Years before the Paris climate agreement was formally adopted in 2015, countries had already created its financing arm.
Confronting climate change, world leaders knew, would require massive investments that were simply out of reach for many developing countries. In fact, the World Bank estimates that at least $90 trillion will have to be spent overhauling global infrastructure by 2030 to prepare for mounting environmental challenges.
So the Green Climate Fund (GCF) was developed in 2010 to fill expected financing gaps, support transitions to sustainable economies, and court private investment.
“The Paris agreement is the basic agreement through which every country makes its own climate commitments,” Simon Wilson, GCF’s head of communications, told Global Citizen. “But not every country has the finances to do so, so the idea was that the richer countries would provide financial support.”
At a time when multilateralism — the concept of countries collaborating toward a shared goal — is under attack, the GCF is making a powerful case for working together to improve the common good and protect the natural world. It’s also demonstrating the value of accountability and transparency. The organization’s board is evenly split between representatives from developing and developed countries, and every board meeting is livestreamed.
“This is not a project of rich countries going in and telling poor countries how they should spend their money,” Wilson said. “You have to get agreement by everyone on the projects that are in place. All of our projects have country ownership, meaning the country signs off on the project, and they agree that it aligns with their national priorities.
“It’s tough, but it’s worth doing, because then you have an enterprise that is owned by everyone,” he said.
Since it began disbursing funds in 2016, the GCF has committed $5.2 billion to support 111 projects that will improve living conditions for 311 million people.
The fund is only getting started. In 2020, countries are expected to significantly increase their Paris climate agreement commitments, which could unlock new revenue for the GCF, especially now that the organization has a proven track record.
If countries live up to previously made pledges, the GCF could see annual funding jump to $100 billion by 2020. While that seems unlikely, countries such as Germany, Norway, the United Kingdom, and France have recently doubled their commitments to the fund, signalling that it will have a bigger budget in the years ahead.
Climate change affects all countries and it can only be solved through collective action. As a result, any country that sends money to the GCF is ultimately doing itself a favor. That’s because the only way to prevent the worst consequences of climate change and achieve the goals of the Paris climate agreement is to dramatically reduce greenhouse gas emissions in all countries.
Even if one country cuts its emissions, these efforts would be undermined if another country raised its emissions by an equivalent amount. In other words, it’s essential for all countries to help each other reduce emissions.
Phasing out fossil fuels in favor of renewable energy is half of the fund’s mandate. The other half involves adaptation. Between these two pursuits, the organization has become a critical player in the effort to safeguard the future.
The city of Ulaanbaatar, the capital of Mongolia, has some of the worst air pollution in the world, a problem caused in part by inefficient cooking and heating devices.
It’s a problem that has only gotten worse in recent years as migrants from the countryside travel to the city to escape the ravages of climate change. Not only do the stoves in homes cause health problems, they also contribute to climate change, making it a ripe target for GCF funding.
In 2018, the GCF disbursed $21.5 million to replace existing heat and cook stoves with safe and efficient alternatives. When the project is completed in a decade, it will have averted nearly 470,000 tons of carbon dioxide.
This is Bayankhoshuu. It’s one of the oldest peri-urban ger residential areas in Ulaanbaatar. Ger areas, which are settlements of low- and medium-income families, have poor infrastructure. They aren’t connected to the city’s heating system and water and wastewater networks. As a result, residents burn coal to keep their homes warm particularly during harsh winter nights. Through its green affordable housing project with @adb_hq, GCF is helping #beatairpollution in #Mongolia. 10,000 green housing units will be fitted with solar panels and will be built with a high efficiency isolation system, eliminating the need to use coal for heating! #worldenvironmentday 🌏 Learn more about the project: https://g.cf/2VydfJP . . . #ulaanbaatar #solarenergy #renewables #cleanenergy #mongolianger #airpollution #notocoal #greenclimatefund #affordablehousing
What makes the project a model for future efforts is how it hinges on a local partnership — half of the project is being funded by a local bank.
Another GCF project in Mongolia led to the creation of the first solar power plant. It’s now feeding renewable energy, as opposed to coal energy, into the grid, Wilson said.
These are the types of mitigation projects that the GCF pursues — sustainable, highly practical, and economically beneficial. In the case of more efficient cooking and heating stoves, everyday citizens have to spend less on their energy bills, and the government spends less on health care costs associated with air pollution.
At the same time, the country is releasing less greenhouse gas emissions into the atmosphere.
Other mitigation projects follow a similar proof-of-concept rubric.
GCF uses its resources to de-risk private and public investments for climate. This new GCF equity investment in solar energy and pumped storage will help deliver reliable and clean power to the residents of Tarapacár region in #Chile. Learn more: https://g.cf/2N1BAWS . . . #climateaction #greenclimatefund #solar #energy #solarenergy #pumpedstorage #cleanenergy #privatesector #publicsector #partnership #risk #risktaker #investment #climate #climatechange #climatecrisis #roadtoclimateaction #cleanpower
In South Africa, the GCF is enabling the construction of new solar power parks. By providing low-interest loans, the fund has been able to attract private sector investors that will be able to turn a profit in the years ahead.
In Egypt, the GCF is backing the development of the country’s largest solar park with low-interest loans. The organization is also helping the Egyptian government change the regulatory landscape to allow private investors to sell energy to the power grid, which could spur more renewable projects in the future.
“If we come in, make an investment, it gets built, power goes onto the grid, and the situation is stable — then there’s potential to make money," Wilson said. “We can essentially create new markets for low carbon. We can be a groundbreaker.”
Sometimes mitigation projects involve restoring natural landscapes that serve as carbon sinks, meaning they absorb carbon dioxide that has been released into the atmosphere. One such effort is taking place in Ecuador, where the GCF is funding reforestation programs, sustainable agriculture, and forestry management.
Through its mitigation projects, the GCF has averted an estimated 1.5 billion tons of carbon dioxide from entering the atmosphere, which is nearly 25% of annual carbon dioxide emissions.
Climate change has created a global climate crisis. Droughts, extreme storms, heat waves, flooding, and many more environmental hazards are getting worse as greenhouse gas emissions accumulate in the atmosphere. In the decades ahead, tens of millions — even hundreds of millions — of people could be displaced by these events.
While emissions reduction remains the primary goal of all climate action, the GCF recognizes that countries have to adapt to new environmental norms; otherwise, standards of life will decrease and people worldwide will be in harm's way.
As a result, the GCF dedicates 50% of its project capacity to safeguarding populations from the hazards of climate change. Half of this funding, meanwhile, is pegged to the most vulnerable populations in areas like the Pacific Island Nations and sub-Saharan Africa.
Few places in the world are as threatened by climate change as the Pacific Island Nations, thousands of which could become uninhabitable by 2050, displacing millions of people in the process.
The GCF has several ongoing projects to bolster these islands from rising sea levels, extreme storms, and saltwater intrusion.
In the Marshall Islands, the fund disbursed $25 million, along with financing from the World Bank, to improve coastal infrastructure and develop early warning detection systems to allow people to better prepare for extreme weather events.
The GCF invested $20 million in a project to improve drainage and irrigation systems in the Caribbean Island states of Antigua and Barbuda, Dominica, and Grenada. This program will improve water use across the islands and allow communities to better withstand water surges from hurricanes.
In Bangladesh and Vietnam, meanwhile, the GCF is funding efforts to protect coastlines from being submerged by rising sea levels.
GCF projects are often a mix of mitigation and adaptation.
In the Solomon Islands, for example, a massive public-private partnership spearheaded by the GCF aims to overhaul how energy is produced on the island. While this seems like a straight emissions reduction effort, it would expand the grid in a way that provides electricity to homes in rural areas for the first time, lifting people out of poverty and making them more resilient to climate events.
Climate change is a daunting, multifaceted challenge that grows worse with each passing year as greenhouse gas emissions accumulate at ever higher rates in the atmosphere. But not all is lost, and few organizations are meeting the problem head-on in all of its staggering variety as effectively as the GCF.
In the years ahead, if climate change is reined in and countries develop sustainable economies, the GCF could be a big reason why.
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