November 13, 2015

First Investments Approved by Green Climate Fund
    by Robert Kropp

Eight climate change mitigation or adaptation projects—three in Africa, three in Asia-Pacific, and two in Latin America—mark the end of the Green Climate Fund's two-year launch period and the beginning of providing financing to developing nations. First in a two-part series.

SocialFunds.com -- Established at the COP16 climate change negotiations in 2010, the Green Climate Fund (GCF) was intended to have developed nations provide $100 billion in annual assistance by 2020 to climate change adaptation by developing nations. With further leverage provided by private investment, the GCF, if funded as originally intended, could help close the pronounced gap in climate change readiness by developed and developing nations.

Unfortunately, recent reports reveal that at present, the Fund has less than $6 billion at its disposal. Furthermore, the US has informed the board of the GCF that it will not deliver on its pledge of $3 billion by December.

So good news on the surface—that the board has approved the first eight investments in projects covering mitigation and adaptation measures—is countered somewhat by the fact that the amount of all the investments by the Fund totaled only $168 million. Hardly even a drop in the bucket when the aforementioned gap in climate change readiness was estimated in 2013 to be over a century.

The eight initial projects are as follows:
1. building wetlands resilience in Peru ($6.2 million);
2. modernizing climate information and early warning systems in Malawi ($12.3 million);
3. increasing resilience of ecosystems and communities in Senegal ($7.6 million);
4. climate resilient infrastructure mainstreaming in Bangladesh ($40 million);
5. a new fund designed to “catalyze a thriving off-grid solar ecosystem in East Africa” ($25 million);
6. an energy efficiency green bond in Latin America and the Caribbean ($217 million);
7. supporting vulnerable communities to manage climate-induced water shortages in the Maldives ($23.6 million); and
8. urban water supply and wastewater management in Fiji ($31 million).

The GCF board will also allocate another $195 million to the energy efficiency green bond, which could lead to an estimated $630 million in private investment. “The energy efficiency green bond...demonstrates how capital markets can move mainstream institutional funds into energy efficiency,” said Samy Ben-Jaafar of GCF.

“The approved projects showcase the transformative impacts that GCF has been designed to deliver,” GCF Board Co-Chair Henrik Harboe said.

However, due to the comparatively miniscule size of the investments, not all board members concurred with Harboe's optimistic view. “The projects were cleared in haste before the Paris meeting but the board is clear we have to present the real picture and not be self-congratulatory in our report to the countries at the conference,” an unnamed board member said. “The fact is the GCF has not really taken off as yet. The report for the meeting is being drafted.”

“On an annual basis, the $168 million we have committed now to the eight projects is really a very small amount,” the board member said.

In 2013, Indian Environment Minister Jayanthi Natarajan said, “What is wrong with the Global Climate Fund is that there is no money there.” Two years later, the root of the problem appears to remain unsolved.

Next: Nongovernmental organizations urge the GCF to deny accreditation to two scandal-plagued banks.