It is the first such decision the Green Climate Fund (GCF) has taken since its creation in 2010.

The GCF said on Thursday it had terminated its agreement with project developers after their failure to comply with its rules on environmental and social safeguards resulted in “legal breaches”.

In 2020, the fund committed $64 million to the programme run by the Nicaraguan government and the Central American Bank for Economic Integration (CABEI), which aimed to reduce deforestation in the UNESCO-designated Bosawás and Rio San Juan biosphere reserves.

The GCF said it had not paid out any funds before terminating its support for the project and no activities had yet taken place.

Community groups warned that the project was going to be carried out in reserves being deforested by a massive invasion of settlers that use violence against Indigenous people with impunity due to weak law enforcement action. They worried that the programme – which was to be overseen by state authorities – would worsen those conflicts and fail to protect the rights of Indigenous communities.

Amaru Ruiz, director of the Nicaraguan organisation Fundación del Río, which supported the affected communities, welcomed the decision by the GCF.

“This sets a precedent globally for the functioning of the fund,” he said. “It is also a recognition of the struggle and resistance of the Indigenous people and Afro-descendant communities of Nicaragua, and it shows that there is a window of opportunity to insist on the fact that climate projects must not violate human rights.”

Fuelling conflicts

The decision concludes a grievance process that has lasted nearly three years since a coalition of local and international NGOs filed a complaint with the GCF. They accused the project of fuelling a violent conflict between Indigenous communities and settlers who were grabbing land to farm cattle and exploit resources, as well as failing to consult local people.

The Bosawas Reserve in Nicaragua has been hit by illegal mining and logging despite protected status. Photo: Rebecca Ore

Independent legal observers have documented repeated attacks against Indigenous people in the area with dozens murdered, kidnapped or raped over the last few years.

An investigation by the GCF’s independent complaint mechanism deemed their concerns justified. It found a series of failures with the project that could “cause or exacerbate” violent conflict. The probe also highlighted a lack of due diligence on conflict risks and human rights violations and the absence of free and informed consultations with Indigenous communities before the project’s approval.

The GCF said it was unaware that the project was not in compliance with its policies at the time of its approval and that new evidence had subsequently been brought to light.

Late-stage consultation

Following the internal investigation, the GCF board agreed last July to suspend the project until it addressed local concerns and fully respected the fund’s policies and procedures. It effectively gave the project developers one last chance to fix the problems.

In an attempt to remedy the issues, CABEI carried out a consultation and engagement process with local communities between August and September. The project developer said a total of 5,550 people participated in 69 events across the region.

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But NGOs criticised it as a “sham”, saying participants were only provided with a brochure in Spanish – a foreign language for many Indigenous people – and were given limited freedom to debate the proposal.

“There’s been an increase in militarisation in the territory,” said Ruiz. “At least eight Indigenous community forest guards were detained after they had denounced the situation of encroachment on their territory”.

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Since 2007, Nicaragua has been ruled by an authoritarian regime led by President Daniel Ortega. His administration has been responsible for “widespread and systematic human rights violations that amount to crimes against humanity”, according to the United Nations Group of Human Rights Experts on Nicaragua.

CABEI detailed in a report sent to the GCF in October the steps that had been taken to make the project compliant with its rules. But the fund’s secretariat, its administrative arm, found the issues were not addressed to its satisfaction and decided to terminate its participation in the programme.

It communicated the decision to its board members at a meeting in Kigali, Rwanda, this week.

Lesson for the future

The GCF secretariat says it is now committed to working collaboratively with CABEI and the Nicaraguan government to “develop a clear strategy to conclude the project in an orderly and responsible manner”. That will include informing people on the ground and “managing the expectations” of the potential beneficiaries.

CABEI did not immediately respond to a request for comment.

Florencia Ortúzar, a lawyer at the Interamerican Association for Environmental Defense (AIDA), said she hoped the GCF would learn a lesson from this case.

“It is a reminder of the importance of including local communities from the very beginning of project design,” she told Climate Home. “The GCF policies and safeguards exist to prevent those regrettable situations and must be implemented rigorously and consistently.”

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At a meeting of the Green Climate Fund (GCF), China’s board representative Yingzhi Liu objected to six projects because their risk assessments highlighted the potential of forced labour use in the production of solar panels.

The programmes, which included efforts to help vulnerable communities in Sierra Leone, Benin and Laos cope with the impact of climate change, were eventually approved following a majority vote.

China manufactures four-fifths of all the world’s solar panels, having a near-total monopoly over the production of some silicon parts which form the core of solar cells.

Forced labour allegations

Beijing has faced multiple accusations of using forced labour practices in solar panel manufacturing. Concerns have focused particularly on the Xinjiang region, where the Chinese government has committed “serious human rights violations” against the Uyghur population, according to a UN report.

Xinjiang is the source of up to two-fifths of the world’s solar-grade polysilicon, a key raw material in the solar panel supply chain.

In 2021 academics at Sheffield Hallam University said that the biggest polysilicon producers in the region reported their participation in “labour transfer” programmes administered “in an environment of unprecedented coercion”.

The Chinese government disputes the presence of forced labour in its supply chains, arguing that employment is voluntary.

Chinese opposition

At this week’s GCF board meeting, China’s Yingzhi Liu said he opposed “the unsubstantiated allegations of so-called forced labour allegations in the solar supply chains” included in the project documents.

“It is unacceptable to have this sort of presumption of guilt and stigmatisation of the PV [photovoltaic] supply chain”, he added. “Chinese PV should be treated in a fair, just and non-discriminatory manner in GCF projects”.

Small islands struggle to get help from UN’s flagship climate fund

None of the project documents seen by Climate Home News mentioned China or Chinese companies directly.

Potential forced labour risks in relation to the supply chains of solar panels featured in the ‘environmental and social action plans’ that accredited entities are required to submit in their funding applications. The assessment allows project developers to rate potential risks and suggest ways to minimise them.

Laos project

Among the proposals the Chinese board member took issues with was a project by Save the Children Australia to strengthen the climate resilience of the health system in Laos, one of Asia’s poorest countries.

The documents submitted to the board said that Save the Children “understands the risk of forced and child labour with procurement of these systems [solar panels]” and will manage the risk through the procurement process.

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Despite regarding the proposal as “good” overall, Liu opposed it for “singling out so-called forced labour” in the solar panel supply chain. The same happened with five more projects.

“They are all good projects with a high impact that will bring benefits,” he added at the end of the session.

Technical requirements

In response to Liu’s remarks, a representative of the GCF told board members that the fund “requires accredited entities to undertake due diligence to make sure there is no forced labour in primary supply chains”, in line with the performance standards set out by the International Finance Corporation – an arm of the World Bank.

The GCF added that all references made to forced labour are “technical” and “have no political dimension”. It also highlighted that the same risk assessments are applied to all supply chains and are not limited to the solar energy sector.

Climate Home found forced labour risks mentioned in projects not involving solar energy submitted to this week’s board meeting.

A proposal to increase climate-friendly rice production in Thailand included forced labour among the potential risks. The project proponents wrote that “although forced labour or child labour is not reported to be a serious problem in rice farming, measures need to be taken to inhibit these practices”. China did not object to that proposal.

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The GCF was set up in 2010 to distribute money from rich countries to poorer ones to help them cut emissions and adapt to climate change.

The fund is supposed to pay particular attention to the needs of small islands as well as the world’s poorest countries (LDCs) and African countries.

Small island officials told the authors of a new ODI report that getting money from the GCF was preferable to getting it from other sources like the World Bank, International Monetary Fund or the private sector.

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But, they said that GCF money was handed out too slowly, the process of applying is too difficult for nations with small civil services and a number of requirements discriminate against smaller nations.

Emily Wilkinson is the lead author of the report, which was shared exclusively with Climate Home. She said that “small island developing states really value the GCF, there’s nothing like it”.

But, she said, “the fact that a third of the proposals of all countries that we spoke to have been in the pipeline for over three years is quite staggering”.

Beneficiary metrics

With funding from rich nations stagnating, the GCF is looking to do as much as it can with its limited money. That’s made things harder for small islands.

Colin Young is a former government official from Belize and is now the head of the Caribbean Community Climate Change Centre, which has worked with the GCF on projects in Barbados.

He told Climate Home that when they apply for projects, the GCF is increasingly telling them they need to get the cost per person helped down.

ODI report author Emily Wilkinson told Climate Home that one small island was told by the GCF that “the investment figures are very large compared to the beneficiary population and the climate impact”.

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The GCF’s investment criteria lists “impact potential” as one metric. As an example, it mentions “number of beneficiaries, number of people affected by climate impacts”.

As small island nations tend to have small populations, the number of beneficiaries is often in the low thousands.

"How do we say in a small country that is in the middle of a hurricane belt, droughts and floods - where people are impacted on the frontlines of climate change - and say that your project we have difficulty funding it because each person is going to get too much per capita from the resources?" Young asked.

Dominica was devastated by a hurricane in 2019. Its environment minister Cozier Frederick said that "adaptation and resilience funding needs are naturally higher for small island states compared to projects in other developing nations".

"Consequently," he said, "there is constant push back from the GCF on costs when applications are submitted".

A GCF spokesperson told Climate Home that number of beneficiaries was one of its "core indicators" but that there was no minimum threshold that has to be met.

Grants vs loans

The report found that one thing small islands like about the GCF is that it offers grants as well as loans.

But, with funding scarce, the report found the GCF is increasingly looking more to loans, so it gets its money back and can lend it out for another projects.

Renewable energy projects tend to be funded through loans, as the solar and wind panels generate electricity which can be sold, generating money to pay back the loan.

But, while that might work for a big solar farm in a large middle-income country like China, not every renewable energy project will make money.

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Young said that for small islands, solar panels are often more about resilience to weather extremes than about reducing emissions.

For example, he said, solar panels can provide back-up energy to hospitals or water pumping stations when a storm knocks out the fossil fuel-powered electricity generator. But those solar panels won't make enough money to pay back the cost of installing them.

He said that the GCF's "increasing desire" to use loans not grants comes from the fact that the needs of developing countries "are clearly much greater than the resources the GCF has".

Nevertheless, he said small islands and the least developed countries "should not be lumped into the category with countries that clearly have less vulnerabilities in terms of size and geography and population".

Getting better

While problems remain, ODI's report found the GCF has taken measures to help small islands get funds.

In particular, small islands appreciated a GCF programme which gives each government $1 million to train staff and engage stakeholders to access GCF funds without relying on private consultants.

One anonymous Pacific interviewee described this as "super important" while a Caribbean official said it "has certainly helped us".

Most of the report's fieldwork was done before Mafalda Duarte took over as head of the GCF in August 2023.

A GCF spokesperson said the GCF gives half its funding to adaptation and half of that goes to LDCs, Sids and African states.

They added that the GCF is a "strong partner for Sids because of the eligiblity challenges small island developing states face with other sources of finance".

They said that there are "processes in place ensure that once a project is brought to the Board for approval GCF is confident of its impact potential. Processes are rigourous for that very reason."

They acknowledged that the GCF must speed up and simplify its process and said it had an "ambitious reform agenda".

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As contributions from traditional donors flatline, the Green Climate Fund’s new leadership is looking to private sources to make the money stretch.

Japan and Norway were the only major donors to announce new contributions at a pledging conference for the Green Climate Fund (GCF) in Bonn, Germany, on Thursday. They offered less money – in US dollar terms – than in the previous fundraising round in 2019.

Other potential big contributors like Sweden, Italy and Switzerland, flagged their intention to make pledges in the coming weeks, saying they were not yet ready to do so for internal budgetary reasons.

Germany, the United Kingdom and France made pledges ahead of the conference.

The United States, which did not provide any money in 2019 under then-President Donald Trump, failed to announce any contribution citing “ongoing uncertainty in our budget”.

Australia said it would rejoin “with a modest contribution” to the fund from which it had withdrawn under a previous right-wing government in 2018. The exact figure is expected to be announced before the end of the year.

Mafalda Duarte, the Green Climate Fund’s executive director, hailed the fundraising as a “success” during a press conference. Contributors “recognise that addressing the climate crisis is a shared responsibility and that developing nations are not alone in this fight”, she said.

But campaigners told Climate Home News they were disappointed by the pledges. “It is just unacceptable,” said Erika Lennon, who monitors the GCF for the Center for International Environmental Law (CIEL). “The climate crisis has only gotten worse and it is ridiculous countries are not meeting that urgency with the level of finance needed”.

Who is contributing?

A critical financing mechanism of the Paris Agreement, the GCF was set up to channel money needed by poor states to meet their targets to reduce carbon emissions and adjust to the effects of climate change.

It is seeking donations to fund its activities between 2024 and 2027, hoping to exceed the $10 billion it raised in the previous fundraising round four years ago.

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Germany is set to become the fund’s biggest donor with a €2 billion ($2.2 billion) pledge – 30% higher in US dollar terms than its previous contribution.

It is followed by the United Kingdom with £1.6 billion ($2 billion) – slightly higher than its 2019 pledge – and France with €1.61 billion ($1.75bn), a 4% cut in US dollars given the less favourable exchange rate.

Once the fund’s biggest contributor, Japan has not raised its financial commitment from four years ago, meaning a nearly 19% decrease in real terms.

The US, which is a co-chair of the GCF’s board, has “strong and steadfast confidence” in the fund, according to a statement read out to the attendees in Bonn on behalf of Alexia Latortue, Assistant Secretary for International Trade and Development.

But no financial commitment is forthcoming. “The US is currently working on its announcement but can’t pledge today given ongoing uncertainty in our budget process,” she added.

Joe Thwaites, a senior advocate at the Natural Resources Defense Council, said it was a “missed opportunity”, and there were now “great expectations the Biden administration will make a pledge no later than Cop28”.

Lower ambition

A stagnation in overall contributions may force the GCF to rein in its ambitions.

Current and expected pledges put the fund on course to only marginally exceed $10 billion, which was labelled as a “status quo” or “low” scenario in an internal strategy document seen by Climate Home. That is contrasted with a mid-level target of $12.5 billion and a “high” scenario of $15 billion.

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The different levels of ambitions have real-world significance.

In the “status quo” scenario, the bulk of resources would be taken up by projects already in the pipeline – the document says – with new programming only achievable through “significant trade-offs”.

Under a “mid” scenario, the fund plans to extend early warning systems to four more countries, help five million more smallholder farmers and develop climate-friendly food systems and ecosystems.

In the “high” scenario, the fund would help developing countries’ financial systems work towards a green transition and promote clean technology innovation, the document says.

Liane Schalatek from the Heinrich Böll Foundation told Climate Home that this is the “wrong signal” to send with only a few weeks to go before Cop28. “If we are staying at 10 billion it is an effective reduction because of the significant inflation that we have seen since the last fundraising. This is simply not good enough.”

Calls for other money flows

The lack of more commitment from wealthy governments may also deal a blow to the new vision for the fund outlined by Mafalda Duarte less than two weeks ago. The executive director wants the fund to have a capitalisation of $50 billion by 2030, up from $17 billion today.

A key pillar of the plan is the ability to draw in dollars from the private sector. “Public resources will not be enough”, said Duarte on Thursday. “They need to be enablers of a much larger flow of investment.”

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Major donors are increasingly calling for an expansion to the donor base beyond the countries historically defined as “developed”. Germany pointed the finger, in particular, at the oil-rich Gulf States and China, saying they had a “responsibility” to pitch in with contributions.

“We accept our responsibility and do our fair share,” said federal development minister Svenja Schulze after the conference. “On this basis, we can also ask others to do their fair share too.”

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Yesterday, French finance minister Bruno Le Maire announced his nation would give €1.61 billion ($1.75bn) to the organisation’s four-yearly fundraising round.

While that’s slightly more in euros than France gave last time in 2019, the changing exchange rate means it is less in US dollar terms.

With the UK also offering only a slight boost to its funding, pledges so far total 15% more than in 2019. If other contributors match that trend, the GCF will raise $11.5 billion this round, short of the $12.5 billion in its middle ambition scenario.

Big potential donors Japan, Sweden and Norway are yet to pledge. A commitment from the US, which did not give any money in 2019 and only delivered two-thirds of its 2014 pledge, could be game-changing.

Constraining ambition

An internal GCF strategy document seen by Climate Home News lays out what that money means on the ground.

While a middle level of funding could help 30 million smallholder farmers adopt low-emission and climate-resilient practices, a "low" or "status quo" scenario of $10 billion can only help 25 million.

A middle scenario could conserve 30 million hectares while a low one would protect just 26 million. The difference is an area the size of Switzerland.

With "high" funding of $15bn, the figures are 32 million farmers and 32 hectares respectively.

So far, Germany is the only major donor to increase its pledge in line with a "mid" scenario, although not with a "high" level of ambition.

Several nations like Spain chose to announce their GCF pledges at the United Nations General climate ambition summit in New York yesterday.

Barbados's prime minister Mia Mottley told this gathering that the GCF fundraising round was "critical" as "it has still work to bridge the gap in a significant way for many countries".

Simpler and bigger

The summit was also where the GCF's new head Mafalda Duarte unveiled her planned institutional reforms after taking over from unpopular previous leadership.

She said that when the fund was set up in 2010, governments wanted it to provide "simplified access tailored to country needs".

But, she said that it had become "one-size fits all" and "more complex with high transaction costs".

The Portuguese banker said she would overhaul the process for institutions to apply for accreditation to access project funds, a lengthy and bureaucratic process.

This is likely to be welcomed by Mottley. Speaking before Duarte in New York, she said that the GCF "had had problems in terms of the complexity of its governance and that must be addressed".

Egyptian climate negotiator Mohammed Nasr told Climate Home that simplifying this process "has been a continuous request by several developing countries, as we always hear complaints on how complex the process is".

Duarte said she wanted to "significantly accelerate" the process of reviewing and approving projects.

50 by 30

She added that she wanted the fund to have a capitalisation of $50 billion by 2030, up from $17 billion today.

To reach this target, she said would focus more on bigger projects, covering whole countries, regions and sectors and maximising private sector investments.

Liane Schalatek, who monitors the GCF for the Heinrich Böll foundation, told Climate Home that, unless governments become far more generous, reaching this target would involve shifting emphasis from grants to loans.

She said she had "serious concerns" about how much opportunity local communities and civil society will get to shape the big projects that Duarte envisions.

This article was corrected on 21/9/23 to correct the fund's current capitalisation from $7 billion to $17 billion and to say that the US has delivered two-thirds of its 2014 promise, not one-third.

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An investigation by the fund’s independent complaint mechanism found a series of failures that could “cause or exacerbate” violent conflict between indigenous people and settlers.

The Green Climate Fund (GCF) will not provide any money to the project managed by Nicaragua’s authoritarian regime until it fully complies with the fund’s rules, its board ruled at an annual meeting in July.

This marks the first time the GCF board puts on hold an approved project over human rights concerns. The decision comes at the end of a process that took more than two years since a coalition of local and international NGOs filed a complaint.

But the fund stopped short of entirely scrapping the project, as local activists requested. The Nicaraguan government now has the chance to make it compliant with the GCF rules.

A GCF spokesperson told Climate Home that the matter “has received, and continues to receive, its highest attention”. They added that the fund reserves the right to exercise its legal rights in case the issues are not addressed to its satisfaction.

Human rights abuses

The project, which was approved in 2020, aims to reduce deforestation in the Unesco-designated Bosawás and Rio San Juan biosphere reserves in the Caribbean Region of Nicaragua.

The region is gripped by an increasingly violent conflict between indigenous communities and settlers, who are grabbing land to exploit the forest’s resources and farm cattle.

Independent legal observers have documented repeated attacks against indigenous people in the area with dozens of people murdered, kidnapped or raped over the last few years.

A report by the internal redress body said the complainants’ concerns that the project may fuel further violence were justified.

It also found the project had been approved even though it did not comply with a series of GCF’s policies and procedures. Investigators highlighted the failure to carry out due diligence on conflict risks and human rights violations and to conduct free and informed consultations with indigenous communities before the project’s approval.

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These failures “may adversely impact the complainant(s) and other indigenous communities in the project areas”, the report said.

A GCF spokesperson said the fund was not aware that the development of the funding proposal was not in compliance with its policies at the time of the project’s approval. New evidence brought to light subsequently through the independent investigation showed that some of the information presented by the project proponent, as part of its due diligence, was not accurate or correct, the GCF added.

Bittersweet ruling

Nearly a year after the investigation was concluded, the board has now requested the GCF Secretariat, its administrative arm, to put the project on hold until it respects the fund’s policies and procedures.

The ruling’s summary does not specify if all of the issues raised through the complaint mechanism will need to be addressed.

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The result is bittersweet for the groups behind the complaint.

Florencia Ortuzar, a lawyer at the Interamerican Association for Environmental Defense (AIDA), says that, even if the outcome may ultimately be positive, the decision gives no clarity as to what process the Secretariat will follow. “We do not know which specific issues of non-compliance will be looked into nor how they will aim to fix them”, she added.

Calls for cancellation

Amaru Ruiz, director of the Nicaraguan organisation Fundación del Río, says the ruling validates indigenous populations’ concerns, but he believes the programme should be axed rather than simply improved.

“A project that violates human rights, consultation processes and a series of procedures should be cancelled”, he told Climate Home News. “The problems are substantive, not just formalities”.

The GCF Secretariat will now need to work with the Nicaraguan state apparatus and the Central American Bank for Economic Integration, its funding partner on the project, to resolve the issues.

The government of Nicaraguan president Daniel Ortega has been accused of widespread human rights abuses. Photo: Presidencia El Salvador

The government led since 2007 by president Daniel Ortega has been responsible for “widespread and systematic human rights violations that amount to crimes against humanity”, according to the United Nations Group of Human Rights Experts on Nicaragua.

Ruiz claims the Nicaraguan regime does not have the political goodwill to play within the rules. “It is only after the financial resources, so I believe it will try to show on paper that the project is now compliant even if that is not the case”, he added. “We will see if the Secretariat acknowledges its previous mistake and will make sure regulations are properly applied now”.

Lack of transparency

The complainants’ worries are compounded by what they described as a lack of transparency during the lengthy redress mechanism.

Investigators concluded the reviews in August 2022 but their findings have only been made public now following the completion of the complaint process. The GCF’s board members discussed the report during three separate meetings before making a final decision nearly two weeks ago.

The discussions happened behind closed doors and public updates on the case were limited. This prompted some complainants to criticise the process as “unfair, non-transparent and deficient”.

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Aida’s Ortuzar told Climate Home News “this is especially concerning as it is the first time a complaint reached the board and it sets a worrisome precedent”.

The report by the redress mechanism also raised concerns over the way the GCF relies heavily on information submitted by project proponents to make decisions on whether to fund them.

“This leaves the GCF extremely vulnerable to policy and safeguards non-compliance that can result in huge reputational risks to the fund”, the investigators wrote.

The article was updated on 27/07 to include comments from the Green Climate Fund received after publication

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Announcing the allocation at Canada’s embassy in Brussels, environment and climate minister Steven Guilbeault implied he would like to have given more but said the pledge was a “significant step forward” nonetheless.

The GCF was set up in 2010 to distribute money from wealthy countries to climate projects in low and middle-income countries. It has spent around US$12bn so far funding climate projects but has recently warned of cutbacks because of a lack of resources.

#LIVE now from Brussels: Minister Guilbeault announces $450M to @theGCF, the world’s largest climate fund. Learn how this will boost global climate initiatives. https://t.co/a7i2y0XGrX

— Environment Canada (@environmentca) July 12, 2023

Guilbeault confirmed at the Brussels press conference that the money will be taken from C$5.3 billion (US$4bn) of climate finance promised at Cop26 in Glasgow and will be spread over four years from 2024 to 2027.

Not the finance minister

At the press conference, Guilbeault was asked if the C$5.3bn (US$4bn) of climate finance that this GCF allocation is part of was Canada’s fair share of the global finance commitment. Analysis by the Overseas Development Institute suggests it falls slightly short.

He replied: “Would I like Canada to put even more money on the table? I’m the environment and climate change minister, not the finance minister unfortunately. But I think we can always do better”.

While Guilbeault was a climate campaigner at organisations like Greenpeace for 30 years before joining the government, the finance minister, Chrystia Freedland, has been accused of ignoring the climate crisis.

But, Guilbeault said, it was a “significant step forward”. The pledge is 50% up from Canada’s last GCF pledge in 2019. But that is a low bar as the 2019 pledge was the same as the pledge the right-wing Canadian government of Stephen Harper made in 2014.

The pledge is part of the GCF’s replenishment round, where wealthy governments promise it money every four years. Canada is only the third major country to pledge this round, following a $2.2bn pledge from Germany and $0.2bn from Austria. Both Germany and Austria’s donations are more generous, when taking population into account.

Canada has previously given about half of its funding to the GCF in the form of loans. France is the only other country to have donated through loans, with most countries giving grants, which do not need to be paid back.

The announcement received a cautious welcome from Canadian campaigners. Pratishtha Singh from Climate Action Network Canada said: "As a wealthy and high-polluting country, Canada needs to show solidarity with the most vulnerable communities and ecosystems battling the climate crisis by putting money on the table."

She added: "Today’s announcement is an encouraging sign – but it must not stop here. Canada must increase climate finance to its fair share of the global effort and convince other wealthy countries to scale up their own contributions to the GCF ahead of the pledging conference in October."

But Catherine Abreu, the Ottawa-based founder of Destination Zero, told Climate Home: "While it's a good faith move for Canada to increase its GCF pledge by 50%, the amount of money Canada has put on the table falls short of the call on donor countries to double their investments - we can do more."

Green Climate Fund pledges by country (Photo credit: Joe Thwaites/NRDC)

Joe Thwaites, climate finance analyst at the US-based National Resources Defence Council, said the 50% increase "raises the bar for other countries that have yet to make a pledge" but that still "on both a per capita and percent of GDP basis, Canada's G7 peers Germany, France and the UK have contributed much more".

Abreu said that, as the announcement was on the same day as Canada co-hosted a ministerial climate meeting, it enabled Canda to encourage fellow donor countries "to step up and provide the finance that's necessary to unlock climate ambition in advance of Cop28".

US president Joe Biden said last April his government would provide $1 billion to the GCF - the US first contribution in six years. But that is not part of the new funding round and only goes to partially deliver on a pledge made almost a decade ago.

This article was updated on 13th July to include Catherine Abreu's comments

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As the American co-chair of the board Victoria Gunderson banged her gavel down yesterday, the boardroom in South Korea applauded and whooped. Behind Gunderson, two advisers to the Pakistani co-chair Naumann Bhatti high-fived.

Board members described the process as characterised by “sleepless nights and hunger pains”, as the board’s twelve developing country and twelve developed country members took a year to negotiate the GCF’s plan for 2024 to 2027.

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Developed country governments pushed for the fund to attract more private finance, rather than money from their taxpayers, and for the most vulnerable countries and communities to be prioritised.

Developing country governments called for wealthy governments to provide more public money, while China pushed back against distinctions between more and less vulnerable developing countries.

The Green Climate Fund was set up in 2010 to distribute money from wealthy countries to climate projects in low and middle-income countries. It has spent around $12bn so far.

Need more money

The GCF gets most of its funding from replenishment rounds when developed governments pledge to give it money for the next period.

These happen every four years and the latest one is happening now, ahead of a pledging conference in the German city of Bonn in October.

African negotiators raised concerns that the GCF is planning based on an assumption that there will not be a major increase in its funding, despite the worsening climate crisis across the world.

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The strategy assumes the GCF will be able to give out about $2-3 billion a year, compared to around $2 billion in the previous three years.

This would be somewhere between what the GCF describes as a “status quo” and “middling” scenario.

A “high scenario” would involve about $3.75 billion a year, according to internal GCF documents seen by Climate Home.

Egypt’s board member Wael Abdoulmagd told the board meeting: “If we are going to successfully contend with the climate crisis, it is imperative that the GCF be in the position to keep up with the times”.

He added that the amount of help the GCF is planning to give out is “stagnant” and said that “raises a lot of concern”.

South Africa’s Tlou Emmanuel Ramaru said that the GCF needs to raise ambition and that, in this “decade of implementation”, this “has to be really demonstrated…by the increase of the programming target”.

Private sector

But Sweden’s Leif Holmberg said that “the finance that is flowing in from the donors will not be enough to combat climate change”.

Because of this, he told the board that the GCF should “play a catalytical role” in mobilising “both public and private capital”.

Developed countries wanted a greater focus on private capital, which they called “greening of the financial system” in the strategy.

The UK’s retreat from climate leadership is not in its national interest

It appeared as one of five key objectives in an early draft but was dropped from the final version.

Switzerland’s Stefan Denzler said this had been “one of the sacrifices made on the altar of compromise”.

Last year, wealthy governments pressured the GCF to seek more funds from rich individuals and big businesses, taking the burden away from governments.

Who pays in and out?

Developed governments have pushed too for bigger and wealthier developing country governments to join them in funding the GCF.

On a recent visit to China, US finance minister Janet Yellen said: “I believe that if China were to support existing multilateral climate institutions like the Green Climate Fund and the Climate Investment Funds alongside us and other donor governments, we could have a greater impact than we do today.”

The GCF’s governing instrument says that all developing countries are eligible for funds, although money to adapt to climate change should be prioritised for countries “that are particularly vulnerable to the adverse effects of climate change, including [least developed countries], [small island developing states] and African States”.

Green Climate Fund backs scheme financing farming corporations accused of destroying forests

Although there was not a serious push to change this, developed countries pushed for prioritising funds. The UK’s Sarah Metcalf said more funds should go to “fragile and conflict-affected states who struggle to access funds despite being on the frontline of the climate crisis” and called for a “targeted approach” on adaptation.

Switzerland’s Stefan Denzler thanked South Korea for hosting the board meeting, adding: “I’m amazed again by not only the friendly people, professional people in this country but also the level of development achieved – sophisticated facilities, hospitality, the general level of development in a country which according to the UNFCCC [the UN’s climate body] is a developing country”.

The UNFCCC’s list of developed and developing countries was drawn up in 1992 and South Korea’s average wealth has tripled since then.

But China’s representative Yingzhi Liu argued back that “all developing countries are eligible to access GCF resources. This is clearly stipulated in the GCF governing agreement and developing countries should not be differentiated”.

The post After “sleepless nights”, governments strike deal on Green Climate Fund strategy appeared first on Climate Home News.

The Green Climate Fund (GCF) approved the project at its board meeting on Tuesday despite opposition from civil society campaigners that accused the “highly dangerous” programme of greenwashing companies linked to deforestation.

The money will support the activities of the &Green Fund, a Dutch investment vehicle that aims to stop deforestation in the supply chains of products like livestock, palm oil and rubber.

The fund claims support from the GCF will avoid emissions of 339m tons, about as much as Poland emits in a year.

Launched in 2017, it counts among its existing backers the Norwegian and UK governments, the Dutch development bank FMO and consumer giant Unilever. Target countries include Brazil, Cameroon, Colombia, Ecuador and Indonesia.

The fund says it offers loans to producers on the condition that they adopt sustainable practices. But campaigners have criticised it for financing companies accused of destroying the environment.

Beneficiaries questioned

Brazilian meat processing giant Marfrig Group is among the seven companies currently listed in the &Green portfolio.

Investigations by journalists and campaigners have repeatedly found evidence of illegal tree cutting to make way for cattle grazing in Marfrig’s supply chain.

Last year the Inter-American Development Bank shelved plans to lead a $200 million financing round for Marfrig after talks reportedly broke off over environmental targets.

The UK’s retreat from climate leadership is not in its national interest

With support from the Dutch fund, the Brazilian company aims to rid its operations in the Amazon of deforestation by 2028.

But its commitment has come under question. Cassie Dummett from Global Witness told Climate Home that, despite Marfrig’s targets, civil society organisations report that the company is exposed to deforestation. “Time and again voluntary commitments by major meatpackers operating in the Amazon and Cerrado have been broken,” she added. “In our view, it is not lack of finance that is delaying the cleaning up of these dirty supply chains, it is lack of will.”

A recent Guardian investigation said Marfrig continued to be involved in ‘cattle laundering’, a practice in which animals from a deforesting ranch are moved to a supposedly ‘clean’ farm before slaughter, disguising their origin.

Marfrig said it condemns cattle laundering and any other irregularities.

The &Green Fund has also supported two Indonesian companies that have been accused of growing palm oil and rubber in protected forests.

The fund told Climate Home that it works with "willing leaders to establish credible, accountable transition plans, applying best-practice international safeguards including compensation for historic damage".

It added that "in the case of non-compliance [to no deforestation commitments], &Green will cancel the contracts leading to acceleration of the loans, early repayment and penalties".

'Paying the polluters'

Florencia Ortuzar, a lawyer at the Interamerican Association for Environmental Defense (AIDA), says the programme runs contrary to the GCF's principles.

“These companies should have changed their ways years ago, because of laws, regulations and national policies. But they haven’t,” she added. “It is not reasonable to believe the problem will stop by paying the companies behind it. It is paying the polluters instead of having them pay”.

‘Historic milestone’: Ecuador nears vote to keep Amazon oil in the ground

Ortuzar added that climate finance is scarce and this is not how it should be used. The GCF has warned that, unless governments give it more money, it will have to reject or delay projects.

Another point of contention is whether the &Green programme aligns with one of the GCF's core concepts: the paradigm shift.

Projects seeking UN funding need to demonstrate how they contribute to long-lasting change toward low-carbon and climate-resilient sustainable development beyond a one-off investment.

Paradigm shift

In its submission to the GCF, the Dutch bank FMO said support from the UN fund would unlock up to $600 million in additional investment from the private sector.

It claimed private investors currently consider the sector too risky and would be more willing to provide money if a “reputable source of debt financing”, like the GCF, absorbed any potential initial losses.

The GCF will provide a loan worth $180 million and a grant worth $9.35 million. The project's proponent said this support could change how financial markets as a whole approach agriculture and supply chain finance.

Comment: The EU lacks ambition on Cop28 renewable targets

But an independent technical review of the proposal, commissioned by the GCF, cast some doubt over the 'paradigm shift' potential. "

The transactions in the current &Green Fund portfolio are with major agricultural market players who typically do not struggle to access finance for overall operations," the report said. "It is not clear whether the incentives are in place for further market uptake by other sources of finance".

Despite finding that "challenges remain", the advisors endorsed the proposal.

Conflicting views

In a statement prior to the approval, a coalition of NGOs said the &Green Fund is not a "huge investment in transformative or paradigm-shifting climate action, but rather in business-as-usual practices that have proven to undermine environmental integrity, effectively greenwashing the very practices that must stop".

&Green told Climate Home it gives funding that is otherwise not available in the financial markets. "By providing funding earmarked for the transformation, &Green empowers the changemakers in these companies to direct funding into projects to include smallholders, sustainably improve production and protect forests that would otherwise not happen", it added.

The GCF supports developing countries to cut emissions and adapt to climate impacts. It is funded by government money, mainly from developed countries.

The GCF has not responded to a request for comment at the time of publication.

The article was amended on 12/07/23 to add comments received after publication from the &Green Fund and from Global Witness

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Joe Biden made the commitment as he hosted a virtual meeting of world leaders on Thursday to spur high-level leadership to limit global warming to 1.5C.

This is the first time since 2017 the US has pledged cash to the Green Climate Fund (GCF), which supports developing countries to cut emissions and adapt to climate impacts.

The move was part of a broad call to action to the Major Economies Forum on energy and climate, a group of more than 20 high-emitting developed and developing countries which account for around 80% of global greenhouse gases.

US brings cash

Biden promised to ask Congress to approve an additional $500m over five years for the Amazon Fund to end deforestation by 2030.

He pledged to raise $200m from public, private and philanthropy sources for cutting methane emissions in developing countries and urged nations to scale up carbon capture and removal technologies.

The US president called on leaders to join a collective pledge for half of all car sales and at least 30% of medium and heavy-duty vehicles to be zero emissions by 2030.

UN’s Green Climate Fund too scared of risk, finds official review

“It’s a really big deal,” Joe Thwaites, a climate finance campaigner at the Natural Resources Defense Council, told Climate Home News of Biden’s pledge to the GCF.

“Over the last few years, the fund has been right up against the limits of its resources. It has been approving money to projects as soon as it is receiving it from donors and has had to hold back projects because of a lack of money,” Thwaites explained.

“This $1bn is significant because it will allow the GCF to unlock more money for communities in need,” he added.

The move, he said, will boost US credibility at the fund, after its ability to provide climate finance had been put into doubt.

As I address the Major Economies Forum on our climate challenges, let me make a few things clear:

We are committed to following the science.
We are determined to strengthen our actions.
We will do what it takes to limit global warming to 1.5 degrees Celsius.

— President Biden (@POTUS) April 20, 2023

Climate finance laggard

However, as the GCF is calling on countries for a third round of funding pledges to replenish the fund, the US is yet to deliver on its first commitment.

The $1bn announcement only accounts for half of the $2bn the US owes the fund after Donald Trump reneged on a $3bn pledge made under Barack Obama almost a decade ago. Since then, European and other donors have doubled their pledges to the fund.

“The question is: can the US clear another billion dollars and finally deliver on the pledge?” Thwaites said. Other donor countries will closely watch what the US will bring to a GCF pledging conference in October, he added.

Keeping 1.5C within reach

The leaders’ meeting was framed by the findings of a report by the International Energy Agency which outlined steps to take to keep the 1.5C goal within reach.

It highlights four key pillars: decarbonising the energy sector, ending deforestation, tackling non-CO2 emissions such as methane, and accelerating the deployment of carbon capture and storage and removal technologies.

UN: World set to blow through 1.5C carbon budget in 10 years

Alden Meyer, senior associate at think tank E3G, told Climate Home that the US was seeking to create more coalitions of the willing to advance action in key sectors – a model which has proved successful in galvanising support to cut methane emissions under the Methane Pledge.

“There are some good pieces,” said Meyer, “but it’s not comprehensive,” citing the lack of initiatives to decarbonise the energy sector.

That’s a gap the EU intends to fill. EU Commission president Ursula von der Leyen proposed to launch an initiative for setting global targets for energy efficiency and renewable energy by Cop28. “These targets would complement other goals,” she said.

Betting on carbon capture

Biden called on countries to speed up the deployment of carbon capture and removal technologies by joining the ‘Carbon Management Challenge’.

This includes capturing carbon from specific polluting plants or directly from the atmosphere and storing it in geological formations, in the oceans or in products.

The White House said the initiative will develop a suite of announcements and goals that will be unveiled at Cop28.

US bets big on carbon-sucking machines

Meyer said US officials are considering setting a collective target for the amount of carbon being stored annually. The EU Commission has already proposed a binding target for the union to store 50 million tonnes of CO2 per year by 2030.

Scientists say carbon capture and removal technologies are needed to limit global warming to 1.5C by counter-balancing residual emissions from hard-to-abate sectors. How much of it is needed depends on how quickly countries reduce emissions and reach net zero.

The IEA estimates that projects are needed to capture around 1.2 billion tonnes of CO2 by 2030 to meet global climate goals – a 30 fold increase on 2021 levels.

However, such technologies remain underdeveloped and face technological, economic and environmental barriers. There’s also uncertainty on the risks of deploying carbon dioxide removal at large scale.

Saudi Arabia, Russia push for more World Bank money into carbon capture

Campaigners have warned that focusing on techno-fixes risks distracting from pressing carbon-cutting action and impede the transition to clean energy sources.

Steven Feit, a senior attorney at the Center for International Environmental Law, told Climate Home it was “very concerning” that carbon capture was increasingly being used “to justify the construction and expansion of the fossil economy” ahead of Cop28 hosted by oil and gas producer UAE.

Feit cited a major scientific report showing that carbon capture was one of the most expensive technologies with little mitigation potential.

The post US pledges $1 billion to Green Climate Fund amid call to keep 1.5C in reach appeared first on Climate Home News.

Archi Rastogi, lead author of the independent report, said there were clear risks in implementing climate-related projects such as new infrastructure. But projects could also result in maladaptation, where instead of helping communities adapt to climate change they actually make the effects worse, and may have more complex fiduciary risks.

Not recognising or properly managing these made the organisation too cautious, he said. 

Developing nations have long pushed the fund to take more risks and provide grants to smaller, more innovative schemes that other funds won’t back.

In 2016, the GCF board agreed that it should “take on risks that other funds/institutions are not able or are willing to take” and adopt a “high level of risk appetite”.

Projects gone wrong

The Green Climate Fund was set up in 2010 and formed part of a compact between poor and rich countries that was the basis for the Paris climate agreement in 2015. It has spent around $12bn so far funding climate projects around the world.

But although the latest review accused it of being overly cautious, some of the fund’s investments have been controversial and former employees have raised concerns about the GCF’s project vetting.

In 2021, concerns were raised about a $66 million flood management project financed by the GCF in Samoa, after river walls failed to protect a hotel from flash flooding. 

The fund was also recently in the spotlight for greenlighting a Nicaraguan project which Indigenous people have accused of exacerbating violence with settlers invading their land. At its latest meeting, the board deferred a decision on the complaint until July. 

Speaking at the board meeting, outgoing executive director Yannick Glemarec accepted that the GCF was responsible for projects that it was financing along with other organisations, saying that, when it comes to a violation of Indigenous people “it’s irrelevant where the money comes from”.  

But he said the GCF was a very large international financial institution with “maybe a third” the level of risk of a social impact investor, and suggested it could take on more. “It’s extremely important to ensure that your risk management system will keep pace with your ambitions,” he said.  

Notable progress

The review team analysed reams of documents, carried out case studies and interviewed more than 700 people around the world, and found the GCF had made “notable progress” in its governance procedures since 2020.  

It found no “insurmountable” challenges in the way the GCF is run, saying the organisation managed to effectively carry out its key roles of accrediting institutions to apply for funds and approving funding proposals. 

Andreas Reumann, head of the GCF’s independent evaluation unit, said it shows that the fund plays a “central and successful role in global efforts to combat climate change” and has responded positively to recommendations for improvement.  

This paints a more favourable picture than a 2021 staff survey which found that 40% of staff had a negative impression of senior management while just 24% had a good impression. Some people within the organisation have also been critical of the way the board responds to feedback.

The organisation has just appointed Mafalda Duarte as its new head.

Unrealistic expectations

The review helped counteract a “persistent false narrative” about the fund’s governance caused in part by unrealistically high expectations of what it would do, said Liane Schalatek, a civil society observer on the GCF board.

Developing countries had anticipated it would provide a large amount of readily available grant funding, while developed countries had wanted it to massively leverage private sector funding and thereby reduce their own financial liabilities. “Those have obviously not come to pass.”  

However, the review said the time had come to “clarify the GCF’s vision” over how it balances the urgency of the climate crisis and the long-term need to build climate finance capacity, and the extent to which it takes a direct and strategic role.  

It concluded the fund should do more to “catalyse” climate finance by, for example, investing in projects that have bigger impacts down the line even if the projects themselves run at a loss. 

But Schalatek warned that it should continue to be a core source of public climate funds, “with a focus on simplified and enhanced direct access and ensuring that affected communities and people through devolved financing have more of a say on how GCF funding support can better address their needs and priorities”.  

Efficiency compromised

A core principle of the GCF is to give developed and developing countries an equal say in board meetings, unlike donor-driven funds.  

The review says this novel governance structure “brings legitimacy but compromises efficiency”, especially given the fund’s proximity to UN climate change politics, posing challenges in setting a strategic vision and key policies.  

Rastogi suggested that more informal meetings between board members would help improve relationships and smooth negotiations.

The review also shows that less money went to adaptation projects than mitigation. With under 7% of global climate finance currently directed towards adaptation, it says the GCF’s impact on this topic is much more important than it is for mitigation, and hints that the board should reconsider how it balances these two key areas of climate action.  

Schalatek said civil society has pushed unsuccessfully for a more even split for some time. “In terms of adaptation it’s barely doing what’s under its mandate,” she said. 

GCF respond

In its formal response to the review, the GCF’s secretariat said the findings and recommendations “broadly resonate” with its experience and would incorporate most of them into its decision-making, management, operations, strategies, budgets and practices. It has, for example, already begun to update its risk register, which the review had found gaps in. 

However, it only “partially” agreed with the recommendation to reconsider civil society’s role in its work. Schalatek said it was difficult for observers to have a meaningful influence on GCF policies and the cost of travelling to board meetings was prohibitive for some developing country representatives. The secretariat countered that some of these issues had previously been considered. 

The review will inform the GCF’s next strategic plan, which is expected to be approved in the summer, and will also be part of negotiations over how much countries will commit to funding it over the next four years.

Going into the review, Rastogi said he was “a bit scared” of what he might find. But he was generally pleased with how the GCF was being governed and noted that all similar institutions go through a teething period in their first few years. “It’s going to get stronger,” he said, while its new executive director would bring in “new blood and a fresh perspective”. 

This article was amended on 3 May 2023 to correct the figure on how much the GCF has spent so far. It originally incorrectly said $20 billion but the real figure is $12 billion.

The post UN’s Green Climate Fund too scared of risk, finds official review appeared first on Climate Home News.

In June 2021, a coalition of local groups and international NGOs complained to the fund about a $117 million project to reduce deforestation in the Unesco-designated Bosawás and Rio San Juan biosphere reserves in the Caribbean Region of Nicaragua.  

The project, which was approved in 2020, aims to reduce extensive grazing and introduce agroforestry systems such as cocoa. 

The region is home to 80% of Nicaragua’s forests and most of its indigenous populations. But it is gripped by increasingly violent conflict between indigenous communities and settlers, who are grabbing land to exploit the forest’s resources and farm cattle. 

Over the past week, the Center for Legal Assistance to Indigenous Peoples reported two attacks against communities in the project area that led to the death of at least five people.

The complainants claimed the project would exacerbate the violence. They argue it was approved without proper due diligence or their free, prior and informed consent. 

Mafalda Duarte named as next chief of UN climate fund

This is the first time a complaint case reaches the board of the UN’s flagship climate fund. Civil society observers argue the board’s handling of the case will set a precedent for future complaints.

Behind closed doors

The findings of the investigation have not been made public because of the sensitive nature of the case and complainants have remained anonymous because of the risk of retaliation.

However, excerpts from a draft report, seen by Climate Home News, shows that the redress body found the project clearly violated several GCF safeguards and procedures, including the lack of consultation with indigenous groups. It agreed that the project may exacerbate conflict.

Board members discussed the report behind closed doors this week during a meeting in Songdo, South Korea. The meeting closed on Thursday without a public update on the case.

Liane Schalatek, a civil society observer at the GCF, told Climate Home the closed door discussion was meant to protect the complainants and the integrity of the process. “It is now used to divert the latter and harm the former…and that is a tragedy,” she said.

Escalating violence

Florencia Ortúzar, a Chilean lawyer at the Interamerican Association for Environmental Defense (Aida), a regional NGO, supported the complainants to bring their case to the GCF. 

Ortúzar said it was “unfortunate and infuriating” that the issue had not be given priority during the four-day long meeting. A delayed outcome means affected communities may have to wait until the next meeting in July for a decision – nearly a year after the investigation’s findings were finalised.

“And in the meantime violence escalates,” Ortúzar told Climate Home.

In a letter to the GCF board, and writing on behalf of 15 indigenous communities, the Center for Justice and International Law said the recent attacks were carried out by a group of 60 armed settlers who burnt down 50 homes. It urged the GCF to publish the final report on the case.

Argentina secures funding boost to kickstart gas exports from ‘carbon bomb’

In its draft recommendations, the redress body urged the board to implement robust due diligence on human rights and independent monitoring as a condition for the project to go ahead.

While the body hasn’t got the power to advise the cancellation of the project, board members could decide to scrap it – the complainants’ preferred outcome.

Credibility test

Amaru Ruiz, director of Nicaraguan organisation Fundación del Río, who supports the affected communities, said the GCF’s credibility was on the line. 

He said the fund should “completely reassess the approval of the project” or risks “legitimising environmental destruction and the process of forest invasion”.

“What is at stake is not the credibility of the [Nicaragua] regime, but the credibility of the fund,” he said.

“This not just the first major grievance case, it is a test case – for the solidity and fairness of the fund’s complaints procedures, but also for the board’s compliance with guidelines it adopted for its own conduct in such cases,” said Schalatek.

“Unfortunately, it appears that the board is falling short in this first test,” she said, adding that indigenous groups still haven’t been able to see the final findings.

IMF approves first batch of climate resilience loans

Human rights abuses

Ortúzar, of Aida, said indigenous people have no confidence in the ability of the Nicaragua government and the Central American Bank for Economic Integration (Cabei), which is providing co-funding, to deliver the project under strict monitoring conditions.

She said the government had expelled UN staff and dissolved close to 200 NGOs to escape scrutiny and it was unlikely to accept monitoring from any third party.

Earlier this month, the UN Human Rights Council found that widespread human rights violations that amount to crimes against humanity are being committed against civilians by the Nicaragua government for political reasons. 

Human rights experts said this was a product of the deliberate dismantling of democratic institutions and the destruction of civic space.  

A report by the Heinrich Böll Foundation found that Cabei’s operations lacked transparency and that it was funding president Daniel Ortega’s authoritarian regime. 

A Green Climate Fund spokesman told Climate Home: “The GCF has robust procedures to address any complaints made in relation to projects, including safeguards to protect complainants. We cannot comment on this case since the matter remains confidential.”

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Developed countries nominated the US Treasury’s Victoria Gunderson to jointly lead the UN flagship climate fund’s deliberations in 2023. These appointments are typically approved without discussion.

On behalf of African board members, Kenyan environment official Pacifica Ogola raised an official objection. The US has contributed just $1 billion to the fund in its 12-year history, compared to $9bn from EU countries and $3bn from Japan. A further $2bn pledged under former president Barack Obama was never delivered. His successors Donald Trump and Joe Biden have not paid in a cent.

Ogola stressed, in a letter dated 16 January, rich countries’ responsibility to inject money into the GCF and called for better enforcement of commitments. Approving Gunderson’s role must not “normalise the situation” of non-payers holding sway over decisions, she argued.

The outgoing co-chairs persuaded African members not to veto the appointment, on the assurance that the board would discuss their broader concerns.

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In March 2022, GCF executive director Yannick Glemarec warned that without more resources, the fund would have to tightly ration support for carbon-cutting projects in the developing world. “Some turn-off will be unavoidable,” he said. “It’s one of my fears.”

US outreach

One week after African members raised the objection, US treasury secretary Janet Yellen visited a project in Zambia helping farmers adapt to the climate crisis.

“The project we are visiting today helps small-scale farmers…It’s funded by the Green Climate Fund, which the United States is proud to be a part of.”

Read US Treasury @SecYellen‘s remarks during her visit to the GCF-@UNDPZambia #climateaction project: https://t.co/YIZF9yT910 pic.twitter.com/Xf2sUwT5vr

— Green Climate Fund (@theGCF) January 26, 2023

Yellen told reporters: “It’s funded by the Green Climate Fund, which the United States is proud to be a part of. We are committed to making sure that the Fund has sufficient resources to carry on this important work.”

The GCF is hosting its next regular request for donations at the end of 2023.

In December 2022, Congress did not earmark any finance for the GCF in the government’s 2023 fiscal year budget. There is enough flexibility in the spending bill that a contribution is still possible – but a Republican majority in the House of Representatives is expected to resist.

Liane Schalatek speaks for civil society as an observer to the GCF board. “The objection highlights the expectation that is placed on a developed country chairing during replenishment to dig deep with their own contributions,” she said.

During the GCF’s last request for donations in 2019, the UK as board co-chair made the largest pledge. But “it is doubtful that the US can replicate the UK example”, Schalatek added.

While the UK promised the most money, it has fallen behind on its payment plan. In October 2022, The Wire reported that three climate projects had to be postponed after the UK failed to pay $288m it had promised by the end of September 2022.

This article was updated on February 2nd to add the final sentence

The post Africa objects to US chairing UN climate fund, citing unpaid $2bn appeared first on Climate Home News.

The UK and US have together failed to hand over more than $2bn of promised money to the fund, which has responded by putting three projects on hold.

At the fund’s October board meeting, the US led wealthy countries in pressuring the fund’s staff to target private sector donations, despite the secretariat expressing doubts about this strategy.

The Green Climate Fund was set up in 2010. Based in South Korea, it receives voluntary donations from rich nations and distributes this money to projects which help low and middle income countries cut emissions or adapt to climate change.

In 2014, then US president Barack Obama promised the fund $3bn but only handed over $1bn before the end of his term. His successor Donald Trump did not give any money to the GCF and, so far, neither has Joe Biden. With Republicans expected to take over Congress on 8 November, it’s unlikely that the US will deliver this money in the next two years if at all.

In 2019, Australia's then prime minister Scott Morrison said he would not "tip money into that big climate fund” and the country has not contributed since. A new government took over in May on a promise to do more on climate change but, after dodging the question on the campaign trail, it has yet to rejoin the fund.

These failures have led to cutbacks. In March, the GCF's head Yannick Glemarec told a board meeting: "Regarding the need for more mitigation [carbon-cutting] projects, this will very much depend on whether or not we are able to mobilise some additional resources.”

UK freeze

At the latest board meeting, the fund announced it would postpone three projects because the UK government had failed to deliver $288m due in September. A GCF spokesperson refused to say what these projects were. GCF deputy head Henry Gonzalez said two were in the world's least developed countries (LDCs).

The UK's board member Sarah Metcalf said this non-payment was because of "pressures on the UK [overseas development aid] budget as a result of ongoing crises". Blaming the Covid-19 pandemic, the UK cut its aid target from 0.7% of national income to 0.5% in 2021. This "temporary measure" has yet to be reversed.

Cop27 movers and shakers: Nine people shaping the climate agenda

Facing cutbacks, the fund's secretariat put together a research paper on alternative sources of funding for the 2024-2027 period. They looked at whether to seek donations from big businesses, rich people, governments through the International Monetary Fund's special drawing rights and from optional levies on purchases like airline tickets.

However, the paper's authors found there would be "significant challenges" to accepting private sector donations. From speaking to philanthropic foundations in 2021, the GCF had found that they were unwilling to cede control over funding decisions.

The GCF's board, made up of an equal number of government representatives from developed and developing countries, decides how to allocate funds. Donors do not have a say.

The authors said the GCF would have to spend about 10% of its money on fundraising, that competition for funds is "fierce" and the GCF could be accused of "crowding out other smaller organizations". It would also need more legal resources to comply with tax and money laundering regulations.

'Hand on the steering wheel'

After the GCF's director of external affairs Oyun Sanjaasuren presented the findings to the board, the US's Victoria Gunderson hit back.

"I'm often known for my candour so I'll be quite candid," she said. "This is not exactly the paper and the tone that I was anticipating to receive so I would have enjoyed or welcomed seeing more options and solutions and multiple paths rather than a series of obstacles without opportunities written behind it."

Board members from the Netherlands and France also urged the GCF to keep looking into this strategy. Norway's climate envoy and board member Hans Olav Ibrekk said: "Its quite clear that public sources will not be enough so we need to look at alternative sources."

In numbers: The state of the climate ahead of Cop27

However, Ibrekk agreed that private donors would try to influence spending. " If you give money to the GCF, you would like to have your hand on the steering wheel, you will not sit in the trunk,” he said.

Titi Akosa, a Nigerian environmentalist and official board observer, told the meeting: "Developed countries should remain the primary source of funding for the GCF. Exploring alternative sources of finance should not be used as a diversion from the core responsibility and obligation of developed countries to provide finance directly to the GCF.”

The GCF will be seeking contributions from governments next year ahead of the 2024-2027 spending period.

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Green Climate Fund (GCF) executive director Yannick Glemarec told a board meeting yesterday: “Regarding the need for more mitigation projects, this will very much depend on whether or not we are able to mobilise some additional resources”.

Without that additional funding, “some turn-off will be unavoidable,” he said. “It’s one of my fears.”

Campaigners blamed the US for these potential cut-backs. Action Aid’s policy director Brandon Wu told Climate Home News: “If the GCF needs to limit its operations in the near future due to lack of funding, it’s hard to find any single country more at fault than the United States”.

“By failing to meet its responsibilities to fund the GCF,” Wu said, “the US is failing frontline communities in developing countries and it is also undermining the prospects of global climate cooperation more broadly.”

The US owes the GCF $2 billion. In 2014, then president Barack Obama promised the fund $3bn but only handed over $1bn before the end of his term. His successor Donald Trump did not give any money to the GCF and, so far, neither has Joe Biden.

Earlier this month, the US Congress approved a 2022 spending bill with a mere $1bn for international climate finance and no money for the GCF. Biden had requested Congress to approve $1.25bn for the fund but negotiations brought the amount down to zero.

Comparison of proposals for US international climate finance in 2022 (Source: Joe Thwaites/World Resources Institute)

On Monday, the Biden administration published its request to Congress for the 2023 fiscal year, which includes $1.6bn for the GCF. Erika Lennon, a senior attorney at the Centre for International Environmental Law who attends GCF board meetings on behalf of civil society, told Climate Home this was a "paltry" amount.

Lennon reiterated campaigners' demand for the White House to deliver $8bn to the GCF. That would cover its $2bn debt plus $6bn to bring the US in step with other donor countries, which doubled their contributions to the fund during its first replenishment in 2019. Collectively, EU member states have delivered more than $9bn to the fund.

If Biden is to ensure that at least $1.6bn is allocated to the GCF in 2023, it will need to make it a funding priority, World Resources Institute's climate finance analyst Joe Thwaites said.

Republicans have previously blocked GCF funding and securing Congress' backing won't be easy. Commenting on Biden's $1.6bn request, Republican representative Lance Gooden tweeted "Biden will give handouts to the green industry while Americans are stuck paying $4 [a gallon] at the gas pump".

Last year, representative Lauren Boebert tweeted: "Democrats have no problem wasting and spending as much of your tax dollars as possible on their liberal wishlist".

$3.2 billion to a Clean Technology Fund.
$1.6 billion to a Green Climate Fund.
$1.45 billion for environmental justice.
$900 million to research climate change.

Joe Biden will give handouts to the green industry while Americans are stuck paying $4 at the gas pump.

— Lance Gooden (@Lancegooden) March 29, 2022

Thwaites said the US could fund the GCF through flexible funds like the state department's economic support fund, which wouldn't require Congress approval. This is the vehicle Obama used to make two $500m payments in 2016 and 2017. In 2022, the fund's budget was increased by $1bn.

"However," Thwaites warned, "this account is used to fund many different overseas programmes and so it depends on how many other claims there are on these resources and whether the administration will prioritise funding the GCF".

The GCF was set up at UN climate talks in 2010 as a financing vehicle for developing countries' climate action. It has since allocated more than $10bn to projects designed to cut emissions and support vulnerable communities cope with climate impacts.

Recent carbon-cutting projects include funding for solar panels in Africa's Sahel region, clean ways of cooking in Nepal and light rail transit in Costa Rica's capital San José.

At the urging of developing countries, the GCF is trying to assign more of its funding to adapting to climate change rather than reducing emissions.

While it is aiming for a 50:50 split, projects to reduce emissions have so far received 62% of the funding in nominal terms and 52% on a grant-equivalent basis.

This article was amended on 29/3/22 to clarify that Lauren Boebert was commenting on the 2022 GCF funding proposal not the 2023 proposal. Lance Gooden's comments on the 2023 proposal were added in.

The post After US fails to pay its debt, UN’s flagship climate fund warns of austerity appeared first on Climate Home News.

The president’s office said that Oquist died on Monday night. Local media reported the cause of death was pulmonary embolism, a common complication of severe Covid-19 infection – although no positive diagnosis of the virus was made.

“Paul Oquist Kelley served the people, the families, all Nicaraguans with love, faithfulness, commitment and untiring bravery,” president Daniel Ortega said in a statement on Tuesday. 

“[He was] a brother, a colleague and I believe one of the most important and prominent people in this country, a true Nicaraguan, more Nicaraguan than many who were born in this country,” said Gustavo Porras, speaker of Nicaragua’s national assembly.

Climate watchers have described him as a “fighter for justice” and a  “complex figure in global climate negotiations”, with a sharp, analytical mind.

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Born in 1943 in California, Oquist attended university in the US before moving to Nicaragua where he held several positions in Ortega’s government in the 1980s and when he returned to power in 2007.

In the climate space, Oquist made waves by refusing to back the adoption of the Paris Agreement, arguing the deal did not go far enough to cut global emissions and protect developing countries from climate impacts.

“We’re not going to submit because voluntary responsibility is a path to failure,” Oquist told Climate Home at the time in a video interview on the sidelines of the UN climate talks in Paris in 2015. 

“We don’t want to be an accomplice to taking the world to 3 to 4C and the death and destruction that represents,” Oquist said. “It’s not a matter of being troublemakers, it’s a matter of the developing countries surviving.” 

Nicaragua, a country in central America described by the World Bank as a “renewable energy paradise”, is a tiny emitter, generating just 0.02% of global emissions. 

Nicaragua eventually joined the Paris Agreement in 2017 in a move president Ortega said was a show of solidarity to countries affected by climate disasters. 

Following this change of heart, Oquist was appointed co-chair of the multi-billion-dollar Green Climate Fund (GCF) board in 2018. In this role his main responsibility was steering the board meetings, where decisions are reached by consensus.

On the GCF board, Oquist called for stricter vetting of potential private sector partners. For example in 2019, he backed civil society concerns about a Chilean private equity firm specialised in wealth management and an Indian bank mired in financial instability. Both entities were accredited.

Joe Biden’s $1.2bn budget for Green Climate Fund falls short of campaigner demands

Oquist was a close political advisor of president Ortega and his defence of the government’s crackdown on political opponents resulted in financial sanctions from the Trump administration. 

Following news of his death, political leaders and climate experts paid tribute to Oquist on social media. 

Venezuelan president Nicolas Maduro said in a statement that Oquist was known for his “inexhaustible energy, cheerful nature and dedication to reveal and defend, internationally and in any setting, the truth.”

South African GCF board member Zaheer Fakir described Oquist as a “fighter for justice and a steadfast and dedicated climate warrior”.

Sad to hear of the passing of a colleague, a comrade and a friend Dr Paul Ouquist. A fighter for justice and a steadfast and dedicated climate warrior. May his kind soul rest in eternal peace. HASTA LA VICTORIA SEMPRE! @theGCF @UNFCCC pic.twitter.com/9bUMe3LqV0

— Zaheer Fakir (@zaheer_fakir) April 13, 2021

Henning Wuester, director of the Initiative for Climate Action Transparency, wrote on Twitter: “With Paul Oquist the global climate process loses a very bright and engaged personality. He was difficult but very sharp and analytical – an important voice to carefully listen to. I will always remember some of his statements of the early days of the GCF.”

Rest in power, Paul Oquist. A complex figure in global climate negotiations, but I will always appreciate the clarity he brought in calling out dodgy private sector deals, backing up CSOs when other governments stayed silent. Classic example in the GCF:pic.twitter.com/WQlLwnrdGH

— Joe Thwaites (@joethw8s) April 13, 2021

The post Climate watchers pay tribute to Nicaraguan envoy Paul Oquist, who died on Monday appeared first on Climate Home News.

The fund was created by the UN to support poor countries, that are not historically responsible for causing the climate crisis, to cut their emissions and cope with climate impacts.

In a letter signed by 46 NGOs, including 350.org, ActionAid, Greenpeace and Oxfam, campaigners wrote: “As the world’s largest historical greenhouse gas emitter, it is both a legal obligation and a moral imperative for the United States to provide finance for developing countries.”

The US owes $2bn to the fund after Donald Trump reneged on a pledge to deliver $3bn to the fund under Barack Obama. Obama’s administration had only transferred $1bn before Trump withdrew US support.

Speaking during a high-level summit on climate adaptation last month, US presidential climate envoy John Kerry promised the US would “make good on our climate finance pledge”. He stopped short of announcing a new commitment.

Campaign groups say the Biden Administration should commit another $6bn to bring the US in step with other donor countries, which doubled their contributions to the fund during its first replenishment in 2019.

Indian farmers head for showdown with government over agricultural reform

At the time, 13 countries, largely European nations together with the UK, South Korea and New Zealand, announced a doubling or more of their contributions to the GCF to help fund green projects for the 2020-2023 period.

But with no contributions from the US, Russia or Australia, the total raised was only $9.8 billion, less than the fund’s start-up capital. As of December 2018, the GCF had identified a $15bn pipeline of projects.

The letter, sent to the White House, added the US has “a duty to ensure that climate finance supports the most vulnerable communities and avoids projects that further entrench fossil fuel infrastructure, such as carbon capture and storage”.

In addition, it called on the US to provide $400 million over four years to the Adaptation Fund. Campaigners described it as “the quickest fund at delivering funding to communities in need”.

The funding requests do not represent a fair share of what the US should do to address the climate crisis but “it is an essential and immediate starting point for the US to build on in the future,” they wrote. Doing its fair share requires the US to reduce emissions at home and provide grant-based funds to support poorer nations, they added.

Cop26 dream team: The people setting the climate agenda on seven key issues

Kerry has promised to “significantly increase” the flow of finance to adaption and resilience initiatives, which he said would include concessional financing, which usually refers to loans with more generous terms than the market rate. It remains unclear what share of finance will go to adaptation versus mitigation projects and how much of it will be grant-based.

Adaptation finance represents only about a fifth of all climate finance, according to the latest data analysis by the Organisation of Economic Cooperation and Development (OECD). And the share of loans has risen with developing nations expected to pay back nearly three quarters of all the climate money they receive, according to the same 2018 dataset.

Anti-poverty charity Oxfam has previously warned climate finance was adding to the debt burden of vulnerable nations, at a time when debts levels are ballooning as countries respond to the economic downturn caused by the coronavirus pandemic. Oxfam described the “excessive use of loans” in climate finance as “an overlooked scandal”.

The post US campaigners call on Joe Biden to commit $8bn to the Green Climate Fund appeared first on Climate Home News.

Under the plan, UN Environment urged massive investments in energy efficiency for buildings, a boost for wind and solar energy, cuts in fossil fuel subsidies and a host of other measures. It reckoned the bill would amount to 1% of global GDP, or about $750 billion.

But the global economy rebounded, still reliant on fossil fuels, despite efforts to diversify. Carbon dioxide emissions grew by a huge 5.8% in 2010, after a 1.4% dip in 2009, and have risen most years since.

Will the coronavirus pandemic, which has killed more than 10,000 people worldwide, offer a new chance to shape a greener, more sustainable world when the economy revives?

Read Chloé Farand’s insightful interview with Fatih Birol, the head of the International Energy Agency, in which he says governments have a “historic opportunity” to usher in an era of climate action when they design long-term stimulus packages.

“Well put @IEABirol,” Christiana Figueres, the former head of UN Climate Change and an architect of the Paris Agreement, commented about the article in a tweet. “We have a massive crisis = opportunity on our hands. We cannot afford to waste it. Recovery must be green.”

In recent years, the idea of green new deals – which echo US President Franklin Roosevelt’s 1930s New Deal after the Great Depression – have caught on in many nations as a way to combat the climate crisis.

And the world now has a lesson to learn from the failings a decade ago.

“We have a responsibility to recover better” than after the financial crisis, UN Secretary-General António Guterres said on Thursday, saying the global health crisis was unlike any in the 75-year history of the UN.

“We have a framework for action – the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate Change. We must keep our promises for people and planet,” he added.

The task is daunting. The UN says global cuts in greenhouse gas emissions of 7.6% a year are needed over the next decade to get on track to limit global warming to 1.5C above pre-industrial times.

But the Covid-19 emergency has opened a new window for a clean energy transition for the world economy.

Slow burn

The pandemic is slowing developing nations’ efforts to work out more ambitious climate plans, which are due to be submitted before talks in Glasgow, still scheduled for November, at the first five-year milestone of the Paris Agreement.

“We are entering into unknown territory,” said Jahan Chowdhury, in-country engagement director for the NDC Partnership, which supports about 75 developing countries design and deliver their climate plans.

The coronavirus is also disrupting Brussels’ legislative process, now unable to work at full capacity. This may delay the EU’s work on its Green Deal, under which the EU Commission wants Europe to be the world’s first carbon-neutral continent, Frédéric Simon at Euractiv writes.

Side effect  

The economic slowdown in China caused by the virus has at least one positive side-effect that is also now visible by satellites over Italy: less deadly air pollution.

The World Health Organisation says air pollution causes seven million deaths worldwide every year, by triggering cancers, heart and lung diseases.

In China alone, reduced air pollution could avert between 50,000 and 100,000 premature deaths if levels stay low for a whole year, according to researchers at the Center for International Climate Research in Norway. They estimate that more than a million people die every year in China from air pollution.

Contaminated 

Illustrating the risks of international travel and face-to-face meetings, the first coronavirus case in Liberia was recorded after an observer returned from a Green Climate Fund meeting in Geneva, Switzerland.

The meeting went ahead after being moved as a precaution from the GCF headquarters in Songdo, South Korea, at a time when the nation had become one of the world’s hotspots for the virus.

This week’s top stories

• Coronavirus slows developing nations’ plans to step up climate action in 2020
• Coronavirus enters Liberia after observer returns from Green Climate Fund meeting
• Coronavirus response to delay EU Green Deal by weeks
• Governments have ‘historic opportunity’ to accelerate clean energy transition, IEA says
• Coronavirus: China’s economic slowdown curbs deadly air pollution

The post ‘Historic opportunity’ – Climate Weekly appeared first on Climate Home News.

The meeting was moved from the GCF headquarters in Songdo, South Korea, to the Swiss city of Geneva at a time when South Korea had become one of the world’s hotspots for the virus.

In a notice sent to participants on Tuesday, the GCF said an observer to the meeting “has been diagnosed positive with the Covid-19 virus upon returning to their country”.

“The participant is an observer from Liberia, and the positive diagnosis has been confirmed by the President of Liberia. Relevant authorities of the Canton of Geneva are being notified,” the statement added.

The news comes after some board members raised concerns about holding the meeting physically in Geneva, where at the time 40 cases of coronavirus, or Covid-19, had then been reported, rather than online.

Coronavirus slows developing nations’ plans to step up climate action in 2020

Attendance to the meeting, when board members discussed a new strategic plan for the next four years, was restricted with each board member and alternate member only able to be accompanied by one advisor.

In a statement before the meeting, the GCF said the room had capacity to accommodate 100 participants with registration available on a first come first served basis.

In an address to the country on Monday, Liberian president George Weah confirmed the coronavirus case and identified the observer as the executive director of the Environmental Protection Agency.

“The spread of this virus represents the greatest threat to the health and well-being of the people of Liberia since the Ebola epidemic suffered by our country from 2014 to 2016,” Weah said.

According to the World Health Organisation, 11,310 people died from Ebola in Guinea, Liberia and Sierra Leone during that time.

Governments have ‘historic opportunity’ to accelerate clean energy transition, IEA says

During the GCF meeting, French board member Cyril Rousseau said “some board members objected” to proposals to hold the meeting online. “That was technically feasible,” he said, adding holding a physical meeting was “the wrong decision”.

“I am puzzled. I think there is some irresponsibility there… We are at risk of introducing the virus in countries where that can put some strain on their health systems,” he said.

Established in 2010, the GCF describes itself “the world’s largest dedicated fund helping developing countries reduce their greenhouse gas emissions and enhance their ability to respond to climate change”.

The GCF said it would inform participants of the infected observer’s accommodation and travel itinerary shortly and encouraged all other participants to follow guidance on necessary precaution including testing and self-isolation.

In a statement to Climate Home News, a GCF spokeswoman said the fund was “first and foremost concerned for the wellbeing of anyone who may have contracted or been exposed to Covid-19.” She added the GCF secretariat was working with Swiss and Korean authorities and public health officials to limit the risks of exposure and transmission.

The post Coronavirus enters Liberia after observer returns from Green Climate Fund meeting appeared first on Climate Home News.

Following months of negotiations and an 11-hour marathon board meeting, EU finance ministers agreed to end lending to oil, gas and coal projects by the end of 2021 – a year later than initially proposed by the bank in July.

Strong initial pushback from eastern European countries facing an uphill climb to reduce their reliance on carbon-intensive energy sources was overcome by widening the window for new gas projects to receive funding.

The EIB is now a step closer to become the European “climate bank” promised by incoming EU Commission president Ursula Von der Leyen.

The new policy signals a change of gear in support for clean energy investments. How other major development banks will react to the news is one to watch.

Climate plot

What can the EU offer China to convince Beijing to ramp up its ambition?

That is the question EU diplomats will have to answer over the next 10 months as the bloc prepares for an exceptional EU-China summit in Leipzig, Germany, in September 2020.

The EU wants to use the meeting to broker a bilateral deal on climate ambition, weeks before the UN climate talks in Glasgow where countries are due to update their climate plans.

In 2014, a bilateral agreement between the US and China committed the world’s two largest emitters to cut emissions, underpinning the Paris Agreement.

With a much smaller share of global emissions, the EU is unlikely to have the clout to make it a climate only affair. What else could the EU bring to the table is not yet obvious. French president Emmanuel Macron was in China last week to work it out. See our report.

Sucking it out of the air

In its World Energy Outlook, the IEA explores what it would take to achieve the Paris Agreement’s tougher 1.5C goal. Its answer: sucking lots of carbon out of the atmosphere.

Under one scenario, the world would overshoot the 1.5C target and reach net zero emissions in 2070. Global temperatures would then be pulled down using negative emissions technologies – something one lead scientist described as incompatible with long-term sustainable development.

Due diligence  

The Green Climate Fund has accredited a Chilean private equity firm specialised in wealth management as protesters denouncing raging against income inequalities continue to clash with security forces in Santiago’s streets.

The fund’s board has also partnered with the subsidiary of an Indian bank which collapsed in 2018. Concerns over due diligence are running high.

Separately, the fund has allocated $407.8 million to 13 green projects helping vulnerable countries curb emissions and cope with the impacts of climate change.

Political limbo 

Sunday’s general election in Spain – the fourth in four years – has once again failed to resolve the political deadlock. The socialists won the most seats but fell 55 short of a majority.

Difficult political negotiations to form a government resume as the country scrambles to host Cop25. The negotiations are not expected to impact the UN climate talks, with political wrangling anticipated to go beyond the meeting’s 2 December kick off date.

Quick hits

• European Investment Bank ends lending to fossil fuel projects
• IEA World Energy Outlook outlines 1.5C scenario
• GCF partners with Chilean private equity firm as unrest continues
• EU plots climate deal with China
• Stakeholders push for progress on France’s climate adaptation plans
• With UN climate talks looming, Spanish election continues political uncertainty

And in climate conversations

• Economic opportunity should see US get on board with shipping clean-up
• The world’s foremost energy outlook is still leading us to catastrophic climate change

The post Banking on the future – Climate Weekly appeared first on Climate Home News.

Following animated discussions at a board meeting of the UN’s flagship climate fund on Wednesday, GCF board members said they were feeling “uneasy” after granting accreditation to four private companies to pitch green project proposals and access the fund’s resources. The GCF was created to help poor countries curb their emissions and cope with the impacts of climate change.

Civil society actors raised serious concerns over the environmental track records and capacity of some of the applicants to carry out the fund’s mission.

Fynsa, an investment company, specialises in managing the portfolio of wealthy clients and high-end real estate in Chile, where raging inequalities have sparked the worst social unrest in decades.

At least 20 people have died in the protests that started almost a month ago, forcing the cancellation of the UN climate talks and the relocation of the negotiations to Madrid, Spain.

IEA World Energy Outlook outlines 1.5C scenario

Liane Schalatek, an observer to the GCF meeting from the environmental think-tank Heinrich Böll Foundation, said there was no evidence the company had adequate experience in applying environmental and social safeguards.

The company’s “track record catalogues a handful of real estate projects with no particular climate component… nor does it appear that the entity has any interests in advancing climate objectives,” Schalatek told the board, warning of a potential “reputational risk” for the fund.

The secretariat pushed back against the idea Fynsa was not interested in climate projects, referencing the firm’s experience of carrying out projects such as green building designs.

A subsidiary of Indian bank IL&FS has also been accredited to work with the GCF. In September 2018, IL&FS, India’s leading infrastructure finance company, defaulted on payments to lenders bringing the country’s financial sector to near-collapse.

“It’s a bit like accrediting Lehman Brothers after 2008,” Schalatek said. “Not a good idea.”

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Since then, the Indian government replaced the bank’s entire board of directors, the secretariat told the board, insisting the risk lied with the parent company and not the subsidiary.

“There is enough evidence that the applicant will be able to unwind their troubled relationship with the parent company,” a GCF staff member said.

The discussions started a debate about the fund’s accreditation process with several board members questioning why civil society concerns over whether the companies were fit to partner with the GCF were not received earlier.

“I am feeling a certain unease,” said Swiss board member Stefan Schwager after the applicants were approved. “Is it really an informed consent or just trust?” he said, calling on the process to be “tweaked”.

Comment: The world’s foremost energy outlook is still leading us to catastrophic climate change

Nicaraguan board member Paul Oquist told the board concerns raised by civil society showed the deficiency of the GCF’s own due diligence process and urged for more time to be spent approving contentious applications.

“We have made mistakes before,” he said. “We list money launders that have been fined by the appropriate authorities in the EU and the US,” he said, citing HSBC which is a GCF partner.

Board member Ayman Shasly, a consultant at Saudi Arabia’s petroleum ministry, disagreed.  He warned that decisions influenced by civil society were “not acceptable” and shouldn’t overrule GCF procedures.

“We don’t need to be run by emotions, feelings and reflections that perhaps have not been examined and are not evidence-based. We know the problems but we take calculated risk” he said.

The post GCF partners with Chilean private equity firm as unrest continues appeared first on Climate Home News.

The Green Climate Fund (GCF) administers US$9.9 billion, provided by developed countries for projects that will help poor countries cope with climate change.

The fund is still establishing itself and has so far allocated $424.4m. The money is given to accredited entities that oversee the projects – at the moment mostly development banks, UN bodies and large NGOs. The fund’s board will meet next Wednesday to consider prospective new entities.

Some of the applications come from export credit agencies. These are state-owned mechanisms that fund or underwrite overseas projects in which domestic companies are involved, often in developing countries.

Weekly briefing: Sign up for your essential climate politics update

A letter signed by 92 green groups from around the world and sent to the board of the fund has called on them to exclude export credit agencies.

“ECAs are meant to promote exports and job creation in the home country rather than the recipient country,” said the letter signed by Oxfam, ActionAid, Friends of the Earth and the Sierra Club, among others.

“Whether from a developed or developing country, their accreditation would thus be inconsistent with – and may be in direct conflict with – the mission and core principles of the GCF, including promoting country ownership, local sustainable development benefits, the efficient use of GCF resources, and the Fund’s international competitive bidding requirements.”

Some countries’ export credit agencies are deeply involved with the coal industry. Between 2007 and 2014, Japan and South Korea supplied $27bn to assist coal projects. One of the major conduits for this coal finance has been Export-Import Bank of Korea (known as Korea Exim), which has been recommended for GCF board approval by the body’s accreditation panel. The Green Climate Fund is headquartered in Korea.

“Though Korea Exim bank made a commitment to ‘green initiatives and sponsorship for sustainable growth’, the Korean government has not moved away from its public financing for coal through Korea Exim bank,” said Jieon Lee, climate and energy coordinator for the Korea Federation for Environmental Movements (KFEM). “Korea’s embrace of coal is inconsistent with its hosting of the Green Climate Fund, aimed at supporting low-carbon development of developing countries.”

At the last GCF board meeting in June, consideration of Korea Exim’s application was postponed. Some board members agreed with green groups that the domestic focus of export credit agencies meant they were inappropriate partners.

Sweden’s representative on the board Anders Wallberg told the meeting in June: “Accrediting an entity that has export promotion would in addition subject the fund to significant reputational risk and we do not believe it would be in the interests of the fund, including the prospects of attracting additional funding. So therefore we cannot agree to this proposal of accrediting the Korean Import Export Bank. And I want to underline that this is a principled position.”

Green Climate Fund: 8 questions for the board

There are 191 applications to be accredited by the fund. A fund spokesperson would not confirm whether there were any other export credit agencies in that pipeline. Campaigners told Climate Home they were concerned about the precedent a Korea Exim accreditation would set.

The GCF board will also choose a new executive director to replace Hela Cheikhrouhou, who stepped down in September.

The post Green Climate Fund urged to blacklist coal-funding agencies appeared first on Climate Home News.

India pavilion at COP21 venue in Paris. (Pic: Avik Roy)

By Avik Roy in Paris

India is the world’s fifth largest economy, a nuclear power, an aspiring actor on the world stage with a charismatic prime minister – and it’s also one of the planet’s top carbon polluters.

The country is frequently cited as one of the main reasons why UN climate talks grind to a halt. Behind every lost day there are always whispers: it’s the Indians again.

But is this fair? Should a country with 300 million without access to power really be expected to lead on slashing the fossil fuels that have brought higher living standards to developed countries?

“It is unfair to call India problematic. In fact, it is a motivated campaign to shut and sideline India at the Paris climate conference,” Chandra Bhushan of Centre for Science and Environment said on the sidelines of the Paris talks.

“What India is demanding is the demand of the poor of the world. The rich countries are very uncomfortable with this. They do not know how to counter India so are spreading the canard that India is a problem,” he added.

Liz Gallagher, climate diplomacy programme leader of E3G, also agreed that India was not – this time at least – slowing progress – citing prime minister Narendra Modi’s announcement of a global coalition to boost solar power.

“India has come with a constructive tone. It is not blocking the talks. India’s leadership in forming a global solar alliance shows its assertiveness in shaping the climate talks rather being reactive to it,” she said.

Report: India, China planned coal plants could blow UN warming target

Still, a closer look at the facts suggests the issues at stake are more complex.

While India has embarked on an ambitious renewable energy pathway, coal is likely to remain its primary source of energy for the next few decades at least.

That makes the country’s negotiators unwilling to back tougher proposals on the table in Paris that would see the world economy decarbonised by 2100.

New Delhi hopes to bring down its dependence on coal for electricity production from the current 61% to 57% by 2031, and boost the share of non-fossil fuel to 40% of India’s total energy mix by 2030.

The contribution of renewable energy in total electricity generation is projected to grow from 12% to 29%, a recent Indian government projection said.

John Kerry: India poses ‘challenge’ at UN climate talks

Those proposals have failed impress some experts.

The Climate Action Tracker think tank released a new analysis on emissions from coal plants, and raised questions over India’s obsession towards coal plants.

“It is clear that India would be making a very risky investment for sustainable development by going too much further into coal when the alternatives are both cheaper, more cost-effective and have a much lower environmental, health, and agricultural damage on the country,” Bill Hare of Climate Analytics said.

India could blow the UN’s 2C warming target if it continues to invest in coal – the most polluting fossil fuel – he said.

That would undoubtedly place India – a country highly vulnerable to future climate impacts – under immense strain.

In a warning of potential impacts to come, the southern city of Chennai has been devastated by floods over the past two weeks from exceptionally heavy rains.

As part of a global deal rich, poor and emerging economies are working on a deal that will see them all of them face some share of the burden of slashing emissions.

The contentious question is who does what and on what basis is it measured?

“There cannot be any separation of developed and developing countries on the basis of economic parity of 1990,” said an EU negotiator earlier this week.

“The world has changed much since then. Emerging economies like India need to understand the onus lies on them too.”

Report: Meet the Indian islanders losing ground to the sea

What’s clear is that India’s top envoys don’t believe the country should take a carbon cutting hit for the rest of the world.

“We are ramping up our renewable energy capacity by seven times and it would be really unfortunate if that effort is not appreciated. Coal would also grow but it is necessary for our development,” said Ajay Mathur, lead negotiator for India.

Coal and energy minister Piyush Goyal agrees.

“We are not at all apologetic of using coal. The US and the West have developed on the back of cheap energy — coal — for the last 150 years ramping up their coal consumption from 0.5 metric tonnes in 1870 to nearly 4.5 metric tonnes per capita few years ago.”

Video: Jairam Ramesh talks up India’s climate progress

So where next? Does the world allow India to burn so much coal that dangerous warming is guaranteed, or does it – as others argue – step in and work with the government in New Delhi?

Carbon capture technologies are expensive and not widely available. As it stands they will not be available in time to help.

Harjeet Singh from Action Aid India says India needs to be engaged rather than criticised, and stresses it needs help with clean technology and funding for green technology.

“On its part India is doing a lot, for instance, the solar alliance that it formed. The reason India is dependent on coal is to make sure that some 300 million have access to electricity.

“Coal is not an obsession for India, it is a compulsion. That needs to be understood,” he says.

Singh argues that India’s longer term energy pathway could be much cleaner than planned if clean technologies continue to advance apace.

“Let’s talk about finance. Let’s help India scale up its target. 175 GW is not a cakewalk,” he says.

“You need technology for storage which is not there. You need a base load for which India is dependent on coal. How do we help India achieve that target?”

Will India be bullied or cajoled into tougher climate targets? That’s unlikely.

This week PM Modi wrote in Financial Times it would be “morally wrong” for the country not to be allowed the chance to use fossil fuels to develop.

Still, in the end it’s unlikely to be the outside world that drives change in India, rather it will be citizens tired of living with filthy air.

Residents of Delhi – one of the most polluted cities on earth – are growing restless at the increasing number of toxic smogs that blanket the city.

The same can be said for other major Indian urban areas. Development is all very well, but if you can’t breathe, you water is polluted and the forests are gone, what then?

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Green Climate Fund chief Hela Cheikhrouhou (Pic: IISD)

By Ed King

The UN’s flagship Green Climate Fund has no plans to scale back initial investment plans, despite US lawmakers blocking a promised US$3 billion contribution.

“We have signed enough contributions to enable us to start investing, which was important because countries have some urgent investment priorities to undertake,” Hela Cheikhrouhou told media on the sidelines of UN climate talks in Bonn.

The GCF is banking on a sizeable contribution from Washington, she stressed, adding she was “reasonably optimistic“ that Congress would recognise its value.

Recent attacks by Republicans labelling the GCF a “slush fund” that would line the pockets of developing countries, were rejected by Cheikhrouhou, who insisted it was setting high transparency and accountability standards.

“Upon a closer look on how this works and has been established, I believe it will meet with satisfaction from observers,” she said.

Green Climate Fund: Pledge Tracker

The fund’s first 8 projects are due to be discussed by the board at a Zambia meeting 2-5 November.

Worth $168 million, the proposed clean energy and climate adaptation plans are sprinkled across Africa, Latin America, Bangladesh and small island states.

The GCF is under pressure from the UN and countries to have projects in the pipeline by December’s UN climate summit in Paris, but Cheikhrouhou said it would not be rushed.

“I expect the board will spend a bit of time to discuss the merits of each project,” she said. “I think we all hope that… certainly the countries and partner institutions hope the board can endorse that but the funding decision has to be taken by them.”

With 136 countries lined up for investments, more funds would be needed in the coming years to ensure the GCF’s scope expanded, said Cheikhrouhou.

Efforts to draw in more donors would be “accelerating” she added.

“Whatever the scope and scale, it will be relatively small compared to what is happening in the developing world, which is in the order of the trillions,” she said.

“And with the understanding that resources will be limited, the quality of impacts is most important in my view.”

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The GCF was created to drive clean energy and climate resilience investments in developing countries (Pic: Dfid/Flickr)

By Ed King

The UN’s flagship Green Climate Fund says it is “severely understaffed” because its salaries aren’t attractive and few want to move to its South Korean HQ in Songdo.

Its directors say it needs more resources and 72 new full-time staff by 2018 to operate effectively.

Some posts have been vacant for two years says the GCF, which had a total approved administrative budget for 2015 of $19,566,866. $11.21 million is set aside for salaries and consultants.

As a result it has employed 62 temporary staff, ballooning its consultancy costs by 185%.

Core GCF teams are also relying on 11 interns to keep the organisation – which has received funding pledges of over $10 billion – ticking over.

“Many potential candidates have been candid that the current headquarters location is difficult in terms of possible spouse employment, and the GCF current compensation package is not attractive enough in comparison to their current employers to warrant a move,” reads its 2015 Annual Update.

Report: OECD estimates climate finance flows at $60 billion

The Fund is seen as a key part of efforts to develop a global climate change deal, which will need to drive billions towards developing countries, allowing them to invest in green infrastructure and prepare for future extreme weather impacts.

Risk management, portfolio building and litigation are cited as areas requiring urgent focus. The “quality and level of support on offer to countries could be compromised” unless key positions are filled, the document adds.

Speaking to France 24 news outlet, GCF executive director Hela Cheikhrouhou admitted concern that support for the fund for leading donors could dry up, just as it was coming online.

“It’s important we maintain the momentum and the ambition… my concern is now the fund is operational, starting to work and developing countries are getting familiar with it, that we lose the momentum.”

Regular funds every year “are not yet assured” the Tunisian official added.

The plea for more funds comes two weeks before a key board meeting in Zambia from November 2-5, where the GCF will reveal the first projects it plans to support.

Eight funding proposals worth $168m were published on its website on Thursday, three targeted in Africa, two in Latin American and the others in Fiji, the Maldives and Bangladesh.

Projects include $25m of investment in an East African solar fund, $40m for a Bangladesh climate resilience programme and $22m for energy efficiency green bonds in Mexico, the Dominican Republic, Jamaica, and Colombia.

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