Climate change presents a set of problems that are unprecedented in their scope and severity. This is something we have heard many times before but that cannot be overstated. Although the international community has managed to make some progress on this issue, such as with the Kyoto Protocol, yet the global community has repeatedly fallen back. The global community has yet to create a system of global climate governance that can seriously tackle global warming? One aspect of climate change policy that might well improve the current governance system, however, is to provide funding and support to global platforms. One platform for financing is the Green Climate Fund (GCF), whose sole purpose is to help societies prepare and adapt for the unavoidable impacts of climate change. It is clear that, in the future, new methods of conserving energy will have to be developed, and that behavioral changes in consumers will be needed. The GCF has the potential seemingly, to affect positively those climate change issues.
The GCF was established by member-countries of the United Nations, and its work is guided by the principles of the UN Framework Convention on Climate Change (UNFCCC). According to their website, the Green Climate Fund’s aims are to “respond to climate change by investing in low-emission and climate-resilient development” and to “deliver equal amounts of funding to mitigation and adaptation.” It must be mentioned that those two concepts are equally important. While mitigation’s role is to address the root causes of climate change, the scientific evidence clearly demonstrates that several global changes have already been set in motion. To combat climate change the global community must focus on helping populations adapt to changing environments. In order to maximize its impact, the Fund has identified priority areas to focus its mitigation and adaptation efforts. By narrowing its focus, the Fund is better positioned to develop strategic approaches that will be effective and sustainable. The two most important ways that the Fund plans to help reduce emissions include: reducing energy generation; and investing in sustainable technology to power buildings, cities, industries and appliances.
In regards to energy, especially electricity, it is clear that there is an urgent need to step up efforts to shift investment towards low emission sources. While there is a new focus on electrification in regions where the poor currently lack access to modern energy services, there has been a lack of international finance for other clean energy services, which may have particular benefits for the poor – cooking fuels for instance. This is why the Fund, while also financially supporting the large-scale deployment of renewable energy, plans to “support programmes aimed at supporting further innovations and breakthroughs in key technologies, […] the costs of which are falling much more slowly than wind or solar PV power.” In other words, the GCF has the capacity to invest in large projects, while also providing support to smaller programmes whose impact – until now – had not been deemed large enough to receive funding.
Another important source of emissions that can be reduced through the GCF are the resources used to power cities, buildings, industries and appliances. Increasing the efficiency of buildings and appliances has significant mitigation potential and can offer substantial economic returns. There is already a focus from mitigations funds on energy efficiency programmes with a particular focus on buildings, but not to a large enough extent. The rapid urbanization of the world’s most crowded regions signifies an opportunity to finance green constructions that reduce emissions and save energy in growing cities, such as in Asia and Latin America. In this context, the Fund can help with initial investments, which are costly and often the reason why innovative programs are unable to take off. In the long term however, constructions with high levels of energy efficiency often lead to huge savings. As a result the GCF has the capability to support cities in the development of green infrastructure and other projects that are expensive to get running, but that will be very beneficial in the future, both for the environment and for local economies.
The question remains: does the GCF possess the potential to be an important player in global climate governance? The rationale behind the GCF is the belief that traditional methods of financing are not enough to move the global economy in a direction, which is both environmentally friendly and does not impede the growth of developing countries. Traditional funding channels have also been criticized for reacting too slowly to events, and for not paying enough attention to local context and cultures.
The GCF is different than previous platforms in a number of ways. It is the only stand-alone multilateral financing organization whose singular mandate is to serve the UNFCCC. Its board is composed of an equal number of individuals from developed and developing countries, which will prevent a scenario we have seen too often in the past, where rich nations speak on behalf of developing countries without being asked. The GCF is also designed to mobilize private sector investment through its Private Sector Facility, because it recognizes that private actors must be actively engaged in the discussion on environmental sustainability. In the end, we have to understand there must have been a reason why member countries of the UN decided to create a new platform rather than provide additional funding, say, the World Bank. Undoubtedly, existing global institutions were not deemed appropriate. Perhaps this was due to a perceived lack of expertise, or perhaps it was the belief that they already had too much on their plate to focus properly on adaptation and mitigation. In any case, it led to the creation of the GCF, which just approved its first eight investments this November. The Green Climate Fund now has the opportunity to become the main vehicle for countries to access climate change-related funding, and thus to become an essential actor in global climate efforts.