FINANCE

U.S. to pledge $3B to Green Climate Fund

The Obama administration is poised to announce a pledge of billions of dollars to an international climate change fund ahead of the G-20 summit in Australia this weekend, several sources have told ClimateWire.

The pledge to the Green Climate Fund -- $3 billion over four years, according to two people close to the funding discussions -- is certain to antagonize Republicans. Many yesterday warned that any such request would be dead on arrival in the new GOP-led Congress. But coming on the heels of a historic agreement with China to jointly roll back greenhouse gas emissions, the promise of U.S. money to help vulnerable countries develop clean energy and adapt to the impacts of climate change is also expected to win broad approval internationally.

Environmental activists who have been anticipating the announcement ahead of a formal pledging meeting in Berlin on Nov. 20 said a significant U.S. contribution will be critical to clinching a new international global warming deal in Paris in 2015.

"An ambitious and robust pledge from the U.S. will send an important signal to the international community that the U.S. is committed to helping developing countries transition to a low-carbon, climate-resilient future," said Athena Ballesteros, who oversees climate finance policy at the World Resources Institute think tank.

"We need ambition and leadership," she said. "The U.S. is a major player in this, and can catalyze more goodwill and international action on climate change with an ambitious pledge."

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Created by the U.N. climate regime in 2009, the Green Climate Fund now operates as a multilateral fund with an independent board of directors. Leaders have called for an initial capitalization of between $10 billion and $15 billion this year, and a group of African countries has made clear that no emissions deal can happen unless the climate fund is well-fed.

So far, with early contributions from France, Germany and a handful of other countries, the fund has about $3 billion.

U.S. officials have been dropping hints for several weeks that their pledge was on the near horizon (ClimateWire, Oct. 17). Those involved in funding discussions say the benchmark has been the World Bank's Climate Investment Funds, which are being phased out to make way for the Green Climate Fund and to which the U.S. contribution is about $2 billion.

Activists had been girding themselves for a pledge in the range of $2.5 billion, which one described as the "bare minimum" of what would be required by the United States to meet the fund's opening bid. The antipoverty group Oxfam America has pegged the United States' fair share, based on the size of its economy and historic greenhouse gas emissions, at $4.8 billion of a $15 billion overall goal, or $3.2 billion of a $10 billion goal.

"The U.S., of the likely contributor countries, is the largest emitter and has the largest share of global GDP, so there's a certain expectation that the U.S. is likely to be the biggest contributor overall to the Green Climate Fund." said Abyd Karmali, managing director of Bank of America Merrill Lynch and a private-sector observer to the fund.

"The pledging meeting for the GCF is going to be where the fund is capitalized officially. That will send a really important signal to the climate change negotiations in Lima, but more importantly, it will put in place, arguably, the financial instrument within the UNFCCC process that has the ability to be truly transformative," Karmali said. And, he noted, ""Business will also be watching very carefully because of the scale of new investment opportunities."

As of yesterday, according to two people knowledgeable about the internal deliberations, the administration was prepared to put $3 billion on the table. The announcement could come as early as today but is more likely to be over the weekend as Obama descends on Brisbane, Australia, for a meeting of G-20 leaders.

A chunk of the $3 billion, sources said, will come from the State Department's so-called "150 account," from which much aid for developing countries is allocated. It accounts for about 1 percent of the entire federal budget, and also includes money for things like international peacekeeping efforts and embassy operations.

But Congress still holds the federal purse strings, and several Republicans said yesterday that the new GOP majority will never let the climate funding see the light of day.

"Absolutely no chance whatsoever" is how incoming Environment and Public Works Committee Chairman Sen. James Inhofe (R-Okla.) described the money's chances of approval.

"I see this as something that he's playing to those who are responsible for his victory in becoming president of the United States. Yet he knows it's not going to pass. But it sounds good -- to him. It doesn't sound good to me," Inhofe said.

Sen. Jeff Flake (R-Ariz.) said the United States needs to focus on getting its fiscal house in order.

"Given a $17 trillion debt and a $400 billion deficit, we ought to move with caution on new spending programs," he said. Asked if he could back the the money if it were offset and did not increase total spending, he said, "I'd need to see the proposal." But, Flake noted, it's "safe to say" he is skeptical of putting U.S. dollars in the Green Climate Fund.

Even Sen. John McCain (R-Ariz.), who once championed climate change legislation, was wary.

"I'm a little skeptical about that," he said of the Green Climate Fund. "Foreign aid, I've always been supportive of that. But earmarking it just for green activities, I'd have to really examine that carefully."

U.S. officials intend to make the case that funding "green activities" is nothing new, nor is it a particularly Democrat-heavy endeavor. The George W. Bush administration initially pushed through funding for the World Bank's climate investment funds in 2008. Congress also put $320 million toward the Global Environment Facility, which has a heavy focus on climate, in the Bush years.

The administration is also expected to play up the fund's independence from the United Nations; hard-fought safeguards and standards; room for private-sector involvement; and the number of developing countries that have already pledged money as well as those waiting in the wings. Mexico and South Korea have already committed to the fund, and several observers said Colombia, Peru, Costa Rica and other progressive Latin American countries also intend to pledge.

Activists, meanwhile, praised the Obama administration for forging ahead on climate policy in the face of his party's midterm losses.

"I think it shows that is clearly a legacy issue for this president, and that he wants to show that the administration has come to a real, meaningful deal in 2015 and mobilize other countries to act," said Oxfam America's Heather Coleman. "The first step in that process was getting China to commit to absolute reductions, and the second step is the Green Climate Fund. The administration knows it can't get a global deal without putting meaningful finance on the table."

Reporter Evan Lehmann contributed.

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