UN’s flagship clean investment fund plans radical boost in support for developing countries once strategy is agreed by board this week
Vulnerable countries like Fiji hope the GCF will help them prepare for sea level rise and future climate-related extreme weather events (Pic: UNICEF)
By Ed King
The Green Climate Fund has revealed it is considering the merits of 22 projects worth more than US$5 billion as it seeks to ramp up support to developing countries in 2016.
Nine proposals in Africa worth $900m and six in Latin America and the Caribbean valued at $1.5bn are among those in an advanced stage of assessment, according to a recent update.
Disaster risk, energy infrastructure and reforestation programmes are among those to be presented to the board for approval, but it’s likely to be a few months before any get the green light.
A planned meeting at the GCF HQ in Songdo, South Korea will not consider funding proposals, said board co-chair Ewen McDonald.
Instead, the governing body will focus on policy issues, a strategic plan and assess calls for staffing levels to be radically boosted through 2016.
“With these matters hopefully resolved, the board will then have a further three meetings this year at which it will consider funding proposals,” said McDonald.
So far, eight initiatives worth $168m have been approved by the GCF, which was mandated at December’s Paris summit to invest in clean energy and help climate-vulnerable communities.
Still, much is expected of a fund that was conceived back in 2009 and which many of the world’s poorest countries are relying on as climate impacts worsen.
Where other funds would have been given time to develop a strategy and slowly grow a project base, the GCF has been expected to hit the ground running.
Report: Green Climate Fund holds Cape Town ‘crisis’ talks over future
Late in 2015, leading donors had expressed fears the new fund’s progress was stalling amid rumours of splits in the board and a lack of overall strategy.
But a week of Cape Town crisis talks in February appears to have delivered the basis for a plan of action, according to the board’s South African co-chair Zaheer Fakir.
“We left the meeting with a shared commitment and operating as one team — a united board, secretariat, observers and implementing entities, working to deliver against our aspirational funding target of $2.5 billion in 2016,” he said.
“I don’t think the GCF can ever get rid of the highly political context it has been placed in as a result of the Paris Agreement,” said Liane Schalatek, associate director of the Heinrich Böll Foundation and one of two official civil society observers in Songdo.
The $10.3bn fund received a boost on Monday with news the US had delivered $500m of its US$3 billion contribution, despite opposition from Republicans in Congress.
“This grant is the first step toward meeting the president’s commitment of $3 billion to the GCF, and shows that the United States stands squarely behind our international climate commitments,” read a State Department statement.
Still, fierce arguments are expected this week over a proposal to accredit HSBC and Credit Agricole partners, allowing them to work with the GCF to leverage further flows of finance.
On eve of board debate, #GCFund must say no to partnerships with @HSBC , Crédit Agricole https://t.co/ztEbHbpU9d pic.twitter.com/VdUanQ71xf
— Karen Orenstein (@KarenOrenstein) March 8, 2016
More than 150 civil society groups have released a statement urging the board to turn down the applications from banks they say are heavily invested in coal and other fossil fuels.
“Creating new business for big banks with large fossil fuel portfolios and poor records on human rights and financial scandal would undermine the very purpose of the Fund,” said Karen Orenstein of Friends of the Earth US.
The board is also primed to discuss staffing levels in Songdo and recruitment process for the next executive director after Héla Cheikhrouhou announced she would leave in September.
Keen to show it runs a tight ship, GCF says its yearly administration budget of $29 million is small compared to GAVI, the vaccine alliance ($98 million) and the Global Fund to fight AIDS/HIV ($288m).
Both have annual funding commitments smaller than the $2.5bn earmarked for approval by the GCF board this year, according to a staffing proposal published by the secretariat.
Communications, risk management, compliance and internal audits are areas identified as under-staffed; it also lacks experts in clean energy, forestry, transport and disaster resilience.
Former UN climate chief Yvo de Boer, who oversaw the 2009 agreement which set up the GCF, told Climate Home the board had to refocus on creating a fund fit for purpose.
“There is not always a consensus of what the nature of the bank should be,” said de Boer, now head of the Seoul-based Global Green Growth Institute
The soon-to-depart Cheikhrouhou faced a “very tough job” he added, given the political backdrop to the fund and frequent rows between developed and developing board members.
“She is holding the tiller but how effective she can be depends on the space she is allowed.”
He added: “I sense there is a growing awareness that money is not the issue. The issue is developing really good proposals that meet the risk-reward demands of investors.”