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FEATURE: The Green Climate Fund – baby steps towards delivery


CDKN’s Ari Huhtala and Christina Elvers report from the meeting of the Green Climate Fund Board in Zambia last week, where the first funding decisions were made.

The board of the Green Climate Fund (GCF) convened last week in Livingstone, next to the great Victoria Falls in Zambia, for its 11th Board Meeting. With only 20 days to go until the crucial COP21 in Paris, this meeting was set to send a strong signal to climate negotiators: Would the GCF move closer to being an institution that channels and delivers large flows of climate finance, or will this much-needed finance continue to trickle, much like the Victoria Falls themselves, due to the (climate change-induced) prolonged dry season?

The Board had set itself an ambitious agenda for this last week in Zambia: the first proposals were to be approved, more implementing entities accredited to the fund, a strategic plan to be adopted and a host of administrative matters to be decided upon.

The agenda item most carefully watched by board members and observers alike was the consideration of funding proposals for projects, the first to ever be considered by the GCF. However, those who expected substantial sums to flow were left disappointed from the outset: the Board considered only eight applications with a total modest budget of $168 million.

Originally, 37 proposals had been put forward to the GCF Secretariat, totalling in excess of $1.5 billion. However, the Secretariat explained that the majority of these proposals were not complete and did not fulfil all of its criteria and could thus not be put forward to the Board for consideration. One reason for this may be the rush to get the first batch of applications in, but it also demonstrates the capacity of countries to put forward fundable projects, and raises questions as to how they could be supported to improve proposal quality.

The proposals that were put forward did, however, represent a wide variety of geographies and issues. Submissions by countries from Peru to Fiji were considered. Proposals spanned climate resilient infrastructure in Bangladesh to a green bonds initiative in Latin America, by multilateral and national implementing entities. Some were in cooperation with the private sector.

The discussions around the proposals revealed tensions and the potential for trade-offs between getting things moving fast to ‘oil the new system’, and the expectation to come up with innovative, transformational projects that are embedded in robust national strategies, have impact at scale and unlock other resources at scale.

The discussion also highlighted other obstacles that make the Board’s work seem cumbersome at best. The Board debated for many hours about whether it even could approve any proposals without having certain policies in place. A rather curious situation arose in which a number of developing countries opposed approval, while developed countries pushed for it. In addition, the discussion highlighted the difficult dual identity of this being a Board of a development and financial institution at the same time. In this instance, developing country representatives argued for a broader perspective and to include projects which are development-focused but might not at first glance be climate projects, while developed world board members were more cautious.

In the end, at 4am on Friday morning, hours after the meeting was officially supposed to close, the Board approved all eight proposals with certain recommendations and conditions. It also agreed to establish a project preparation facility providing funding up to 10% of requested funding (with a maximum of $1.5 million), to help entities create fundable proposals. Find the decision on the funding proposals here.

In the spirit of moving climate finance, the Board was also set to accredit more implementing entities to the GCF. However, due to the dragged-out discussions on other agenda items (in particular the funding proposals), the Board decided in the early hours of Friday to postpone discussions on accredited entities to its next meeting.

The Board also endeavoured to agree on a strategic plan to clarify its vision. A first draft of the plan had been prepared by the GCF Secretariat and was presented to the Board. However, a number of board members dismissed the Secretariat’s proposal, a Board committee was established to draft a new version of the plan, and the decision postponed. This is not only of concern because the GCF still lacks a Strategic Plan; rather, it highlights a divide between the Board and the Secretariat.

Overall, this Board meeting left many wanting. While it was celebrated as a success that funding proposals were approved, the fact that no new entities were accredited due to time constraints left a bad taste in the mouths of many (not least the representatives of the candidate entities who came all the way to Zambia). If the Board wants to approve finance at scale, it needs to find a way to be more efficient in making this happen, specifically in accrediting entities and approving funding proposals, without compromising on its integrity or its goal to fund transformational projects. Climate change is a fact, and the pressure to speed up mitigation and adaptation action in developing countries is mounting. The GCF has the potential to respond to these challenges at scale. The lessons learned at this Board meeting will hopefully help it to meet the high expectations by both its users and financiers.

To find out more about the CDKN-supported Climate Finance Advisory Service, which provides developing country governments with briefings and advice on the international climate finance negotiations, please visit www.cdkn.org/cfas, where you can also find day-by-day briefings from the Livingstone GCF meetings.

 

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