U.N. Climate Fund Promised Billions to Poor Nations. For Some, the Wait Is Long.
Continue reading the main story
Share This Page
A landmark pledge seven years ago by the world’s richest nations to spend billions to help developing countries tackle climate change seemed like a godsend for Kiribati, the Pacific island nation threatened by rising seas.
The result of that promise was the Green Climate Fund. But Kiribati — like many of the poorest countries most vulnerable to climate change — has yet to see any project funding.
Instead, many of the projects that have won early backing were approved despite concerns raised by current and former observers on the fund’s board over whether officials had done enough vetting of projects — especially on those involving the private sector, which make up half of the approximately $2.6 billion in project financing authorized so far.
“We raised our objections, but the gavel just came down,” said Liane Schalatek, one of two civil society observers on the fund’s board and associate director at the Heinrich Böll Foundation North America, an environmental group associated with the Greens party in Germany.
“There’s a real lack of transparency,” she said.
The observers took issue, for example, with a proposed project that would hand out $265 million in equity and grants to Geeref Next, a Luxembourg-based investment fund that proposed to finance renewable energy or energy efficiency projects in about 30 countries — with no explicit plan to disclose what those projects would be.
The fund’s 24-member board approved the proposal.
The board observers have also asked why the fund’s finances, set up to back locally owned projects that reach the most vulnerable communities, were going toward private-sector enterprises led by global investment firms — like $110 million in loans and grants for solar projects in Kazakhstan led by London-based United Green Energy and the investment arm of Kazakhstan’s sovereign wealth fund.
Those concerns also went unaddressed.
According to funding proposals for the 54 projects approved so far, as well as a record of objections raised by board observers, other projects that have raised red flags include:
• $25 million in equity and grants administered from Mauritius, a corporate tax haven, for off-grid solar power in Rwanda, Kenya and Uganda;
• $50 million in loans and grants to repair a Soviet-era dam in Tajikistan, even though experts have warned that hydropower there is vulnerable to the retreat of the snow melt that feeds dams;
• $9 million in loans to a renewable energy project in rural Mongolia that observers worried would be used to power coal mining.
The Green Climate Fund also faces challenges on the donor front.
This year, President Trump said the United States would no longer pay into the fund — a snub that accompanied the Trump administration’s decision to withdraw from the Paris climate accord.
The United States had promised to contribute $3 billion — more than any other country, though less than other donors on a per-capita basis — of which the Obama administration delivered $1 billion.
Industrialized nations have indeed pledged to generate $100 billion a year by 2020 to help developing countries reduce their greenhouse gas emissions and address the effects of climate change. The fund has so far secured $10.3 billion in financing.
To be sure, the climate fund has also enjoyed some notable successes, including private projects. The off-grid solar projects in Rwanda and Kenya, for example, have been praised for their focus on reaching remote communities.
But the board observers’ concerns underscore the challenges facing the fund, now a pillar of the Paris climate pact, as negotiators gather this week at United Nations climate talks in Bonn, Germany.
Critically, the early mix of approvals has meant that less than a tenth of the funding has gone to the kind of projects that make up the fund’s mandate: those owned and controlled by the poorer nations themselves.