GCF - Green Climate Fund : Opportunities , Challenges and Risks

Green Climate Fund Opportunities, challenges and risks

By Meena Raman, TWN

background Parties agreed to set up the GCF in Cancun in 2010 at the insistence of developing countries  In 2011, the GCF was launched as the operating entity of the financial mechanism of the UNFCCC  The Board has 24 members, composed of an equal number of members from developing and developed country Parties  Current developing country board representing Africa are South Africa, Egypt and Benin. LDCs represented by Zambia with Bangladesh as alternative. 

The objective of the Fund  The

Fund , “in the context of sustainable development” is “to promote the paradigm shift towards low emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change.”

Other facts  

So far, about $10.2 billion have been pledged to the Fund for a period of 4 of years.

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This is about $2.5 billion a year.

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This is a far cry from the $100 billion pledged per year by 2020 in Cancun in 2010. However, it is still the largest multilateral fund for climate change.

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Most of the money pledged is to be in the form of grants and is not supposed to be earmarked, which gives the GCF the freedom to decide on its use.

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About only 1.9% has been put in the Fund so far. There is a deadline for 50% of the pledges to come in by 8 days!

Allocation of resources  The

Board decided that the aim is for a 50:50 balance between mitigation and adaptation over time;

 Aim

for a floor of 50% of the adaptation allocation for particularly vulnerable countries, including least developed countries (LDCs), small island developed States (SIDS) and African States;

 To

manage access to resources with a view to seeking geographic balance and a reasonable and fair allocation across a broad range of countries, while maximizing the scale and transformational impact of the mitigation and adaptation activities of the Fund;

 To

maximize engagement with the private sector, including through a significant allocation to the PSF;

 That

sufficient resources should be provided for readiness and preparatory support;

Fund for readiness The Board decided that “the Fund will provide readiness and preparatory support to: (i) enable the preparation of country programmes providing for low-emission, climate-resilient development strategies or plans; (ii) support and strengthen in-country, Fund-related institutional capacities, including for country coordination and multistakeholder consultation mechanisms as it relates to the establishment and operation of national designated authorities (NDAs) and country focal points; (iii) enable implementing entities and intermediaries to meet the Fund’s fiduciary principles and standards, and environmental and social safeguards, in order to directly access the Fund;

What money is available for readiness? 

All developing countries will have access to readiness support and that the Fund will aim for a floor of 50% of the readiness support allocation to particularly vulnerable countries, including small island developing States, least developed countries and African States;

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Readiness commitments to individual developing member countries will be capped at US$ 1 million per calendar year

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The Fund can provide up to US$ 300,000 of direct support to help establish an NDA or focal point and meet the costs of delivering on the Fund’s requirements

What is funding for?

Funding will be used to support (i) Supporting the NDA or focal point to engage with regional, national and sub-national government, civil society and private sector stakeholders with regard to the priorities of the Fund, taking a gender sensitive approach; (ii) Developing strategic frameworks for national engagement with the Fund (including country programmes, initial proposal approval process), building on existing strategies and plans, including low-emission development strategies, Nationally Appropriate Mitigation Actions, National Adaptation Plans, and National Adaptation Programmes of Action. There are initial general guidelines for the preparation of country programmes;

(iii) Enabling regional, national and sub-national institutions to meet the accreditation standards of the Fund, including for the fasttrack accreditation process in coordination with the NDA or focal point; and (iv) Supporting the development of initial pipelines of programme and project proposals, including the identification of appropriate financial instruments, that are aligned with the objectives and initial investment framework of the Fund and that will support a paradigm shift to low-emission and climate-resilient development;

degradation –plus) implementation;

Initial result areas of funding (a) Design and planning of cities to support mitigation and adaptation; (b) Energy efficiency of buildings and appliances; (c) Energy efficiency of industrial processes; (d) Low‐emission transport; (e) Low‐emission energy access; (f) Small‐, medium‐ and large‐scale low‐emission power generation; (g) Sustainable land use management to support mitigation and adaptation; (h) Sustainable forest management to support mitigation and adaptation including afforestation and reduction of forest degradation;

(j) Adaptation activities to reduce climate‐related vulnerabilities; (k) Selected “flagship” activities cutting across adaptation result areas; (l) Readiness and capacity building for adaptation and mitigation activities; (m) Scaling up of effective community‐based adaptation (CBA) actions; and (n) Supporting the coordination of public goods such as “knowledge hubs”.

GCF- Fund level impacts Mitigation Reduced emissions through increased low-emission energy access and power generation; Reduced emissions through increased access to low-emission transport; Reduced emissions from buildings, cities, industries and appliances; Reduced emissions from land use, deforestation, forest degradation, and through sustainable forest management and conservation and enhancement of forest carbon stocks; Â ď ˝Adaptation Increased resilience and enhanced livelihoods of the most vulnerable people, communities, and regions; Increased resilience of health and well-being, and food and water security; Increased resilience of infrastructure and the built environment to climate change threats; Improved resilience of ecosystems and ecosystem services ď ˝

Initial investment criteria 

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Impact potential : Potential of the programme/project to contribute to the achievement of the Fund’s objectives and result areas Paradigm shift potential: Degree to which the proposed activity can catalyse impact beyond a one-off project or programme investment

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Needs of the recipient: Vulnerability and financing needs of the beneficiary country and population

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Country ownership : Beneficiary country ownership of and capacity to implement a funded project or programme (policies, climate strategies and institutions)

Efficiency and effectiveness : Economic and, if appropriate, financial soundness of the programme/project 

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Sustainable development potential: Wider benefits and priorities

National Designated Authority (NDA) The GCF has received 83 initial National Designated Authority (NDA) or focal point designations as of 7 January.

Role of NDAs  Board will only consider funding proposals that are submitted with a formal letter of "no-objection", in accordance with the procedure approved.  No-objection has to be express and will be published on GCF website  There are best practices for the establishment and composition of national designated authorities and focal points  Best-practice options for country coordination and multistakeholder engagement

Implementing entities who can access funds The

recipient countries need to nominate competent subnational, national and regional implementing entities for accreditation to receive funding.

Entities

seeking accreditation will be assessed against the Fund’s fiduciary principles and standards and environmental and social safeguards (ESS)

Entities

will be accredited with certain fiduciary functions, size of project/activity within a programme, and environmental risk category.

Fit-for-purpose approach to accreditation  

So So far, far, 7 7 entities entities have have been been accredited accredited to to receive receive money money and and are: are:

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Centre Centre de de suivi suivi écologique écologique (CSE) (CSE) from from Senegal, Senegal, which which focuses focuses on on combating combating desertification desertification and protecting coastal areas; and protecting coastal areas;

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Fondo Fondo de de Promoción Promoción de de las las Áreas Áreas Naturales Naturales Protegidas Protegidas del del Péru Péru (PROFONANPE) (PROFONANPE) that that specializes in funding biodiversity conservation and managing protected areas; specializes in funding biodiversity conservation and managing protected areas;

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the the Secretariat Secretariat of of the the Pacific Pacific Regional Regional Environment Environment Programme Programme (SPREP) (SPREP) based based in in Samoa, Samoa, which focuses on protection and sustainable development of the Pacific region's which focuses on protection and sustainable development of the Pacific region's environment; environment;

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Acumen Acumen Fund, Fund, Inc., Inc., a a social social impact impact investment investment fund, fund, that that works works on on improving improving the the lives lives of of low low income income communities communities in in Africa Africa and and Asia Asia in in healthcare, healthcare, agriculture agriculture and and clean clean energy energy and and the the Asian Asian Development Development Bank Bank (ADB), (ADB), the the United United Nations Nations Development Development Programme Programme (UNDP) (UNDP) and and Kreditanstalt Kreditanstalt für für Wiederaufbau Wiederaufbau (KfW), (KfW), which which is is a a German German government-owned government-owned development development bank. bank.

Interim environmental and social safeguards Based on International Finance Corporation’s performance standards  Assessment and management of environmental and social risks and impacts  Labour and working conditions  Resource efficiency and pollution prevention  Community health, safety and security  Land acquisition and involuntary resettlement  Biodiversity conservation and sustainable management of living natural resources  Indigenous peoples  Cultural heritage 

Other concerns Decision-making - Consensus vs voting  Voting linked to contributions 

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Private sector – what private sector and whose private sector- TNCs vs micro,small and medium enterprises.

 Further

information can be obtained via the GCF website at  www.gcfund.org  For

articles on the GCF – visit  www.twn.my/