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INSIDER: 3 Takeaways from the Green Climate Fund Meeting

Last week, the Board of the Green Climate Fund (GCF) convened in Songdo for its penultimate meeting in 2016. As the biggest multilateral climate fund to date, the GCF has a vital role to play in delivering on the goals of the Paris Agreement. While the GCF has made some progress in the last year—including approving its first projects, adopting a strategic plan, strengthening its readiness program and building institutional partnerships—a lot more work remains to be done.

Three takeaways:

1. Board Approves $746 Million, but Programmatic Approaches Unresolved

Last year, the GCF set an ambitious goal of allocating $2.5 billion for proposals in 2016. At this meeting, the Board approved $746 million for 10 proposals, which brings 2016 allocation totals to just over $1 billion. While this represents progress, it is less than half the stated goal.

The proposals included projects and programs involving flood management and risk reduction, forests and sustainable landscapes, natural resource management and sustainable energy. More than half the allocated amount went to proposals on sustainable or green energy from the Inter-American Development Bank, European Bank for Reconstruction and Development, and Deutsche Bank. Notably, there were two proposals from national implementing entities (Morocco and Namibia) and one proposal under the enhanced direct access pilot (Namibia), which allows national institutions to obtain an envelope of funds for a program with subprojects.

Several controversial issues also arose in the process of approving this round of proposals. The most significant question was how to handle proposals for programs consisting of sub-projects to be identified in the future. At the previous meeting in July, Board members considered this question, particularly how much to delegate authority for the selection and oversight of those sub-projects to the entities seeking funding. Another issue was how to handle situations where entities wish to propose regional programs starting with a few countries and expanding to others at a later stage. The GCF requires government endorsement for any activity (the no-objection procedure), so the question is whether multi-country proposals should have endorsement from all countries at the outset or on a rolling basis as activities start to expand. However, the Board did not reach resolution on these issues in July. In the absence of clear policy guidance, many Board members were reluctant to approve programs at this meeting.

Eventually, Board members agreed to proceed with approvals in the understanding that it would not set precedent. The discussion that unfolded during the approvals process highlighted the need for the Board to clarify these issues, and many Board members stated that this policy issue must be resolved before the next round of approvals in December. 

2. First Steps Toward an Accreditation Strategy

An important issue for the GCF is how to prioritize the entities it will partner with to channel money to developing countries. To create a partnership, entities must enter into an accreditation arrangement with the GCF, which is a rigorous and lengthy process. At present, there is a four-year backlog of processing accreditation applications, possibly much more if requests for accreditation increase. The GCF currently processes these applications on a first come, first serve basis, and there is no guidance to the Secretariat about how to prioritize applications. For instance, currently 11 of the 41 entities accredited to date have been national institutions from developing countries. If the GCF Board wants to even out this ratio they need to provide the Secretariat with that guidance.

To address these concerns, earlier this year the Board agreed to develop a strategy for accreditation. Unfortunately, the Board was not able to adopt the proposed strategy at this meeting, but it did provide some guidance on questions of prioritization. The Board agreed that the Secretariat should prioritize applications from national institutions, entities in the Asia-Pacific region and private sector entities, as well as take steps to streamline processes where possible. Hopefully, this is a first step toward a more effective strategy for handling accreditation at the GCF.  

3. Board Appoints New Head

After lengthy deliberations, the Board appointed former Australian Climate Envoy and Head of the Global Green Growth Initiative Howard Bamsey as the new executive director of the GCF Secretariat. The executive director plays a crucial role in ensuring that the GCF Secretariat can effectively and efficiently fulfill its role in soliciting and reviewing funding applications, which makes this appointment perhaps the most important decision the Board makes this year. One of Mr. Bamsey’s first tasks will be to address recruitment challenges and strengthen Secretariat staffing, which will enable it to handle a growing pipeline of requests for accreditation and proposals. The GCF may also need to consider opening regional offices, particularly to improve efficiencies in providing readiness support to national institutions.  

Next Steps

The GCF Board will meet once more this year from December 13-15 in Apia, Samoa. In addition to considering the next round of proposals and accreditation applications, the Board will need to finalize several policies up for discussion, including programmatic approaches, accreditation strategy and simplified procedures for approving smaller-scale activities, which is a critical issue for smaller, more vulnerable countries.

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