1. finance

 Experts’Workshopon FinancingEnvironmentalGlobalPublicGoods:
HowtoRaisetheMoney?
15(Wed.)‐16(Thurs.) May 2013 Seoul, Korea Hosted by the Korea Development Institute (KDI) Session 1
Dr. Joohoon Kim, Acting President of KDI, opened the workshop with warm welcoming remarks. He explained the aim of the Joint KDI‐CGD‐CIGI Project is to assess the viability of innovative financing mechanisms, including carbon tax, special drawing rights, financial transaction tax, airline levies, favorable tax treatment of green bonds, and to identify worthy projects that contribute to environmental global public goods. The Chair of the first session on Progress and Challenges in Development/Climate Finance was Dr. Soogil Young, former Chairman of Presidential Committee on Green Growth of the Republic of Korea. Ms. Shamshad Akhtar, Assistant Secretary‐General of UN DESA, presented reflections on the UN’s experience. She emphasized that the climate clock is ticking, and that coordinated and proactive action from the international community, governments at all levels and business will be required to evade the worst effects. Conventional development finance mechanisms are not sufficient for climate change mitigation and adaptation. The challenge lies in how to deliver the international commitments to mobilize climate finance, aligning funding to the demand (which exceeds the secured amount), tapping the potential of domestic resource mobilization, and devising appropriate risk‐return arrangements. The global community must agree on needs (balancing between adaptation and mitigation efforts) and the implementation mechanism—that is, how to deploy funds efficiently and effectively. Developing countries stress that any commitments should be “new and additional,” but it is unclear to what extent private financing should be counted towards commitments, especially if that existing private finance would happen in any case. With respect to resource deployment, there are major differences in the political economy of mitigation and adaptation efforts. Supporting mitigation programs benefits both donors and recipients and its disbursement on efficiency grounds is critical, while financing adaptation projects assists recipients directly. Evidence suggests that, to date, climate funds have mostly focused on mitigation, with adaptation accounting for less than 5% of total funds. Climate funds should address adaptation needs of low income countries, which suffer the most from climate change. The proliferation of funds is a concern. An important question is how to facilitate harmonization among different climate funds and mechanisms without undermining their independence. Market‐based climate finance has been severely impacted by the global financial crisis since 2008. Carbon finance constitutes only $2 billion (of total $ 97 billion annual flow) according to the Climate Policy Initiative Study. Risks associated with carbon market mechanisms need to be managed, monitored and regulated. ‐ 1 ‐ Session 1
Ms. Raundi Halvorson Quevedo, a Senior Advisor at OECD, reflected on the OECD’s perspective. She noted that the environment for development finance has radically changed. The share of ODA in total net development resources is decreasing at a rapid pace, while the share from the private sector is rising. Questions for the role of ODA in the context of post‐2015 debate include: - Should ODA focus on the poorest and the most vulnerable? - Should ODA be used to catalyze other flows from the private sector? - Should ODA be used for other global objectives? She reviewed the need to modernize the concept of ODA: possibly expanding it to cover financial instruments and risk mechanisms, and to provide incentives to develop new risk mitigation instruments to mobilize private capital. ODA statistics must be improved, nailing down the concept of concessionality and illustrating the benefits of recipients. They should highlight the volume of resources that actually enter the budget systems of recipient countries. The OECD is working with development finance institutions to harmonize and consolidate data sets on different kinds of flows such as FDI, remittances and export credits. Climate change mitigation finance has increased 2.5 fold between 2007 and 2010. Total bilateral climate‐related aid in 2010 was US$ 22.6 billion as the estimated upper bound and US$14.5 billion at the lower bound. Japan, Germany, and France are ranked top 3 donor countries for mitigation; Japan, the UK, and Spain are the top 3 for adaptation. The top 3 recipient developing countries are India, Egypt, and Indonesia for mitigation, and Indonesia, Iraq, and Kenya for adaptation. Climate related finance accounted for 13% of total ODA in 2011. Following the presentation, the floor discussion highlighted the difficulty of devising any kind of index of Quality Measures for climate finance beyond the Paris Declaration indicators due to data unavailability. The OECD is looking at leverage ratios, examining portfolios of development finance institutions in the DAC community. A reference was made to the World Bank’s recent publication on “Turn down the heat: Why a 4℃ warmer world must be avoided” and to the discussion in the G20 about the need to address climate change issues in the post‐2015 debate. ‐ 2 ‐ Session 2
Mr. Kilaparti Ramakrishna, Director of UN ESCAP, East and North‐East Asia Office, chaired a session on the International Politics of Climate Finance. With respect to governance of climate change finance, Dr. Prodipto Ghosh, former Secretary of Ministry of Environment and Forest in India, ran through the result of previous negotiations with respect to the financial mechanism of the UNFCCC. - Developing countries are intended to be primarily, not exclusively, channeled through the financial mechanism, which need not necessarily be a ‘physical institution.’ - The mechanism as a whole should be accountable to the Conference of Parties (CoP). - Governance of the mechanism should be balanced and equitable. - Bilateral aid agencies, regional development banks (RDBs) and other multilateral financial institutions (MFIs) should provide accountability reports to the Conference of the Parties. - Any claim by any developed country party that it has met its commitments, through an MFI activity, is subject to acceptance by the CoP. He laid out the distinction between traditional ODA , based on the principle of solidarity, where donors accept no responsibility for causing the underlying conditions, and climate finance, based on the principle of responsibility, where the greater share of ‘responsibility’ of developed countries is emphasized. The Green Climate Fund (GCF) is to ensure country ownership, scale up finance for climate change from public and private sectors, promote complementarity with diversified sources of climate finance, apply a diversity of financial instruments, and facilitate rapid progress towards direct access by developing countries to GCF resources. He described the list of potential voluntary financial sources including marine & aviation levies, and the Tobin Tax. He noted that multilateral development bank (MDB) procurement guidelines that are apparently weighted in favor of suppliers from “donors” are, in effect, “tying“ the aid. He reviewed the respective role of grants and loans, payments for verified mitigation results and options for access to climate funds. He remarked on the issue of potential conflict of interest of the GCF in respect of its role as accreditor of other implementing/funding agencies if it also provides loans in addition to grants. With respect to “the Rise of the Global South and Its Impact on Climate Finance”, Professor Inge Kaul from the Hertie School of Governance in Berlin, Germany, recalled that the significant research results on innovative sources of financing to meet global imbalance and climate changes were published by the Brookings Institution in the 1960s and 1974. The obstacle to progress is not technical. Political economy barriers (for example, ‘willingness to ‐ 3 ‐ Session 2
pay,’ free riding on global public goods, and the misperceived apparent loss of sovereignty) are the problems. The current climate crisis is an opportunity to address climate finance and the green economy market. The cost‐benefit analysis on climate financing must be reassessed: all countries should learn what each country will gain specifically as well as collectively as we pursue climate stability and what we will be paying if we fail to respond. To stimulate actors, we should focus on complementary missing links, encouraging the BRICs to become more involved in international cooperation. Constructive ideas may include: - Create a BRICS clean technology center - Promote R&D for green technology, advertising the results to provide visibility on the public goods - Concentrate on climate financing mechanisms familiar to most governments (e.g. thematic bonds and carbon taxes), given that it will take longer to introduce something brand new and innovative. ‐ 4 ‐ Session 3
Mr. Jean‐Pierre Landau, former Deputy Governor of Banque de France, chaired the session assessing the viability of various financing mechanisms. Dr. Wonhyuk Lim, Director of Global Economic Research at KDI, presented a paper on Carbon Taxes and Border Tax Adjustments. Given that cumulative emissions of CO2 have increased, nearing a tipping point, the question is, from a One‐world view/framework (global citizens in a single country) how to internalize negative externalities (greenhouse gas emissions) in a fair, effective, and efficient way. From a fairness perspective, issues on the Polluter Pays Principle (PPP) include what to do about past emissions and how to deal with ownership transfer and inheritance, and possible retroactive enforcement. Conceptually, responsibility for causing the problem can be distinguished from responsibility for fixing the problem. A gap may exist between who caused the problem and who has the resources to fix it; however, the actual correlation between cumulative greenhouse gas emissions and GDP is very high, making it easy to align the fairness and effectiveness dimensions of the climate change problem. Clearly, to be efficient, emissions should be reduced wherever the marginal abatement cost is the lowest. As a low‐hanging fruit, inefficient fossil fuel subsidies must be phased out. In addition to pricing carbon, it will be important to use revenue derived from carbon taxes or a cap‐and‐trade scheme to address existing distortions in resource allocation. With respect to carbon taxes in a One‐World Approach, incorporating the effects of Revenue‐Recycling (RR) and Tax Interaction (TI) effects, net welfare cost of a carbon tax can be minimized (and be even free‐lunch) by aligning the carbon tax policies with social/income taxes. In view of a Two‐World Approach, the South caught up with the North in annual emissions in 2003 and 2004. Even though the North leads South by a 2 to 1 margin on cumulative emissions, the South will catch up with the North by 2030. The traditional approach based on this picture is to adopt the “common but differentiated responsibilities” framework. This entails that “All countries must contribute to a solution, consistent with their economic situation.” Lim contrasted the old “Kyoto” approach with the new “Greenprint” Approach. Kyoto focused on emission cuts, with nearly all costs of the burden borne by industrialized countries. Greenprint focuses on technical progress where all countries contribute to a solution consistent with their economic situation. Kyoto adopted time‐bound mandatory cuts for developed countries, based on targets and timetables, without close attention to cost. Greenprint proposes that newly‐industrialized and emerging market economies lead the way and contribute to funding and commit to making future cuts conditional on ‐ 5 ‐ Session 3
development of new technologies. Lim pointed out that this approach fails to account adequately for advanced economies’ historical responsibility for climate change. On balance, to maintain basic principles of internalization of externalities in a fair, effective, and efficient way, PPP should be upheld applying “Common but Differentiated Responsibilities (CBDR)" based on the dual meaning of responsibilities in a non‐dichotomous way. This International Approach shifts away from a target‐timetable approach of the Kyoto Protocol to a Cost‐benefit Approach, which focuses on relative costs, phases out inefficient fossil fuel subsidies, adopts price for carbon that reflects its social cost, either through a tax or cap‐and‐trade with allowance auctions, and recycles some of the revenue, including from Border Tax Adjustments (BTAs), to address existing distortions in resource allocation. Some statistics deserve attention. In Jan 2013, the IMF published a major report on fossil fuel subsidies based on surveys of 176 countries. They amounted to about $1.9 trillion. Removing them could lead to a 13% decline in CO2 emissions. Furthermore, a carbon price of $25 per ton of CO2 in Annex II economies could raise around $250 billion in 2020 while reducing their CO2 emissions by about 10% that year. If carbon tax revenue was recycled in such way to address preexisting distortions, the economic cost will be as low as 0.03%; when environmental benefit is added, there will be a net benefit.(Allocating 10 percent for climate finance would meet a quarter of the $100 billion funding committed for climate change in 2020). If a carbon tax is imposed, Border Tax Adjustments are supposed to address the challenge of ‘emission leakage’. On the import side, emissions embodied in imported goods and services from non‐regulating countries are taxed at the emission price of the regulating region, consistent with Most Favored Nation (MFN) and National Treatment (NT) Principle. On the export side, emission charges paid by domestically regulated firms are rebated for exports to non‐regulating countries. With respect to BTAs, some countries may move unilaterally, given the gridlock in international negotiations. Theoretically BTAs can level the playing field in international trade and help to internalize the cost of climate change, but importing countries may be tempted to strategically impose BTA rates above the fair level to exploit market power in international trade. At the same time exporting countries subject to carbon tariffs may retaliate with countervailing tariffs leading to a detrimental trade war. Furthermore, unilateral action forgoes large potential savings from "where‐flexibility" if emissions reduction is realized in the country with the lowest marginal abatement cost. In practice it will be very difficult to apply BTA in emission content to each and every imported item, and even on the average emission content by industries. This will not ‐ 6 ‐ Session 3
incentivize emission abatement in firms abroad, and hence the global cost savings of BTA could be quite small. In this regard, carbon offset policies such as Clean Development Mechanism (CDM) can be much more cost‐effective than BTA since they partially level emission prices abroad. Attribution of carbon tariff revenues to exporting countries may substantially reduce BTA’s adverse distributional impacts. Professor Hyungna Oh from Kyunghee University in Korea provided an overview of cap‐and‐
trade systems, including ”Clean Development Markets (CDM),” where reductions from tradable allowances are sold as “offset credits,” and Joint Implementations. Carbon markets were anticipated to be a source of climate finance, dedicating a percentage of revenues, but the experience has been disappointing. She compared systems implemented in the EU, New Zealand and India, the South Korean carbon system planned for 2015 and China’s to be adopted in 2016. The nine northeastern US states’ Regional Greenhouse Gas Initiative (RGGI) system, which is limited to the American power sector, is in decline as the reduction goal has been accomplished. California’s state system is just starting up and will kick in over the next two years. The EU’s emission trading system (ETS) is the largest market (covers up to 87% of international trade volume), the only one with significant secondary market that is linked to the Clean Development Mechanism, being the main purchaser of CDM credits. The credits generated through CDM, called Certified Emission Reductions (CER), represent second‐largest market of carbon‐denominated assets and are used as offset credits. CDM’s projects and rules continue to evolve. The chief problem in financing via carbon markets is the low prices of permits, with prices across all systems falling, if not collapsing: the average annual price per ton of CO2 in all markets fell since 2008 due to the global recession and oversupply of permits. Carbon markets will not be a major source of climate finance unless reduction targets are firmly established, the carbon price is consistent at a significant level, and there is a single transparent global market. Ms. Clara Delmon, a policy officer at Ministry of Foreign and European Affairs in France, presented the picture on Financial Transaction Taxes & Airline Levies. The Leading Group on Innovative Financing for Development, a group of 64 member countries with Nigeria chairing in 2013, is working on the UN’s post 2015 agenda, the illicit financial flows, and the climate change financing. There is a persisting reluctance of many countries, especially within the G20 and Europe, to entertain a financial transaction tax. Still, Project of Commission has been proposed and a version will be adopted in 2014. The allocation of proceeds is still to be determined. It has been difficult to identify a partner within in Leading Group to promote such efforts. ‐ 7 ‐ Session 3
The air ticket levy is an excellent example of an operational mechanism of innovative financing. Air traffic has not suffered damage. Implementation modalities are simple. A very satisfactory amount of resources has been raised, providing a moral contribution from a sector benefitting from globalization. The tax is applied to passengers who board in France, and is collected by General Directorate of Civil Aviation. The tax amount is then transferred to the French Development Agency to a special fund, called the Solidarity for Development Fund. UNITAID is the beneficiary of revenues. The next step will be scaling up the initiative to try to implement it in other countries. Private actors such as the airline companies are in a good position to testify on this mechanism. After these presentations, the discussion on operational mechanisms, concluded that while carbon prices are effective in reducing emissions, they are problematic as a source of funds for adaptation and mitigation. Carbon prices vary dramatically across systems, in contrast to the desirability of a single global price. Unilateral BTAs will also be problematic. It appears the US will not agree to the application of BTAs to enforce agreed standards. One hypothetical question is whether redistributing the revenue from BTAs back to exporting countries could provide a sufficient incentive to non‐regulating countries to adopt a carbon tax or cap and trade scheme. Given that BTAs can trigger a detrimental trade war, it would be preferable for countries to adopt a carbon tax or cap‐and‐trade system, and use the revenue to address preexisting distortions. ‐ 8 ‐ Session 4
Dr. Thomas Bernes, former Executive Director of Centre for International Governance Innovation (CIGI), chaired the session on Special Drawing Rights and Public Private Partnerships. Dr. Barry Carin, a Senior Fellow from CIGI, presented an approach to exploit the potential of the IMF’s Special Drawing Rights as the easiest way to kick‐start climate financing despite political and legal barriers. He described the current circumstances where CO2 emissions are continuing to increase relentlessly and conclusion of a legally binding global deal is very unlikely. Australia is unlikely to adopt climate change‐related issues as a G20 agenda item for 2014, given national sentiment: Australian polling data shows that not many people are concerned about global warming. Public support fails to prod governments to act: US polling data showed that 61% of Americans support a carbon tax if it creates jobs. International agreement of internationally coordinated taxation systems is also unrealistic. To get a realistic chance of raising revenue for climate change financing, we will have to change the rules or the interpretation of existing rules. To be pragmatic, we must find an approach that does not require any national legislation, or US Congressional approval in particular. The “new idea” is to direct the funds to G20 countries in direct proportion to their respective IMF quotas. The G20 could propose a new SDR issue of $400 billion, with the shares of G20 members to be transferred to a new G20 “Trust Fund.” The “Trust Fund” then exchanges the SDRs for currency from foreign exchange reserve authorities. Donors to the “Trust Fund” pay interest on the transferred SDRs. The “Trust Fund” provides the currency proceeds to G20 countries in proportion to their quota to invest in climate change related projects. This approach is as close to a “free lunch” as possible. The Trust Fund allocates currency proceeds in proportion to countries’ quota shares; hence, every country gets back what they put in initially. SDRs donors should pay interests, but it is feasible There is no completely free lunch. The cost of the proposal is that donors of the SDRs to the “Trust Fund” must pay interest to the ultimate SDR purchasers to provide the incentive for foreign exchange authorities to exchange hard currency for SDRs. This should not prove to be difficult, if the proceeds are spent in each country according to the SDRs that were provided. If the Trust Fund were obliged to spend roughly $75 billion in the US (according to its quota share), the US Congress would have to appropriate perhaps $2 billion a year. To increase the chance of acceptance of this idea, it would be prudent to have a companion proposal identifying the executing agents and describing how the proceeds would be spent. Dr. Michele de Nevers, a Senior Program Associate at the Center for Global Development (CGD), presented ideas related to catalyzing private funding. The Private sector’s involvement is critical to climate finance, given the scale of capital required. According to the ‐ 9 ‐ Session 4
International Energy Agency (IEA), global investments will need to total US$ 750 billion per year by 2030 and over US$ 1.6 trillion per year in 2030‐2050 to reduce carbon emissions by 50% by 2050. The estimate is that 80% of climate financing must come from the private sector. Public climate finance should be used to help mobilize private climate finance. Given the fiscal constraints in developed countries, Public Private Partnerships (PPP) is an approach to counteract shrinking public budgets. Public funding can accelerate investments, promote learning and scale economies, support policy reforms and reduce risks: public funds can promote private investments through investing in complementary infrastructure and reducing risk and increasing confidence for private investors. The Clean Technology Fund (CTF) is an example that public funding can leverage private financing. 8 out of 10 public CTF projects include private financing. There are a variety of approaches for different elements of the solution. First is the Climate Investment Funds (CIFs), public fund to help developing countries invest in low‐emission and climate‐resilient development. The US$5.2 billion Clean Technology Fund is a public fund that mobilizes private funding to finance scaled‐up demonstration, deployment, and transfer of low carbon technologies. Lastly, the Strategic Climate Fund (US$ 2.4 billion) focuses on new approaches with potential for scaling up. Noting it was time for new mechanisms, Mr. Darius Nassiry, Head of International Cooperation at the Global Green Growth Institute (GGGI), described how a Green Venture Fund (GVF) could work. Although cost‐effective mechanisms are in demand, it is extremely difficult for existing institutions to solve today’s problems. Each phase in development and deployment faces critical financing gaps; small deals cost relatively more than the big ones in the early stage and policy uncertainty exists in commercialization periods. Challenges are greater in deployment stages as investors seek for a higher rate of return then. In this light, public‐sector involvement should leverage funds to guide private‐sector investment – without trying to dictate investors’ precise path. The GVF comprises two funds of funds, each backed by cornerstone public investment to be matched or exceeded by private capital. A Technology Innovation Fund will provide capital to expand investment in clean technology innovation, particularly early‐stage investment in clean energy technologies. A Technology Deployment Fund will provide capital to increase private investment in deployment of existing clean energy technologies in developing countries. The GVF will also include a Preparatory Facility to support business incubation and project preparatory activities to help ensure deal flow. Various issues were covered. What should be the size of the funds of funds? The Fund will ‐ 10 ‐ Session 4
have to set technology priorities. Should there be a single Fund of Funds (FOF) with two classes of shares for different investments or two separate Funds? Private investors will be more likely to invest alongside public cornerstone equity at the FOF level if they are confident that the fund managers’ investment choices are ‘returns‐led’ rather than ‘mission‐
led’. Care will have to be taken to avoid unintended signaling effects of public sector involvement. A fund of funds has the advantage of reducing risks, enabling a fast decision making cycle. It also provides a buffer for political failures In the general discussion, points were made about risk management. It is very difficult to justify use of climate funds to meet conventional risks of investment of developing countries. There is a tension between the private sector’s antipathy to public sector intervention and its need for public financing to start off. This world is not like the one in 1992. An attempt to change rules to reinterpret UNFCCC and to examine different framework will not lead the world to what developing countries are imagining. Market prospects for climate financing were also discussed. Probably all adaptation projects and many of mitigation projects will fall short of investment thresholds when analyzed with the conventional evaluation tools; for this matter, an adjusted evaluation system must be developed to appropriately assess risks of climate financing. State and municipal governments will be happy to have a big truck of money for infrastructure improvement for adaptation reasons. It will be very easy to spend quite a big money in a constructive way. The international community should prepare for the contingency that there will be no global agreement on binding national emission targets in next few years. And there will be no big money transfer from developed countries to developing countries. It is always easier to draw an agreement in a smaller group than global group. Marketing and tailoring are necessary to get some countries get involved. At the last meeting on climate financing, the US suggested that substantial funds are already flowing. One of the advantages of climate funds is that they have an agreed governance structure; programs are selected and proposed by countries who also select which technology to adopt. ‐ 11 ‐ Round Table
Dr. Wonhyuk Lim chaired a Round Table discussion. He criticized the past decisions to avoid a price‐based approach or benefit‐cost based approach in favor of a target and time‐table approach. The traditional two‐world perspective is not productive at all; the grouping of countries by carbon emission should be more broken down, as income taxation grouping for labor market, to reflect the fact that there aren’t just two distinctive country groups of advanced and poor economies. The starting point for the introduction of market mechanisms should be the creation of a bond market in each country. Being supported by earmarked levy reflected in the airline tickets, for instance, this bond should make a significant contribution in raising the required revenue, as displayed in the chart below. Using the revenue from the bond issue, each government can establish a “Climate Change Facility” through which investment into Funds‐of‐Funds is possible. It was allowed that although this is only a second‐best option (there still are too many uncertainties), it is better to make a move than to discuss forever‐‐the clock is ticking. We should explore linking the bond market to Special Drawing Rights, for possible positive synergistic effects. It was suggested that the term “Green Climate Fund” should be used rather than “climate change facility,” so as to avoid creation of an additional institution to complicate the situation further. Also, an addition of final link that feeds "invests in Funds of Funds" back into the initial stage of "governments" or "revenues" will complete the cycle, self‐reinforcing the mechanism. Of course the mechanism would have several levels‐‐from regional to national to global. The revenues from a Carbon Tax should be managed by the Green Climate Fund; any additional mechanism or institution as that will only dilute the focus. ‐ 12 ‐ Round Table
It is important not to forget the simple truth that when the general public perceives an emergency, they voluntarily contribute; the US managed to raise sufficient fund to continue World War II. The key is to build a consensus that the world is in emergency; should the climate change issue gain general acknowledgement, climate financing may be possible through voluntary contribution without involving government. We discussed the principle of burden sharing (who pays how much?). The US definitely has a larger historical responsibility and the ability to pay. The world expects the US to fulfill their responsibility. But even if the North put their utmost efforts to reduce emission, that is not going to be enough. There has to be something done in the South too. It was noted that the Southern countries are not sitting back on this issue nor is there lack of consensus in Western world on financial support for developing countries’ efforts (e.g. Azerbaijan’s emission reduction plan for 2020 supported by European countries). A practical proposal for a burden sharing formula may have to wait until the end of second workshop scheduled for ‘how and where to spend the money.’ It is important to know, at least approximately, the size of fund required. Then with a serious data analysis on fund raising options (SDR, Tax or Levies), further progress can be made. Another trend to note is that a number of regional development banks are interested in the Green Climate Fund. We discussed the governance implications for global climate financing, given the unresolved burden sharing issue. The G20 may be not the best venue to deal with climate financing; there had been resistance from a number of developing countries when the G20 signaled possibility of placing global environment financing issue on agenda. Instead, the G20 may help to make IMF or another to work together and solve the problem as early as possible. The place to begin should be setting a fully articulated budget with a governance structure — where to spend and who to make decisions. Then decide how to raise the money. Harmonization to coordinate different carbon markets is not a good option for worldwide climate financing, at least in a short‐term perspective. We should install trust funds as intermediaries, since individual governments will not make a move until they see institutional changes. When the US Congress passes legislation to double the IMF quota, as agreed in 2009 by the G20, then a proposal using existing SDRs would not require further congressional approval. This could serve as a starting point for fund raising. By recognizing the Green Climate Fund as a sole international governing authority/entity, any risks of multiplying governing body and causing confusion may be avoided. The Fund should be the certifying authority. As long as the Fund recognizes a proposal as worthy, each government/organization or any entity may execute the program/project independently (recognizing sovereignty) irrespective of governance structure. ‐ 13 ‐