About $10 billion had been pledged to the fund as of September 1, 2015. The United States has made the largest commitment, of $3 billion, though it is yet to formally sign the contribution agreement, according to an update on the website of the fund. The other large contributors - Japan, the United Kingdom and Germany - have already done so. The first round of projects to be financed by the Songdo, South Korea headquartered fund is expected to be announced later this year.
The purpose of the fund is to "make a significant and ambitious contribution to the global efforts… to combat climate change". It proposes to use a variety of financial instruments including grants, concessional loans, guarantees and equity for mitigation and adaptation projects.
Yet, many things remain unclear:
1) What kind of projects will be funded?
2) What are the returns sought?
3) To what extent will the funding be in the form of grants?
4) Which countries will get more funding: those that are more ready or those that are more needy?
5) Will the funding be new and additional?
6) How will private sector finance be integrated into GCF's operations?
It looks like raising the funds annually required will remain a permanent challenge, and more so in times of economic stress.
Also challenging is the structure of decision-making within the fund. The attempt to give equal voice to the developed and developing countries means the GCF has a board with 24 members. That makes it somewhat unwieldy, especially when consensus is sought on decisions. Apple manages its hugely successful business with just seven board members. It was therefore not surprising to see, in the agenda items of the last board meeting in July, a discussion on 'decision-making procedures for the board in the absence of consensus'.
There has been progress meanwhile on some of the nuts and bolts required to make a fund operational. Local partners are being accredited in various countries to channel money from the GCF. In India, the National Bank for Agriculture and Rural Development (NABARD) was accredited in July 2015. "Accreditation provides NABARD access to financial assistance from Green Climate Fund for both adaptation and mitigation projects," a statement from the bank said.
GCF statements indicate that financing for at least some projects will be approved at the next board meeting in November, in Zambia, ahead of the climate conference in Paris. It is not clear if the announcement of actual funding will be flagged as a success of the fund or flogged as an example of the limited activity of the fund. What can be said with certainty is that the fund, and the $100-billion promise, will figure prominently in the give-and-take climate negotiations in Paris later this year.
A meeting of officials from developed countries meanwhile, hosted by the US and Switzerland in early September, concluded that climate finance is "flowing at significant levels" and that the $100-billion goal was very much within reach.
The author is editor, Global Policy, for Bloomberg New Energy Finance