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TWN Info Service on Climate Change (Dec16/01)
19 December 2016
Third World Network

GCF Board approves funding proposals worth USD 315 million

19 December, Apia (Indrajit Bose) — The Board of the Green Climate Fund (GCF) which is under the UN Framework Convention on Climate Change (UNFCCC), approved with conditions, 8 projects worth USD 315.2 million, at its 15th meeting held in Apia, Samoa, from 13-15 December.

With the latest set of approvals, the total that the GCF Board has approved for funding proposals this year amounts to around USD 1.3 billion.

The Board also elected Ayman Shashly (Saudi Arabia) as its new Co-chair from the developing country constituency for 2017, while Ewen McDonald (Australia) will continue as the co-chair from the developed country constituency for 2017.

The Board also accredited seven new entities to access the GCF Funds. (Access to the Fund’s resources is managed through national, regional and international entities and intermediaries that have been accredited by the Board.)

There were also some contentious issues such as a Bangladesh project submitted by the United Nations Development Programmes (UNDP), the terms of reference for the selection of the permanent trustee of the GCF and the issue of a simplified process for the approval of proposals.

On the funding proposals, the Board approved the following projects:

  • USD 133 million for ‘Catalyzing Private Investment in Sustainable Energy’ in Argentina with the Inter-American Development Bank (IDB) as the accredited entity (AE);
  • USD 17 million for the ‘Pacific Islands Renewable Energy Investment Programme’ with the Asia Development Bank (ADB), as the AE;
  • USD 28.2 million for ‘Accelerating the Transformational Shift to a Low-Carbon Economy’ in Mauritius with the UNDP as the AE;
  • USD 20 million for the ‘Business Loan Programme for GHG (greenhouse gases) Emissions Reduction’ in Mongolia with XacBank as the AE;
  • USD 57.7 million for ‘Integrated Flood Management to Enhance Climate Resilience of the Vaisigano River Catchment’ in Samoa with UNDP as the AE;
  • USD 12.2 million for ‘SCF Capital Solutions’ in South Africa with the Development Bank of South Africa (DBSA) as the AE;
  • USD 24.1 million for ‘Building Resilient Communities, Wetlands Ecosystems and Associated Catchments’ in Uganda with UNDP as the AE;
  • USD 23 million for ‘Climate Information Services for Resilient Development’ in Vanuatu with the Secretariat of the Pacific Regional Environmental Programme (SPREP) as the AE.

The Board considered and approved every project on its individual merit, departing from its previous practice of approving projects as a package.

A project from Bangladesh submitted by the UNDP proved contentious, as the Board could not agree on the project, titled ‘Enhancing Women and Girls Adaptive Capacity to Climate Change’. There were several disagreements among the Board members on the project, with developed country Board members questioning the “climate” component of the project.

Following initial discussions among the Board members, UNDP withdrew the project from being considered for funding. According to sources, ‘pressure’ was put on the entity to do so. The GCF Secretariat told members that it was informed that UNDP wished to undertake further work using the technical expertise of the Bangladesh government and collect more data and wished to bring back the project to the Board for its consideration at its next meeting.

The Board also had a rich exchange of views on policy issues related to funding proposals. (Separate articles on the Bangladesh project and policy discussions on funding proposals will follow).

Besides approving the projects, the Board accredited the following seven entities: Central American Bank for Economic Integration (CABEI); Foreign Economic Cooperation Office (FECO) of the Ministry of Environmental Protection of China; Fundación Avina (Fundación Avina); Korea Development Bank (KDB); PT Sarana Multi Infrastruktur (PT SMI) from Indonesia; Société de Promotion et de Participation pour la Coopération Economique (PROPARCO) of France; World Wildlife Fund, Inc.

In the relation to the programme on ‘Readiness and Preparatory support’, the Board decided that up to an additional USD 50 million would be made available.

(The Governing Instrument [GI] provides that the “Fund will provide resources for readiness and preparatory activities and technical assistance, such as the preparation or strengthening of low-emission development strategies or plans, NAMAs (nationally appropriate mitigation actions), NAPs (national adaptation plans), NAPAs (national adaptation plans of action) and for in-country institutional strengthening, including the strengthening of capacities for country coordination and to meet fiduciary principles and standards and environmental and social safeguards, in order to enable countries to directly access the Fund”.)

The Board also adopted a decision regarding the policy on indigenous peoples. In the decision adopted, the Board requested the Secretariat to prepare a fund-wide indigenous peoples’ policy, which it would consider at its 17th meeting in 2017. The Board also invited submissions from members/alternate members and observer organisations in relation to the development of the policy by the 16th meeting of the Board, scheduled in April 2017.

Selection of permanent trustee

The issue of the terms of reference for the selection of permanent trustee became a contentious issue during the meeting.

(The current interim trustee of the GCF is the World Bank. In 2011, the Conference of Parties to the UNFCCC invited the Board of the GCF to select a trustee through an open, transparent and competitive process. Consequently, the Board in 2014, agreed that the process to appoint the permanent trustee should be concluded no later than the end of 2017, so that the trustee can start its contractual agreement with GCF no later than April 2018.)

Co-chair McDonald said that the draft decision for the Board’s consideration did not propose the selection process but asked the Co-chairs to develop a decision-making process for the selection. The work would be delivered at the next meeting of the Board (the 16th meeting) and a decision would be taken on a process going forward.

Mikio Mori, the Board member from Japan raised what he termed a “practical issue” faced by “some donors including Japan”. He said that according to the Japanese legal structure, when a substantial sum of money is contributed to a fund, it has to be via established financial institutions and this also applies to GCF. He added that Japan is respectful of the requirement that the permanent trustee should be decided through an open and transparent bidding process, and proposed additions to the draft decision to reflect that the trustee selection criteria should ensure that donors maintain the ability to continue to contribute to the GCF, and that the assets of the GCF benefit from international privileges and immunities.

Ayman Shashly (Saudi Arabia) wanted to understand Japan’s concern and sought clarification on whether its proposal would amount to contributors making their contribution subject to a trustee of their satisfaction. He reminded the Board members that according to the initial resource mobilization policy of the GCF, members had agreed that there would be no conditions associated with the contributions in any way or fashion. “We reject any conditions on who is going to be the trustee,” emphasised Shashly.

Omar El Arini (Egypt) said he that he understood Japan’s concerns but that he did not see any nexus between the additions it proposed to the draft decision and the terms of reference for the selection of a permanent trustee. “This could be in the announcement made because when you invite bids, you state the qualifications,” said Arini.

Anton Hilber (Switzerland) and Karsten Sach (Germany) clarified that the matter was not about conditional contributions but about stating the difficulties in generating the contributions.

Jorge Ferrer Rodriguez (Cuba) added that it was a process decision and that substantive discussions should happen after the terms of reference are prepared. He added that he was unwilling to accept any restrictions or conditions imposed by contributors on the selection of the permanent trustee.

Mori in response stressed again that there was no other way Japan could contribute to the GCF if the permanent trustee was not an international financial institution. He suggested that the Board could proceed with an open and transparent procurement process but the outcome of the process should lead to an organization which would enable Japan to make its contribution.

Shashly responded that members were pre-judging the process. “We are going ahead of ourselves. Let us keep the decision simple. Let us get the bidders. Then we can decide based on the contributors’ legislative requirements,” he added.

In the decision that was finally adopted, the Board requested the Secretariat to submit to the Board by its 16th meeting, detailed terms of reference for the selection of the permanent trustee and a detailed plan for the competitive procedure for its selection. Reflecting the discussions, the Board also requested the Secretariat that in developing the terms of reference, the Secretariat should take into account: “the need for the assets of the GCF to be covered by the appropriate privileges and immunities”; and “the legal and institutional requirements of the contributors.”

Simplified approval process

Another issue that became contentious was the operational guidelines for the simplified proposal approval process. Departing from the usual practice, no document on the issue was presented to the Board for its consideration of the matter.

Co-chair Zaheer Fakir (South Africa) entrusted Nagmeldin Goutbi Elhassan (Sudan) and Juha Pyykkö (Finland) with the task of continuing with consultations on the issue.

However, the Board could not adopt the guidelines at the meeting due to a lack of consensus. Reporting on the consultations, Elhassan said time was not enough to reach a draft decision and the agreement (in the consultations) was that they continue with the consultations among Board members.

Responding on the report back by Elhassan, Ali’ioaiga Feturi Elisaia (Samoa) said that the matter had been an ongoing issue for a long time and that it was difficult for him to comprehend the difficulties (in reaching a decision). He stressed that the GI of the GCF required that there be a simplified approval process. “We do not want some of our countries or constituency (members) to not be able to access funding,” he stressed further.

(Clause 53 of the GI provides that “…The Board will develop simplified processes for the approval of proposals for certain activities, in particular small-scale activities.)

Elisaia further added that the Board, at its 13th meeting, had requested the Secretariat to prepare guidelines. “That is absent. No document has been presented to the Board. When we were asked to provide inputs, we provided those in time. My constituency has been waiting patiently and faithfully. We hope the Board is not being selective when it comes to this and just because this is a simplified approvals process. We need to think outside of our comfort zone to arrive at a decision that is opportune for everybody,” said Elisaia and stressed that it was of great concern that the Board could not agree on a simplified approvals process.

Diann Black-Layne (Antigua and Barbuda) also expressed her disappointment on not reaching a resolution on the matter. “When we look at the way this Fund is developing, we have to admit that there are preferences given to some type of projects, and accredited entities, and processes are made easier for them (in an apparent reference to international entities). Direct access entities have to fight harder. The fact is that when projects come from the World Bank or other development banks, Small Island Developing States do not benefit. That is why we fought for direct access. This is something that cannot be tolerated. If this continues, we cannot continue to approve projects,” said Black-Layne. “If we cannot make things simpler we have to ask where are we going,” added Black-Layne.

Fakir suggested consultations continue on the issue, and that the Co-Chairs present this matter to the Board at the 16th Board meeting, recognizing that this was an urgent matter to be dealt with.

Besides these matters, the other decisions adopted by the Board include: the terms of reference for the review of the financial terms and conditions of the GCF’s financial instruments; the terms of reference of the review of the structure and effectiveness of the independent Technical Advisory Panel; approval of the work plan and budget of the Independent Redress Mechanism Unit for 2017; and approval of the work plan and budget of the Independent Integrity Unit for 2017.

The 16th meeting of the Board will be held from 4-6 April 2017 at the GCF headquarters in Songdo, Korea.

(Edited by Meena Raman)

 


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