COP28 Green Climate Fund: a still too-empty wallet

 COP28 Green Climate Fund: a still too-empty wallet

This Monday, the fifth day of COP28 and the second thematic day, was dedicated to the topic of climate finance, a hot topic of particular interest in this edition. In this article we explain, in a simple way, some key elements to understand in which direction we are going, and in particular the Green Climate Fund and the latest report of the High Level Panel on Climate Finance.

by Sofia Farina

After the first days devoted to speeches by heads of government and state, COP28 got into the thick of negotiations and work, with a schedule set by thematic days. Sunday was dedicated, for the first time in the history of the Conferences of the Parties, to health and the impacts of climate change on it, while today the week began with a day devoted to climate finance, a hot topic of particular interest in this edition.

The Green Climate Fund

The Green Climate Fund (GCF) event featured high-caliber speakers on its stage, including Simon Stiell, UN Executive Secretary for Climate Change, and Mafalda Duarte, Executive Director of the GCF itself.

The GCF had already begun to occupy the pages of newspapers around the world in the first days of COP28, thanks to the resounding announcements of new contributions to it by, for example, the United States, with 3 billion promised by Vice-President Kamala Harris, and Italy with the 300 million declared by Meloni.

To review briefly, the GCF was set up as a funding mechanism for the Paris Agreement and has become the largest climate fund in existence. Its mandate is to promote a paradigm shift towards low-emission and climate-resilient development paths in so-called developing countries. The Fund has a portfolio of USD 13.5 billion (USD 51.8 billion including co-financing) to implement transformative climate actions in more than 120 countries with impacts on more than 900 million people. Finally, it has a support programme that builds resilience and capacity and helps countries develop their own NDCs to combat climate change. NDCs are the non-binding national plans that governments implement as a contribution to achieving the global targets set out in the Paris Agreement.

What has been done so far is not enough

“The simple idea behind the GCF is one of the best critical ideas we have had in the fight against climate change. Finance is the big driver of climate action. By providing grant finance to developing countries, both mitigation and adaptation projects can get off the ground. It creates momentum. Leverages grants to multiply their impact. It helps developing countries create ambition in their Nationally Determined Contributions and National Adaptation Plans” Simon Stiell argued during his speech. Besides praising the Fund, the UNFCCC Secretary also stressed the complexity of its management: “Building and managing a fund that provides funding to dozens of different sectors such as agriculture, water infrastructure, energy or erosion protection is very complex”.

Both Stiell and Mafalda Duarte celebrated the successes achieved and the work done by the fund so far, as well as the recent funding breakthroughs promised in recent days. On the other hand, they also emphasized, emphatically, that there is a need to sharply increase resources and speed up the funding processes.

“If we continue to work in the same way, we will continue to achieve the same kind of results. We have done good work, we have achieved results on the ground, but not at the scale and speed required” Duarte said. According to the GCF Executive Director, it is clear that “we are not mobilizing enough private capital and that we are leaving behind many vulnerable people, especially in the most fragile parts of the world. Unfortunately, fragility is not going to decrease, but to increase. We have multiple crises that follow each other and feed off each other”.

In the same vein, Stiell stated that “the fund is not yet close to reaching a size commensurate with the high quality demand from developing countries. This means a wider pool of contributors. For too long we have relied on a small group of countries to provide most of the funding. More countries should consider it in their own interest to contribute. It will be a contribution to our common future. To our shared prosperity”.

The report “A climate finance framework”

Today, there was also a press conference to present the second report of the High Level Panel of Independent Experts on Climate Finance (which, if you wish, you can read in full here: https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2023/11/A-Climate-Finance-Framework-IHLEG-Report-2-SUMMARY.pdf).

In the report, there is also a paragraph on the current state of climate finance. It is stated that the amount of global climate finance has more than tripled in the last ten years, reaching USD 1.27 trillion in 2021/22, or about 1% of global GDP. However, the insufficiency of current funding is also underlined, as well as major shortcomings from the perspective of the least developed countries: climate finance is concentrated in developed economies and China, and in mitigation rather than adaptation. Furthermore, private funding is insufficient, most of it remains in the country of origin, and climate finance is mainly provided in the form of debt. There is also long-standing criticism of the lack of transparency on how climate finance is measured and disbursed.

Already in the previous report, presented at COP27, it was stated that USD 2.4 trillion per year by 2030 is needed to reach the goals of the Paris Agreement, to be allocated to emerging economies and developing countries, excluding China. The new report details this target in more detail, breaking it down into different areas of investment. Specifically, it says that USD 1.5 trillion will be needed for energy transition, USD 250 million for adaptation and resilience, USD 300 million for loss and damage, USD 300 million for natural capital and sustainable agriculture, and USD 50 million for just transition.

The paradigm shift that is continually and consistently called for at COP events and conferences is one that should lead us to see these not as costs, but as investments to be able to live on a more habitable and sustainable planet for all. In Stiell’s words: “We must abandon the idea that funding for developing countries is charity or development aid. As long as we think of climate funding in this way, it remains vulnerable. They can be cut as soon as domestic political considerations dictate. Instead, we must see investments in climate mitigation and adaptation as enlightened self-interest. Climate change does not concern the North or the South, and neither should we. We are in the same sinking boat, and those who have the most life jackets must provide some for the others.”

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