Green Climate Fund approves first set of funding proposals after debate

9 November 2015

The Green Climate Fund (GCF) held its eleventh Board meeting in Livingstone, Zambia on 2-5 November and adopted important decisions after long and intense debate, that included the approval of eight funding proposals.

Central to the overall exchanges and debate during the Zambia Board meeting was the underlying issue of what message gets conveyed to the United Nations Framework Convention on Climate Change’s (UNFCCC) twenty-first session of the Conference of Parties (COP21) in Paris. (Over 195 countries are expected to arrive at a global agreement in Paris scheduled to take place from 30 November to 11 December.)

Several developing country Board members including those from Egypt, India and Saudi Arabia were concerned that the approval of funding proposals were being hurried to gain political mileage at COP 21, when there were still several policy issues that remained to be addressed, relevant to the process for approving proposals.

The Board member from Saudi Arabia said that after the disappointing initial resource mobilisation of US$ 10.2 billion for the GCF, the level of finance for funding the new proposals amounted to only US$ 168 million, which was a “mere sweetener for developing countries to sign up to the new agreement (in Paris)”. (Of the US$1 0.2 billion pledged, up to now, only US$ 5.83 billion has been legally committed to the GCF).

Developing country Board members were very disappointed that no decision was taken on when the first formal replenishment of the Fund’s resources could take place, following the initial resource mobilization which happened in 2014. This was because developed country Board members did not want to zero in on any set date to trigger the replenishment. (See details of exchanges in this regard below).

Towards the end of the meeting, after intense exchanges, the Board decided on approving all the funding proposals with conditions and recommendations attached to all but one project, before any disbursements could be made.

The meeting was considered ‘historic’ by some as it was the first time that the Fund had to consider and approve the funding proposals. Eight funding proposals were on the table for approval and the projects were discussed at length, largely occupying most of the attention of Board members. The funding proposals that were considered and approved are the following:

  • Building the Resilience of Wetlands in the Province of Datem del Maranon in Peru;
  • Scaling Up the Use of Modernized Climate Information and Early Warning Systems in Malawi;
  • Increasing the Resilience of Ecosystems and Communities through the Restoration of the Productive Bases of Salinized Lands in Senegal;
  • Climate Resilient Infrastructure Mainstreaming in Bangladesh;
  • KawiSafi Ventures Fund in Eastern Africa;
  • Energy Efficiency Green Bond in Latin America and the Caribbean;
  • Supporting Vulnerable Communities in Maldives to Manage Climate Change-Induced Water Shortages; and
  • Urban Water Supply and Wastewater Management Project in Fiji

The Fiji project was approved without any conditions, while all the others projects had conditions and recommendations attached to them.

Among other decisions adopted at the Board meeting included the status of initial resource mobilization, implementation of the readiness programme, initial monitoring and accountability framework for accredited entities as well as a decision related to the strategic plan for the Fund.

The Board members also did not get enough time to consider the proposals for the accreditation of new entities to the GCF who can access its resources, as the meeting went into over time and ended past 4 am on 6 November, a day after it was supposed to have concluded.

The Board also saw intense exchanges on the status of initial resource mobilization and readiness.

On the initial resource mobilisation process, the Secretariat informed the Board that of the US$ 10.2 billion pledged, the signed contributions totaled US$ 5.83 billion and that 14 countries had not signed their contribution agreements for part or all of the pledges. The Secretariat also informed that the United States (US) was discussing arrangements and the first tranche of resources would not be realised by December 2015. (The US has pledged US$ 3 billion in grants to the Fund).  

Developed country Board members said they were in the process of working with the Secretariat to sign the contributor agreements. The US added that it is continuing to work with the Congress on the specifics and added that the timeline was uncertain since it was dependent on the legislative budgetary process. Developing country Board members urged the developed countries to fulfill their pledges and a decision to this effect was taken at the meeting.

On readiness, developing country Board members were concerned about the slow pace of rolling out readiness funding for countries. After much discussions, the Board members decided on adopting a decision, which among other things, mandates the Secretariat to produce a revised allocation system for readiness and preparatory support, taking into account the needs and priorities of developing countries.

Divergences over formal replenishment of resources

There was considerable divergence over the first formal replenishment of the GCF. During the discussions, the GCF Secretariat presented two options to the Board to start the replenishment process. One option was when the cumulative project/programme funding approvals reach 60 per cent of the contributions signed by the eleventh meeting of the Board (the current meeting) and the second option was end of June 2017.

Members were divided over the replenishment issue as developed countries did not want to zero in on any set date to trigger the replenishment. They also said they needed to know the results achieved so far before discussing replenishment. Developing country Board members objected to this and reminded them that the discussions on replenishment should take place in the context of the UNFCCC negotiations.

Jose Deglado (Austria) said that they needed to show that the Fund is working in order to justify the replenishment. Javier Sanz Mu๑os (Spain) said it was too early to discuss replenishment and the discussion be postponed to happen within the framework of the strategic plan. Atsuyuki Oike (Japan) added that since the GCF does not have any achievements to speak of just yet, he could not ask for replenishment from the government. Caroline Leclerc (Canada) said she was in a difficult position given a new government in the country.

Leonardo Diaz-Martinez (US) said he has no authority to agree on a trigger beyond what was already agreed. He added that US $10.2 billion is the headline number for this Fund and any pledging meeting would happen only after the 60 per cent trigger was met.

Stefan Schwager (Switzerland) also said he was not in favour of a replenishment process ahead of the delivery of the projects. He said that either of the options presented was not suitable but added that he preferred a percentage trigger to a time-bound trigger. “We need to review the achievement before we can discuss replenishment,” he said.

Andrea Ledward (UK) said the Board had already agreed on the 60 per cent trigger. She added that results were important for getting the support of the ministers. Anders Wallberg (Sweden) spoke in the same breath as he outlined the importance of having an evaluation of initial results to guide replenishment. Arnaud Buisse (France) said he found it strange to start a discussion on replenishment before the trigger and suggested the Board come back to the issue when the trigger starts.

Ewen McDonald (Australia) too indicated evaluation of the Fund and the importance of having results before budgeting is discussed. Karsten Sach (Germany) added that he needed proof of a track record, adding that a decision on the replenishment process is either not needed or not helpful at this stage. He suggested linking the 60 per cent to contributions signed by a future date, such as those signed by April 2017.

Reacting to the comments, the developing country Board members said that the operative word in climate finance was predictability and that it is an important element for the Paris talks. “Since a clear trigger is needed, a date would be clearer,” said Zaheer Fakir (South Africa). On the 60 per cent target, Fakir asked whether the trigger is to be applied to a moving target or to the funds currently committed (US $5.8 billion) or the funds pledged (US $10.2 billion). “I would like to see a decision which sends predictability with clarity on what the trigger is. The Secretariat should rethink the process,” said Fakir.

Jorge Ferrer Rodriguez (Cuba) and Tosi Mpanu Mpanu (Democratic Republic of Congo) supported Fakir. Rodriguez (Cuba) said the US $100 billion commitment suggests that they should be collecting money yearly and a share of that should come to the GCF. He expressed doubts on questions raised by developed country Board members to assess the results of the Fund.

Dipak Dasgupta (India) said that in the report to the COP, they could only point to the signed contributions. The report to the COP from the GCF should state the commitments in the grant equivalent of signed pledges and not promissory notes, which do not count. “We have US $5.8 billion and that is the only number. A second step is to convert commitments to projects but we have no idea how much of this US$ 5.8 billion will be committed to projects. If we do not get this number, it will be the failure of this Board,” said Dasgupta “We don’t have US$ 10.2 billion. Only US $5.8 billion is going to Paris,” he said. Dasgupta further elaborated that climate finance flows mean actual flows, which is shown by actual disbursements (to developing countries).

Omar El-Arini (Egypt) said that on the 60 per cent trigger, the Board had already agreed when replenishment would start and added that it was not helpful to divert from the commitments agreed to. He added that the Board needs a process for determining the amount needed for replenishment and the trigger that would determine when the replenishment would start. He clarified that that it did not mean that they should be approving projects and programmes just to get to 60 per cent. He said either January 2017 or June 2017 should be the start of replenishment.

Objecting to the word ‘donors’ used by developed country Board members, Ayman Shasly (Saudi Arabia) reminded that the GCF is “not a donation fund.” He added that the resources to the GCF are “to pay for the damage that developed countries have caused over many years (due to their historical emissions).” He stressed that the discussion was not a good signal for the Paris agreement. He said that after the disappointing initial resource mobilisation of US $10.2 billion, the level of finance for projects amounting to US$ 168 million was a “mere sweetener for developing countries to sign up to the new agreement”.

Shashly also said the conditions being set by the developed country Board members were not helpful. “Now you say you want this Fund to prove itself. This is another conditionality. Now you say there will be no replenishment process until we deliver,” he said.  Shashly called on the Secretariat to be factual and accurate in its reporting to the COP. He said that there should be no more of this “promising messaging” that the Board had approved eight projects and was working on a strategic plan. To the developing countries, he said “dream on that they would get any meaningful money from this Fund.”

Shashly said that there seemed to be no intention to provide clarity on the future of the resources. “What is the magic number? We are saying, whatever is the number right now, is the number. 60% of this number (US$ 5.8 billion) is about US $3 billion, which is nothing. We cannot be more disappointed. We hear a lot of talk but no actions. We are converting this Fund into a body only for investments. Contributors only give funds with conditions. This Board is rendered helpless even if we are to intervene in the discussion on replenishment. We continue to be a non-existent Board,” retorted Shashly strongly.

Yingming Yang (China) called for a decision on replenishment, adding that climate finance in the UNFCCC is about new, additional, predictable, sustainable and scalable finance. He also said that a formal arrangement on GCF replenishment would help create a constructive atmosphere for the on-going negotiations under the UNFCCC.

The discussion ended with Co-Chair Henrik Harboe (Norway) saying that it would be beneficial to have a process document ready for the next meeting on the replenishment issue.

Among other developments at the meeting, Zaheer Fakir (South Africa) and Ewen McDonald (Australia) were elected as the new Co-Chairs of the GCF Fund. The next meeting of the GCF Board will be held in the week of 7 March 2016.+

(Edited by Meena Raman)

TWN Info Service on Climate Change Nov15/

UNFCCC / Green Climate Fund / 11th GCF Board meeting
2 November - 5 November 2015, Livingstone, Zambia
9 November 2015