2020 marks an important year for climate finance and the beginning of a critical decade for climate ambition. Starting off its first meeting of the year, the Green Climate Fund (GCF) Board met from 10-12 March, in Geneva, Switzerland, to address pertinent agenda items. The Board considered an updated workplan for the next three years, the effectiveness of its committees, and recommendations for improving the efficiency and effectiveness of the simplified approval process (SAP).

Board members agreed on measures to increase the GCF’s capacity for an expected doubling of project proposals, and also discussed budgetary issues such as progress on ‘stuck’ projects and what lessons can be learned from the pilot programme on reducing emissions from deforestation and forest degradation or REDD+. This update informs of these GCF discussions and on the six funding proposals the GCF Board approved.

Progress on the GCF’s Work Program 2020-2030

As was decided at the previous Board meeting, the Co-Chairs presented a draft of the updated workplan of the Board for 2020–2023, including a schedule for a list of items the Board will consider in 2020. The Board considered a draft decision to adopt the updated workplan, which built on previous discussions that were held at an informal meeting from 5-7 February 2020, in Monrovia, Liberia.

Board members requested prioritizing: by June 2020, the approval of key policies related to the investment framework, including the incremental and full cost methodology, the policy on ‘concessionality’ and the mapping on eligibility and selection criteria; and by 2021, the approval of guidelines on the Board decisions without a Board meeting.

In informal consultations, views diverged on: strategic objectives and allocations; shifting financial flows; project prioritization; diversifying instruments; accreditation prioritization; and efficient process management and delegation. The Board advanced convergence of views on diversifying instruments and accreditation prioritization, but concluded with the need to further discuss the workplan at its June session.

The Board also took note of actions to be undertaken in 2020 in response to the guidance received from parties during the UN Climate Change Conference (COP 25) in 2019.

Working towards enhancing the effectiveness of committees

The status of the review of the effectiveness of committees was also highlighted as critical to be addressed as soon as possible under the GCF’s work plan. A previous report, which was distributed on a limited basis, suggested that there was scope to improve transparency by reviewing record keeping and reporting to the Board, and enhance effectiveness by reviewing structures of committees as well as the way committees operate and coordinate.

The Board took note of the ‘Final report of the review of the effectiveness of committees and groups established by the Board’ and of the ‘General Guidelines for Committees and Panels,’ and requested the Co-Chairs to consultant with members and Committees and present updated guidelines by its next June session.

Improving the GCF’s Simplified Approval Process

The Board also considered the review of the simplified approval process pilot scheme, which assesses the results achieved by the simplified approval process (SAP) to date, and includes recommendations for streamlining and improving the efficiency and effectiveness of the SAP. The review found the following:

  • The SAP is a valuable funding modality that can lead to expeditious approval of low-risk projects that can better address the urgent climate adaptation needs of GCF priority countries, such as the African States, the least developed countries (LDCs) and the small islands developing States (SIDS);
  • The SAP pipeline has grown by an average of 10.5% every month and represented 22% of all submission in the GCF pipeline, demonstrating a strong demand for SAP, especially from direct access entities (DAEs) which compose the majority of pipeline submissions; and
  • Despite the fact that SAP projects are small in terms of GCF finance and have low risks, the SAP is perceived similar to the regular proposal approval process even if they involve funding proposals that imply higher risks and require much larger amounts of GCF finance.

The review’s main recommendations include:

  • expand to activities that imply limited environmental and social risks;
  • speed up the approval cycle of such projects and programmes with ‘In between Board Meeting’ approvals;
  • introduce delegated authority to the Secretariat for the approval of SAP projects and programmes that imply minimal to no environmental and social risks;
  • use dedicated independent expert consultants in lieu of the independent Technical Advisory Panel (ITAP);
  • increase the Secretariat’s capacity for technical reviews of a larger number of SAP proposals using external technical reviewers;
  • strengthen technical support to DAEs with closer alignment to Project Preparation Facility and Readiness activities; and
  • keep expanding the knowledge products on SAP, which build the capacity of accredited entities and national designated authority in SAP project design/development.

Some members signaled their: opposition to delegating authority or functions of the ITAP to external consultants; concern over the unbalanced geographically distribution of projects in the SAP pipeline; and opposition to introducing any notion of “GCF priority countries.”

Observers called for ensuring that any ‘In between Board Meeting’ approval process allows for stakeholder input, and opposed the use of the SAP to facilitate private sector involvement as well as an opening up of the SAP for any projects outside of activities with minimal or no adverse environmental or social risks or impacts. The Board requested the Secretariat to further develop the SAP for Board consideration by its next meeting.

Increasing ITAP’s capacity for an expected doubling of project proposals

As ITAP is one of the areas identified in the SAP review in which efficiency could be increased both under the SAP and the regular GCF proposal approval process, the Board considered an option to enhance the ITAP by increasing its members to ensure that more projects will be brought before the Board for approval.

GCF Executive Director Yannick Glemarec clarified, among others, that the GCF’s key challenges include an increased need for project review, with an expected increase in the number of projects per year based on the level of replenishment. He said that 52 projects are currently undergoing review and noted that the GCF is on track to submit 21 projects to ITAP for the Board’s next meeting. He added that a larger number is expected for the Board’s subsequent meeting, in part to deliver on the ambition for UNFCCC COP 26.

During discussions, members raised procedural questions and advocated establishing a roster of experts. Observers stressed the importance to engage in more detail with in-country project relevant stakeholders and affected people. The Board decided to, inter alia:

  • re-appoint three members of the ITAP for a 1.5- year term;
  • increase the size of the ITAP from six to ten members by the end of 2020;
  • approve an additional administrative budget for the Board for the year 2020 in the amount of USD 338,800, to cover the additional four members of ITAP, the administrative support consultant, and the operationalization of the roster of experts; and
  • request the Secretariat, in consultation with the Investment Committee and the ITAP, to propose updates to the operational modalities of ITAP to accommodate the increased workload by the next Board meeting.

Status of the GCF’s financial resources

The GCF saw USD 10.3 billion in contributions during the fund’s initial resource mobilization which lasted from 2015-2018, and USD 9.8 billion for the GCF’s 2020-2023 replenishment, or first replenishment (GCF-1), with a combined total of USD 8.3 billion received so far. At its March meeting, the Board took note of the Status of GCF resources, pipelines and portfolio performance.

The GCF resource status shows that the total of GCF funding commitments amounts to USD 6.5 billion, which is composed of: USD 5.4 billion under approved projects; USD 0.3 billion under Readiness and Project Preparation Facilities; and, taking other factors into account, a remaining commitment authority of USD 1.8 billion. Noteworthy, USD 13.9 billion of co-financing mobilized, in addition to the 5.4 billion GCF financing, serve the approved projects and activities in 105 countries.

The largest portion of GCF Funding, amounting to USD 2.2 billion, is allocated to 37 countries in the African Region. This geographical distribution is followed by: USD 1.9 billion allocated to 34 countries in the Asia-Pacific region and USD 1.1 billion allocated to 27 countries from Latin and Caribbean Region. About USD 1.4 billion has been committed to 23 LDCs and USD 0.8 billion to SIDS.

The GCF portfolio of approved projects is expected to abate a total of 1.6 billion tonnes of greenhouse gases (GHG) in carbon dioxide equivalent and reach 348 million (direct and indirect) beneficiaries, based on the estimations of accredited entities. Since November 2015, the Board approved 124 funding proposals, with 74 projects under implementation and 61 projects receiving funds. In total, the approved projects, including co-financing, amount to USD 20.6 billion.

By the start of the year the GCF Funding pipeline showed 79 public and private sector funding proposals, which request a total GCF funding of USD 3.4 billion to support projects and programmes totaling USD 11.8 billion, when taking co-financing into account.

During discussions, members raised concerns about projects that are not progressing over long periods of time, suggesting consideration to restructure such projects and implement early filters as remedy measures. The Secretariat informed that it was developing a stronger portfolio performance management system to identify early warning and project performance and reported that seven projects worth USD 500 million “were stuck for two years” but are now expected to move towards implementation by mid-2020.

Progress on Reducing Emissions from Deforestation and Forest Degradation or REDD+

Regarding Reducing Emissions from Deforestation and Forest Degradation (REDD+), the Board took note of the Secretariat’s analysis of the experience with, and the progress made towards, achieving the objectives of the pilot programme for REDD-plus results-based payments. Findings include:

  • a positive response from REDD+ countries, and that the numbers of countries submitting REDD+ results to the UNFCCC increased from three to 12 in the last two years;
  • procedures approved by the Board are fully functional, and that technical capacities were enhanced in ITAP with UNFCCC experts; and
  • the pilot is relevant to the REDD+ results-based payments finance landscape, given that the GCF has provided 30% out of the global volume of this finance and a large interest to continue and to explore options, including involving the private sector to leverage additional finance for the pilot programme.

So far four projects in Brazil, Ecuador, Chile and Paraguay for USD 228.63 million have been approved, with six projects in the pipeline from Argentina, Colombia, Costa Rica, Indonesia, and Papua New Guinea. Nine more are expected by the end of the pilot programme, seven from the Latin America and the Caribbean (LAC) and three from the Asian region, while the funds are likely to be exhausted by 2021 and prior to the end of the pilot programme in 2022.

Recommendations from the analysis include, given the complexity of REDD+ elements, to further discuss and analyze alternatives for the continuation of the implementation of REDD+ results-based payments, including:

  • analyzing market and non-market contexts, the role of the private sector, complementarity with other multi- and bilateral funding arrangements, and technical and procedural matters; and
  • considering options such as to extend the pilot programme, a second pilot programme with some adjustments, a permanent funding window, and a grandparenting period.

Noting diverging views on REDD+ in general, some members highlighted that ensuring environmental integrity is a key issue to take into account when addressing the future for the pilot programme. Members also: voiced their reservations about considering a permanent funding window; supported consideration of the role of private actors; and cautioned against prejudging ongoing negotiations under Paris Agreement Article 6 (cooperative approaches). Raising concerns about the four funding proposals already adopted, Civil Society and Indigenous Peoples: called for revisions of the pilot programme; opposed the use of reference levels that lower ambition; raised questions about carbon storage permanence and verification of Indigenous Peoples and local communities; and stressed the need to avoid double counting.

Board approves USD 169.7 million in GCF funding for six projects and programmes

The GCF Board approved six funding proposals amounting to USD 169.7 million in GCF funding that will support projects and programmes with a total value of USD 618.7 million. The majority of the funding, or 74%, is allocated for adaptation projects, and 26% for mitigation projects. The expected impact potential is to abate a total of 22.9 million tonnes of carbon dioxide equivalent (CO2eq) of GHGs and reach 4.8 million (direct and indirect) beneficiaries. Specifically, the GCF approved finance to support four public-sector projects in the following countries:

  • Viet Nam, with a USD 30.2 million GCF grant for a USD 156.3 million adaptation project which aims to empower vulnerable smallholders by securing water provision, supporting farmers to adopt climate-resilient agriculture, and strengthening access to agro-climate information, credit and markets.
  • Zimbabwe, with a USD 26.6 million GCF grant for a USD 47.8million adaptation project which seeks to address climate impacts and build the resilience of smallholder farmers in three semi-arid agroecological regions of southern Zimbabwe.
  • Sri Lanka, with a USD 39.8 million GCF grant for a USD 49 million adaptation project which aims to strengthen the capacity of smallholder subsistence farmers to address climate-induced irrigation and drinking water shortages by improving the resilience of farm- and land-management practices, and by climate proofing ecosystems.
  • Cuba, with a USD 38.3 million GCF grant for a USD 119.9 million cross-cutting project which seeks to increase the climate resilience of agricultural production and ensure food security through improved ecosystem services from agroforestry, silvopastoral systems, reforestation and assisted natural forest regeneration in seven municipalities vulnerable to climate change.

The Board also approved two private sector funding proposals for climate action in the following countries:

  • Ecuador, Ethiopia, Ghana, Paraguay, Peru, Sierra Leone, and Uganda are benefiting from GCF funding of USD 25 million in equity for a USD 200 million mitigation programme, titled ‘Arbaro Fund – Sustainable Forestry Fund.’ It will invest in sustainable plantation forestry projects with adaptation co-benefits to increase carbon sinks by producing wood in a sustainable manner and conserving natural forests, whilst contributing to reduction of illegal logging.
  • Haiti, with a USD 1.5 million GCF grant and a USD 8.4 million loan for a USD 45.7 million cross-cutting project. The project aims to: develop 22 community-scale solar plus battery storage micro-grids in communities where currently no grid power exists; provide affordable and reliable access to modern energy services in communities; and build capacity for microgrid deployment and operation.

The Board further:

  • took note of the explanation provided by the Secretariat and the Accreditation Panel regarding the accreditation of the applicant ‘National Committee for Sub-National Democratic Development’; and
  • transferred to the Board for approval, without Board meeting and on a no objection basis, of the two applicants ‘Bhutan Trust Fund for Environmental Conservation’ and ‘Trade and Development Bank of Mongolia’.

In addition, the GCF also considered a number of reports during its meeting, including on the activities of the Secretariat, Board committees and independent units, and by the Co-Chairs such as proposals on Board decisions without a Board meeting, and their proposal on the review of committees, panels and groups.

The GCF Board Meeting closed without a decision on the date and venue of its next meeting, but with the understanding that the previous decision on the date, from 23-25 June 2020, stands unless the Board revokes that decision.

Given the extraordinary circumstances regarding the COVID-19 virus outbreak, the Board considered: authorizing the Co-Chairs to determine whether to change the venue, or hold the meeting by way of video conference, teleconference or net meeting; and requesting the Co-Chairs to continue to monitor the developments and consult with the Board on a possible change in date and/or venue for its next meeting. Observing no consensus, the Co-Chairs proposed further in-between meeting consultations.