Design And Analysis Of The Green Climate Fund

As a major breakthrough in the international climate finance, an agreement to establish the Green Climate Fund (GCF) was achieved at the2009Copenhagen Summit of the United Nations Framework Convention on Climate Change (UNFCCC). It requires the developed countries to provide USD30billion of fast-start funding (FSF) between2010and2012, and they set a goal of mobilizing USD100billion per year by2020to address the needs of developing countries.The GCF proposal was then confirmed at the2010Cancun Summit, and rapidly became one of the core issues at the2011Durban Summit and the2012Doha Summit. However, the GCF has not progressed smoothly as it raises many concerns, the details of which remain unresolved.One of the most important reasons why the GCF has progressed slowly are the obstacles related to fund-raising and disbursement. As the benefactors, developed countries have no fund-raising schemes, and there is no satisfactory solution for enforcing the GCF among developed countries; thus, financing the GCF is a tremendous challenge. Furthermore, as the recipients, developing countries have no reasonable disbursement schemes, and there is no solution for distributing the GCF among these developing countries; thus, distributing the GCF is also causing enormous difficulties. This paper focuses on the schemes of the GCF design. By starting from the paying side, this paper discusses how to allocate the funds among developing countries, and followed by a quantitative evaluation with the energy version of global trade analysis model (GTAP-E). This research also studies how to ehance the enthusiasm of developed countries for financing the GCF. The schemes proposed in this research may be useful for the GCF design in the post-Kyoto era.This paper can be divided into five parts when removed the preface and the conclusion:(1) Part two provides a quantitative evaluation of the fast start finace (FSF). According to the most regional financing reports released by UNFCCC, we focus on the issue regarding how developing countries accessed the fund, how developed countries provided money and the GCF allocation between climate mitigation and climate adaptation in the fast-start funding period. The lessons will be useful for the GCF design in the future. The analysis is mainly used to propose the questions which will be discussed in the following parts.(2) Part three discusses the issue of how to enforce the GCF among developed countries. This study develops and introduces a scheme of burden sharing named preference score compromise (PSC) method, which is a combination of environmental responsibility and economic capacity. The respective weights assigned to the two factors are determined based on the Borda rule in voting theory, which avoids the arbitrary allocation of weights. The PSC approch will be useful for mobilising the GCF in the Post-Kyoto era.(3) Part four focuses on the issue of how to distribute the available resources among developing countries. As the twin purposes of the GCF are climate change mitigation and climate change adaptation, the ANCC approach is proposed by considering regional adaptation fairness as well as abatement efficiency. Among others, the design of regional adaptation fairness does not consider climate losses, but also embody the heterogeneity of economic strength. The purpose of abatement efficiency needs to design reasonable schemes to encourage developing countries to reduce their emissions as much as possible.(4) To investigate the environmental and economic impacts of PSC-ANCC, the energy version of global trade analysis model (GTAP-E) is used for the quantitative assessment. The world was divided into14regions with each region consists of13sectors. The results are elaborated from three aspects, including the social welfare, the real GDP and regional carbon emissions. With the framework, the cost and benefit of the GCF finance for developed countries was also studied.(5) In the Post-Kyoto era (2013-2020), developed countries face at least two tasks:achieving the2020emissions reduction targets pledged at the2009Copenhagen Summit and financing the GCF for developing countries. To solve this issue, the2020emissions reduction targets for developed countries were introduced into the framework, and we will investigate the effects of the GCF design while developed countries also undertake some carbon-pricing measures domesticly. This research is an improvement and the extension of those in section5.