Compromise Proves Elusive as EU Fails to Fill Climate Fund Seats

2 April 2012

EU ambassadors failed to reach an agreement on a joint proposal for the allocation of seats between member states on the UN Framework Convention on Climate Change's Green Climate Fund (GCF) before a 31 March deadline. As a result, members of the European bloc will have to negotiate directly with other developed countries to determine the makeup of the governing board.

Current EU president Denmark announced that nominations will thus be withheld until these negotiations have taken place.

The governing board of the GCF will be made up of twenty-four permanent seats with twelve reserved for developing country representative and twelve reserved for those from developed countries. There will be an additional twenty-four seats that will rotate amongst members. The fund's first board meeting is tentatively set for 25-27 April, but analysts say uncertainty surrounding the composition of the board may cause a delay. With the fund scheduled to launch in 2013, many European leaders have expressed concern that further delay will damage the EU's legitimacy in the global fight against climate change.

"It shows that the EU unity we had in Durban has been eroded and that could damage Europe's image in global climate change talks," said Danish presidency spokesman Jakob Alvi. "Despite willingness to compromise and adequately share board seats, it has, unfortunately, not been possible to come to an agreement within the EU."

Thirteen of the twenty-seven EU member states have requested a board seat to ensure input in the funding decisions of the GCF. A draft document, leaked to Reuters, proposed that Britain, France, and Germany each retain a permanent seat in addition to an alternating seat that each would share with another country. This proposal was apparently stonewalled by Germany and Poland, each of whom demanded exclusively non-rotational seats, according to an anonymous EU source.

Germany's reservations stem from its position as the probable lead contributor to the US$100 billion GCF. Poland has insisted on a permanent seat as a safeguard for its coal-reliant economy, which it fears is being targeted by stricter climate policy.

"(The Commission) has tried to rob us so many times before," a Polish government source told Reuters. "This time around we want to wear a second jacket - just in case - and let nothing we are eligible for miss us."

Warsaw has been a notably vocal opponent to the EU's aggressive approach to reigning in greenhouse gas emissions, most recently vetoing Brussels' carbon reduction roadmap (see Bridges Trade BioRes, 19 March 2012).

Slow road to implementation

The beginnings of the Green Climate Fund took root at the 2009 UNFCCC Conference of the Parties (COP) in Copenhagen when developed countries agreed to provide US$30 billion a year over three years in "fast start" funding to help developing countries adapt to and mitigate the impacts of climate change. The countries also agreed to a long-term commitment of providing US$100 billion per year by 2020, to be mobilised from a "wide variety of sources."

A year later in Cancun, Mexico parties created a new fund to channel the promised financial resources to developing countries. Over the course of this year, a transitional committee has met repeatedly to define the institutional and procedural framework of the Green Climate Fund and to lay the groundwork for the Fund to become functional.

Last December's Durban COP saw further movement on the Fund, with the text approving the governing instrument to establish the 24 member board. Members of the board - and their alternates - are to be selected by their respective constituency or regional group within a constituency. According to the Durban text, members are also expected to have the necessary finance and climate change skills and expertise and notes that gender balance should also be considered.

It was agreed that the World Bank will serve as the interim trustee of the Fund for the first three years after its operationalisation. Washington had been pushing for the Bank to be designated as the trustee, insisting that the Fund must be managed by an international organisation with experience in managing funds globally.

ICTSD Reporting: "EU fails to resolve dispute over UN climate fund seats," REUTERS, 30 March 2012; "EU seeks to decide who gets U.N. climate fund seats," REUTERS, 28 March 2012.

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