Since different countries are aiming to move away from future investment in coal, GCF should ensure early channelling of funding to the developing countries to stimulate the private sectors in driving the renewable energy revolution
The Conference of the Parties (COP) at their 16th conference held in Cancun of Mexico in November 2010 established the Green Climate Fund (GCF) under Article 11 of the United Nations Framework Convention on Climate Change (UNFCCC).
The GCF was established to ramp up the flow of climate finance to the developing and least developed countries to help them accelerate both climate change adaptation and mitigation projects, in addition to what these countries implement at their capacities.
The role of GCF has become even more important with the adoption of Paris Agreement, which has a clear goal of containing the rise of global mean temperature well below 2° C compared to pre-industrial level and at the same time, it (Paris Agreement) has also urged the member countries to pursue enhanced efforts to limit the mean temperature rise to within 1.5° C.
The fund also urged the member countries to pursue enhanced efforts to limit the mean temperature rise to within 1.5° C. The agreement, further aimed at strengthening the capacity of different countries to deal with the negative impacts of climate change.
While the Paris Agreement delineated the targets, the success, to be frank, hinge on the activities that are undertaken on the ground. Several critical factors require thoughtful considerations – for instance, our current patterns of economic activities are in no way compatible with reaching 2° C, let alone 1.5° C and both frequency as well as the intensity of climate change-induced events is rapidly increasing.
What raises more alarm is the recent case of prolongation of a flood, attributable to climate change, in countries like Bangladesh and elsewhere. Some recent reports revealed the possibility of intensifying flood-induced crisis on life and livelihoods in South Asia in the future.
Against this backdrop, GCF shall not only be relevant in the years to come but also be instrumental in channelling finance to arrest these challenges in developing and least developed countries.
Amid economic disruption led by Covid-19, all countries have both opportunities to build back better or to take ugly decisions that may solely be considered from an economic angle. However, the present crisis has, reportedly, prompted many countries, including the developing and least developing countries, to trigger policy levers to pursue green recovery.
As part of green recovery, countries are planning for investments in renewable energy and power efficiency now and in the future.
Countries, especially from the developing and least-developed categories, would face immense challenges to meet full requirements of such investments given the job losses and the measures necessary to fulfil present economic, health and other essential demands, following the Covid-19 pandemic.
GCF, therefore, may opt for appropriate instruments, which are operational for years, to support these countries in need. It has several implications – enhancing disbursement volume for which often GCF is criticised by some for not meeting expectations, leveraging finance to projects to be Paris climate goal compatible and finally, helping countries to augment GHG mitigation while contributing to their economic recovery.
This is also the opportunity for GCF to remain relevant. For instance, as the energy demand has reduced globally, the use of fossil fuels has also seen a steep fall.
Many countries are planning to review energy policies to slash the incorporation of coal in power generation, for several reasons. Coal is no longer the cheapest fuel and when external costs of GHG emission and air pollution are considered, coal rather becomes too expensive.
Investment in coal power plants now and in the coming days is, therefore, likely to become stranded assets. On the other hand, containing global warming to 2°C under Paris climate goal would necessitate minimising coal capacity in global electricity generation to almost zero by 2050.
Some countries have already vowed to go for 100% renewables by 2050. Given the pace of installation of renewable energy-based systems and the experience of countries like Germany, it would be over-ambitious for many of the countries to achieve so, but tangible initiatives would certainly help spur renewable energy and thereby complement climate change mitigation goal.
The funding avenue, as a result, would only expand for GCF on the GHG mitigation front. As mentioned earlier, climate change-induced disasters are increasing at an increasing rate. Poor countries are, evidently, disproportionately affected from such disasters.
The recent studies substantiate that South Asian countries would perhaps be the most severely affected in the event of disasters led by climate change. This region experienced two back to back cyclones, namely Amphan and Nisharga, in May 2020, with severe effects on lives and livelihoods.
It is imperative to acknowledge these losses and to be prepared for future disasters. In light of these, GCF would, perhaps, see bigger opportunities to inject its funding to adaptation projects, designed for the countries more vulnerable to climate change, and play a pivotal role in supporting these countries in their pursuits for enhancing resilience against the diabolical challenges of climate change.
While initiatives shall, of course, be undertaken by different countries, the onus is on GCF to be the catalyst in achieving the paradigm shift for which a lot of discussions have been taking place globally over the years.
Moreover, the world's least developed and the most vulnerable countries are left behind in terms of how much climate finance they have secured over the years, when they are the ones who need this finance the most.
Since co-finance is one of the critical factors in GCF projects, countries that have a better capacity to attract private investment and can generate income are, reportedly, in a better position to tap GCF resources.
On the other hand, there have been repeated calls from different stakeholders to GCF to ensure that both mitigation and adaptation projects get similar preference so that the funding ratio could be kept 50:50 for mitigation and adaptation.
However, the present distribution of GCF projects reveal that 40 percent funding has been channelled to mitigation projects whereas 25 percent funding has been leveraged to adaptation projects. Projects with cross-cutting elements - both mitigation and adaptation- have received the remainder of the funding, i.e., 35 percent of the total disbursed fund.
While GCF has been established to accelerate mitigation and adaptation activities, particularly in developing and least developed countries, as follows from this analysis, GCF has even broader roles now that emerged from Covid-19.
This is the unique opportunity for GCF to complement the efforts of different countries in green recovery and thereby, supporting the world to be on track to realise the Paris Climate goal on mitigation.
Since different countries are aiming to move away from future investment in coal, GCF should ensure early channelling of funding to the developing countries to stimulate the private sectors in driving the renewable energy revolution.
Finally, climate change and Covid-19 represent two distinctive problems but there is one thing in common – in both cases, support is required by the needy ones.
Therefore, GCF can strategically inject funding to the countries that are more vulnerable to climate change and this will be achievable when adaptation receives more priority than what it appears to receive now.
Shafiqul Alam is a Humboldt Scholar; He is an engineer and environmental economist.