The Green Climate Fund, International Governance, and Climate Justice in Developing Nations
| Author | Steven Ferrey |
| Pages | 49-83 |
49
The Green Climate Fund,
International Governance,
and Climate Justice in
Developing Nations
Steven Ferrey
Introduction: e Largest Transfer of Wealth in History ................................ 49
I. Comparing International Commitments on Climate Change .................53
A. e Commitments in Copenhagen and Cancun ...............................53
B. e 2015 Paris Agreement ................................................................ 62
C. Financial Demands of the Agreements ..............................................66
1. e Sources of Finance for Developing Countries ....................... 66
2. Accessible Institutional Funds .....................................................68
II. Institutions at Control Climate Capital Flow .....................................71
A. Traditional Development Banks and Climate Funding .....................71
B. New International Carbon Financing Structures ...............................73
1. Administered rough Traditional Organizations ....................... 74
2. Administered rough Alternative Governance Structures ..........76
III. e Critical Nature of the International Financial Conduit .................... 80
Conclusion ..................................................................................................... 82
Introduction: The Largest Transfer of Wealth in History
Several developed countries have committed to the largest sustained inter-
national transfer of wealth in history: a commitment of an additional $100
billion per yea r of foreign aid continuing in perpetuity for the explicit pur-
pose of dealing with global climate change.1 Since the current warming trend
is irreversible and will last over a period of 100 years or more,2 this com-
1. U N S-G, R S-G’ H-L A-
G C C F 2 (2010), http://www.un.org/wcm/webdav/site/
climatechange/shared/Documents/AGF_reports/AGF%20Report.pdf [hereinafter U N
S-G].
2. Susan Solomon et al., Irreversible Climate Change Due to Carbon Dioxide Emissions, 106 P. N’
A. S. 1704, 1704 (2009).
Chapter 3
50 Climate Justice
mitment constitutes trillions of dollars of additional cross-national nancial
assistance from some wealthier developed nations to the bulk of countries. It
is of unprecedented dimension, scale, and longevity.
New climate change nancing will need to come from a wide variety of
sources, public and private, bilateral and multilateral, including alternative
sources of nance and the scaling up of existing sources and increased private
ows. Commitments to domestic mitigation of warming and the introduc-
tion of new public instruments based on carbon pricing will be important
for mobilizing adequate climate na ncing.3 Developing nations want these
funds to be administered through newer organizations set up with the domi-
nant governing board control exercised by recipient nations, in which there
would be fewer administrative requirements and less monitoring of recipi-
ents’ decisions and accounting for use of the proceeds. e donor countries
typically prefer administration by t he traditional multilateral international
organizations, in which there would be traditional monitoring of recipient
fund use and accountability, and where the boards a re constituted with a
majority of donor countries. An international batt le over the administration
of trillions of dollars of discretionary funds is not merely a ght over funds.
In a larger dimension, it maps the future of 21st centur y international law
and regulation.
is scenario will represent a dierent form of wealth transfer compared
to tradition. e entire world is dependent on scores of countries mak ing
signicant and successful greenhouse gas (GHG) emissions reductions; the
failure of any one country to follow through has irreversible impacts on all.
e battle against global climate change can only be successful if devel-
oping cou ntries ma ke immediate fundamental changes in their electried
economies. e newly pledged massive nancial transfers are the engine
for developing countr y climate cha nge mitig ation. If they are misapplied,
the entire world economy bears the cli mate wa rming burdens and conse-
quences. erefore, unlike most other kinds of foreign assistance, account-
ability a nd control of how t his assistance is used is of unusual impor tance.
A misstep by any nation equally impact s all nations with warming conse-
quences. An eective solution cannot be c entralized; it must be achieved in
every country according to the nation’s particular culture, regulatory sys-
tem, and unique situation.
In December 2009, at the United Nations Climate Change Conference in
Copenhagen, industrialized countries set a goal of mobilizing $100 billion
per yea r by 2020 to support mitigation and adaptation activities in devel-
3. U N S-G, supra note 1, at 5.
The Green Climate Fund and International Governance 51
oping countries.4 It will matter for climate justice how this unprecedented
nancial ow is or is not controlled. As a starting point for the detail that
follows, only mitigation of emission of greenhouse gases by all nations will
reduce climate warming. Since climate change is expected to most severely
aect those countries with the least resources to adapt, mitigation activities
with worldwide impacts can increase global equity.
Adaptation to the eects of warming does not itself reduce the amount of
climate wa rming, but f unds for this purpose can be expended in a manner
that promotes climate justice. Whet her adaptation f unds promote climate
justice depends on where these funds go and how they are spent. is is a
function of the local governments th rough which c limate mitigation and
adaptation fu nds are fu nneled. It is a lso a function of accounting and con-
trol over disbursement of these f unds, wh ich is inuenced by the interna-
tional organizations that administer t he ow and alloc ation of these fu nds.
is chapter examines the dierent components and the moving parts in
this choreography.
is $100 billion annual pledge is an unprecedented amount of wea lth
transfer. For context, the total annual 2016-2017 United Nations budget,
including all of its remote worldwide posts, is $5.4 billion annually; added
peacekeeping operations raise annual expenditures by $7.87 billion to $13.3
billion.5 About ha lf of this latter amount comes from mandatory United
Nations assessments, and t he other half from voluntary donations by Mem-
ber nations. e asse ssments a re ba sed on gross national product (GNP);
richer countries pay more tha n poorer countries.6 e top 10 most-assessed
countries by the United Nations are the most developed auent counties,
which contribute 76.44% of the regular United Nations budget, although
representing only 5% of world nations.7
For multilateral agencies that nance infra structure in developing coun-
tries, the annual operating budget of the World Bank (excluding loans and
grants) is approximately $1.5 billion.8 e annual budget of the International
4. U N S-G, supra note 1, at 2.
5. See United Nations, UN Budget for 2016/17 adopted by UN General Assembly, http://www.un.org/
pga/70/2015/12/23/general-assembly-adopts-un-budget-for-2016-17/; United Nations, Financing
Peacekeeping, http://www.un.org/en/peacekeeping/operations/nancing.shtml (last visited Sept. 18,
2016).
6. Id. ere are some exceptions, however. For example, Brazil pays more than Liechtenstein even though
Brazil’s per capita income is much lower, because as a larger country its total GNP is much higher.
7. Matt Rosenberg, e Number of Countries in the World: By Most Accounts, ere Are 196 Countries in
the World, A.C, http://geography.about.com/cs/countries/a/numbercountries.htm (last visited
Aug. 21, 2016). ere are 193 Members of the United Nations, among 196 countries in the world.
Taiwan, Puerto Rico, Bermuda, Greenland, and Palestine are not recognized as countries.
8. See World Bank, World Bank Budget Increase, http://web.worldbank.org/WBSITE/EXTERNAL/
EXTABOUTUS/ORGANIZATION/EXTPRESIDENT2007/EXTPASTPRESIDENTS/PRESID
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