4.2 Operation of adaptation finance for developing countries in practice
4.2.2 Operation of GCF
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approach will be an important criterion for allocating resources”.311 In terms of adaptation finance, the COP decides that “the Board will take into account the urgent and immediate needs of developing countries that are particularly vulnerable to the adverse effects of climate change, including LDCs, SIDS and African States, using minimum allocation floors for these countries as appropriate. The Board will aim for appropriate geographical balance”.312
As regards programming and approval processes of proposals by GCF, the COP decides that “the GCF will have a streamlined programming and approval process to enable timely disbursement.
The GCF Board will develop simplified processes for the approval of proposals for certain activities, in particular small-scale activities”.313 In respect of the financial instruments for the GCF, the COP decides that “the GCF will provide financing in the form of grants and concessional lending, and through other modalities, instruments or facilities as may be approved by the Board.
Financing will be tailored to cover the identifiable additional costs of the investment necessary to make the project viable. The GCF will seek to catalyze additional public and private finance through its activities at the national and international levels”.314
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launched by the GCF board during the 18th Board meeting in October 2017, the purpose of SAP is to reduce time and efforts required for approval and disbursement of funds for certain projects, with a focus on small scale projects.319 SAP began operation in February 2018 with a proposal by the Namibian direct access entity, to improve the ecosystem management practices of farmers.320 It is necessary to state that the SAP is currently in a Pilot phase, it is expected to make further improvements in the simplification process. Adaptation finance provisions for projects under SAP is channeled through DAEs, the proposed adaptation project should have the capacity to be
“transformed, promoting a paradigm shift to low emission and climate-resilient development with a budget not more than USD 10 million; and the environmental and social risks and impacts should be extremely low or none”.321 The process under SAP for developing countries to access adaptation finance is streamlined for easy access, “the proposal submission can be done by AEs and NDAs using the online SAP Concept Note template and ESS checklist which is a mandatory step”.322 The AEs are responsible for monitoring resources allocated to projects, although entities not accredited may submit proposals on specific private sector program. The GCF requires that
“entities should have objectives in line with GCF, and must possess experience and a strong financial and managerial infrastructure”.323 A report in September 2017, showed that the sum of USD 2.2 billion had been approved for 43 projects and programmes.324 As of June 2019, the GCF
“has a total value of USD 17.6 billion, USD 5 billion of which has been allocated for 102 projects approved by the GCF Board”.325
The financial instruments adopted by the GCF in efforts to achieve its mandate provides “debt, equity, guarantees, and grants through investments which aims to achieve de-risk investments;
drive systemic transformation; scale small projects and bundle them into larger portfolios; support capacity building; develop public-private climate-resilient infrastructure; and encourage innovation”. These investments are in areas such as transport; infrastructure and built environment;
319GCF/B.18/23 p. 81.
320GCF/B.22/10/Add.15
321GCF/B.18/23 p. 81.
322Ibid. p. 82.
323GCF’s Private Sector Facility 2017, p. 6.
324GCF Performance check 2017, p. 1.
325Salazar Research gate 2019, p. 6.
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forest and land use etc., furthermore these investments must be in accordance with country priorities.326
With the Readiness programme, GCF works with national level entities to build readiness to access adaptation finance.327 The GCF Readiness programme aims to enhance country ownership and encourage access to the GCF. The GCF assists countries in undertaking adaptation planning and developing strategic frameworks to build their programming with the GCF through the Readiness programme which provides up to USD 1 million per annum for National Designated Authorities (NDAs). The resources are expected to strengthening the institutional capacities of NDAs or establish them. NDAs are representations of national governments that relate amongst countries and the GCF.328 Furthermore, the GCF’s Readiness Programme assist developing countries to establish National Adaptation Programme (NAPs), with a one-time financial assistance of up to USD 3 million.329As of January 2018, 47 proposals have been submitted under the GCF Readiness Programme, with six approved.330
The GCF is structured to pool resources according to developed countries’ commitment, hence the success of GCF depends largely on how developed countries fund it.331 The GCF also receives share of funds from revenues realized through the pricing of CO2 emissions.332 The GCF also aims to gather resources from private sector, it operates a Private Sector Facility (PSF), the essence here is to engage local and global private sector to brace climate change mitigation and adaptation projects in developing countries. The GCF, with the cooperation of private sector, aims to create opportunity for funding high impact, transformative and innovative climate projects and activities in developing countries. PSF aims to “change the current paradigm by de-risking the delivery of private capital and scaling up private sector investment flows for low carbon and climate resilient development”.333
326GCF’s Private Sector Facility 2017, p. 5.
327Ibid.
328GCF Readiness and preparatory support 2018, p. 4.
329Ibid.
330Adaptation finance bulletin No. 2, 2018.
331Donner et al ERL 2016, p. 909.
332Antimiani et al. ESP 2017, p. 52
333GCF’s Private Sector Facility 2017, p. 6.
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Criteria for allocation of adaptation finance for developing countries under the Convention have some basic criteria towards adaptation measures and projects. It must target the vulnerable,334 while cost effectiveness and efficiency is important.335 It aims to encourage Country-driven development programmes,336 and promote transparency.337 To achieve a fair distribution of scarce resources among developing countries, different views have been expressed by scholars. It has been suggested that criteria for allocation by country-specific should be applied, the reason for this is based on the diverse nature of developing countries.338 Another writer emphasized the need to consider the national needs of recipient countries as the criteria for distribution.339 While it has also been suggested by some writers that the determination of distribution of funds through geographic and economic ability is crucial.340 However, any criteria adopted must give priority to the most vulnerable. Inclusiveness is deemed necessary so as to ensure that all the relevant parties have adequate information about adaptation funds and also to ensure that there is wide consultation before any decision is reached.341