At COP 16 held in Cancun, Mexico, the Conference of the Parties (COP) decided to establish a Green Climate Fund (GCF) in the broad context of long-term support, under which developed countries committed to jointly mobilize funds rising to USD 100 billion per year by 2020. These funds would be raised from a mix of public and private sources, including alternative sources. Parties decided the GCF shall be designated as an operating entity of the financial mechanism of the Convention under Article 11, with arrangements to be concluded between the COP and the Green Climate Fund to ensure that it is accountable to, and functions under the guidance of, the COP. It was also decided that a significant share of new multilateral funding for adaptation should flow through the GCF. The Fund will support projects, programmes, policies and other activities in developing country Parties using thematic funding windows.

The Fund will be governed by the Board comprising 24 members, as well as alternate members, with an equal number of members from developing and developed country Parties.

The COP also decided that the GCF shall be designed by a Transitional Committee (TC) comprising 40 members - 15 members from developed country Parties and 25 members from developing country Parties - to design the details of the fund. The Committee held its first meeting in Mexico City from 28-29 April.

The Committee includes experienced and respected individuals from the fields of finance and climate change. The exact composition of the Committee is: seven members from Africa; seven members from Asia; seven members from Latin America and the Caribbean; two members from small island developing States; two members from the least developed countries and fifteen members from developed countries.
 
The April meeting, convened by UNFCCC Executive Secretary Christiana Figueres, was attended by a wide array of observers. This is significant, given that the Transitional Committee will make special efforts to encourage input from all Parties and from relevant government and non-governmental organizations and the private sector, who will contribute valuable insights to the design of the Fund.

Three Ministers were elected as co-Chairs: Mexican Finance Minister, Ernesto Cordero Arroyo; South African Minister in the Presidency for Planning, Trevor Manuel; and Norway’s State Secretary at the Ministry of Finance, Kjetil Lund. This high-calibre chairing arrangement reflects the high rank of many of the TC members.
 
Opening the meeting, Ms. Figueres said “the task before you is to propose a design that will make the Green Climate Fund the window into a new era of vastly greater financing for climate action in the developing world, and to do so in time for approval in Durban.”  

She cited the launch of the Green Climate Fund as being one of the significant decisions that nations reached in Cancun, which show that governments can take repeated steps forward, including this year in Durban.

“To get government and private capital flowing freely on this scale, the Green Climate Fund needs to become a trusted avenue for deploying climate funding to the best effect and it needs to offer a compelling route for private sector capital to engage in bigger climate investments in the developing world,” said Ms. Figueres.

 “I am convinced that as governments, industry and investors increasingly realize that a low-carbon future in a world resilient to climate change is not only necessary, but sustainable and profitable, then the necessary finance will flow faster than many now expect. A well-designed Green Climate Fund will help ensure that this happens sooner rather than later,” Ms. Figueres said.

Four work streams were identified, and will be led by eight "work stream co-facilitators." The work streams can be summarized as follows:

1. Scope, guiding principles and cross-cutting issues: Work under this stream will include, inter alia:

• Objectives and principles
• Thematic scope
• Size and scalability
• Country-led and results-based approaches
• Complementarity and value added
• Methods to enhance complementarity between the Fund’s activities and those of other bilateral, regional and multilateral funding mechanisms and institutions

2. Governance and institutional arrangements: Work under this stream will include, inter alia:

• Legal and institutional arrangements, including fiduciary management issues, for the establishment and operationalization of the GCF
• Rules of procedure, functions and responsibilities of the Board and other governance issues related to the Board
• Role of the Fund’s secretariat and the procedure for selecting and/or establishing the independent secretariat
• Trustee arrangements and issues of fiduciary responsibility for the Fund
• Relationship between institutional arrangements of the GCF and other bodies established under the Convention, as well as national entities

3. Operational modalities: Work under this stream will include, inter alia:

• Methods to manage the large scale of the financial resources from a number of sources and deliver through a variety of financial instruments, funding windows and access modalities, including direct access, with the objective of achieving a balanced allocation between adaptation and mitigation
• Modalities for contributions to the Fund
• Methods to mobilize and leverage private sector finance, both foreign and domestic
• The financial instruments that the Fund can use to achieve its priorities
• Methods to ensure a balanced allocation between mitigation and adaptation
• Mechanisms to ensure the provision of appropriate expert and technical non-binding advice, including from relevant thematic bodies established under the Convention
• Mechanisms to ensure stakeholder input and participation

4.  Monitoring and Evaluation: Work under this stream will include, inter alia:

• A mechanism to ensure periodic independent evaluation of the Fund’s performance
• Mechanisms to ensure financial accountability and to evaluate the performance of activities supported by the Fund, in order to ensure the application of environmental and social safeguards, as well as internationally accepted fiduciary standards and sound financial management to the Fund’s activities

There was clear support among members for a strong Technical Support Unit (TSU). The TSU took up its work in the first week of May and is housed by the UNFCCC secretariat in Bonn.

Next steps include a workshop in late May/early June in Bonn and a second meeting of the Transitional Committee scheduled for early July.