Economics for the Earth Blog

The silver lining to a terribly dark cloud -- the Green Climate Fund and Durban

Posted Dec. 21, 2011 / Posted by: Karen Orenstein

There have been lots of “d” words used to describe the Durban climate talks that recently ended in South Africa -- disaster, debacle, delusion, devastation. I wholeheartedly endorse the use of such descriptors to define what happened during those wrenching, humid two weeks, where rich countries steadfastly acted to protect the economic power of their elites and polluting industries. . . the climate, people (especially the poor), and the planet be damned!

To see the US delegation, under the destructive, damaging leadership of Todd Stern and Jonathan Pershing, squash any reference to equity in any negotiating text coming out of Durban was disheartening to say the least. Indeed, I find it to be downright disgusting and sincerely shameful. (One can imagine that Pershing the Climate Scientist and Father cries himself to sleep some nights thinking about the actions of Pershing the Negotiating Politician.)

All this said, there was one silver lining to the talks, in my opinion. The Green Climate Fund turned out better than I expected. For several years, Friends of the Earth US and many others had been campaigning to establish this fund at the UNFCCC (especially as an alternative to the World Bank). After the GCF’s establishment at the Cancun climate conference in 2010, I spent a good chunk of 2011 trying to help shape the beginnings of that new institution into a fund that is as equitable, effective, and environmentally sound as possible.

And I think we have left Durban with a fighting chance of doing so.

Why? Because we have potentially tamed the private sector facility provision of the GCF, or at least have a real opportunity to do so -- an opportunity that, pre-Durban, I feared we had lost. (Many of us had feared the private sector facility would be the death knell to constructing a good fund. See a letter we wrote trying to prevent the Green Climate Fund from becoming a “Greedy Corporate Fund.”)

There is now a “no-objection” clause for developing countries’ national designated authorities, national bodies that recommend particular funding proposals to the GCF board, according to the countries’ given climate strategies and plans. Paragraph 7 of the GCF decision states:

Also requests the Board to develop a transparent no-objection procedure to be conducted through national designated authorities …, in order to ensure consistency with national climate strategies and plans and a country driven approach and to provide for effective direct and indirect public and private sector financing by the Green Climate Fund. Further requests the Board to determine this procedure prior to approval of funding proposals by the Fund;

This “no objection” clause ostensibly allows a developing country’s national designated authority to object to any activity proposed by the private sector, whether international or domestic. So, for example, if mining company Rio Tinto wants to build a hydroelectric dam to power one of their aluminum smelters (like they are doing in Cameroon), they cannot unilaterally get GCF financing for this “clean” power project.

In 2012, then, it will be absolutely critical to get the sequencing of the “no-objection” procedure right, so that a nearly final project is not simply presented to the national designated authority as a fait accompli for a rubber stamp. The right to object must be a tool to be exercised at the early stages of any GCF activity.

We also won when it comes to the World Bank, another area where I had mostly given up hope pre-Durban. An “open, transparent, and competitive bidding process” to determine the permanent trustee has now been mandated. The competitive bidding process, in particular, prevents the World Bank from being a shoo-in for permanent trusteeship (it’s now interim trustee, despite many objections by developing countries and civil society).

And the Durban decision leaves little ambiguity that the GCF possesses juridicial personality and legal capacity, a key prerequisite to enable developing countries to directly access the Fund (rather than having to go through multilateral implementing agencies like the World Bank).

Yes, the decision to have a joint UNFCCC-GEF interim secretariat is frustrating (and, frankly, kind of silly – the GEF is based in Washington, DC and the UNFCCC secretariat is based in Bonn, Germany, and this trans-Atlantic interim arrangement is to be housed at the UNFCCC). But the permanent secretariat is supposed to be housed in the GCF’s yet-to-be-determined host country.

We by no means have a perfect, nor even an easy, path ahead of us to construct the kind of fund that would ensure justice, environmental integrity, and ecologically sound development. There are many landmines lying in the road ahead of us.

The private sector facility could still upend the intention of the Fund to meet the needs of people and the planet in developing countries; we could still see a Least Developed Country competing with the likes of ExxonMobil for direct access to the GCF. Further, it will take hard work and dogged persistence on the part of many to lay the foundations for ensuring that national designated authorities are truly participatory, representative of impacted communities, democratically functioning and well-run. And we'll have to fight arduously to make sure that false solutions like "clean coal" are excluded from GCF funding streams.

Plus, of course, there’s no money and no plan for how to raise the money necessary to fill the Fund. That’s one problem that’s impossible to overemphasize. Even the world’s best fund is meaningless if there is no money in it. (The US, in particular, successfully led an effort to block any specific sources of finance from being mentioned in final negotiating text.)

So, any which way you look at it, the road ahead is a tough one, and the UNFCCC negotiating process is a dysfunctional mess that -- because of countries like the US and Canada -- privileges maintenance of the economic status quo over the survival of the planet. But at least we have a real shot now at getting a good Green Climate Fund. That, to me, is a real silver lining to a terribly dark cloud.

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