Green Climate Fund

The design of the Green Climate Fund

http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/10066.pdf

Summary

The Green Climate Fund (GCF) was adopted as a financial mechanism of the UN Framework Convention on Climate Change (UNFCCC) at the end of 2011. It aims to make an ambitious contribution to attaining the mitigation and adaptation goals of the international community. Over time it is expected to become the main multilateral financing mechanism to support climate action in developing countries.

The board of the GCF met for the first time in August 2012 and its modalities will be agreed throughout 2012 with a goal of making the fund operational by early 2014.   

Graphs and statistics 

Details on our Data

  • Information on contributions is as of May 2016. On the 21st May 2015 the Fund reached its threshold with signed contributions equaling 50% of its total pledges. It is now authorized to allocate resources for project implementation. Signed contributions however are not reflected in the charts above as these have not yet been deposited into the Fund.
  • First project approvals: November 2015





Basic description

Name of Fund

Green Climate Fund (GCF)


Official Website
 
http://www.greenclimate.fund

Date created


Date fund proposed: December 2009. December 2010 decision to establish the GCF made.

Date fund made operational: The GCF became fully operational in 2015. May 21, 2015 marked the “effectiveness date” of the GCF after the conversion of a pledge from Japan brought the Fund over the 50% threshold of funding promises from the Berlin Pledge Conference converted into signed contribution requirements. The GCF was then able to start allocating its resources.
 
Proposed Life of Fund
 
The termination of the Fund is not set, but would be required to be approved by the COP based on a recommendation of the Board.

Administrating Organisation

The GCF is a legally independent institution with a fully independent secretariat headed by an Executive Secretary. The World Bank serves as the interim trustee of the GCF, and the Fund functions under the guidance of and remains accountable to the UNFCCC Conference of Parties.

Technical experts from the UNFCCC and the GEF comprised an interim secretariat to provide technical, administrative and logistical support to the Board until the independent secretariat of the GCF is established. The Independent Secretariat, located in Songdo South Korea, began its work in December 2013. The Secretariat is currently divided into four units – country programming, mitigation and adaptation, private sector facility, and support services – but a proposed reorganization would place the two mitigation and adaptation divisions and the PSF into portfolio development and portfolio management divisions, respectively.

Objectives


The GCF will contribute to the achievement of the ultimate objective of the United Nations Framework Convention on Climate Change (UNFCCC). In the context of sustainable development, the Fund will promote the 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, taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change. National ownership is intended to be central to the GCF approach.

The Fund will strive to maximize the impact of its funding for adaptation and mitigation, and seek a balance between the two, while promoting environmental, social, economic and development co-benefits and taking a gender-sensitive approach.

Activities Supported


The GCF will support projects, programmes, policies and other activities in all developing country parties to the UNFCCC.

The GCF finances activities to both enable and support adaptation, mitigation (including REDD+), technology development and transfer (including CCS), capacity-building and the preparation of national reports.

Countries will also be supported in the pursuit of project-based and programmatic approaches in accordance with strategies and plans (such as low-emission development strategies, Nationally Appropriate Mitigation Actions, National Adaptation Plans of Action, National Adaptation Plans and others). 

Conditions and Eligibility Requirements


The GCF is an operating entity of the UNFCCC’s financial mechanism. Recipient countries can submit funding proposal through National Designated Authorities (NDAs).  Recipient countries will be allowed direct access through accredited sub-national, national and regional implementing entities they propose and set up as long as these implementing entities fulfil certain fiduciary standards.

GCF funds can also be accessed through multilateral implementing entities, such as accredited multilateral development banks and UN agencies. See a current list of accredited implementing entities at the bottom of this page.

A private sector facility will also be established that allows direct and indirect financing by the GCF for private sector activities. National Designated Authorities, which can object to private sector activities, are to ensure that private sector interests are aligned with national climate policies.

Accessing the Fund

All developing country Parties to the Convention are eligible to receive resources from the GCF. The GCF gives recipient countries access to funding through accredited national, sub-national and regional implementing entities and intermediaries (including NGOs, government ministries, national development banks, and other domestic or regional organizations that can meet the Fund’s standards). Countries can also access funding through accredited international and regional entities (such as multilateral and regional development banks and UN agencies) under international access. Private sector entities can also be accredited as implementing entities.

Some funds will be distributed through Enhanced Direct Access, in which developing country-based accredited institutions receive an allocation of GCF finance and then make their own decisions on how to program resources. The EDA model differs from other arrangements, in which finance is only accessible through discrete projects and programs approved by the GCF board. In November 2015, the GCF approved USD 169 million for its first eight projects, which included two private sector and two mitigation projects and six public sector projects focusing on adaptation or crosscutting mitigation and adaptation. 

 

 Fund Governance

Decision Making Structure

A broad framework and general direction for operationalising the GCF exists in the Governing Instrument approved by COP 17 in Durban and produced by a Transitional Committee (TC), established following COP 16 in Cancun in 2010. The TC was comprised of 25 representatives from developing countries and 15 from developed countries.
 
The GCF Board of 24 members is comprised of an equal number of representatives from developed and developing countries selected by the UNFCCC regional constituencies. It includes one dedicated seat each for the Least Developed Countries (LDCs) and Small Island Developing States (SIDs). Two Co-Chairs of the Board are elected by Board members to serve a period of one-year, with one from a developing country Party and one from a developed country Party.

The World Bank will act as an interim trustee for the first three years of the GCF, functioning under the guidance of and accountable to the COP. A permanent trustee will be selected thereafter in an open and competitive process.


Non-Government Stakeholder Participation

Stakeholders are defined in the GCF Governing Instrument as private sector actors, civil society organisations, vulnerable groups, women and Indigenous Peoples.

The governing instrument includes two civil society and two private sector representatives as active observers to all Board Meetings although they will not be able to vote on decisions. The rules for such participation will need to be decided, as will further modalities for stakeholder engagement and participation. The GCFinterim secretariat has invited submissions on modalities for observer participation. The Board has issued initial best practice guidelines and options for country coordination and multi-stakeholder engagement for the Fund. At its 11th meeting, the Board approved an initial monitoring and accountability framework for GCF accredited entities, which highlights an oversight role for National Designated Authority and local stakeholders through participatory monitoring approaches.

Civil society representatives attended the Transitional Committee meetings and were engaged in discussions through text submissions and expert testimony.

Information Disclosure


The comprehensive information disclosure policy is still under development, but operates under the “presumption to disclose.” Form and function is to be decided, but the GCF information disclosure policy is intended to perform in a transparent manner. An independent fraud unit and a redress mechanism to address complaints related to Fund operations will also be established. The Secretariat’s communication strategy to set parameters for sharing information with the public will be formally considered in early 2016. 

Issues raised

 
Additionally, some stakeholders have expressed concern about the GCF process, including the transparency and diversity and balance of the GCF’s accredited entities. Applicant identities are only revealed after Board approval, in part to avoid reputational impact if they are not accredited, and independent third-party views on the track record of applicant entities are not part of the Accreditation Panel review process. Developing country Board members have raised concerns about the preponderance of multilateral and bilateral development agencies and financing organizations among the first 20 Accrediting Entities. The transparency of GCF processes was also called into question after a controversial decision in 2013 banned live webcasting of its meetings.
 
Some have noted the need to agree a business model to capitalise the fund, agree access and allocation guidelines, and operationalise accountability functions.The importance of focusing on the private sector facility of the GCF, and finding effective ways to harness the expertise and capacities of the private sector in its operationalisation. The GCF’s Board most important task will be to regain momentum lost since December 2011.Our Climate Finance Fundamental on the GCF presents an overview of the governing instrument.
 
 Relationship with Official Development Assistance

Inclusion as Official Development Assistance


The GCF aims to channel new and additional financial resources through a replenishment process, but does not define these terms.

Financial instrument/ delivery mechanism used (e.g. grant, loan)

Grants, concessional loans and other financial instruments yet to be determined.

Nature of recipient country involvement


The GCF aims to provide simplified and improved access to climate finance including through direct access. It also aims to adopt a country-driven approach that encourages the involvement of relevant stakeholders, including vulnerable groups and addressing gender aspects.


 Overview of GCF accredited entities, as of 6 November 2015

Name of Entity

Acronym

Country

Entity Type

Size

Fiduciary Standard

Environmental and social risk category

Accreditation conditions

Accreditation Date and Decision

INTERNATIONAL

Africa Finance Corporation

AFC

Nigeria

Int’l

Large

basic, project management, on-lending/blending

Category A / Intermediation 1

Annex XIII, Decision B.10/06: 1) gender

Decision B.10/06,  July 9, 2015

Agence Française de Developpement

AFD

France

Int’l

Large

Basic, project management, grant award, on-lending/blending

Category A / Intermediation 1

none

Decision B.10/06,  July 9, 2015

Asian Development Bank

ADB

Philippines

Int’l

Large

Basic, project management, grant award, on-lending/blending

Category A / Intermediation 1

none

Decision B.09/07 March 26, 2015

Conservation International Foundation

CI

USA

Int’l

Medium

basig, project management, grant award

Category C/ Intermediation 3

none

Decision B.10/06,  July 9, 2015

Deutsche Bank Aktiengesellschaft

Deutsche Bank AG

Germany

Int’l

Large

Basic, project management, grant award, on-lending/blending

Category A / Intermediation 1

Annex XIV, Decision B.10/06: 1) Fiduciary ; 2) Gender

Decision B.10/06,  July 9, 2015

European Bank for Reconstruction and Development

EBRD

UK

Int’l

Large

Basic, project management, grant award, on-lending/blending

Category A / Intermediation 1

none

Decision B.10/06,  July 9, 2015

Inter-American Development Bank

IDB

USA

Int’l

Large

Basic, project management, grant award, on-lending/blending

Category A / Intermediation 1

none

Decision B.10/06,  July 9, 2015

International Bank for Reconstruction and Development and International Development Association

Word Bank

USA

Int’l

Large

Basic, project management, grant award, on-lending/blending

Category A / Intermediation 1

none

Decision B.10/06,  July 9, 2015

Kreditanstalt für Wiederaufbau

KfW

Germany

Int’l

Large

Basic, project management, grant award, on-lending/blending

Category A / Intermediation 1

none

Decision B.09/07 March 26, 2015

United Nations Development Programme

UNDP

USA

Int’l

Medium

Basic, project management

Category B/ Intermediation 2

none

Decision B.09/07 March 26, 2015

United Nations Envrionment Programme

UNEP

Kenya

Int’l

Small

Basic, project management

Category B/ Intermediation 2

Annex XIX, Decision B.10/06: 1) ESS

Decision B.10/06,  July 9, 2015

REGIONAL

Acumen Funds, Inc.

Acumen

USA

Regional

Micro

Basic, project management, on-lending/blending

Category C/ Intermediation 3

Annex VII, Decision B.09/07: 1) Fiduciary; 2) Gender

Decision B.09/07, March 26, 2015

Caribbean Community Climate Change Center

CCCCC

Belize

Regional

Small

Basic, project management, grant award

Category B/ Intermediation 2

Annex XII, Decision B.10/06: 1) Fiduciary; 2) Gender

Decision B.10/6, July 9, 2015

Corporación Andina de Fomento

CAF

Venezuela

Regional

Large

Basic, project management, grant award, on-lending/blending

Category A/ Intermediation 1

Annex XI, Decision B.10/06: 1) ESS

Decision B.10/6, July 9, 2015

Secretariat of the Pacific Regional Environment Programme

SPREP

Samoa

Regional

Small

Basic, project management

Category C/ Intermediation 3

None

Decision B.09/07, March 26, 2015

NATIONAL

Centre de Suivi Ecologique

CSE

Senegal

National

Micro

Basic, project management

Category C/ Intermediation 3

Annex IV, Decision B.09/07: 1) Fiduciary;  2) Gender

Decision B.09/07, March 26, 2015

Environmental Investment Fund

EIF

Namibia

National

Micro

Basic, project management, grant award

Category C/ Intermediation 3

Annex VII, Decision B.10/06: 1) Fiduciary

Decision B.10/06, July 9, 2015

Ministry of Natural Resources

MINIRENA

Rwanda

National

Small

Basic, project management, grant award

Category B/ Intermediation 2

Annex IX, Decision B.10/06: 1) Fiduciary; 2) ESS

Decision B.10/06, July 9, 2015

National Bank for Agriculture and Rural Development

NABARD

India

National

Large

Basic, project management, grant award, on-lending/blending

Category B/ Intermediation 2

Annex X, Decision B.10/06:    1) ESS; 2) Gender

Decision B.10/06, July 9, 2015

Peruvian Trust Fund for National Parks and Protected Areas

Profonanpe

Peru

National

Micro

Basic, project management

Category C/ Intermediation 3

Annex V, Decision B.09/07:   1) Fiduciary

Decision B.09/07, March 26, 2015