After US fails to pay its debt, UN’s flagship climate fund warns of austerity

The head of the UN’s flagship climate fund has warned that it will have to reject emissions-cutting projects if its donors do not provide more resources.

Green Climate Fund (GCF) executive director Yannick Glemarec told a board meeting yesterday: “Regarding the need for more mitigation projects, this will very much depend on whether or not we are able to mobilise some additional resources”.

Without that additional funding, “some turn-off will be unavoidable,” he said. “It’s one of my fears.”

Campaigners blamed America for these possible cuts. Action Aid’s policy director Brandon Wu told Climate Home News: “If the GCF needs to limit its operations in the near future due to lack of funding, it’s hard to find any single country more at fault than the United States”.

“By failing to meet its responsibilities to fund the GCF,” Wu said, “the US is failing frontline communities in developing countries and it is also undermining the prospects of global climate cooperation more broadly.”

The US owes GCF $2 billion. Barack Obama had promised the fund $3bn in 2014, but only $1bn was given before his term expired. Donald Trump, his successor, didn’t give any money to GCF and Joe Biden, so far.

A US Congress bill for 2022 was approved earlier this month with $1bn to international climate finance and no money to the GCF. Biden had asked Congress to approve $1.25bn to the fund, but negotiations reduced the amount to zero.

Monday’s request by the Biden administration to Congress for the 2023 fiscal years, which includes $1.6bn in funding for the GCF, was published by the Biden administration. Climate Home was informed by Erika Lennon (a senior attorney at Centre for International Environmental Law) that this amount is a “paltry”.

Lennon reiterated the demand of campaigners that the White House deliver $8bn to GCF. It would pay the US $2bn of its debt, plus $6bn. This would bring the US in line with other donor countries who doubled their contributions during the fund’s first replenishment in 2019. Collectively, more than $9bn has been contributed by EU member countries to the fund.

Joe Thwaites, a climate finance expert at World Resources Institute, stated that Biden must make the GCF a priority funding priority if he wants to ensure that $1.6bn is allotted to it by 2023.

GCF funding was previously blocked by Republicans, so it will be difficult to secure Congress’ support. Republican representative comments on Biden’s request for $1.6bn. Lauren Boebert tweeted“Democrats will waste and spend as much of your tax dollars on their liberal wishlist.”

Democrats will spend as much tax money as they can on their liberal wishlist.

Someone should tell them we owe more than $28 TRILLION. https://t.co/AaURoPkRvF

— Rep. Lauren Boebert (@RepBoebert) June 28, 2021

Thwaites stated that the US could finance the GCF using flexible funds such as the state department’s economic assistance fund, which would not require Congress approval. This is the same vehicle Obama used to make two $500m payment in 2016 and 2017. The fund’s budget increased by $1bn in 2022.

Thwaites warned that “this account is being used to fund many overseas programmes and it depends on whether there are other claims on these resources and if the administration will prioritize funding the GCF.”

GCF was established at UN climate talks 2010 as a financing mechanism for developing countries’ climate actions. Since then, the GCF has contributed more than $10bn towards projects to reduce emissions and assist vulnerable communities in coping with climate impacts.

Recent carbon-cutting projects include funding for solar panels in Africa’s Sahel region, clean ways of cooking in Nepal and light rail transit in Costa Rica’s capital San José.

The GCF is responding to the call of developing countries by directing more funding to adaptation to climate change than to reducing emissions.

It is aiming to split the funding 50:50, but projects to reduce emissions have received 62%.