Insights and Commentaries

The UNFCCC Technology and Finance Mechanisms

15th June 2015

Topic(s): Carbon capture, law and regulation, Policy, use and storage (CCUS)

The Institute is closely engaged with all aspects of the United Nations Framework Convention on Climate Change (UNFCCC) process as they relate to carbon capture and storage (CCS). We are particularly interested in the interaction between the Technology Mechanism and Finance Mechanism – in particular the Climate Technology Centre and Network (CTCN) and the Green Climate Fund (GCF). This Insight by the Institute's John Scowcroft takes stock of current developments in these important areas and looks ahead to the role the Institute can play.

Climate Technology Centre Network (CTCN)

As an accredited member of the Climate Technology Centre Network ​(CTCN), the Institute is in a prime position to assist the CTCN and developing countries on CCS matters. The CTCN usually meets about twice a year. Over the medium to longer term, the Institute may well be able to leverage unique UNFCCC opportunities to assist the acceleration of CCS projects through playing a facilitative role in the CTCN - the Institute is currently the only Network member with CCS knowledge. It is also important to note that CTCN is dependent on donations from governments and currently they have a budget that predicates spending of US$100 million over the next five years but only US$35 million of that is covered by guaranteed donations.

Green Climate Fund (GCF)

The Institute attends GCF Board meetings as an accredited observer. The GCF has two categories of Observer - Private Sector and Civil Society. The Institute is categorised as Civil Society, whose other members are very largely drawn from the environmental non-governmental organisation (ENGO) community. The Institute liaises with the Active Private Sector Observers who have been elected to sit on the GCF Board (currently Abyd Karmali from the Climate Markets and Investment Association and Gwen Andrews of the World Business Council for Sustainable Development) and submit views on a wide range of issues.

The Fund is expected to be valued at over US$100 billion per annum by 2020 to support developing country climate change activities. The Fund’s Governing Instrument specifically refers to CCS as a potentially eligible technology: “..the Fund will finance agreed full and agreed incremental costs for activities to enable and support enhanced action on adaptation, mitigation … technology development and transfer (including carbon capture and storage), capacity-building.”

The GCF had received US$4 billion in contributions as of 30 April 2015, representing 42 percent of the amount that was committed during the Fund's initial pledging conference in 2014. The Fund is authorised to allocate resources once at least 50 percent of the total amount pledged at GCF's High-Level Pledging Conference in Berlin in November 2014 has been made available, ie at least US$4.7 billion equivalent. On 21 May, the Japanese Government signed a contribution with the GCF. With the Japanese announcement GCF has formally reached ‘effectiveness’ and can begin the critical phase of considering funding proposals with a view to submit to the Fund’s Board some initial projects later this year, ahead of the 21st Conference of the Parties (COP 21) to the UNFCCC in Paris in December.

The Way Forward

The relationship between the Centre (essentially the CTCN’s Secretariat) and the GCF’s Secretariat

An underlying discussion, mandated by the COP itself, has been how to define the relationship between the Technology and Finance Mechanisms. In practice the individuals concerned are a combination of UN employees (the secretariats) and Boards, members of which are appointed by Parties. The CTCN and GCF Boards are generally expert in their respective fields, being drawn from Technical and Finance and International Development Ministries respectively. However, many of the board’s advisers (especially for the GCF) are negotiators who bring many of the COP road blocks to the Board. This means that for much of the time meetings resemble a prolonged negotiating session rather than a Board meeting.

Given this, there has been little progress in attempts to exploit synergies that could arise from the CTCN giving the GCF technical advice on projects and vice versa. Indeed, the GCF’s decision to establish a Technical Advisory Panel could imply the reverse.

Potential Future Funding from the GEF

To date the main funder for climate related technical work such as the Technical Needs Assessments (TNAs) for developing countries (which in a number of cases have identified the need for CCS), has been the Global Environment Facility (GEF). The GEF have indicated that now the GCF is in place and funded, its future funding programmes would not cover climate related issues. Given that TNAs are the basic working tool for both the CTCN and the GCF when it comes to determining where to direct finance and effort, the current disconnect between the two bodies could be significant going forward.

The Institute’s Role

Given the Institute’s role in the CTCN and as an observer to the GCF and that it has established good working relationships with CTCN and GCF staff and Board members, it is in a good position to ensure that CCS remains on the table.

In principle, therefore, the Institute should continue to:

• Follow and understand the work being progressed by the GCF and its Board, Committee on including the tracking and scaling up of public/private finance,
• Follow and understand the work being progressed through the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI) on the finance mechanism (including the GCF) as tasked by the Convention and Kyoto Protocol including the review of the finance mechanism (2014-2020) with particular reference to the relationships between the Finance Mechanism and the Technology Mechanism,
• Submit the Institute’s views as an accredited observer on various aspects of the GCF specifically and finance mechanism more generally,
• More broadly, within the current negotiations on the Post 2020, agreement, contributing Contribute to finance discussions in the ADP including issues such as:
  • development of a potential finance roadmap to support technologies
  • following party funding commitments under the 2015 Agreement
  • enabling environments and policy frameworks to encourage financial flows
  • and the expansion of the GCFs current thematic windows of ‘adaptation’ and ‘mitigation’ to also potentially including ‘technology’.

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