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OPINION: Paradigm shift in climate finance?

Annelieke Douma and Anouk Franck of Both ENDS, provide an NGO perspective on key debates in the Green Climate Fund

Green Climate Fund: vision and purpose

The Board of the Green Climate Fund (GCF) meets for the third time this week in Berlin, Germany. The 24 Board members from around the world come together again to further discuss the essential modalities of this new international Climate Fund. Until now progress in the negotiations has been slow and decisions have only been taken on operational aspects, such as the decision to locate its seat in South Korea. In the meantime, essential questions around the vision and purpose of the Fund are left unaddressed. Therefore, this meeting in Berlin is seen as an important one to speed up the process to operationalise the Fund by 2014.

The vision of the GCF is on the agenda as part of the discussion of the so-called Business Model Framework. This Framework is crucial for the way the Fund will be further developed and operationalised. The question is whether it will, indeed, promote the paradigm shift as described in the GCF’s guiding document, the Governing Instrument. Clearly, there is no unified vision around either the Framework or the need for a paradigm shift. Earlier attempts to lay the basis for the Framework have been unsuccessful, and therefore a number of informal meetings have been needed before the actual Board meeting, to get this process back on track.

Paradigm shift

For many of the donor countries, the paradigm shift seems to consist of finding innovative ways to leverage private climate investments, notably through the GCF’s Private Sector Facility. Developing countries and civil society organisations are not convinced that putting the private sector at centre stage should be the starting point. They are wary that the numerical game of adding private sector investments attracted by GCF subsidies to the total of climate funds made available may be a trick of donor countries to renege on their promise to provide new and additional funding for climate change adaptation and mitigation. Indeed, it makes sense to first decide on the key objective and the target groups of the Fund, before thinking of modalities on how to reach them.

What real paradigm shift, then, should the GCF bring about? Both ENDS and its partner organisations working on climate change and adaptation in India, Argentina, Philippines, Indonesia and Ghana suggest the GCF should take the needs and priorities of the groups most vulnerable to climate change as the starting point for developing the Business Model Framework, and focus on developing country ownership. Contrary to many multilateral funds or institutions most trusted by donors (including the World Bank) that follow centralised models for decision-making, the GCF should champion direct access to the Fund.

Direct Access…

Direct access to funds by national governments is crucial to integrate the resources in existing structures and policies. They know their context and priorities best and should decide on how to use climate finance within their country. A paradigm shift requires a long-term, programmatic approach to achieve low-emission and climate resilient development, and thus long-term national plans on adaptation and mitigation. Supporting these processes at the national level for the GCF would thus be crucial.

… and one step beyond

Another step is needed however: the explicit devolution of support to the local level. Local actors are often already implementing sustainable adaptation and mitigation strategies, but they often experience large difficulties in accessing climate funds. They have crucial knowledge and experiences to contribute to national strategy development, and are therefore important actors to be involved in decision-making processes on climate funding allocation. They can also play an important role in assessing the impacts of projects on the ground.

But how to exactly operationalise this devolution to the national and local level?  There are already lessons to be learned from other multilateral funds, including the Adaptation Fund, the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the Global Environment Facility. At this moment, there is no one existing fund that goes far enough in devolving decision-making to the local level, making it participatory, and building capacity at the national level.

Our research pointed out that the Global Fund provides the most interesting and far-reaching model of multi-stakeholder decision-making  through its Country Coordinating Mechanisms, where civil society organisations and affected people, alongside governmental agencies and the private sector, take part in the development and submission of proposals. Another interesting development is the establishment of national climate funds in countries like Bangladesh, Brazil and the Philippines. Although most of these are still in their infancy, it would be essential for the GCF to ensure that such existing structures are respected and used as long as they are committed to follow the principles of participatory decision-making and devolution of funds to the local level where they are most needed.

Key recommendation for Berlin

Based on these assessments, we propose that the 24 Board members in Berlin should ensure that direct access is accepted as a central feature of the GCF, in line with the Governing Instrument, and that clear questions are formulated to guide the Fund to incorporate this central issue into its Business Model Framework. Such an innovation would be fundamental to the GCF: it deserves dedicated and timely research and efforts to make it work – and achieve a real paradigm shift.

For more information, read the report “Reaching local actors in climate finance – lessons on direct access for the Green Climate Fund”.

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