Copenhagen Accord 2009 indicates that an effective responde to climate change will require new investments on huge scale. The Copenhagen Accord included broad commitments on the scale of financial support that developed countries would provide, and a number of donors made specific pledges for the near term.
Then, the idea is proposed to create Green Fund which aims to to create a coordinating, commitment, and burden-sharing mechanism for developed countries to contribute to financing developing countries’ climate change needs and to mobilize resources on a large scale, commensurate with the Copenhagen Accord,by using official funds to leverage private financing; and to begin channeling loans and grants to developing countries from day one, while long-term revenue sources are being developed.According to IMF staff position note prepared by Hugh Bredenkamp and Catherine Pattillo, the Green Fund would use an initial capital injection by developed to leverage resources from private and official investors by issuing low-cost “green bonds” in global capital markets.
Contributors could agree to scale their equity stakes in proportion to their IMF quota shares, making these the “key” for burden sharing among the contributing countries.Since much of the financing would need to be provided ultimately as grants or highly concessional loans, the fund would also need to mobilize subsidy resources from contributors. Governments would likely require new sources of fiscal revenue for this purpose, including from carbon taxes and expanded carbon-trading schemes, which may take time to put in place.
Bredenkamp & Pattilo argues that the Green Fund could cover its subsidy needs from bond proceeds, interest income on its reserve asset capital base, and/or revenues from other innovative international tax schemes.
In relate to existing climate program; the author’s idea is to channeling the fung through current climate fund, or developing “special-purpose disbursement facilites”.
The Idea of Green Fund will increase the capitalization from industrialized countries. Its new gate on top of old scheme and perhaps will increase the number of fund flowing to developing countries in various forms. The new gate is stand on the side of supporting developing countries to combat global warming on their homeland. I don’t see any equal and fair perspective there.