ASIA-PACIFIC: South Korea Hosts The Green Climate Fund

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By Jutta WolfPhoto credit: Land Rover Our Planet, Flickr

BONN – A huge amount of some 5.7 trillion US dollar – 5,700,000,000,000 – is required yearly to build a green infrastructure by 2020 in order to limit global temperature rise to 2 degrees C, a new report by the World Economic Forum (WEF) estimates.

Developing countries in particular are in pressing need of adequate funds to limit or reduce their greenhouse gas emissions and adapt to the impacts of climate change. The Green Climate Fund (GCF) plays an important role in providing the necessary funding. Continued warming from the release of greenhouse gases (GHGs) into the atmosphere is projected to have substantial adverse impacts on the environment, human health and the economy .

The multilateral Fund was established at the sixteenth session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) in Cancun, Mexico, from November 29 to December 10, 2010, to “promote the paradigm shift towards low-emission and climate-resilient development pathways . . . taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change”. It was designated as an operating entity of the Convention’s financial mechanism.

The Fund was temporarily hosted at UNFCCC’s headquarters in Bonn, Germany, until December 4 but now has moved to South Korea. The official opening of its headquarters in Songdo, South Korea – attended among others by the country’s president Park Geun-hye, World Bank President Jim Yong Kim, and UNFCCC Executive Secretary Christiana Figueres – marks a concrete step toward making the Fund operational.

Figueres said, the Fund is a “GPS for climate investments, to set the course and test directions for different investments,” and will be “an important bridge connecting the world of finance with the climate change challenge.”

Underlining the importance of the event, Giulia Christianson, Theo Trifkovic and Clifford Polycarp of the World Resources Institute (WRI) say in a blog: “The GCF has been working toward the official opening of its offices for more than a year since Korea was selected to host the Fund. Now that it has its new premises, it’s time for it to make brisk progress in 2014 to complete the development of its operational policies. Several issues remain to be resolved. They are scheduled to be completed by May 2014 to allow the GCF to mobilize resources in September 2014 and begin its operations by the end of the year.”

The Fund’s first-ever Executive Director Héla Cheikhrouhou said the Fund should act as the catalyst that tips the balance towards climate-friendly investment decisions. “This will require tackling two big issues that are important for the GCF’s operations: strengthening its funding recipients’ institutions and systems to ensure effective use of its resources, and identifying ways to incentivize the private sector to play a stronger role in tackling climate change,” authors of the blog say.

The Government of the Republic of Korea and other international organizations, including WRI, convened two major events in Korea to help the Fund address the two big issues, the blog points out. The authors write:

Climate Finance and Development Effectiveness

“A two-day Global Forum on Climate Change Finance and Development Effectiveness hosted by the United Nations Development Programme (UNDP) and Korea’s Ministry of Strategy and Finance took place on December 2-3. This event provided a platform for civil society and government leaders to discuss major topics concerning access to climate finance, development policy, and coherence and transparency of investments. Participants came to several important conclusions, including:

“It’s important to strengthen countries’ institutions and systems to manage climate finance effectively. Doing so will foster stronger country ownership over mitigation and adaptation activities and result in more sustainable outcomes.

“There is a need to integrate climate finance with countries’ development decision-making to ensure that they truly undertake development projects that are low-carbon and climate-resilient.”

According to WRI experts, the strength and capacity of countries’ institutions and systems will be important to the success of the Fund. “As the Fund firms up its rules for accrediting the institutions of countries that wish to access its resources, there are at least four ways the GCF can strengthen these national institutions and systems: set aside funding, promote coordination, integrate such support into larger projects, and fast-track support before the GCF is operational.”

Climate Finance and the Role of the Private Sector

WRI convened together with Korea’s Ministry of Strategy and Finance and the Korean Capital Market Institute on December 5 a conference joined by global leaders of business, finance, government, and civil society on Climate Finance and the Private Sector: Investing in New Opportunities. Participants shared their practical experiences, discussed opportunities associated with climate-friendly investments (such as those directed toward clean energy development), and suggested ways the Fund could help usher in low-carbon, climate-resilient development.

Among other things, the forum concluded that there is a need to synchronize the goals and lexicon of the public and private sector to build trust; and even when the business case for clean energy investments are evident, knowledge barriers may prevent these investments from being realized.

According to WRI experts, the Fund will need to find ways to be responsive to such barriers that prevent the private sector from making more climate-friendly investments. “It can do so in two ways: by providing support for creating the policy, regulatory, and institutional conditions that incentivize shifting investment toward cleaner, low-carbon, and climate-resilient activities; and by carefully tailoring its financial instruments and financing approaches to the needs of a diverse set of investors operating in different markets,” WRI experts say. [IDN-InDepthNews – December 6, 2013]

Photo credit: Land Rover Our Planet, Flickr

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