Climate fund criticized by Trump has slow, complex start

The $10 billion Green Climate Fund that U.S. President Donald Trump said was a waste of tax dollars has fallen behind on its goals, with a biggest payout so far of just $5 million for a U.S.-led solar energy project.

Work at the international fund, which aims to help poor nations cut greenhouse gas emissions and adapt their economies to heatwaves, storms and rising seas has been slowed by legal red tape and the approval process, board members say.

The GCF, whose South Korean headquarters opened in 2013, says it only approved projects worth $1.3 billion in 2016, short of its goal of $2.5 billion. It has approved total loans and grants worth $2.2 billion. All but $13 million is still in the bank.

GCF officials declined to comment on Trump's remarks or elaborate on the slow pace of approvals, deferring to the 24 board members who represent both developed nation donors and developing nations that will receive funds.

"On disbursement, my own personal view is that it's appalling," said Zaheer Fakir, a board member from South Africa.

Announcing on June 1 that the United States was quitting the 2015 Paris climate agreement, Trump said he was halting U.S. contributions to the GCF after $1 billion paid under former President Barack Obama, who had pledged a total of $3 billion.

Trump, who says climate action will cost U.S. jobs and wants to promote the U.S. coal industry, said the fund cost taxpayers a "vast fortune" and many other nations "will never pay one dime."

Reuters contacted five current and former board members, who said they did not agree with Trump's comments. They acknowledged the fund had been slow to get going but said it was difficult to get projects off the ground and unreasonable to expect big flows of money straight away.

"The fund is like a plane that's taken off but we're still building it in mid-air. That's a risky situation," said another board member who did not want to be named.

NO SLUSH FUND

More than 40 nations in 2014 promised a total of $10.3 billion to the GCF, including Obama's $3 billion.

Washington's $1 billion is the biggest single contribution so far. But Sweden's $581 million, for instance, works out as $60 per capita, against $3 per American. Japan has promised $1.5 billion.

The board members also say the 2016 project approval goal had been largely aspirational to encourage nations to step up climate finance. Fakir said that the board sometimes lacked time to consider projects in detail and developed countries often attached too many conditions to loans.

"Everyone wants to prove Trump wrong about the GCF. It's not a slush fund - it's defining the climate agenda," he said of GCF goals of spurring wider public and private funds for grants and loans.

The fund also faces legal complexities in starting to work with multilateral lenders such as the World Bank, the Asian Development Bank or private banks. Once agreements are in place, a flood of disbursements is expected to follow.

Another legal hurdle is that the GCF is associated with the United Nations but is not a U.N. agency and so its staff lack legal protection, for instance, from prosecution if projects go awry.

The fund is seeking to negotiate nation-by-nation agreements to protect its operations but has signed only about a dozen.

So far, the GCF's biggest single disbursement for a project is $5 million, to the private New York-based Acumen Fund to develop solar energy in Kenya and Rwanda. Such projects will go ahead despite Trump's decision.

HUGE BLOW

GCF data show it has also disbursed $1 million to a Mongolian commercial bank to help curb greenhouse gas emissions, and $1 million to a project to protect the Peruvian rain forest.

Many governments, cities and states have expressed support for the fund after Trump's pullout. But they are unlikely to fill the shortfall to Obama's pledge.

"There is a gap of $2 billion which is about 20 percent of the total. It is of course is a huge blow," said Lars Roth, a board member for Sweden.

Swiss Foreign Ministry spokesman Pierre-Alain Eltschinger said the U.S. was likely to be recorded as in arrears. There is no legal recourse to demand Trump pays more - national payments are voluntary.

Eltschinger said it was "not realistic to expect anyone to make up for the U.S. shortfall. So this remains a problem."

Others hope that other nations will step up.

"Other countries should fill the void. If China or Russia wants to take the lead in GCF, they will have to increase their payment," said Song Young-gil, former Incheon city mayor who spearheaded a successful bid to host the GCF headquarters.

The GCF, which has about 110 staff in Incheon, was set up after a 2009 commitment by rich nations to raise climate finance to $100 billion a year by 2020, from both public and private sources. The GCF is just one part of that financing goal.

In Paris in 2015, governments agreed to set a new, higher target for climate finance by 2025.

The United States has a seat on the GCF board at least until end-2018. Its claim for a seat beyond that may weaken if other countries exceed its $1 billion contribution. (with extra reporting by Soyoung Kim in Seoul, Michael Shields in Zurich, Luca Trogni in Milan; writing by Alister Doyle; editing by Anna Willard)

 

(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)