full TC meeting in mid-July 2011.
Liane Schalatek is Associate Director of the Heinrich Böll Foundation North America.
- Download the full-length version of this analysis (pdf, 7 pages, 502 KB)