Update on the work of the Transitional Committee for the Design of the Green Climate Fund

1. ecbi Update on the work of the Transitional Committee for the Design of the Green Climate Fund Carol Mwape european capacity building initiative initiative européenne de renforcement des capacités for sustained capacity building in support of international climate change negotiations pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques

2. The UNFCCC Transitional Committeefor the Design of the Green Climate Fund • TC-GCF established by decision 1CP/16 of the Conference of the Parties at the UN Climate Conference in Cancun, Mexico (2010) • 40 members (15 developed and 25 developing countries) nominated by the UN regional groups, LDCs and SIDS • LDCs represented by Zambia and Bangladesh • mandate of designing the Green Climate Fund according to the TORs outlined in Appendix III of 1CP/16 • GCF intended to be the operating entity of the financial mechanism of the convention and to be under the guidance and authority of the Conference of Parties

3. MAIN ISSUES OF NEGOTIATION UNDER THE TC • Relationship between the GCF and the Conference of Parties; • Legal status of the GCF; • Independence of the secretariat; • Windows; • Direct access • Private sector • Transitional arrangements for the operationalization of the GCF

4. WORK OF THE TRANSITIONAL COMMITTEE • TC1: Mexico 28-29 April 2011. Inception meeting. established four work streams (WS I: Scope, guiding principles and cross-cutting issues, WSII Governance and institutional arrangements, WSIII Operational modalities, WSIV Monitoring and evaluation • TC2: Japan 13-14 July 2011. discussed issues arising under each WS. A group of developing countries presented a document providing text for the operationalization of the Green Climate Fund • TC3: Switzerland 11-13 September 2011. main agenda item was to work on the report outline that set out the recommendations and operational documents for approval by COP17 • TC4: South Africa 16-18 October 2011. finalize draft report for adoption by TC and submission to COP 17 for approval. Final work of the TC before COP17 in Durban, South Africa

5. TC.3 Geneva: Proposal for GCF Definitions “Eligible activities” means projects, programmes and other types of activities eligible for financial support by the GCF. “Implementing Entities” means the national legal entities and multilateral organizations that have been accredited by the GCF Board as meeting its criteria for accessing funding in order to implement eligible activities approved by the GCF. “Funding Entities” means the national legal entities and multilateral organizations that have been accredited by the GCF Board as meeting its criteria for accessing funding in order to approve and fund eligible activities.

6. TC.4 Cape Town: Proposal for revised draft language

7. Enhanced Direct Access 5.4.1 Direct Access 47. Recipient countries will nominate competent sub-national, national and regional implementing entities for accreditation to receive funding. The Board will consider additional modalities that further enhance direct access, including through funding entities with a view of enhancing country ownership of projects and programmes.

8. ISSUES OF CONCERN FOR DEVELOPING COUNTRIES • Limited role of the COP in relation to the GCF • The role of national entities in the approval of projects • The private sector facility providing for direct access to the fund • Authority given to the GCF Board to add, modify and remove funding windows without COP approval • Procedure for selection of a permanent Trustee after the interim period for the World bank elapses • Process for conferring legal status on the GCF not elaborated

9. ISSUES OF CONCERN FOR DEVELOPED COUNTRIES • Restriction of windows to adaptation and mitigation (absence of REDD+ window) • Restriction of financial inputs to developed countries when there was indication of will by some developing countries to contribute to the Fund • COP endorsement of host country • Limited weight given to the private sector facility compared to direct access

10. CURRENT STATUS OF WORK OF THE TC • TC members expressed views on the draft report. Zambia on behalf of LDCs expressed concern on authority provided for the GCF Board to add, modify and remove funding windows without COP approval. LDCs also emphasised the need for national decision making on projects • Draft report not perfect and incomplete but offers a starting point for further work • General acceptance of the report by 38 TC members • US and Saudi Arabia objected to having the report adopted by TC and objected submission for approval by COP17 • No consensus reached and report was considered by TC to be submitted to COP17 for further consideration and approval

11. IMPLICATIONS FOR DURBAN • Further consideration of the TC report and governing instruments could open the text to negotiations by Parties • Anticipated operationalization of the Fund may not be achieved if report doesn’t get approved at COP17 • Negotiations on long term finance and sources of finance under the LCA could be negatively affected • Means of implementation for adaptation, mitigation (1.b.ii) may be not be assured and could affect progress in thematic negotiations

13. WORK OF THE TC • Mid 16th October TC members met to decide on the work programme for the remaining task • 17th October TC members reviewed the draft report in smaller groups for expression of views • 18th October Co Chairs conducted consultations on issues of divergent views • Evening of 18th October Co chairs presented a report with recommendations to COP17 and an appendix of the GCF governing instrument. The instrument sets out the design of the GCF.