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...................Financing Ambitious Climate Action: Part II - the Green Climate Fund

Mahlet Eyassu MelkieCVF SeminarTagaytay, Philippines13 August 2016

Slide

Outline of Presentation

• Landscape of Climate Finance

• Paris Agreement in relation to the Financial Mechanism of the Convention

• Climate financing readiness and access to the Green Climate Fund (GCF) and other funds

• Supporting NDCs

• Strengthening links and synergies between the CVF and V20 for enhanced financing responses

• Questions for Consideration

213 August 2016

Slide 313/08/16

UNFCCC

GCF

Mitigation & Adaptation Window

PSF

GEF

Special Climate Change Fund (SCCF)

LDC Fund

Adaptation Fund (AF)

Funds available under the Convention and the Protocol

Slide 413/08/16

Broader Landscape of Climate Finance

Slide

Paris Agreement in relation to the Financial Mechanism of the Convention

• FM of the Convention, including its operating entities, to serve the Paris agreement (Article 9.8).

• The GCF and GEF, as well as the LDCF and the SCCF to serve the Paris Agreement (para 58 of 1/CP.21).

• Adaptation Fund may serve the PA, subject to relevant decisions of the CMP and the CMA (para. 60 of 1/CP.21); Parties to the Kyoto Protocol invited to make a recommendation to the Conference of the Parties to the Paris Agreement (CMA1) in this regard.

• GCF requested to expedite support for the formulation and implementation of NAPs (para 46 of of 1/CP.21).

• Institutions serving the Agreement shall aim to ensure efficient access to financial resources through simplified approval process and enhanced readiness support in particular LDCs and SIDS (Article 9.9 & para 64 of 1/CP.21).

513/08/16

Slide

Green Climate Fund (GCF)

CO

P 1

6 (

20

10

) • Agree to establish a new climate fund (GCF)

• Transitional committee

CO

P 1

7 (

20

11

) • Adoption of the Governing Instrument of the GCF

20

12

-p

rese

nt • 13 GCF Board

meetings so far

• $10.3 billion pledged for Initial Resource Mobilization

• 2 sets of funding proposals approved thus far

613/08/16

Slide

What makes the GCF different?

Scale Governance Allocation Access

• Largest climate fund linked to the objective of Convention

• Paradigm shift promoting a low emission and climate-resilient pathway

• Projects/Programmes must be 2°C compatible

• Equalrepresentation of developed and developing countries on GCF Board (12 members each)

• Dedicated seats for LDCs and SIDS

• Countries’ priorities

• Balanced 50:50 allocation between mitigation and adaptation

• 50% of adaptation finance allocated for LDCs, SIDS and African States

• National and Regional direct access or International access through accredited entities

• Fast track accreditation

• ReadinessSupport- 50% of which is directed to LDCs, SIDS and African States.

713/08/16

Slide

Features of the GCF

• GCF Governing Instrument acknowledges the urgent and immediate needs of developing countries that are particularly vulnerable to the impacts of climate change, including LDCs, SIDS and African States; recognizes that the capacity constraints of these countries makes it difficult to access financial resources.

• National Designated Authorities (NDAs) – serve as focal points to interface between recipient countries and the Green Climate Fund-141 NDAs/Focal points have been nominated.

813/08/16

Slide

Investment Criteria of the GCF

Impact potential

Paradigm shift potential

Sustainable development potential

Responsive to recipients needs

Promote country ownership

Efficiency & effectiveness

Slide

GCF support for NDC implementation

• As of May 2016, a total of 189 (I) NDCs have been submitted with a total

conditional and unconditional financing needed of more than $4.4 trillion.

• GCF in its Strategic Plan has explicitly recognised NDCs as “an important

reference point for the fund’s programming”.

• GCF has agreed to enable support for the preparation and

implementation of Nationally Determined Contributions (NDCs).

• As a priority, support must be provided for developing countries to

develop a financial strategy on how to finance their NDCs and to convert

their NDCs into bankable projects and programmes.

1013/08/16

Slide

Readiness and Preparatory Programme of the GCF

NDA and national

stakeholders

Strengthening the NDA/Focal Point and engagement of stakeholders

Strategic frameworks/

Country programmes

Support for formulation of

NAPs

Knowledge Sharing/ South-South exchange

Implementation & Accreditation

Pipeline development

Slide

Readiness and Preparatory Programme of the GCF…

• Readiness Programme - an initial $15 million was available with a $1 million cap per country; $3 million had been disbursed through May 2016.

• Countries can access up to $300,000 directly from the Fund for strengthening their NDAs/Focal Points.

• At least 50% of this readiness support is earmarked for LDCs, SIDS, and Africa.

• Board has decided to expedite the disbursement of readiness support.

1213/08/16

Slide

Readiness and Preparatory Programme of the GCF…

• As of May 2016, readiness support proposals from 49 countries have been approved, totaling $13 million. Of these, 34 have come from LDCs, SIDS and African States.

• Countries that have received Readiness support thus far: Antigua and Barbuda, Benin, Bolivia, Brazil, Cambodia, Colombia, the Cook Islands, DRC, Ethiopia, Honduras, Kenya, Mali, Mexico, the Federated States of Micronesia (FSM), Niue, Pakistan, Palau, Rwanda, Seychelles, Vanuatu, and Zambia.

• At GCFB 13, the Board agreed to support the formulation of NAPs as a separate activity, by allocating an additional $3 million per country in addition to the $1 million cap.

1313/08/16

Slide

Accredited entities

• Accredited entities - 33 in total

• 13 national and regional direct access entities

• 15 international entities

• 5 private sector entities

• Direct access (national and regional) entities:

• LDCs: Ethiopia, Senegal, Rwanda

• SIDS: CCCCC in Caribbean; SPREP in the Pacific

• Africa: Kenya, Morocco, Namibia, Nigeria, Development Bank of Southern Africa and African Development Bank

• The accreditation of national and regional entities vs international entities will have to be balanced.

1413/08/16

Slide

Project Approval by the GCF

• Projects/Programmes need to meet the Fund’s investment criteria to be approved and to access finance from the GCF.

• The GCF has approved two sets of projects thus far:

• $168 million for 8 approved projects (6 public, 2 private) LDC (Bangladesh,KfW), SIDS (Maldives (UNDP) & Fiji (ADB)) and African States (Malawi (UNDP), Senegal (CSE), Multiple countries- Acumen). Others are in Peru (Profonanpe) and Multiple countries in Latin America (IDB).

• $256 million for another 9 approved projects (8 public, 1 private) with 3 from LDCs, SIDS and African States [Gambia (UNDP), Mali (World Bank), Tuvalu (UNDP)]. Others are in Armenia (UNDP), Chile (CAF), El Salvador (IDB), Sri Lanka (UNDP), Tajikistan and Uzbekistan (WB), and Vietnam (UNDP).

1513/08/16

Slide

Status of the Fund’s Portfolio

Projects now in the Pipeline Proposals with a 50% probability of being presented to the Board

41 public and private sector proposals, with a total GCF request of $2.4 billion.Additionally there are 104 Concept Notes in the pipeline with a total GCF request of $5.5 billion.

24 projects and programme proposals worth $1.4 billion.

Public vs Private Sector Public vs Private Sector

31 public sector proposals and 10 from privatesector.

19 public sector and 5 from private sector.

International vs Direct Access International vs Direct Access

32 of 41 projects have been submitted by international entities; 9 have been submitted by direct access entities.

22 from international entities; only 2 from public direct accessentities ($10 million) and one private direct access ($263 million).

1613/08/16

Slide

Decisions taken by Board to accelerate building the GCF pipeline

• Establishment of a Project Preparation Facility to provide funding up to 10% of requested GCF funding with a maximum of USD 1.5 million for project preparation, especially for small-scale activities and direct access entities.

• Establishment of a Simplified approval process for certain activities, especially small-scale activities.

• Issuance of a request for proposals for the pilot programme of micro, small and medium sized enterprises (MSMEs) and for the pilot phase for additional modalities to Enhance Direct Access.

1713/08/16

Slide

Next Steps/Recommendations

• In order to take advantage of the Board’s aspirational goal of approving projects/programmes worth $2.5 billion for 2016, developing countries will have to be proactive in submitting proposals.

• Developing countries should consider use of the readiness programme to have their National Implementing Entities (NIEs) accredited, in order to be able to access funds directly.

• Developing countries should consider use of the Project Preparation Facility (PPF) to get financial support for project/programme proposal development.

• The high imbalance between private vs pubic sector projects and international vs direct access need to be balanced.

1813/08/16

Slide

Links and synergies between the CVF and V20

• The V20 has an action plan with pillars of:

• Mobilizing and delivering climate finance;

• Boosting capacity through the exchange of best practices;

• Outreach and advocacy

• V20’s call for improved access to resources from all sources is a major priority for vulnerable countries.

• The CVF can be a platform to consider how best to support the V20 in achieving its action plan.

1913/08/16

Slide

Questions for Consideration

• What resources are needed for vulnerable developing countries to convert their NDCs and adaptation plans into bankable projects and programmes that can satisfy the criteria of existing Funds?

• How can vulnerable countries accelerate their efforts to build the GCF’s portfolio with proposals from direct access entities, to ensure greater country ownership?

• How can countries best use available political processes to emphasize the need for direct access to international support?

2013/08/16

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