BARCELONA —The U.N.‘s Green Climate Fund can start deciding where to deploy its cash following the signing of an agreement with the Japanese government that means it will have enough money to begin operating.
The new fund for international climate finance needed to convert half of the $9.35 billion pledges made for its first pledging conference last November into firm contribution agreements to become effective. It had set a deadline for the end of April.
Japan and the United States did not meet that deadline, leaving the fund short. But Japan’s move to firm up its $1.5 billion pledge on Thursday brings the total covered by signed agreements to $5.47 billion, above the 50% threshold.
“This achievement means the Fund has reached an important milestone and can now start making financial commitments to developing countries,” said Héla Cheikhrouhou, executive director of the Green Climate Fund (GCF).
Atsuyuki Oike, a senior official with Japan’s Ministry of Foreign Affairs, said Tokyo hoped the step forward would “contribute to successful negotiations” for a new global climate change deal due to be agreed in Paris at the end of the year.
Earlier this week, French President Francois Hollande said developing nations were unlikely to sign up to that deal without more financial commitments from wealthy governments to help them adapt to climate impacts and transition to renewable energy.
The GCF, which is seeking additional funds from donors, aims to become the main international vehicle for climate finance.
“Governments that have not yet pledged to the Fund are encouraged to step forward,” Cheikhrouhou said in a statement on Thursday.
She also called on those that have made pledges but not yet signed an agreement to do so “urgently”.
At the end of April, the U.S. Department of the Treasury said Washington remained committed to the GCF and would continue to work with Congress to fulfill its $3 billion pledge.
The Green Climate Fund aims to have ready its first set of projects for approval by its board at a meeting in November. Money is unlikely to start flowing for activities on the ground until next year, however.
Exactly which type of projects the GCF will choose to back remains unclear.
Its mandate is to promote a shift toward low-emission and climate-resilient growth in developing countries, and help keep global temperature rise below 2 degrees Celsius.
The fund has a goal of allocating half of its resources for emissions-reducing projects and half for efforts to protect people from climate change impacts such as extreme weather and rising seas.
A recent analysis identified under-funded areas that could maximise the GCF’s impact – in particular, investments in efficient and resilient cities, land-use management and reducing the vulnerability of small islands, the fund said.