Early last month, South Korea’s Songdo hosted to the latest meeting of the Green Climate Fund (GCF). CDKN’s Christina Elvers observed that compared to last year’s disappointing meeting in Zambia, GCF managed to make some major progress with the US signing the first tranche ($500m) of their commitment to the GCF. Riding on the momentum of the Paris Agreement, 2016 should be a very important year for the fund as it committed itself to take funding decisions worth $2.5 bn in 2016 for mitigation and adaptation projects. The main challenge is whether the fund delivers to those nations most in need.
GCF’s stated aim of providing direct access to developing countries, and thus bringing about a “paradigm shift” in terms of access to finance for vulnerable countries. However many developing countries would need support in preparing the proposals, as the President of Kiribati rightly pointed out in the Guardian early this year. At the moment, many of these small developing nations do not have means to access the fund directly but only though accredited private entities such as banks and multilateral institutions approved by GCF. Understandably simplifying the accreditation process is not on the table, as accountability to donors as well as to poor people is of prime importance, point out Harjeet Singh from Action Aid. It is therefore a positive development that GCF has finally approved a readiness support to Rwanda whose direct access entity, MINIRENA, received a $1.5m grant to prepare the proposals.
Many questions though whether it is the right decision to spend such large amount on preparation support and this is where carbon market frameworks come in the pictures. In 2012, the CDM High-Level Panel on the CDM Policy Dialogue proposed that GCF shall build on “CDM standards and methodologies in accounting for payments for verified results, so as to leverage the achievements, knowledge, and resources of the CDM”. While some part of their recommendations, such as purchase of CDM credits clearly cannot be considered due to the additionality criteria, it might worth to reflect on the lessons learned on this long-standing mechanism of emission reductions. Besides CDM, Gold Standard can also provide GCF with knowledge on how to set the standard which enables project developers to deliver high-impact, community focused emission reduction projects in developing countries. It is only by learning from these institutions’ past experience that GCF will be able to design a financial response that would truly lead to a paradigm shift.