Climate finance putting the puzzle together.

• Author: Barbut, Monique

After the disappointment of the much-heralded 2009 Copenhagen Accord, the 2010 Cancun Agreements were considered to have achieved progress, because an agreement was reached to establish the Green Climate Fund in order to scale up the provision of long-term financing for developing countries.

Over the last year, largely unbeknownst to the public, Governments from countries rich and poor were busy working on the design of the Green Climate Fund, aimed at mobilizing $100 billion a year by 2020 for mitigation and adaptation to climate change. However, do we really need and can we afford a new global fund, particularly in today's distressed financial environment?

The Global Environment Facility (GEF), a fund created on the eve of the historic Rio Earth Summit of 1992 to promote sustainable development in poor countries, has been serving as the major source of financing for the global environmental conventions created in Rio, including climate change. Today, the GEF grants $300 million per year for climate change mitigation in developing countries. The GEF also operates two funds on behalf of the climate change convention, the Special Climate Change Fund and the Least Developed Countries Fund. These funds have provided $420 million in grants to developing countries in an effort to reduce vulnerability to climate change in the context of their national development. An Adaptation Fund was also established under the Kyoto Protocol of the Climate Change Convention. Moreover, in 2008 the World Bank established two Climate Investment Funds to provide grants and loans for climate change mitigation and adaptation. Similar funds exist at various regional development banks, UN agencies and bilateral aid agencies, all dealing with climate change.

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Given this long line of funds, why do we need yet another fund for climate change? What can a new fund do that existing funds and institutions cannot? The common response is that we need a fund which can provide resources at a scale that is large enough to move economies away from their dependence on fossil fuel-based energy systems. A secondary response is that we need a fund which is more democratic in its governance structure. While dreaming up a new fund that can mobilize hundreds of billions of dollars is indeed an exciting thought exercise, it is not practical, particularly in a distressed economic environment where the Governments of most developed countries are in dire financial...