TWN Info Service on Climate Change (Jul14/01)
4 July 2014
Third World Network  

Green Climate Fund: No concrete pledges in resource mobilisation meeting

Oslo, 3 July, (Meena Raman) – The first meeting to mobilise resources for the Green Climate Fund (GCF) did not see any concrete pledges of funds from interested contributors. It did not even result in setting a target or scale of ambition for the amount of resources to be mobilised, despite strong calls from both developing country governments and civil society participants during the meeting.

The one and a half day meeting of “interested contributors” for the initial resources mobilisation for the GCF was held in Oslo, Norway, on 30 June-1 July and was hosted by the Norwegian government.  Welcoming remarks were made by Norwegian Minister of Foreign Affairs, Mr. Borge Brende, and the Minister for Climate and Environment, Mrs. Tine Sundtoft.

Senior officials from 24 developed and developing countries interested in contributing to the Fund attended the meeting, as well as the Co-chairs of the Board of the GCF (from the Philippines and Germany) who opened the meeting. Also in attendance were four representatives of the Board (two developed/two developing countries), the Fund’s Executive Director and two active observers of the Board (one civil society/one private sector member).

The meeting selected Norway’s Henrik Harboe, Director of Development Policy, Ministry of Foreign Affairs, to chair the session. Harboe is also a member of the GCF Board. The meeting took place just weeks after the GCF Board decided to start the resource mobilization process at its meeting in Songdo, Republic of Korea, on 21 May this year. The initial resource mobilization (IRM) process is to ensure the initial capitalization of the Fund.

Observers to the Oslo meeting had hopes that interested contributors from developed countries would indicate some firm commitments to the Fund, but these were dashed. Many expressed disappointment along the corridors after the meeting ended.

In response to strong calls from developing countries to indicate some ambition on the scale of the resources to be mobilised and to set some target, several developed country delegates expressed that they did not have the political mandate at the meeting to give any indication on the “numbers” and that any pledges of funds will only be possible at the forthcoming Climate Summit in New York in September (convened by UN Secretary General Ban Ki-moon) or at the final pledging meeting of contributors as part of the IRM process in November, at a venue which is yet to be decided.

The Oslo meeting was seen by developed country contributors as a “technical” session to sort out issues relating to the scope and timeline of the collective engagement process; the policies for contributions, the template for legal agreements of contributions; consideration of a document about the Fund called ‘programming document’; outreach to other potential contributors; and the next steps, including on facilitation arrangements for the IRM process.

The main outcome of the meeting was agreement on the selection of a facilitator and an eminent person to help with the IRM process. The names are not to be disclosed until the persons have accepted their assignments.

The meeting chairperson, Harboe, in summarising the discussion on the scale of the resources, said that all participants want to maximise resources to the GCF and there is agreement that the scale of resources is crucial. He added that all earlier commitments stand, referring to the US$100 billion per year by 2020 which was agreed to by Parties to the UNFCCC in 2010 in Cancun, Mexico, including the decision adopted in 2013 in Warsaw, Poland. (The Warsaw decision urged developed countries to maintain continuity of mobilisation of public climate finance at increasing levels from the fast-start finance period of US$30 billion from 2010 to 2012, in line with their joint commitment to the goal of mobilizing US$100 billion per year by 2020.)

Where there is disagreement, said Harboe, was on strategies to get there (to the US$100 billion goal). On how to reach targets, he said one group of participants (from developing countries) expressed that having very ambitious scenarios and a number will focus countries to do more while others (from the developed countries) think that the process has to start with the “technical stuff and parameters” and then to go back to their political masters (on reaching the targets). He added that several delegates at this meeting had “technical mandates” and they could not be pushed on the “numbers”. He said that the meeting in November is the time for “maximum pledging” and that the Oslo meeting and another planned in September are to prepare for that. 
Harboe  added that the role of the eminent person was to find out from each Party what their “first bid” and “range” of contribution would be, as each country would not be willing to say what it is willing to do without knowing what the other is contributing. Hence, it is for the eminent person to help Parties and create the dynamics to get everyone towards the scale for significant resources to the Fund.

Norwegian Foreign Minister Brende in his welcome remarks, stressed the importance of the GCF for multilateral climate financing in the coming years. There are high expectations, he said, and hoped for “monumental pledging and commitments” during the forthcoming General Assembly meeting in New York (referring to the Climate Summit).  Stressing that “actions speak louder than words”, the Minister said that Norway will provide GCF with funding, and an announcement will be made in New York by its Prime Minister. He added that the objective is to finalise commitments to the IRM process by the UNFCCC meeting in Lima, Peru at the end of the year. Brende further stressed that there will not be a legally binding agreement on mitigation without commitments on finance and that this was a prerequisite for the global commitment, referring to the 2015 agreement to be concluded in Paris under the Durban Platform. 

Norwegian climate change Minister Tine Sundtoft said that the purpose of the GCF is to make an ambitious contribution to combat climate change and to do that, it needs to be different from other funds and has to reach a larger scale. She echoed the words of Christiana Figueres, the Executive Secretary of the UNFCCC, that mobilising resources for the GCF was “an iconic issue of trust building” in the negotiations and added that the Paris deal is only possible with resources in the GCF.

In opening the meeting, Board Co-chair Manfred Konukiewitz (Germany) delivered some key messages: that the GCF is the cornerstone of the 2015 global deal in Paris; the timeline for the IRM is important and tangible success needs to be seen in the process before the Lima Conference; contributions will also be welcome after Lima but participants need to be mindful of the timeline; there also needs to be ambition on the scale of contributions so that the GCF can focus on results and impacts. He stressed that there could be no outputs without inputs.

Board Co-chair Jose “Joey” Salceda (the Philippines) at the opening of the session stressed the importance of the GCF to the developing countries who are already paying the price of climate impacts and face daily survival challenges. In a later intervention during the meeting, in response to the United States who had pleaded for the understanding of participants on the difficulty of having a numerical target for the GCF to mobilise resources, Salceda said it was a discomfort that developing countries like the Philippines must indulge the plea for understanding by the developed countries in avoiding the issue of scale. He referred to how Typhoon Haiyan (in 2013) impacted losses of US$12 billion on the Philippines and that his province is spending 11% of its budget to make development resilient and ensure there is no casualty during disasters. “No matter how we try to avoid discussions of scale, we cannot avoid the voices of the poor who have died from climate disasters that visit my country year after year,” stressed Salceda. He added that the GCF was created to overcome the shortcomings of the current climate finance efforts. Without any signal on the scale and ambition of the resources that will be committed to the Fund, the success of the climate talks in Lima and Paris will be in jeopardy, he said.

Hela Cheikhrouhou, the Executive Director of the GCF in her remarks with a power point presentation, showed how the GCF could promote the paradigm shift to low emissions and climate resilient development, highlighting the possible strategic impacts and list of result areas of the Fund. She stressed that with the GCF, it is possible to buy down upfront costs, provide easy cash flows and take higher risk tolerance in supporting investments. She added that it was possible to save trillions tomorrow by investing in billions today.

On scale of resources and scenarios

During the discussion on the document on the Fund’s programmes, Rodrigo Rojo, the Board member from Chile said that the most important information needed is the size of the funds which was missing in the document.  Responding to several developed country delegates who said that there is no need to produce programming scenarios based on different IRM scenarios, he stressed the need for a clear size of the Fund. 

The delegate from Indonesia also iterated several times that there is need for programming scenarios based on the short-term, medium-term and the long-term needs. Knowing the scale of resources is important for determining his country’s contribution to the IRM process, he added.

Dipak Dasgupta, the GCF Board member from India also stressed the need for clarity on the scale of the resources and added that contributors must give a clear sense of what is their minimum threshold. Dasgupta said that the issue of scale will surface again at the next meeting in September.  If this is not resolved by the time the Board meets in October, it will not be informed about what is the likely outcome of the IRM process. He was of the view that this approach was a set up for failure.  At some point of time, there is need to narrow down the range of the level of resources and to talk about it openly early in the process. He said delegates owed it to the GCF’s functioning without waiting for the outcome in November.

Similar views were also expressed by Mexico and South Africa.

The delegate from France in response said that this was a technical meeting and the political momentum is around the UN Summit (in September). The mandate here is to discuss technical issues in relation to the pledging session. The representative from Germany also said that issue of scale of resources is complex and that the meeting is about technical issues which are distinct from the political process. 

The United States representative said that the reluctance on having an indication of the scale resources or for scenario planning is not about its lack of commitment to contribute to the Fund. There is need to understand the difficult fiscal environment of the country. Its pledge has to do with sensitive negotiations, and is a very delicate political process. “Having numbers from outside” will not help the process. 

The United Kingdom delegate said that he did not have instructions (to indicate any number) as he was only dealing with the technical level. He said that politicians will reserve that (in reference to giving any target) for themselves. 

The Japanese delegate said that the IRM process is separate from a formal replenishment process. He said that what was clear is that the aim of the IRM is to be finalised by November but the end date is actually open-ended. He said delegates need to prepare for the maximum amount of pledging and should not be having non-technical discussions, referring to discussions about the scale of resources. 

On the terms of reference for the facilitator and eminent

On the terms of reference for the facilitator and the eminent person, the Oslo meeting Chairperson Harboe reflected some ideas as follows: for the facilitator, the person needs to have a deep knowledge about resources mobilisation; possess diplomatic and negotiation skills; and has experience in chairing international processes. The facilitator is to chair the IRM process and conduct communications with Fund contributors for a timely outcome and will work closely with the Executive Director of the GCF.  As for the eminent person, among the criteria the person should be well connected to governments and political leaders, and should be able to engage with the contributing countries.

Policies for contributions 

On the policies for contributors, among the issues raised were options to allow a limited amount of earmarking of funds instead of a complete prohibition against it; to have more clarity regarding paid-in capital contributions; exchange rate risks; issues around the uncertainty of when a permanent trustee would be selected with some contributors from developed countries suggesting a possible extension of the current interim trustee arrangements (the World Bank is the interim trustee for now).

While several delegates from developed countries wanted to have some flexibility in allowing for a limited amount of earmarking, the delegate from Sweden did not support the idea of earmarking saying that this was not a good idea.

The delegate from the United Kingdom also raised the issue of decision-making in the GCF Board which is working on the basis of consensus. He said while there were advantages and disadvantageous in this regard, he said that voting arrangements should be looked at and wanted recommendations to be made for the Board to decide. He wanted to address the relationship between contributions and voting and called for an information note in this regard. This was supported by the United States.

In his summary of some of the issues raised, Harboe said that several participants had raised concerns about the prohibition against earmarking and called for flexibility. He said that some had suggested if there could be a guarantee that a major share of the funds are un-earmarked, this can then limit the flexibility. Several delegates also wanted clarity on how to deal with resources coming from the private sector and the role of the Private Sector Facility.

The Board member from Chile, Rodrigo Rojo, raised concerns that matters that were already resolved by the GCF Board (on earmarking) were now being reopened at the meeting.+