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A defining moment: time to pledge to the Green Climate Fund

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Currency and money

By November of this year, developed countries are expected to commit substantial funds to the newly operational Green Climate Fund, which over the coming years is expected to play a central role in supporting actions in developing countries get on a low emissions development pathway and build resilience to climate impacts.

Contributions to the Green Climate Fund this year are needed to meet urgent needs in developing countries, and to build momentum and confidence towards a new global agreement next year, which is needed to ensure all countries are fully engaged. The GCF resource mobilization will be an important test of global commitment to confront the climate challenge, and willingness of developed countries to step up to the plate and meet their obligations.

WWF is calling for grant contributions of USD$15 billion this year, to be disbursed over a maximum period of 3 years. This amount should be contributed by developed countries, specifically those listed in Annex 2 of the UNFCCC, who assumed responsibility under the Convention for providing financing for actions in developing countries. Contributions by other countries and organizations will also be very welcome, but such contributions should be in addition to the $15 billion.

After the initial resource mobilization this year, contributions must be scaled up rapidly towards the $100b committed annually by 2020.

So far there are some promising signs. Germany’s leader Angela Merkel committed to contributing €750 million (USD$ 1 billion). Sweden has also made a public commitment for a smaller amount of USD$ 44 million to the GCF in 2014, and other developed countries are actively considering how much to contribute and the timing of their announcements.

South Korea, the host country of the GCF’s secretariat, has also indicated it will make a contribution, and several developing countries are also considering a contribution, including Peru, the host of this year’s climate negotiations under the UNFCCC.

The willingness of developing countries and others without formal financing obligations to consider making contributions to the GCF this year is an indication of how important multilateral financing is to global efforts, and should be an additional incentive to developed countries to make substantial contributions in line with their capabilities and responsibilities.

A successful pledging process to the GCF will also be a strong indication that governments and leaders and serious about taking action on solutions to the climate crisis, and reaching a successful outcome in this current round of global negotiations.

Mobilizing and budgeting for these resources will require the commitment of Financing Ministers and Leaders over the coming months. This issue should be high on the agenda of Leaders when they meet for the climate summit convened by Ban Ki Moon in New York in September.

Impetus for global action

Negotiations are underway towards an agreement by the end of 2015 that will redefine the approach to the world’s greatest collective challenge – preventing dangerous disruptions to the global climate. This will test the world’s commitment to the well-being of future generations, to multilateralism and to finding equitable and fair solutions to global problems.

Substantial progress on the 2015 agreement is needed this year, but it is largely groundwork laying and momentum-building – draft texts, parameters for commitments, raising expectations and political engagement, and moving forward with on-the ground actions – leaving the concrete commitments and numbers largely to next year.
With one exception – financial contributions to the newly operational Green Climate Fund (GCF).

Money for climate action

Countries agreed half a decade ago to create this Fund and make it the main channel for financing climate actions in developing countries under the UNFCCC. This funding is essential to helping developing countries shift to clean and renewable energy systems and low carbon development pathways, as well as preparing for and adapting to the climate impacts that cannot be avoided.

Since the 2015 agreement will only come into force in 2020, countries need to implement concrete actions that reduce emissions in the short term to build momentum in the climate battle and gain time for long-term efforts to take effect. The most urgent and critical component of pre-2020 action is to ensure financing is in place, and here there is a key role for the Green Climate Fund.

The level of finance contributions is an important test of whether developed countries are willing to live up to their end of the global bargain that was struck, and which needs to be respected in order to get an ambitious and game-changing global agreement.

Help needed to find new and untested development pathways

Developed countries had the luxury of unrestricted use of fossil fuels to power their economies and create their wealth. But the fossil era is drawing to a close. Developing countries are now expected to pursue a different path.

The challenge lies in the reality that, despite their enormous environmental and social costs, fossil fuels like coal, oil and natural gas are proven and established sources of energy that have been widely used to meet energy needs.

Shifting away from these energy sources will have long term environmental, social and economic benefits, but in most cases increased near-term investment needs which will result in huge savings over the medium and long term. Meeting these short term costs, which come on top of the existing huge challenges developing countries have in reducing poverty and meeting education, health care and other needs of their citizens, will require new and scaled up sources of financing.

As such it was agreed that developed countries would take the lead in making the transition to low carbon economies, and that they would support developing nations in their efforts to pursue their own transitions.
Developed countries have a clear and widely recognized responsibility to provide the financing needed to support scaled up action in developing countries.

Yet they have refused to give specifics about how much support they will contribute in the coming years, beyond a collective agreement to mobilize $100 billion annually by 2020 for developing countries. That is only five years away and there is little indication that finance levels have even risen above 2010-2012 levels.

Mark Lutes is a senior adviser on Climate Change for WWF’s Global Climate & Energy Initiative. He is based in Sao Paulo, Brazil.

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