The Green Climate Fund (GCF)

The Green Climate Fund (GCF)

Updated October 2, 2019
The Green Climate Fund (GCF)
International Environmental Assistance
to humankind” and, accordingly, requires parties to (1)
inventory, report, and control their human-related
Many governments hold that environmental degradation
greenhouse gas emissions; (2) cooperate in preparing to
and climate change pose international and trans-boundary
adapt to climate change; and (3) assess and review the
risks to human populations, economies, and ecosystems. To
effective implementation of the convention. The UNFCCC
confront these challenges, governments have negotiated
also commits the higher-income parties (i.e., those listed in
various international agreements to protect the
Annex II of the convention as members of the Organization
environment, reduce pollution, conserve natural resources,
for Economic Cooperation and Development in 1992) to
and promote sustainable growth. While some observers call
seek to mobilize financial assistance to help lower-income
upon industrialized countries to take the lead in addressing
countries meet certain obligations common to all parties.
these issues, many recognize that efforts are unlikely to be
sufficient without similar measures being taken in lower-
The Green Climate Fund (GCF)
income countries. However, lower-income countries, which
tend to focus on poverty reduction and economic growth,
The GCF is one of the international financial institutions
may not have the financial resources, technological know-
connected to the UNFCCC. The fund was proposed by
how, and/or institutional capacity to deploy
parties to the UNFCCC during the 2009 Conference of
environmentally protective measures on their own.
Parties (COP) in Copenhagen, Denmark, and its design was
Therefore, international financial assistance, or foreign aid,
agreed to by all parties during the 2011 COP in Durban,
has been a principal method for governments to support
South Africa. The GCF was made operational in 2014. The
actions on global environmental problems in lower-income
GCF aims to assist lower-income countries in their efforts
countries. Often, this assistance can serve as a cost-effective
to combat climate change through the provision of grants
strategy for donor countries to provide greater market
and other concessional financing for mitigation and
access for domestic goods and services abroad and
adaptation projects, programs, policies, and activities. The
increased environmental benefits at home.
GCF is capitalized by contributions from donor countries
and other sources, potentially including innovative
The United States and other industrialized countries have
mechanisms and the private sector.
committed to providing financial assistance for global
environmental initiatives through a variety of multilateral
The GCF currently complements many of the existing
agreements, including the Montreal Protocol (1987), the
multilateral climate change funds (e.g., the Global
U.N. Framework Convention on Climate Change (1992),
Environment Facility, the Climate Investment Funds, and
and the U.N. Convention to Combat Desertification (1994).
the Adaptation Fund). However, some parties believe that,
International financial assistance takes many forms, from
as one of the official financial mechanisms of the
fiscal transfers to market transactions. It may include
UNFCCC, it may eventually replace or subsume the other
grants, loans, loan guarantees, export credits, insurance
funds. Many countries, specifically lower-income countries,
products, and private sector investment. It may be
expect that the GCF will become very large (i.e., in the
structured as official bilateral development assistance or as
range of several tens of billions to over $100 billion
contributions to multilateral development banks and other
annually) and serve as the predominant institution for
international financial institutions.
climate change assistance in the developing world. These
countries believe that the agreement to establish the GCF
The United Nations Framework
within the framework of the United Nations has been a key
Convention on Climate Change
success in the recent international negotiations. Other
(UNFCCC)
countries, however, would rather see a smaller role for the
GCF, preferring instead to have private investment and
other financing flow through a variety of channels. Some
The 1992 UNFCCC was the first formal international
parties also caution that ambitious steps need to be taken to
agreement to acknowledge and address human-driven
ensure that the GCF is operated appropriately, meeting a
climate change. The U.S. Senate provided its advice and
strict set of fiduciary standards and social safeguards, in
consent to the convention’s ratification in 1992, the same
order to achieve an adequate buy-in by donor countries of
year it was concluded (Treaty Number: 102-38, October 7,
its effectiveness and by recipient countries of its legitimacy.
1992). The UNFCCC entered into force in 1994. As of
March 2016, 196 governments are parties to the UNFCCC.
Information about GCF activities, organization, policies,
projects, and contributions is available on its website at
As a framework convention, the UNFCCC provides general
http://www.greenclimate.fund/.
obligations for all parties but leaves them free to design
their own means to fulfill these obligations. The convention
“acknowledges” that climate change is a “common concern
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The Green Climate Fund (GCF)
Organizational Structure
account under the Function 150 and Other International
The structure of the GCF was negotiated at various COP
Programs budget. The Foreign Assistance Act of 1961, as
meetings to the UNFCCC. Decisions included:
amended (P.L. 87-195; part II, Chapter 4), provides the
President authority to use the Economic Support Fund “to
 Status. Parties to the UNFCCC designated the GCF as
furnish assistance to countries and organizations, on such
“the operating entity of the Financial Mechanism of the
terms and conditions as he may determine, in order to
Convention” to be “accountable to and function under
promote economic or political stability.”
the guidance of the COP to support projects,
programmes, policies and other activities in developing
On January 17, 2017, the State Department announced that
country Parties” (UNFCCC Decision 3/CP.17§3, 2011).
it made an additional $500 million grant to support the
GCF. The agency’s press release stated that the funding was
 Governance. The UNFCCC set forth the composition of
provided “from the fiscal year 2016 Economic Support
a board to have 24 members, composed of an equal
Fund (ESF) appropriation.”
number from lower- and higher-income country parties,
with representation from relevant U.N. groupings
The Trump Administration’s FY2018 budget request,
including Small Island Developing States and Least
released on May 23, 2017, “eliminate[d] U.S. funding for
Developed Countries (3/CP.17§A9). Functions of the
the Green Climate Fund (GCF) in FY2018, in alignment
board are to include approving projects and funding,
with the President’s promise to cease payments to the
selecting implementing agencies, monitoring fiduciary
United Nations’ climate change programs.” Subsequent
standards and environmental and social safeguards, and
budget requests have also eliminated funding.
evaluating performance.
Issues for Congress
 Host country. The UNFCCC selected Songdo, Incheon,
Members of Congress hold mixed views about the value of
Republic of Korea, as the host of the GCF (6/CP.18§3).
international financial assistance to address climate change.
While some Members are convinced that human-induced
 Management. The UNFCCC established an
climate change is a high-priority risk that must be addressed
independent secretariat to execute the day-to-day
through federal actions and international cooperation,
operations of the fund (4/CP.19§2).
others are not in agreement. Some are wary, as well, of
international processes that could impose costs on the
 Trustee. The UNFCCC invited the World Bank to serve
United States, redirect funds from domestic budget
as the interim trustee (3/CP.17§16).
priorities, undermine national sovereignty, or lead to
competitive advantages for other countries. Nonetheless, as
Funding
a party to the UNFCCC, the United States has certain
The GCF was officially opened for capitalization at the
obligations under the treaty. The executive branch
U.N. Climate Summit in September 2014. Parties called for
continues to negotiate and implement the UNFCCC
an immediate capitalization of between $10 billion and $15
obligations. Committees of Congress engage in oversight
billion over the course of the first year. Initial funding came
(from home and at the COP), provide input to the executive
from Germany, France, and a dozen other countries that
branch formally and informally, and decide program
pledged approximately $2.3 billion. Further pledges
authorities and appropriations for these activities.
brought the total to approximately $10 billion by the close
of 2014, including (in approximate U.S. dollars) Japan
As Congress considers potential authorization and/or
($1.5 billion), United Kingdom ($1.2 billion), Germany ($1
appropriations for the GCF (or, conversely, their
billion), France ($1 billion), Sweden ($600 million),
prohibition), concerns may arise regarding the fund’s cost,
Canada ($300 million), Norway ($250 million), and
purpose, direction, efficiency, and effectiveness. Further,
Australia ($200 million), among others. The GCF Board
Congress might weigh the allocation of foreign assistance
launched its first replenishment cycle in October 2018.
funds between bilateral and multilateral channels, as well as
among the variety of multilateral mechanisms. Congress
U.S. Commitments: The Obama Administration announced
may also give guidance to the Departments of State and the
a U.S. pledge of $3 billion over four years during the G-20
Treasury with respect to the GCF’s internal policies and
meetings in Australia on November 15, 2014. The Obama
external commitments. Further, Congress may gauge the
Administration’s FY2016 budget requested $500 million
impacts that U.S. participation in the fund might have on
for the fund. H.R. 2029, the Continuing Appropriations Act,
environmental protection, private sector investment,
2016, enacted December 18, 2015, as P.L. 114-113, had no
technological innovation, national security, humanitarian
provisions explicitly providing—or prohibiting—funding
efforts, and international leadership.
for the GCF. The Obama Administration’s FY2017 budget
requested $750 million for the fund ($500 million from the
For more discussion on the benefits and costs of
U.S. Department of State and $250 million from the U.S.
international environmental assistance, see CRS Report
Department of the Treasury).
R41845, The Global Climate Change Initiative (GCCI):
Budget Authority and Request, FY2010-FY2016.
U.S. Contributions: On March 8, 2016, the United States
made an initial contribution of $500 million to the GCF.
Richard K. Lattanzio, Specialist in Environmental Policy
The funds were obligated with FY2016 budget authority
from the State Department’s Economic Support Fund—an
IF10382
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The Green Climate Fund (GCF)

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