Climate change is a common – and perhaps the greatest – environmental challenge to all humanity. Yet it hits hardest at the least developed countries, which are least responsible for it and which are also the least able to adapt to its adverse impacts. This is environmental dumping on a global scale. Its inequitable impact is an added factor of stress in global society.

The 1980s recognized that the global character of the new and emerging environmental problems – like climate change and the loss of biodiversity – required new approaches to international environmental cooperation. The period between the Brundtland Commission and the Rio Earth Summit, roughly from 1984 to 1992, was one of the most creative and productive in the recent history of international environmental management. It was soon recognized that developing countries could only be expected to make a contribution in dealing with global issues – where both they and developed countries necessarily had to be involved – if there was an appropriate financial scheme in place to offset the additional costs. The Global Environment Facility (GEF) and the Climate Convention were conceived and developed in that period, benefiting from extensive cross-fertilization. At the time of the Rio Summit, the Climate Convention was agreed and the GEF was operational on a pilot basis.

The ultimate objective of the Convention is to halt the build-up of greenhouse gases in the atmosphere before it becomes dangerous, affecting food production and preventing ecosystems adapting naturally to climate change. Efficiency in limiting future emissions is vital for success. Climate change is a by-product of two centuries of economic growth, and thus action to address it must pass through the economy of the 21st century. Major technological innovations are needed in the energy, transport and industrial sectors in all countries.

First priorities
Tackling climate change must be compatible with advancing the aspirations of the world’s poor, as part of their efforts to achieve sustainable development. Meanwhile, industrialized countries in particular are concerned that the economic costs of mitigating climate change should be minimized. The Convention recognizes these concerns in a number of ways. It acknowledges, for example, that the first and overriding priorities of developing countries are to alleviate poverty. It also emphasizes the importance of promoting sustainable development, noting that sustainable economic growth and development will enable countries to address climate change better. And it calls for policies and measures to deal with climate change to be cost-effective, to ensure global benefits at the lowest possible cost.

Article 11 of the Convention defines a mechanism for the provision of financial resources to developing countries for implementing it, to function under the guidance of its Conference of the Parties (COP).

The GEF was designated to be the interim financial mechanism. When the Convention entered into force in March 1994, negotiations to restructure the GEF after the pilot phase were also concluded. That year $2 billion was pledged in support of GEF’s mission to protect the global environment and promote sustainable development.

The next year – at the first Conference of the Parties – the GEF received its initial guidance on policies, programme priorities and eligibility criteria for funding activities to assist developing countries meet commitments under the Convention on the principles of full agreed costs and full agreed incremental costs. The GEF then developed its operational strategy according to these principles. It included three initial operational programmes to address greenhouse gas mitigation – on energy efficiency and conservation, renewable energy and low greenhouse gas emitting energy technologies. Activities also started to support the preparations of national communications that are required under the Convention.

The negotiations and conclusion of the Kyoto Protocol in 1997 – followed by the Bonn Agreement and the Marrakech Accords in 2001, that paved the way for implementing it – resulted in additional possibilities for financial support for climate activities. The Bonn Agreement called for the establishment of new funds to help implement the Convention and the Protocol. Political declarations by the European Community and its member states – together with Canada, Iceland, New Zealand, Norway and Switzerland – indicated their intention to contribute 450 million euros annually by 2005. The Marrakech Accords established three new funds: the Special Climate Change and Least Developed Countries Funds under the Convention, and the Adaptation Fund under the Kyoto Protocol. The Funds are to be managed by the GEF.

Learning by doing
The scope of climate activities under the GEF – which until then had mainly focused on mitigation – was thus broadened to include adaptation and capacity-building, as the COP requested in November 2001. This provides an opportunity to seek synergy in implementation with the Biodiversity and the Desertification Conventions, if the scope of the GEF is indeed broadened to include desertification. Kyoto’s market-based instruments – the Clean Development Mechanism (CDM) and a system of emission trading – provide incentives for the private sector to seek investments in climate projects overseas. GEF has already identified the need to contribute towards creating enabling environments for market transformation. The CDM and trading schemes may trigger a stronger role for the Facility in enabling activities – including capacity-building, – compared to the investment projects which currently dominate its funding.

The ten years since Rio have seen a lot of learning by doing. The Convention and the GEF together – through their COP and Council respectively – have struggled to give operational content to such complex concepts as common but differentiated responsibilities, incremental costs and global environmental benefits. We have learned to cooperate. After more than ten years of negotiations, the focus on the climate front will have to be squarely on implementation. The level of the third replenishment of the GEF Trust Fund, in relation to the resources needed to implement the Convention and the Protocol, underlines the increased need for GEF funding to leverage other multilateral, bilateral and private funding. This requires a continuing intensive relationship between the COP to the Convention and the GEF Council and their respective Secretariats. It takes two to tango.