How on earth will poorest nations fund climate deal?

The path to good green intentions is strewn with obstacles that could waylay a $100 billion plan to help poorer countries fight climate change. These range from the adequacy of the fund's size to its secrecy-minded operations. And it's all part of a worldwide effort mandated by the Paris climate deal, whose overall cost could reach $16.5 trillion.

Part of the climate accord struck over the weekend in Paris, the Green Climate Fund will subsidize the developing nations in adopting such steps as carbon-free power generation and protections against global warming-linked catastrophes like hurricanes and rising seas.

Climate cleanup work is an expensive proposition. The total tab, focused on developed economies curbing their voluminous carbon emissions, is around $16.5 trillion, the International Energy Agency estimates. A switch from fossil fuels would entail a massive reordering of global energy production and delivery, moving toward renewable sources and greater energy efficiency, the agency said.

Low-lying nations such as Zimbabwe and Madagascar are most at risk from major storms and escalating oceans. But according to the Notre Dame Global Adaptation Index, they have the least financial ability to stave off environmental havoc. In fact, their carbon emissions are -- relative to major industrial powers like the U.S. and China -- minuscule, so they haven't contributed much to the problem.

In a statement issued two weeks ago, Héla Cheikhrouhou, the fund's executive director, said the $100 billion kitty was dedicated to supporting the climate conference's "objective on climate change to keep temperature rise under 2 degrees Celsius." He noted that its board already had approved a $168 million outlay for eight projects, including safeguarding Amazon River wetlands in South America and building hurricane shelters in Bangladesh.

The fund did not respond to a request for comment about criticisms.

Potential problems include:

Insufficient money. A study by the London School of Economics concluded that the fund's intended size of $100 billion per year was far too small to get the job done. The LSE report recommended at least $400 billion, and found that a sum up to $2 trillion was more likely to be effective.

Even scraping together the $100 billion might be tough. The Green Climate Fund has so far received pledges of around $10 billion, but actually has just $1 billion of that in hand, says Climate Central, an environmental study group.

President Barack Obama has said the United States would chip in $3 billion, but the GOP-run Congress intends to scuttle that. Sen. John Barrasso (R-Wyo.), a member of the Senate Environment and Public Works Committee, said: "Congress has never authorized funding the Green Climate Fund, and we cannot support providing taxpayer dollars to the fund."

Meanwhile, potential aid recipients are disconcerted that the reference in the Paris climate pact was only in the document's preamble, thus not giving it adequate legal force to ensure it is enshrined in international policy.

Waste. Among Republican lawmakers,there's a strong suspicion that the fund's money will end up frittered away or in the bank accounts of corrupt officials.

Lending credence to the waste fears was the Bangladesh government's $3.1 million project to build "climate-resilient housing" along the nation's coast after a cyclone battered it. The watchdog agency Transparency International Bangladesh discovered that the homes had no walls. Why? The government wanted to stretch its budget and build more houses. Channeling Green Climate Fund largesse to boondoggles like Bangladesh's risks more of the same.

Secrecy. The fund has drawn criticism for operating behind closed doors. Green groups were furious to learn last summer that Deutsche Bank was one of the financial institutions the fund tapped to distribute the money. It turns out the German bank is a big investor in the coal industry. (The bank issued a statement saying that it fully supports the objective of a "low-emission economy.")

To be sure, in the wake of the Paris conclave, there is a lot of momentum behind the Green Climate Fund and international commitments to hold down greenhouse gas emissions. So some of the good intentions may end up actually coming to pass.

Obama is hedging his bets on corralling the money needed for the Green Climate Fund by enlisting private financial sources. Microsoft billionaire Bill Gates recently declared he would invest $2 billion in technology to combat climate change. Gates wrote on his blog: "Given the scale of the challenge, we need to be exploring many different paths."

  • Larry Light

    Larry Light is a veteran financial editor and reporter who has worked for the Wall Street Journal, Forbes, Business Week, Money, AdviceIQ and Newsday.