The Green Climate Fund – Projections vs. Reality
14 Pages Posted: 1 Jul 2019 Last revised: 7 Oct 2019
Date Written: June 30, 2019
The Green Climate Fund (GCF) is supposed to be the main institutional tool that assists the achievement of the goals of the Paris Agreement and Agenda 2030’s Goal 13: Take urgent action to combat climate change and its impacts. The original projections envisaged the mobilization of $100 billion annually by 2020 – a demonstration of the international community’s determination to address the climate challenges accordingly. However, 5 years after the GCF’s initial resource mobilization (IRM) reality is very different: the Fund’s capital by June 2019 stands at $10.3 billion – i.e. the same resources that were pledged under the IRM in 2014, with no additional commitments from the last 5 years – which is telling of the interest from both the public and the private sector. The main reason for the lack of interest seems to be the GCF’s slow progress: as of June 2019 the GCF has spent $2 billion for projects under implementation. Even if the total amount of $17.6 billion mobilized for approved projects is considered, that would mean an average annual mobilization of $4.4 billion (since the GCF became operational in 2015).
If we assume that $100 billion per year is a realistic assessment of the needs for investment in climate change solutions globally, then it is clear that GCF’s current pace of operations will contribute very little towards the meeting of Goal 13 by 2030. This paper examines the challenges that the GCF faces – such as education levels and special interests in developing countries – and concludes that for all its slow progress the GCF has an important role in mobilizing climate finance in countries or regions within countries where the incentives for private investors are limited.
Keywords: Agenda 2030, Climate Change, Green Climate Fund
JEL Classification: Q20, Q40, Q50, Q54, Q56, Q58
Suggested Citation: Suggested Citation