Debate in GCF Board over funding development and climate-change projects

Apia, 20 December 2016 (Indrajit Bose)

The Board of the Green Climate Fund (GCF) during its 15th meeting in Apia, Samoa, from 13-15 December could not agree on an adaptation project from Bangladesh.

The crux of the debate and disagreement was whether the project was a development or a climate change project. Developed country Board members viewed the project more as a development rather than a climate change project, and raised questions about the project’s climate change component.

The Board approved 8 projects worth USD 315 million during the meeting but the Bangladesh project was not one of them.

The United Nations Development Programme (UNDP) submitted the project, titled ‘Enhancing Women and Girls’ Adaptive Capacity to Climate Change’ in Bangladesh, and requested GCF grant funding of USD 67.22 million. The Bangladesh government intended to co-finance the project with USD 7.8 million.

According to the proposal, the Bangladesh Ministry of Women and Child Affairs (MoWCA) would have been the executing entity of the project for its duration of 6 years.

According to the funding proposal for the Board’s consideration, the project was structured along three components: the expansion of climate resilient drinking water supply benefiting 1.27 million people directly and 3 million indirectly; support for the adaptive livelihoods of women and adolescent girls through direct cash transfers benefiting 40,000 women and 17,000 adolescent girls from income support and livelihood diversification; and strengthening the institutional capacity within MoWCA to monitor, evaluate and report on adaptive social protection.

When the GCF’s Independent Technical Advisory Panel (ITAP) had carried out its assessment of the project, it had recommended approving the project on the condition that the accredited entity would present a revised water system model and a harmonized approach to cash transfer allocations. This effectively meant overhauling the entire project proposal.

The ITAP raised what it called “technical and practical” issues while presenting the project to the Board. These included issues largely around lack of clarity on supply of water to the beneficiaries, maintenance and management of the facilities, capacity of the MoWCA to manage the water systems and cash transfers.

On cash transfers, the ITAP representative said to the Board, “We understand the cash transfers have been very effective in Bangladesh, especially for development issues. However, we would like to see that these cash transfers are effective for ensuring adaptive livelihoods. We are speaking about climate change here. So we want to see the rationale for using cash transfers to make them more resilient to climate change.”

Board members were divided in their responses to the funding proposal. Several developed country Board members said that it was an important “development” project and that the GCF should prioritize and fund only climate change related projects. They were also against the cash transfer component of the project.

Henrik Harboe (Norway) said, “What I see here is climate change has deteriorated the state of women and children. It is a very important development project but not a climate project. Many large development institutions can finance such projects.  But we are a Fund dedicated completely for climate change. I need to be convinced that this is a good climate project and that the GCF is the right source. It would be good to know what other sources have been tried to be reached for financing this project,” said Harboe.

Several Board members from developed countries echoed similar concerns as Harboe.

Leonardo Martinez-Diaz (US) said the project had two components: water and livelihoods. He said that the water part was closely associated with climate change, but he was concerned about the sustainability and maintenance of the water tanks. He said the second part of women and girls’ livelihood opened an important question. “Is a development project or a livelihoods project in a vulnerable area automatically a climate project by virtue of it happening in a vulnerable area? he asked.

He said further that this was an important question which was not easy to answer. He added further that the reality was that the GCF had limited resources and that the connection between livelihoods and climate change is more difficult to sustain. “Clearly these livelihoods may help these women and girls have higher incomes overtime, but we think it is better addressed by agencies that are focused on this kind of work over time,” said Martinez-Diaz. “The question”, he added “is whether this Fund will finance development and poverty reduction as a general matter in vulnerable areas.” His view was that “this is pushing it too far.”

He added that he would welcome the GCF to fund the climate component and other partners could fund the more development-oriented elements of the project and find synergies between them.

Many developing country Board members on the other hand were supportive of the project and recommended that the project be approved with conditions. Board members from Cuba, Democratic Republic of Congo (DRC), Burkina Faso, Tanzania supported the project, with conditions.  (See further details below).

Ayman Shashly (Saudi Arabia) said that the development-climate discourse was not a strong argument, adding that in the climate negotiations in Paris last year, Parties to the UNFCCC could not even agree to a definition of what is climate finance. He asked therefore how one could draw a distinction between climate finance and development finance.

Shashly also said that the Board was there to support the development of countries in terms of their adaptability to the impacts of climate change. “We are talking about Bangladesh. We are talking about perhaps the most vulnerable country (in the world). We are talking about a least developed country. We are talking about women and gender. If you are not happy about cash transfers, well every country has a structure to deal with their issues. To change structural behaviour for the long term you perhaps need cash transfers. Is this not a paradigm shift from what other businesses are doing? I just cannot understand. The project speaks to the heart of the UNFCCC and what we are doing here,” lamented Shashly.

Following these exchanges, Co-chair Zaheer Fakir (South Africa) said that when in doubt, the Co-chairs refer to the Governing Instrument (GI) of the GCF.

He read out paragraph 2 of the GI, which says, “In the context of sustainable development, the Fund will 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, taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change.”

Fakir also said that the GI is the acid test to determine whether a project meets the criteria of the Fund. He also said that how much is climate related is debatable but that it was not for the Co-chairs to make that decision.

After further informal consultations when the decision on funding proposals came up to the Board on 15 Dec., the Bangladesh project was not on the list of projects to be approved.

UNDP withdrew the project from being considered for funding, following the initial discussions among Board members. According to sources, ‘pressure’ was put on the entity to do so.

On 15 Dec, the GCF Secretariat told members that it was informed that UNDP wished to undertake further work using the technical expertise of the Bangladesh government and collect more data and wished to bring back the project to the Board for its consideration at its next meeting.

Following this, Kamaluddin Ahmed, Board member from Bangladesh asked if the GCF had received any communication from the National Designated Authority (NDA) “It undermines country ownership if the NDA has not come forward to communicate this,” he said.

Ahmed was asked by Co-Chair Ewen McDonald (Australia) to speak to the accredited entity regarding this.

Highlights of exchanges

Jorge Ferrer Rodriguez (Cuba) agreed that the project needs improvement but also added that the Board had not approved any project in the form it came to the Board. Projects have been approved with conditions, he said. He also said that there is an interrelationship between sustainable development and climate change, and added that the Intergovernmental Panel on Climate Change (IPCC) clearly stated the relationship between the two. He said in relation to the issue about the sustainability of the project, he had not seen any project to be sustainable. He stressed that Bangladesh needs the project and recommended that it be approved with conditions.

Tosi Mpanu Mpanu (DRC) said he supported the project as it reflected country driven-ness. “The government is showing co-financing by being part of the project. It seems 47 million people are affected with saline water intrusion and this is an effect of runaway climate change. This project is about climate change in many ways. It will have a major effect on livelihoods of millions of people and we should support it”, he added.

Mamadou Honadia (Burkina Faso) also supported the project for two reasons: that there would be safe water supply to millions of people and that there was a gender component. He also said he would like the project proponent to address further on how the private sector could contribute to the replicability and sustainability of the project.

Richard Muyungi (Tanzania) said there could be weaknesses in the project but the overall objective and thrust of the project was very clear that this is where the Board should go in terms of investing its Funds.

Azimuddin bin Bahar (Malaysia) expressed support to the project by stressing that it was an adaptation project and added that the maintenance and the sustainability aspects that were raised by the ITAP were important considerations.

Caroline Lecrec (Canada) said there were fundamental flaws with the project. She said she was not clear of the link between the water component and increased resilience of women. She also said that “the proposal made a generic rationale around how this constitutes climate change and once you start scratching at the links between lack of access to water for 95 per cent of the population and climate change…I find myself a bit skeptical…the proposed activities should lead to a climate change benefit as a primary objective, not as a secondary objective.”

Lecrec said that she did not like the tension that members were faced with between sustainable development and climate change. She said that two should go together and there should be no tension. “This Fund should support projects with climate change as a primary objective, not as a secondary objective, she reiterated.

Karsten Sach (Germany) questioned the climate change objective of the project.  “We (referring to the GCF) will go into replenishment (of resources) in one or two years,” said Sach. “If we argue that we are the same as the other Funds, we will be lost…We need to be succinct in what this Fund ought to be funding,” he said.  He added further that he had serious doubts about the conceptual issues as well as technical issues of the project.

Kate Hughes (UK) said she was concerned with the possible duplication with other programmes in the areas (of the project) and there was no mention of a national resilience programme jointly run by UNDP, UN Women and others.  She also asked whether the MoWCA was the appropriate agency that had the capacity to manage the water component of the programme and why the Water Ministry was not involved. She also expressed concerns about the technical feasibility of the project.

Speaking for the Civil Society Organizations’ (CSOs), Lidy Nacpil, who is an active observer on the Board and from the Asian Peoples' Movement on Debt and Development said that the CSOs were very much concerned that questions were being raised whether the project submitted is a climate project or a development project.

“We believe it is unrealistic and artificial to strictly separate and dichotomize sustainable development programmes and climate programmes. Listening to the points by Board members who are not convinced this is an adaptation project, we urge the GCF Board to come out with a paper that explains more clearly what it considers as adaptation,” said Nacpil.

Nacpil also said that the CSOs supported the project and recognized that the project needs improvements. “We note that many of the GCF projects that have been considered and approved thus far, also need improvements.  We find it difficult to understand why many of the Board members are being especially hard on this one,” she added further.

(Edited by Meena Raman)

UNFCCC / Green Climate Fund / 15th GCF Board meeting
13 December - 15 December 2016, Apia, Samoa
by Indrajit Bose
Apia, 20 December 2016