Pressure on GCF Board increases after Bali meeting makes few decisions

— After only a handful of decisions at the last GCF Board meeting in Bali, the first one lead by the new German and Philippine co-chairs, the pressure on 24 Board members increases to deliver at the Board’s all important next meeting in May.

The recent sixth meeting of the Board of the Green Climate Fund (GCF) in Bali from February 19 – February 21, 2014 was meant to propel the new Fund toward full operationalization by year’s end. After Bali, however, this tightly timed goal – which included the expected start of the GCF’s resource mobilization efforts in connection with the UN Secretary General’s extraordinary climate summit in New York on September 23^rd – is in peril. The 24 Board members left Bali with less than a handful of actual decisions taken and many more postponed for the next Board meeting in late May, after old tensions between developed and developing countries flared up. At issue are competing approaches on how the GCF should support the paradigm shift towards low-carbon and climate-resilient development in recipient countries. Will the GCF operate as a fund closely tied to the UN Framework Convention on Climate Change (UNFCCC) passing on primarily concessional public finance to all eligible Non-Annex I-Countries under the Convention? Or is the GCF to develop eventually into a more full-fledged climate bank with complex financial instruments which could prioritize public funding to leverage private sector engagement in fewer competitively selected countries and investment opportunities?

Presiding over their first GCF Board meeting as new co-chairs, German Board member Manfred Konukiewitz and the Philippine’s Jose Ma. Clemente Sarte Salceda faced difficulties in steering their colleagues through a heavy-set agenda and keeping them task-oriented and focused on decision-making. Instead lengthy discourses about the Fund’s travel and administrative policies took away precious Board time. This short-changed in-depth Board member feedback on a number of operational policies for which only progress reports were under review in Bali with a decision based on revised texts to come in May – such as structure to measure Fund-wide success of its operations. In total six of the eight policies deemed essential for the Fund to be able to receive and disburse funding this fall will have to be decided at the next Board meeting. Added to this are a number of operational modalities, where decisions expected in Bali were postponed to the May meeting, including on a work program to get developing countries and project pipelines ready for GCF funding. This increases the pressure on the GCF Board and its Co-Chairs for the May meeting tremendously. With Board meetings time-limited to three or four days, it might even become necessary to schedule an extra-ordinary Board meeting in June.

In Bali, the Board was only able to decide on two of the total eight policies considered essential requirements for GCF resource mobilization. One set the terms of reference of several accountability mechanisms for the Fund, including an Independent Evaluation Unit to review GCF operations periodically and an Independent Redress Mechanism to now allow both people negatively affected by GCF projects or programs and recipient countries wanting to challenge GCF Board funding decisions to seek remedies. The other decision, and probably the most important one in Bali, set Fund-wide benchmarks for how GCF resources will be allocated.  In redrafting a proposed decision text several times, the Board confirmed that the mandated balance between spending for adaptation and mitigation in effect means a 50:50 split “over time.” It also reserved a minimum half of all of its adaptation spending for particularly vulnerable countries, such as LDCs and SIDS. However, the Board did not provide upper limits on how much of the GCF’s resources could be given to a single country or to its Private Sector Facility (PSF), opting instead for decision language that calls for geographical balance and fairness in allocating money to a broad number of developing countries.

Interestingly enough, there was only one issue in which the Board went beyond what was considered to be a likely outcome for the Bali meeting. Hearing from a broad range of Board members that they wanted to see more ambitious actions on implementing the GCF mandate for a gender-sensitive approach to its funding, the Board asked the GCF Secretariat to prepare a draft gender policy and action plan for approval at its fall meeting in October. It also tasked the Secretariat to ensure that gender implications are considered in all those operational policies coming up for decision already in May.

In preparation for the next GCF meeting in May, good cooperation between the Board Co-Chairs and a still understaffed GCF Secretariat, which is to revise and re-issue more than a dozen complex policy papers, will be crucial. The Co-Chairs will have to step up their efforts in smoothing out Board disagreements over key operational policies already in the lead-up to the May meeting and work with the Secretariat strategically to draft balanced decision texts which the Board members – in the interest of seeing the Fund succeed and start funding quickly – can compromise on.

Liane Schalatek, Heinrich Böll Stiftung North America

A comprehensive summary report of the 6th GCF Board meeting in Bali is forthcoming and will be available at www.boell.org.