Reality Check Issues:

• Reality Check, November 2011
• Reality Check, July 2011
• Reality Check, March 2011
• Reality Check Africa, January 2011
• Reality Check, December 2009
• Reality Check, August 2008
• Reality Check, April 2008
• Reality Check, April 2009
• Reality Check, January 2008
• Reality Check, January 2007

Contents

• INTRODUCTION
• CLIMATE FINANCE ARCHITECTURE
  • Background
  • Climate finance mechanisms
    • The Green Climate Fund
  • Climate finance: scope and magnitude
• EMERGING ISSUES
  • Additionality and Concessionality
  • Absorption capacity
  • National Adaptation Programmes of Action
  • Access to Information and Transparency
• ENSURING EFFECTIVENESS OF CLIMATE FINANCE:
  RECOMMENDATIONS AND CONCLUSION
• Bibliography

SUMMARY

The aid effectiveness campaign has succeeded in offering a set of operating principles and a process framework for making development assistance more transparent, effective, accountable and consultative. However, as climate change poses to be a significant threat to African countries, the prevailing modality to address adaptation and mitigation is the global fund, which is delivered directly to projects, bypassing partner countries’ public finance management systems and institutions.

Though there is great variation in the costs of adaptation, the estimates are monumental, ranging between US$75-$100 billion annually; for Africa, approximately US$18 billion annually. There is an urgent need to fuse the gains made by the aid effectiveness movement with the goodwill and enthusiasm of global funds.

The number of vertical funds operating in the environment sector is astounding, considering the lag time with which both civil society and developing country governments were struggling to grapple with in the issue of climate change. As of December 2009, there were 22 funds with USD$18 billion in commitments. Two institutions have emerged as administrators of these funds: the Global Environment Facility Trust Fund and the World Bank. The emerging centrality of the supply side of these global funds is appealing as it will ensure coherence, reduce transaction costs and facilitate accountability. But the emerging supplier is less appealing: the World Bank, with its record on funding projects which exacerbated environmental damage and displacement of people and the lack of transparency around its operations. The most recent global fund to be created is the Green Climate Fund (GCF), established at the 16th COP in Cancun, with initial commitments of US$30 billion in ‘fast-start finance’.

 

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