The Green Climate Fund (GCF) is a fund for climate finance that was established within the framework of the United Nations Framework Convention on Climate Change (UNFCCC). Considered the world's largest fund of its kind, GCF's objective is to assist developing countries with climate change adaptation and mitigation activities. The GCF is an operating entity of the financial mechanism of the UNFCCC. It is based in Songdo, Incheon, South Korea. It is governed by a Board of 24 members and supported by a Secretariat.
Mafalda Duarte, a Portuguese development economist, is the Fund's Executive Director.
The Green Climate Fund supports projects and other activities in developing countries using thematic funding windows. It is intended that the Green Climate Fund be the centrepiece of efforts to raise climate finance under the UNFCCC. There are four other, smaller multilateral climate funds for paying out money in climate finance which are coordinated by the UNFCCC. These include the Adaptation Fund (AF), the Least Developed Countries Fund (LDCF), the Special Climate Change Fund (SCCF) and the Global Environment Facility (GEF). The GCF is the largest of these five funds.
As of Dec 2023, the GCF had a portfolio of 13.5 billion USD (51.9 billion USD including co-financing).
The process of designing the GCF has raised several issues. These include ongoing questions on how funds will be raised, the role of the private sector, the level of "country ownership" of resources, and the transparency of the Board itself. Also, this additional international climate institution might further fragment taxpayer's money that is put towards climate action.
The Fund's former director Héla Cheikhrouhou has complained in 2016 that the Fund is backing too many "business-as-usual types of investment proposals". This view is echoed by a number of civil society organizations.
In 2023, the Executive Director announced a series of reforms aimed at making the Fund more efficient and positioned to deliver greater impact.
History Wealthier, industrialized countries have been the countries responsible for most greenhouse gas emissions.Center for Global Development, 15 Aug. 2015 "Developed Countries Are Responsible for 79 Percent of Historical Carbon Emissions" Rapid Transition Alliance, 13 Apr. 2021 "Cambridge Sustainability Commission Report on Scaling Behaviour Change" As a consequence, it has been argued that these countries are morally responsible to pay for a lion's share of the cost of climate mitigation worldwide, including costs of the transition of less developed and least developed countries.The Guardian, 23 Nov. 2015 "Paris Climate Talks: Developed Countries Must Do More than Reduce Emissions" Los Angeles Times, 15 Sept. 2019 "Editorial: Wealthy Countries Are Responsible for Climate Change, But It’s The Poor Who Will Suffer Most" A number of civil society groups determined that the United States and the European Union are morally responsible for at least 54% of the cost of mitigating climate change-driven disaster damage in the Global South.CSO Equity Review (2019) "Can Climate Change Fuelled Loss and Damage Ever be Fair?" Manila, London, Cape Town, Washington, et al.: CSO Equity Review Coalition. Others have argued that wealthier countries should help finance the transition of less developed and least developed countries because the former can more realistically afford the substantial investment now urgently needed for the transition.The New Republic, 8 Dec. 2015 "Who’s Most Responsible for Climate Change?"
The Copenhagen Accord, established during the 2009 United Nations Climate Change Conference (COP-15) in Copenhagen mentioned the "Copenhagen Green Climate Fund". The fund was formally established during the 2010 United Nations Climate Change Conference in Cancun as a fund within the UNFCCC framework. Its governing instrument was adopted at the 2011 United Nations Climate Change Conference (COP 17) in Durban, South Africa.
Procedures During COP-16 in Cancun, the matter of governing the GCF was entrusted to the newly founded Green Climate Fund Board, and the World Bank was chosen as the temporary trustee. To develop a design for the functioning of the GCF, the "Transitional Committee for the Green Climate Fund" was established in Cancun too. The committee met four times throughout the year 2011, and submitted a report to the 17th COP in Durban, South Africa. Based on this report, the COP decided that the "GCF would become an operating entity of the financial mechanism" of the UNFCCC, and that on COP-18 in 2012, the necessary rules should be adopted to ensure that the GCF "is accountable to and functions under the guidance of the COP". Researchers at the Overseas Development Institute state that without this last minute agreement on a governing instrument for the GCF, the "African COP" would have been considered a failure.Schalatek, L., Stiftung, H., Nakhooda, S. and Bird, N., February 2011, The design of the Green Climate Fund , Overseas Development Institute. Retrieved 7 April 2012 Since then developing countries (like South Africa) have embarked on integrated planning and infrastructure prioritization to avoid lock in to unstainable development pathways and work towards a just transition to "greener" economy.Maia, J.; Giordano, T.; Kelder, N.; Bardien, G.; Bodibe, M.; Du Plooy, P.; Jafta, X.; Jarvis, D.; Kruger-Cloete, E.; Kuhn, G.; Lepelle, R.; Makaulule. L.; Mosoma, K.; Neoh, S.; Netshitomboni, N.; Ngozo, T.; Swanepoel, J. (2011): Green jobs: an estimate of the direct employment potential of a greening South African economy. Industrial Development Corporation, Development Bank of Southern Africa, trade and industrial policy strategies.
Furthermore, the GCF Board was tasked with developing rules and procedures for the disbursement of funds, ensuring that these should be consistent with the national objectives of the countries where projects and programmes will be taking place. The GCF Board was also charged with establishing an independent secretariat and the permanent trustee of the GCF.
The fund partners with 84 organizations that include commercial and development banks, state agencies and civil society groups, which pilot and execute innovative approaches to climate programs.
There are other multilateral climate funds (i.e. governed by multiple national governments) which are important for paying out money in climate finance. As of 2022, there are five multilateral climate funds coordinated by the UNFCCC. These are the Green Climate Fund (GCF), the Adaptation Fund (AF), the Least Developed Countries Fund (LDCF), the Special Climate Change Fund (SCCF) and the Global Environment Facility (GEF). The GCF is the largest of these five funds.
Sources of finance
Countries agreed to mobilise $100 billion a year by 2020 in climate finance, some of which has been mobilised through the GCF. Uncertainty over where this money would come from led to the creation of a High Level Advisory Group on Climate Financing (AGF) by UN Secretary-General Ban Ki-moon in February 2010. There is no formal connection between AGF and GCF, although its report is one source for debates on "resource mobilisation" for the GCF, an item that will be discussed at the GCF October 2013 Board meeting. Disputes also remain as to whether the funding target will be based on public sources, or whether "leveraged" private finance will be counted towards the total.Institute for Policy Studies (2013), Green Climate Fund, A Glossary of Climate Finance Terms. Retrieved 23 July 2013
As of February 2020, a total of US$10.3 billion was pledged and US$8.24 billion confirmed, as part of the Initial Resource Mobilization (IRM) period.Green Climate Fund, Status of Pledges. Retrieved 22 March 2020 As of Dec 2023, the GCF had a portfolio of 13.5 billion USD (51.9 billion USD including co-financing).
The lack of pledged funds and potential reliance on the private sector is controversial and has been criticized by developing countries.
U.S. President Obama committed the US to contributing US$3 billion to the fund. In January 2017, in his final three days in office, Obama initiated the transfer of a second $500m installment to the fund, leaving $2 billion owing. Former U.S. President Donald Trump in his announcement of U.S. withdrawal from the Paris Agreement on 1 June 2017, also criticized the Green Climate Fund, calling it a scheme to redistribute wealth from rich to poor countries. + Green Climate Fund Financial Contribution by Country Country Announced ($Millions) Signed ($Millions) Signed per capita GDP per capita Emissions per capita (tonnes of CO2e) USA $3,000 $3,000 $9.41 $55,000 17 Japan $1,500 $1,500 $11.80 $36,000 9 UK $1,211 $1,211 $18.77 $46,000 7 France $1,035 $1,035 $15.64 $43,000 5 Germany $1,003 $1,003 $12.40 $48,000 9 Sweden $581 $581 $59.31 $59,000 6 Canada $277 $277 $7.79 $50,000 14 Italy $334 $268 $4.54 $35,000 7 Norway $258 $258 $50.20 $97,000 9 Australia $187 $187 $7.92 $62,000 17 Spain $161 $161 $3.46 $30,000 6 Netherlands $134 $134 $7.94 $52,000 10 Switzerland $100 $100 $12.21 $85,000 5 South Korea $100 $100 $1.99 $28,000 12 Denmark $71.8 $71.8 $12.73 $61,000 7 Belgium $66.9 $66.9 $6.18 $48,000 9 Finland $107 $46.4 $8.49 $50,000 10 Austria $34.8 $34.8 $4.09 $51,000 8 Luxembourg $46.8 $33.4 $58.63 $111,000 21 Mexico $10.0 $10.0 $0.08 $10,000 4 Czech Republic $5.32 $5.32 $0.57 $20,000 10 Hungary $4.30 $4.30 $0.43 $14,000 5 New Zealand $2.56 $2.56 $0.57 $42,000 7 Estonia $1.30 $1.30 $0.99 $20,000 14 Monaco $1.08 $1.08 $28.89 $163,000 – Panama $1.00 $1.00 $0.25 $12,000 3 Iceland $1.00 $0.50 $1.55 $52,000 6 Latvia $0.47 $0.47 $0.24 $16,000 4 Chile $0.30 $0.30 $0.02 $15,000 5 Colombia $6.00 $0.30 < $0.01 $8,000 2 Indonesia $0.25 $0.25 < $0.01 $4,000 2 Malta $0.20 $0.20 $0.47 $23,000 6 Poland $0.11 $0.11 < $0.01 $14,000 8 Lithuania $0.10 $0.10 $0.04 $16,000 5 Bulgaria $0.10 $0.10 $0.02 $8,000 7 Romania $0.10 $0.10 < $0.01 $10,000 4 Liechtenstein < $0.1 < $0.1 $1.48 $135,000 1 Cyprus $0.50 – 0 $27,000 7 Ireland $2.70 – 0 $53,000 8 Vietnam $0.10 – 0 $2,000 2 Portugal $2.68 – 0 $22,000 5 Peru $6.00 – 0 $7,000 2 Mongolia < $0.1 – 0 $4,000 7
Beneficiary countries +CountryNumber of projects (as of July 2023)Total GCF Financing ($ million, as of July 2023)Ghana7103.7Afghanistan117.2Albania429.1Antigua and Barbuda239.4Argentina4208.7Armenia5117.1Azerbaijan4 -Bahamas431.2Bahrain12.3Bangladesh7374.0Barbados387.0Belize212.0Benin866.6Bhutan251.9Bolivia133.3Bosnia and Herzegovina117.3
Issues The process of designing the GCF has raised several issues. These include ongoing questions on how funds will be raised, the role of the private sector, the level of "country ownership" of resources, and the transparency of the Board itself. In addition, questions have been raised about the need for yet another new international climate institution which may further fragment public dollars that are put toward mitigation and adaptation annually.
The Fund's initial investments have met with mixed responses. But in at least one case it also drew praise for involving local communities in the formulation of an adaptation project, and for incorporating consumer protection into a plan for off-grid solar energy.
Role of the private sector One of the most controversial aspects of the GCF concerns the creation of the Fund's Private Sector Facility (PSF). Many of the developed countries represented on the GCF board advocate a PSF that appeals to capital markets, in particular the pension funds and other institutional investors that control trillions of dollars that pass through Wall Street and other financial centers. They hope that the Fund will ultimately use a broad range of financial instruments.Oscar Reyes (2013), Songdo Fallout: is green finance a red herring?, Foreign Policy in Focus. Retrieved 23 July 2013