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Module 3: Project development and the Green Climate Fund (GCF)

Module 3: Project development and the Green Climate Fund (GCF). Content. GCF background and objectives Resources allocation Access modalities Project development Project requirements: Investment criteria Further elements (ESS, gender policy, RMF) Support for project preparation

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Module 3: Project development and the Green Climate Fund (GCF)

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  1. Module 3: Project development and the Green Climate Fund (GCF)

  2. Content • GCF background and objectives • Resources allocation • Access modalities • Project development • Project requirements: • Investment criteria • Further elements (ESS, gender policy, RMF) • Support for project preparation • Key take aways and lessons learned

  3. GCF background and objectives

  4. Green Climate Fund (GCF) - History Source: GCF 2014; Climate Funds Update Selected milestones: 2009: Copenhagen Accord, COP 15: "Copenhagen Green Climate Fund” is mentioned 2010: GCF formally established by COP 16 in Cancun 2011: GCF Governing Instrument adopted in Durban, during COP 17: “The Fund will be designated as an operating entity of the financial mechanism of the convention […] and will be accountable to and function under the guidance of the COP.” 2015: First projects approved by the GCF Board • The operationalization of the GCF is ongoing. • Some issues with regard to both the way it works and how he addresses certain issues are under discussion. • This is mainly due to the highly political context in which the GCF operates and the high expectations regarding its work.

  5. GCF Objectives • 50:50 balance between mitigation and adaptation over time; • a floor of 50% of the adaptation allocation for particularly vulnerable countries, including least developed countries (LDCs), small island developed States (SIDS) and African States; Source (chart): GCF website /infographics (14 November 2017) • Green Climate Fund (GCF) will “promote the paradigm shift towards low-emission and climate-resilient development pathways by providing support to developing countries to limit or reduce their greenhouse gas emissions and to adapt to the impacts of climate change, taking into account the needs of those developing countries particularly vulnerable to the adverse effects of climate change.” (GCF 2011)

  6. 1. Scale and Impact • 2. Governance • 3. Access • 4. Allocation • The largest and fastest-growing climate fund • Promote a paradigm shiftand help developing countries transform their economies and put them on a low emission and climate-resilient pathway • Country -driven and in line with countries priorities • Expected to become the main global fund for climate finance • Board comprised of an equalnumber of members from developed countries and developing countries • Dedicated seats for SIDS and LDCs • Active observers from civil society and private sector • Recipient countries will be able to utilize direct access or access through international and regional intermediaries and implementing entities accredited by the Fund • Public and private entities can be accredited • Minimum floor for adaptation financing to SIDS, LDCs • The allocation of resources will be balanced between adaptation and mitigation activities • The allocation of resources will be based on results Why is the GCF different? Source: GCF 2015a

  7. The role of paradigm shift and transformational change The key ambition of the GCF is to promote a paradigm shift towards low-emission and climate-resilient development pathways. • The understanding of what “paradigm shift” means is still developing. • It seems to imply systemic, not incremental change, encompassing large-scale transformations of societies, patterns of production and consumption • The term is often used interchangeably with “transformational change” One useful definition: “A shift away from practices that are incompatible with the challenges of climate change.” (CDKN, 2013: How can the Green Climate Fund initiate a paradigm shift?) The GCF has developed different categories to operationalize its paradigm shift potential criterion, thus contributing to the understanding of what a paradigm shift actually means.

  8. Resources allocation

  9. GCF approved projects (as of 2 May 2019) Source: GCF website(15 May 2019)

  10. GCF result areas Source (chart): GCF website /infographics (16 May 2019)

  11. GCF projectsizes (Status: 02 May 2019) Source: GCF website(16 May 2019)

  12. Access modalities

  13. Country ownershipandaccessoptions • Country ownership: • National Designated Authority (NDA)represents the interests and priorities of the country when providing “non-objection” letter • Access options: • Accredited entities: Countries can work through various implementing entities – international, regional, national, or sub-national • Entities applying for accreditation with GCF need to fulfil the Fund’s fiduciary standards and environmental and social safeguards (ESS) Source: CDKN 2017

  14. Rolesandresponsiblities: Overviewofinvolvedentities Source: Chart takenfromGIZ, 2017. Guidebook: Writing a Green Climate Fund Funding Proposal (p. 13)

  15. Rolesofactors in GCF context (simplified) $$$$ • Accredited Entity • Proposaldevelopment • Management of GCF funds, overallprojectcoordinationandreporting • Implementation GCF Executive Entity Executive Entity Executive Entity NDA Checks if project proposal is in line with country strategies Non-objection $ $ $ Implementation ofproject / programmeparts

  16. Direct Access as a prominent focus of international CF discussions A thorough cost-benefit analysis is recommended before deciding for accreditation of national entities: It is not a prerequisite, but rather additional option allowing countries to select the most suitable mechanism. Using multilateral or regional implementing entities can be equally effective.

  17. National implementing entities

  18. Senegal: Centre de SuiviEcologique National implementing entities • Institutions at the national level, e.g. funds, ministries, agencies, and NGOs. • NIEs must align with the GCF’s objectives and meet its fiduciary standards and environ-mental and social safeguards through an accreditation process. • To ensure balance of diversity, GCF will actively support applications for accreditation received from subnational, national and regional public and private sector entities Namibia: Environmental Investment Rwanda: Ministry of Natural Resources India: National Bank for Agriculture and Rural Development Peru: Peruvian Trust Fund for National Parks and Protected Areas Morocco: Agency for Agricultural Development of Morocco Ethiopia: Ministry of Finance and Economic Cooperation Kenya: National Environment Management Authority Argentina:Unit for Rural Change of Argentina

  19. Project development

  20. When designing a project, a climate lens should be applied and the entire project cycle should be considered from the outset General elements of the project cycle include: Identification of needs and priorities Preparation and design of the project Appraisal of the project proposal Approval of funding institutions Implementation of the project Evaluation of the project or programme

  21. Project approvalprocess • Project approval process involves NDA, implementing entities (IE) and GCF Secretariat, Board and Advisory Panel. • ~18 months from concept note submission to final project approval Source (chart): GCF website /infographics (16 May 2019)

  22. Initial ProposalApprovalProcess – FundingProposal Submission & Review NDA No-objection 6 Legal arrangements 2 3 Accredited Entity Concept development (voluntary) Submission of fundingproposal 1 Trustee Generation of fundingproposals 4 Analysis and recommendation Secretariat Technical Advisory Panel 5 BoardDecision Board Source: GCF website/fundingprojects – fineprint(16 May 2019)

  23. GCF Initial Proposal Approval Process - Concept Development (voluntary) Concept note submission Fundingproposaldevelopment Accredited Entity Providefeedback, recommendations Secretariat 2-4 weeks Source: GCF website/fundingprojects – fineprint(16 May 2019)

  24. Independent Technical Advisory Panel • The independent Technical Advisory Panel (TAP) will conduct technical assessment of the performance of the project or programmeagainst activity‐specific criteria, as defined in the initial investment framework. • The TAP will present the outcome of its technical assessment and its recommendations on each funding proposal to the GCF Board. • The Secretariat facilitates the response from AEs to the assessment and recommendations from the TAP. • The TAP assessment and the AEs responses will be published on the GCF website. Source: GCF website/fundingprojects – fineprint(16 May 2019)

  25. GCF SimplifiedApprovalProcess (SAP) … offeringeasieraccessto GCF resourcesforsmaller-scaleactivities. outreach Adopted in October 2017, specifically (but not only) targeting direct access entities • Simplification: • The documentation to be provided with the Funding Proposal is reduced • The review and approval processes are streamlined. • Requirements: • Project that is ready for scaling up, and has the potential for transformation to adapt and/or mitigate to climate change. • Requiring a GCF contribution of up to USD 10 million. • With minimal environmental and social risks and impacts. • GCF Secretariat will assess concept note or funding proposal to determine if eligible under SAP forestmanagement earlywarning advisoryservices rural energy watersupply

  26. Project requirements

  27. GCF Investment Criteria Source: GCF 2017a

  28. Further elements • Environmental and Social Safeguards • Accredited entities need to present the environment and social impact assessment and the Environmental and Social Management Plan, and explain how the project will avoid or mitigate negative impacts the Environmental and Social Safeguard (ESS) standard. • Gender Policy • GCF has adopted its own gender policy and applies a gender sensitive approach to all its climate mitigation and adaptation activities, implemented by all accredited entities. • Results Management Framework • The programmes and projects funded by the Fund will be regularly monitored for impact, efficiency and effectiveness. Performance indicators meeting the RMF will be an important criterion for allocating GCF resources.

  29. Support for project preparation

  30. Support provided by GCF’s Project Preparation Facility (PPF) Source (chart): GCF 2017a The GCF’s Project Preparation Facility (PPF) provides support to turn a concept note into a full funding proposal. The Board will approve requests for support from project proponents, by reviewing and assessing them against GCF’s investment criteria as well as its justification of needs for project preparation funding with information on the underlying project. The PPF is available to all AEs, with preference given to direct access entities submitting projects under the micro- to small-size categories (up to US$10 million)

  31. Support provided by GCF’s Project Preparation Facility (PPF) The application template is available on the GCF website: www.greenclimate.fund/documents/20182/104167Project_Preparation_FundingApplication_Template.docx/65e91043-7122-44798778-b563b8ee3ee2 Requests for PPF support • Usually in the form of grants, but private sector projects may include other instruments, such as grants with repayment contingency and equity instruments • The grant is capped at 10% of total funding requested, or a maximum of US$1.5 million. • Applications must be submitted by the AE. The applicant must justify how the proposed project or programme is aligned with national priorities and ensure full country ownership. • A no-objection letter from the NDA should be provided alongside the PPF application.

  32. GCF Readiness and Preparatory Support Programme Additional information is available at: http://www.greenclimate.fund/gcf101/empowering-countries/readiness-support Countries also have access to the GCF Readiness and Preparatory Support Programme, in order to request additional support to help establish and strengthen NDAs, as well as to build capacities for entities seeking direct access to the GCF. NDAs can access these support funds directly, if they meet the assessment criteria of the GCF, or work with delivery partners that provide the support. The GCF has signed Readiness and Preparatory Support Framework Agreements with the delivery partners FAO, GIZ, UNDP and UNEP.

  33. GIZ Guidebook: Writing a Green Climate Fund Funding Proposal • The Guidebook aims to inform about Green Climate Fund (GCF) requirements for funding proposals and to provide ideas for their successful development. • It provides valuable background information about the GCF, the project application process and the actors involved. • The guide sets out a detailed step-by-step consideration of the GCF funding proposal template and how to complete it. If you are interested in the guidebook, please contact the GIZ CF Ready Programme at https://www.giz.de/fachexpertise/html/19694.html

  34. GCF project preparation: Support provided by GIZ’s Climate Finance Readiness Programme Objective: Support the transformational use of climate finance in the countries Support for national climatefinanceinstitutionswithaccreditationundertheGCF‘sdirectaccessmodality Strategic and conceptual support in developing national climate strategies and policy packages Global exchange of experiences On behalf of BMZ and with co-finance from USAID, the Czech Ministry of the Environment and the Green Climate Fund, GIZ implements the Climate Finance Readiness Programme (CF Ready)  Currently supports 14 partner countries and one region to access andeffectively use climate finance. Three pillars:

  35. GCF project preparation: Support provided by the Africa Climate Change Fund (ACCF) Objective: Support regional member countries prepare to access greater amounts of climate finance and use the funds received more efficiently and effectively. Climate finance readiness and preparatory activities Knowledge management and information sharing related to climate change Capacitybuildingandtraining Hosted and managed by the African Development Bank and with co-finance from Germany, Italy and the Government of Flanders (Belgium), the Africa Climate Change Fund  Supports African countries in their transition to a more climate-resilient and low-carbon mode of development. Areas of intervention:

  36. GCF project preparation: Support provided by the Inter-American Development Bank Objective: support LAC countries in accessing resources from the Green Climate Fund (GCF) to enable and catalyze climate investments towards, low carbon, climate resilient technology and infrastructure. Information and Knowledge Sharing Identification and Prioritization of Projects Detailed Design of Projects Established by the Inter-American Development Bank, the Technical Cooperation (TC) project Regional Support for the Green Climate Fund (Nov. 2015 - Nov. 2018)  Supports Latin America and the Caribbean (LAC) countries in preparing to, and accessing resources from the Green Climate Fund (GCF). Three pillars:

  37. Key take aways and lessons learned

  38. Key take-aways Developing a rough project idea for the GCF or other funding possibilities is one of the major tasks and opportunities of sector experts, given their specific sector knowledge. Project developers need to identify an Accredited Entity (AE) on the national or international level that can submit your project idea to the GCF. Your institution may act as Implementing Entity (IE – in case it is accredited with the GCF) or, more likely, Executing Entity (EE – no GCF accreditation needed) though. Early on in the process of developing your proposal, project developers should consult withtheir National Designated Authority (NDA). It will eventually have to confirm the project is in line with national priorities and will be able to provide you with further advice. Estimates vary, but from developing a project idea to getting a project approved by the GCF may take 24 or even 36 months. There are several opportunities to get support for developing a project idea for the GCF. AEs may also provide substantial assistance in this respect.

  39. Some early learnings: Success factors for successful GCF projects Source: Based on GIZ, 2017. Guidebook: Writing a Green Climate Fund Funding Proposal (pp. 8/9) Focus on climate change, emphasize the climate-context of the project in relation mitigation and/or adaptation to climate change. Highlight that proposed activities are in line with national priorities and existing strategies and policy frameworks (e.g. your country’s NDC), demonstrating country ownership of a funding proposal. Pay particular attention to stakeholder engagement during project development and implementation as it underlines country ownership and might contribute to replicability. Identify scope for innovative long term benefits that enable a paradigm shift: knowledge sharing, communication about lessons learned, creation of an enabling environment and contributions to the regulatory framework in place will add significantly to your GCF proposal and increase its replicability potential. Demonstrate how activities are expected to achieve outcomes and impacts, contributing to the GCF’s objectives, with a convincing logic framework.

  40. Thank you for your attention!!!

  41. List of references and recommended readings: CDKN, 2013: How can the Green Climate Fund initiate a paradigm shift? https://cdkn.org/wp-content/uploads/2013/10/Policy-brief_GCF-paradigm-shift_LR1.pdf Fayolle, V. and Odianose, S., 2017: Green Climate Fund Proposal toolkit 2017. London: Acclimatise and Climate and Development Knowledge Network.https://cdkn.org/wp-content/uploads/2017/06/GCF-project-development-manual.pdf GCF, 2011: Governing Instrument for the Green Climate Fund. https://www.greenclimate.fund/documents/20182/574763/Governing_Instrument.pdf/caa6ce45-cd54-4ab0-9e37-fb637a9c6235 GCF, 2015a: Engaging with the Green Climate Fund. https://www.greenclimate.fund/documents/20182/194568/GCF_ELEMENTS_01.pdf/542c1610-81b4-40df-be62-025cef3d26d8 GCF, 2015b: GCF Concept Note User’s Guide. http://www.greenclimate.fund/documents/20182/239759/GCF_Concept_Note_User_s_Guide.pdf/64866eea-3437-4007-a0e4-01b60e6e463b GCF, 2017a: Accreditation to the Green Climate Fund. http://www.greenclimate.fund/documents/20182/818273/1.3_-_GCF_Accreditation_Introduction_February_2017.pdf/4d44997c-6ae9-4b0e-be5d-32da82e62725 GCF, 2017b: GCF 101. A comprehensive guide on how to access the Green Climate Fund.http://www.greenclimate.fund/gcf101 GIZ, 2017. Guidebook: Writing a Green Climate Fund Funding Proposal.

  42. List of references and recommended readings: GIZ CF Ready Programme.https://www.giz.de/fachexpertise/html/19694.html Mersmannet al., 2014: Shifting Paradigms. Unpacking Transformation for Climate Action. A Guidebook for Climate Finance & Development Practitioners.https://www.giz.de/expertise/downloads/giz2014-en-climate-finance-shifting-paradigms.pdf ODI, 2011: Direct access to climate finance: experiences and lessons learnt, ODI Discussion Paper.https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/7479.pdf

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