Climate Finance - The Rich Better Have My Money

THE RICH BETTER HAVE MY MONEY

CLIMATE FINANCE, THE GREEN CLIMATE FUND, AND GETTING THE CHA-CHING FLOWING.

WHAT IS CLIMATE FINANCE? Historically, developed countries have polluted more than their fair share of the atmosphere and due to this, vulnerable people in developing countries are feeling the impacts of climate change the hardest today. This is a massive injustice and the global north owes the global south a climate debt. One way to rectify this injustice is through the reparation of climate finance. Climate finance is a moral and legal obligation through which developed countries must provide money to developing countries to help them mitigate and adapt to climate change.

the unfccc AND the big bucks Realizing that anthropogenic climate change was the real deal and that something needed to be done, 196 countries came together

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in 1992 to sign on to the United Nations Framework Conven-

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tion on Climate Change (UNFCCC). This convention recognized

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that developed countries had a historical responsibility for climate change and that emission reductions needed to take place based on equity and common but differentiated responsibilities. In line with this, article 4 of the Convention declared that developed countries (or Annex 1 and Annex 2 in convention jargon) had to provide finance that was new, additional, predictable, and adequate to developing countries (Non-Annex 1) so that they could comply with the reduction measures under the convention.

CLIMATE FINANCE TIMELINE ARTICLE 4.

DEVELOPED COUNTRIES MUST PROVIDE NEW, ADDITIONAL, PREDICTABLE, AND ADEQUATE FINANACE TO DEVELOPING COUNTRIES.

FAST TRACK FINANCE: DEVELOPED COUNTRIES PLEDGE $30 BILLION A YEAR TO DEVELOPING COUNTRIES TILL 2012.

THEY ALSO PLEDGE LONG-TERM FINANCE OF $100 BILLION PER YEAR BY 2020 TO DEVELOPING COUNTRIES THROUGH THE COPENHAGEN GREEN CLIMATE FUND.

LEAST DEVELOPED COUNTRIES FUND ESTABLISHED TO ADDRESS ADAPTATION NEEDS IN LEAST DEVELOPED COUNTRIES. SPECIAL CLIMATE CHANGE FUND ESTALISHED TO SUPPORT ADAPTATION + TECH TRANSFER AND ADAPTATION FUND ESTABLISHED FOR ADAPTATION PROJECTS AND PROGRAMS IN DEVELOPING COUNTRIES

GOVERNING INSTRUMENT OF THE GREEN CLIMATE FUND IS ADOPTED. THE WORK PROGRAM ON LONG-TERM FINANCE IS LAUNCHED.

GREEN CLIMATE FUND ESTABLISHED FOR THE $100 BILLION/YEAR BY 2020 FOR MITIGATION AND ADAPTATION IN DEVELOPING COUNTRIES. THE STANDING COMMITTEE ON FINANCE WAS ESTABLISHED FOR BIENNIAL ASSESSMENTS.

STRUGGLE FOR THE CONTROL OF THE BOARD OF THE GREEN CLIMATE FUND AS DEVELOPED COUNTRIES WANTED IT TO BE OUTSIDE THE UNFCCC. THE WORK PROGRAM ON LONG-TERM FINANCE ENDS.

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THE green climate fund The Green Climate Fund was established in the first decision of COP16 in Cancun in 2010 and it

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is accountable to the UN. It was set up to replace all other institutions that dealt with climate finance because they were clearly inefficient. The GCF says that it aims to “play a key role in channelling new, additional, adequate and predictable financial resources to developing countries and will catalyse climate finance, both public and private, and at the international and national levels�. A major part of its objective however is to raise and channel the finance goal of $ 100 billion a year by 2020. The GCF has a governing instrument that lays out its mandate and structure. It is supposed to work through a country-driven method with participation from other relevant institutions and stakeholders in a gender-sensitive manner.

The GCF is governed by a board of 24 members - 12 from the Global North and 12 from the Global South. It additionally has has one civil society representative from the North and one from the South.

Money flows out of the GCF through a project-based approach in developing countries, and an equal amount of money is supposed to be alloted to mitigation and adaptation projects.

pROBLEMS WITH THE GCF Like many things under the UNFCCC, the GCF has problems due to oppressive voices from the Global North and the ambiguous language in its governing instrument: The GCF in theory has to manage billions of dollars, but it is a just a fund.

Hence, this management needs to be done through intermediaries who can help the finance flow to the right places. Sadly, the GCF interpreted the term “intermediaries” to mean development banks and other large banks.

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What developing countries wanted was “direct access” or national level intermediaries who hold the decision-making power with the finances. The current system is not good, especially because the GCF often accredits awful intermediaries like Deutsche Bank who are famous for being large-scale coal financers, money launderers and human rights violators and other big-scale human rights offenders like the World Bank. The heavy reliance on international intermediaries instead of focusing on direct access entities and

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building capacity domestically, is probably the biggest single problem with the GCF.

MORE pROBLEMS WITH THE GCF Developed countries are pushing for a business model under the Private Sector Facility provision of the GCF. It was originally supposed to build capacity in the local private sector, but the language in the GCF was fuzzy enough to modify it to mobilize large amounts of capital from big players in the private sector. Developed countries argued that they needed this because without the private sector financing they would not have enough money to contribute to the GCF’s goal of $100 billion per year by 2020 (how about that military spending?).

paris is in-SEINE At the end of this year, countries will gather together again for COP21 in Paris to create a final climate deal that will most probably be inequitable and lock us into years of inaction. Developed countries have attempted to water down the text of these negotiations to the point where it is extremely

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weak, but in addition to the fight for a strong text out of Paris, developing countries have one big question to ask: WHERE IS THE MONEY? Based on science and equity, the amount of money needed for mitigation, adaptation, and loss and damage is way into the trillions (far off from the $100 billion/year by 2020 goal). Developed countries say that through loans and leveraged private sector investments they have delivered $60 billion already, but in reality this number is more like $5-6 billion flowing from the North to the South. Additionally, with only $10 billion in the fund, the GCF approved its first 8 projects this year in countries in the Global South. Developing countries were not happy with the process behind this decision as there was a lack of transparency. Additionally, the North is saying they will provide something called “preferential finance” only to “most vulnerable countries” like the LDCs and Small Island Developing States, and this is driving a wedge through the G77+China. Talk about a sticking point in the climate talks!

WHAT CAN CIVIL SOCIETY DO The GCF is a space that is easier to navigate than the UNFCCC and so civil society voices are heard louder here and we do have a lot of space for influence. It is extremely important that we engage with the GCF at the national level by involving ourselves with National Designated Authorities and other implimenting institutions. We need to build networks in developing countries and make sure that the right amount of money is reaching the right people in a fair way. In terms of the broader negotiations, it is key that we do what we do best - mobilize with strong demands for reparations for climate debt, but also educate more people on the issue of climate finance. If we are really serious about the moral obligations of climate justice, we are thinking of a redistribution of resources from North to South. On a practical level, if we want to reach the most vulnerable and marginalized, we can’t reach them without grant based public finance.

We need to keep in mind that to change everything we don’t need everyone, we just need all of us. Governments and big industry have been messing with our planet and our people for too long and we don’t need them to be a part of the solution!

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TEXT and DESIGN: Aneesa Khan, 2015

Special thanks to Brandon Wu for all the finance presentations and inspiration over the last 2 years.