Stabilizing the global climate is one of the most urgent challenges in coming decades. Our warming world affects all people and ecosystems, particularly the poor who already suffer disproportionately from climate-change impacts.
Decisions made at these meetings are critically important for the funding of climate mitigation and adaptation activities in developing nations. They’ll have important implications for meeting the immediate investment needs of developing countries, as well as for long-term global climate finance. The meetings will mark the start of discussions on how to sunset the CIFs and transition to a new global climate finance mechanism—the Green Climate Fund.
The Intergovernmental Panel on Climate Change (IPCC) estimates that our best chance of containing global temperature rise to 2°C is to keep atmospheric concentration of carbon dioxide below 450 parts per million (we’re currently at 390 ppm). In addition to several other climate mitigation strategies, sticking to this cap will require significant new investment in low-carbon infrastructure and activities in developing countries.
Experts estimate the cost of funding this development to be about $300 billion annually by 2020, growing to $500 billion by 2030. The problem is, there’s a huge funding gap when it comes to meeting these costs—industrialized nations have only committed to mobilize $100 billion of new funds annually by 2020 to meet these needs. The world will need to figure out a way to come up with the rest of the funding if we’re going to prevent developing nations from feeling climate change’s most severe impacts.
Introducing WRI’s Climate Finance and the Private Sector Project
The Green Climate Fund (GCF) Board wrapped up its second meeting on Saturday with a major decision: selecting Songdo City in South Korea to host the Fund. The decision, which was adopted by consensus of the Board, was greeted with joy by the Koreans, who spared no effort to provide an offer of the highest quality to earn the confidence of the Board. The UNFCCC Conference of Parties will have to endorse this decision at its next meeting in Doha later this year to confirm the selection.
The second meeting of the Green Climate Fund (GCF), the institution that’s expected to become the main global fund for climate change finance, will take place tomorrow in Songdo, Korea. While the Board will discuss several issues—everything from criteria for its executive director to hammering out a work plan—one is likely to take center stage: choosing the Fund’s host country.
Six countries are currently vying for the role: Germany (Bonn), Korea (Songdo), Mexico (Mexico City), Namibia (Windhoek), Poland (Warsaw), and Switzerland (Geneva). The decision is an important one—the appointed country will be tasked with providing a home for one of the main vehicles to help the world’s most vulnerable nations mitigate and adapt to climate change.
Addressing global climate change requires huge investments. In order to keep global temperature rise below 2 degrees Celsius and protect vulnerable communities from climate change’s impacts, experts estimate that developing countries will need between $110 and $275 billion annually to mitigate and adapt to climate change. The International Energy Agency estimates that for developing countries to transition to low carbon energy, approximately $10 trillion dollars in energy investments by 2050 is required. In addition, another $ 1.5 trillion per year will be required by 2030 for adaptation action.
Unfortunately, there’s a huge gap between the funding we have and the funding we need: According to experts, developing countries’ climate change financing needs exceed current and prospective flows by at least five to 10 times. While many policy analysts focus on the need for more money and a greater availability of technology to bridge this gap, there’s another issue that’s less talked about but equally important: investing in institutions and capacity development.
By “institutions,” I mean countries’ national structures, mechanisms, and related arrangements to effectively implement climate policy and administer climate finance, such as a national climate change commission, an inter-agency committee on climate change, a national climate change adaptation fund, or national climate change trust funds. “Investing” in these institutions means creating the necessary policy, institutional, industry, and financial conditions that can help scale up investments in climate action. Building these strong and effective institutions will also require capacity and knowledge-building.
It’s a long way from Bonn to Bangkok—literally and figuratively. It would be a great understatement to suggest that the June session of the UN climate talks in Bonn, Germany were acrimonious. In Bonn, governments spent the week arguing about procedural issues such as the nomination of chairs and the finalization of agendas. At the Bangkok negotiations that took place this past week, they argued over substance instead.
These arguments actually represent progress. Because the 50-plus issues under negotiation are contentious and have real impacts on national interests, they are deserving of robust debate. But we still have a long way to travel to get to Doha, Qatar, the location of the United Nations Framework Convention on Climate Change’s (UNFCCC) COP 18 summit, which takes place this November. Significant differences of opinion persist on each of the three key issues identified in our pre-Bangkok blog post:
This past week, the board of the Green Climate Fund (GCF) met for the first time. This was an important milestone around the goal of increasing financial support to help developing countries mitigate and adapt to climate change. Expectations are high for the Fund, officially established at the 2011 Durban climate talks. It’s positioned to become the main global channel for climate finance, expected to reach $100 billion per year by 2020.
Sentiments from Last Week’s Meetings
There was an atmosphere of excitement at last week’s meetings in Geneva, which brought together a group of 24-countries and their alternates, charged with improving the mobilization of climate finance. The meeting itself focused largely on procedural actions, including the election of the two co-chairs.
This is a two-part series on expanding access to clean energy in developing countries. Tune in tomorrow for the second installment, which will highlight specific ways institutions can implement successful clean energy projects.
This week, key leaders from the policy, industry, government, NGO, banking, and civil society sectors are gathering in the Philippines for the 7th annual Asian Clean Energy Forum (ACEF). The event, organized by the Asian Development Bank and USAID, aims to foster discussions about how to scale up clean energy initiatives and curb climate change in Asian nations.
One the forum’s key themes is access to clean energy. In March 2012, the World Resources Institute and the DOEN Foundation also organized a workshop focused on innovative practices in providing access to clean energy in developing countries (check out the new video about this forward-thinking event). The workshop brought together an inspiring group of practitioners, project developers, and financiers who are all successfully implementing clean energy access projects in communities across the world. These practitioners are bringing efficient cook stoves to Africa, solar home systems to India, and small-scale hydro to Indonesia – reaching poor rural communities who are in great need of clean energy solutions.
In the recent UN climate negotiations (COP 17) in Durban, South Africa, the issue of transparency of climate finance appeared in a variety of contexts in the final agreement on long-term cooperative action. From the sections on reporting and review for developed and developing countries, to the Standing Committee, to the registry, and to fast-start finance, making sense of this multitude of provisions on climate finance transparency is a challenge.
However, what's clear is that the moderate progress made in Durban fell short of what is needed to achieve a transparent and effective climate finance regime. This post aims to summarize where we stand on this issue following the Durban COP.