The Design Process for the Green Climate Fund: Lots of Disagreement, Little Time - COP 17

At the climate summit last December in Cancun, parties to the UN Framework Convention on Climate Change (UNFCCC) decided to set up a Transitional Committee (TC) in charge of designing the new Green Climate Fund (GCF). The TC is tasked to propose its design recommendations to the next meeting of the Conference of Parties (COP) in Cancun in late November for approval.

With three out of four scheduled meetings of the TC now completed after the recent one in Geneva (from September 11th to 13th), severe differences remain primarily, although not exclusively, between the 25 developing countries and the 15 developed countries represented in the TC regarding the form and functions of the Fund. This is despite the fact that some progress and convergence of opinions on important matters are emerging, such as that funding decisions should be driven by, and consistent with, developing countries’ own national climate and development plans. However, the points of divergence and disagreement are too many and too fundamental in nature to simply hope for a rapid alignment or quick compromise between the TC members. Given that there are just two full days of negotiations in the 4th TC Meeting in Cape Town on October 16th and 17th and a mere four weeks of behind-the-scenes hackling and drafting left to bridge that divide, it is hard to agree with the optimistic assessment of UNFCCC Executive Secretary Christiana Figueres that the TC “is now fully on track to conclude the design of the Fund for the approval by the UNFCCC’s Conference of the Parties in Durban” in late November. The road to Durban remains bumpy, and TC members have little time to cover a lot of distance.

These contentious issues include the legal status of the Fund, its relationship with the COP and other governance arrangements, the engagement of the private sector, key operational modalities (such as the number of windows and financing instruments to be used) as well as overriding objectives and guiding principles to ensure that the GCF is a new kind of climate finance animal – a new creation that fills the gaps in the existing climate finance architecture and surpasses the existing instruments in ambition, scope, scale and transformational impact.

They do in fact juxtapose two extremely different visions and business models for the GCF: One vision foresees a bigger Fund controlled and overseen tightly by the COP which channels largely public budgetary contributions predominantly in the form of grants to developing countries according to their needs and allows them direct access to and ownership over how to spend, implement and account for these sums (the developing country preference); the other vision focuses on using limited public financial input into a smaller Fund which functions largely independent of the COP with the primary objective to facilitate the entry of private sector investments for developing countries in order to generate the bulk of the US$100 billion in longterm climate finance annually. This Fund also establishes tight accountability, efficiency, results-orientation and fiduciary standards for direct access of GCF financing of recipient countries (the developed country preference).