South Korea has emerged as one of the first backers of the United Nations’ new Green Climate Fund, the major new climate finance initiative that was approved at the Durban talks over the weekend.
South Korea, which last month unveiled plans to spend KRW35.5trn (€23bn) by 2020 to develop clean energy technology, has offered to contribute to the start-up cost of the fund, and will host one of first two board meetings; Switzerland will host the other. Countries have until April 15 to register their interest in hosting the fund.
The fund – which aims to channel $100bn a year from developed countries towards climate change mitigation and adaptation activities in developing countries – was approved by the plenary session of the Conference of the Parties (COP) in the early hours of yesterday morning.
“Given the urgency and seriousness of climate change, the purpose of the fund is to make a significant and ambitious contribution to global efforts towards attaining the goals set by the international community to combat climate change,” says the report adopted (FCCC/CP/2011/L.9). It will be “the main global fund for climate change finance”.
The fund will channel “new, additional, adequate and predictable financial resources” and act as a catalyst for both public and private climate finance. It will be able to deploy “instruments or facilities” alongside grants and concessional lending. The fund will be able to “directly and indirectly” finance private sector mitigation and adaption activities.
“Countries have already started to pledge contributions to start-up costs of the fund, meaning it can be made ready in 2012, and at the same time can help developing countries get ready to access the fund, boosting their efforts to establish their own clean energy futures and adapt to existing climate change,” said Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC).“The Durban package recognises the potentially crucial role that the private sector could have in financing the transition to a low-carbon economy,” said Stephanie Pfeifer, Executive Director of the Institutional Investors Group on Climate Change (IIGCC). “As an international agreement begins to take shape, action at a domestic level will remain an important driver of investor behaviour.
“Introducing measures which stimulate private investment into climate change solutions has become more important than ever before.”
“Durban will be remembered as the birthplace of the Green Climate Fund,” said Celine Herweijer, director of sustainability and climate change at consulting firm PricewaterhouseCoopers.
Attention will now shift to how the fund will be run – with a secretariat, board and Executive Director set to be appointed. The latter will, at a stroke, become one of the key players in global climate finance.
The fund will be administered by a 24-member board, comprising equal numbers from developed and developing nations, serving for three-year terms. There will be two co-chairs.
Countries are to nominate members to an interim secretariat by March 31. The interim secretariat, part of the UNFCCC, is to make arrangements for convening the fund’s first board meeting by April 30. The fund’s assets will be administered by the World Bank as trustee, which has caused concern from some campaigners.
Despite the approval of the fund, there is no clear steer on how it will be funded. In the 13-page final document just 33 words are devoted to ‘financial inputs’.
In terms of how funds are allocated, there will be a results-based approach with a “streamlined” programming and approval process – which will include payment for verified results.
An independent evaluation unit will be set up to monitor the performance of the fund. And there will be an independent “integrity unit” to investigate allegations of fraud and corruption.