TWN Info Service on Climate Change (Mar16/04)
15 March 2016
Third World Network

GCF adopts Plan to help implement target of USD 2.5 billion of projects

15 March, New Delhi (Indrajit Bose) — The Board of the Green Climate Fund (GCF) has adopted an initial Strategic Plan (SP) and resolved to “swiftly implement” it to meet its aspirational target of approving projects worth USD 2.5 billion in 2016 and “to scale up the Fund’s investments in ambitious climate action.”

Described as a “living document”, the SP is also to “guide the Board in addressing policy gaps and channel the Fund’s resources of the initial resource mobilization period between 2015 and 2018, and to invest the Fund’s resources in transformational climate actions in a country-driven manner”.

This was one of the decisions adopted at the 12th meeting of the Board held in Songdo, South Korea from 8-10 March.

The Board also welcomed the decision reached at 21st meeting of the UNFCCC’s Conference of Parties (COP21) in Paris that the GCF, as an operating entity of the Financial Mechanism of the Convention, will serve the Paris Agreement. The Board in its decision requested the Secretariat to present at its next meeting (in June) a proposal on how the Fund could support the implementation of the Paris Agreement and related COP decisions.

The SP was decided upon after several rounds of consultations, including in an ad hoc group comprising Board members from Maldives, Egypt, Norway, USA, Germany and Chile. An informal meeting was held in Capetown in early February this year to discuss the elements of the Plan, and the Board devoted a session on 7 March in Songdo, in an informal setting to discuss it, including its operational priorities and action plan, which the Board decided would be integrated in its workplan. 

During the discussions, Board members commented on the draft SP presented to them. Developing country Board members stressed the importance of the GCF to empower national designated authorities (NDAs) to drive climate action plans and not the accredited entities and for the GCF to serve as a knowledge sharing platform. They also raised issues of the Fund’s portfolio and scale of projects, impacts and results of the Fund, allocation of finances to the Fund itself.

Developed country Board members on the other hand largely talked about reflecting stronger in the SP the gender component, strengthening the private sector and for the GCF to go for results-based payments, beyond it just applying to REDD+ (reducing emissions from deforestation and forest degradation, and foster conservation, sustainable management of forests, and enhancement of forest carbon stocks), (which is now the case under the UNFCCC).

Developing countries on the otherhand raised issues over results-based payments beyond REDD+.  

Following the exchanges, in relation to results-based payments, the SP which was finally adopted states that the Board intends to prioritise pipeline development by "operationalising results-based payments for REDD+ in line with (UNFCCC’s) COP guidance and the Governing Instrument (of the GCF), evaluating the implementation of results-based payments, and assessing its applicability to other sectors within the purview of the GCF".

Developing country Board members were also of the view that whenever there is mention of private sector, it should be clarified that the reference is to private players in developing countries.

They were also concerned that the issue of maximizing the GCF’s impact by supporting projects and programmes that are scalable and which should not undermine the Least Developed Countries (LDCs), Small Island States (SIDs), Africa and other smaller countries (see highlights of exchange below).

The members agreed that the SP was a living document and decided to “review the Fund’s SP as part of each replenishment process with a view to revising the strategic vision” and to update the core operational priorities and underlying action plan for the next replenishment cycle.

According to the SP that was adopted, the core operational priorities of the GCF include:

—     “Allowing the GCF to scale up its investments in developing countries with the objective of tapping its full potential to promote urgent and ambitious actions enhancing climate change adaptation and mitigation in the context of sustainable development;

—     Maximizing its impact by supporting projects and programmes that are scalable, replicable and employ GCF resources in the most efficient manner by, inter alia, catalyzing climate finance at the international and national level, including by maximizing private sector engagement;

—     Setting out the approach of the GCF to programming and investing the full amount pledged for the 2015-2018 programming period, while striving to maximize the impact of its funding for adaptation and mitigation, and to seek balance between the two;

—     Ensuring that the GCF is responsive to developing countries’ needs and priorities including by enhancing country programming and direct access e.g. through enhanced support for accreditation of NIEs (national implementing entities), ensuring fast disbursement, implementing a gender-sensitive approach, supporting multi-stakeholder engagement, ensuring the effective use of funds and enhancing transparency

—     Proactively communicating the GCF’s ambition in terms of both scale and impact as well as its operational modalities with a view to enhancing predictability and facilitating access.”

The action plan contained in the SP lists key strategic measures that the Board intends to promote in the following five areas:

—     “Prioritizing Pipeline Development

—     Strengthening the Fund’s Proactive and Strategic Approach to Programming

—     Enhancing Accessibility and Predictability

—     Maximizing the Engagement of the Private Sector

—     Building Adequate Institutional Capabilities)”.

In the decision adopted, the Board requested the Secretariat to take necessary steps to implement the action plan in a gender-responsive manner, and report at each Board meeting on progress achieved.

Below are some highlights of exchanges that took place among Board members.

Highlights of exchange

Ayman Shashly (Saudi Arabia) said the current SP was a supply-driven plan and it should have been the other way round, i.e. driven by demand. The SP needs an assessment of what is needed out there and how we are going to supply funding. It needs to show that the Fund is driven by what is needed to be done, and not by what is available to finance, said Shashly. “This needs a change in mindset”, he added. Sashly also expressed the concern that the GCF, from a grant-based institution, is shifting to be a loans-based institution, with a few grants here and there.

Jorge Ferrer Rodriguez (Cuba) said the draft was far from being an SP. The need is to have a clearer roadmap or action-oriented document on how to achieve the goal, said Rodriguez. “While the SP repeats the goal of allocating USD 2.5 billion for 2016, there is no figure for 2017 or 2018. We also have to keep in mind the important issue of increasing the resources,” he added. Rodriguez also called for a clear operational roadmap with timelines and timeframes in the SP. He said that there is clarity needed on how to achieve the operational priorities of the GCF. “The national designated authorities (NDAs) should prepare annual plans, not the accredited entities. We need to cope with the fact that we don’t have enough resources, and we need to have operational and strategic priorities based on needs. The decision needs a reference to that,” said Rodriguez.

Yingming Yang (China) said the GCF should establish a knowledge-sharing platform, become an agent of change and be influential.

Tosi Mpanu Mpanu (Democratic Republic of Congo) said that on deepening engagement with private sector, there should be clear reference to private sector in LDCs and SIDs. “We should take higher risks, as the GCF will go where no one else has gone. Country ownership is an important issue and it is important to keep in mind indigenous peoples and local communities,” said Mpanu.

Diann Black-Layne (Antigua and Barbuda) said it was important to see the strategic approach to the UNFCCC. Many countries are experiencing loss and damage. The SP must include what the private sector will do in that aspect and acknowledge mitigation/adaptation and loss and damage in terms of the different thematic areas that needs the Fund’s attention, added Black-Layne. She also advised the Board against giving lip service to gender and to use it in the right context.

Richard Muyungi (Tanzania) said that the GCF must be seen in the context of the Convention and the Fund should be consistent with previously agreed instruments and guidance from the COP. “We need to know whether the SP will keep it in that context. We are focused on providing results in the results based approach, but my concern is whether we are able to address impacts of climate change in developing countries in terms of what their adaptation needs are. As much as we might think of results approach, we must think of impacts-based allocation as well,” said Muyungi.  He also called upon prioritizing pipeline development and clarity on the role of NDAs and focal points. “While the SP puts the onus of pipeline development on accredited entities, it is important to elevate the role of NDAs and to ensure that priorities of countries are articulated,” said Muyungi. Pointing to the refer ence in the SP on cutting-edge climate technologies, Muyungi said in adaptation, cutting-edge technologies are not necessarily required, but the need is for “something that is available and accessible”.

Colin Young (Belize) said the issue of investing in projects that are scalable should not disadvantage LDCs, SIDs and small countries. “The issue of scale should be extended to communities’ ownership and participation. If we focus on just scale, this would disadvantage smaller countries. On operational priorities, there is focus on scale, but small projects can have impacts too,” said Young.  

Ali’ioaiga Feturi Elisaia (Samoa) stressed that the Plan was missing reference to private sector in SIDs and LDCs. The focus on scale, as mentioned in the operational priorities of the SP, needs to be considered carefully. While the vision is to communicate the paradigm shift, the scale should also be seen in country-specific context,” said Elisaia. He also said that the GCF needed to significantly step up its efforts on pipeline development and readiness support.

Karsten Sach (Germany) said that the small group had discussed at length various issues such as pipeline development, measures to enhance readiness support, identifying national, regional priorities, identification of opportunities, operation of results-based payments and its applicability beyond REDD+. He also said that the group had talked of enhancing accessibility and predictability, what kind of project/programme the Fund requires, simplified processes and simplifying the proposals approvals process, and maximizing private sector engagement and institutional building. Sach added that the SP is a living document and that it should be reviewed as part of each replenishment process and taking into account COP guidance.

Caroline Lecrec (Canada) said the SP could put more emphasis on transparency, governance, results, learning and private sector engagement. Referring to the document as being “underwhelming” with respect to the private sector, Lecrec said she expects more on the issue. “We would be open to see reference to policies for contributions from alternative sources,” she added.

Jacob Waslander (Netherlands) called for greater emphasis on governance, private sector and gender components in the SP. “The investment behaviour of commercial banks should be changed and we should have our influence and push big players in the private domain. We want to monitor their behaviour and we could emphasize that notion stronger in the SP,” said Waslander. On the private sector, he added that there were important flows from the private sector and international capital markets and that their influence in getting transformational change should be acknowledged.

Anders Wallberg (Sweden) said it was time to move from gender sensitive to gender responsive approach. He was of the view that results-based finance should go beyond REDD+.

Anton Hilber (Switzerland) said that the results-based notion extended beyond REDD+ and that readiness projects should have results-based approach. “We will not have enough to finance all. So we need to do results-based allocation in terms of projected results,” said Hilber. He also added that it was a myth that adaptation could not be done with the private sector.

Leonardo Martinez-Diaz (USA) said the Plan should include something about strengthening knowledge platform and that the GCF should help operationalize components relating to the private sector. He added that scaling up did not mean large countries or large projects and the idea was for small concepts to grow. “The point is not to disadvantage any country,” he said.

(Edited by Meena Raman)