Green Climate Fund near-empty despite pledges of more than $10 bn

Rich countries yet to formally commit money though they made public commitments

Developed countries have given a paltry 1.03 per cent to the Green Climate Fund (GCF) of the $10.2 billion of pledges they announced publicly amid plenty of hype last year. The lack of real monies against the pledges has created a crisis. The fund, meant to be a financial bulwark against climate change will fail to be operational if 50 per cent of the funds pledged by developed countries do not materialise by the end of April.

The crisis was revealed in a report furnished at the ninth meeting of the GCF board in Seoul.

Developed countries had committed to provide $100 billion annually to the GCF by 2020, and in the first round of pledging in 2014, some of these countries announced they would provide resources that would collectively add up to $10.2 billion. The rules require that developed countries come true on at least half their pledges. But, so far only a handful of countries have actually signed up contracts with GCF to transfer the funds. These add to a mere $104.83 million.

Reacting to the paltry actual contributions of rich countries, Meena Raman, observer from the Third World Network at the GCF meeting, said, “We expect the $10.2 billion to come through quickly. Green Climate Fund should be a fund of hope, not a fund of hype.”

The GCF was set up by an agreement among about 190 countries to help developing and poor countries fight climate change. The countries had decided that by 2020 the fund would be worth $100 billion annually. Many developing countries demanded a road map for scaling up contributions from rich nations between now and 2020 to ensure the funds do come through. The rich countries collectively blocked such mid-term targets for the fund.

The lack of funds and caveats imposed on the use of the paltry funds rich countries offer to reduce emissions in poor countries and adapt to inevitable climate change have several times threatened to derail negotiations towards achieving a global deal, that is to be sealed by the end of this year.

The information provided at the GCF board meeting only added to the deepening of distrust between the rich and developing world blocks.

Brandan Wu, senior policy analyst at Action Aid USA, speaking to Business Standard from Seoul, said, “The $10 billion in pledges to the GCF is a drop in the bucket compared to needs on the ground, but at least it can get the fund up and running delivering finance to vulnerable countries and communities that need it the most.”

On the importance of getting the fund running in time, Wu said, “If rich countries fail to deliver the resources in a timely manner — by the April 30 deadline that they themselves set — that sends an awful signal.”

At the board meeting, the US, which has publicly pledged $3 billion, said it would not actually sign the formal deal to contribute its pledged funds in time for the GCF to become operational following the April deadline.

Only six countries that pledged funds have actually contracted with GCF to deliver these in time for the April deadline. These are Panama, Luxembourg, Iceland, Latvia, Poland, Chile and Indonesia. Their contributions add to a tiny amount – less than $10 million. Three other developed countries have signed formally to give some of the funds they promised. None of the big developed countries have so far contracted to pay.