CRS Report Released: International Climate Change Financing: The Green Climate Fund (GCF)

The Congressional Research Service (CRS), the public policy research arm of Congress, recently issued the report International Climate Change Financing: The Green Climate Fund (GCF) (Apr. 16, 2013). The 16-page report authored by Richard K. Lattanzio, discusses the following:

Summary

Over the past several decades, the United States has delivered financial and technical assistance for climate change activities in the developing world through a variety of bilateral and multilateral programs. The United States and other industrialized countries committed to such assistance through the United Nations Framework Convention on Climate Change (UNFCCC, Treaty Number: 102-38, 1992), the Copenhagen Accord (2009), and the UNFCCC Cancun Agreements (2010), wherein the higher-income countries pledged jointly up to $30 billion of “fast start” climate financing for lower-income countries for the period 2010-2012, and a goal of mobilizing jointly $100 billion annually by 2020. The Cancun Agreements also proposed that the pledged funds are to be new, additional to previous flows, adequate, predictable, and sustained, and are to come from a wide variety of sources, both public and private, bilateral and multilateral, including alternative sources of finance.

One potential mechanism for mobilizing a share of the proposed international climate financing is the UNFCCC Green Climate Fund (GCF), proposed in the Cancun Agreements and accepted by Parties during the December 2011 conference in Durban, South Africa. The fund aims to assist developing countries in their efforts to combat climate change through the provision of grants and other concessional financing for mitigation and adaptation projects, programs, policies, and activities. The GCF is to be capitalized by contributions from donor countries and other sources, including both innovative mechanisms and the private sector. Currently, the GCF complements many of the existing multilateral climate change funds (e.g., the Global Environment Facility, the Climate Investment Funds, and the Adaptation Fund); however, as the official financial mechanism of the UNFCCC, some Parties believe that it may eventually replace or subsume the other funds. While many Parties expect capitalization and operation of the GCF to begin shortly after the November 2013 conference in Warsaw, Poland, many issues remain to be clarified, and some involve long-standing and contentious debate. They include what role the CGF would play in providing sustained finance at scale, how it would fit into the existing development assistance and climate financing architecture, how it would be capitalized, and how it would allocate and deliver assistance efficiently and effectively to developing countries.

The U.S. Congress—through its role in authorizations, appropriations, and oversight—would have significant input on U.S. participation in the GCF. Congress regularly determines and gives guidance to the allocation of foreign aid between bilateral and multilateral assistance as well as among the variety of multilateral mechanisms. In the past, Congress has raised concerns regarding the cost, purpose, direction, efficiency, and effectiveness of the UNFCCC and existing international institutions of climate financing. Potential authorizations and appropriations for the GCF would rest with several committees, including the U.S. House of Representatives Committees on Foreign Affairs (various subcommittees); Financial Services (Subcommittee on International Monetary Policy and Trade); and Appropriations (Subcommittee on State, Foreign Operations, and Related Programs); and the U.S. Senate Committees on Foreign Relations (Subcommittee on International Development and Foreign Assistance, Economic Affairs, and International Environmental Protection); and Appropriations (Subcommittee on State, Foreign Operations, and Related Programs). As of April 2013, the U.S. Administration—through its State,

Foreign Operations, and Related Programs 150 account—has made no specific budget request for appropriated funds to be contributed to the GCF.