Green Climate Fund's Second Replenishment Shows Far More Finance Needed from Developed Countries / 2023 P4G Colombia Summit Accelerates Climate Solutions

CRP Climate Reality Project - 10/9/2023 9:40:00 AM

Green Climate Fund's Second Replenishment Shows Far More Finance Needed from Developed Countries

On october 5th, 25 nations gathered at the Green Climate Fund's pledging conference to announce $9.3 billion in new contributions to the fund's second replenishment. Formally established in 2010, the Green Climate Fund is central to the cooperative international effort on climate change. Capitalized by 37 developed countries, with voluntary additional contributions by 9 developing countries, it provides finance to developing countries towards mitigation, adaptation and resilience efforts. Its first round of funding (2015) and first replenishment (2019) both comprised roughly $10 billion. New executive director Mafalda Duarte aims to grow the fund to $50 billion by 2030.

The Green Climate Fund plays an important role in catalyzing transformational change toward a low-emissions and climate-resilient future. It already disburses its funds with a balance between adaptation- and mitigation-focused projects. In an environment where developing countries have repeatedly stressed the need for more concessional finance, 41% of its funds are made available as grants.

World Resources Institute previously released research estimating appropriate levels of contribution to the Green Climate Fund, in line with developed countries' historical responsibility for greenhouse gas emissions and ability to contribute.

The following is a statement from Shuang Liu, Acting Global Finance Director for World Resources Institute:

"Developed countries are still delivering nowhere near the amount of finance that developing countries need to address the climate crisis. Instead of ratcheting up ambition, developed countries are in danger of providing even less finance than in the Fund's prior funding rounds. As climate-driven floods, droughts and heatwaves devastate communities, the status quo is simply not enough."

"Developed countries need to deliver a step-change in ambition to meet their responsibility to aid developing countries in adopting clean energy and adapting to the increasingly extreme climate impacts they bear little historical responsibility for."

"A few countries did step up with substantial contributions, including Germany, the United Kingdom, and France.

"The United States did not announce any new finance today but have indicated they are preparing a pledge. As the country that should fairly provide the greatest share of climate finance, the U.S. should deliver a substantial contribution before COP28 to boost their credibility ahead of the negotiations."

2023 P4G Colombia Summit Accelerates Climate Solutions

The 2023 P4G Colombia Summit brought together more than 1,100 government leaders, CEOs, entrepreneurs, NGOs and investors from more than 24 countries to accelerate climate finance for just transitions. With more than 23 sessions, the summit helped businesses access financing and overcome policy barriers. Hosted by the Government of Colombia, City of Bogotá and the National Business Association of Colombia (ANDI) in Bogotá, Colombia on September 22-23, 2023, the Summit covered climate finance challenges and solutions across three main tracks: biodiversity, energy transition and sustainable cities.

P4G contributes to green and inclusive growth in low- and middle-income countries by helping locally led climate businesses become investment ready. It works alongside national level public-private platforms and global leaders to improve market systems for in-country climate transitions, while also accelerating green entrepreneurs' journey to commercial investment readiness. By doing so, P4G helps to increase the flow of global climate finance to local climate solutions to enable in-country climate transitions.

The need for a just transition echoed throughout the summit sessions. Bogotá Mayor Claudia Lopez opened the summit by emphasizing the value of community-led public-private partnerships to ensure social inclusion, quality education and good jobs are part of the climate response. Shameela Soobramoney, CEO of South Africa's National Business Initiative, underscored that the just transition must center people by making sure resources are adequately distributed, and that in South Africa, businesses are pioneering ways to make that happen.

Framing the summit's focus on implementation, Robyn McGuckin, Executive Director of P4G shared the initiative's approach to supporting climate businesses in low- and middle-income countries with funding, technical assistance and enabling systems support so they can become financially viable and scale their impact. Bruce MacMaster, CEO of ANDI, reinforced the need for urgent action, with public-private partnerships as an essential component of implementing the solutions needed at the speed required. Officials from the governments of Denmark, the Netherlands and the Republic of Korea, and WRI, announced their commitment to support P4G for five more years, as it is a critically needed instrument to accelerate climate finance and support in-country transitions in food, water and energy systems in P4G countries.

In the high-level sessions, speakers highlighted the need for new financing mechanisms that can help bridge the climate funding gap. Morten Elkjaer, Senior Vice President of the Danish Investment Fund for Developing Countries (IFU), shared how IFU is looking to establish good relationships at the country level because local anchoring ensures that funding goes where it is needed the most. At the Summit, IFU signed a Memorandum of Understanding with the CleantechHUB in Colombia to drive finance for green entrepreneurship and innovation. The CleantechHUB will identify climate projects and companies in the region in which IFU can potentially invest in the future.

At acceleration roundtables, 34 P4G partnerships and Colombian businesses shared their business models, results and key challenges with government representatives and investors from across different industries, who then provided suggestions and lessons learned to strengthen their models. For example, representatives from P4G's Green Last Mile partnership highlighted their work on using electric three-wheelers for zero-carbon last-mile delivery services in Bogotá. Experts from Kenya, a country leading on electric mobility, discussed how governments can support effective regulation, as Kenya is doing through its e-mobility commission. Kenya's experts learned how the country might be able to replicate electric last mile delivery in Nairobi.

In the Investor Pitch Sessions, representatives from P4G partnerships such as Transforming Africa's Bamboo, Digital Food Rescue and Village Energy pitched their business proposition and received feedback from expert judges from across P4G's partner countries. They emphasized the need for businesses to clarify their specific investment needs and returns, along with the impact the partnership generates. Lemarron Kaanto, Ambassador of Kenya to Brazil, noted that attending the pitch sessions enabled him to learn about the start-ups that have huge potential and their role in green growth.

To close out the summit, leaders and youth discussed what is needed for a sustainable future. Representing the youth voice, Mtamu Kilulu, CEO of MycoTile, noted the value of bringing entrepreneurs together to challenge each other and their ideas in a way that wouldn't happen in their own countries. Ani Dasgupta, president and CEO of WRI, underscored the need for systems change, so that we can replicate conversations happening at this summit across sectors and countries to look at what enterprises, innovators and SMEs are doing and ask ourselves, "How can we help?"

As P4G looks to build on the momentum from the Colombia summit, we are thrilled to share that Vietnam will host the 2025 P4G Summit. The government of Vietnam highlighted its commitment to the success of P4G and a summit that would focus on topics such as food security related to hunger, sustainable management, finance for a just transition and global plastics.