The revelry surrounding Germany’s World Cup victory in Brazil is finally winding down, but for those who follow climate change, Germany has kept the celebration going. On Monday (Bastille Day!), Germany made the first substantial pledge of financing to the Green Climate Fund (GCF), pledging $1 billion to the new fund headquartered in Inchon, Korea. Until now the GCF had received a mere $55 million in funds meant to cover the administrative costs of setting up the new fund. (This paltry sum contrasts sharply with a recent pledge from the BRICS (Brazil, Russia, India, China and South Africa) to put up $100 billion for a new infrastructure development bank to be headquartered in Shanghai.)
Germany’s announcement was heralded by climate advocates as the first step towards creation of a climate fund that they hope will eventually deliver a substantial share of the $100 billion in climate finance for developing countries that was pledged at the Copenhagen climate summit in 2009. The first formal pledging session for the GCF is scheduled for late November this year, just ahead of the Lima climate summit in December. Developing nations are pushing for $15 billion in pledges to the GCF from wealthy nations. The chief UN climate negotiator, Christiana Figueres, has called for “at least $10 billion” in initial pledges for the Green Climate Fund.
Is the $10 billion target realistic? Overall, wealthy governments self-reported providing climate aid worth roughly $10 billion a year during the Fast Start Finance period 2010-2012. However, an analysis by the Overseas Development Institute (ODI), World Resources Institute (WRI), and Open Climate Network (OCN) raises questions of double counting and definitional and operational biases. The biggest climate fund in existence to date is the Climate Investment Fund, managed by the World Bank and other multilateral development banks. Total pledges to the CIFs since 2008 amount to almost $8 billion, with contributions gradually paid in over five years.
If all contributors were to pledge to the Green Climate Fund in the same proportion as they did to the CIFs this would lead to total pledges of around $11 billion, slightly exceeding Figueres’ target. So this may not be an unreasonable goal. And as I blogged earlier, transfering the CIFs to the GCF could help jump-start funding. Germany’s share of total CIF pledges was almost $700 million in concessional loans and grants (plus or minus, depending on exchange rates and questions related to accounting for loans). Not all the pledges have been paid: the US still owes about $800 million of its $2 billion pledge.
Might America’s newfound enthusiasm for the international sport of soccer be followed by a Tim Howard-sized save on climate finance? If the GCF were to receive the same proportional allocation of pledges as the CIFs by each contributor, this would imply a US pledge of $2.9 billion exceeding the US pledge to the CIFs. If pledges were paid in over three years, as they were supposed to be in the case of the CIFs, this would imply annual funding of close to $1 billion from the US. But as a new blog post from our friends Abigail Jones and Michael Wolosin at Climate Advisers notes, under the US Global Climate Change Initiative about $1.86 billion flowed through the primary multilateral channels from 2010-2014, an average of about $370 million per year, and a similar amount flowed through bilateral channels.
With US elections coming up this fall and an increasingly polarized Congress, it’s hard to imagine that, even if the Administration wanted to, the US would be in a position to ramp up its funding commitment for climate change through multilateral channels to the $1 billion implied by a pari passu commitment to the CIFs. If the US does not pledge in proportion to the CIFs, will other donors take up the slack to reach the $10 billion goal? Maybe the BRICS can help.