GCF Board to develop request for proposals for reducing emissions from deforestation

Songdo, 26 October 2016 (Hillary Chew)

Kuala Lumpur – The Green Climate Fund (GCF) at its 14th Board Meeting held from 12-14 Oct in Songdo, South Korea, requested the Fund’s Secretariat to develop a request for proposals (RFPs) for REDD-plus for funding results-based actions, for its consideration by the next meeting in December this year in Samoa.

(REDD-plus refers to activities related to reducing emissions from deforestation and forest degradation in developing countries. The activities under REDD-plus are defined and implemented in three phases: (a) Phase 1 is the development of national strategies or action plans, policies and measures, and capacity-building; (b) Phase 2 is the implementation of national policies and measures and national strategies or action plans and results-based demonstration activities; and (c) Phase 3 is the evolvement into results-based actions that should be fully measured, reported and verified.)

Deliberating for the first time on REDD-plus, a mechanism of the United Nations Framework Convention on Climate Change (UNFCCC) to address emissions from the forestry sector, the Board adopted the decision which stressed that the RFPs include guidance consistent with the Warsaw Framework for REDD-plus and other REDD-plus decisions under the UNFCCC.

It also called for further guidance to support efforts by national designated authorities (NDAs) and focal points to engage with the GCF in the early phases of REDD-plus using existing GCF modalities, tools and programmes.

The Board also requested the Secretariat “to implement, with the advice of the Co-Chairs, a process for stakeholder and expert input to support its work under this decision and provide a progress report to the Board at its 15th meeting”.

The decision also recognised “the need to complement other sources and types of finance, and that the GCF can support the development of national REDD-plus strategies or action plans and investment plans, including through the Readiness and Preparatory Support Programme, and that the fund can support the implementation of national REDD-plus strategies or action plans”.

Board members were deliberating on a document prepared by the GCF secretariat titled ‘Initial operationalisation of results-based finance for REDD-plus’.

The document provided background information on REDD-plus finance, noted key elements for designing a REDD-plus results-based finance scheme and proposed options to initiate the operationalisation of GCF results-based finance for REDD-plus.

The Secretariat’s paper proposed that to operationalise the results-based finance, the Fund could adopt a two-track approach composed of one track for financing intermediate, predefined and measurable milestones and a second track for payments for verified REDD-plus results.

Initially, members were split on the two-track approach as some viewed it as being inconsistent with the three-phase Warsaw Framework on REDD-plus while some expressed concerns that not many countries are ready to put forward proposals; hence the need for the GCF to support countries to move from the readiness phase to the results-based actions phase.

(In 2013, under the UNFCCC meeting of the Parties in Warsaw, Poland, Parties adopted 7 decisions for REDD-plus which are referred to as the ‘Warsaw Framework’ for REDD-plus).

In summing up the discussion during an informal meeting of the Board prior to the official Board meeting, the Board Co-Chair Zaheer Fakir (South Africa) said the discussion noted that there are good experiences and practices from other funds and there is need to ensure complementarity and coherence with REDD-plus funding sources, follow best practice approaches and lessons learnt building on standards and existing initiatives with decisions taken under the UNFCCC.

He said the discussion helped clarify the proposed approach by GCF to accommodate all REDD-plus phases and the need for a clear signal on building on the Warsaw Framework. He added that there was overall agreement on the need for financing of REDD-plus implementation at different stages.

He also noted that support was expressed for the GCF to explore key technical issues and modalities in the process of developing RFPs for results-based payment and consideration of the initial modalities which could start at the 16th board meeting.

Fakir also said that the discussion highlighted the potential value of considering REDD-plus financing in the broader context of the architecture of the GCF and climate finance that is firmly anchored in national strategy and how GCF could finance all phases of REDD-plus and not only the results-based payment. He also noted that there was a strong urge for the Board to consider an indigenous peoples policy and a clear timeline for developing the modalities and the request for the GCF to develop further guidance on how its environmental and social safeguards could incorporate the Cancun safeguards taking into account non-carbon benefits (of forests).

(In 2010, the UNFCCC meeting of Parties in Cancun, Mexico, adopted a decision on safeguards for REDD-plus in relation to results-based payments).

Highlighted below are some exchanges on the REDD-plus issue in the Board.

Tosi Mpanu Mpanu (Democratic Republic of Congo) said that a majority of emissions in his country is due to deforestation and REDD-plus will definitely have a transformational role to play there.

“Whatever we undertake here must align with what has been accomplished,” referring to the three-phase approach and cautioned that the two-track approach may create confusion in the mind of project proponents. However, he said he could support the two-track approach if the view was that it can gather strong momentum for projects to take place. He said his constituency (the African region) has specific concerns regarding non-carbon benefits but said that this discussion has yet to be resolved.

Mpanu Mpanu preferred to have an early decision to cope with submissions for proposals and hoped that the Board will be in a good position to adopt the modalities in early 2017 to facilitate pre-2020 actions and the implementation of the Paris Agreement.

He noted the need for clarity with experts on the use of the terms results-based payments and results-based finance and to ensure consistency with the decisions of the UNFCCC Conference of Parties. He stressed that there should be no new conditions imposed for accessing REDD-plus finance.

Diann Black-Layne (Antigua and Barbuda) said that small island states got some REDD-plus financing amounting to a mere US$600,000 but the cost of development of REDD-plus itself was US$2.5mil. She said that it was important to note the time incurred and “even if you have great results there is no guarantee of payment.”

Nagmeldin Goutbi ElHassan (Sudan) supported the two-track approach and regarded it as more of a process issue and would like the Board to make a decision (on the operational framework) by 2017.

Ayman Shasly (Saudi Arabia) said GCF needs to send signals that it wants to do things differently and show a leadership role. He stressed that the 1.5°C limit in temperature rise cannot be achieved “without doing a lot of work in REDD-plus. So we need to be ready ... don’t be reactive but proactive. Reach out to those potential countries ... don’t wait for them to come to you,” he added. He said the decision should make reference for simplified process for the RFP.

Supporting Shasly, Colin Young (Belize) said the leadership has to come from the Board, warning that ‘we are in a position that we could lose opportunity to mitigate deforestation given the upward (deforestation) trajectory in the last 10 years’. “I heard about using the standards developed by others funds. Those have largely been ineffective in terms of significant mitigation efforts but I hope the GCF will be a different kind of fund. The GCF should have greater appetite (for risks), he added.

Young stressed that REDD-plus has to be looked at with a different lens as it does not fit into the typical investment projects. He also cautioned against the use of the term results-based finance and called for consistency with UNFCCC COP decisions.

Richard Muyungi (Tanzania) said the GCF should consider supporting countries in phase one and phase two but phase three would be about what the countries can do in terms of results-based actions.

Raul Delgado (Mexico) said the right approach is to follow the modalities, principles and guidelines set by the UNFCCC. On access modalities, he believed that the GCF strategies should be flexible to allow countries to receive funding through NDAs/focal points and accredited entities.

Henrik Harboe (Norway) said expectations for REDD-plus is high and the potential is huge if the GCF could support it effectively. The starting point, he said, is the Warsaw Framework and GCF decisions but the Board also needs to look beyond to be ambitious.

Harboe said that there were good experiences that we can build on including issues of safeguards and projects which should be firmly anchored in green economic growth strategies. REDD-plus strategies should be transformative, he added.

He did not see the logic with the two-track approach as all concerns including milestones can be accommodated in the phased-approach of the Warsaw Framework. He urged for an ambitious timeline for results-based payment to be operationalised as well as for stakeholder consultations.

Sally Truong (Australia) supported the development of full operational modalities and wanted the GCF REDD-plus financing to show complementarity (with other funds). She said the two-track approach will send a clear signal that GCF is ready to support a broad range of proposals.

Leonardo Martinez-Diaz (United States) said supporting the two-track approach and results-based finance seems like the sensible way to go.

Karsten Sach (Germany) said a full operational framework is needed to enable the GCF to play a strong role in REDD-plus but that would take time to learn lessons including those existing international mechanisms outside of the UNFCCC.

He said GCF needs to clarity on the methodological approaches and said that they should be based on existing frameworks such as the World Bank’s Forest Carbon Partnership Facility and UN-REDD. He said the Cancun Safeguards will need to be assured and double-funding should be avoided.

Anton Hilber (Switzerland) said complementarity was extremely important as there are a lot of actors out there, noting that work has been done in many countries that are ready with independent monitoring.

Andrea Ledward (United Kingdom) would like the GCF to be the gold standard in terms of social and fiduciary issues and urged for wide consultation particularly with the NDAs and civil society organisations. She said GCF does not operate in isolation and it should complement and build on existing standards of other mechanisms.

The active observer representative for southern civil society organisations,Kimaren Riamit of the Indigenous Livelihood Enhancement Partners (Kenya) said that although the Warsaw Framework was referenced in the decision, crucial components such as the recognition of non-carbon benefits and community-based monitoring were not considered. He called on the Board to mandate the Secretariat to develop further guidance on the matter.

Edited by Meena Raman

UNFCCC / Green Climate Fund / 14th GCF Board meeting
12 October - 14 October 2016, Songdo, Incheon, Republic of Korea
by Hillary Chew
Songdo, 26 October 2016