TWN Info Service on Climate Change (Apr17/01)
11 April 2017
Third World Network

2017 to be year of implementation of Green Fund projects on the ground – says Board Co-chair

11 April, Delhi (Indrajit Bose) — The year 2017 will be a “year of implementation” according to Ayman Shashly (from Saudi Arabia) who is the new Co-chair of the Green Climate Fund (GCF), under the UN Framework Convention on Climate Change (UNFCCC).

The other Co-chair of the GCF is Ewen McDonald from Australia.

Shashly said that the slogan of 2017 being a year of implementation is to set an objective for the Board to see funds coming out of the GCF to approved projects for their execution on the ground. He called on the Board to work towards that objective as he opened the 16th meeting of the Board held in Songdo, South Korea, from 4-6 April.

During the meeting, the Board approved with conditions, 8 projects worth USD 755 million. The projects approved are as follows:

·         USD 265 million for the ‘GEEREF NeXt programme financing renewable energy and energy efficiency projects’ across five regions in Africa; Latin America and the Caribbean; Middle East and North Africa; Non-European Union Eastern Europe / Central Asia; and the Pacific with the European Investment Bank (EIB) as the Accredited Entity (AE);

·         USD 154.7 million for the ‘Renewable Energy Financing Framework programme’ in Egypt with the European Bank for Reconstruction and Development (EBRD) as the AE;

·         USD 50 million for the ‘Scaling up Hydropower Sector Climate Resilience project’ in Tajikistan with the European Bank for Reconstruction and Development (EBRD) as the AE;

·         EUR 102.7 million for the ‘Simiyu Climate Resilience project’ in Tanzania with KfW development bank (KfW) as the AE;

·         EUR 20 million for the ‘Irrigation Development and Adaptation of Irrigated Agriculture to Climate Change in Semi-arid Morocco project’ with Agence Française de Développement (AfD) as the AE;

·         EUR 31.97 million for the ‘Saïss Water Conservation project’ in Morocco with the (EBRD) as the AE;

·         USD 86 million for the ‘Tina River Hydropower Development project’ in the Solomon Islands with the World Bank as the AE; and

·         USD 34.35 million for the ‘Ground Water Recharge and Solar Micro Irrigation to Ensure Food Security and Enhance Resilience in Vulnerable Tribal Areas of Odisha’ in India with the National Bank for Agriculture and Rural Development (NABARD) as the AE.

The Board members were, however, divided on a project from Ethiopia, titled ‘Responding to the increasing risk of drought: building gender-responsive resilience of the most vulnerable communities’. There was no consensus to approve it. This is the first time that the Board decided not to approve a project. The Board discussion on the matter was mired in controversy over the various options the Board had in considering funding proposals. (A separate article on the Ethiopia project will follow.)

With this batch of funding approvals, the total amount of approved funding by the GCF to date stands at USD 2.2 billion to 43 projects and programmes. Prior to this meeting, the number of projects approved was 35.

Board members were informed by the Secretariat that the amount of money disbursed thus far to approved projects was however, only USD 5.5 million. According to the information provided, this was primarily due to the non-fulfillment of conditions that were imposed on the projects when they were approved by the Board, or limited progress made in legal arrangements relating to the Accreditation Master Agreements (AMAs) and Funded Activity Agreements (FAAs) that enable the funds to be transferred to the AEs or the implementing entities.

For instance, the Board was informed that of the 35 projects approved until the 15th GCF Board meeting, 11 AMAs were yet to be executed; 32 FAAs had not been executed; and 30 projects’ project-specific conditions were not fulfilled.

Status of the Fund’s resources

The Board also discussed the status of the initial resource mobilization and took note of the report prepared by the Secretariat on the matter.

According to the document prepared by the Secretariat, of the total USD 10.3 billion pledged to the GCF by countries, the signed pledges amounted to USD 10.1 billion equivalent.

For 2017, the GCF Secretariat estimates that the total amount of resources available to make funding decisions would be USD 4.3 billion. This includes cash installments, loans and promissory notes.

Sources told TWN that while cash to be disbursed and promissory notes are confirmed, in that they will eventually flow into the GCF, the signed pledges depend on the conditions in the contribution agreement a country signs with the GCF Secretariat.

For instance, in the case of the US contribution agreement, the USD 3 billion pledge is conditioned on the “availability of funds”. The US has thus far contributed only USD 1 billion, and there are concerns that no further contributions will be made under the Trump Presidency.

Permanent Trustee

The Board also adopted a decision in relation to the ‘competitive process’ for the selection of the permanent trustee. (The current interim trustee is the World Bank and the Board is supposed to put in place a competitive process for the selection of the permanent trustee.)

The Board established an ad hoc ‘Trustee Selection Committee’, with Zaheer Fakir (South Africa), Omar El Arini (Egypt), Mikio Mori (Japan), and Larry McDonald (the US), as the members of the ad hoc committee.

The committee met during the sidelines of the 16th Board meeting to discuss the organization of work and programme of activities. Fakir reported back to the Board that the committee would present its work at the 17th meeting and the terms of reference and selection criteria for the permanent trustee would be decided in between meetings.

Independent Redress Mechanism

The Board also took note of the revised terms of reference (ToR) of the Independent Redress Mechanism (IRM), which is a mechanism instituted to receive complaints related to the operations of the Fund and which would evaluate and make recommendations to the Board.

Lalanath de Silva, head of the IRM, informed the Board that following extensive consultations with different stakeholders, the updated terms of reference for the IRM were prepared. Silva also said that no fundamental changes were made to the two functions of the IRM, which are to reconsider rejected proposals; and to address complaints about grievances from people affected by projects of the Fund.

Among other revisions, the modalities for affected persons or groups have been changed. The changes now allow individuals to file complaints; authorized representatives could be appointed by complainants; and the confidentiality of complaints would be maintained.

Several Board members responded to the revised terms of reference of the IRM.

Omar El Arini (Egypt) reminded the Board that the IRM is not going to be a court of appeal and added that the GCF should use structured dialogues and workshops to clearly communicate the functions of the IRM and how it will do its work.

Nauman Bashir Bhatti (Pakistan) said that the ToR did not envisage a modality for a National Designated Authority (NDA) or a government to approach the IRM for issues arising during the project implementation phase and that this should be included in the terms. Just because the government or NDA has issued a no-objection letter during the submission of the proposal should not mean they cannot raise environmental and social safeguard issues should they develop during the life of a project, said Bhatti. This modality should be relevant in redress issues arising in projects having transboundary impacts too, added Bhatti.

Yang Weifeng (China) queried as to whether the IRM could ask the Board to reconsider its decision in the event a proposal was denied due to a lack of consensus on the Board due to political reasons or non-policy related issues.

Diann Black-Layne (Antigua and Barbuda) said that the GCF is not a compensation fund but that was a Fund designed to implement international law (referring to the UNFCCC). She stressed that in the policy discussions it should be underscored that for whatever reasons a project may be rejected, it was the prerogative of the Board to do so, and not the GCF Secretariat or the independent Technical Advisory Panel (iTAP). As long as projects fit the criteria of the Fund, they should come to the Board, she added. “We are a new Fund. Although we would like to say that all our decisions are based on technical reasons and fiduciary standards, it is clear that that is not the case. There are also political reasons we are using to make Board decisions. The quicker we can get the IRM up and running the better it is for us to start acting as a Board that is responsible to and accountable to the Conference of the Parties (COP) (to the UNFCCC). Reconsideration of funding decisions is very important to this Fund and to the COP which it serves and we are hoping that the spirit in which we heavily negotiated the arrangements between the Fund and the COP must be respected at all times,” said Black-Layne.

Anton Hilber (Switzerland) said he supports the IRM to be active in all cases of adverse impacts from GCF activities and not just those related to explicit policies and that the IRM should be able to initiate investigations. As the project cycle evolves, the IRM should be closely linked to project termination/cancellation policy, which the Board did not have and which the Board would need to develop.

Larry McDonald (US) wanted the decision in relation to the IRM to reflect that funding decisions are reconsidered when a denial was based on non-compliance of policies and procedures of the GCF, and not because there was disagreement over the judgement of the Board.

Co-chair Ewen McDonald asked the IRM head to respond to questions and comments of Board members offline. The matter did not come up for discussion again during the meeting. 

Besides these matters, the Board decided on the work programme of the Secretariat for 2017 along with the adjusted administrative budget and the interim work plan and interim budget of the Independent Evaluation Unit (IEU).

There are four main elements of the work plan of the IEU for March to June 2017 which covers the following: (1) preparing the outline of the independent evaluation policy; (2) establishing the IEU; (3) building and strengthening evaluation capacity; and (4) identifying key elements of IEU’s annual and rolling three-year work plan.

Several crucial matters on the agenda could not be discussed due to time constraints. The items included policy matters related to the approval of funding proposals; policies on the formal replenishment process; update on the GCF risk management framework; update on matters related to accreditation framework and policy; status of accreditation matters; and performance criteria and measurement procedures for Board-appointed officials.

The Board also decided that the 17th meeting of the Board will be held in Songdo, South Korea in July, and that the 18th meeting will be held in Egypt in October.

(Edited by Meena Raman)