TWN Info Service on Climate Change (Jul19/03)
12 July 2019
Third World Network

Great work of the Climate Fund should be narrative for doubling resources 

Kathmandu, 12 July (Prerna Bomzan): Developing country Board members of the UNFCCC’s Green Climate Fund (GCF) emphasized that the great work of the Fund thus far in supporting climate actions in developing countries and its impacts, should be the main narrative in replenishing its resources, at least to double that of the USD 10 billion amount of what was pledged in the initial resource mobilization (IRM).

They added that “the tremendous work done by the GCF” should be the “main narrative”, for securing more resources, instead of the “negative narrative” revolving around “one particular issue of governance”, (in an apparent reference on the need for procedures for voting in the absence of consensus on the Board in its decision-making process).

(According to sources, a decision on voting was a conditionality imposed by developed countries in making contributions to the Fund. The GCF Board had long and intense discussions over this in Songdo, and managed to adopt a decision that included procedures for voting).

Several developing country Board members also highlighted the need for the GCF to have a strategy to ensure that the UN-Secretary-General’s Climate Summit to be held in September in New York also shows “ambition” in the area of financial support from developed to developing countries and not just focus on ambition in mitigation actions. 

These views were expressed during the discussion on matters related to the first formal replenishment of the GCF at its 23rd Board meeting in Songdo, South Korea, held from 6-8 July.

(The first formal replenishment process was launched at the Board’s meeting in October 2018 in Manama, Bahrain, given the Fund’s decreasing resources and the conclusion of its IRM programming period between 2015-2018).

At its recent 23rd meeting, the Board discussed the following matters: (a) a report on the replenishment process; (b) the period of the first replenishment; (c) update to the policies for contributions, and (d) the strategic programming document outlining scenarios for the GCF replenishment.

Report from the replenishment process

Board Co-Chair Nagmeldin Goutbi Elhassan Mahmoud (Sudan) invited Johannes Linn, (the Global Facilitator appointed by the GCF to help oversee the first formal replenishment process, and who is from the Brookings Institution), to provide an update to the Board.

Linn reported that the first consultation meeting was held on 4-5 April in Oslo, Norway, where the participants consisted of “27 potential contributors” along with a Co-Chair from the GCF Board, 8 Board members, one observer each from the UNFCCC, the Global Environment Facility and civil society organisations, the GCF Executive Director, staff and trustee. The meeting was opened by Norway’s State Secretary for International Development, Aksel Jacobsen, who announced that his country will double its contribution to the GCF.

Linn reported that “contributors stressed the importance of filling policy gaps including decision-making in the event that all efforts to reach consensus have been exhausted”.

He also reported that participating Board members at the Oslo meeting noted that improving the capacity and delivery of the GCF needed to be matched by the urgency and scale of financial resources contributed to the Fund. They also added that the policy gaps in the GCF should not be a hindrance to the replenishment process, said Lin further. It was also noted that the track record of the IRM phase demonstrated that the Fund was ready to deliver.

On the strategic programming for the first replenishment, Linn reported that “potential contributors stressed that the business-as-usual scenario was not an acceptable option and that the Fund needed urgently to pursue the more ambitious scenarios (identified in the programming document) commensurate with global climate goals and the latest science,” and added that “several Board members commented on the need for a sizeable GCF-1 (first) replenishment in this context”.

The Global Facilitator also said that participants agreed that the second consultation meeting, to be hosted by Canada, will take place on 29-30 August. He also said that the dates of the pledging conference for the replenishment and the Board meeting that will endorse the outcome remains to be considered and decided.

Following the report provided, Board member, Ayman Shasly (Saudi Arabia) said that the first consultation meeting (in Oslo) was an “eye opener” on the issues surrounding the contributions. He said that participants were “not in a positon whatsoever to be able to have a target” in terms of the sufficiency of the financing needed “even after considering that the Secretariat has the capacity of executing projects worth USD 3-5 billion per year which would roughly amount to USD 15 billion when multiplied by 4 years.” Shasly further mentioned that the “clarity on threshold of the trigger for the second replenishment” was also not addressed and lamented that with “no target and no trigger, we are not sure of how the process will be going forward.”

Shasly, also said that said that “all the good work” of the GCF demonstrated until now in terms of “impact on adaptation and mitigation” and how the IRM was “utilised in the right way” should be the “storyline” to drive the replenishment process.

Wael Aboul-Magd (Egypt) said that it was important to highlight the role of the GCF in the enhanced climate regime under the Paris Agreement (PA), with the Fund being the “main channel to support the implementation of the PA”. Referring to the UNS-G Summit, he reminded the need for “increasing ambition across the board,” including that of “support”. He added that there was a clear need to indicate the “doubling” of the resources from that of the IRM. (During the IRM, USD 10 billion was pledged). The Egyptian member also highlighted the importance of “facilitating access” of the resources, saying that this was stressed by the African heads of states at their latest summit.

Aboul-Magd echoed Shasly and said that “the tremendous work done by the GCF should be the main narrative”, expressing concerns about the “negative narrative” revolving around the replenishment process with “linkages and conditionalities to one particular issue of governance” (in an apparent reference to the decision on decision-making in the absence of consensus). 

Richard Muyungi (Tanzania) underlined the need to “link” the replenishment process to the UN Secretary-General’s Climate Summit to encourage heads of states and governments to give priority to the replenishment.”  He seconded Shasly on the good work done by the GCF and that the “link” to the September Summit should be based on “this storyline”.

Paul Oquist (Nicaragua) also flagged the need to have a “strategy” for the September Summit.  Jeremiah Garwo Sokan (Liberia) said that the first phase of replenishment “needs to be ambitious,” which must take into consideration the needs of developing countries. Ali Gholampour (Iran) also said that “ambition is important not only for mitigation actions but also for support,” adding that it is a “legal and political commitment by the developed countries” to provide sufficient resources for the replenishment.

Hans Olav Ibrekk (Norway) said it Linn’s report was “comprehensive and balanced” report and underscored that Norway is “doubling” its “contribution” in its own national currency. Sue Szabo (Canada) expressed “strong commitment of Canada for climate finance” and looked forward to hosting the second consultation meeting (to be held end of August).

Linn in response, assured members about the “important linkage” between the various meetings and further stated that the “review of the Fund” demonstrates that “further steps will be very helpful to help the Fund be effective on the ground”. He added that “further improving the effectiveness is a win-win for recipient countries” and will also “result in more money available to deliver”.

In response, Shasly (Saudi Arabia) took the floor again stating that there was “an implied notion that the contributions will be conditioned” and stressed that developing countries “will not accept conditioned contributions”.

GCF Executive Director Yannick Glemarec in his response said that the Secretariat has developed an outreach strategy for the New York Summit including a series of briefings with heads of state.

Strategic programming document outlining scenarios for the GCF replenishment

Co-Chair Josceline Wheatley (United Kingdom) invited the Secretariat to present the latest strategic progamming document which incorporated inputs from the 22nd Board meeting and views provided in the first replenishment consultation in Oslo, including the initial findings of the Independent Evaluation Unit’s (IEU) performance review of the GCF.

The document presented by the Secretariat recommended a ‘pursuit of impact scenario’ with the following elements: strive for more ambitious impact scenario; capture the GCF’s unique focus on paradigm shift; strengthen the approach to adaptation; refine outcome areas and programming directions. The scenario was underpinned by a “theory of change” with “four key outcome areas” applied across mitigation and adaptation actions: viz. (1) transformational planning and programming; (2) catalyzing climate innovation; (3) mobilizing climate investments at scale and (4) expanding and replicating knowledge. The focus areas of the adaptation and mitigation actions were on the following: built environment (infrastructure); energy and industry; livelihoods; land-use, forests and ecosystems.

Lars Roth (Sweden) welcomed the “focus on maximising the effectiveness” of the Fund and the need to address the “strengthening of the operations of the Fund”. He stressed on   GCF’s “added value in the wider landscape” urging for “catalysing climate finance, both, public and private at national and international levels”.

Roelof Buffinga (Netherlands) welcomed the “theory of change” and stated that the “GCF funding needs to be additional to private finance”.  Hiroshi Matsuura (Japan) welcomed the theory of change and hoped the document overtime would be useful in realising the “quality of GCF’s investments”.

Hans Olav Ibrekk (Norway) said that the focus on adaptation was important. Stefan Schwager (Switzerland) said that the performance review should be reflected in the document and welcomed the theory of change to “unlock” the GCF’s potential. He expressed concerns that “mobilisation should be aspirational with no undue pressure”.

Frank Fass-Metz (Germany) supported the proposed key outcomes and the programming directions. He wanted “focus much more on institutional transformation” and supported the GCF “taking more risks”. He also added to preserve the 50:50 ratio in allocation of resources between mitigation and adaptation actions.

Cyril Rousseau (France) supported the ‘pursuit of impact’ scenario and added that there was need to “further build on the performance review” by the IEU and to “fill the policy gaps to give clear guidance on funding proposals”. He supported “institutional transformation” as well as an increase in the share of adaptation to vulnerable countries beyond the present 50 per cent allocation.

Nauman Bhatti (Pakistan) highlighted that the risk taking by the GCF was very low in the document and he “did not see a clear reference on how to enhance direct access”. He also stressed the need for “clarity on balance” between mitigation and adaptation.

Jorge Ferrer Rodriguez (Cuba) referred to the struggle of the smaller economies which have “low-chances” of securing finance. In this regard, he called for caution on ideas which would exclude the smaller economies automatically. He also reiterated that any concepts which were previously rejected by the Board should not be brought back into the document, referring to the issue of co-financing which was not accepted by the Board in the past.

Wael Aboul-Magd (Egypt) welcomed the “strengthened approach on adaptation needs”. and sought “clarity” on the “instruments” to be used, recalling that “many countries in the developing world are heavily indebted”, and therefore, the GCF should not be increasing the indebtedness of already indebted countries.

Ayman Shasly (Saudi Arabia) cautioned that the theory of change and the ‘pursuit of impact’ scenario would “endanger the character and objective of this Fund”. He did not support the suggested scenario and urged for the continuance of the current approach. He added that the focus of the document was on a “mitigation-centric programming,” that can change the 50:50 allocation between mitigation and adaptation. He said further that the document changes the nature of the instruments to be used with “no more grants”.

The Secretariat in response, clarified that the scenarios are “not for decision here” but were presented as “proposals for deliberations”. Shasly questioned about the timing of the decision on the document.

Co-Chair Wheatley clarified that the current version is to serve as input and to “incentivise contribution” and will come back as part of the replenishment report.

Shasly underlined that the “storyline has to be set right” and “the way document is written now, it is hard to accept it”. Co-Chair Wheatley said that there will be some variation in the next version.

Period of the first replenishment of the GCF

The Board also agreed in a decision which was adopted that the period of the first replenishment would be for a four-year period from 1 January 2020 to 31 December 2023.

Edited by Meena Raman