China launches separate international climate aid fund and sparks 'interesting' politics

LIMA, Peru -- The Chinese government yesterday launched a new multimillion-dollar fund aimed at helping other developing countries tackle climate change.

The unveiling of the "South-South" fund during a high-level ministerial event on the margins of U.N. climate talks here comes on the heels of a landmark announcement from China that it will peak carbon emissions by 2030. At the same time, Chinese leaders have spent the past week chiding wealthy nations for failing to make tracks on a $100 billion annual funding pledge by 2020 to help poor countries and prodding them to put more money into the new Green Climate Fund.

"Climate change poses very serious challenges to human survival and development, which requires international communities' cooperation and a proactive response," said Xie Zhenhua, vice chairman of China's National Development and Reform Commission.

The fund was lauded by U.N. officials as a groundbreaking way to both spark clean energy projects in the developing world and to enable countries with little money but long experience coping with weather-related disasters to enter into partnerships and learn from one another.

But with China poised to inject $1 trillion in direct foreign investment over the next decade -- much of that focused on extractive industries in Africa, Latin America and elsewhere -- others cautioned that the fund will require transparency measures to ensure it will be truly green.


Chinese officials did not formally specify how much seed money they will offer up for the developing country fund, but Xie said China will double the approximately $44 million it has spent on climate aid since 2011. Climate finance experts who participated in discussions about the details of implementing the new fund said China indicated it will contribute ¥500 million (about $80 million) over the next three years.

In the meantime, Xie told more than a dozen ministers and heads of U.N. agencies gathered at the event that the fund is prepared to accept contributions.

"China welcomes all types of resources," Xie said, including bilateral institutions and private-sector entities "who are willing to provide funding sources."

In comments to ClimateWire after the event, Xie made it clear that China has no intention of putting money into the burgeoning Green Climate Fund. Asked why China did not simply put its money into the U.N.-launched mechanism, he described it as an obligation for rich nations alone.

"The GCF is for other countries. Annex I [developed] countries should inject the money," Xie said.

He also insisted that the new Chinese fund is in no danger of siphoning money away from the Green Climate Fund.

"It will not hamper it. Don't worry about that," Xie said.

Who gives first?

Which countries should contribute to the Green Climate Fund has been an issue of some debate since it was created in 2010. Many activists and diplomats maintain that only wealthy countries should be obligated to put money into the fund, which is just now getting off the ground with an initial capitalization of almost $10 billion -- including a $3 billion promise from the United States.

"Countries like China are not yet at the level of development where they would be comfortable making a major contribution to international funds," said Gabon Foreign Minister Emmanuel Issoze-Ngondet.

But that hasn't stopped much smaller or poorer nations. Developing countries from Mexico to Indonesia have pledged more than $100 million to the Green Climate Fund.

Some of the offerings from poor countries are small but symbolic. Mongolia, for example, promised $50,000. But, Environment Minister Oyun Sanjaasuren told ClimateWire, the government felt that as a country vulnerable to climate change, it should also contribute.

"We don't want to just sit and complain," Sanjaasuren said. "We of course need a lot of help, as well, but everybody has to collaborate. We shouldn't just complain that we are disproportionately affected."

U.N. climate chief Christiana Figueres lauded the South-South fund as "underscoring of the fact that we will only solve climate change by cooperating with one another and not by competing with one another."

She told ClimateWire that the Green Climate Fund is also a "very good opportunity" for developing countries to help one another.

Brazil prefers 'South-South' model of giving

"Clearly, the bulk of the financing absolutely has to come from industrialized countries, but it is also a very good opportunity for some developing countries to show their goodwill," Figueres said.

Samantha Smith, the leader of the World Wide Fund for Nature's global climate and energy initiative, noted that many developing countries, including China, have had concerns about the World Bank's role in the Green Climate Fund and the conditions wealthy countries have imposed on their funding.

"The politics is really interesting," Smith said. "What we're seeing is developing countries, in this instance China, setting up new institutions. ... It shows the developing countries are moving into a space where they are doing things proactively."

Other major economies could be following China's lead. Brazil's chief negotiator, Ambassador Antonio Marcondes, said yesterday that his government also is focusing on directly helping other developing countries bilaterally.

"We're not considering contributing to the Green Climate Fund at present. We are putting emphasis on south-south cooperation," he said.

"We are committed to sharing our proven experience in reducing deforestation in terms of policies, actions and technology with Amazonian countries and are considering expanding that cooperation to other tropical basins," Marcondes said.

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