A two-year drought – its worst in decades – was followed last November by devastating floods. The double crisis is estimated to have killed tens of thousands of people, displaced millions more, destroyed livelihoods, and exacerbated severe hunger and water scarcity.

For the East African nation, this was not just a one-off, freak event. Cycles of drought and flooding are becoming more frequent, intense and unpredictable as civilians also come under attack by militants waging an ongoing civil war.

Channeling donor cash to help fragile countries cope with the growing impacts of climate change should be the core mission of the Green Climate Fund (GCF). But, since its creation nearly 14 years ago, barely a single dollar from the UN’s flagship fund has reached Somalia.

Its new head wants to change that. Mafalda Duarte marked her first semester as the fund’s executive director with a visit to Somalia where she promised a different approach to get more money to the world’s poorest.

“We have to be deliberate, be more proactive,” she told Climate Home in an exclusive interview. “We cannot operate like in other countries where we might just sit and wait for them to bring proposals to us. Because of low capacity [in vulnerable countries], we have to work hand in hand with government to put forward a plan.”

Current mandate “not enough”

The Green Climate Fund, which has received pledges of $12.8 billion for the next four years, finances 253 projects in 129 developing countries. It has a mandate to split its resources equally between emissions-cutting and adaptation activities – and to allocate at least half of the latter to the most vulnerable countries.

But Duarte told Climate Home that “those parameters are not enough” anymore. “Even though we are compliant, it is still not enough to get this to support countries like Somalia,” she said.

A Somali herder tries to keep his cows alive amid a devastating drought. Photo: UNICEF Ethiopia/2022/Mulugeta Ayene

Having listened to the priorities of ministers, business leaders and civil society in Mogadishu, the Green Climate Fund is now preparing to invest more than $100 million in Somalia over the next 12 months.

A first project – already in the pipeline before this month’s visit – should give isolated communities access to off-grid solar energy, as part of a broader pan-African effort covering 70 million people. Funding proposals to boost the climate resilience of Somalia’s agricultural sector and improve food security could be put in front of the fund’s board for approval as early as July.

Building resilience

The Portuguese executive director, who took the fund’s helm last August, said this new targeted approach would not be limited to Somalia. “You will see us do more,” she said. “We will look at the list of the most vulnerable countries, where we are doing almost nothing at the moment, and we will endeavour to do something similar.”

Welcoming the direction charted by Duarte, Liane Schalatek, associate director of the Heinrich Böll Foundation, said “pushing” the fund’s biggest partners, like the World Bank and UN agencies, to use its money for more work in vulnerable countries will be key to its success.

“A country like Somalia will depend on international access entities that often want to do the easier rather than the harder stuff, so it’s important to overcome their reluctance,” added the experienced GCF watcher.

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Duarte believes that UN agencies and multilateral development banks need to coordinate their efforts to limit the damage from future climate disasters. “We cannot keep being reactive and provide humanitarian assistance when the next mega-drought or flood hits,” she said. “We have to work collectively and build the resilience of the communities.”

The GCF’s head wants to shake up how the fund operates more widely. Setting out simpler rules and processes is the next item on her reform agenda, with the goal of moving away from “a one-size-fits-all approach”.

Poorer countries with less administrative capacity have long complained about the difficulty and time it takes to access the fund’s resources, despite a dedicated programme to help them do that.

“Whether it is a country like Somalia, or one like Brazil or India, it doesn’t matter – it is all the same [now],” Duarte said. “That, of course, does not work. We are not operating in the same environment, with the same capacity. We cannot be this onerous and demanding.”

Overcoming local challenges

Translating ambition into real dollars on the ground will not necessarily be easy, given the barriers that have traditionally kept investors away from the most fragile nations.

Conflict, weak institutions and poor governance raise the possibility of projects not achieving their objectives or, worse, seeing their precious resources squandered. For many, the risk is too much to stomach.

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The Green Climate Fund finds itself walking a tightrope. On the one hand, it has faced criticism over the years for being too cautious. But, on the other, it recently pulled out of a forest protection project in Nicaragua over human rights concerns after a three-year complaints process.

A GCF spokesperson said the fund is now “working to better understand what the real risk is and mitigate that”. In Somalia, for example, that means learning from the World Bank which has worked extensively with local financial institutions, they added.

For Schalatek, the GCF should not be afraid of providing money to what she describes as “climate finance orphans” that have historically been ignored, working more closely in such countries with informal networks of NGOs centred on community interests.

“[The GCF] is a dedicated UN fund and not a bank,” she said, “so it needs to have the appetite to go where no one else is going.”

* This article was amended after publication to attribute the comments in paragraph 21 to a GCF spokesperson.

The post In Somalia, Green Climate Fund tests new approach for left-out communities appeared first on Climate Home News.

The Climate Investment Funds (CIFs) secured up to $2billion this year from G7 countries to help wean the world off coal as part of efforts to limit global heating to 1.5C – the tougher goal of the Paris Agreement. 

“It is not enough to focus on clean energy investment,” Mafalda Duarte, CEO of the Climate Investment Funds, told Climate Home News in an interview. “Unless we focus on accelerating the pace at which we move away from coal, we are not going to meet the Paris Agreement goals.”

Earlier this year, Cop26 president designate Alok Sharma said the UK wanted to make the November Glasgow summit “the Cop that consigns coal to history”.

Duarte said the G7’s funding pledge was “a powerful signal” to developing nations that rich countries support their energy transition.

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The CIFs is in the process of identifying two or three developing countries to pilot the programme and benefit from the first tranche of investment.

South Africa, India and Indonesia are potential candidates, where coal mining is a significant but precarious source of employment.

Earlier this week, Coal India, one of the world’s largest mining companies, responsible for around 80% of India’s coal output, announced it will cut its workforce by 5% every year for the next 5-10 years to reduce costs as it plans to close unviable mines. There was no mention of a plan to reskill workers.

Duarte urged all coal-dependent nations to get in touch. If successful, subject to support from donor countries, the programme could be extended.

The aim, Duarte said, is to “accelerate the tipping point at which it’s cheaper to build a new renewable energy power plant than maintain an existing fossil fuel plant” – something that still isn’t the case in many developing countries.

According to analysis by the Rocky Mountain Institute, in 2020 the net cost of completing the global coal-to-clean transition would have been $128 billion, dropping to near zero by 2022 before generating net savings of more than $107bn by 2025.

But, while in the US and Europe completing a coal phase out in 2020 already offered estimated annual net savings of around $9bn each, in China and India it would have resulted in annual net costs of $41bn and $21bn respectively, according to the study.

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Duarte told Climate Home that, although an estimated 42% of global coal capacity is already operating at loss, “pure economics are not going to play in favour of divesting from [relatively new] coal assets in time for meeting the Paris goals”.

Divesting from existing infrastructure is a lot more complex than investing in renewable energy, she added.

To address this, CIFs will use the G7’s $2bn to de-risk private sector capital and lower investment costs to repurpose coal assets, strengthen countries’ institutional capacity to manage the transition and create alternative job opportunities and social protection schemes for communities dependent on coal for their livelihoods.

Duarte said the CIFs would use the funding to demonstrate what sort of investments have the most impact when delivered at scale to accelerate a country’s coal exit.

“And then the market picks up and private capital can scale it to the point where you are moving in the direction of solving the problem. That is the point of acceleration,” she said.

In its statement, the G7 said the $2bn in funding was expected to mobilise $10bn in co-financing from the private sector.

The CIFs mobilises $9.5 for every $1 of concessional funding it spends in middle-income countries, Duarte told Climate Home. Others say it’s not as much. Analysis by Joe Thwaites, of the World Resources Institute, finds the CIFs has so far delivered $4.7 for every $1 spent.

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Perhaps most importantly, the fund will aim to showcase investments and social protection measures to support communities move away from fossil-fuel jobs.

Duarte told Climate Home there was very little research and evidence on what the transition of fossil fuel-dependent communities looks like in developing countries.

“I would say we desperately need to do work in this area and figure out how to do this. Otherwise, I don’t think we’re going to succeed,” she said.

The story was updated on 01/07/21 to add analysis on the amount of co-financing the CIFs mobilises. 

The post Climate fund considers India, South Africa to pilot $2bn coal transition scheme appeared first on Climate Home News.