LIMA (Thomson Reuters Foundation) - The Green Climate Fund will invest in energy projects that shift away from “business as usual” and have a significant impact on curbing climate change, its executive director has said.
“I think there is genuine appetite to really move the boundaries, and move into those areas that have so far not been the mainstream of investments in terms of technologies,” Héla Cheikhrouhou told the Thomson Reuters Foundation.
Her comments come after green groups and development agencies sent a letter last week asking the fledgling Green Climate Fund (GCF) to adopt an explicit policy that its funds will not be used directly or indirectly for financing fossil fuel or other polluting energy initiatives.
That request came in the wake of revelations that Japan had lent around $1 billion of its early climate finance to construct three coal-fired power plants in Indonesia.
“We cannot allow the fossil fuel industry, whose products are the main cause of climate change, to take the limited funds intended for responding to the devastating impacts of climate change,” Samantha Smith, leader of WWF’s climate and energy initiative, said in a statement on the letter.
“Renewable energy must be prioritized in the distribution of climate funding and fossil fuels excluded,” she added.
Cheikhrouhou said the Green Climate Fund’s board had identified three areas of focus in energy technology: clean energy solutions, efficient cities and industries, and clean transport.
“In those three result areas...there is a clear wish to sharply move away from business as usual,” she said in an interview on the sidelines of U.N. climate talks in Lima.
The fund - which won additional donor pledges on Tuesday, lifting total contributions above an informal target of $10 billion - will allocate resources to help poorer countries adopt greener energy systems and deal with the impacts of climate change according to six criteria, its head said.
Within those, “they need to prove to us that this is something that promotes a paradigm shift, and that its climate impact is quite significant,” she added.
Cheikhrouhou did not say whether the GCF would draw up a list of things it will not fund, as civil society groups called for in their letter.
But once project proposals begin to come in next year, the fund will compare them “and see which ones are really moving us away from the unsustainable path we are on,” she said.
She urged developing countries that have not already done so to designate a national authority or focal point to work with the fund. Just over half - 70 states - have taken this step, and 27 of them have requested support to get ready and access money.
“I think it will require quite a bit of handholding to the countries, to the institutions, so they internalize our rules and how we work, and what we can finance,” she said.
Besides helping developing countries pursue low-carbon growth, the GCF aims to allocate half of its resources over time to projects that help poor communities adapt to more extreme weather and rising seas.
The fund’s board hopes to approve a “sample” of projects and programs by the time of the U.N. next major climate conference in a year’s time in Paris, where governments are due to agree a new global deal on climate change, Cheikhrouhou said.
Money will start flowing to projects on the ground in 2016, she added.
She urged more countries, including developing nations, to join the 24 that have contributed so far to the fund.
“The data is there...it’s much cheaper to invest now than years from now” to deal with climate change, she said.
Reporting by Megan Rowling; editing by Laurie Goering