Green Climate Fund

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Content

• Objectives and structure

• Key design elements

- Resources allocation

- Initial results management framework

- Investment framework

- Access and country ownership

- Project approval process

- Readiness support

- Private Sector Facility

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Objectives and structure

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Green Climate Fund (GCF) - History

Milestones 2009-2014:

• 2009: Copenhagen Accord, COP 15: "Copenhagen Green Climate Fund” mentioned

• 2010: GCF formally established by COP 16 in Cancun• 2011: GCF Governing Instrument adopted in Durban, during COP 17:

“The Fund will be designated as an operating entity of the financial mechanism of the convention […] and will be accountable to and function under the guidance of the COP.”

• 2012: Decision for Songdo, Republic of Korea, as the host for GCF Secretariat• 2013: Hela Cheikhrouhou selected by the Board to become the Fund's

Executive Director• 2013-2014: Decisions to make the GCF operational during various GCF board

meetings

Source: GCF 2014Climate Funds Update

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Objectives and structure

Green Climate Fund (GCF) aims to promote a “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.” (GCF)

0.25 0.50

US$ 9 MILLION*

* allocated for administrative functions. Resource mobilisation process is underway.Source: GCF 2014 Climate Funds Update

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Why is it different?

Source: Xing Fu-Bertaux, GIZ 2014GCF 2014

1. Scale and Impact

• Make a significant and ambitious contribution to global efforts to combat climate change

• Promote a paradigm shift and help developing countries transform their economies and put them on a low emission and climate-resilient pathway

• Country -driven and in line with countries priorities

• Expected to become the main global fund for climate finance

2. Governance

• Board comprised of an equal number of members from developed countries and developing countries

• Dedicated seats for SIDS and LDCs

3. Access

• Recipient countries will be able to utilize direct access or access through international and regional intermediaries and implementing entities accredited by the Fund

4. Allocation

• Minimum floor for adaptation financing to SIDS, LDCs

• The allocation of resources will be balanced between adaptation and mitigation activities

• The allocation of resources will be based on results

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Current status update

Confirmed the completion of eight essential requirements to receive, manage and disburse finance (as listed in Annex XXII of the decision B.05/17):

Structure, fiduciary principles, environmental and social safeguards Investment and financial risk management framework Initial results areas and results management frameworkProcedures for accrediting implementing entities and intermediariesPolicies and procedures for the allocation of Fund resourcesProposal approval process, including criteria for programme and project

funding Initial modalities for the operation of the Fund’s mitigation and adaptation

windows and the Private Sector FacilityThree accountability mechanisms

Resource mobilization underway!

Source: GCF decision B.05/17

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Key design elements

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Key design elements

Source: GCF 2014

Resources allocation

Initial results management framework

Investment framework

Access and country ownership

Project approval process

Private Sector Facility

Readiness support

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Resources allocation

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Resources allocation

Source: GCF decision B.06/06

50:50 balance between mitigation and adaptation over time;

a floor of 50% of the adaptation allocation for particularly vulnerable countries, including least developed countries (LDCs), small island developed States (SIDS) and African States;

geographic balance and a reasonable and a reasonable and fair allocation across a broad range of countries, while maximizing the scale and transformational impact of the mitigation and adaptation activities of the Fund;

maximize engagement with the private sector, incl. through a significant allocation to the Private Sector Facility;

sufficient resources should be provided for readiness and preparatory support;

all allocation parameters should be determined in grant equivalents;

…to be reviewed no later than 2 years from the start of allocation of resources.

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Initial results management framework

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Initial results areas

Mitigation• Energy efficiency of buildings and

appliances; • Energy efficiency of industrial processes; • Low-emission transport; • Low-emission energy access; • Small-, medium- and large-scale low-

emission power generation;

Adaptation• Adaptation activities to reduce climate-

related vulnerabilities; • Selected flagship activities cutting across

adaptation result areas; • Scaling up of effective community-based

adaptation (CBA) actions;

Afforestation / REDD+• Sustainable forest management to

support mitigation and adaptation including afforestation and reduction of forest degradation;

• REDD+ implementation;

Cross-cutting• Design and planning of cities to support

mitigation and adaptation; • Sustainable land use management to

support mitigation and adaptation; • Readiness and capacity building for

adaptation and mitigation activities; • Supporting the coordination of public

goods such as “knowledge hubs”.

Source: GCF decision B. 05/03

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Initial results management framework

Levels of logic model

Source: GCF decision B. 07/04See GCF decision B. 05/03, Annex II for more performance indicators

Paradigm shift

Fund level impacts

Project / programme outcomes

Project / programme outputs

Activities

Inputs

• Performance measured at the paradigm shift and impact levels refers to the aggregate project/programme-based results of the Fund

• Inputs, activities, and outputs will be defined for each project/programme on a case-by-case basis

• Results management framework should take a gender-sensitive approach and that the results should be disaggregated by gender if relevant

• Further decision will be taken at the next Board meeting regarding:

• approach to gender, indicators on mitigation and adaptation,

• methodologies, data sources, frequency, and responsibilities for reporting

• logic model for REDD+

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Initial results management framework (mitigation)

Levels of logic model

Source: GCF decision B. 07/04See GCF decision B. 05/03, Annex II for more performance indicators

Paradigm shift

Fund level impacts

Project / programme outcomes

Shift to low-emission sustainable development pathways

Reduced emissions: • through increased low-emission energy access and generation• through increased access to low-emission transport• from buildings, cities, industries and appliances• from land use, deforestation, forest degradation, sustainable forest

management and conservation

• Strengthened institutional and regulatory systems for low-emission planning and development

• Increased number of large low-emission power suppliers• Lower energy intensity of buildings, cities and industries• Increased use of low-carbon transport• Improved management of land or forest areas

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Initial results management framework (adaptation)

Levels of logic model

Source: GCF decision B. 07/04See GCF decision B. 05/03, Annex II for more performance indicators

Paradigm shift

Fund level impacts

Project / programme outcomes

Increased climate-resilient sustainable development

• Increased resilience and enhanced livelihoods of the most vulnerable people, communities, and regions

• Increased resilience of health, and food and water security• Increased resilience of infrastructure and the built environment • Improved resilience of ecosystems and ecosystem services

• Strengthened institutional and regulatory systems for climate-responsive planning and development

• Increased use of climate information in decision-making• Strengthened adaptive capacity and reduced exposure to

climate risks• Strengthened awareness of climate threats and risk

reductions

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Investment framework

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Investment framework

Source: GCF decision B.07/06, Annex XIV

Investment policies

Covers all grants, concessional loans and

other financial instruments extended

by the Fund

Portfolio targets

Covers initial allocation parameters

and targets in line with resources allocation

Investment guidelines

Covers assessment criteria and sub-

criteria

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Investment policies

• Funding projects and programmes demonstrating maximum potential for a paradigm shift towards low-carbon and climate-resilient sustainable development, consistent with initial results areas and management framework and country-driven approach

• Accounted for in grant-equivalent terms based on a standard methodology

• Minimum concessional funding (i.e. a grant-equivalent subsidy element) necessary to make a project or programme viable.

• Intermediaries may blend the financing received with their own resources in order to increase the level of concessionality of the financing

• No “crowding out” of potential financing from other public and private sources

• Only revenue-generating activities that are intrinsically sound from a financial point of view will be supported through loans

Source: GCF decision B.07/06, Annex XIV

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Investment guidelines

Initial investment guidelines will be activity-based and will be composed of the following criteria:

Impact potential

Paradigm shift potential

Sustainable development potential

Needs of the recipient

Country ownership

Efficiency and effectiveness

Source: GCF decision B.07/06, Annex XIV

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Access and country ownership

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Access and country ownership

• Designated institution with the mandate to officially communicate with the Fund. Countries must decide what arrangements work best for them.

• Need to involve the Ministry of Finance as countries can also take loans from the GCF with implications for sovereign debt

Source: GCF/B.06/07Update on the Green Climate Fund’s Readiness and Preparatory Support Programme, July 2014http://www.gcfund.org/readiness/designations.html (accessed 08.08.2014)

National Designated Authority (NDA)

• Designated individual or an office in the national government that has the mandate to officially communicate with the Fund.

• Countries may nominate a Focal point instead of an NDA. This may be interim arrangement for countries who wish to take time to agree the optimal NDA arrangement.

Focal Point

Implementing Entities (IE)

• Countries can work through multiple entities (international, regional, national)

• The NDA nominates or endorses the IE, through which a country will access the GCF. IE must be accredited by the GCF

The Board is developing further guidance; arrangements are initial and may evolve

There is no hard deadline to nominate an NDA or Focal point (the sooner the better)

43 initial NDA or focal point designations as of August 2014

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Role of National Designated Authority

National Designated Authority:

Acts as the focal point for the Fund communication

Recommends to the Board funding proposals in the context of national climate change strategies and plans, including through consultation processes

Facilitates the communication of nominations of entities to the Fund

Seeks to ensure consistency of funding proposals from national, subnational, regional and international intermediaries and implementing entities with national plans and strategies

Implement the no objection procedure‐

Can develop a strategic country work program on a periodic basis, that identifies priorities for the GCF and preferred implementing entities (optional)

Source: GCF Decision B.04/05GCF Decision B.07/03Update on the Green Climate Fund’s Readiness and Preparatory Support Programme, July 2014

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Accreditation process for national, regional and international implementing entities – fit-to-purpose approach

Source: GCF decision B07/02, Annex I

Full accreditation cycle should be completed within six months and reviewed after five years

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Fiduciary standards, environmental and social safeguards

Fiduciary principles and standards

Environmental and social safeguards (ESS)

Basic fiduciary standards related to: (a) Key administrative and financial capacities (b) Transparency and accountability

Specialized fiduciary standards related to: (a) Project management (b) Grant award and / or funding allocation mechanisms (c) On-lending and / or blending

• Assessment and management of environmental and social risk and impacts

• Labor and working conditions• Resource efficiency and pollution

prevention• Community health, safety and security

• Land acquisition and involuntary resettlement

• Biodiversity conservation and sustainable management of living natural resources

• Indigenous people• Cultural heritage

Source: GCF decision B07/02, Annexes I, II

On an interim basis, the Performance Standards of the International Finance Corporations will be adopted. ESS will be completes within a period of 3 years after the Fund becomes operational

IFC Performance Standards:

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Project approval process

29Source: GCF decision B 07/03

* not a part of the initial proposal approval process

Country / Regional WorkProgram (optional)*

Generation of Funding Proposals

Concept Development (optional)

Preparation and Submission of Funding Proposal

Analysis and recommendations to the Board

Board Decision

Submission of country work programs

Compilation of country work programs

NDA / Focal point

Secretariat

Call for funding proposals or spontaneous funding proposal submissions

Secretariat

Concept note submission

Feedback on the concept

IE / EE / Inter-

mediary

Secretariat

No-objection

Funding proposal submission to the Secretariat

NDA / Focal point

Analysis and recommendation to the Board

Secretariat

Board decision:- Approval- Conditional approval - Rejection

Board

NDA / Focal point

SecretariatTechnical advisory panel

IE /Inter-

mediary

Project approval process

1 month 12-14 months 3 months

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Readiness support

31Source: Update on the Green Climate Fund’s Readiness and Preparatory Support Programme, July 2014

Readiness is a strategic priority: it should help to maximize effectiveness and reduce risks

It reduces possibilities that funding is not well suited to country needs, increasing the likelihood of effectiveness

US$ 30 million were provided by Germany and Korea for early readiness efforts

Detailed work programme is being developed and to be approved by the Board

Four initial activities:

Readiness and preparatory support by the GCF

32Source: GCF update on designations (accessed 08.08.2014) GCF 7th Board Meeting Decisions: B.07/06, B.07/03, B.07/02

43 NDA or focal point designations submitted in August 2014 countries may request readiness support to strengthen these arrangements

Reflected in the investment framework: “Sufficient support for readiness and preparatory activities”

Reflected in project approval process: readiness support upon request for country work programme development

Reflected in the accreditation process: “readiness and preparatory support in the context of direct access and the different capacities and capabilities of countries and institutions to enhance country ownership, with a view to facilitating capacity-building”

Readiness and preparatory support by the GCF

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Readiness scoping process

Readiness and preparatory support by the GCF

Source: Update on the Green Climate Fund’s Readiness and Preparatory Support Programme, July 2014

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Private Sector Facility

35Source: GCF decision B.07/08

… PSF implementation details to be decided at the next Board meeting

Private Sector Facility is an integral component of the Fund that will evolve over time will be reviewed no later than 3 years after initial resource mobilization

It is reflected in the initial investment framework: “Maximize fund-wide engagement with the private sector, including through significant allocation to the PSF”

PSF implementation details will be decided at the eighth Board meeting, based on the recommendations by the Private Sector Advisory Group, with a focus on:

modalities to promote participation of private sector actors in developing countries, in particular local actors in Small Island Developing States, Least Developed Countries and Africa, and with a special emphasis on adaptation;

modalities and instruments to mobilize private resources at scale including through special financing vehicles or instruments, including risk mitigation instruments

Private Sector Facility (PSF)

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Thank you for your attention!!!