session i: global context - gcf readiness programme...gcf example: clean energy and resilience...

CCAP

SESSION I: GLOBAL CONTEXT

Stan Kolar

GCF Readiness Programme in Uzbekistan Workshop 1

26-28 July 2017

CCAP 1

CENTER FOR CLEAN AIR POLICY

Analyze. Engage. Innovate.• Technical, Policy, and Economic Analyses

• Publications and Outreach

• Multi-Stakeholder Partnerships and

Dialogues

• Innovative Solutions

• Execution

A Think Tank that Does• Acid Rain Legislation

• EU Market Design

• Early design and promotion

of NAMA concept

• In country work on energy,

waste and transportation

Workshop 1, Session I

CCAP 2

CCAP’S MITIGATION ACTION IMPLEMENTATION

NETWORK (MAIN) -- MOBILIZING ACTION

Goals:

Components:1. Regional dialogues of policymakers, experts, climate finance providers,

private sector

2. Harvesting of best practices, case studies, policy solutions

4. Support for NAMA design, enabling policies, accessing financing

5. Bring MAIN countries input into UNFCCC, GCF, and other institutions

Create networks of

policymakers

involved in NAMAs

in Asia and Latin

America

Build capacity to

develop bankable

NAMAs

Facilitate

financing for

early NAMAs

Help countries

go from

NAMA’s to

INDC’s to

NDC’s


CCAP

CLIMATE CHANGE IN THE GLOBAL CONTEXT

• Near universal scientific consensus that climate change – Is real (earth is warming, sea water level is rising, increased droughts, sever

weather, etc)

– Is caused by human activity

– We are certain of it

– It is very dangerous

– And we can fix it (at least partially)

• The Paris Agreement anchors the universally accepted consensus that global warming should be limited to 1.5°C to prevent catastrophic changes to the earth’s climate

• The primary tool of the PA for achieving this goal is the cumulative effect of nations’ Nationally Determined Contributions

3Workshop 1, Session I

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• New era of Country Contributions

– 194 INDCs submitted

– 66 Percent of emissions covered

– 175 countries signed on April 22 in New York

– 150 parties have ratified (as of June 28, 2017)

• Strong commitments on climate finance

– Paris Agreement reiterated call for USD 100B annually by 2020

• In 2025 a new collective target of >100B will be adopted

– The GCF is fully operational

Paris Outcome requests GCF, GEF to support countries’ NDC implementation and further the purpose of Agreement

4

THE PARIS AGREEMENT LAID THE GROUNDWORK FOR

TRANSFORMATIONAL CHANGE


CCAP

THE STATE OF THE PA


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WHAT DOES US WITHDRAWAL MEAN?

– “Led by California, dozens of states and

cities across the country responded

Friday to Trump’s attack on the worldwide

agreement by vowing to fulfill the U.S.

commitment without Washington — a goal

that is not out of reach.”

Los Angeles Times, June 2, 2017

– The Paris Agreement architecture is not reliant on US participation


• US NDC may stay on track anyway due to:

• Natural gas and renewables pushing coal out of the market

• State-level and private sector action will push further de-carbonization

American withdrawal has mobilized action on the level of individual

companies, cities and US states

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POST-PARIS CLIMATE ACTION

7

• New diplomatic action– Paris Agreement entered into force October 5 2016

– ICAO adopts market-based mechanism

– Montreal Protocol HFC amendment

– Discussions on linking EU, China, California, and New Zealand emissions trading schemes

• New Cooperative Initiatives– NDC Partnership

– NDC Leaders Compact

– Marrakesh Partnership

• Roadmap to 100 Billion

• COP22– 2018 end date for the Paris rulebook

– Marrakech Action Proclamation


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THE GREEN CLIMATE FUND

Workshop 1, Session I 8

World’s largest climate fund

Primary financial mechanism of the Paris Agreement

Provide support to developing countries

Adaptation: adapt to climate impacts

Country ownership

Mitigation: reduce greenhouse gas emissions

Source: GCF

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CLIMATE FINANCE ACCESS IN UZBEKISTAN

• The Green Climate Fund and other climate funds (GEF,

Adaptation Fund, etc.) are some of the key tools for

achieving PA’s goals

• Uzbekistan’s access to climate finance will be best

achieved by anchoring mitigation and adaptation projects

and programs in its NDC

• Uzbekistan’s NDC should account for the nation’s

strategies, priorities and needs in both adaptation and

mitigation objectives


CCAP

CLIMATE FINANCE ACCESS IN UZBEKISTAN (2)

Through NDC, climate finance represents unique

opportunity for

– Access to significant financial resources

– More efficient usage of financial instruments

– Leverage private climate finance flows with public funds

at the international and national level?

– Improving enabling environments to facilitate climate

finance

– Facilitating technology development, innovation and

transfer and capacity-building support


CCAP

THANK YOUFor more information,

please visit us at

www.ccap.org

11

CCAP

Dialogue. Insight. Solutions.

SESSION II: AN OVERVIEW OF THE

GREEN CLIMATE FUND (GCF)


26-28 July 2017

CCAP

1. Basic GCF facts

2. What does the Fund support

3. Funding priorities

4. How is the Fund organized

5. Funding channels

6. Funding modalities

7. Accredited entities

8. How to engage with the GCF

9. Overview of GCF activities in the region

10. Update and news on GCF

1

OUTLINE

Workshop 1, Session III

CCAP 2

BASIC GCF FACTS

• Financial Mechanism of the UNFCCC

➢ GCF is accountable to the UN

• Goal:

➢ Promote paradigm shift to low-emission and climate-resilient development in

developing countries

• Governance:

➢ 24 Member Board + Independent Secretariat

• Approach:

➢ Proposals selected through competitive process based on 6 key criteria

➢ Funds delivered through accredited entities

➢ Public and Private

➢ Mitigation and Adaptation


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Adaptation

Mitigation

3

GCF RESOURCES

• USD 10.3 billion in pledges

• 50/50 split between adaptation &

mitigation

• 50% of adaptation resources for

SIDS, LDCs and African States

• ~USD 80 million for Readiness

support

• USD 40 million for Project

Preparation

3

Other DevelopingCountries

SIDS, LDCs, and Africa

Total GCF Portfolio

Adaptation Portfolio


CCAP 4

HOW IS THE FUND ORGANIZED (1)

• GCF Board– 24 Board members – 12 developed and 12 developing

– Consensus-based decisions

– Typically meets 3 times a year to:

• Consider funding proposals

• Set Fund policies and procedures

• GCF Secretariat

– Executes the day-to-day operations of the Fund

– Accountable to the Board

– Provides technical support to GCF partners: NDAs, AEs, and other

national stakeholders


CCAP 5

HOW IS THE FUND ORGANIZED (2)

Green Climate Fund

Accredited Entities

Programs

and Projects

Source: GCF


CCAP

• Access to the GCF resources

takes place through a country-

driven approach

• Selecting a NDA is the first

major step in engaging with the

Fund

• The NDA, in consultation with

other national stakeholders,

identifies the country’s strategy

for engaging the GCF

6

ROLE OF THE NATIONAL DESIGNATED AUTHORITY (NDA)

Convene National

Stakeholders

Nomination letters for

direct access

No-objection letters for

projects/programs

Approval of readiness support

Strategic oversight aligned

with national priorities

Scope of NDA


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• The GCF works through a wide range of AEs to channel its resources

to projects and programs

7

ROLE OF ACCREDITED ENTITIES

Direct access International access

Sub-national, national or

regional organizations,

nominated by NDAs

UN agencies, multilateral,

bilateral and regional

institutions

Public or private

• Must meet the fiduciary principles and standards, environmental and

social safeguards and gender policy of the Fund.

• Countries may access GCF resources through multiple entities

simultaneously


CCAP 8

ROLE OF ACCREDITED ENTITIES

Provide technical assistance and

capacity building

Oversee projects/programs management and implementation

Deliver resources to projects/ programs

Develop & submit proposals in

consultation with NDA & country stakeholders


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ACCREDITED ENTITIES – STATE OF PLAY

Entities accredited

Stage I

Submitted

Application initiated

87

Stage II

Under review

76 13 48

Legal

agreement

signed

25

21

21

6

Direct (National)

Direct (Regional)

International

48 Entities Accredited

Pipeline of 224 entities seeking accreditation

As of June 2017

Workshop 1, Session III 9

CCAP 10

GCF PROGRAMMING

Readiness and Preparatory

Program

Project preparation facility

Funding proposals

Capacity building and

technical assistance to

help countries effectively

engage with the GCF

Project development

support accessed through

Accredited Entities

Country-driven programs delivered by

Accredited Entities that contribute to

low-carbon, climate resilient

development


CCAP 11

EIGHT STRATEGIC IMPACTS AREAS

Health, Food and Water Security

Livelihoods of people and

communities

Infrastructure and built environment

Ecosystems and ecosystem

services

Increased Resilience

from:

Energy Generation and Access

Transport

Forests and Land Use

Buildings, Cities, Industries and

appliances

Reduced Emissions through:

Mitigation Strategic Impacts

Adaptation Strategic Impacts

With a focus on…

• Impacts

• Paradigm-shift potential

• Crosscutting adaptation-mitigation

benefits

• Sustainable development co-benefits


CCAP 12

PRIVATE SECTOR FACILITY (PSF)

Why the PSF?

Possibleinterventions

Access to the

private sector

• To mainstream climate change mitigation and

adaptation actions in the private sector

• Integrated into core of the Fund

• Fund climate risk assessment models and tools

• Long-term debt, credit lines

• Equity to develop a project to full bankability

• Guarantees to bear specific risks

• Accredited entities with private sector operations

• Present funding proposals spontaneously or in

response to calls for proposals

Source: GCF


CCAP

• Central Asia – No Readiness requests

– Three funding proposals: • $ 50 m for climate-resilient hydropower in Tajikistan

• $ 378 m for the Sustainable Energy Financing Facility (10 countries including Tajikistan)

• $ 19 m for Climate Adaptation and Mitigation Program for the Aral Sea Basin (Uzbekistan and Tajikistan)

– No national or regional accredited entities

• Eastern Europe– No Readiness requests

– One funding proposal• $ 20 m for EE retrofits in buildings in Armenia

– No direct access accredited entities

OVERVIEW OF GCF ACTIVITIES IN THE REGION

Workshop 1, Session III 13

CCAP

Will complete after GCF Board meeting

14

UPDATE AND NEWS ON GCF


CCAP


SESSION IV: FRAMEWORK FOR

TRANSFORMATIONAL

PROPOSALS


25-27 July 2017

CCAP

HOW NAMAS CAN LEAD TO TRANSFORMATIONAL CHANGE

1

Improving policy

and institutional

frameworks

Addressing

financial risks

and returns

Identifying projects

and demonstrating

feasibility

Workshop 1, Session IV

CCAP

IMPROVING POLICY AND INSTITUTIONAL FRAMEWORKS

• Policies can encourage low-carbon investment through:– Carbon pricing (e.g., a carbon tax)

– Economic instruments (e.g., tax incentives)

– Mandates (e.g., building codes)

• Policies should be designed to afford:– Transparency: policies should be easily understood

– Certainty: policies should provide clear, long-term signals and avoid retroactive changes

– Economic viability: policy incentives should lead to economically viable projects

• Engaging Ministries of Finance and Planning is critical to ensure NAMA policy is integrated into national planning and budgeting

2Workshop 1, Session IV

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ADDRESSING FINANCIAL RISKS AND RETURNS

• Financial and policy instruments can boost returns and reduce risks

relative to BAU alternatives

3

Instrument Risks/Barriers

Performance guarantees Lack of familiarity with technology

Concessional loans High interest rate environments, lack

of long-term capital

Aggregation and securitization High transaction costs

Feed-in-tariffs or competitive

tenders

High investment costs or policy risks


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IDENTIFYING PROJECTS AND DEMONSTRATING

FEASIBILITY

• Pipeline development can ensure viability and provide confidence to investors

• Approach may differ by sector and type of NAMA investment

4

NAMA with fewer, distinct

projects: Developing an initial set

of projects can showcase

technical and economic soundess

to inform broader replication

NAMA with many homogenous,

small-scale projects:

Characterizing broader project

pipeline to show market potential

and scale of opportunityIntegrated

waste management

Distributed solar


CCAP

CCAP EXAMPLE: COLOMBIA WASTE NAMA

• Tariff reform offers tipping fees for recycling and alternative treatment

• Recycling surcharge raises resources for alternative technologies

• Inter-agency board selects local projects for funding

Policy and institutional framework

• Equity fund to provide affordable equity capital for advanced waste management projects

Financial mechanisms

• 14 municipal projects at various stages of development

Project pipeline identification

5Workshop 1, Session IV

CCAP 6

GCF EXAMPLE: CLEAN ENERGY AND RESILIENCE THROUGH SMES IN SOUTH AFRICA

Initial phase funded by the government provides institutional framework and demonstrates national buy-in Scaling program through National Development Bank New law requires 30% procurement from small businesses


• Supply chain financing provides access to working capital for SMEs for RE, EE, and agricultural resilience projects

• Capacity building and incubation programs to promote SME growth


• Initial projects already financed and additional projects identified

• Revised eligibility criteria to align with GCF



CCAP

Strengths Weaknesses

• SCF is an innovative financing

mechanism with high potential for

scale and replication

• Strong financial and institutional

commitment from national

government

• Short operational track record of

accredited entity, and risk of

insufficient operational resources to

implement the Program

• Program depends on private equity

co-financing without firm

commitment from investor

7

GCF EXAMPLE: CLEAN ENERGY AND RESILIENCE THROUGH SMES IN SOUTH AFRICA

Strengths and weaknesses identified by the TAP and Board


CCAP 8

GCF EXAMPLE: RENEWABLE ENERGY FRAMEWORK IN EGYPT

• RE prioritized in NDC; new law sets 20% generation target by 2022

• Grid planning and integration of RE

• Revision of FiT tariffs and contracting arrangements

• Improve design of competitive solar and wind tenders

Strengthen policy and institutions

Long-term debt financing for first-mover renewable energy projects


• Work with government and private developers to identify strong projects



CCAP 9


• Supports the achievement of

Egypt’s energy strategy and 2022

target

• Addresses enduring capital

shortage through long-term debt

financing

• Enhanced regulatory framework for

FiT and competitive tenders

encourages private investment

• Accelerating RE reduces subsidy

expenditures, generating fiscal

gains

• Uncertain viability of RE

investments after GCF financing,

given short-term and high pricing of

domestic commercial banks

• While highly concessional financing

justified to kick-start market, should

have clear transition to market rates

GCF EXAMPLE: RENEWABLE ENERGY IN EGYPT



CCAP 10

GCF EXAMPLE: GROUND WATER RECHARGE & SOLAR IRRIGATION IN INDIA

• Defining ater tariff setting criteria and guidelines to inform State water pricing and cost-recovery policy, and RE

• Inter-agency State steering committee approves annual work plan for investments

Policy and Institutional framework

Installation of effective groundwater recharge technology that Building solar-pump market through standardization of procurement and installation, training & certifying local entrepreneurs, and demonstration of concept

Financial Sustainability

• 15 water stressed districts identified for installation of recharge structures and solar pumps for irrigation

• Build capacity of local installers and operators for tanks and solar pumps



CCAP 11


• Program is well-targeted to vulnerable

populations in high-risk districts

• Cost recovery likely given precedence

of water tariffs

• Local training and participation in value

chain can promote local markets and

program sustainability

• Financial risks include high

dependence on co-financing & rough

construction cost assumptions

• Technology risks given limited field

testing of groundwater and solar pump

technologies

GROUND WATER RECHARGE & SOLAR IRRIGATION IN INDIA – GCF ASSESSMENT



CCAP 12

GCF EXAMPLE: DEVELOPMENT OF ARGAN ORCHARDS IN DEGRADED ENVIRONMENT

• Argan tree orchards and arganiculture priority activity in NDC

• Scale up Morocco’s arganiculture NAMA


Grant support to plant 10,000 ha of Argan trees, increase resource-efficient practices and productivity, and enhance value chain for Argan products

Financial sustainability

• Support fruit producers’ cooperatives to enhance access to international market through improved product quality, certification, and marketing



CCAP 13

GCF EXAMPLE: DEVELOPMENT OF ARGAN ORCHARDS IN DEGRADED ENVIRONMENT


• Opportunity to demonstrate

reforestation as an effective way to

sequester emissions and generate

economic benefits

• Lack of sustainable financial and

marketing strategy

• Limited involvement of key national

institutions and demonstrated

interest of private investors to

promote the argan industry as a

successful export



CCAP


SESSION V: GCF INVESTMENT CRITERIA


25-27 July 2017

CCAP 1

GCF INVESTMENT CRITERIA

Impact potential

Paradigm shift potential

Sustainable development potential

Country ownership

Efficiency & effectiveness

Responsive to needs of recipients

Potential to contribute to achievement of Fund's

objectives and result areas

Vulnerability and financing needs of beneficiary

in targeted group

Economic and, if appropriate, financial

soundness, as well as cost-effectiveness and

co-financing for mitigation

Country ownership and capacity to implement

(policies, climate strategies and institutions)

Wider economic, environmental, social (gender)

co-benefits

Long-term impact beyond a one-off investment

• Six criteria reward ambitious and transformational proposals in the context of

sustainable development

Workshop 1, Session V

CCAP

• All proposals (mitigation/adaptation; public/private) are assessed

against the six criteria

• Medium and large proposals (>$50 million) received a “low”,

“medium” or “high” score for each criterion

• Each criterion has additional specific sub-criteria and indicators

2

HOW ARE GCF CRITERIA APPLIED?

We will illustrate criteria using example of GCF-EBRD Egypt renewable

energy financing framework, approved December 2016• Technical assistance to support RE integration, policies and planning

• Long-term debt financing for RE projects

• Total funding: $1 billion; GCF funding: $150 million loan; $5 million grant


CCAP

Definition: Potential to contribute to low-emission and climate-resilience

development

3

IMPACT POTENTIAL

Key Elements:

Mitigation impact

• Expected tons of carbon reduced/avoided

• Sector-specific indicators, e.g.,

• Expected decrease in energy intensity of buildings, cities, industries and appliances

• Expected number of MW of low-emission energy capacity installed/generated

Adaptation impact

• Direct and indirect beneficiaries (total and proportion)

• Activity-specific indicators, e.g.,

• Enhanced adaptive capacity & resilience

• Strengthening of institutions and regulatory frameworks

• Increase in generation and use of climate information in decision-making


CCAP 4

IMPACT POTENTIAL Egypt RE Financing Framework

• Directly supports the development of 600 MW of new wind and solar PV,

more than doubling current capacity

• Reduces 800,000 tCO2 eq annually

Points of caution:

• Proposal does not clearly articulate how additional 3,700 MW will be realized to

meet Egypt’s 2020 target


CCAP

Definition: Degree to which the proposed activity can catalyze impact

beyond a one-off project or program investment

5

PARADIGM SHIFT POTENTIAL

Strengthen regulatory frameworks and policy

• Enhanced policy and regulation to drive low-carbon, climate-resilient investment

Replicability & scalability

• Theory of change for expanding the program’s impact

Market development and transformation

• Shift incentives for market participants by reducing costs and risks, and enhancing returns

Key Elements:


CCAP 6

PARADIGM SHIFT POTENTIALEgypt RE Financing Framework

• Combines direct financing with policy and TA support to build a pipeline of

RE projects:

• Long-term financing for private sector RE investments to address high

costs and limited availability of commercial financing

• Government capacity building for grid infrastructure and planning, design

and implement FiT and competitive tenders

• TA to private sector developers

• Demonstrates technical and financial viability of first-mover RE projects

that builds confidence among investors

Points of caution:

• Uncertain viability of future RE investments without GCF financing, given short-

term and high pricing of domestic commercial banks


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Definition: Contribution to sustainable development

7

SUSTAINABLE DEVELOPMENT POTENTIAL

Environmental

• Enhanced air quality, soil quality, biodiversity

Economic

• Job creation; Government or private savings

Social

• Improved health, education, safety

Gender-sensitive

• Addresses gender inequalities

Key Elements:


CCAP 8

• Reduces power shortages to meet growing electricity demand and

support economic growth

• Ease fiscal burden of electricity subsidies by mobilizing private sector

investment in clean power

• Promotes participation of local private sector developers, vendors, and

investors

• Enhances access and reliability of power for 400,000 consumers

SUSTAINABLE DEVELOPMENT POTENTIALEgypt RE Financing Framework


CCAP 9

NEEDS OF THE RECIPIENT

Definition: Vulnerability and financing needs of the beneficiary country

and population

Vulnerability of country and target groups

• Vulnerability of country and target beneficiaries

Economic and social development

• Level of development of country and target beneficiaries

Absence of alternative sources of financing

• Inadequate existing financing channels

Need for strengthening institutions and implementation capacity

• Institutional barriers to develop, implement, and monitor climate-related activities

Key Elements:


CCAP 10

NEEDS OF THE RECIPIENTEgypt RE Financing Framework

• Power shortages and load shedding slows down economic and social

development

• Economic downturn since 2011 has constrained availability of long-

term financing from local commercial banks

• Weak national credit standing limits international financing


CCAP

Definition: Beneficiary country ownership of, and capacity to implement, a

funded program

11

COUNTRY OWNERSHIP

Existence of a national climate strategy

• Program objectives align with national strategy

Coherence with existing policies

• Program is support by and contributes to country’s policy and institutional frameworks

Capacity of accredited entities or executing entities to deliver

• Demonstrated track record in similar context and program area

Engagement with civil society

• Program designed in consultation with stakeholders

Key Elements:


CCAP 12

COUNTRY OWNERSHIPEgypt RE Financing Framework

• Expanding RE is a key pillar of Egypt’s NDC

• Program supports country’s new Renewable Energy strategy to

generate 20% of electricity from RE by 2022, including through FiT and

competitive tenders

Points of caution:

• Lack of public sector co-financing could limit government’s long-term

commitment

• Macroeconomic and political risks could pose risk to investment climate


CCAP 13

EFFECTIVENESS AND EFFICIENCY

Least concessionality

• Proposed financial structure includes least amount of subsidy needed to achieve objectives

Co-financing

• Financing leveraged from public and private sources

Cost-effectiveness

• GCF support will not crowd out existing financing channels

• Cost per ton

Financial viability

• Economic and financial internal rate of return

• Long-term financial sustainability

Definition: Cost-effectiveness and efficiency (financial and non-financial)

Key Elements:


CCAP 14

EFFECTIVENESS AND EFFICIENCYEgypt RE Financing Framework

• Long tenor and grace period of debt financing can help attract co-

financing for RE in a new sector and challenging economy

• Pricing for each RE project determined on case-by-case basis to

respond to specific project parameters

Points of caution:

• Generous financing terms to launch new market – how will concessionality be

decreased over time?


CCAP

The GCF Board has identified the following common gaps in GCF proposals:

I. The linkage between climate actions and sustainable development;

II. How the program promotes innovation;

III. How benefits will be sustained once GCF financing ends;

IV. Monitoring and evaluation, including how lessons can be disseminated to inform and promote replication in other regions/countries;

V. How benefits for women and girls will be delivered;

VI. How fiduciary weaknesses in beneficiary countries will be addressed;

VII. Country ownership and effective stakeholder engagement;

VIII. Additionality of the funding

15

KEY AREAS FOR IMPROVEMENT


CCAP


SESSION VII: GCF PROJECT

FUNDING CYCLE AND

REQUIREMENTS


25-27 July 2017

CCAP

• GCF project funding cycle

– Concept note

– Funding proposal

– Requests for proposals

• Types of financial mechanisms

• GCF standards and approval requirements

1

OUTLINE

Workshop 1, Session VII

CCAP 2

GCF PROJECT FUNDING CYCLE

Legal arrangements and letter of commitment

Calls for proposals and rolling submissions

Concept note (voluntary)

Submission of full proposal

Assessment by Secretariat and Technical Advisory

Panel

Board assessment & decision

Feedback from

Secretariat in 2-4

weeks

3 weeks

5-8 weeks

Preparation of full proposalTiming will

depend on

needed analysesNDA no-

objection


CCAP 3

CONCEPT NOTE

Concept note provides an opportunity to receive early feedback from the GCF

Secretariat on project idea

What is it?

• Basic information about program activities

• Technical and financial pre-feasibility

• Alignment with GCF criteria

How to submit?

• Submitted to Secretariat by accredited entity, NDA or executing entity

• NDA must be consulted in preparation, and informed when concept note is submitted

How is it assessed?

• Secretariat provides comments and overall recommendation:

• Endorse

• Not endorse, possibility of resubmission

• Reject proposed approach


CCAP 4

FUNDING PROPOSAL

Funding proposal provides the basis for final Board decision

What is it?

• Demonstrates performance against GCF criteria

• Strong technical and financial feasibility

• Developed in consultation with county stakeholders

How to submit?

• Submitted to Secretariat by accredited entity

• Requires NDA no-objection letter

How is it assessed?

• Evaluated by Secretariat and independent Technical Advisory Panel (TAP)

• Board decides taken on a consensus basis


CCAP 5

FUNDING PROPOSAL SUBMISSION AND REVIEW

Secretariat assessment

• Completeness check

• Performance against investment criteria

• Compliance with GCF policies (e.g. environment and social safeguards, gender)

TAP

assessment

• Performance against investment criteria

• Offers conditions and recommendation on proposal

• Can ask AEs for clarifications

Board review• Board members review funding proposal documents,

Secretariat and TAP assessments

Accredited entity response

• Opportunity to respond to TAP and Board inquiries

Board decision

• Board can decide to:

• Approve proposal

• Approval conditional on modifications

• Reject proposal

1

2

3

4

5


CCAP 6

FINANCIAL INSTRUMENTS

4

3

21

Guarantees

GrantsEquity

Concessional

loans

With/without

repayment

contingency

High: 40 maturity – 10 grace period – 0% interest

Low: 20 maturity – 5 grace period – 7.5% interest

Terms

determined on a

case-by-case

basis

Source: GCF


CCAP

Grants

Technical assistance &

capacity building

Non-revenue generating adaptation

e.g., Coastal protection in

Vietnam

Loans

Address high upfront

costs

Provide liquidity

e.g. Energy efficiency lending in Mongolia

Guarantees

Mitigate specific risks

e.g., Underpin energy

efficiency bonds in Latin America

Equity

Early-stage equity to promote project

development

e.g., Green start-ups in South Africa

e.g., Sustainable

agriculture and energy access in Madagascar

7

FINANCIAL INSTRUMENTS - EXAMPLES


CCAP

• Proposals can be submitted on a rolling basis, or in

response to Requests for Proposals (RFPs)

• Accredited or non-accredited entities (in partnership

with accredited entities) are eligible

• Entities submit concept notes; promising concepts

invited to further develop into full proposals

• Generally assessed against additional criteria,

beyond six GCF investment criteria

8

REQUESTS FOR PROPOSALS


CCAP 9

MICRO-, SMALL- & MEDIUM-SIZED ENTERPRISES (MSME)

Private-sector investment in support of MSME activities

$200M allocation

Up to 10 pilots

Min 4 SIDS, LDCs & Africa

Last round: 31 Jan 2017

Accredited or potential entities

Business loan program for GHG emission reduction

Mongolia, XacBank

SCF Capital Solutions

South Africa, DBSA

Approvals to date:


CCAP 10

ENHANCING DIRECT ACCESS

Delegated decision-making for individual proposals under broader program approved by the Board

$200M allocation

Up to 10 pilots

Min 4 SIDS, LDCs & Africa

Last round: 31 Jan 2017

Accredited or potential entities

Approvals to date


Resilient Livelihoods through Community-Based Natural Resource Management in

Namibia, EIF

CCAP 11

MOBILIZING FUNDING AT SCALE PILOT PROGRAM

Innovative, high-impact projects and programs that mobilize private sector investment in climate change activity

$500M allocation

Minimum of 3 projects

Launch: 23 May 2017

Accredited or potential entitiesApprovals

expected fall 2017


CCAP 12

PILOT PROGRAM FOR REDD+ RBP

$300M-$500M allocation

A default rate of $5/ tCO2e

ERs towards NDCs but not for offsetting

Vol. of ERs offered depends on score on special criteria

• UNFCCC requirements for REDD+

• REDD+ request submitted to UNFCCC in BUR and published

• National or subnational scale

• Consent of REDD+ focal point

• A no objection letter by NDAEligibility Criteria:

REDD+ Results Based Payments


CCAP

• Environment and Social Standards (ESS)

• Gender policy

• Fiduciary standards

13

GCF STANDARDS AND APPROVAL REQUIREMENTS


CCAP

• Eight principles drawn from the IFC’s Performance Standards, which describe

approaches to managing environmental and social risks and impacts.

1. assessment and management of environmental and social risks and impacts

2. labour and working conditions

3. resource efficiency and pollution prevention

4. community health, safety and security

5. land acquisition and involuntary resettlement

6. biodiversity conservation and sustainable management of living natural

resources

7. Indigenous peoples

8. cultural heritage

• In reviewing funding proposals, the GCF Secretariat will check how the

Accredited Entity follows the ESS

14

ENVIRONMENTAL AND SOCIAL SAFEGUARDS STANDARDS


CCAP

• Assessment must be published in

advance of Board’s consideration of

funding proposal:

• Category A: 120 days for high risk

• Category B: 30 days for medium

risk

• Category C: no ESS for low risk

• Add what low, medium and high risk

mean

15

ENVIRONMENTAL AND SOCIAL SAFEGUARDS STANDARDS

• Higher-risk projects must include a study to ensure compliance with ESS

Source: Green Climate Fund Handbook


CCAP 16

GENDER POLICY

Equal resilience & ability to address climate change

Equal contribution to & benefit

from sponsored activities

Reduce climate-

exacerbatedgender gap

Address & mitigate risks for

both gender

Objectives: AE should demonstrate:

A mandatory initial socioeconomic and gender assessment

Gender equitable stakeholders’ consultations

Inclusion of gender perspective in the social and environmental safeguards

Project screening for gender sensitivity at the various stages


CCAP

• Basic Fiduciary Standards

– Key administrative and financial capabilities

– Transparency and accountability

• Specialized Fiduciary Standards

– Project management

– Grant award and/or funding allocation mechanisms

– On-lending and/or blending

17

FIDUCIARY STANDARDS


CCAP


SESSION VIII: GCF READINESS

PROGRAM AND PROJECT

PREPARATION FACILITY


25-27 July 2017

CCAP

1. GCF preparatory support overview

2. Readiness Program • Overview

• Supported activities

• How to access support

• Country and entity work programs

• Readiness support provided to date

3. Project Preparation Facility• Overview

• Example of supported activities

• Application process

• PPF support provided to date

1

OUTLINE

Workshop 1, Session VIII

CCAP 2

GCF PREPARATORY SUPPORT

Readiness and Preparatory

Program

Project preparation facility

Funding proposals

Capacity building and

technical assistance to

help countries effectively

engage with the GCF

Project development

support through

Accredited Entities


CCAP 3

READINESS – OVERVIEW

cap per country per yearUSD 1 million

• NDA strengthening (up to 300,000)

• Support for direct access entities

• Strategic frameworks, including country programmes, concept notes, pre-feasibility studies

cap per country (not per year)USD 3 million

• National adaptation plans (NAP) and / or other adaptation planning processes


CCAP

1. Strengthening national capacity

– Stakeholder coordination

– Establishing ‘no objection’ procedures

– Monitoring, oversight and streamlining of climate finance

2. Strategic frameworks

– Country programs

– Concept notes

– Pre-feasibility studies

– Support to enhance private sector engagement, e.g. preparation of tenders or PPPs

3. Direct access

– Support national entities to meet GCF accreditation standards

– Post-accreditation support to build capacity

– Development of accredited entity GCF work programs

4. Formulation of NAPs or other adaptation strategies

4

READINESS – SUPPORTED ACTIVITIES


CCAP 5

READINESS – HOW TO ACCESS SUPPORT

Direct

NDAs or focal points

To support core GCF functions

USD 300K per year

Delivery partner

International, regional, national, sub-national

All areas

Subject to caps above

Countries can submit multiple requests and use different partners


CCAP 6

READINESS – STEP BY STEP

• NDA/focal point (with delivery partner) develops & submits detailed readinessproposal

ProposalDevelopment

• Secretariat reviews proposal & financialmanagement capacity to approve fundingrequest

Review & Approval

• Legal arrangements concluded withdelivery partner

Legal arrangements

• Disbursements made upon review of progress reports

Disbursement & reporting


CCAP 7

READINESS – STATE OF PLAY

As of 31 March 2017

LATIN AMERICA &

the CARIBBEAN

28 approved

(USD 7.1 M, 21 countries)

13 disbursed


AFRICA

39 approved

(USD 12 M, 31 countries)

23 disbursed


ASIA-PACIFIC

30 approved


17 disbursed


EASTERN EUROPE

5 approved


1 disbursed

(USD 375K, 3 country)

Readiness support$30 M for 78 countries


CCAP

READINESS - COUNTRY PROGRAMS

Country program

Country investment

priorities with GCF

National climate change

strategies and plans

Self-assessment and Action

Plan

Country programs are meant to help

countries’ identify strategy areas for

engagement with the GCF

Workshop 1, Session VIII 8

CCAP

• The Secretariat is engaging with over 100 countries in

advising and supporting them to develop their country

program documents

• Roughly half are going through internal country

programming processes that target the elaboration of a

country program to be endorsed by their NDAs/FPs.

• Three countries programs endorsed so far: Antigua

and Barbuda and Zambia.

9

READINESS – PROGRESS ON COUNTRY PROGRAMS


CCAP 10

READINESS - ENTITY WORK PROGRAMS

• Accredited entity work programs are meant to promote a strategic and

country-driven approach to proposal development

• Entity work programs can include:

– Focus areas: regions, sectors, types of activities;

– A potential pipeline with the GCF: information on potential projects

and programs, potential activities where support may be needed

under the Project Preparation Facility.

• The Secretariat is engaging with 48 direct and international AEs to

update or develop work programs

• Encourages coordination between NDA and AEs through Structure

Regional Dialogues


CCAP 11

PROJECT PREPARATION FACILITY - OVERVIEW

• Support for project/program development

• 10% of total project costs or $1.5M

• Access to support through AEs, especially micro/small projects & direct access

What is available?

• AEs submit request plus project/program concept note

• In conjunction with NDA no objection letter

How to apply?

• Secretariat evaluates performance against investment criteria

• Also assesses justification of needs & consistency with GCF policies

• Executive director approves requests

What is assessed?


CCAP

1. Pre-feasibility and feasibility studies, as well as project design

2. Environmental, social and gender studies

3. Risk assessments

4. Identification of program/project-level indicators

5. Pre-contract services, including the revision of tender documents

6. Advisory services and/or other services to financially structure a proposed

activity

7. Other project preparation activities, where necessary, provided that

sufficient justification is available

12

PROJECT PREPARATION FACILITY-SUPPORTED ACTIVITIES


CCAP13

PROJECT PREPARATION FACILITY -APPLICATION PROCESS

• Developed by the AE in collaboration with NDA, and with support from the SecretariatApplication

• Submitted documents include: PPF application, No objection letter, Concept noteSubmission

• Assessment by Secretariat

• Final decision by Executive DirectorReview

• Legal arrangements between AE and Secretariat

Grant agreement

• Project development activities

• AE reports to Secretariat periodicallyImplementation,

monitoring and reporting

• Projects developed using funding from the PPF should be submitted to the Board within 2 years

Submission of project proposal


CCAP 14

PROJECT PREPARATION FACILITY – STATE OF PLAY

CCAP 14As of 31 March 2017

Will update after the July GCF

Board meeting…


CCAP


SESSION X: ANNOTATED GCF

CONCEPT NOTE AND PROPOSAL


CCAP Workshop 1, Session IX 1

WHY DEVELOP A CONCEPT NOTE?

Test funder’s interest before dedicating significant resources to

project/program development

Engage stakeholders and build country buy-in

Secure project preparation funding to develop full proposal

Sources: GCF, CCAP


RECALL…OVERVIEW OF GCF CONCEPT NOTE

Concept note provides an opportunity to receive early feedback from the GCF

Secretariat on project idea

What is it?

• Basic information about program activities

• Technical and financial pre-feasibility

• Alignment with GCF criteria

How to submit?

• Submitted to Secretariat by accredited entity, NDA or executing entity

• NDA must be consulted in preparation, and informed when concept note is submitted

How is it assessed?

• Secretariat provides comments and overall recommendation:

• Endorse

• Not endorse, possibility of resubmission

• Reject proposed approach

CCAP

A. Project / program information– Focus area, size, duration

B. Project / program details– Background, market / regulation

overview

C. Financing / Cost information

• Financial mechanism design, amounts and sources, etc.

D. Performance against investment criteria

E. Rationale for GCF involvement and exit strategy

F. Risk Analysis

G. Multi-stakeholder engagement

H. Remarks

I. Supporting Documents (e.g., prefeasibility study)

Workshop 1, Session IX 3

COMPONENTS OF A CONCEPT NOTE

CCAP

➢ Geographic focus

➢ Countr(ies), Regional

➢ Accredited entity and executing entities

➢ Access modality

➢ Direct access, international access, both

➢ Public or private

➢ GCF strategic results area(s)

➢ Project/program life span, expected start/end date


A. PROJECT/PROGRAM INFORMATION

Basic project/program information

CCAP

➢ Main activities and planned measures; objectives and

anticipated outcomes

➢ Background and relevant experience of AE and executing

entities

➢Market context, including baseline data and projection, existing

government regulation and pricing structures

➢Institutional and implementation arrangements between AE and

executing entity(ies), timetable


B. PROJECT/PROGRAM DESCRIPTION

Summary and project/program description

CCAP

• What is the strategic context for the project/program?

– Current economic, regulatory and market context

– Role of target sector in climate and development priorities

• What is the baseline situation?

– Emissions baseline, climate vulnerability baseline

– Key barriers

• What are project/program objectives against baseline?

– How proposed activities aim to address barriers and improve

the baseline scenario


B. PROJECT/PROGRAM DESCRIPTION: KEY CONSIDERATIONS

CCAP Workshop 1, Session IX

C. FINANCING/COST INFORMATION

Financing/cost information for GCF request and co-finance

➢Cost estimates by major cost categories

➢Financial model: • Projection covering the period from financial closing through

final maturity of GCF financing with detailed assumptions and

rationale

➢How financial instrument(s) address barriers and

achieve project objectives, and leverage public and/or

private finance.

7

CCAP

• Need to justify why climate finance is needed

• What barriers need to be overcome?

• What are private investor concerns?

• E.g., High risks from unfamiliar technologies or new providers?

• What are project developer concerns?

• E.g. Affordability, accessibility

• Make the case that climate finance will be used well

• Demonstrate leverage, efficiency, financial feasibility, least concessionality

• Mobilization of indirect or long-term investment for project/programs that do

not leverage significant co-financing

• Show that host country and accredited entity will invest own resources

• Sustainability –

• E.g., reinvestment of returns in the mechanism to fund more projects


C. FINANCING/COST INFORMATION: KEY CONSIDERATIONS

CCAPWorkshop 1, Session IX 9

D. EXPECTED PERFORMANCE AGAINST INVESTMENT

CRITERIA

Potential to achieve the GCF’s six investment criteria

9

Impact potential

Paradigm shift potential

Sustainable development potential

Country ownership

Efficiency & effectiveness

Responsive to needs of recipients

Potential to contribute to achievement of Fund's

objectives and result areas

Vulnerability and financing needs of beneficiary

in targeted group

Economic and, if appropriate, financial

soundness, as well as cost-effectiveness and

co-financing for mitigation

Country ownership and capacity to implement

(policies, climate strategies and institutions)

Wider economic, environmental, social (gender)

co-benefits

Long-term impact beyond a one-off investment

CCAP

➢ Concept notes should address all relevant core indicators:

• Mitigation:

• 1) tCO2eq reduced

• 2) Cost per tCO2eq

• 3) Volume of finance leveraged (public and private)

• Adaptation:

– 4) Direct and indirect beneficiaries (total and relative to

population)



CRITERIA : CORE INDICATORS

CCAP

• Demonstrate how proposal meets each of the six criteria– With a focus on impact potential and paradigm shift

– Provide indicators plus brief narrative to give broader context

• Quantitative indicators preferred, with qualitative where

applicable

• Provide methodologies and underlying assumptions

• Provide a benchmark in a comparable context (e.g.

country, sector and/or technology)



CRITERIA : KEY CONSIDERATIONS

CCAP

➢ Justification for the amount of funding requested and the financial

instrument(s) proposed

➢ How GCF support will address barriers to achieve project/program

objectives

➢ How the project/programme sustainability will be ensured after GCF

ends


E. RATIONALE FOR GCF INVOLVEMENT AND EXIT STRATEGY

How the project/program sustainability will be ensured in

the long run

CCAP

• Justify GCF involvement

– What are the barriers that limit alternative sources?

– How will GCF support be critical?

• Describe the exit strategy for the GCF

– How will the project/program achieve long-term sustainability?

• Financial and economic viability

• Longer-term maintenance of physical assets

– How will donor funding be phased out and alternative sources be

phased in?


E. RATIONALE FOR GCF INVOLVEMENT AND EXIT STRATEGY: KEY CONSIDERATIONS

CCAP

Substantial risks that the project/program may face, and proposed

risk mitigation measures


F. RISK ANALYSIS

➢ Potential risks include:• Technical risk

• E.g., Underperformance of the technology leading to lower revenues.

• Financial risks

• E.g., Ability of borrower to convert local currency into US Dollars may

affect its capacity to service debt.

• Operational risk

• E.g., Inadequate technical capacity or processes may impact

operations of newly installed energy efficient equipment

• Environmental and social risks

• E.g., Adverse impacts on community health

➢ How will risks be monitored and mitigated?

➢ E.g. criteria for sub-projects, terms of contracts, reserve accounts,

institutional arrangements, capacity building

CCAP

➢ Specify the plan for multi-stakeholder engagement, and what has

been done so far in this regard.

– How the relevant stakeholders are engaged with the project/program

design

– How the consultations will be carried out during the project/program

implementation.

– Particular attention to vulnerable groups


G. MULTI-STAKEHOLDER ENGAGEMENT

Stakeholder engagement and coordination at multiple

levels of governance, civil society and private sector to

ensure strong country ownership


H. STATUS OF PROJECT/PROGRAMME

➢ Required: Pre-feasibility study is expected to be completed at this stage

➢ Optional: Feasibility study and/or environmental and social impact

assessment

➢ If project/programme is extension of a previous or existing project:

Evaluation report of the previous project

CCAP

A. Project / program summary- focus area, size, duration, accredited

entity

B. Financing / Cost information– cost per component, GCF financial

instrument, co-financing, financial markets overview (if applicable)

C. Detailed project / program description– strategic context, market

overview/regulation/taxes/insurance (if applicable), timetable

D. Rationale for GCF involvement and exit strategy

E. Performance against investment criteria – detailed

F. Appraisal summary – economic and financial analysis, technical

evaluation, env and social assessment, financial management and

procurement

G. Risk Analysis and management – key risks, likelihoods, mitigation

measures

H. Results and monitoring – logic framework corresponding to GCF

results management framework

I. Annexes – no objection letter, project/program appraisal studies


COMPONENTS OF GCF PROPOSAL TEMPLATE

CCAP

Additional requirements of full proposals include:


GCF PROPOSAL VS. CONCEPT NOTE

No objection letter

Detailed project/program appraisal

Detailed risk analysis

Logic framework

In general: full proposals – relative to concept note– require greater level of detail

and analytical backing to demonstrate performance against GCF criteria and

justification for financial support

CCAP

Economic and financial analysis

• Include economic and financial justification (qualitative and quantitative) for the concessionality that GCF provides

Technical evaluation

• Include justification for why a particular technological solution is the most appropriate for this project/program

Environmental, Social Assessment, including Gender

• ESS outcomes and management plan

• Will depend on risk level of project

Financial management and procurement

• Including financial accounting, disbursement methods and auditing


DETAILED PROJECT/PROGRAM APPRAISAL

CCAP

➢ Detailed description of risk factors

➢ Level of impact (estimated % of project /program value)

➢ Probability of risk occurring (high/medium/low)

➢ Mitigation measures


DETAILED RISK ANALYSIS

CCAP

Activities Outputs Outcomes ImpactsParadigm

shift objectives


LOGIC FRAMEWORK

Low-carbon

and/or

resilient

development

Indicators

corresponding

to eight GCF

results areas

Defined at the project/program

level

Reduced

emissions/in

creased

resilience as

per eight

GCF results

areas

The logical framework demonstrates how project/program will achieve results in

line with GCF objectives

• Based on GCF Results Management Framework

CCAPWorkshop 1, Session IX

22

Activities Outputs Outcomes ImpactsParadigm

shift objectives

Low-carbon

development

through

creation of

favorable

market

environment

for retrofits

-Strengthened

institutional and

regulatory

systems

-Lower energy

intensity of

buildings

-Policy and

financing

instruments

established

-MRV

established

-Access to

affordable capital

for retrofits

Reduced

emissions

from

buildings,

cities and

appliances

-Development of

MRV framework

-Policy

development

-TA to

policymakers

and banks

-Structure

financial

instruments

-Targeted

incentives

LOGIC FRAMEWORK- EXAMPLE

De-risking and scaling-up investment in energy efficient building retrofits - UNDP

CCAP

THANK YOUFor more information,

please visit us at

www.ccap.org
