Author: Cui Lianbiao

As a major breakthrough in international Climate finance, the 2009 Copenhagen Climate Conference proposed the establishment of a global Green Climate Fund (GCF). It requires developed countries to provide $30 billion in Fast-Start Finance (FSF) between 2010 and 2012, and at least $100 billion a year in long-term funds between 2013 and 2020 to help developing countries mitigate and respond to climate change. As soon as GCF was put forward, it has been widely concerned by the academic and political circles, and has developed into one of the core issues of the international climate summit negotiations. However, due to the failure to achieve substantial breakthroughs on many key issues, the GCF is not progressing smoothly.

Financing and distribution are the two core issues of GCF, and whether they can be solved effectively concerns the success or failure of GCF. From the perspective of capital supply, the current lack of a fair and reasonable financing responsibility sharing scheme among developed countries, climate fund financing faces great challenges. On the other hand, with regard to the issue of distribution, there is no fair and effective mechanism for the allocation of funds among developing countries, and the use of the GCF is also pending. This book focuses on the mechanism innovation in the process of GCF financing allocation, proposes the fund raising scheme among developed countries, discusses the reasonable allocation of funds among developing countries, and makes a quantitative assessment of the economic and environmental impact of GCF design schemes. Finally, the study also discusses the influence of different ways of using funds on the financing enthusiasm of developed countries.

(1) Quantitative evaluation of the implementation status of the Fast Start Fund, and relevant experience can be used to guide the next GCF financing allocation mechanism design. Based on the UNFCCC's recently released Country Finance report, it analyzes the experiences, main obstacles and challenges of developing countries in accessing finance, developed countries in providing finance, and equitable distribution of finance during the fast-start fund phase. On this basis, the paper leads to the subsequent issues to be discussed.

(2) Starting from the issue of GCF financing, this paper discusses how to share the financing responsibility of the Climate Fund among developed countries. A Preference Score compromise (PSC) method is proposed, which takes into account both the historical responsibility of financing and the capacity level of different countries. Due to the design idea of voting theory, PSC can comprehensively weigh the interest orientation of different countries and avoid the subjective weight allocation problem.

(3) From the perspective of the use of GCF, it discusses how to allocate climate funds fairly and effectively among developing countries. Taking into account the two main objectives established by the GCF: Climate Adaptation and Climate Mitigation, an ANCC allocation scheme is proposed that takes into account both adaptation equity and emission reduction effects. Adaptive equity takes into account not only a country's climate loss, but also the differences in economic power of different countries. The emission reduction effect is prominent in the incentive effect of GCF on the active emission reduction of developing countries during the use of GCF, which can significantly reduce the carbon emissions of emerging economies.

(4) The Energy version of the Global Trade Analysis Model (GTAP-E) was used to quantitatively assess the environmental and economic impact of the PSC-ANCC solution for GCF financing and distribution issues. The study divides the world into 14 regions, each containing 13 industry sectors. From three dimensions of resident welfare, real GDP and carbon emission, the heterogeneity of the impact of PSC-ANCC scheme on each region was discussed. At the same time, the influence of different ways of using funds on the financing enthusiasm of developed countries is discussed.

(5) Entering the second implementation period of the Kyoto Protocol, developed countries should not only achieve the 2020 emission reduction targets promised by the Copenhagen Climate Conference, but also provide GCF financing support for developing countries. This book puts developed countries' 2020 emission reduction commitments into a quantitative framework. The impact of the implementation of climate Fund financing and allocation on the global environmental economy is discussed. This content is a supplement and extension of Chapter 5.