Green Climate Fund approves eight projects at Zambia meet

Last week, the Green Climate Fund (GCF) approved eight projects worth US$ 168 million at its tenth board meeting in Zambia. Although all the projects were vetted through the GCF’s approved criteria, there were questions about insufficient attention paid to readiness/preparedness of vulnerable countries and enhancing local participation in design and implementation of projects. There were also concerns about the timing and the size of the projects being approved. Some parties argued that the relatively small amount of US$ 168 million in funding so close to COP 21 might be a rouse to sweeten the low ambitions of developed countries on climate change.

The eight projects were submitted to the GCF board after detailed review (including an investment risk analysis) by the GCF secretariat and Technical Advisory Panel (TAP). The selected projects were:

1. Building the resilience of wetlands in the province of Datem del Maranon in Peru—This project aims to increase resilience of indigenous communities living in the carbon rich wetlands of Peru by:
   • Entrusting rights on natural resources management from these areas to the local communities and installing mechanisms to help manage these resources
   • Strengthening commercial viability of bio-business for non-timber forest products

2. Scaling up the use of modernised climate information and early warning systems in Malawi—This initiative aims to help reduce vulnerability of the local communities to extreme weather events by addressing technical/financial/capacity/access barriers related to weather and climate information.

3. Increasing the resilience of ecosystems and communities through the restoration of the productive bases of salinised lands in Senegal —Increased temperature, reduced rainfall and sea level rise have led to a rise in land salinisation and contamination of the water table in Senegal. To deal with these impacts, the above project aims to increase awareness and promote adoption of appropriate technologies that help deal with salinisation.

4. Climate resilient infrastructure mainstreaming in Bangladesh—This project aims to integrate climate change adaptation into infrastructure planning, supervision and maintenance of the local government engineering department responsible for local infrastructure throughout Bangladesh.

5. KawiSafi Ventures Fund in East Africa—The project (partially funded by GCF) entails funding for a new impact fund, KawiSafi Ventures Fund that will seek to catalyse a thriving off-grid solar ecosystem in East Africa, demonstrating that nations can leapfrog fossil-fuel grids to clean energy. This fund will provide both, equity and debt capital to companies based on their individual capital requirements. The long-term life of the fund, 12 years with two 1-year extensions, gives companies time to develop, iterate, refine, and build financially viable business models that have scaled social impact. The fund will initially focus on Rwanda and Kenya, but may also expand to other East African countries such as Uganda throughout the life of the fund.

6. Energy efficiency green bond in Latin America and the Caribbean— The project (partially funded by GCF) aims to provide an alternative financing mechanism for energy efficiency projects in Latin America and Caribbean (LAC) through the issuance of green Asset Backed Securities (ABS). The project would also contribute to the development of LAC capital markets, by introducing green ABS under the highest standards and fostering socially and environmentally responsible investments among local institutional investors. Initial countries under consideration for allocation of the resources of the programme include Mexico, Dominican Republic, Jamaica, and Colombia.

7. Supporting vulnerable communities in the Maldives to manage climate change-induced water shortages—The increasingly variable rainfall patterns and sea-level rise induced salinity of groundwater has led to acute water shortages in the Maldives. This project aims to provide clean water to 105,000 residents of the Maldives by:
   • Scaling up an integrated water supply system to provide safe water to vulnerable households
   • Introduction of decentralised and cost-effective dry season water supply systems, including water desalination
   • Improving groundwater quality and availability to secure freshwater reserves for long term resilience

8. Urban water supply and wastewater management project in Fiji— The project aims to ensure that residents of some of Fiji’s most densely- populated areas have improved access to safe piped water and an environmentally-friendly sewerage system.

These projects were reviewed based on impact potential, paradigm shift potential, sustainable development potential, needs of recipient, country ownership and efficiency & effectiveness. Specific criteria are mentioned below.

Source: GCFund.org

According to the GCF, the indicative minimum benchmarks cannot solely determine whether a proposal should or will be approved. Instead, they represent the minimum requirements that the proposals should meet under normal circumstances in order to become eligible for further funding consideration.

Although the above set of criteria were developed after taking into account the view of all board members, there were still objections on the strength of the readiness initiative. The board therefore decided to establish a project preparation facility to provide funding of up to 10 per cent of requested GCF funding with a maximum of US $ 1.5 million for any single proposal, to help developing countries in preparing their funding proposals. US $ 14 million has been approved for funding such initiatives in the next year.

Concerns were raised about the lack of involvement of nationally designated agencies in the project design/approval process. This, parties said would lead to a dilution of ownership from the recipient countries.

There were also concerns over gaps in institutional capacity for handling large sums of money in some vulnerable countries. More attention on this would increase transparency and effectiveness of this fund.

Parties re-iterated the importance of considering transformative projects that facilitated a paradigm shift in the specified sector. This would help in more efficient allocation and expenditure of the fund.

In the end, the board decided to review the proposal approval process based on the experience gathered from the review of the first batch of proposals, with a view to:

• Strengthen and scale up the fund’s pipeline and country pipelines and programmes
• Streamline and improve the transparency of the proposal approval process
• Define further decision-making options including deferral of proposal approval
• Review how concept notes should work within the project cycle, facilitate the independent Technical Advisory Panel’s feedback on concept notes, and facilitate contact of the ITAP with accredited entities as useful and necessary
• Support the board to make decisions regarding funding proposals
• Strengthen project/programme eligibility criteria, including categories of incremental cost eligible for funding
• Interim procedures for redress pending the recruitment of the head of the independent redress mechanism

Another key decision was to formalise the fund’s aspiration to approve funding proposals worth US $2.5 billion next year. Hopefully the next round of projects will take into account all of the concerns voiced by board members during the meeting.

It would not be appropriate to judge the functioning of the fund from these eight projects that account for only a small portion of the fund’s size. Lessons from these initial projects should be used as building blocks for better, more effective/efficient projects.