Takeaways from Green Fund Meltdown

From Climate Home is this post today by Megan Darby 8 takeaways from the Green Climate Fund meltdown  Excerpts in italics below with my bolds and images.

The UN’s flagship climate finance initiative had a public setback this week. What went wrong, what are the political implications and what happens next?

The UN’s flagship climate finance initiative had a major setback this week, with the board failing to agree on any big ticket decisions.

Longstanding tensions at the Green Climate Fund came to a head in Songdo, South Korea, as it opened talks on raising a new round of contributions.

On top of that, the head of the secretariat abruptly resigned, adding top level recruitment to the fund’s woes.

As the dust settled, Climate Home News spoke to several participants and observers about what went wrong, the fallout and next steps. Here are eight takeaways.

1. Absent Oquist

The meeting got off to a bad start when the Nicaraguan co-chair failed to show up. Ok, so things were pretty bad back home, with anti-government protests turning violent.

But it was ironic, given Paul Oquist had done a major U-turn to get the job. He notoriously refused to endorse the Paris Agreement in 2015, saying it was too weak. Nicaragua only joined last year when it became apparent Oquist otherwise had no chance at leading the GCF board.

In his absence, developing country board members complained they had not been properly consulted on the agenda, kicking off a protracted procedural dispute.

2. Trump towers

After president Donald Trump made clear he had no plans to put any more money into the GCF, you may wonder why the US still has a seat on the board.

Trump sizes up the benefits were Paris Accord to actually succeed.

Well, the country has already handed over $1 billion and Geoffrey Okamoto is the Trump appointee charged with seeing it is spent wisely. But he can afford to be provocative, having no stake in the fund’s sustainability.

His insistence that the replenishment process should be “donor-driven” did not go down well, on a board deliberately structured to give the developing world an equal say. Nor did his lobbying to end talks on time, while others were trying to salvage some agreement.

3. Fundraising

If there was any doubt on where the talks got stuck, a glance at the video page should dispel it. There are no fewer than six sessions recorded on “matters related to replenishment”, spanning more than 24 hours.

At heart, it is a rich-poor fight of the kind familiar to anyone who follows UN climate negotiations. Donor countries try to attach conditions to funding, while beneficiaries demand they quit stalling and deliver.

In previous meetings, the board has tended to push through some headline outcomes – usually project approvals – at the last minute, while deferring contentious policy decisions. This time round, representatives from Canada and Finland as well as the US were not prepared to just muddle through.

4. Performance review

Before it can raise new money, the fund will need to show donors what it has done with the initial round of contributions. This and other preparatory work is expected to take six months or so.

“If there is one thing we need to decide this time, it is to start a review, because that is a precondition to replenishment processes,” said Germany’s Karsten Sach in the meeting.

The problem was in deciding who should carry out the review. Most saw it as the natural remit of the fund’s independent evaluator Jyotsna Puri, but a handful of developing countries wanted to outsource it. So here too, there was no agreement.

5. Bamsey bails

After a weary-looking chair admitted defeat on replenishment, he dropped a bombshell: the fund’s top executive Howard Bamsey resigned with immediate effect.

Nobody blamed Bamsey for the chaos, which was essentially political, or cast doubt on his explanation the move was for “pressing personal reasons”. The Songdo-based role had kept him away from his family in Australia. (He could not be reached for further comment.)

But the timing took some – including the secretariat’s communications team – by surprise. He had been expected to oversee the replenishment process before leaving. His replacement must take on the heavy lift of fundraising and resolving a backlog of governance issues, while navigating the heated boardroom politics.

6. Projects in limbo

The collapse means a three-month delay for 11 projects bidding for nearly $1 billion of GCF money. Solar panels in Tonga, water management in the Guatemalan highlands and climate finance upscaling across 17 countries are some of the interventions that will just have to wait.

“The people and communities the GCF is meant to support – those who are most vulnerable – are the ones who suffer the most when progress is delayed,” said Action Aid’s Brandon Wu.

It does nothing to help the fund’s reputation for being slow to get money moving. Then again, with a cash crunch looming, the fund cannot afford to make cavalier spending decisions.

7. Political fallout

It comes in a critical year for the UN climate process. Ministers are due to take stock of global action at the Cop24 negotiations in Katowice, Poland this December.

Climate finance is a key part of that. The industrialised world has promised to mobilise $100 billion a year by 2020. Many countries’ climate plans hinge on that support.

The GCF is not expected to deliver all that investment, but is a totem of international cooperation. If it breaks down, it bodes poorly for the Paris Agreement.

8. Optimism

Despite the public meltdown, everyone CHN contacted was hopeful of getting things back on track. There is time for the fund to redeem itself before Cop24, at the next board meeting in October. Behind the scenes, its advocates will knock some heads together in the coming months.

While finance people may be horrified at the inefficiency and game-playing, those coming from a climate negotiations background see the occasional political upset as par for the course.

“Anything about new money is always very thorny,” said Meena Raman of the Third World Network. “I don’t think we have given up on [the GCF] and I don’t think anyone should.”

Footnote:  The last takeaway is wishful thinking from Climate Home, who are desperately hopeful that Paris Accord and the Green Fund succeed, despite the obvious signs of collapse.  Staying hopeful is also a signal of virtue.