CSO Update on the 34th Green Climate Fund Board Meeting – Day 2

Prepared by the The Asian Peoples’ Movement on Debt and Development (APMDD)

DAY 2 – 18 October 2022

Access the full intervention of GCF Observer Network HERE

Right before the start of Day 2 of the GCF Board Meeting, the Asian Peoples Movement on Debt and Development together with partners in the CSO Observer Network and members of Korean Trade Unions held a protest outside of the Grand Hyatt Incheon, the venue of the GCF B34. Wearing vests marked with “Climate Finance Now”, the CSOs issued a giant billing statement to demand from rich countries their unfulfilled climate obligations. As the Board is expected to discuss the GCF’s low level of available funds and the upcoming 2nd replenishment (GCF-2) set for 2023, the CSOs protested against the meagre, delayed, and difficult-to-access climate finance mobilised so far under the GCF, causing several funding proposals to be deferred for Board’s consideration.

 

Some BMs and members of the GCF Secretariat went outside of the Grand Hyatt Hotel and took photos of the action.

Day 2 of the GCF B34 started with discussions on the remaining items under the Strategic Planning and Programming Matters. The co-chair from France, Jean Christophe Donnelier presented the proposed timeline for updating of the USP, to which Kairos dela Cruz, the Active Observer from the developing country CSOs, argued that civil society were not consulted in setting the dates and asserted that CSOs must be involved in every round of drafting the review. This was reiterated and supported by the BMs from Denmark, US and Spain.

As for the linkages to other strategies, the Secretariat presented a document that included annotations on strategic and institutional priorities, as well as the operational goals of the Fund. The presentation focused on discussing how objectives flow from the strategic vision, to which the secretariat sought the Board’s guidance on the level of detail needed to be included in the Strategic Plan vs other strategy documents, such as the private sector strategy, adaptation guidance, direct access action plan, accreditation strategy, readiness strategy, updated Project Preparation Facility (PPF) modalities, and update of country ownership guidelines.

The BM from the US echoed the earlier point made by developing countries about not treating dollar-value targets as the basis for impact assessment. According to her, cost-effectiveness does not always translate to being impactful and may not always measure the number of lives affected or the adaptation component of projects.

Some BMs also emphasized how the GCF needs to address the issue around the accessibility of the Fund, to which BM from Gambia asserted the prioritization of LDCs and other developing countries that have not yet received any funding.

The BMs from Germany and Sweden on the other hand, raised the need to improve structures that will maintain gender balance. They also stressed the need to develop financial flexibility, prompting them to mention again the value of incentivizing private sector mobilization through diversification of financial instruments available.

The intervention from the CSO Observer Network delivered by Kairos dela Cruz, the Alternate Active Observer of developing country CSOs, highlighted the connection of the strategic plan with the accreditation strategy and the GCF’s practices on accreditation and re-accreditation. The CSOs believe that the GCF’s fundamental comparative advantage is to use its vast network of partners, including accredited entities, to full advantage in achieving its vision. The GCF should demonstrate how to implement, update, and adopt new policies that will allow the AEs to fully comply with the Fund’s policies on environment and social safeguards, the  Indigenous Peoples policy and Gender policy among others. The intervention also asserted that the GCF must allow AEs to shift their portfolios away from the drivers of climate change (i.e. fossil fuels), to low emissions, climate resilient activities in line with the goals of the Paris Agreement.

After hearing all comments from the Board and the observers, the co-chair from France then concluded the agenda item. A draft decision text for Board adoption, together with the summary of discussions will be provided after further consultations with the Board and observers.

The Board then discussed the agenda item, Consideration of Funding Proposals (FPs), which started with an overview of the 9 FPs for consideration, worth a total of USD 593.1 million. Of these, 44% are from direct access entities (DAEs) and 39% are adaptation projects. In terms of financial instruments, 41% will be loans and 28% will be grants.

The Secretariat reported that due to the lack of available funds, at least 3 FPs had to be held back for consideration at this Board meeting. The reason cited was the late delivery of pledges by developed countries, which resulted in less available funds that the GCF can commit for projects, as well as the recent volatility of foreign exchange rates. This prompted the BM from the UK to apologize for the late delivery of pledges to the GCF, without clarifying the reason behind the delay.

The BM from Antigua and Barbuda responded and urged the developed country BMs to deliver the remaining unfulfilled pledges, in order to allow more FPs to be approved by the Fund. This was echoed by other developing country BMs.

While many developed country BMs had positive feedback about the fact that the GCF is considering diverse financial instruments in the batch of FPs presented, some suggested that the GCF can also expand its portfolio towards projects around “land use”, “food security”, and “forest financing”.

Other BMs questioned the ITAP’s lack of support to AEs, which eventually affected their assessment of the FPs. The BM from Antigua and Barbuda asserted there is a need to review the mandate of the ITAP, specifically on helping AEs improve their FPs to pass the ITAP’s review. The co-chairs, then proposed to come back to the board with a proposed decision regarding the ITAP’s protocol on helping AEs which shall be presented later on the course of B34.

The CSO Intervention, delivered by Erika Lennon who is the Active Observer for developed country CSOs, raised concerns regarding the status of the GCF Portfolio, particularly on the imbalance against adaptation projects and the challenges around direct access financing. The CSOs called for the urgent delivery of climate finance obligations by developed countries, as well as an ambitious target for the GCF’s second replenishment (GCF-2). As most of the projects being considered for this Board Meeting are under the programmatic or “sub-fund” approach, the CSOs asserted community involvement should be among the primary focus. The intervention also stressed the continuing lack of transparency and information disclosure, especially from private sector FPs and called upon the GCF to ensure the accessibility of stakeholder engagement reports and plans.

The Board then went to discuss the Funding Proposals one by one, as summarized below:

FP Information

Discussion

Status

SAP 025: Adaptation of agricultural production systems in Coastal Areas of Northwest Guinea-Bissau

Adaptation

Country: Guinea-Bissau

AE: Sahara and Sahel Observatory (OSS)

Total Financing: USD 9.95 million

GCF Financing: USD 9.8 million (grant)

Co-Financing:  USD 150 thousand

There were no comments for this FP except for the CSO intervention delivered by Tara Daniel, the alternate Active Observer of developed country CSOs. The CSOs expressed their support of the project due to its excellent gender mainstreaming approach and how the FP sets a good example for future projects, especially on gender mainstreaming.

APPROVED

FP191: Enhancing Adaptation and Community Resilience by Improving Water Security in Vanuatu

Adaptation

Country: Vanuatu

AE: Pacific Community (SPC)

Total Financing: USD 28.2 million

GCF Financing: USD 23.3 million (grants)

Co-Financing: USD 4.9 million

No comments from the Board.

APPROVED

FP192: The R’s (Reduce, Reuse and Recycle) for Climate Resilience Wastewater Systems in barbados (3R-CReWS)

Cross-Cutting (7.5% mitigation; 92.5% adaptation)

Country: Barbados

AE: Caribbean Community Climate Change Centre (CCCCC)

Total Financing: USD 50 million

GCF Financing: USD 39.4 million (grants)

Co-Financing: USD 10.6 million

No comments from the Board.

APPROVED

FP193: Peruvian Amazon Eco Bio Business Facility (AmazonEBBF)

Mitigation

Country: Peru

AE: Peruvian Trust Fund for National Parks and Protected Areas (PROFONANPE)

Total Financing: USD 10 million

GCF Financing: USD 8.97 million (grants)

Co-Financing: 1.03 million

The BMs from Spain and Switzerland supported the project and defended the track record of the FP’s accredited entity, PROFONANPE.

However, contrary to the claims made, the CSOs cited issues around FP001, which is another GCF project led by the same accredited entity that have failed to consider local and indigenous knowledge and secure free, prior and informed consent (FPIC) among affected communities. The intervention delivered by Kairos dela Cruz, alternate Active Observer for developing country CSOs, urged the Board to reconsider approving the project.

APPROVED

FP194: Programme for Energy Efficiency in Buildings (PEEB) Cool

Cross-Cutting (35% Mitigation; 65% Adaptation)

Countries: Albania, Argentina, Costa Rica, Djibouti, Indonesia, Mexico, Morocco, Nigeria, North Macedonia, Sri Lanka, Tunisia

AE: Agence Française de Développment (AFD)

Total Financing: EUR 1.012 billion

GCF Financing: EUR 131 million and USD 45 million (loans); EUR 44 million (grants)

Co-Financing: EUR 837.5 million and USD 281 million

The FP was approved without objections from the Board.

After the approval, the co-chair called upon Erika Lennon, the Active Observer for developed country CSOs, to deliver the CSO intervention which stated the vagueness of the adaptation rationale of the project, and pointed out the potential marginalization of the informal sector due to the new national building regulations pushed by the project. The CSOs added that the FP failed to incorporate indigenous and local knowledge on cooling which should have been central to the project. The FP’s gender action plan was also loosely integrated with the main objectives of the project.

APPROVED

FP195: E-Motion: E-Mobility and Low Carbon Transportation

Mitigation

Countries: Panama, Paraguay, Uruguay

AE: Corporación Andina de Fomento (CAF)

Total Financing: USD 231 million

GCF Financing: USD 76.6 million (USD 9.8 million in grants; USD 66.8 million in loans)

Co-Financing:

No comments from the Board.

APPROVED

FP196: Supporting Innovative Mechanisms for Industrial Energy Efficiency Financing in Indonesia with Lessons for Replication in other ASEAN Member States

Mitigation

Country: Indonesia

AE: Korean Development Bank (KDB)

Total Financing: USD 247.7 million

GCF Financing: USD 105 million  (USD 5 million in grants, USD 100 million in guarantees)

Co-Financing: USD 142.7 million

The interventions from the CSOs and PSOs showed contrasting views about the FP.

The CSOs believe this FP should not be supported by the GCF because the target beneficiaries of the FP include the petrochemical and paper industry, which have been cited by local groups and indigenous peoples communities as notorious in waste disposal and to have labor practice violations. Kairos dela Cruz, the alternate Active Observer for developing country CSOs emphasized that CSOs believe conditions towards ensuring environmental and social safeguards must be set upon the approval of the project.

The PSO Active Observer Margaret-Ann Splawn expressed the private sector’s support of the project, and mentioned that the project is transformative, leverages private sector finance, and will grow on its own without further need of concessional funding.

APPROVED

FP198: CATALI.5T Initiative: Concerted Action to Accelerate Local I.5 Technologies – Latin America and West Africa

Mitigation

Country: Argentina, Costa Rica, Dominican Republic, Honduras, Mexico, Benin, Burkina Faso, Côte d’Ivoire, Guinea, Mauritania, Niger, Senegal, Togo

AE: Deutsche Gesellschaft fuer Internationalen Zusammenarbeit (GIZ)

Total Financing: EUR 36.5 million

GCF Financing: EUR 26.8 million (grants)

Co-Financing: EUR 9.7 million

The intervention from the CSOs, delivered by alternate AO Kairos dela Cruz, were centered on the missed opportunities of the FP for more locally-led projects, projects led by women and by Indigenous Peoples, and the fact that the programme failed to call for adaptation focused ventures. The FP should be geared to promote projects and ideas that arise from Indigenous Peoples in their territories as Indigenous Peoples have the knowledge and often best placed to design the most effective climate action, which should be promoted and recognized in this programme.

The CSOs also noted the set-up of the programme and its budget distribution. Of a total of 36.5 million euros, with 26.8 million euros coming from the GCF, only 7.8 million will be spent on direct support to the FP outcomes, while the rest will be spent on providing technical assistance, capacity building and “community building” activities, which will likely cover a significant amount for personnel costs of the AE and Executing Entities (EEs).

APPROVED

FP197: Green Guarantee Company (GGC)

Cross-Cutting (80% Mitigation; 20% Adaptation)

Country: Gabon, Rwanda, India, Indonesia, Laos, Philippines, Brazil, and Trinidad & Tobago

AE: Mitsubishi UFJ Financial Group (MUFG)

Total Financing: USD 405 million

GCF Financing: USD 82.5 million (equity)

Co-Financing: USD 322.5 million

There were a number of oppositions for approving this FP from developing country BMs, particularly from Antigua and Barbuda, Ghana and Pakistan. They mentioned issues around country ownership and questioned the necessity of the project due to its redundancies, and lack of track record, among many other issues.

The BM from Antigua and Barbuda raised the issue around securing the No Objection Letters (NOLs) for target countries identified. The project identified 19 recipient countries, but only 8 NOLs were secured. This issue has been repeatedly raised by developing country CSOs in the past, which is also the reason why the approval of this FP was deferred.

The FP again received opposing views from the CSOs and PSOs. Developed Country CSO Active Observer Erika Lennon, underscored the CSOs strong rejection of the FP as it offered little detail on how climate impacts will be monitored, and is unconvincing in terms of how E&S and gender standards will be applied. The CSOs also reiterated the issue of country ownership, which cannot simply be a tick box exercise in gathering NOLs. The FP also seemed to be lacking the linkage to country NDCs, and has no evidence of stakeholder consultations. The CSOs also underscored that the list of countries included in the programme is incoherent and it is not clear that guarantees for bonds are an effective form of support in some of these countries, which already have well developed financial markets (such as Brazil, Philippines or Indonesia).  The FP also showed no prioritization or minimum allocation of support foreseen for the LDCs, SIDS and African countries included in this proposal, which –  to the extent that they have less developed financial markets – would need such a guarantee approach the most.

The PSO Active Observer expressed the private sector’s support for the FP. She urged the Board to approve this FP so the GCF can further catalyze private sector investment, it will approve this project.

During the discussion, the GCF General Counsel also clarified that the GCF may face major financial risks for countries without the NOLs.

The accredited entity, MUFG also continued to persuade the Board by highlighting the potential private sector finance that may be mobilized by the project.

Given the outstanding issues, the Board decided to suspend discussions for further consultations.

SUSPENDED FOR FURTHER DISCUSSIONS

Still under funding proposals, the Board moved on to matters related to requests for extensions and amendments of already-approved FPs:

  1. SAP016 Fiji Agrophotovoltaic Project in Ovalau – requested for extension to comply with the terms of the project and Funding Activity Agreement (FAA)

  2. FP166 Light Rail Transit for the Greater Metropolitan Area (GAM) in Costa Rica – requested for extension to comply with the terms of the project and Funding Activity Agreement (FAA)

  3. FP039 GCF-EBRD Egypt Renewable Energy Financing Framework- requested for the upgrade of the environmental and social risk categories

  4. FP052 Sustainable and Climate Resilient Connectivity for Nauru – requested for the upgrade of the environmental and social risk categories

  5. FP099 Climate Investor One – requested for the inclusion of India among its target countries.

All requests mentioned were approved. However, the Board is also to deliberate on the changes to FP115 Espejo de Tarapacá in Chile, another MUFG project, but through an executive session. This means that the webcast was suspended and only the Board and selected individuals were allowed in the Board room.

The executive session was also extended to allow the Board to discuss the GCF Updated Salary Scale/System. This prompted the co-chair to adjourn the meeting for the rest of the participants at 16:43, Korea Time.

You can catch GCF34 via webcast and on demand here: https://www.greenclimate.fund/boardroom/meeting/b34#videos

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