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The Green Climate Fund (GCF), the largest dedicated international climate fund, is expected to channel billions of dollars to help developing countries combat climate change. It is one of the primary institutions supporting implementation of the Paris Agreement and is built into the Agreement as one of the operating entities of the Agreement’s financial mechanism.
This week, the Board of the Green Climate Fund meets in Songdo, South Korea, for its 13th meeting since the Fund’s inception in 2010. At this meeting, the Board will, among other things, address how the GCF can best support the Paris Agreement. This month, World Resources Institute, Sierra Club, and the Center for Clean Air Policy, with inputs from CARE International, submitted views on key improvements the GCF could make to advance the goals of the Agreement. In particular, we offered recommendations on how the GCF could:
Integrate the overarching goals of the Agreement into the work of the Fund;
Enhance and support NDC implementation and long-term planning; and
Promote programmatic funding approaches to deliver funding for transformational action at scale.
Integrate Overarching Goals of the Agreement
Some of the more important aspects of the Paris Agreement include its recognition of the need to hold global temperatures well below 2 degrees C (3.6 degrees F), while pursuing efforts to limit temperature increase to 1.5 degrees C (2.7 degrees F) (Art. 2.1(a)) and of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development” (Art. 2.1(c)). The GCF should, in all its activities, strive to support the global effort to reach these goals.
One way for the GCF to support making all financial flows climate-compatible is for the Fund to encourage accredited entities to shift their overall portfolios – not just the funding they receive from the GCF – to be in line with Article 2.1(c). The Fund’s Board has already requested the Accreditation Panel to develop tools to assess “the extent to which the Accredited Entities’ overall portfolios of activities beyond those funded by the GCF have evolved in this direction during the accreditation period.” (Decision B.12/29(c)). The GCF should develop tools to enable benchmarking of the progress Accredited Entities make in shifting their overall portfolios toward climate compatibility.
NDC Implementation and Long-term Planning
Implementation of the Paris Agreement hinges on countries successfully achieving and ratchetting up the commitments outlined in their nationally determined contributions (NDCs). For many countries, the GCF could be an important source of financing to help ensure NDC implementation. Before receiving such finance, though, countries face the challenge of linking the broad goals outline in their NDCs to strong, bankable project pipelines.
Finding a strong pipeline of transformational proposals has proved to be the GCF’s biggest challenge. If all projects up for consideration at this Board meeting are approved, the GCF will have financed a portfolio of projects worth a total of just under $425 million ($168 million last year and $256.6 million at this meeting). To put this in context, the GCF has a goal of allocating $2.5 billion for proposals this year, and only two more Board meetings planned for this.
Through its Readiness Program and Project Preparation Facility (PPF), the GCF has a critical role to play in helping countries develop effective and ambitions project pipelines that support the achievement of NDCs. Providing early and meaningful readiness and preparatory support to build national capacity and strong country pipelines for mitigation and adaptation is essential. It will be important to support efforts to convert NDCs into ambitious and paradigm shifting policies and measures, and develop matching financing strategies to ensure activities are funded.
Scaling-up resources for readiness and preparatory support and streamlining the readiness or PPF proposal approval process to ensure timely provision of support will be critical. To increase efficiency, the GCF should also consider setting up regional hubs to provide readiness support in partnership with accredited entities.
Programmatic Funding Approaches – Achieving Funding at Scale
The Paris Agreement and the GCF Governing Instrument highlight the need for efficient access to funding. One way to improve the GCF’s efficiency overall is for the Fund to move toward funding impactful programs that go beyond one-off projects. Under such an approach, the Board would work with accredited entities that demonstrate capacity to manage larger programs at sectoral, national, or regional levels. Ideally, any programs or projects would include policy-level initiatives that have the potential to change behavior in markets and economies such that benefits will go beyond the confines of the specific program.
The GCF already has the foundation to support programmatic approaches. Now it needs to build parameters for how it will implement this in practice. The expeditious launch of the enhanced direct access (EDA) program, which aims to allow certain entities from developing countries to access programmatic funds, would be a move in this direction. The drafting of the accreditation strategy (to be considered later this year) is also an opportunity to ensure that the entities accredited to receive financing from the GCF are capable of identifying and managing initiatives with a broad and transformative impact.
Finally, the GCF may wish to partner with existing climate funds and bodies to channel funding to countries that may not have a national accredited entity or would prefer to use existing funding channels. For example, the GCF should consider options for partnering with other entities referenced in the Paris Agreement, including the Adaptation Fund, the Least Developed Countries Fund (LDCF), the Special Climate Change Fund (SCCF) and the Climate Technology Center and Network (CTCN). In particular, these entities could help the GCF deliver small-scale support for mitigation and adaptation, and avoid duplication of effort between funds. Ideally such partnerships would not generate an additional administrative burden for the funds or funding recipients but rather help create synergies between entities of the Agreement.