TWN Info Service on Climate Change (Sept20/01)
1 September 2020
Third World Network

Green Fund Board approves funding proposals via virtual meeting

Katmandu/Delhi, 1 Sept (Prerna Bomzan and Indrajit Bose) – In its first ever virtual meeting held from 18-21 August, the Board of the Green Climate Fund (GCF) approved USD 878.6 million for a total of 15 funding proposals, including one from Sudan, despite objections to the latter by the United States (US).

The 26th Board meeting, took place in a virtual setting due to the COVID-pandemic.

It began with an opening tribute to a highly respected staff of the GCF Secretariat Leonardo Patt Jr., who passed away recently due to COVID-19, after attending his last face-to-face meeting of the Board in Geneva in March this year. Patt was the GCF Secretariat’s Environment and Social Safeguards, Gender and Indigenous Peoples’ Manager,

The online Board meeting took place amid issues of connectivity and access, raised by developing country Board members who voiced out that such meetings posed a disadvantage to their constituency, especially in regard to difficult matters that required negotiations on decisions in arriving at consensus in the Board.

Two funding proposals from Afghanistan and Colombia were only approved after new or amended conditions were placed on them.

A multi-country funding proposal titled “High Impact Programme for the Corporate Sector” submitted by the European Bank for Reconstruction and Development (EBRD), drew reservations by some developing country Board members, but was approved eventually by consensus. Developing country Board members were concerned about the fact that a huge amount of GCF resources were being channeled to the EBRD. (See details below).

Other issues that arose included concerns by developing country Board members over the approach of the Secretariat to support initiatives under its existing project pipeline that can be immediately submitted for review and approval at upcoming Board meetings to contribute to a ‘green resilient recovery’ in developing countries. Several developing country members reminded the Board that the GCF was a climate change fund and that all projects approved are in support of ‘green recovery’, adding that countries should not need to add additional justification to get funding from GCF. (See below for further details).

Controversy over the Sudan funding proposal

The funding proposal from Sudan titled “Building resilience in the face of climate change within traditional rain fed agricultural and pastoral systems” is an adaptation project submitted by the United Nations Development Programme (UNDP) as the accredited entity (AE), requesting a grant of USD 25.6 million.

Mathew Haarsager (US) registered his objection explaining that “we do not have consensus to approve this project”. Referring to the US congressional mandate, he explained that “we oppose the use of funds for countries that have been designated as supporters of international terrorism as well as other applicable legislative funding mandates”.

Ayman Shasly (Saudi Arabia) denounced the US objection, stating that it did not serve the purpose of the Fund, adding that all members have signed integrity policies including the anti-money laundering and countering the financing of terrorism policy.

Ali Gholampour (Iran), Wael Aboul-magd (Egypt) and Walter Schuldt (Ecuador) while extending support to the Sudan project, emphasized on the key principles of inclusivity and full accessibility of the Fund’s resources to all developing countries.

Support was also expressed by Richard Muyungi (Tanzania), Jeremiah Sokan (Liberia), Cheikh Sylla (Senegal), Ronald Jumeau (Seychelles) and Philip Weech (Bahamas).

The funding proposal was put to a vote the following day, after Co-Chair Sue Szabo (Canada) reported that all efforts at reaching consensus had been exhausted. (The other Co-Chair of the Board is Nauman Bashir Bhatti from Pakistan).

A virtual voting procedure was implemented for the first time, with the project being approved by the rest of the 23 Board Members casting votes in its favour, with the US being the sole objector.

Other funding proposals approved

The funding proposal titled “Afghanistan Rural Energy Market Transformation Initiative – Strengthening Resilience of Livelihoods Through Sustainable Energy Access” is a mitigation project submitted by the UNDP as the AE, requesting a grant of USD 17.2 million. The project was approved after consultations on a set of conditions, raised mainly by Heike Henn (Germany) and some other developed country Board members.

The funding proposal titled “Colombia REDD-plus Results-based Payments for results period 2015-2016”, was submitted by the Food and Agriculture Organization (FAO) as the AE, for a payment of USD 28.2 million. The project was approved after new conditions were imposed.

Concerns over its “environmental integrity” and “gaps and weaknesses” in the current environmental criteria score card were raised by Hans Olav Ibrekk (Norway), Henn (Germany) and Masahiro Takasugi (Japan). Brenda Ciuk (Mexico) and Schuldt (Ecuador) strongly supported the project, expressing dissatisfaction and caution about the new conditions stressing that this should “not set a precedent” for future projects under REDD-plus. (REDD-plus refers to reducing emissions from deforestation and forest degradation, and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries).

The multi-country (Armenia, Jordan, Kazakhstan, Morocco, Serbia, Tunisia, Uzbekistan) funding proposal titled “High Impact Programme for the Corporate Sector” is a mitigation project, submitted by the EBRD as the AE, for an amount of USD 258 million.

Some developing country Board members had reservations primarily about its programmatic approach in the absence of a GCF policy in this regard. Other concerns included lack of country ownership as well as huge risks posed to the GCF by a single entity like the EBRD capturing over USD 1 billion of the fund’s resources (over several projects).

Shasly (Saudi Arabia) in approving the funding proposal, requested his statement be placed on record that the project “pre-empts” the discussion on the programmatic approach policy which is yet to be concluded by the Board. He added that the “project was not negotiated in fair terms with the GCF” as it has “no say and no control whatsoever in the project investment”. “This project truly is a living example of developed countries providing climate finance to developing countries and taking it back” in the form of recycling the money with a profit premium, “while dictating how this money is going to be spent”, he said. He added further that with this project, the EBRD portfolio which is biased towards mitigation will surpass USD 1 billion representing 10 per cent of the GCF’s resources.

The need for country ownership was stressed by Muyungi (Tanzania) and Sylla (Senegal) while Aboul-magd (Egypt) echoed Shasly on the need of a programmatic approach policy, adding that this specific project should not be used as a model for future programmatic approaches.

Other funding proposals approved were as follows:
– USD 103.8 million for “Indonesia REDD-plus RBP for results period 2014-2016”, with the UNDP as the AE;
– USD 27.4 million for ‘Improving Climate Resilience of Vulnerable Communities and Ecosystems in the Gandaki River Basin, Nepal” with the International Union for Conservation of Nature as the AE;
– USD 38.6 million for “Enabling Implementation of Forest Sector Reform in Georgia to Reduce GHG Emissions from Forest Degradation”, with the Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) as the AE;
– USD 32.7 million for “Resilience to hurricanes in the building sector in Antigua and Barbuda”, with the Department of Environment, Angitua and Barbuda as the AE;
– USD 38 million for “Ecosystem-based Adaptation in the Indian Ocean – EBA IO” in Comoros, Madagascar, Mauritius and Seychelles with the Agence Francaise de Developpement (AFD) as the AE;
– USD 165.2 million for “Resilient Landscapes and Livelihoods Project” in Ethiopia, with the World Bank as the AE;
– USD 30.1 million for “Ghana Shea Landscape Emission Reductions Project”, with the UNDP as the AE;
– USD 88.8 million for “ASER Solar Rural Electrification Project” in Senegal, with the West African Development Bank as the AE;
– USD 10 million for “Forest resilience of Armenia, enhancing adaptation and rural green growth via mitigation”, with the FAO as the AE;
– USD 10 million for “Promoting zero-deforestation cocoa production for reducing emissions in Cote d’Ivoire (PROMIRE)”, with the FAO as the AE;
– USD 5 million for “Fiji Agrophotovoltaic Project in Ovalau”, with the Fiji Development Bank as the AE.

Issue over ‘green resilient recovery’

Board members discussed various issues in relation to the Secretariat’s report on its activities. This included the GCF Secretariat’s activities in relation to the post-COVID ‘green resilient recovery’ in developing countries.

In its report to the Board, the Secretariat had presented that it “… has advanced an approach to support the development and approval of initiatives under its existing project pipeline that can be immediately submitted for review and approval at upcoming Board meetings to contribute to a green resilient recovery in developing countries.”

Developed country Board members from Germany, Denmark, Norway, and Finland welcomed the Secretariat’s approach on ‘green stimulus measures’, while developing country members suggested a more cautious approach given the very limited resources of the Fund.

Ayman Shasly (Saudi Arabia) said that the GCF is a climate change fund. “Anything the Secretariat does must not jeopardize the balance between adaptation and mitigation funding,” he stressed.

Nagmeldin Elhassan Mahmoud (Sudan) also spoke to the issue and added that all the projects approved by GCF are in support of “green recovery” and that the countries should not need to add “additional justification” to get funding from GCF.

Wael Aboul-magd (Egypt) said that while nobody could object to green recovery, one must be cognizant that the GCF is a climate fund with limited resources for adaptation and mitigation. He added that unless additional resources are made available, one must be careful in dealing with the issue of green recovery.

Readiness and Preparatory Support Programme

The issue of ‘green resilient recovery’ was also debated during discussions on the Readiness and Preparatory Support Programme.

In the Work Programme and Budget 2020-2021 presented to the Board, the Secretariat had included components related to ‘green resilient recovery’.

While stressing the importance of the readiness programme, Shasly wanted to know if ‘green resilient recovery’ would mean reallocating existing resources. Lyu Xia (China) said she shared concerns regarding ‘green resilient recovery’ and resources implications resulting as a consequence. Janine Felson (Belize) and Karma Tshering (Bhutan) stressed the importance of the readiness programme and for it to take into account the COVID-19 recovery measures.

Following further discussions, the Board adopted the proposed work programme and approved an additional USD 162.39 million for the execution of the ‘Readiness and Preparatory Support Programme’. The Board also requested the “Secretariat to ensure that readiness support for resilient recovery efforts is fully consistent with the existing mandates and decisions of the Board… and follows a country driven and country ownership principle”.

Review of the Multilateral Organisation Performance Assessment Network (MOPAN)

Another contentious issue was the ‘Review of the Multilateral Organisation Performance Assessment Network (MOPAN)’. (The MOPAN was launched in 2002 as a network of like-minded donor countries for monitoring the performance of multilateral development organisations at the country level. The network members include Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, Netherlands, Norway, Republic of Korea, Sweden, Switzerland, the United Arab Emirates, the United Kingdom and the US).

According to the document circulated on the issue, “the Secretariat received initial notification from MOPAN of the intention to assess GCF in December 2019. However, MOPAN remains in the planning stage for the assessment cycle and has not yet communicated a timeline. The scope of the assessment, and the applicable indicators, is also yet to be determined.”

Some developing country Board members did not want any assessment undertaken by MOPAN without the approval of the Board and they wanted the GCF Secretariat to write to MOPAN to halt any further assessment until further directions from the GCF Board.

According to sources, developing country Board members had chanced upon information related to MOPAN assessment rather than being officially informed about such assessment by the Secretariat. Sources also revealed that developed country Board members were aware of the said assessment. The matter is likely to be discussed in-depth at the next meeting of the Board.

Accredited entities approved

The two new AEs were approved to access the fund’s resources. They were La Banque Agricole (LBA), from Senegal and the United Nations Industrial Development Organization (UNIDO), in Austria.

The GCF Secretariat reported that the Sumitomo Mitsui Banking Corporation (SMBC) based in Japan, requested for a deferment of its application for consideration to a subsequent Board meeting, with a view to improve its application taking into account concerns and comments expressed.