TWN Info Service on Climate Change (Mar19/01)
5 March 2019
Third World Network

GCF Board approves projects worth USD 440 million

5 March, Songdo (Indrajit Bose)- The Board of the Green Climate Fund (GCF) approved, with conditions, nine projects worth USD 440 million at its 22nd meeting in Songdo, Republic of Korea, from 26 to 28 February.

It also appointed French national, Yannick Glemarec, as the new Executive Director of the Fund’s Secretariat.

Glemarec was reportedly selected from a final shortlist of three candidates who were interviewed by the Board at the Songdo meeting. In his previous role, Glemarec was Deputy Executive Director of UN Women.

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

·         USD 96.5 million for reducing emissions from deforestation and forest degradation (REDD-plus) for results achieved by Brazil in the Amazon biome in 2014 and 2015 with United Nations Development Programme (UNDP) as the accredited entity (AE);

·         USD 8.0 million for a climate resilient agricultural practices project titled ‘Resilient Rural Belize’ (Be-Resilient) with International Fund for Agricultural Development  (IFAD) as the AE;

·         USD 29.6 million for Mali solar rural electrification project with Banque Ouest Africaine de Developpement  (BOAD) as the AE;

·         USD 18.8 million for Promotion of Climate-Friendly Cooking: Kenya and Senegal, with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) as the AE;

·         USD 100 million for Nigeria Solar IPP Support Program for the financing of long-term financing Solar IPP projects, with Africa Finance Corporation (AFC) as the AE;

·         USD 69.6 million for a climate finance facility to scale up solar energy investments in Francophone West Africa LDCs in Benin, Burkina Faso, Guinea-Bissau, Mali, the Niger, and Togo with West African Development Bank (BOAD) as the AE;

·         USD 100 million for the generation of renewal energy projects in South Africa with Development Bank of Southern Africa (DBSA) as the AE;

·         USD 9.0 million for enhancing climate resilience of rural communities in central and north Benin through the implementation of ecosystem-based adaptation in forest and agricultural landscapes with UNDP as the AE; and

·         USD 8.9 million for building the resilience of communities living in landscapes threatened under climate change through an ecosystems-based adaptation approach in Namibia with Environmental Investment Fund (EIF) as the AE

The Board also discussed a document on scenarios for the GCF’s first formal replenishment. Following the discussions on the document which saw many concerns raised, developing country members proposed that there be a decision adopted to help the Secretariat and the Board to understand better some of the key elements that they wanted to see in relation to the replenishment issue. However, there was no agreement on the matter and further discussions will take place at the next meeting of the Board. (See further details below).

(Under the GCF’s replenishment process, an initial organizational meeting was held in Nov. 2018 in Bonn, Germany. The first consultation meeting is scheduled for April in Norway, with a second consultation in August, followed by a pledging conference in October 2019).

The Board also accredited nine 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.) The new entities accredited are:

·         Alternative Energy Promotion Centre (AEPC) based in Nepal;

·         Environmental Project Implementation Unit of the Ministry of Nature Protection of the Republic of Armenia;

·         Fondo Mexicano para la Conservación de la Naturaleza A.C. based in Mexico;

·         National Fund for Environment and Climate of Benin;

·         Pacific Community in New Caledonia;

·         JS Bank Limited based in Pakistan;

·         Attijariwafa Bank based in Morocco;

·         Macquarie Alternative Assets Management Limited based in Australia and

·         Luxembourg Agency for Development Cooperation based in Luxembourg.

Accreditation of the Nepali entity, AEPC, proved controversial as Board members from Norway and Denmark said that the entity would have to return outstanding liabilities to these countries before it could get GCF resources and also wanted this condition to be met prior to the signing of the accreditation agreement between the GCF and the entity.

Developing country board members led by Saudi Arabia strongly objected to this. Ayman Shasly (Saudi Arabia) said that he would not accept any sort of mixing of the accreditation process with a particular case of a country and an entity. After further consultations, the condition was removed and AEPC’s accreditation came through.

The Board also adopted a host of policy decisions at the meeting. These included decisions on readiness and country programming; cancellation and restructuring policy; investment criteria indicators; and policy on the protection from sexual exploitation, sexual abuse and sexual harassment (separate articles to follow on some of the issues).

A few issues such as decision-making in the absence of consensus, guidelines on decisions without a Board meeting and updated gender policy and action plan proved contentious and no agreement could be reached on these issues. These were deferred to the next meeting of the Board.

During the Board meeting, Co-Chairs Nagmeldin Goutbi El Hassan Mahmoud (Sudan) and Josceline Wheatley (UK) opened the agenda items and tasked small groups to work on the issues along the side lines of the meeting.  These issues have been on the Board’s agenda for a while now, and discussions especially on the decision-making in the absence of consensus have happened in the Board in the past, but with no resolution.

According to sources, the scope of the decision-making policy and the voting mechanism proved contentious. Several developing country Board members were of the view that the guidelines on decision-making in the absence of consensus should apply to only funding proposals, whereas developed country Board members were of the view that the guidelines should apply to both policies and funding proposals. It was also not clear what type of voting procedures should be applied.  Some of these disagreements continue from previous deliberations on the issue (See related TWN update).

Replenishment issue

A document on strategic programming outlining scenarios for the GCF replenishment was prepared by the Secretariat for the Board meeting. The document comprises sections on needs of developing countries, ambitious mitigation and adaptation scenarios and GCF’s implementation potential as well as programming scenarios for GCF’s replenishment.

Some of the key messages that emerged from the document include the following: that the needs of developing countries are urgent and significant; there is significant potential for the GCF to raise ambition to deliver greater impact; and learning and evolution of the Fund is needed for it to deliver its full potential.

During the discussions on the subject, it emerged that developed countries, while acknowledging the growing needs of developing countries, said that the focus must be, among other matters, on the Secretariat’s capacity to deliver; to review feedback on implementation and results of the GCF’s investments; improving requests for proposals; involving more private sector and diversified use of instruments.

Developing country Board members raised substantive issues with the document, such as concerns on the use of several terms and concepts that were not clear or did not enjoy consensus in the Board. These included terms such as ‘climate rationale’, ‘good governance’, ‘markets’, and ‘co-financing’. They also stressed on the need to have references to science, adaptation impact potential and reducing the risk of loss and damage, and how the GCF can support countries articulate their needs. Several developing country members also said that attention must be given to adaptation and not just mitigation.

Jorge Ferrer Rodriguez (Cuba) said the document referred to ‘climate rationale’ several times and clarified that there is no agreement in the Board on the definition of ‘climate rationale’. He also said that the document referred to ‘markets’ several times and reminded the Board that “this is not the World Trade Organisation” and that “we are not here to open up to markets”. Rodriguez also raised concerns on the use of the term ‘good governance’ and asked members what they mean by the use of that term and who defined it. He urged members to “refrain from using political concepts that are not clear” or that have not been agreed to.

(In the past, developed country Board members have raised “governance” issues with the Fund and held hostage progress on replenishment as a result of lack of “good governance”. See related TWN Update.) Rodriguez also said that repeated references to ‘co-financing’ in the document were not helpful and that for the public sector projects, co-financing should be there where possible instead of it becoming a condition for a project to be brought to the GCF.

Shasly (Saudi Arabia) said the document “skewed the storyline” and considered the Fund as a mitigation-only fund. He stressed that the Fund is here to support developing countries in mitigation and adaptation.

Wael Aboul-Magd (Egypt) also raised concerns with references to co-financing. He also said that the objective of the Fund is to be transformational; hence, efficiency is not a dollar per tonne matter only. Referring to references to insurance and bonds in the document, Aboul-Magd said that the issues must be deliberated upon very carefully first. He also said that the sense of a mitigation-centric approach from the document was very clear and while the document mentions several times that there should be balance between mitigation and adaptation finance, in practice, the principles in the document did not quite reflect the balance.

Nauman Bashir Bhatti (Pakistan) said the document should have an enhanced focus on what are the actual needs of developing countries and that the Fund should not be moving away from its Strategic Plan, which certain elements in the document reflected. He also said that country driven transformation were confined to only “catalytic investments”, which should not be the case. He also added that there should be more focus on the additionality, enablement and how the Fund can enhance the risk appetite for both public and private sector. Bhatti also said the guidance from the UNFCCC’s Conference of the Parties (COP) should be taken into account in the replenishment process.

Ali Gholampour (Iran) said technology needs assessment was missing from the document, which the Secretariat should focus on.

Following the discussions, developing countries proposed a draft decision on the issue.

On behalf of the developing country constituency, Richard Muyungi (Tanzania) said that replenishment needs guidance and because of the importance of the process and the many ideas, there may be need for guidance on how to shape the document. “We should provide a decision based on document to help the Secretariat and the Board to understand better some of the key elements that we want to see,” said Muyungi.

While the draft decision was not made public, sources revealed to TWN that the draft decision outlined the urgency of the first formal replenishment process, spoke to the needs and priorities of developing countries, balancing financing for mitigation and adaptation, and outlined potential programming and managing capacities of the Secretariat and the increasing needs of developing countries, among other matters.

Following closed door consultations on the issue by Co-chairs on the draft decision, Co-Chair Wheatley delivered a long statement to the Board, saying that many important points were raised in the discussions and the draft decision.

He added that “There is agreement that replenishment is a critical matter for the Fund this year. We took a critical decision on this last year in which we all stressed the importance and urgency of the GCF conducting a successful and ambitious first replenishment. The Board also agreed that replenishment should take into account the stated ambitious actions and contributions of developing countries. It also stressed the urgency to reach pledges by October 2019. It also agreed that replenishment would be informed by a strategic programming document which would be guided by ambitious mitigation and adaptation scenarios, which take into account the needs of developing countries.”

He said further that “Given that the Board had already expressed an opinion on those items, Co-Chairs consulted on the proposed decision. There is not a shared view to have a decision on this matter at this time in view of the fact that principle notions proposed in the draft had already been taken up through previous decisions and will continue to be taken up through the Board’s ongoing consideration, including in the updated Strategic Plan. That document will reflect the Fund’s mandate as an operating entity of the financial mechanism of the UNFCCC and the Paris Agreement. It will also reflect the Fund’s more mature stage of operations and it will set out how to achieve continuous improvement of the GCF’s accessibility, efficiency, effectiveness, impact, scale and reach. So, as we have agreed the Board will have a discussion on updated Strategic Plan and the next step is for all stakeholders to make submissions by 30 April 2019 in that connection. And we will have further discussion on these issues at B.23 (the next board meeting). At this point in time, and given the previous decisions of the Board and the ongoing mandates of the Board, we could not find convergence that it was best to arrive at a new decision at this point but rather to continue under the mandate of existing decisions.”

It is expected that another version of the document, taking into account the views expressed during the meeting, will be issued and discussed at the next board meeting, which is scheduled from 6-8 July in Songdo, South Korea.

(More articles to follow).

Edited by Meena Raman