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Design and analysis of the green climate fund

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Abstract

The Green Climate Fund (GCF) has been one of the core issues of the world climate summits under the United Nations Framework Convention on Climate Change (UNFCCC) in recent years. However, the GCF has not progressed smoothly, and currently there are no satisfactory schemes for raising and distributing the fund. This paper first discusses how to finance the GCF among Annex II countries. It introduces the’ preference score compromises’ (PSC) approach which is based on environmental responsibility and economic capacity, with historical emissions as an indicator for environmental responsibility and GDP as indicator for economic capacity. The results show that the United States and the European Union are the two largest contributors to the GCF, sponsoring more than 80% of the funds. Second, we discuss how to allocate the funds among non-Annex II parties. The ‘adaptation needs’ (AN) approach, which takes account of economic strength and climate damages, is proposed to achieve the adaptation purpose of the GCF, and the results reveal that African countries with high levels of climate vulnerability could get most funds, with a share of almost 30%. Regarding the mitigation purpose of the GCF, this research introduces two approaches: the ‘carbon reduction contribution’ (CC) approach and the ‘incremental cost’ (IC) approach. Both approaches could achieve significant reductions in carbon emissions in non-Annex II parties, whereas the latter may provide limited adaptation finance but result in more mitigation effects. This paper also develops a method to combine abatement efficiency and adaptation fairness of the GCF, and we find that with an equal split between the AN and CC (or AN and IC) approaches, the amount of USD 100 billion could finance an emissions reduction of 1613 MtCO2 (2477 MtCO2), while allocating USD 16 (or USD 9) per capita for adaptation in non-Annex II parties. The schemes proposed may be useful for promoting the development of the GCF in the future.

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Authors and Affiliations

  1. Center for Energy and Environmental Policy Research, Institute of Policy and Management, Chinese Academy of Sciences, Beijing, 100190, China

    Lian-biao Cui

  2. Center for Energy and Environmental Policy Research, Institute of Policy and Management, Chinese Academy of Sciences, Beijing, 100190, China

    Lei Zhu

  3. Department of Economics, University of Oldenburg, 26111, Oldenburg, Germany

    Marco Springmann

  4. Center for Energy and Environmental Policy Research, Institute of Policy and Management, Chinese Academy of Sciences, Beijing, 100190, China

    Ying Fan

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  1. Lian-biao Cui
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Corresponding author

Correspondence to Ying Fan.

Additional information

Supports from the National Natural Science Foundation of China under Grant No.71210005 and No. 71273253 are greatly acknowledged.

Lianbiao Cui is member of CEEP (Center for Energy and Environmental Policy Research) in the Institute of Policy and Management (IPM), CAS (Chinese Academy of Sciences), and is currently a lecturer in School of Statistics and Applied Mathematics, Anhui University of Finance and Economic. He received his Ph.D. degree from the joint program of CEEP at CAS and the University of Science and Technology of China (USTC) in 2014. His research fields include energy economics, computable general equilibrium model (CGE), international environmental cooperation and climate finance.

Lei Zhu is an associated professor at CEEP in IPM, CAS. He got his Ph.D in management science and engineering from the joint program of CEEP at CAS and USTC in 2011. His research fields include energy economics and management, energy investment assessment, climate change, energy and climate technology evaluation, real option analysis. He has involved over 10 research projects, and published over 30 papers in peer reviewed journals.

Marco Springmann is a Ph.D student of economics at the University of Oldenburg, Germany. His research interests are the economic and environmental analyses of climate policies. In his PhD, Marco analyses subglobal climate policy options, in particular carbon tariffs and potentially more equitable alternatives. Marco holds two Master degrees, one in physics from Stony Brook University, New York, and one in sustainability with concentration in ecological economics from the University of Leeds, UK.

Ying Fan is a professor at CEEP in IPM, CAS. She got her Ph.D degree in system engineering. She visited Cornell University in the U.S. as a visiting scholar from 2004 to 2005. Her research and teaching fields include energy-environment-economy system modeling, energy finance, climate change, emissions trading scheme, energy and environmental policy. She has carried out over 50 research projects, and published over 150 papers in peer reviewed journals and 10 books.

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Cui, Lb., Zhu, L., Springmann, M. et al. Design and analysis of the green climate fund. J. Syst. Sci. Syst. Eng. 23, 266–299 (2014). https://doi.org/10.1007/s11518-014-5250-0

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