Last week, the Green Climate Fund (GCF) Board met for its last meeting before the upcoming climate talks in Paris. Countries created the GCF to be the main global fund for climate finance, and as such, it could play a vital role in delivering the goals of an agreement in Paris. If the GCF is to be a key player in the future climate regime, it needs to show that it can effectively spend money. Is it up to the task?

Five outcomes from the recent Board meeting begin to answer that question:

1. Board Approves Initial Projects, With Conditions

After intense discussions, the Board approved all eight projects up for decision last week, amounting to $168 million in total funds. This marks an important milestone for the GCF, showing that it is ready to disburse funding to support low-carbon and climate-resilient development in developing countries.

However, the scale of funding is far short of what’s needed. The Board has an aspirational goal of disbursing $2.5 billion in 2016, to ensure that the GCF gets on track to spend enough money before 2018 to trigger replenishment of the initial $ 10 billion in committed funds. It will need to significantly ramp up its efforts to reach that goal.

Countries will also need to ensure that funding proposals embody the scale and innovation adequate to meet the planet’s pressing needs. The approved portfolio contains projects that show promise in addressing climate change and improving peoples’ lives. They seek to, for example, bring renewable energy to rural communities, scale up the use of climate information for early warning systems, increase ecosystem resilience, and manage climate-induced water shortages. The Board returned repeatedly to questions of whether the projects were sufficiently climate-focused and innovative to live up to the GCF’s mandate to “promote the paradigm shift towards low-emission and climate-resilient development pathways.” For example, questions arose as to whether infrastructure technologies proposed in Bangladesh were sufficiently innovative, or whether water projects proposed by Fiji and the Maldives adequately demonstrated a relationship to impacts from climate change. The Board approved the wetlands resilience project in Peru on the condition that its proponents gain buy-in from affected indigenous Peoples.

2. Increased Readiness Support

Strong project proposals will come from countries that have solid plans and strong institutions ready to effectively access and deploy finance to reduce the impacts of climate change. Currently, many countries still struggle to meet this goal. In order to help ensure the emergence of strong project proposals in the future, the Board created a project preparation facility last week to help national institutions from developing countries generate ambitious pipelines. The Board also approved an additional $14 million to help these institutions become ready to effectively access and utilize GCF funding (bringing the total allocation of readiness finance to $30 million).

To meet its goal of quickly disbursing funds for ambitious activities, the GCF will need to boost its own capacity to support project proponents and swiftly distribute these readiness funds. The GCF will benefit from partnering with other actors that have the resources and capacity necessary to support developing country institutions.

Climate Finance Readiness at WRI

On the sidelines of the GCF board meeting in Zambia, WRI hosted a dinner to highlight lessons learned to date by institutions from developing countries that have sought finance from the GCF. The dinner brought together a diverse group of representatives from government agencies, development finance institutions, civil society groups and the GCF secretariat. The conversation brought to light, among other things, the need for clearer information about GCF financing, including its accreditation and project approval processes.

In order to help fill some of the information gap, WRI has partnered with the GCF secretariat and the Deutsche Gesellschaft Für Internationale Zusammenarbeit (GIZ) to develop a self-assessment tool for institutions that are interested in seeking GCF funding.

3. A Plan for a Strategic Plan?

Going forward, the GCF could potentially benefit from having a clearer plan in place for how it will support a true shift toward more climate-compatible development. If well crafted, a strategic plan could potentially help the institution clarify its role relative to other funding sources, and enable it to focus on areas where its investments could have the greatest impact. The Board recognized the potential value of such a plan last week, and put in place a process for developing a more detailed strategy. The Board agreed to create a working group consisting of three board members from both developed and developing countries to explore the option. An informal Board meeting will take place early next year to clarify key questions at stake, including how a clearer strategy might help the institution scale up activities and respond to developing country needs. The process will be open to stakeholder engagement and will, hopefully, help guide the Fund toward an ambitious future.

4. Monitoring and Accountability Framework Established

In order to help ensure that those receiving finance from the GCF adhere to the GCF’s standards, the Board adopted an initial monitoring and accountability framework last week. While the GCF will need additional procedures to put the framework into practice, it is a good start in being able to monitor the impact of GCF activities. The framework sets out monitoring and reporting requirements for accredited entities and remedial measures in the case of a breach of requirements. It also includes a role for local participatory monitoring. An interesting and welcome development was the inclusion of a provision that requires assessing whether an entity’s overall portfolio is moving toward low-emission and climate-resilient development as a factor in determining reaccreditation every five years. This provision clarifies that the GCF should look at the overall funding trends of entities before deciding whether to accredit them.

5. Delayed Accreditation

There were several issues that the Board did not have time to address last week, including accreditation of nine new entities to the GCF as implementing entities. The agenda item came up very late in the meeting (3:30am on the last night) and the Board decided to defer accreditation decisions until the next meeting. On the one hand, the delay could allow for improvements to be made to the accreditation process, such as the introduction of more transparency. It also postpones accreditation of some of the bigger banks up for accreditation that some have found controversial. However, the result was disappointing, particularly for the three national entities from Africa who worked hard in the expectation of being accredited at this meeting. It may also put a damper on the motivation of other institutions considering accreditation to the Fund.

High Hopes, Big Questions

With its first project approvals, the Fund moved into a new phase of its operation. But key questions remain. Will the Fund promote a paradigm shift to low-emissions, climate-resilient development, or will it pursue only incremental changes? Will it be a force to enable developing countries to take even more ambitious climate action, or will it support business as usual? Successful implementation of the Paris Agreement will depend in no small part on the GCF’s effectiveness. It is time for the Fund to step up.