Copenhagen Green Climate Fund and the World Bank

Briefing paper

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Date produced: 01/06/2010

The United Nations Framework Convention on Climate Change (the UNFCCC) at Article 11, provides for a financial mechanism to be implemented including the provision of financial resources on a grant or concessional basis for the transfer of technology and to address climate change.

The Copenhagen Accord reiterated and elaborated on this commitment. In particular, paragraph 8 stated the collective commitment by developed countries to provide new and additional resources approaching USD 30 billion for the period 2010 ] 2012. It was further stated that this should grow to USD 100 billion per year by 2020 and that a significant portion of such funding
should flow through the Copenhagen Green Climate Fund (CGCF).

Paragraph 10 of the Copenhagen Accord, stated that the CGCF would be established as an operating entity of the financial mechanism of the UNFCCC to support projects, programmes, policies and other activities in developing countries related to mitigation including REDD-plus, adaptation, capacity-building, technology development and transfer.

There has been some concern from NGOs and developing countries that developed countries might insist on using the World Bank to deliver climate finance. In the event this comes to pass, this note sets out our views on the most appropriate structure and administration of the CGCF such that the World Bank’s operational role is substantially limited. In particular, we address:

(a) the different options for structuring World Bank trust funds;

(b) whether, for each option, the World Bankfs environmental and social safeguards apply;

(c) the best way to structure a World Bank trust fund so that it complies with the UNFCCC and what any MoU between the two should contain; and

(d) whether the World Bank could devolve all authority over such a trust fund to the UNFCCC COP such that its own role is substantially eliminated.

We have also provided a brief overview of how the World Bank3 deals with trust funds together with some relevant examples before answering the issues detailed above.