GCF Board approves funding proposals worth USD745 million; appoints new Executive Director

18 October 2016 (Indrajit Bose)

The Board of the Green Climate Fund (GCF) approved, with conditions, 10 projects worth USD 745 million at its 14th meeting in Songdo, Republic of Korea, from 12 to 14 October.

It also appointed Australian national, Howard Bamsey, as the new Executive Director of the Fund’s Secretariat, for a 4-year term.

Bamsey was selected from a final shortlist of 4 candidates who were interviewed by the Board at the Songdo meeting in an executive session which was closed to observers. Bamsey has previously been involved in climate negotiations under the United Nations Framework Convention on Climate Change (UNFCCC) and served as the Co-chair of the ‘Dialogue on Long-term Cooperative Action’ from 2006-2007, that launched the Bali Action Plan in 2007.

The Board also accredited 8 new entities, to access the GCF funds. (Access to the Fund’s resources is managed through national, regional and international entities and intermediaries that have been accredited by the Board.)

On the funding proposals, the Board approved the following projects:

  • USD 37 million for Scaling-up of Glacial Lake Outburst Flood risk reduction in Northern Pakistan with United Nations Development Programme (UNDP) as the accredited entity (AE);
  • USD 41.2 million for Priming Financial and Land-Use Planning Instruments to Reduce Emissions from Deforestation with UNDP as the AE;
  • USD 80 million for Sustainable Energy Facility for the Eastern Caribbean with Inter-American Development Bank (IDB) as the AE;
  • USD 16.7 million for Senegal Integrated Urban Flood Management Project with Agence Française de Developpement (AFD) as the AE;
  • USD 39.3 million for Development of Argan Orchards in Degraded Environment with Agency for Agricultural Development of Morocco (ADA Morocco) as the AE;
  • USD 9.5 million for Climate Resilient Agriculture in Three of the Vulnerable Extreme Northern Crop Growing Regions of Namibia with Environmental Investment Fund (EIF) as the AE;
  • USD 10 million for Empower to Adapt: Creating Climate Change Resilient Livelihoods through Community-Based Natural Resource Management in Namibia with EIF as the AE;
  • USD 378 million for Sustainable Energy Financing Facilities with European Bank for Reconstruction and Development (EBRD) as the AE;
  • USD 53.5 million for Sustainable Landscapes in Eastern Madagascar with Conservation International/European Investment Bank (CI/EIB) as the AE; and
  • USD 80 million for Universal Green Energy Access Programme with Deutsche Bank AktienGesellschaft (Deutsche Bank AG) as the AE.

Of the 10 projects approved, there was considerable discussion on the Pakistan project and the EBRD project.

Dinesh Sharma, the Board member from India, raised objections to the Pakistan project and said that the project was based on the assumption that there would be no glacial lake flood outbursts during the implementation period of the project, and that, he added, was a faulty premise.

Sharma was also concerned about the location of the project in Gilgit Baltistan and the province of Khyber Pakhtunkhwa. “The same portion comes under the administrative control of different countries. Not just India, it’s Pakistan, it’s the other countries also. They are all listed in the appraisal note. Nepal, Bhutan, China. Only India for some reason is not listed … There are other countries involved because of glacial melting problems,” said Sharma. The Indian Board member stressed several times that his objections were not politically motivated but based on technical grounds.

After lengthy exchanges, it was agreed that an independent technical assessment would be carried out to study the feasibility of the Pakistan project and any disbursement of funds to the project would be based on the outcome of the assessment.

Developing country Board members also expressed concerns in relation to the EBRD proposal, which covers 13 countries (Albania, Armenia, Egypt, Georgia, Jordan, Kyrgyz Republic, Moldova, Mongolia, Montenegro, Morocco, Serbia, Tajikistan and Tunisia).

Of the 13 countries, no-objection letters from the respective national designated authorities (NDAs) (a mandatory requirement for projects to be considered at the GCF) were obtained from only 10 countries. Several developing country Board members expressed that such a proposal should not have come up for consideration in the first place since the very basic criterion of having no-objection letters from all the countries was not fulfilled and this would set a wrong precedent and go against country ownership, the bedrock of the GCF.

In the final decision adopted, it was confirmed that only those countries that had provided the no-objection letter would be included in the programme for funding in the EBRD proposal.

On the process of approving the funding proposals, there were disagreements on whether to approve the projects as a package or to assess the merit of each individual project. Several developing country board members expressed concerns over the package approach. After intense discussions, the Board decided to approve all the projects as a package but with conditions.

The Board members also pointed to several policy gaps in the process of approving projects. These included conditional approval to projects, quality of funding proposals, concluding first on the review of the initial proposal approval process, and strengthening and scaling up of projects/programmes in the GCF pipeline.

In the decision adopted, the Board emphasized that the approach taken of approving funding proposals at the 14th meeting of the Board did not “constitute a precedent”. (Separate article on funding proposals to follow.)

Besides approving the project, the Board also accredited, as a package, the following 8 entities to the GCF: South African National Biodiversity Institute (SANBI); Food and Agriculture Organization (FAO); International Fund for Agricultural Development (IFAD); Nederlandse Financierings-aatschappij voor Ontwikkelingslanden N.V. (FMO); Banque Ouest Africaine de Développement (West African Development Bank, BOAD), Togo; Caribbean Development Bank (CDB), Barbados; XacBank LLC (XacBank), Mongolia and the GIZ, Germany.

Except for SANBI, FAO and IFAD, the rest of the entities had submitted their application for accreditation at the last Board meeting in July, but due to some disagreements which arose then, the Board deferred the consideration of these entities to the 14th meeting.

The Board had, at its previous meeting, major disagreements over the application by the Korean Export-Import Bank (KEXIM), which was one of the entities listed for accreditation at the 13th Board meeting. At the recently concluded meeting in Songdo, KEXIM requested that its application for accreditation be kept aside and not included for consideration at the 14th Board meeting.

[At the last Board meeting, several developed country Board members, led by the United States, said the nature of KEXIM being an export credit agency (ECA) and its practice of providing tied assistance did not render it appropriate to be accredited as an entity to the GCF. Developing country Board members, however, opposed this at the last meeting and said that there was no policy in place to reject KEXIM on these grounds and said that GCF’s existing policies would be a strong safeguard to keep a check on the accredited entities. Due to this disagreement, the Board did not approve any of the entities for accreditation at the last meeting, and agreed to defer the matter to the 14th Board meeting.]

The withdrawal by KEXIM of its application became an issue at the 14th Board meeting.

Developing country Board members, led by Ayman Shashly (Saudi Arabia) and Wensong Guo (China) sought clarity on the reason behind the applicant’s request.

The Secretariat responded that the applicant wanted to “put aside” its application without elaborating on the reason. In response, Shashly expressed unhappiness over the issue and said that the Board should discuss this as part of the accreditation strategy so that such instances do not repeat. “We spent time discussing the case and for no obvious reason, the applicant has withdrawn,” said Shashly.

Tosi Mpanu Mpanu (Democratic Republic of Congo) said that developing country Board members were very supportive of the applicant and had stated at the 13th  meeting that there was no policy in place that could exclude the accreditation of the entity. He said that “… we should not punish stakeholders and partners because of some of the gaps that come under the purview of our own work …We are very supportive of this applicant … My understanding is that it (KEXIM) has not withdrawn but (has) just put (its application) on hold,” said Mpanu Mpanu.

Omar El Arini (Egypt) expressed concerns that any decision to address policy gaps in the accreditation strategy should not be applied retroactively. (He was referring to whether there should be an exclusion list in the accreditation policy for certain entities to be excluded from accreditation, which is pending consideration by the Board.)

At the Songdo meeting, the Board also adopted decisions on policy and strategy for accreditation; support for facilitating access to environmentally sound technologies and for collaborative research and development; support for reducing emissions from deforestation and forest degradation in developing countries, and the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks in developing countries (REDD-plus); and review of the interim trustee of the GCF. (Separate articles on these issues will follow.)

Edited by Meena Raman

UNFCCC / Green Climate Fund / 14th GCF Board meeting
12 October - 14 October 2016, Songdo, Incheon, Republic of Korea
by Indrajit Bose
18 October 2016