Download Green Climate Fund - Philippine Movement for Climate Justice

Philippine Movement for Climate Justice
34 Matiyaga St. Barangay Pinyahan, Quezon City 1100 Metro Manila, Philippines
Phone: +63.2.925.3036
Website: www.climatejustice.ph |Email Address: [email protected]
May 2014
TALKING POINTS: Green Climate Fund (GCF) – updates after
the7th Board Meeting in Songdo, Korea
Climate negotiators, finance ministers and civil society observers from countries around the world
gathered in May for a seventh round of negotiations overthe Green Climate Fund (GCF)1. Foremost
on their agenda was the need to finalise a set of “essential requirements” needed to kick-start the
Fund and begin mobilising resources to address climate change impacts on the most vulnerable
societies.
The GCF grew out of the the16th Conference of Parties (COP16) summit in Cancun, Mexico in 2010,
in response to the urgent need to fund mitigation measures, adaptation projects and national
climate action programmes in the south, where countries like the Philippines stand to lose the most
from the impacts of climate change. The GCF is to become the United Nations Framework
Convention on Climate Change’s (UNFCCC)main financing hub, under the direction of the COP.
While the Fund is still under negotiation, the GCF Board, consisting of 24 member states divided
evenly between developed and developing countries, submits proposals to the GCF Secretariat
between meetings, which finalises documents for discussion in the next round of meetings.
The Songdoround revolved around the following keydocuments, drafted in the 5th and 6th Board
Meetings in Paris and Bali, respectively. The documents outlinehow the fund is expected to operate,
which institutionsare eligible to implement projects on the ground, and thestandards required
forproject approval and assessment. The Board laid down eight “essential steps”for discussion
before the Fund can start initial resource mobilisation – collecting funds from developed country
parties based on commitments made at the UNFCCC, and disbursing them to recipient countries and
their national implementing agencies. Two of these were agreed upon in Bali in February (initial
allocation of the Fund’s resources; and the terms of reference of its Independent Evaluation Unit,
Integrity Unit and redress mechanism). The Board reached agreement on the restat Songdo:
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Guiding framework and procedures for accrediting national, regional and international implementing
entities and intermediaries, including the Fund’s fiduciary principles and standards and
environmental and social safeguards
Initial proposal approval process, including the criteria for programme and project funding
Initial results management framework of the Fund
Fund’s financial risk management and investment frameworks
Structure of the Fund, including the structure of its Private Sector Facility
Initial modalities for the operation of the Fund’s mitigation and adaptation windows and its Private
Sector Facility
*“What is the Green Climate Fund?”1
The Songdo Meeting
Deadlock over several key issues in the negotiations, carried
over from the previous meetings, re-emerged in Songdo. But
with participants under significant pressure to hammer out a
working fund by next year’s COP21 in Paris, debates were
eventually resolved through a series of compromises and
meetings that extended for hours at a time, with negotiators
hung up over specific wordsin the text that often devolved into
matters of syntax.
Throughout the negotiations, there was a general unwillingness
among countries of the north to commence resource
mobilisationbefore more stringent standards on finance have
been incorporated into the texts. Several board members,
including representatives from Japan and the United States,
insisted, as they have done in the past, on purely
voluntaryfinancial commitments on the part of northern donors
in the future , anddemanded specific language to ensure that
the documentsagreed upon in Songdo still be subject to
revision in subsequent meetings. China expressed concerns
over social safeguardsand accreditation indicators that it
claimed could prove too onerous for potential
countryrecipients, preventing them from accessing muchneeded finance. Latin American representatives highlighted
provisions on land use and forestry that could have implications
on the controversial United Nations REDD++ programme
(Reducing emissions from deforestation and forest degradation on
Deforestation) active in their region.
India and a number of other developing country states, for their
part, continued to press their northern counterparts for a
concrete dollarfigure on funding commitments – to no avail.
References to “a very significant scale” of resources, present in
previous document drafts, were removed at the request of
some of these governments.
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UNFCCC Parties had originally agreed to mobilise up to US$ 100
billion a year by 2020.
The Board did, however, agree on a vague commitment “to
commence the process to mobilize resources commensurate
with the Fund’s ambition to promote the paradigm shift
towards low-emission and climate-resilient development
pathways by providing support to developing countries to limit
or reduce their greenhouse gas emissions and to adapt to the
impacts of climate change.”
Southern country board membersalso requested less stringent
fiscal accreditation requirements, more emphasis on grantbased allocations versus loans, and a stronger role for
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The Green Climate Fund or GCF is
the “operating entity of the financial
mechanism of the UN Framework
Convention on Climate Change.”
The UN Framework Convention on
Climate Change (UNFCCC) is a legally
binding treaty adopted by 195 Parties
(nations) and entered into force on
March 21, 1994.
Under the UNFCCC, developed country
Parties are committed to provide
finance to cover the “full incremental
costs” incurred by developing country
Parties in implementing climate
adaptation and mitigation measures
(Article IV paragraphs 3 and 4).This
finance is referred to as climate finance.
The Green Climate Fund is supposed to
receive climate finance from developed
country Parties, in fulfilment of their
commitment under the UNFCCC, and
disburse these funds for projects,
programmes, policies and other
activities in developing countries.
The Green Climate Fund is still in the
early stages of its establishment.The
decision to set up the Green Climate
Fund was reached at the16thSummit of
the UNFCCC Conference of Parties (COP)
held in Cancun, Mexico in December
2010. The COP16 formed a Transitional
Committee (TC) with the task of
preparing proposals for the design of
the Green Climate Fund. This
Transitional Committee met four times
in 2011 and presented their proposals to
the UNFCCC COP17 held in Durban,
South Africa last December 2011.
On the basis of the recommendations of
the Transitional Committee, the COP17
in Durban approved the Governing
Instrument for the Green ClimateFund.
This document outlines the objectives,
guiding principles, governance and
institutional arrangements, operational
modalities and other basic features of
the design of the Fund.
The composition of the Board of the
GCF was finalized in the first half of
2012 through a selection process by
governments of country groupings
represented in the Board as provided for
by the governing instrument. There are
24 members of the GCF board, half
from developed countries and half from
developing countries.
SOURCE: Primer on the Green Climate Fund,
Jubilee South Asia Pacific Movement on Debt
and Development
nationally designated authorities (NDAs) for implementing projects in line with the Fund’s stated
commitment to country-led development.Some African states expressed concern over the
complexity of the accreditation process, which could limit direct access to the fund, not least for
states with weak institutional capacity and limited resources.They emphasised the need for capacity
development for countries with weak institutions and limited resources to carry out projects that
will meet GCF standards. Safeguards must also be put in place so that national and sub-national
entities, not multilateral development banks (MDBs), will have privileged access to climate finance.
In contrast, several developed country governments were in favour of fast-tracking finance
for MDBs. The United States pushed for a “competitive” project approval process, with an
emphasis on fiscal standards.
There was considerable controversy over attempts to remove a specific provision that would gauge
recipients’ eligibility for funding according to their income-per-capita levels (i.e. lower income
countries would be prioritised for finance), with medium developing countries (MDCs) concerned
that societies with overall rising per capita incomes, such as Saudi Arabia, India or China, could be
overlooked even as vast swathes of their populations – even a growing proportion – remain below
the poverty line and are especially vulnerable to climate change. The Board agreed on a lastminute proposal, with southern country governments, Norway and other Scandinavian states in the
lead, that funding be measured according to the United Nation’s human development index (HDI)
and other social indicators.
With considerable pressure from civil society actors, there has indeed been some progress toward
developing a more comprehensive set of social, environmental and gender safeguards to ensure that
projects financed by the Fund operate according to international best practice.Yet no matter
howcomprehensive and well-thought out these safeguards are, they are outweighed by the
Fund’s emphasis on loans, as opposed to grants, as the primary catalyst for climate finance – not
least for developing country members of the Board and civil society observers, which have opposed
this time and again in past meetings.
In addition, the Songdo round reinforced the Board’s commitment to the Fund’s controversial
Private Sector Facility (PSF), which gives privileged access – up to 20% or more – of the funds for the
private sector to finance projects in developing countries.
Most member states called for more clarity on the functions of the Private Sector Facility (PSF),
whose representatives submitted their own proposals toward the end of the meeting, lobbying for a
stronger role for the private sector in climate finance.
There was no agreement on clear language restricting the GCF from financing fossil fuel projects.
Alarmingly, countries like Japan expressed openness to fundingsuch projects in developing countries
that have yet to use up their “carbon budgets”.
KeyAgreements Reached by the Board
1. adopted the initial guiding framework for the Fund’s accreditation process , which will apply
to the private sector
2. adopted initial fiduciary principles and standards, to be submitted for review within three
years
3. adopted the Performance Standards of the International Finance Corporation (IFC) –on an
interim basis, considering controversies over the fact that IFC standards do not represent
international best practice
4. decided to finalise the Fund’s own set of environmental and social safeguards (ESS), drawing
on best practices from a variety of institutions, three years after the Fund becomes fully
operational
5. a fit for purpose accreditation approach that “matches the nature, scale and risks of proposed
activities to the application of the initial fiduciary standards and interim ESS”
6. agreed on the initial investment framework, consisting of the Fund’s investment policies,
investment strategy and portfolio targets and investment guidelines
7. agreed on criteria to cover impact potential for both for adaptation and mitigation, the
paradigm shift potential, sustainable development potential, the needs of the recipients,
country ownership and efficiency and effectiveness
8. agreed on initial financial risk management framework, consisting of financial risk policies,
risk monitoring and reporting and risk governance
9. agreed on initial proposal approval process for mitigation and adaptation projects and
programmes, involving both the public and private sectors. Recognised a stronger role for
NDAs in forwarding national climate action programmes, with greater room for southern
states to dictate preferred accredited agencies or intermediaries in accessing the Fund’s
resources.
10. agreed on the results management framework (meant to measure the impact of the Fund at
a country level), after considerable controversy over the design of a logical framework for
results management. Southern member states were against indicators that included sectorwide or economy-wide baseline mitigation targets, which could prove too burdensome for
accreditation. They were also against indicators that assessed the mere volume of funds
disbursed as a measure of better adaptation (Third World Network).
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PMCJ General Critiques of the currently proposed mechanisms, standards, structure, etc. of the
Fund
Background and Critiques
1. Current debates have implications on what the GCF ends up becoming– emphasis should
be on getting northern governments to finance climate adaptation and mitigation in the
south through public channels and grants-based allocations, not loans, and with as little
interference from the IFIs and the corporate sector as possible.
2. The role of the private sector must be subordinate to the Fund’s ultimate aims agreed by
the COP and at UNFCCC. The private sector as such must not be a separate “theme”
with a privileged position in the Fund, or with a position on an equal playing field with
other components of the Fund, as we have discussed in the past (i.e. with a special place
in the Secretariat, independent from the Board).
3. Private sector finance is a tool for climate mitigation and adaptation in the hands of the
public sector and utilised in the interest of the public – not an end in itself.
4. To be truly “country-led”, finance should ideally support southern governments and
their respective national climate programmes/plans of action, with an emphasis on
longer-term shift in public policy-making toward making the transition to a post-carbon
economy: for so long as this actively promotes the broader interests of the majority of
their peoples, taking into full account the vast power inequalities and structural
injustices that prevail within and between societies
5.
Funding by the North must be seen in the context of climate justice and as reparations
for their historical emissions ultimately responsible for climate change
6. Once GCF is formalised and operationalised, and its true nature clarified, there will be a
need to pose the alternatives
7. Modalities of the Fund draw on all other aspects of the Fund, like its investment
framework. Posing alternatives must take into account, among others, the interests of
those who have shaped or approved it into its current form.
For example, its emphasis on overly restrictive financial qualifications to receive loans
(from the perspective of potential southern governments), its emphasis on the private
sector via Private Sector Advisory Group (PSAG) and the Private Sector Facility (PSF), its
emphasis on making projects financially sustainable (as opposed to socially, politically,
ecologically and culturally sustainable) and its emphasis on quantitative measures over
qualitative indicators in allocating funds and deciding on success is “understandable”, if
we see it in the context of various actors haggling to turn the GCF into a funding pool
for the private sector to dip in, i.e. more and more like a Bank offering loans and less of
a fund offering “aid”/reparations for climate debt owed by the north to the south.
This is an investor-led, not country-led, or people-driven, framework. All of which calls
to the fore questions about the true nature of the GCF: is it a Bank or a Fund? Are we
offering debt or genuine aid?
8. Given all the flaws of the GCF, it might nevertheless be best to engage with it while it is
still “under construction”, rather than saying we ought to bypass it entirely because it
does not fit exactly/ideally with our own perspectives; a basic principle must be to call
on the north to deliver on climate finance, whether through GCF, a new GCF, or some
other channel
9. Approaches to changing or tinkering with the language of the Fund, if we are restricted
to this tactic at this point in time, should involve re-introducing elements of community
empowerment, reinforcing country ownership and qualitative measures of holistic
development to provisions that are already there. A few suggestions:
a. Introduce specific language requiring control by communities over renewable
sources of energy in off-grid rural areas as an indicator of equitable development
and as a measure of successful results. This will then require qualitative measures of
results tied to results management framework.
b. Introduce specific language on qualitative measures of successful projects (impact
indicators) that take into account the conditions of communities on the ground over
the long-term. Find ways to measure:
i. the resilience of the most vulnerable societies, the ways by which
communities adapt to climate change; experiences which can be carried
over to other projects, and integrated into national climate adaptation
frameworks
ii. the nature and quality of formal and informal institutions that ensure fair,
equitable access to resources for the most vulnerable communities
iii. country ownership and community ownership – develop better metrics
iv. integrity of the natural ecosystem and public infrastructure
c. Introduce specific language on equitability. Language on gender, class and other
equity issues remain limited at best. Social, gender and environmental safeguards
currently do not match the Fund’s proposed fiduciary standards, reflecting
d. Introduce specific language emphasizing social and environmental safeguards vs.
financial standards that could penalize developing states or civil society actors
seeking funding for their projects, but who risk being denied much-needed finance
because they are unable to meet overly restrictive standards given limited
institutional capacity. Countries most vulnerable to climate change tend to face
e. Introduce specific language on funding southern governments’ climate change
adaption/mitigation programmes holistically and at all levels of implementation, as
opposed to focusing on individual private sector-led projects in the south, whose
measures of success involve limited time frames and narrow returns on investment,
not overall levels of social development and environmental sustainability
f. Introduce specific language allowing communities and civil society actors to benefit
directly from the fund, and requiring that only small and medium enterprises (SMEs)
in developing countries, not transnational corporations, can make use of the Fund
g. Consider possibility of critiquing the Fund on its own “business-efficiency” terms,
e.g. funding fossil fuel projects in one country while at the same time funding
renewables in another is absurd, even from a financial standpoint
Other Points
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Very limited language on developing resilience from the grassroots; allowing
communities and southern countries to benefit directly from the fund
Fundamental contradictions between the GCF’s stated “country-led approach” (countryled or people driven?) and conditions required by the Fund of southern countries,
emphasis on investments in stand-alone projects (bypassing national government
initiatives) vs. funding state-led sustainable development in the south (funding
environmental agencies, funding universal social protection systems to build resilience
to climate change, public infrastructure, etc.)
Contradictions in the GCF’s stated aim of a “paradigm shift” within the framework of
loans, debt, private sector-led development
Contradiction between means and ends (financial/fiduciary mechanisms - emphasis on
loans, etc. - in contradiction with the GCF’s “social aims” and goals)
Privileging the private sector, via the Private Sector Facility, fiduciary modalities that
favour loans-based funding vs. grants, etc.
GCF indicators/conditionalities for allocating resources remain quantitative, schematic,
and limited to promoting an investor-friendly environment
Alternatives: direct grants to southern governments and civil society actors, need to reassert our basic principles and not lose sight of the bigger picture; limited gains made
would not have been possible without civil society engagement/critiques
*“What is Climate Finance?”
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PMCJ to GCF:
Fund Climate Justice! No to debt and corporate capture
The Philippine Movement for Climate Justice (PMCJ),
representing activists and people’s organisations from across
the country, is at one with calls from around the world that
are demanding a new Climate Finance regime – a new Green
Climate Fund (GCF) – that is fair, transparent, democratic and
accountable, and responsive to the needs of those most
vulnerable to climate change.
This month, the GCF board is to engage in its seventh round of
meetings in Songdo, where negotiators will iron out the final
mechanisms, institutions, and guiding frameworks through
which the GCF’s resources are to be used. The Fund, once up
and running, will finance climate adaptation and mitigation
efforts around the world.
The meetings will again pit north versus south, vested
interests against public interest, leaving countries like the
Philippines, and the most vulnerable populations within them,
sidelined in elite attempts to stifle any real action on climate
change through a marketised Climate Fund that sits well with
the status quo. Indeed, while the GCF promises
accountability, fair and equal results for all parties involved,
market mechanisms and a renewed emphasis on the GCF’s
Private Sector Facility (PCF) will privilege corporate
investments over public control and finance of climate
adaptation.
Through the same blind faith in market efficiency, in other
words, and by privileging the same actors that led to the
climate crisis, our leaders intend to solve all our problems.
But at the heart of the climate crisis is a fundamental injustice.
Like other nations of the south, our people stand to lose the
most from a problem we have had least responsibility for.
While our carbon emissions have never come close to those of
the industrialised north, climate change is predicted to affect
us the most: a fact borne out by Haiyan, the strongest
typhoon ever to make landfall in recorded history and one of
the worst humanitarian disasters to face us in recent decades.
The Philippines has been pushed to the front lines in a battle
over Climate and the fate of the planet. The need to deal with
the challenges posed by climate change, and the funding
required to bring this to bear, is more urgent than ever.
What matters above all is how these resources are to be
spent, who benefits from them, and whether or not the GCF
Climate finance refers in general to
funds that are allocated and disbursed
for climate programs and projects.
These include both public and private
funds. Public funds include those from
bilateral arrangements (between two
countries), multilateral sources (from
several governments through
multilateral institutions) or from
domestic sources (government
financing its own programs). Private
funds come mostly in the form of
investments.
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The delivery of climate finance is the
commitment and obligation of the
governments of developed countries, or
the rich industrialized countries. This
provision is basedon the principle of
common but differentiated
responsibilities (CBDR) and historical
responsibility.
• The UN framework Convention on
Climate Change makes it clear that
Climate Finance is meant to cover
the full costs of adaptation and
mitigation measures of developing
countries.
• Adaptation refers to policies, programs
and measures to enable peoples,
communities and societies to deal
with the impacts and effects of climate
change. These impacts and effects
include relatively slow onset impacts as
well as more dramatic effects of
increasing frequency and magnitude of
extreme weather events.
• Mitigation refers to policies, programs
and measures aimed at “reducing GHG
emissions and enhancing sinks and
reservoirs” (UNFCCC Website).
• For the climate justice movement –
Climate Finance should be considered
part of the reparations for climate debt,
the debt that is owed by those most
responsible for climate change
towards those who are least
responsible and yet suffer its greatest
impacts.
• Governments of rich, industrialized
countries have the responsibility to
ensure that these funds come from
those responsible for the excessive
greenhouse gas emissions –
corporations, the elites, other complicit
institutions including the state – and
should not be at the expense of the
impoverished and marginalized people
in their own countries.
SOURCE: Primer on Climate Finance,Jubilee
South Asia Pacific Movement on Debt and
Development
will aid or hinder attempts at a global transition to a fair, equitable and sustainable society that is
less dependent on fossil fuels that are the root cause of climate change.
We demand, therefore, that a new Climate Finance regime compel northern countries to cover the
“full incremental” costs of climate adaptation and mitigation in the south, in line with the degree of
their historic emissions, and in accordance with agreements made under the United Nations
Framework Convention on Climate Change (UNFCCC). Current pledges by northern governments fall
far short of the estimated USD 700 billion (minimum) required to deal with the threats posed by
climate change.
We demand that the World Bank and other financial institutions with a proven track record of unjust
dealings with southern countries play as minimal a role as possible – or better still, keep their hands
off – Climate Finance. As it stands, the World Bank is the GCF’s interim trustee. Its mere
involvement, however restricted, calls into question the Fund’s integrity and commitment to a fair
deal for southern countries, especially if the Bank is allowed a more permanent role.
We demand climate finance with no strings attached. Funds should not be tied to conditionalities or
structural adjustment measures similar to those imposed in the past. They should not take the form
of loans or debt that will increase the burden on societies already struggling to survive. Adaptation
and mitigation measures should not be attached to investments that allow northern countries to cut
their own emissions by transferring their burden to the south.
We demand a new Climate Fund that is transparent and accountable to the public, with independent
institutions empowered to ensure that all funds go where they should and deliver real results to
people on the ground.
We demand a new Climate Finance regime that is sensitive to the nuances of specific nations and
communities whose needs will vary according to culture, geography, and history. This must have full
human wellbeing in harmony with nature as its ultimate goal, and must therefore respect the selfdetermination of the peoples of the south, uphold human rights, food sovereignty, gender justice,
and the right to jobs and livelihoods. It must lead to the empowerment of communities – not
corporations or vested interests.
We demand that all decisions made with regard to Climate Finance, Adaptation and Mitigation be
done with the full democratic participation of all nations, peoples and communities at the forefront
of the climate crisis. This entails more than formal recognition of their rights to participation, but
active involvement by communities in partnership with states that are genuinely responsive to their
needs and concerns.
We demand that the Philippine government, and other southern country governments, not be
exempt from their own duties, but take the lead in pressuring those of the north to deliver on their
commitments in the interests of our peoples. The decision to accelerate fossil fuel use to drive
economic growth, with a view toward “catching up” with the north, is reprehensible. The fact that
we live on one planet is a reminder of the risks we face from the reckless use of fossil fuels
regardless of where one emits. We are at a crossroads, and the climate crisis should be seen as an
opportunity to learn from the mistakes of the past, and move away from the self-destructive,
carbon-intensive pathway taken by northern societies on the road to affluence for their elites – what
we call “development”.
But alternative development pathways are available. Haiyan was a reminder of the need to shift to a
post-carbon economy that is ecologically sane and socially just.
We demand, further, that efforts at dealing with the threats posed by climate change not stop at
finance. Climate finance should not amount to mere compensation for vanished islands and ruined
crops, stronger typhoons and longer droughts, worsening poverty and growing inequality,
biodiversity loss and loss of human life.
The gravity of the ecological crisis demands that we re-shape, at a fundamental level, existing
structures of power and the economic dynamics of a profit-driven society that have brought the
planet to the brink of collapse.
We demand, finally, that Climate Finance be seen in its proper context: as the ecological debt long
owed by the global North to the global South, as reparations by the developed world to a world
struggling to develop sustainably and equitably, as repayment by the elite to the most marginalized
and exploited members of society who stand to lose the most from the impacts of a changing
climate, and as an investment for a future on a livable planet -- one held in trust by past and present
generations for the generations to come.
We demand neither loans nor charity. We demand more than finance. We demand justice.