GEF & GCF

Global Environment Facility ( GEF )

Global environment Facility was created in 1991 as a result of mounting concern in the preceding decade over global environmental problems and efforts to formulate financing responses to address these problems. Of the many ideas for financing environmentally beneficial projects proposed by various governmental and non-governmental institutions, the GEF was the one which finally received the necessary political and financial support. The GEF is funded by donor nations, who commit money every four years through a process known as GEF replenishment. The GEF makes these grants available to developing countries and economies in transition to support actions to address critical threats to the global environment in the areas related to biodiversity, climate change, international waters, land degradation, the ozone layer and persistent organic pollutants. Apart from serving as the financial mechanism of UNFCCC, GEF also serves as the financial mechanism of other Conventions, namely Convention on Biological Diversity (CBD), the Stockholm Convention on POPs and the UN Convention to Combat Desertification (CCD).

Green Climate Fund ( GCF )

The Green Climate Fund (GCF) is designated as an operating entity of the Financial Mechanism of the United Nations Framework Convention on Climate Change (UNFCCC), which is accountable to and will function under the guidance of the Conference of the Parties (COP). It has been formed in accordance with article 11 of the Convention, and has been founded within the framework of the UNFCCC as a mechanism to transfer money from the developed to the developing world, in order to assist the developing countries in adaptation and mitigation actions to combat climate change. The formal decision to form this Fund was taken at the 15th CoP in Copenhagen. And it is expected that the GCF would deliver a significant portion of the climate finance pledge by developed countries to mobilize $100 billion per year by 2020 for mitigation and adaptation in developing countries.

Why was there a need to set up the Green Climate Fund , when already the GEF was set up ?

With the growing realization about the large amount of resources that would be required for climate change mitigation and adaptation, especially in developing countries and also with fourth assessment report of the IPCC establishing this fact. It became evident that the funding and operational arrangements under the Global Environment Facility were inadequate, and there was a need for major and urgent reforms in the financial mechanism. With this, the developing countries initiated the talks on the need of a new green fund to carry out the full mandate of provision of financial resources to developing countries exclusively dedicated to climate change, unlike GEF which serves broader areas of global environment. Moreover, the GEF is based on voluntary contributions rather than being based on the principle of assessed contributions, which generates concerns over the political neutrality of the Fund. It was established at that time without any legal capacity and there were also other concerns, like lack of financing for adaptation. This is also because adaptation targets local impacts and associated vulnerabilities rather than generating global benefits, which the GEF mandates. Most importantly the funds received under the climate change focal area in GEF were not in line with the actual requirement of funds, and neither was the scope of GEF large enough to channel and disburse a significant part of the US $100 billion pledged under long term finance by developed countries, which would now flow through the Green Climate Fund. All these reasons lead to the formation of the Green Climate Fund.