About the GCF

  • The Green Climate Fund (GCF) was established by advanced economies to manage a collective fund created in order to help developing economies minimize potential social and economic losses stemming from climate change and adapt to new environmental conditions.
  • The simplest way to describe the GCF would be as the World Bank for the green/environment sector, which is why it is also known as the “Other World Bank.”
  • The GCF is a specialized fund tailored to climate change response. Starting in 2020, it is expected to extend its support to several developing countries with more than USD 100 billion each year. Unlike other existing climate-related funds, such asthe Global Environment Facility, the GCF focuses its resources on responding to climate change e.g. reducing global greenhouse gas emissions.

History of the GCF

  • Members of the United Nations Framework Convention on Climate Change (UNFCCC) negotiated the finer details of establishing the GCF back in 2011 at the 17th Climate Change Conference (COP17) in Durban, South Africa.
  • One of the most significant milestones in UNFCCC history was the Kyoto Protocol (COP3), in which OECD countries (excluding Korea and Mexico), the European Union, and other transition economies agreed to reduce greenhouse gas emissions. Thereafter,member nations of the UNFCC agreed to create the GCF by contributing USD 100 billion every year, starting in 2020, to protect forests in developing countries and to transfer clean energy technologies to developing countries at the 16th Climate ChangeConference (COP16) in Cancun, Mexico, at the end of 2010.
  • In Cancun, UNFCCC members agreed to raise USD 100 billion annually by 2020, and resolved to delegate the authority to raise the fund to the GCF. In addition, UNFCCC members created a 40-member Transitional Committee for the Green Climate Fund, whichwas officially recognized during COP17.
  • In a meeting held in October 2012 in Incheon, the GCF Board of Directors voted Incheon, which was in fierce competition with Bonn in Germany for the GCF Secretariat, as the new hosting city of the GCF. Later on, at the COP18 in December, the UNFCCCconfirmed Incheon (Songdo) as the new home of the GCF Secretariat. Following a year-long layover for preparations, the GCF Secretariat was launched on December 4, 2013, in Songdo, Incheon.

Hosting and Success of the GCF

  • Hosting the GCF
    • Feb 22, 2012: Nominated as a candidate city for the GCF (Ministry of Economy and Finance → Incheon, Seoul)
      • Mar 5, 2012: Submitted application form to declare candidacy for the GCF Secretariat (Incheon Metropolitan City → Ministry of Economy and Finance)
      • Mar 13, 2012: Hosted a proposal session for the GCF (GCF Committee, Ministry of Economy and Finance) → Confirmed Incheon as the host city in Korea
    • Apr 15, 2012: Submitted a Government Application for the GCF* (GCF Interim Secretariat)
      • * List of Candidates (6): Korea, Germany, Switzerland, Mexico, Poland, Namibia
    • Aug 23 ~ Aug 25, 2012: Government delegation participated in the 1st GCF Board Meeting (Geneva, Switzerland)
      • GCF Secretariat host country selection process (multiple round system) - Presentation from the 6 candidate countries
    • Sep 16 ~ Sep 18, 2012: Participated in the GCF Host Country Evaluation Committee (Washington DC, USA)
      • Resolution: Korea, Germany, and Switzerland given top marks (Green Light)
    • Oct 18 ~ Oct 20, 2012: Hosted the 2nd GCF Board Meeting (Songdo, Incheon)
      • Confirmed Songdo, Incheon, as the new home of the GCF Secretariat
    • Dec 4, 2013: Opened the GCF Secretariat (Songdo, Incheon)
  • Success Factors
    • Served as an effective mediator in producing results through joint (international) initiatives.
      • Prior experience in successfully hosting major international events (e.g. the G20 Seoul Conference, Busan Development Cooperation Forum, and the Nuclear Security Summit), all of which produced internationally significant results.
    • A mature infrastructure for the GCF thanks to government and private sector initiatives aimed at “green” growth e.g. GGGI and GTC-K.
      • The Korean government was recognized as a leading country in terms of “green” growth thanks to its self-regulation system for emissions, the Emissions Trading System, and the new GGGI, all of which were created as part of the government’s commitmenttowards “green” growth. Also, the government developed a policy to expand ODA funding to more than USD 5 billion by 2020. This helped its claim as a leader in “green” growth as well.
    • Cheongwadae (Blue House), central government ministries, including the Ministry of Economy and Finance, and the Incheon Metropolitan City Government used comprehensive and effective initiatives to host the GCF.
      • The government utilized opportunities such as the G20, Rio+20 meetings as well as meetings with heads of state visiting Korea to build a more convincing case for its candidacy as a host country for the GCF Secretariat and build a consensus in theinternational community.
      • The government assigned different roles to different stakeholders, primarily led by a private sector committee featuring the Korea International Trade Association, to execute well-organized promotional activities aimed at helping Songdo’s candidacyas the host city for the GCF.
    • The Incheon Metropolitan City Government and Incheon citizens extended their full support to help the government’s bid for the GCF Secretariat.
    • Incheon used the impressive G-Tower, and leaned on Songdo’s reputation as a green city with a friendly living environment for foreigners.
  • Impact
    • Impact on the Economy
      • Economic impact of approximately KRW 380 billion per year (KDI)
      • Revitalization of the free economic zone, green finance sector, and growth in the MICE industry
    • Impact on Politics/Foreign Affairs
      • Role as a bridge between advanced economies and developing countries
      • Increased influence in the international community
    • Impact on the Society/Culture/Environment
      • Enhanced urban brand value of Incheon
      • Build-up of a more internationally open mindset among the citizenry
      • Improved international awareness of Incheon as an exemplary model for low carbon emissions and “green” growth

Structure and Management of the GCF

  • Structure
    • The GCF is an operating entity under the United Nations Framework Convention on Climate Change (UNFCCC), which, under the guidance of the COP, reports its performance annually to the UNFCCC.
    • The GCF has the legal rights and responsibilities of a corporate entity (juridical person), and has privileges and exemptions under the Convention on the Privileges and Immunities of the Specialized Agencies. The GCF has an independent Secretariatand an independent review organization under its Board of Directors.
    • * Features 12 developed countries and 12 developing countries. Developing countries include three each from the Asia-Pacific region, Africa, Central and South America, and one each from small island developing states, least developed countries, andother countries.
  • Funding
    • The GCF will be financed by developed countries, and will utilize various alternative resources e.g. public and private sector funding. For the first three years, the World Bank will function as the trustee of the GCF.
  • Development Plan for the GCF
    • Developing countries may apply directly to the Secretariat, depending on their national climate change strategies. Funds applied, distributed, and arbitrated through the National Implementation Entity (NIE), which must be approved by the GCF Secretariat,will be distributed evenly between reduction and adaptation initiatives. To ensure transparent and efficient financial management of funds, the GCF will apply consignment standards and environmental/social safeguards.
  • GCF Funding Channels
    • The GCF will feature two funding channels - one for reduction and one for adaptation initiatives. The Board will be given the authority to add, modify, or remove any other funding channels.

Development Plan for the GCF

  • Background
    • As the hosting nation of the GCF, Korea must maximize the potential for effecting positive change domestically while meeting the expectations and fulfilling its promise as the GCF host country to the international community.
    • As promised during the GCF host country selection process, the Korean government will actively cooperate with various stakeholders to ensure the successful launch of the GCF Secretariat. It will also play the vital role of the host nation in climatechange financial negotiations and business model discussions so that the GCF can develop into a more substantial international agency.
    • Moreover, in order to help the Korean economy transition into a green society and maximize the impact of green development domestically, the Korean government is expected to bolster its efforts to establish Korea and its people as the gold standardfor green growth. Finally, the government will build a “green” infrastructure and financial systems in addition to related services to maximize the domestic impact of hosting the GCF Secretariat.
  • Implementation
    1. Supporting the Early Establishment and Stable Operations of the GCF
      • The Korean government enacted special legislation for the GCF (Green Climate Fund Operation Support Act) on July 30, 2013, to classify the GCF’s status as a corporate entity, and to provide the legal basis for entering into an agreement with theUN in regards to the privileges, exemptions, and support extended to the GCF. The National Assembly ratified the government’s agreement with the UN pertaining to the establishment of the GCF Secretariat in Korea on August 27, 2013. As a follow-up,the Ministry of Economy and Finance, Incheon Metropolitan City Government, and the GCF signed an administrative and financial agreement for the GCF on October 8, 2013, at the 5th GCF Board of Directors Meeting in Paris, France. To support theofficial opening of the GCF Secretariat in Korea (December 4, 2013), the Incheon Metropolitan City Government provided the required office space inside the G-Tower, and installed various IT and office equipment. Based on the GCF proposal, theGCF Secretariat has full access to the Main Auditorium, International Conference Room, and other conference rooms upon request. Also, Incheon offers the full extent of its support to create a comfortable living environment for GCF staff. In particular,the Global Service Center provides a wide range of information on education, housing, medical care, transportation, finance, etc. to help GCF staff settle into their new life in Korea.
    2. Reinforcing the Role of the GCF
      • The Korean government has devised a USD 40 million plan to help developing countries build up their capacity for GCF initiatives. In addition, it plans to help the GCF consider the proposals and opinions of developing countries (who will becomethe end-users of the GCF) through international forums and seminars from the project discovery stage.
      • The Korean government also reviewed multiple business models linked with existing ODA, GGGI, and GTC-K initiatives (e.g. EDCF, KOICA, and KSP), and it is expected to utilize domestic agencies (create a new Climate Change Cooperation Center at KDIor KIEP) on a consignment basis in order to induce cooperation with developing countries in relation to the GCF.
      • Moreover, the government will establish channels to consult regional councils such as the UNDP, UNEP, GGGI, World Bank, Asian Development Bank, African Union, etc. and host regional forums with delegations from developing countries to better understanddemand and collect a wider range of feedback.
    3. Bolstering Efforts to Transition into an Advanced Green Country
      • In order for Korea to firmly establish itself as a leader in “green” growth, it must bring major change in terms of its national awareness of “green” growth and its execution of “green” growth policies. The Korean government must carry out comprehensivepublic advertisement campaigns to improve the general public's understanding of climate change issues and the GCF, and strengthen its education on the need for “green” growth initiatives as well as concrete action measures by integrating syllabion the environment into the nation’s elementary, middle, and high school education system. Moreover, the government must develop and distribute content on specific codes of conduct to promote “green” practices in people’s day-to-day lives.
      • The Korean government must also provide incentives to local governments and corporations to encourage “green” consumption, energy-saving activities, “green” diet, afforestation, extensive bicycle use, etc. and discover/provide business models thatcan ensure social contribution.
      • Finally, the government must increase its credibility in the international community by systematically promoting Korea's successful development experience and its efforts towards “green” growth to promote GCF funding and solidify its global leadershipposition in the green sector.
    4. Maximize Domestic Impact of Hosting the GCF
      • The Korean government will develop experts in green policies, climate change policies, and other related technologies with the help of research and educational institutions specializing in environmental issues to encourage more domestic expertsto participate as consultants in projects led by the GCF.
      • The government must continue to strengthen the capacity and capabilities of the GTC-K and develop it as a partner for the GCF, GGGI, and as a key player in collaborative efforts to develop climate technology on the international stage. The Koreangovernment must also lead technology-driven discussions and propose a future direction for green technology by establishing a green technology DB. Moreover, to strengthen the network among researchers in charge of climate change in various environmentalresearch institutes, the government must form a council that systematically monitors and coordinates measures to address climate change matters.
      • The government must provide GCF-related information and serve the role of a one-stop outlet for Korean companies looking to enter the green market overseas by developing the domestic infrastructure and creating the conditions that can enable Koreancompanies to participate in GCF implementation projects. Also, the government must cooperate with corporations to give them more opportunities to participate in GCF projects by planning, consulting, funding, executing, and evaluating relevantprojects.
      • The Korean government must strengthen the capacity of the green finance sector progressively so that Korean financial institutions can participate as partners in the management and execution of fund resources when the GCF begins its operationsin earnest. During the early stages (before the GCF begins its operations in earnest), the government must bolster the capacity of existing financial institutions in the field of green finance, improve the living environment in Songdo, and supportservice vendors that can help Songdo and Incheon become a bona fide international city that experts from overseas can genuinely look forward to living in.
      • Finally, the Korean government must create internationally competitive living conditions from a foreigner’s point of view in terms of medical care, education, transportation, culture, leisure, and infrastructure in the Songdo area

Current Status of GCF Activities

  • Supports climate change response projects in developing countries
    • Business Areas: Supports initiatives in developing countries aimed at adapting to climate change and reducing greenhouse gases (50:50)
      ※ • More than 50% of resources for adaptation purposes are allocated to countries that are most vulnerable to climate change e.g. small island developing states (SIDS), least developed countries (LDCs), and the African continent.
    • Scale: 192 projects, USD 37.2 billion (GCF contribution of USD 10.1 billion)
    • Performance: Reduced 2.0 billion tons of carbon dioxide, with 614 million beneficiaries
    • • Approved National Implementation Entities: 113 NIEs (including the Korea Development Bank and KOICA)
  • Approved National Implementation Entities: 95 NIEs (including the Korea Development Bank)