Reviewing  Financing  Approaches  for  Mi4ga4on  Ac4on  in  Light  of  the  Paris  Agreement:  Climate  finance  &  GCF    

Climate  Technology  Ini4a4ve,  16th  Workshop  23-­‐24  June  2016,  Berlin  

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Content  

•  Introduc4on    •  GCF    

•  Objec4ves  

•  GCF  and  Paris  Agreement  

•  Resources  alloca4on  

•  Access  modali4es    

•  Investment  criteria  

•  Project  porSolio  

•  Private  sector  engagement  

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§  There  is  no  interna4onally  agreed  defini4on  of  climate  finance  

Global  climate  finance  flows  

Source:  Climate  Policy  Ini4a4ve  2015  

•  In  2014,  climate  finance  flows  totaled  USD  391  billion  •  Mi9ga9on  –  USD  361  billion,  mainly  for  RE,  EE  &  sustainable  transport    

•  Adapta9on  –  USD  25  billion,    mainly  water  &  wastewater  management,  agriculture,  forestry  and  infrastructure  

§  There  are  mul4ple  sources  of  climate  finance:  •  UNFCCC  mechanisms,  e.g.  GCF,  GEF,  LDCF,  SCCF    •  Government  budgets  •  Na4onal  development  finance  ins4tu4ons    •  Mul4-­‐  &  bilateral  development  finance  ins4tu4ons    •  Commercial  financial  ins4tu4ons    •  Corporate  actors    •  Project  developers  •  Households    

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GCF Objectives and structure

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Objec9ves  

Green  Climate  Fund  (GCF)  will  “promote  the  paradigm  shiC  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  par4cularly  vulnerable  to  the  adverse  effects  of  climate  change.”  (GCF)  

Source:  GCF  2016  

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Resource  mobiliza9on    

Source:  GCF  2016  

Largest  UNFCCC  fund  dedicated  to  climate  finance  

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Resource  mobiliza9on    

Source:  hcp://www.climatefundsupdate.org/data    

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Green  Climate  Fund  (GCF)  -­‐  History  

Milestones  2009-­‐2016:  

2009:      Copenhagen  Accord,  COP  15:  "Copenhagen  Green  Climate  Fund”  is          men4oned  

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  opera5ng  en5ty  of  the  financial          mechanism  of  the  conven5on  […]  and  will  be  accountable  to  and          func5on  under  the  guidance  of  the  COP.”  

2012-­‐2014:  GCF  Secretariat  in  Songdo,  Republic  of  Korea;                    GCF    Board  takes  decisions  to  make  the  GCF  opera4onal  

2015:      First  implemen4ng  en44es  accredited  and  8  projects  approved  

2016:      Target  to  approve  USD  2.5  billion  of  projects

Source:  GCF  2016  

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GCF and Paris Agreement

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GCF  and  Paris  Agreement  

Paris  Agreement,  Ar9cle  9:  

“8.  The  Financial  Mechanism  of  the  Conven4on,  including  its  opera4ng  en44es,  shall  serve  as  the  financial  mechanism  of  this  Agreement.”  

“9.  The  ins4tu4ons  serving  this  Agreement,  including  the  opera4ng  en44es  of  the  Financial  Mechanism  of  the  Conven4on,  shall  aim  to  ensure  efficient  access  to  financial  resources  through  simplified  approval  procedures  and  enhanced  readiness  support  for  developing  country  Par4es,  in  par4cular  for  the  least  developed  countries  and  small  island  developing  States,  in  the  context  of  their  na4onal  climate  strategies  and  plans.”  

Source:  UNFCCC  

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GCF  and  Paris  Agreement  (II)  

COP  21  decisions:  

“46.  Further  requests  the  Green  Climate  Fund  to  expedite  support  for  the  least  developed  countries  and  other  developing  country  Par4es  for  the  formula4on  of  na4onal  adapta4on  plans,…,  and  for  the  subsequent  implementa4on  of  policies,  projects  and  programmes  iden4fied  by  them;  

“58.  Decides  that  the  Green  Climate  Fund  and  the  Global  Environment  Facility,  the  en44es  entrusted  with  the  opera4on  of  the  Financial  Mechanism  of  the  Conven4on,  as  well  as  the  Least  Developed  Countries  Fund  and  the  Special  Climate  Change  Fund,  administered  by  the  Global  Environment  Facility,  shall  serve  the  Agreement;”  

“64.  Urges  the  ins4tu4ons  serving  the  Agreement  to  enhance  the  coordina4on  and  delivery  of  resources  to  support  country-­‐driven  strategies  through  simplified  and  efficient  applica4on  and  approval  procedures,  and  through  con4nued  readiness  support  to  developing  country  Par4es,  including  the  least  developed  countries  and  small  island  developing  States,  as  appropriate;”  

Source:  UNFCCC  

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GCF resources allocation

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Resources  alloca9on  

Source:  GCF  decision  B.06/06    

§  50:50  balance  between  mi9ga9on  and  adapta9on  over  4me;    

§  a  floor  of  50%  of  the  adapta9on  alloca9on  for  par9cularly  vulnerable  countries,  incl.  least  developed  countries  (LDCs),  small  island  developing  States  (SIDS)  and  Africa;    

§  geographic  balance  and  a  reasonable  and  fair  alloca4on  across  a  broad  range  of  countries  

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Resources  alloca9on  (II)  

Source:  GCF  decision  B.06/06    

§  projects  with  maximum  poten9al  for  a  paradigm  shiC  towards  low-­‐carbon  and  climate-­‐resilient  sustainable  development,  consistent  with  ini4al  results  areas  and  management  framework  and  country-­‐driven  approach  

§  maximize  engagement  with  the  private  sector,  incl.  through  a  significant  alloca4on  to  the  Private  Sector  Facility;    

§  sufficient  resources  should  be  provided  for  readiness  and  preparatory  support;    

§  no  “crowding  out”  of  poten4al  financing  from  other  public  and  private  sources  

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GCF access modalities

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GCF  access  modali9es  

Country  ownership:  •  Na4onal  Designated  Authority  (NDA)  

ensures  that  GCF  funding  proposals  from  accredited  en44es  are  in  line  with  na4onal  plans  and  strategies  [“no-­‐objec4on”  procedure]  

Access  modali9es:  •  Countries  can  access  the  GCF  

through  accredited  interna4onal,  regional  or  na4onal  en44es  

•  To  receive  accredita4on,  en44es  need  to  fulfill  requirements  on  fiduciary  standards  and  environmental  and  social  safeguards  

Source:  GCF  2016  

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Interna9onal  implemen9ng  en99es  

Source:  GCF  2016  

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Na9onal  implemen9ng  en99es  

Senegal:    Centre  de  Suivi  Ecologique  

Namibia:    Environmental  Investment  

Rwanda:    Ministry  of  Natural  Resources  

India:    Na4onal  Bank  for  Agriculture  and  Rural  Development  

Peru:    Peruvian  Trust  Fund  for  Na4onal  Parks  and  Protected  Areas  

Morocco:  Agency  for  Agricultural  Development  of  Morocco  

Ethiopia:  Ministry  of  Finance  and  Economic  Coopera4on  

Kenya:  Na4onal  Environment  Management    Authority  

Argen9na:  Unit  for  Rural  Change  of  Argen4na  

Source:  GCF  2016  

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GCF investment criteria

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Result  areas  

Source:  GCF  2016  

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Project  sizes  

Source:  GCF  2016  

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GCF  investment  criteria  

Impact  potential  

Paradigm  shift  potential  

Sustainable  development  potential  

Needs  of  the  recipient    

Country  ownership  

Efficiency  and  effec9veness  

Source:  GCF  2016  

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GCF project portfolio

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GCF  approved  projects    

Source:  GIZ  2016;  GCF  2016  

Peru:  Building  Resilience  of  Wetlands    

Fiji:  Urban  Water  Supply  and  Wastewater  Management  

Senegal:  Resilience  of  Ecosystems  and  Communi4es  through  Restora4on  of  Produc4ve  Bases  of  Sani4zed  Lands    

East  Africa:  KawiSafi  Fund  for  Off-­‐grid  Solar  Power  

Malawi:  Scaling  up  Modernized  Climate  Informa4on  and  Early  Warning  Systems  

Bangladesh:  Climate-­‐Resilient  Infrastructure  Mainstreaming  

Maldives:  Management  of  Climate  Change-­‐Induced  Water  Shortages  in  Vulnerable  Communi4es  

La9n  America  &  Caribbean:  Energy  Efficiency  Green  Bonds    

8  approved  projects  for  USD  168  million:    Adapta4on  [5]      Cross-­‐cutng  [2]    Mi4ga4on  [1]  

8  more  projects    for  USD  208  million  for  the  next  GCF  Board  mee9ng  28-­‐30  June  41  proposals    in  the  pipeline  for  USD  2.4  billion,  with  a  total  project  value  of  USD  6.6  billion.  

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GCF Private Sector Facility

26 Source:  GCF  decision  B.07/08    

Private  Sector  Facility  (PSF):  

§  Focus:  climate-­‐sensi4ve  private  sector  investments  in  developing  countries  in          renewable  energy,  transporta4on,  energy  efficiency,  agriculture  and  water          efficiency,  forestry  and  land  use,  waste  management,  and  urban  planning  

§  Aim:  to  address  the  par4cular  investment  requirements  of  the  private  sector  and  to  promote  public-­‐private  partnerships  

§  Financial  instruments:  debt,  equity,  guarantees,  and  grants.    

§  Projects  &  programmes:  

§  Invests  alongside  qualified  commercial  banks,  private  equity  firms,  investment  funds,  development  banks  and  other  financial  intermediaries  for  climate  change  projects  and  programmes.  

§  Provides  financing  to  financial  intermediaries  for  climate  change  projects  and  programmes  

§  Accredita4on:  a  diverse  balance  in  accredited  private  en44es  [3  accredited  private  en44es  so  far]  

Private  Sector  Facility  (I)  

27 Source:  GCF  DECISION  B.10/11  

Establishment  of  two  pilot  programmes:    

§  A  pilot  programme  to  support  micro-­‐,  small-­‐,  and  medium-­‐  sized  enterprises:    

à  Up  to  US$  200  million  over  the  course  of  the  ini5al  resource  mobiliza5on  period  

§  A  pilot  programme  to  mobilize  resources  at  scale:    

à  Up  to  US$  500  million,  over  the  course  of  the  ini5al  resource  mobiliza5on  period  

§  Consistence  with  the  GCF  objec4ves  and  policies:  country  ownership  through  the  par4cipa4on  of  NDA,  stakeholders  and  accredited  observers,  inter  alia  NDAs/FPs  providing  non-­‐objec4on  for  selected  proposals  

§  The  implementa4on  and  scale  of  the  ini4al  phase  of  both  programmes  will  be  reviewed  in  two  years  

Private  Sector  Facility  (II)  

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Thank  you  for  your  agen9on!  

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Back  up  

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The  global  climate  finance  architecture    

Source:  The  Global  Climate  Finance  Architecture.  ODI,  2014  

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Why  is  it  different?  

Source:  Xing  Fu-­‐Bertaux,  GIZ  2014    GCF  2014  

   

1.  Scale  and  Impact  

•  The  largest  and  fastest-­‐growing  climate  fund  

•  Promote  a  paradigm  shiC  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  priori4es  

•  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  

•  Ac4ve  observers  from  civil  society  and  private  sector  

3.  Access    

•  Recipient  countries  will  be  able  to  u4lize  direct  access  or  access  through  interna9onal  and  regional  intermediaries  and  implemen4ng  en44es  accredited  by  the  Fund  

•  Public  and  private  en44es  can  be  accredited  

4.  Alloca9on  

• Minimum  floor  for  adapta4on  financing  to  SIDS,  LDCs  

•  The  alloca4on  of  resources  will  be  balanced    between  adapta9on  and  mi9ga9on  ac4vi4es    

•  The  alloca4on  of  resources  will  be  based  on  results    

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Accredita9on  procedure  

Fit-­‐for-­‐purpose-­‐approach:    Applicants  will  only  need  to  prove  the  fulfilment  of  those  fiduciary  standards  and  environmental  and  social  safeguards  which  are  necessary  for  the  implementa4on  of  those  projects  the  IE  intends  to  carry  out:        

 Fast-­‐track  accredita9on  process:    

Ins4tu4ons,  which  successfully  passed  the  accredita4on  process  of  either    •  the  Global  Environment  Facility  (GEF),    •  Adapta4on  Fund  (AF)  or  the    •  Directorate-­‐General  for  Development  and  Coopera4on  –  EuropeAid  of  the  European  Commission  (EU-­‐DEVCO)  

Who  can  apply  for  accredita9on:  Interna4onal,  regional,  na4onal  and  sub-­‐na4onal  en44es  

NDA  endorsement  (direct  access)    Fiduciary  standards  Environmental  and  social  safeguards      Gender  policy    

Source:  GCF  2015.  Introduc4on  to  accredita4on  framework  

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Role  of  Na9onal  Designated  Authority  (NDA)  

§  Provide  broad  strategic  oversight  of  the  Fund’s  ac4vi4es  in  their  country  -­‐  alignment  with  na4onal  sustainable  development  objec4ves  and  frameworks  

Source:  GCF  Decision  B.04/05,  GCF  Decision  B.07/03,  GCF  Decision  B.10/10    Update  on  the  Green  Climate  Fund’s  Readiness  and  Preparatory  Support  Programme,  July  2014  

§  Convene  relevant  public,  private  and  civil  society  stakeholders  to  iden4fy  priority  sectors  to  be  financed  by  the  Fund.  

§  Communicate  nomina4ons  /  no  objec4on  of  en44es  seeking  accredita4on  to  the  Fund  under  the  ‘direct  access’  

§  Implement  the  no-­‐objec4on  procedure  on  funding  proposals  submiced  to  the  Fund,  to    ensure  consistency  of  funding  proposals  with  na4onal  climate  change  plans  and  priori4es.  

§  Over  130  countries  have  selected  their  NDAs  

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Project  approval  process  

Source:  GCF  2016  

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Readiness  support  

Source:  GCF  2016  

§  US$  15  million  of  $30  million  presently  available  for  immediate  programming  

§  Direct  support  to  NDAs  or  focal  points  available  

§  The  Fund  will  aim  for  a  floor  of  50%  of  the  readiness  support  alloca4on  to  SIDS,  LDCs,  African  States