Green Climate Fund

Ashley attended the UNFCCC Climate Talks. She has a Bachelor of International Relations with Honours from La Trobe University. Ashley is currently studying a Master of Environment at Melbourne University with a particular focus on Global Environmental Politics. 

1. Background

This policy brief will examine the Green Climate Fund (GCF) which is a unique mechanism to provide financing for developing nations to reduce emissions and adapt to the effects of climate change. The brief will focus on projects which have been implemented or approved by the GCF to take place in Small Island Developing States (SIDS) of the Pacific. Specifically, how accessible the process was for these small states with minimal resources and recommended policies that could improve its effectiveness and accessibility. COP23 will be hosted by Fiji who aims to bring the issues facing SIDS to the fore. This policy brief will highlight the challenges faced by the Pacific islands in trying to access finance.

Pacific Islands are at the fore front of the impacts of climate change. It is widely publicised they are “sinking into the ocean” (1) due to sea level rise. However, they are also at the mercy of increasing extreme weather events in the Pacific; including drought and tropical storms. These events can also have a profound effect on the limited water supply, inadequate infrastructure and the reliance on imported diesel for fuel production in many Pacific islands (2). What makes matters worse is their contribution to climate change through greenhouse gas emissions is almost negligible at 0.03 percent (3). Some SIDS have made valiant efforts to work towards 100 percent renewable energy, unfortunately this would barely contribute to the overall reduction of global emissions. Additionally, these states generally have low capacity to adapt with restrictive incomes, small populations and geographical remoteness (4). 

2. Green Climate Fund

At the United Nations Framework Convention on Climate Change (UNFCCC) negotiations the Association of Small Island States (AOSIS) which includes the Pacific has argued for financial assistance from developed nations to help them deal with the effects of climate change. In response to this demand from AOSIS and other developing nations the developed nations, agreed to establish The Green Climate Fund (GCF) at COP17 in Durban (5). It was first suggested at Copenhagen where developed nations agreed to contribute US $100 billion per year to assist developing countries mitigate and adapt to climate change (6). Unfortunately, only US $10.3 billion has been received by the fund and they have been slow to approve projects (7). The fund aims to provide developing nations with access to finance for mitigation, to reduce their GHG emissions and adaptation to protect them from the adverse effects of climate change. Adaptation funding is especially important in the Pacific Island context and has been something AOSIS has argued for since Copenhagen. The fund also aims to “promote a paradigm shift towards low-emission and climate-resilient development pathways in developing countries.” (5)

The fund does this by providing finance in the form of grant, loans, equity or guarantees. At least 50 percent of adaptation funding is allocated to the Least Developed Countries (LDC), Small Island Developing States (SIDS) and African States as they are the most vulnerable to the impacts of climate change. The Fund is governed by a Board of 24 members and has an equal number of representations from developed and developing nations (7). Australia and Saudi Arabia are currently the Co-Chairs of the GCF.

The distribution of funding has been channeled mostly through multilateral institutions including United Nations Development Program (UNDP), World Bank and Asian Development Bank. While these organisations have the capacity to roll out these projects the GCF was supposed to provide direct access for nations to finance. A prevailing issue with climate finance is the differing priorities of developed and developing nations. Developing countries argue the need to “get on with it” whilst developed continually argue the GCF should be “getting it right first”. Currently the policy of the GCF is to “get it right first” through a rigorous application process which Pacific Island nations see as limiting their ability to access the funds desperately needed (2). A balance needs to be struck so those on the front lines, inducing the SIDS can protect themselves sooner rather than later.

2.1 Pacific Island and the GCF

The SIDS of the Pacific have struggled to access funding from multilateral institutions in the past. The Pacific islands face a unique set of circumstances which have limited their ability to engage with multilateral institutions. Pacific Islands are under-resourced and under-capacitated lacking the technical expertise, the ability to finance bids and lack the human resources needed to complete the complex paper work required by the GCF. For example, in Tuvalu the environment department is staffed by five people (2). The lack of capacity is a major challenge for small island states and needs to be addressed to make it easier for the Pacific island to access the Fund.

2.2 Projects

The Pacific Islands have had multiple projects approved including:

The Pacific Island Renewable Energy Investment Program was the first initiative to be approved by the GCF for the Pacific (8). The program covers primarily The Cook Islands, but also focuses on Tonga, The Republic of Marshall Islands, The Federated States of Micronesia, Papua New Guinea, Nauru and Samoa (8). The project reflects the aim of the GCF to promote a paradigm-shift to low carbon emission technology. It will shift the energy of these nations from diesel to renewable energy. The benefits of this program include: preventing 95.6K tonnes of CO2 from entering the atmosphere. Importantly it will increase each nations energy security by allowing them to produce their own energy instead of relying on importing diesel. This will also lead to less government finance being spent on importing expensive diesel. An additional benefit will be increased private sector investment for implementing the technologies (8). The project will cost $26 million with $17 million from the GCF, $5 million from the Asian Development Bank and $4 million from the Cook Islands Government (8).

The Fiji Urban Water Supply and Wastewater Management Project was approved by the GCF in 2015. Its aim is to provide safe piped water to the people of Suva by building a pumping station, wastewater treatment plant, creating a reservoir and pipeline for the city’s water supply (9). Improving urban water quality and sanitation are high priorities for the Fijian government and other in the Pacific. Climate change will threaten the water supplies of SIDS in the Pacific through increased drought and potential salinisation from extreme storm surges. Additionally, the infrastructure to deliver water is under threaten from increasing severe storms in the region. The project in Fiji will also attempt to 'climate proof' the infrastructure. The project will cost over USD $405 million to be funded through a grant from the GCF of USD $31 million; a loan from the Asian Development Bank for 153 million; another loan from the European investment Bank of 70 million and the Fijian Government will also contribute 150 million towards the project (9).

Tuvalu Coastal Adaption Project presents an interesting example of how Pacific islands states interact with the GCF. The project will cost USD $38.9 million which is made up of a $36 million Grant from the GCF and $2.9 from Tuvaluan government (10). The project aims to improve the coastal resilience of three of nine islands. 2,780-meter of highly vulnerable coastline will be protected through a number of measures including: eco-system initiatives, beach nourishment, concrete and rock revetments, and sea walls. This represents an important expansion of the 570-meter coverage they have currently. The project also aims in increase the capacity of Tuvalu to manage these types of projects which will in turn help encourage addition funding or finance from the private sector (10).

While this project was successful Tuvalu initially applied for a $100 million flood protection scheme which was rejected, and the tiny nation had to start the process of applying for funding all over again (11). Tuvalu started their application in 2014, it was rejected in 2015 and finally approved in 2016. When the rejected proposal was reviewed, the government needed to fix technical issues of eligibility criteria, terms and conditions and the facilities (12). The government worked closely with the United Nations Development Program (UNDP) and the Secretariat of the Pacific Regional Environment Programme (SPREP). Tuvalu’s proposal was also helped by Samoa who was serving as the SIDS representative on the GCF board when the proposal was being considered (12). At COP19 Tuvalu’s Prime Minister argued his nation and other vulnerable Pacific islands were being buried in red tape in trying to access finance and their interactions with the GCF support this (2). Therefore, if the Pacific islands and other small island states need finance and there is funding available, a series of reforms are required to ensure these nations get the financing they need in a timely manner.  

3. Policy Recommendations

The Pacific Islands have had projects approved by the GCF, however the process was lengthy and stretched the capacity of the small island nations. The Pacific Islands need quick and easy access to funding, the issue is balancing their need whilst ensuring they have the capacity to implement the funding. There are three potential policy options which could be implemented to help Pacific Island nations access the GCF. The first would be to form a regional coalition and group projects together. The second would be to reduce the paperwork needed based on the country that is applying and the size of the project. The third would be to introduce a final review where states could go back fix or clarify any issues and resubmit their proposal.

3.1 Regional Groups

The Pacific Island Nations experienced similar issues in trying to access the Global Environments Facility (GEF), therefore there is the potential to learn from what happened at the GEF. To combat their inability to access finance individually, the Pacific Island nations joined together and formed the Pacific Alliance for Sustainability (2). This alliance is a success because it has delivered over $200 million of funding through 30 different projects in the region since 2006 (2). Therefore, there is the potential to create a similar alliance within the GCF. A regional body could be set up around the main issues facing the Pacific, including water, sea level rise, fishing, energy and sanitation; and encourage the countries to develop a joint project on a particular issue. For example, Kiribati, the Marshall Islands, Tokelau and Tuvalu are all atolls and have limited fresh water reserves due to shallow subsurface lens that are easily influenced by drought and contamination from salt water (13). Under a regional alliance focused on fresh water these states could join together and pull their resources for an application which could address their shared problem.

3.2 Quicker Access

It is recommendation that the application process should be modified based on the size of the project and the capacity of the country applying for the loan. The projects approved by the GCF for Pacific Islands are mostly under USD $50 million. Samoa’s representative to the UN had argued that a separate and simplified application could be used for micro or small-scale projects (14). Simplified procedures would also enable the Pacific islands to apply for projects themselves without having to enlist the help of multilateral bodies, improving their capacity and bring a sense of ownership and agency to the process. This would also deliver on the original aim of the fund to provide ‘direct’ access to the fund for all nations (5). It is also important to note that demands for accessible finance from the Pacific island nations is not an attempt to “compromise the quality of proposals or jeopardise GCF safeguards and standard” (14). It is a recognition of reality, that the small island states have constrained capacity to engage with the GCF.

3.3 Review System

There is also the potential for a review system. The GCF have been accused of "micro-scrutinising" paperwork and rejecting proposals for clerical errors (15). The large amount of paperwork already places a burden on SIDS and this was evident in Tuvalu’s bid for funding which took over two years and was initially rejected. This process could be potentially revised to be more efficient and effective by providing an interim review before the final decision is made.

The experience of Tuvalu’s bid for finance, shows that a rejection can dramatically extend the process for a small island state. An interim review would encourage collaboration between a nation and the GCF allowing issues to be resolved in a timely and efficient manner.

4. Green Climate Fund Structured Dialogue with the Pacific

In July 2017 the GCF did takes steps towards gaining a better understanding of the issues facing the Pacific and their inability to access the Fund. The Structure Dialogue with the Pacific was held in Tonga, with the help of Australia. The aim of the meeting was three-fold to: build the capacity of Pacific Islands to access the Fund, priorities increasing their involvement with the Fund and accelerate the implementation of projects (16). The meeting had unprecedented attendance with ministers from Pacific Island nations; representatives of the GCF National Designated Authorities (NDAs) and Focal Points, Accredited Entities, Readiness delivery partners, civil society, private sector, GCF Board Members and the Secretariat (17). This meeting is a successful first step towards improving access for Pacific Island by encouraging dialogue between parties. However, there were no specific policy recommendations at the end of the dialogue only a commitment to improving access. The dialogue is important and should be continued with the aim of producing recommendations, like the ones mentioned above which can be actioned by the GCF.

5. Conclusion

The GCF is still in its infancy and therefore we have the opportunity to make real changes within the structure and process of the organisation to provide adequate support for developing nations. The small islands of the Pacific faced a particular set of challenges in attempting to access finance. They are already feeling the effects of climate change, and lack the financial and institutional capacity to deal with these issues which is where the GCF fund should come in. However, there have been many issued faced by Pacific islands in accessing funds including: lack of financial and technical expertise, lack of human resources, extensive and burdensome paperwork and micro-scrutinising. It is important the projects approved by the GCF are successful for the islands and for donor countries however the capacity of the SIDS needs to be taken into account for their applications. The policy reforms of the potential for regional groups, quicker access for micro and small projects and a review process are all aimed at providing SIDS better access to the Fund whilst ensuring the proper oversights are still maintained. Moreover, the dialogue between the GCF and Pacific Nations was an important step in trying to address the issues facing the Pacific. A continued dialogue between both parties has the potential to produce real change in GCF and provide the much-needed access for the Pacific Nations.


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