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Priorities for the Green Climate Fund in 2012

With the first meeting of the Green Climate Fund (GCF) fast approaching, two regional groups – Asia-Pacific and Latin America and the Caribbean – have yet to nominate their Board members. Negotiated over the last two years, the GCF is expected to deliver large-scale finance to developing countries to address climate change. Without completing the nominations, though, the Board cannot begin the important task of making the “main global fund for climate change finance” operational.

Earlier this year, WRI and Climate Analytics facilitated a meeting in New York City of representatives from prospective Board member countries and others involved in the Fund’s design (see summary note). Participants exchanged ideas and perspectives on the Board’s program of work for 2012 and priorities for its first meeting. In addition to the basic administrative arrangements – like selecting a host country and establishing a secretariat – the Board needs to do the following in 2012: * Determine the Fund’s strategy and business model: How will it receive and move money? The Board needs to agree on an approach and the timing for developed and other interested countries to make commitments to the Fund. It will also need to agree on how to move money to a wide range of economic actors – governments, financial institutions, enterprises, communities, and individuals – to incentivize them to make more climate-friendly investment decisions.

  • Define the Fund’s operating rules: How will it access and allocate its resources and leverage additional investments by private sector actors? The Board will need to define criteria for accessing resources from the Fund, including options that empower developing country institutions to “directly” access its resources beyond what may be provided through the multilateral development banks (MDBs) or UN agencies. It will also need to agree on rules for allocating the Fund’s resources across themes, sectors, and countries in a manner that provides the certainty necessary to make long-term investments, while also incentivizing ambitious actions and leveraging resources controlled by government and private actors.

  • Define accountability rules: How will it ensure sound financial management, avoid or redress adverse environmental and social impacts, and be transparent and inclusive? Defining these rules for developing country institutions and the private sector will be particularly challenging. The Board will need to make sure that developing country systems for assuring protections are strengthened and that rules for private sector entities are equally strong.

Even as the Fund is being designed, early progress can be achieved. Developing countries can prepare themselves to receive funds by integrating climate change considerations into their development plans and programs, identifying priority areas for support, improving their institutions, and strengthening their management systems. For their part, developed countries can support these efforts by developing countries so that scaled-up resources can be programmed more effectively once the GCF is fully operational.

As the Board gets its work underway, it will need to act quickly and decisively to complete the Fund’s design and make it operational. It will also need to be pragmatic in balancing multiple priorities and interests to design an effective Fund in a timely manner. Finally, it will need to demonstrate significant progress by the next climate change ministerial meeting in Doha later this year if it is to inspire confidence and attract funding on a scale that will have a transformational impact. But first things first: The countries that are holding up the first meeting need to bridge their differences and finalize their Board nominations.

This post is also available in French, Spanish, and Chinese.

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