Rich countries gathered in Paris last week to create pledges towards the UN Green Climate Fund (GCF). Description of how the should seize a chance to boost the fund's unique capabilities.
The GCF is critical in helping developing countries implement their obligations underneath the Paris Agreement. In its brief existence, the fund has mobilised $5 billion for climate action in nearly 100 countries, that will avert 1.5 billion tonnes of CO2 and help a lot more than 310 million people thrive. Impressively, given the glacial pace of international development, over fifty percent of GCF projects already are being implemented.
With the fund's resources now almost exhausted and also the strategic window to act on climate change narrowing rapidly, its ability to support transformative climate action in countries most in need ought to be optimised.
The $9.8bn pledged by countries last week could be a lot more effectively deployed by recognising the inherent variations in the two overarching climate goals of adaptation and mitigation; and modifying both its allocation mix and it is activities.
Put simply, the GCF ought to be reoriented to primarily support adaptation directly, and direct its mitigation funding towards creating the environment for private sector investment, while leaving implementation of the latter to the private sector.
Both mitigation and adaptation result in the development of a public good. However mitigation is really a public good that's intrinsically global: the advantages of each tonne of greenhouse gases (GHG) mitigated are distributed worldwide, through the atmosphere. By contrast, adaptation is a local public good; the advantages of adaptation measures will usually only visit those in the neighborhood area or country.
This distinctive characteristic of mitigation versus adaptation seems obvious, but it has deep implications for financing facilitated by the GCF.
The “product” from mitigation could be commoditised and traded around the local and/or global markets. Most mitigation is achieved in measures that sit comfortably inside the private finance sphere, such as energy, transport, efficiency, and agriculture. What this means is there's possibility of international private sector entities to recognize profitable pro-environmental opportunities, and to purchase global action that facilitates low carbon development.
Adaptation has much less possibility to generate private sector opportunities. Even at the local level, adaptation fails to attract private sector investment, because the local public good it produces positive externalities that cannot be easily turned into a marketable commodity. What this means is adaptation necessarily involves public sector intervention: more robust public spending on infrastructure, healthier ecosystems, better health systems, etc.
There is really a significantly more favourable global private sector investment environment for mitigation in accordance with adaptation, the bulk of which will remain down to the general public sector.
The UN secretary general's high level panel on climate finance has previously called for a significant proportion from the $100bn per year pledged towards the GCF by rich countries by 2023 in the future from the private sector.
This raises particular questions for adaptation. Building low carbon economies may be the business for the future and lends itself to global investment. But would the non-public sector in France, Germany or the United States be interested in providing funds for Adaptation in The Seychelles, Tuvalu or Fiji?
It makes sense, then, for most from the GCF allocation for use to aid adaptation actions. GFC funds directed to mitigation ought to be done inside a more strategic, facilitative manner. Adaptation only makes up about a quarter of GCF expenditure compared to 42% on mitigation.
Dr Ulric Trotz, deputy director and science advisor in the Caribbean Community Global warming Centre, argues that “GCF resources shouldn't be used to 'implement' actual mitigation actions,” such renewables projects and efficiency measures. Instead GCF mitigation funding should offer the systems-level developments needed for clean energy transformation.
Such “systems transitions” are very well documented in the IPCC 1.5 Special Report; where enabling conditions identified include policy and legislative reforms. GCF may also create a pipeline of costed, prepared to implement proposals. This could have a bigger multiplier, for both climate and sustainability objectives, than funding mitigation projects directly.
Adaptation would need implementation, but this too might be put in ways in which support more systemic improvements. Countries should integrate climate risk into national development plans and national budgets to gain access to adaptation funding.
Using this method, the standard envisaged expenditure within the budget (e.g. upgrading a coastal road) becomes the nation baseline contribution to the “adaptation package” (i.e. what the country would have spent in nevertheless on that action).
The incremental costs recognized by the risk management analysis (adaptation costs) may then be accessed in the GCF. The capability building issue here then becomes mainly one of how countries gain the capability to “integrate climate risk” to their national development plans and yearly budgetary processes. This enables countries to obviously define their national adaptation resource needs across all sectors. The essential point here's that this approach offers an avenue for channelling adaptation funds to countries, through a “budgetary support” process (by implication through the Ministry of Finance),
Bold global climate action is undermined by political timidity. The failure of rich countries to commit substantial monetary resources for global climate action is easily the most emblematic illustration of this timidity.
