Coverage of Japan’s coal funding has sparked an important debate about the role of international climate finance in facilitating the transition to a low-carbon economy.
Making the transition to a low-carbon, climate-resilient economy is going to take a lot of investment, and the limited budgets of the public sector can’t tackle it alone.
But by targeting their support, governments can create incentives for significant private investment into climate activities; in other words, they can “mobilize” private investment.
Launched in 2014, the Green Climate Fund offers an ambitious platform for contributions and investments in climate mitigation and adaptation in the developing world. WRI worked with the GCF secretariat and Board and a large number of partners and stakeholders to help shape the Fund's structure.
Providing finance to support developing countries’ efforts to respond to a changing climate is a key challenge of the 21st century. To meet this challenge, it is essential to find new ways to raise funds and invest in projects that curb emissions and build resilience to the climate impacts that are already unavoidable.
WRI’s finance team has provided technical and analytical work to the GCF from inception in 2011 through launch in 2014. Unlike previous major multilateral climate funds, the Green Climate Fund has a broad base of contributors among both developed and developing countries. Its 24 Board members are balanced between developed and developing countries, and its administration is lean.
The Fund is designed to work through partners, such as national development banks and the World Bank. Private sector involvement is also central to the Fund, which has the flexibility to use innovative financial instruments to encourage private companies to help tackle climate change, thereby stretching GCF resources.
The WRI team has sought to support the GCF management and Board to help ensure that ambition and rigor were built in to GCF design, so the Fund can deliver value for money to mitigate and adapt to climate change.
As pledges of support flow in, the Fund’s investment framework lets it set priorities about how money can be invested for maximum impact. The Fund’s structure enables it to extend its reach through a wide array of partners, balanced between national and international institutions, while ensuring that all partners meet high fiduciary, environmental and social standards.
WASHINGTON— On November 20, 2014, countries held a pledging conference of the Green Climate Fund in Berlin – where countries announced their financial commitments to the Fund. These funds will be used to support vulnerable countries to respond to the mounting risks of climate change, and to reduce emissions that cause climate change.
Recently the world took two giant steps toward reaching a global agreement to fight climate change in 2015: a landmark U.S.-China accord and a $4.5 billion pledge to the Green Climate Fund by the United States and Japan.
But there are some conditions attached.
Why is the recent U.S. pledge to the Green Climate Fund important for a 2015 climate agreement?
Call it bad timing: Brazil’s greenhouse gas emissions intensity is rising while that of most of the G20 countries decreases, just as more infrastructure investment will be needed to support expected economic growth and social inclusion. Representatives of commercial banks in Brazil, the Brazilian Development Bank (BNDES), the Inter-American Development Bank (IDB), Brazil’s Ministry of Finance and others joined WRI experts to explore how they can collectively help the country make the transition to a low-carbon economy.
The Green Climate Fund (GCF) is the most ambitious climate finance fund thus far, with a goal of completely transforming sectors and economies toward low-emission, climate-resilient development.
Last week marked a key moment for climate finance: The last foundations were laid for the GFC, and it’s now ready to receive funding.
The Green Climate Fund (GCF) has a big role to play. It’s expected to become the world’s main mechanism for securing and distributing finance to help developing nations tackle climate change.
The multi-billion dollar question is: Can it live up to this expectation?
Through the Compact of Mayors and parallel initiatives, cities are making ambitious commitments to curb emissions, adopting new greenhouse gas emissions measuring standards, and supporting the financing of low-carbon infrastructure.