TWN Info Service on Climate Change (Jul15/06)
16 July 2015
Third World Network

GCF: All medium and large funding proposals will be subject to a scale

Penang, 16 July (Meena Raman)-The Board of the Green Climate Fund (GCF) has agreed on a decision on how to assess funding proposals based on applying a scale. The decision was adopted at the recently concluded 10th meeting of the Board that took place between 6-9 July in Songdo, South Korea.

They agreed that the scale of ‘low/medium/high’ based on the investment criteria will be applied to all medium and large projects, based on the total funding size of the project.

At its previous meeting in March this year, the methodology to be adopted on reviewing funding proposals from developing countries was one of the most controversial among the decisions adopted.  The major disagreement between developed and developing country Board members was over the “initial assessment methodology” to be followed by the Secretariat and the independent Technical Advisory Panel (iTAP) to conduct technical assessments of funding proposals from developing countries for the Board’s consideration.

Basically, developing countries were concerned over whether the Secretariat and the iTAP can properly evaluate which proposals are to be funded by the GCF, given what is mainly in the nature of a qualitative assessment of the proposals, although couched one that is quantitative.

The Board at the 9th meeting decided to adopt the initial activity-specific sub-criteria and indicative assessment factors such as impact potential, paradigm shift potential, sustainable development potential, needs of the recipient, country ownership and efficiency and effectiveness. It also decided to use indicative minimum benchmarks which would be further considered at the 13th Board meeting.

The Board further decided then to use a scale of low/medium/high in order to assess the relative expected performance of a sub-set of projects and programmes based on the initial investment criteria. The Investment Committee (IC) was to recommend to the Board to which subset of proposals this will apply to.

Since the Board had not defined what constitute micro, small, medium and large funding proposals, the IC provided two approaches in this regard for the Board’s consideration. The first approach was to define the project based on its total size while the second approach was to use the GCF funding amount to define what micro, small, medium and large proposals are.

In the eventual decision that was adopted at the 10th Board meeting, it was decided that the first approach would apply, with  the project size defined as: (a) micro proposals - up to and including US$ 10 million in total project size; (b) small proposals - above US$10 million and up to and including US$ 50 million in total project size; (c) medium proposals - above US$ 50 million and up to and including US$ 250 million in total project size and (d) large proposals – above US$ 250 million in total project size.

On the selection of a sub-set of proposals for the pilot to which the scale will apply, the Board had to consider the following options: (i) total project size above US$ 50 million; (ii) GCF funding amount above US$ 50 million; (iii) including a portion of small-sized proposals in the scaling pilot; or (iv) including half of proposals within some categories of project size in the scaling pilot.

Following discussions on the matter, the Board agreed “that the scaling pilot will apply to all medium and large proposals”. It further decided “that in monitoring the effectiveness of the scaling pilot, mitigation proposals will only be compared with mitigation proposals and adaptation proposals will only be compared with adaptation proposals”.

In addition, the Board decided “to recognise country needs and circumstances while applying the scaling pilot…” and also requested the Secretariat to review the scaling pilot on an annual basis and to communicate the findings to the IC and to the Board.  

Below are highlights of some interventions from Board members in this regard.

Jorge Ferrer Rodriguez (Cuba): “I have a difficultly that the scaling would only apply to half of medium and large proposals. This could be discriminatory. I think we should stick with applying the scale to all medium and large projects. It should be based on total project size.” 

Omar El-Arini (Egypt): “This decision on the size of the project is less relevant. It would be inappropriate to apply the scaling pilot to two projects with same total cost, with one requesting grant finance and another requesting for a loan. If this were the case, the Fund would certainly prioritize the loan. This is for the Fund’s sake not the country’s sake that submits the project. How could we balance this? We need to make sure we are accommodating the country’s strategy and needs.”

Leo Martinez (US): “Comparing mitigation to mitigation and adaptation to adaptation (proposals) should be reflected in the decision. I also agree that scaling should not apply to micro or small projects for the time being.”

Andrea Ledward (UK): “On the project size, we should take the first approach which is based on the total project size, as this is consistent with the accreditation framework. (On the subset of proposals to which scaling should apply), I prefer the option that delivers against three principles, viz. that maximizes learning, is broad  and inclusive, and does not disadvantage anybody for not being part of the pilot.”

Ingrid-Gabriela Hoven (Germany): “I also support the approach based on the total project size which is in line with the accreditation framework”. She also stressed the importance of comparing projects in comparable circumstances.