The government's Green Climate Fund move is a welcome first step

Australia took a modest but important step forward today with the announcement by the Foreign Minister that it will now contribute $200 million to the Green Climate Fund, a multilateral mechanism assisting the world's poorest countries to improve their resilience to climate change and decarbonise their economic growth.

As a founding board member under previous governments, Australia has played a constructive role in establishing the fund's mandate and governance rules. However, until now the Abbott Government had resisted increasing pressure both domestically and internationally to stump up for the fund's initial capitalisation.

The GCF plays an important role in channeling climate finance to poor and vulnerable countries, and our refusal to contribute was met with disbelief, even outrage, by other country representatives and observers at the Lima climate talks.

What is surprising about Australia's reluctance is not just that Australia, as a wealthy economy, is expected to play a fair part in helping developing countries deal with the impacts of climate change. It is also because we clearly have a lot to lose if countries in our region – some of the world's most vulnerable – are severely damaged by climate impacts. Conversely we have a lot to gain by improving the resilience and stability of our region.

Today's commitment  falls short of the $350 million per year that The Climate Institute suggests is the minimum fair contribution to climate financing from Australia. And the money should not be redirected from elsewhere in the aid budget, from which the government has already made billions of cuts.

Greater transparency, as well as a rethink, on the government's approach to aid and climate finance is urgently needed. There is an opportunity for the government to clarify its total climate finance contribution when it submits its post 2020 emission commitments – but answers on the status of existing aid programs should be provided well before that.

The Prime Minister's statement on the GCF also provides the first indication of how our post-2020 commitments will be developed: via a taskforce in the Department of Prime Minister and Cabinet for submission to the international community by mid-2015. This timeline indicates that Australia will lurk at the back of the pack, waiting and watching for others to step forward first. We should look to be announcing our commitments in line with other major emitters like the EU, US and China which are working towards the March deadline agreed in Warsaw.

However this suggests that if the momentum already generated – by the early announcement of post-2020 targets from the EU, US and China and the successful achievement of the GCF's initial $10 billion target – continues through to Paris, Australia's target-setting process will be set in the context of growing global pressure.

The government's shifting language already indicates a desire to be seen to be doing more: the Prime Minister's statement repeats the government's recent efforts to re-frame 2020 goals by using a 2005 baseline rather than the 2000 baseline used since 2009. This changes the minimum 5 per cent reduction target to a minimum 12 per cent – still well short of what others are doing; even the US has 17 per cent below 2005 levels by 2020.

Of course, shifting the baselines doesn't shift the science. Our analysis is that a fair contribution towards the internationally agreed goal of avoiding 2-degree warming requires a 2025 goal of 40 per cent reductions off 2000 levels, or a 45 per cent goal off 2005 levels. 

While Australia should not be hijacking the aid budget to support the GCF, or fudging the numbers, today's announcement is an important signal that the Abbott Government is recognising it risks getting stranded on climate action. It still has a long way to go to credible domestic and international policies but today's announcement should be cautiously welcomed as a first step.  

John Connor is chief executive of The Climate Institute.