The Green Climate Fund starts to deliver

SmartEarth Managing Director, Noel Casserly, writes about the recent financing decisions of the Green Climate Fund and the importance of climate finance in the run up to the climate change summit in Paris in December.

With less than three weeks to go before the climate summit in Paris political pressure is growing on developed countries to show how they will meet their commitments in climate funding to help developing countries. French President, Francois Hollande, addressing a gathering of French ambassadors recently said that “If we are to succeed in Paris it will require not only political commitment, but also financing”. Developed countries have promised to mobilize $100 billion each year in climate finance for developing countries by 2020. Who pays, how to scale up, and the role of private finance remain crunch issues within the negotiations.

Expectations of the Green Climate Fund (GCF) are high. The Fund is mandated to play a central role in mobilizing and channeling the financial resources required for developing countries to build low-emission climate resilience. The Fund has received pledges of approximately US $10 billion, of which more than half have been signed into contribution agreements. The GCF is committed to delivering equal amounts of funding for adaptation and mitigation.

The GCF Board, at its meeting in Zambia last week (2 to 4 November), made the first financial allocations under the fund and approved US $168 million of GCF funding for eight projects and programmes. Those chosen in this first round have a wide range of objectives, from protecting Peruvian wetlands and developing an energy-efficiency green bond for Latin America to expanding the use of climate information and early warning systems in Malawi, and managing water shortages in the Maldives.

The projects include three in Africa, three in Asia-Pacific, and two in Latin America. The partnering entities for the projects include national, regional, and international bodies accredited to the Fund, from both the public and private sectors

A total of 37 funding proposals had been submitted to the GCF in 215, requesting close to US $1.5 billion in funding, and of these, 8 went forward to the GCF board with a recommendation that funding be approved. The others will take more time to come through the approval process.

What’s noteworthy is that most of the proposals (27) submitted to the GCF are from “international access entities” ie multilateral institutions and banks such as UNDP, Asian Development Bank, Inter-American Bank. Only one project approved for funding is partnered with a national implementing entity (Centre de Suivi Ecologique (CSE) in Senegal for a project to increase the resilience of ecosystems and communities through the restoration of salinized lands). The key point is that very few national governments have been accredited to date as national implementing entities.

To date, about 20 institutions have been accredited by the GCF and the Fund’s Executive Director, Héla Cheikhrouhou, was quoted recently as saying that “close to 100 well-established institutions from around the world are working towards becoming GCF accredited entities”.

Under the GCF modalities and procedures, entities which are already accredited under the Global Environment Facility, the Adaptation Fund or EUs DEVCO can avail of a fast-track accreditation process.

Direct access to climate finance, which helps to promote enhanced country ownership, remains a key issue for developing countries. Accreditation of national and regional implementing entities under the GCF will be a priority for many developing countries. Collaboration between already accredited national entities and prospective applicants for accreditation would help to make progress here (a nice example of this is the application for readiness support by the Democratic Republic of Congo involves a collaboration with CSE, the national implementing entity in Senegal)

The GCF makes available “readiness support” to help countries engage with the fund and to identify support interventions that will add value at the country level. About 28 countries have already applied for readiness support and to date, GCF has finalized readiness proposals with 17 countries for a total of US $ 4.6 million.  Readiness funding covers a number of areas including the strengthening of the national focal point, preparation of country strategies and programmes, information sharing etc. Typically, funding in the region of €50,000 to €300,000 is sought. Mali was the first country to receive funding under this stream.

The GCF sees readiness and preparatory support activities not as one-off measures, but part of an ongoing process to strengthen a country’s engagement with the Fund. The GCF focuses its readiness support on particularly vulnerable countries and will target a minimum of 50% of country readiness funding to Least Developed Countries (LDCs), Small Island Developing States (SIDS), and African States.

The GCF has invited every developing country to nominate a National Designated Authority (NDAs), who are the interface between each country and the Fund. These Focal Points communicate the country’s strategic priorities for financing low-emission and climate-resilient development across its economy. Over 130 countries have already selected NDAs to play this role. They are chosen by governments to act as the core interface between a developing country and the Fund. Most countries have someone in their finance, environmental or other relevant ministry. Both accredited partners and NDAs can submit funding proposals; NDAs have veto power over investments in their respective territories. NDAs provide broad strategic oversight of GCF’s activities in a country and serve as the point of communication with the Fund. Funding proposals are submitted through these NDAs, ensuring that investments are aligned with local needs and existing climate change planning.

With climate finance being a critical element of global climate talks, the approval of the first project proposals marks a major trust-building measure between developing and developed countries. Readiness and preparatory support will be crucial in helping countries to engage with the Fund and increase the number of national implementing entities. Support, capacity building, the sharing of experience as well as collaboration between already accredited national entities and prospective applicants for accreditation will be essential in moving the process forward.