Green Climate Fund GCF Yun Yang Sabin Basnyat
Green Climate Fund (GCF) Yun Yang/ Sabin Basnyat Division of Mitigation and Adaptation Feb 21 -22, 2019
2 Introduction to GCF ü GCF is a global fund created to support the efforts of developing countries to respond to the challenge of climate change. ü GCF was set up in 2010 by the 194 countries who are parties to the UNFCCC, as part of the Convention’s financial mechanism. ü The Fund seeks to promote a paradigm shift to low-emission and climate-resilient development, taking into account the needs of nations particularly vulnerable to climate change impacts. ü We have a special focus on LDCs, SIDS, and African states (min. 50% of overall GCF adaptation funding). ü GCF’s activities are aligned with the priorities of developing countries through the principle of country ownership. ü A key innovation is to use public investment to stimulate private finance through the Fund’s dedicated Private Sector Facility. Country driven Risk appetite to unlock ideas Public+ private Climate impact focus Paradigm shift
3 GCF’s Accreditation Framework ü GCF works through a network of Accredited Entities (AEs) to channel its resources for projects and programs. ü AEs comprise private and public, non-governmental, sub-national, regional or international entities. ü Accreditation is a fit-for-purpose due diligence process ensuring our partners share the same objectives as GCF, and that they have extensive experience and a strong financial and managerial infrastructure. Mandate & track record § Alignment with GCF’s objectives § At least three years of operations Project size § Micro (<USD 10 M) § Small (USD 10 -50 M) § Medium (USD 50 -250 M) Fiduciary functions § Basic § Specialized • Project management § Large (>USD 250 M) Environmental & social safeguards § A/I-1 (potential high impact) • Grant award § B/I-2 (medium impact) • On-lending/blending (loans, equity, guarantees) § C/I-3 (minimal or no impact)
What kind of support GCF provides? • Funding proposals (FP) • Request for Proposals (Rf. P) • Readiness funding • Project preparation facility (PPF)
How is the funding proposal process
What do we look for? Additionality of GCF Funding Strong Climate Rationale § Why GCF? § Projects must crowd-in additional financing on top of GCF § Climate Impact of investment is key § Scientific evidence to provided 8 Results Areas Energy Buildings, Cities, Industries Country Driven Approach § Alignment with NDCs § Early country (NDA) engagement § No-objection letter Transport § § § Fiduciary standards Risk Management ESS M&E Criteria Gender Policy Legal Standards Ecosystems Six Investment Criteria 1. Impact Potential 2. Paradigm Shift Potential 3. Sustainable development potential 4. Recipient needs 5. Country ownership 6. Efficiency & effectiveness Compliance with GCF Policies Livelihoods of people & comm. Health, food and water security Forests and land use Infrastructure Completeness of documentation § § § Feasibility study Financial Model Project Timetable Gender Analysis Environmental studies No-objection letter
Investment Framework Criteria Impact potential • Contribution to the shift to low-emission sustainable development pathways • Contribution to increased climate-resilient sustainable development Paradigm shift • Innovation • Contribution to the creation or strengthening of knowledge, collective learning processes, or institutions • Sustainability of outcomes and results • Potential for strengthened regulatory frameworks and policies • Potential for expanding the proposal’s impact Sustainable development potential • Expected positive environmental impacts • Expected positive social and health impacts • Expected positive economic impacts • Potential for reduced gender inequalities
Investment Framework Criteria Needs of the recipient Country ownership Efficiency and effectiveness • Scale and intensity of exposure of people, and social/economic assets to risks • Comparably high vulnerability of the beneficiary groups • Level of social and economic development of the country and target population • Opportunities for the GCF to overcome specific barriers to financing • Opportunities to strengthen institutional capacity in relevant institutions • Objectives are in line with priorities in the country’s national climate strategy • Experience and track record of the Accredited Entity or executing entities in key elements of the proposed activity • Stakeholder consultations and engagement • Financial adequacy and appropriateness of concessionality • Cost-effectiveness (mitigation only) • Potential to catalyse and/or leverage investment (mitigation only) • Expected economic/financial internal rate of return Financial viability in the long run • Application of best practices and degree of innovation
Readiness funding USD 1 million cap per country per year • NDA strengthening • Support for direct access entities • Strategic frameworks, including country programmes, concept notes, prefeasibility studies USD 3 million cap per country (not per year) • National adaptation plans (NAP) and / or other adaptation planning processes
Project preparation funding $1. 5 M cap per request • Support for project/ programme development • Especially micro-to-small size projects • Accredited entities submit requests • Especially direct access • No-objection letter from NDA/focal point • Executive director approves requests
What is Project Preparation Facility (PPF) • To support project and programme preparation, especially for micro-to-small category projects • All accredited entities (AEs), especially direct accredited entities, can request support from the PPF • Each request will be subject to a cap of USD 1. 5 million • Proposals developed with PPF resources should be submitted to the Board within two years after the PPF request was approved
What are the eligible PPF activities? 1. 2. 3. 4. 5. 6. Pre-feasibility and feasibility studies, as well as project design; Environmental, social and gender studies; Risk assessments; Identification of programme/project-level indicators; Pre-contract services, including the revision of tender documents; Advisory services and/or other services to financially structure a proposed activity; and 7. Other project preparation activities, where necessary, provided that sufficient justification is available.
Partial Risk Structure GCF LSF+TA TA Market Partners 1. 2. 3. 4. Utilities ESCOs CA Cooling Vendors Associations/Govt. agency Local FI Partner AE Loan LSF+TA Loan E+S Customers TA: Technical Assistance CA: Cooperation Agreement TA LSF: Loss Sharing Facilities E+S: Equipment, Engineering Service
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