Green Climate Fund Can Be Spent To Subsidise Dirty Coal

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If at this moment you were to ask me, What’s in a name? I would say, everything.

At its recent board meeting in South Korea, the “Green Climate Fund” (GCF) refused an explicit ban on fossil fuel projects. As a result, the fund which was set up as part of UN climate negotiations in order to help developing countries finance clean energy and measures to help adapt to climate change, can be spent on coal-fired power plants.The Four Corners coal-fired power plant, near Farmington, NM is a major source of pollutants, with measurements confirmed by Los Alamos National Laboratory researchers. Image Credit: DOE/Los Alamos National Laboratory

Japan, China, and Saudi Arabia were opposing the ban.

As per its own press release, the fund paints a rosy picture about its goals:

The Green Climate Fund was established by 194 governments to serve as the central global investment vehicle for climate finance, uniquely bringing together public and private investments to help advance the global paradigm shift towards low‐emission and climate resilient growth in developing countries.

It is widely claimed that the objective of the GCF is to raise $100 billion per year in climate financing by 2020. This is not an official figure, however, and disputes remain as to whether the funding target will be based on public sources, or whether leveraged private finance will be counted towards the total.

However in light of the current developments, even if it does end up achieving those defined targets, it is unclear what purpose it will serve.

“It’s like a torture convention that doesn’t forbid torture,” Karen Orenstein, a campaigner for Friends of the Earth US who attended the meeting told the Guardian. “Honestly it should be a no-brainer at this point.”

There are no clear rules on climate finance, not even an acceptable definition for what “climate finance” is. As a result there is a real danger that these funds could be channelled to support dirty energy. There is no watchdog agency that ensures the money is spent in the most effective way. Not only does the lack of clarity make a mockery of the fund, it defeats the whole purpose of having it in the first place. Even considering that the GCF is clear on its own objectives, it has been having a hard time of it, to say the least. The fund has struggled for support with the obligated industrialised countries paying only about 1% of the $10.2 billion which was committed at the UN climate negotiations in Lima last December. The deadline for contributions is 30 April.

If you were still consoling yourself, somewhere along the lines that, “So what, at least no one’s really funded coal using climate finance,” I am really sorry to break your bubble.

Enter Japan.

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Japan designated its $1 billion in loans for coal plants in Indonesia as climate finance, as per the Associated Press. To add more salt to the wound, last week Japan counted another $630 million in loans for coal plants in India and Bangladesh as climate finance. Of course, since there are no rules, all donors can decide for themselves what projects are to be counted as climate finance. Japan claims innocence and has denied any wrongdoing, adding that the projects it has been helping to finance will utilise new and efficient technology, result in less pollution than older coal-fired plants, and thus qualify as clean energy.

“This is unacceptable on its own, and the fact that it is being done in the name of ‘climate finance’ makes a farce of the entire concept”, said Brandon Wu of ActionAid.

An analysis of the 300 top climate finance projects reported to the UN since the Copenhagen summit (2009) showed that Japan was the only country which counts direct support to coal plants, among its contributions.

It should have been Climate Finance 101 that the ‘green’ funds can’t be used to finance fossils, but Japan is undeterred by any criticism. The country says it will continue to count its new coal plants as climate finance. It explains that without its financial and technological help, many developing countries might build more polluting coal plants.

The local populations at the sites where these coal power plants are coming up, have been opposing them against all odds.

“We want more power but not this one,” said Sidramappa Ranjanagi, who leads a local farmers’ organization in India. “In America they have stopped coal-based plants because it affects people’s health. Why can’t the government come up with solar power plants? We use solar power units at home here and they’re good.”

The US and many other countries have cut public funding for coal projects in developing countries. Germany still supports coal projects in poor countries, but unlike Japan it doesn’t count them as climate finance.

There were however some positive outcomes of the meeting, GCF became the first multilateral climate fund to recognize that more than just being vulnerable to climate change, women are important actors in addressing climate change.

In another forward looking step, development of Carbon Capture and Storage (CCS) technology has been included among the list of supported activities under the GCF. If only a condition was put that coal plants can be financed with the green fund, only if they deploy CCS, things would have looked much more promising.

Follow the link – to read our previous coverage of the GCF.


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Anand Upadhyay

is a Fellow with The Energy and Resources Institute (TERI, New Delhi). He tweets at @indiasolarpost. Views and opinion if any, are his own.

Anand Upadhyay has 95 posts and counting. See all posts by Anand Upadhyay