Negotiators Come Closer to Reaching a Deal on the Green Climate Fund

by Rebecca Lefton

The UN climate change negotiations in Durban, South Africa have gone into emergency session on Saturday after negotiators worked through the night. Time is running out for parties to work out a second commitment of the Kyoto Protocol and a host of other issues, including technology, adaptation, and reducing emissions from deforestation and degradation (or REDD).

But it appears that negotiators are close to reaching an agreement on the Green Climate Fund. Implementing the Green Climate Fund in Durban would probably be the most important achievement to come out of this process, ensuring that significant financial resources are dedicated to help developing countries avoid the worst impacts of global warming through the rest of this decade.

All parties here in Durban endorsed the development of a fund to mobilize large sums of money for adaptation and mitigation in developing countries during the last UN climate summit in Cancun. At that meeting a Transitional Committee (TC) was created, comprised of 40 parties and tasked with designing the implementing structure for the Green Climate Fund. The TC finished its work at a final meeting in Cape Town in October. Unfortunately though the TC was not able to achieve final consensus at the meeting on the implementing document for the GCF and the final approval of the GCF was postponed to this meeting in Durban. We have written about why parties should advance the fund here.

This week negotiators have worked to overcome major sticking points on the GCF. The new draft decision proposed by the Chair for the Green Climate Fund reflects significant progress from the last document produced in Cape Town.

One of the biggest obstacles in moving this forward was concern about the relationship between the Conference of Parties (COP) and the fund. The United States wants to ensure that financial experts are controlling the board, not a revolving set of climate negotiators who may know little about the intricacies of managing a global financial institution.

In that respect the compromise document looks promising. On the one hand it designates the GCF as an operating entity of the Financial Mechanism of the Convention, similar to the relationship of the Global Environment Facility, or GEF. The GEF was established in 1991 and is currently the primary source of international clean energy investments and though it is connected to the COP it is not directed by the COP.

Second, the draft decision further overcomes concerns about the amount of authority the COP has over the board by creating a thorough process over the next year to ensure that the GCF is “accountable to and functions under the guidance of the Conference of the Parties.” The GCF can begin its formation while these long-term issues get worked out and, at the end of the day, the GCF will only be guided by the COP rather than directed.

The decision also indicates that the parties are turning their attention toward creating a board to govern the fund and designating a host country so the fund can get off the ground.

The decision laid out a new timetable for nominations for the Board by March 31, 2012.

A party will be selected in Durban to temporarily host the interim secretariat of the GCF to ensure that it can get up and running as quickly as possible before selecting a permanent host country at the next COP. Germany and Switzerland have already volunteered to host the fund.

During the last two weeks negotiators and observers called for the need to fill the fund by selecting sources of long-term finance. While the compromise text does not address this issue it does stress the need to secure funding to facilitate its operationalization and capitalize the fund. Germany has already pledged 40 million Euros to this effort and other parties are coming on board.

While the agenda for this meeting won’t allow for a thorough discussion of long term financing this is a topic that should be advanced either at the next COP or in other suitable forums like the G20.

Rebecca Lefton is a policy analyst with the international climate team at the Center for American Progress