“The current UNFCCC negotiations over the creation of the Green
Climate Fund are heading down a dead end,” he said. “The
Transitional Committee charged with the design of the fund is
dominated by figures from government with no private sector
experience.

“They are looking to create yet another multilateral institution
for managing pools of public money but, even if they succeed in
creating a fund, there is no earthly way developed world
governments will resource it to the tune of $100 billion per
annum.”

He described the Transitional Committee as “an unfolding triumph
for the developing world”, which has long favoured public financing
for climate change mitigation and adaptation over private
finance.

But he said that this is “a purely pyrrhic victory. There will
never be a $100 billion, government-to-government funds transfer,
nor anything approaching it.” He is also dismissive of proposals to
tax aviation or financial transactions to provide the finance.

However, Liebreich argued that the financing is available via
the private sector, with public money used “in a surgical way only
to deal with specific risks and viability gaps that the private
sector cannot take on”.

He proposes the creation of a Green Climate Finance Framework.
“What is needed … is a set of instruments to provide a range of
different forms of support including soft loans, grants to cover
the extra cost of clean solutions, and skills-building,” he
said.

“Each instrument would be offered by any number of public and
private institutions in competition with each other, which would
keep costs down and provide for good governance and transparency.
The bulk of the required finance would be provided by the private
sector directly to individual projects, rather than as
government-to-government transfers.”

Such a framework would be required to support what BNEF
estimates is the $50 billion per year of private sector debt
financing needed to complement $30 billion in equity and $20
billion from development banks.

The framework would act as a certification standard for
qualifying projects, that would make them eligible for a range of
financing programmes.

“Many questions remain in the detailed design of a Green Climate
Finance Framework,” Liebreich wrote. “The main point, however, is
that it can be done. The promise of $100 billion of climate finance
[a year] for the developing world can be met, with sufficient
creativity and flexibility all round.”

target=”_blank”>The White Paper is available here.