For a greener world
The Green Climate Fund is designed to help countries implement sustainable climate investments, but the investment need is significant. At Apulia, G7 leaders can help in numerous ways, from bolstering support for developing countries in mitigation and adaptation efforts to bridging the gaps in funding
What are the mission and vision of the Green Climate Fund?
The Green Climate Fund is a key multilateral finance mechanism under the Paris Agreement and the United Nations Framework Convention on Climate Change, designed to help developing countries implement climate investments that align with mitigation and adaptation objectives.
We are unique among funds. GCF was established to empower a broad ecosystem encompassing multilateral development banks, bilateral agencies, the private sector and civil society organisations, with a mandate to significantly boost these investments. We offer the unique advantages of scale and flexibility in our resources, grants and other instruments.
At the United Nations Climate Ambition Summit last September, I presented my ‘50by30’ vision. We are working towards transforming our organisation to operate on a larger scale, more efficiently and with greater impact. We are keenly focused on supporting the most vulnerable countries and communities, and using our unique position to catalyse substantial private-sector investments in developing countries. We are diligently refining our processes to enhance efficiency, as developing countries depend on us for rapid and reliable access to funding and implementation, without compromising quality. Our unique position enables us to bring together this network of partners for significant impact, whether at the country, regional or global level.
How much money is needed?
Various estimates indicate the financial needs of developing countries. The High-Level Panel on Climate Finance recently identified a need for $2.4 trillion annually. Recent challenges, including the Covid-19 pandemic and conflicts in Ukraine and the Middle East, have complicated the landscape for climate investments. These events have added fiscal pressures to the countries that provide funding through us and others. The macroeconomic situation has grown more complex, while the demand for support in developing countries has increased – they are grappling with economic shocks and many face unsustainable debt levels. Even in adaptation, we are significantly below the necessary funding levels, with estimates suggesting a need for $300 billion to $500 billion annually.
Last year, GCF completed its second replenishment cycle with $13 billion pledged, marking a 30% increase from the $10 billion in the previous cycle, although one significant country has not yet confirmed its pledge. We welcomed generous pledges and significant increases from countries such as the United States, Germany, the United Kingdom and France. Contributions also came from developing countries, which demonstrates the widespread support and collective ownership that GCF receives.
How is GCF deploying its funds?
We have committed $14 billion to over 250 projects in 129 countries. We are the only fund mandated to balance our investments across mitigation and adaptation efforts equally. For adaptation resources, we prioritise the least developed countries, small island developing states and Africa. Approximately 65% of our funding supports public sector projects, with 35% going to private sector initiatives. Our portfolio is diverse and ranges from energy projects to a wide array of adaptation sectors including agriculture. To date, we have invested close to $933 million in early warning systems – the largest such portfolio in the world – and we plan to expand these efforts in response to the UN secretary-general’s call for developing countries to be better prepared for climate disasters.
Do you find donors are still focused on the urgency of the crisis?
Donors demonstrated their commitment during our last replenishment, despite the challenging macroeconomic situation. However, the funds raised are still far from what is needed. As we approach this year’s UN climate conference in Azerbaijan, it is essential to define a new collective quantified goal to replace the $100 billion annually set in 2009. There are divergent views among developed and developing countries on how to frame this goal.
The current system for mobilising resources to support developing countries is inadequate. Only a few countries have met their commitment to provide 0.7% of gross national income for official development assistance. New progressive fiscal tools could provide a solution without adversely affecting the poorest nations. It is difficult to envision any other way to mobilise public resources at the necessary scale.
How can G7 leaders at Apulia best help?
G7 leaders should emphasise their commitments to support developing countries in their mitigation and adaptation efforts and to bridge the significant adaptation funding gaps. They should commit to aligning the investment architecture so that the Green Climate Fund, multilateral development banks and others work cohesively and collaboratively. They should also underscore their commitment to providing concessional finance through GCF. The key for the G7 is to be more ambitious in the quantity of climate finance, seek additional revenue sources to mobilise these funds, and enhance collective efforts around domestic resource mobilisation and private sector capital mobilisation using tools like GCF. G7 leaders should ensure that multilateral development banks – as a support system for developing countries – are well integrated and functioning effectively. They should signal their ongoing commitment to increasing concessional financing and making this critical funding available to meet the new collective quantified goal.
