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Financing sustainable and green economy

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Al - Hamndou Dorsouma:
In 1991, one year ahead of the Earth Summit in Rio de Janeiro in Brazil, the Global Environment Facility (GEF) was created as the financial mechanism of the Rio Conventions, with the aim at providing grants to developing countries and countries with economies in transition for projects that benefit the global environment and related to biodiversity, climate change, international waters, land degradation, the ozone layer, and persistent organic pollutants. Although long criticized for its complex procedures, the GEF is today one of the largest funder of global environment, sustainable development and the Rio Conventions.
Finance is seen as the major constraint for the implementation of sustainable development. Several decades after its initiation in 1987 by the Brundtland report "Our common future" and its official launch in 2002 during the Johannesburg Summit, the obstacle still remains. Though, the Monterrey conference in 2002 was expected to sort out the issue, given that financing of sustainable development was seen by many countries as an important step towards the implementation of the Agenda 21 and their national sustainable development plans. However, 20 years after the Earth Summit, finance along with institutional, technical and technological constraints is still the major limiting factors for achieving the sustainable development goals.
More specifically, climate finance is emerging as critical element of climate change negotiations, with a primary objective to provide financial flows from industrialized to developing countries to: i) adapt to climate change and/or ii) reduce GHG emissions. Climate finance is now at the very heart of the response to climate change, as shown by the commitments recently made by developed countries to provide USD 30 billion from 2010 to 2012 and 100 billion per year by 2020 to support developing countries in their response to climate change. These commitments form the bulk of climate finance in the existing and future finance for climate change. The High Level Panel on Climate Finance set up in February 2010 by the UN Secretary General concluded that "mobilizing 100 billion per year by 2020 is challenging but feasible". But the current reality is that the access of climate financing resources is characterized by a lack of efficiency and performance due to cumbersome funding requirements and limited absorptive capacity by recipient countries. As of April 2011, 24 global funds have been operating; with a total of USD 30 billion pledged but only USD 2 billion were actually spent. This shows the gap that needs to be filled to ensure that committed resources are actually fully, wisely and efficiently spent.
Financing sustainable development and green economy will be a key issue of discussion in the forthcoming Rio+20 Conference. Learning from the recent experience of climate finance is an important entry point to find a better way to address this issue. The Rio+20 Conference provides the international community with a unique opportunity to rethink the financing of green economy in the context of sustainable development and poverty reduction, in addressing the key following questions:
· Where the financing for sustainable development and green economy will come from?
· How different will this financing be different from the climate financing resources?
· How additional this kind of finance will be from the traditional development assistance and other sources of finance?
· How to improve the access to existing financing mechanisms by developing countries that are ready to implement their sustainable or green development strategies?
· How to address the institutional, technical and technological obstacles that hamper the delivery of existing finance?
· What would be the adequate, predictable and efficient source of financing of sustainable development and green economy?
Responding to these questions is critical to pave the way for a successful outcome at Rio this year. What is true is that as for climate finance, sustainable development and green economy cannot solely be financed from public sources. To be efficient, this financing needs to come from a variety of sources, including public and private, bilateral and multilateral, external and domestic sources. Moreover, building on the process of accessing climate finance, there is a need to innovate and seek better way to deliver financing for sustainable development and green economy. It is therefore important to help recipient countries overcome the bottlenecks that limit their access to existing funds. Additionally, in Rio, the international must deeply think about addressing the issue of institutional setting for sustainable development and green economy. This constitutes a basis for a better delivery of financing along with the need to remove the barriers that limit technology development and transfer in the developing world.
Finally, while building capacities is being made for several years now, progress seems to be very low, given that the concrete impacts of the capacity building activities is yet to be demonstrated. To deliver financing in an efficient manner, there is a strong need of building expertise and ensure readiness of recipient countries to access funds. An innovative way of building capacity in the developing countries, especially in the least developed countries, is therefore an important step for the provision and delivery of finance and results.
(Source: United Nations Environment Programme)