In the last week, the world took two giant steps toward reaching a global agreement to fight climate change in 2015:

  • First, the United States and China – the two biggest emitters of climate-warming carbon dioxide – announced a landmark accord pledging to curb those emissions.

  • Second, the United States and Japan collectively pledged up to $4.5 billion for the Green Climate Fund (GCF), which will help poor countries adapt to the impacts of climate change and further reduce carbon pollution.

But there are some conditions attached, and the details in a White House fact sheet released on November 15 point to three potential speed bumps that could be perceived as contentious issues by some developing countries.

  1. The White House notes that the $3 billion U.S. pledge is not to exceed 30 percent of total confirmed pledges. That means that if collective pledges to the Fund fall short of $10 billion—the goal called for by UNFCCC chief Christiana Figueres—the U.S. could ultimately deliver less than $3 billion. Japan has a similar condition attached to its pledge. On the positive side, this helps push other countries—like the United Kingdom—to make ambitious pledges. It also pressures countries like Australia and Canada, which have the capability to pledge, but which have so far been reluctant to do so. On the negative side, it raises uncertainty about the total the Fund will receive, which could be a lot less if other countries don’t help the Fund get to the $10 billion goal.

  2. The fact sheet indicates that the United States intends to target a significant portion of its pledge to the GCF’s Private Sector Facility, a part of the Fund geared toward unlocking private sector resources to fight climate change. While the GCF Board has already agreed that in aggregate, a “significant” amount of the Fund’s resources will be channeled through the Private Sector Facility, attaching specific provisions to an individual pledge about where in the Fund money should flow may prove contentious at the level of the Fund’s Board. At the latest meeting of the GCF Board in Barbados, developing countries indicated that contributors should not pick and choose where their money flows, but should respect decisions made at the Board-level about how funds can flow to different activities in a balanced way.

  3. Although the White House says that the U.S. recognizes GCF should become a “preeminent, effective, and efficient channel” for global climate finance, it also spells out that the U.S. could put some of its $3 billion pledge into other multilateral climate funds, which include the Climate Investment Funds or the Global Environment Facility, depending on progress by the GCF Board in making final decisions over the next few Board meetings through 2015. This may not sit well with some developing countries, given that many see the GCF as the main vehicle for international climate finance going forward, an important step up from other climate funds in terms of balanced governance, with the number of seats on the Fund’s decision-making Board balanced evenly between developed and developing countries.

Japan and the United States joined a host of countries that have already helped expand the fund, bringing the total pledged to the GCF to about $7.5 billion ahead of a November 20 pledging meeting. Germany was the first to pledge, with a nearly $1 billion contribution, triggering France and Sweden to follow suit with respective pledges of $1 billion and $550million. Some developing countries, including Mexico and South Korea have shown tremendous leadership by pledging resources.

The financial commitments to the GCF and the U.S.-China accord send a strong signal that countries—both developed and developing—are willing to curb emissions and help communities prepare for the consequences of climate change. The Japanese and U.S. pledges also show that global climate action is a good investment, as both countries’ world-leading clean technology sectors are well-positioned to deliver climate solutions around the globe.

Ultimately, these are important caveats around the U.S. pledge, and could prove contentious at the GCF pledging meeting on November 20 or the first meeting of the Fund’s Board early next year. Observers should keep their eye on these conditions and their implications for the GCF in the coming months. While we welcome the ambitious U.S. pledge as a demonstration of leadership and commitment to an international climate agreement in 2015, the conditions attached to the pledge have to be communicated constructively to developing country partners to maintain trust and goodwill in the lead-up to the Berlin pledging session on November 20, as well as the fast-approaching UN climate negotiations in Lima this December.