Engaging with the Green Climate Fund Ousseynou Nakoulima Thank you to the Center for Clean Air Policy for inviting the Green Climate Fund to participate in this important forum on Climate Finance. Focus of my short presentation today is the “Role of GCF in helping developing countries achieve low-emission and climate-resilient development and reach their NDC targets”. I will provide: Brief introduction to the Fund Overview of GCF’s Readiness and Preparatory Support Ousseynou Nakoulima Director, Country Programming CCAP Climate Finance Forum 20-21 May 2016 | Bonn, Germany

About GCF World’s largest climate fund Agreed by 194 Parties to the UNFCCC Provide support to developing countries Mitigation: reduce greenhouse gas emissions World’s largest climate fund. Established at the 16th Conference of the Parties in 2010 (Cancun, Mexico); Agreed by 194 Parties to the UNFCCC. GCF is an operating entity of the financial mechanism of the UN Framework Convention, reiterated in the Paris Agreement; Created to support low-emission (mitigation) and climate-resilient (adaptation) investments in developing countries; and Investment mix: public and private sector, and here GCFis determined to partner with the private sector and harness its implementation capacity, to catalyze investments and maximize impact. Adaptation: adapt to unavoidable impacts Investment mix: public and private sector

GCF architecture Brief run-through of GCF’s architecture – how we are structured. Simple picture of the architecture Fund with resources flowing through accredited entities To climate change projects/programmes in countries Using one of four financial instruments or a combination With NDAs/FP playing a key role all through

State of Play: resources and allocation US$ 10.2B in pledges US$ 9.9B in signed contributions 42 governments, 8 developing countries Geographic balance Where are we on two important topics: Resources: To date, more than USD 10 billion equivalent has been pledged by governments to the Fund since it launched its initial resource mobilization period in 2015; So far, USD 9.9 billion equivalent of the total pledged amount has now been converted into signed agreements and arrangements — representing more than 96% of the pledged total; and Pledges from 42 state governments, 8 of whom are developing countries. Allocation: Aim to equally balance its allocation between adaptation (climate-resilient) and mitigation (low-emission) over time, and allocate significant resources to the private sector. Also aim to allocate at least half of its resources for adaptation for countries that are particularly vulnerable to the impacts of climate change: Least Developed Countries (LDCs), Small Island Developing States (SIDS) and African States. Resources we have and how we’re expected to balance the overall portfolio over time Here’s what we have: 10.2 billion in pledges 5.8 converted into signed contributions that we can commit Comes from 35 countries, 8 developing Here’s how we need to allocate: 50% each to adaptation & mitigation (overall, not by country, and measured in grant-equivalent terms) 50% of adaptation has to go to SIDS, LDCs & African states Ensure geographical balance but no country allocations Significant allocation to the private sector Sufficient resources for readiness (have $16million released, of which $2.5 million committed to 9 countries) Resources and allocation targets Resources for readiness Significant allocation to private sector

Accredited Entities 33 entities accredited to date Ethiopia Kenya Rwanda Morocco Senegal Namibia Argentina India Peru Fund works through a wide range of entities to channel its resources to projects and programmes. To date, we have 33 institutions that are authorized to implement GCF-backed projects and programmes. What do Accredited Entities do? They: Develop and submit funding proposals for projects and programmes; Oversee management and implementation of projects and programmes; Deploy a range of financial instruments within their respective capacities; and Mobilize private sector capital. 33 entities accredited to date As of 31 March 2016

Building institutions: Fit-for-Purpose Accreditation Fiduciary functions Mandate & track record Basic Specialized Alignment with Fund objectives At least 3 years of operations Environment & Social risk category Project size The purpose of the accreditation process is to ensure that arterial system through which the Fund’s resources will flow are healthy That they are good enough to carry the relevant type and size resources that they are intended to carry, and will manage it’s use in an environmentally & socially responsible manner Assess their standards and their track record for carrying the kind of resources they intend to carry, and for the purposes they intend to carry it Accredit them for those purposes – that’s the fit-for-purpose approach We’ll cover this in more detail in the last session today Micro (>10mn) Small (10-50mn) Medium (50-250mn) Large (>250mn) A (high) B (medium) C (low)

Eight strategic result areas In greater detail: Eight areas of GCF’s strategic results areas - mitigation and adaptation. Covering: Livelihoods, energy, transportation, buildings & cities, forests & land use, other ecosystems, and health, food & water systems Focused on impact, paradigm-shift potential; crosscutting adaptation-mitigation benefits, and broader sustainable development co-benefits What areas of mitigation and adaptation will we fund? Adaptation – Activities that make resilient : the livelihoods of people and communities Infrastructure & built environment Ecosystems & ecosystem services Health, food & water systems Mitigation – activities that reduce or avoid emissions: Energy generation & access Transport Appliances, buildings, cities & industries Forests & land use For each activity in any of these areas, we will also be looking for impacts, paradigm shift potential, crosscutting benefits & sustainable development co-benefits Will cover this in more detail in the next presentation With a focus on Impact Paradigm-shift potential Crosscutting adaptation-mitigation benefits Sustainable development co-benefits

Catalysing the private sector – GCF Private Sector Facility To mainstream climate change mitigation and adaptation actions in the private sector Why a PSF? Fund climate risk assessment models and tools Long-term debt, credit lines and refinancing Equity to develop a project to full bankability Guarantees to bear specific risks Interventions possible Why a Private Sector Facility? The PSF seeks to help scale up investment in low-emission development and unlock private sector investments in adaptation, responding to different country financial contexts and availability of capital. Say a word about the private sector facility Why was it created? Recognition that addressing the climate change challenge at scale will require mainstreaming climate action into the day-to-day business of the private sector Variety of ways to do it Develop the tools to help them integrate climate risk into their business models Provide debt of varying forms to incentivize them – long-term, liquidity, or refinancing Equity to take early stage risks, and guarantees to cover specific risks How can private sector access? Integrated into the Fund using the same operational modalities Bring forward proposals through any of the accredited entities with the ability to undertake private sector operations Accredited entities with private sector operations Present funding proposals spontaneously or in response to calls for proposals Access to the private sector

Approved project – public sector Support of vulnerable communities in Maldives Managing climate changed-induced water shortages Funding: GCF: USD 23.5M | Maldivian Gov’t: USD 4.5M Providing safe and secure freshwater to people on the outer islands of the Maldives 32K people in vulnerable households with safe water 73K people from a dry season water supply system Improved groundwater quality to secure freshwater reserves for long-term resilience Approved project with UNDP (AE) and Maldives Ministry of Environment and Energy. High levels of poverty on the outer islands of the Maldives, which experience drinking water shortages during the dry season causing significant human, environmental and social impacts. With $24M from the GCF, the project will: Scale up an integrated water supply system based on rainwater, groundwater, and desalinated water into a low-cost delivery system for vulnerable households. This will provide uninterrupted supply to 49 islands that currently rely on emergency water deliveries for three months of the year. Build water desalination production plants on four larger islands that will contribute to this improved dry season water desalination network to outer atolls and local supply systems. And increased capacity of local and central government authorities will strengthen the management and efficiency of these systems. This will result in: 100,000 direct beneficiaries (26% of country’s population) who will have access to safe water and improved groundwater quality to secure freshwater reserves for long-term resilience.

Approved project – private sector KawiSafi Ventures Fund in East Africa A new investment fund to drive off-grid solar power Funding: GCF: USD 25M | Acumen: USD 7M Investing in 10–15 clean energy companies, initially in Rwanda and Kenya 15M direct beneficiaries Saving 1.5M tonnes of CO2 emissions Providing off-grid populations with access to cleaner and safer power Approved project with Acumen to create KawiSafi, a new investment fund to drive off-grid solar power in East Africa. With $25M from the GCF, Acumen will: Use equity capital from GCF to leverage investment and grant capital to set up a Technical Assistance Facility. Finance early-stage small- and medium-sized enterprises with core business models that address the off-grip solar system in East Africa This will result in: 15M direct beneficiaries (16% of Rwandan, Kenyan and Ugandan populations); Saving 1.5M tonnes of CO2 emissions by displacing kerosene at the household level (with health and safety co-benefits); and Leveraging of GCF’s investment capital on a roughly 4:1 basis to create a $100M fund.

Build a pipeline of private sector-operated solar projects Project support Accelerating country pipelines Country Delivery Partner Amount Requested Duration Senegal IFC USD 600,000 12 months Purpose Build a pipeline of private sector-operated solar projects Proposed activities Comprehensive mapping of solar resources Technical and economic feasibility analysis Review of institutional, legal and regulatory frameworks Senegal wants to develop solar energy projects throughout the country and requested GCF to provide readiness support through the International Finance Corporation (IFC) to build a pipeline of private sector-operated solar projects within two years. Total expected cost for the readiness activities is $2.5M, of which $600K from GCF. Expected outputs include: Comprehensive mapping of solar resources throughout the country; Technical and economic feasibility analysis of possible project sites; and Review of the institutional, legal and regulatory framework for privately owned, renewable electricity production.

Financial instruments 1 With/without repayment contingency Terms determined on a case-by-case basis 2 Grants Equity 3 4 Guarantees Fund has the ability to deploy 4 types of financial instruments: grants, equity, guarantees and loans Grants with/without repayment contingency Loans with high concessionality – 40 years maturity, 10 years grace, 0% interest Loans with low concessionality – 20 years maturity, 5 years grace, 0.75% interest Other non-grant instruments terms determined on a case-by-case basis Fund has the ability to deploy 4 types of financial instruments – grants, equity, guarantees and loans Grants with/without repayment contingency Loans with high concessionality – 40 years maturity, 10 years grace, 0% interest Loans with low concessionality – 20 years maturity, 5 years grace, 0.75% interest Other non-grant instruments terms determined on a case-by-case basis On what basis are terms decided? Concessional loans High: 40 – 10 – 0% Low: 20 – 5 – 7.5%

Getting ready: GCF Readiness Support Nice group of people, our direct access country partners, representing entities and NDAs and focal points. Photo from GCF’s first "Readiness Week" to assist direct access entities in developing their project ideas. The week-long event brought together the 13 organizations that have been accredited for direct access to the Fund, as well as 27 developing countries, represented by a National Designated Authority or Focal Point (NDA/FP). More on this in a second…

GCF Readiness Support: Helping countries to build capacities Knowledge National priorities, strategies, plans Coordination Planning Institution building Programming and preparation The Fund has developed some guidelines that will help countries understand the capacities the NDAs or FPs will need to ensure effective implementation of the Fund’s activities. Ideally, the NDA or FP would have or would be able to attain: Knowledge and familiarity with: National priorities, strategies and plans The country’s efforts and needs regarding adaptation and mitigation 2. Insight: On the institutions and stakeholders in the country that are relevant for engagement with the Fund (ML and bilateral institutions, CSOs and entities with potential to be accredited as intermediary or Ies) and An overview of activities of other funding mechanism and institutions in order to ensure proper coordination 3. Influence: With a mandate that allows it to contribute to and drive national development strategies and plans And capacity to facilitate multi-stakeholder consultations and engagement Monitoring Monitoring and Evaluation Multi-stakeholder engagement

Readiness week assessment: What we heard Support needed for project and programme preparation Policy, regulatory and institutional capacity challenges Stakeholder consultations Support to accreditation of direct access entities During the April readiness week we heard a lot from our country partners. Some main themes include: Diverse range of support needed for country and entity project and programme preparation. Variety of policy, regulatory and institutional capacity challenges. Depending on country context, some countries are well advanced in putting forward projects and programme, whereas others required a range of capacity support to get the NDA up and running and to build out their project and programme proposals. Countries voice the need for more engaging and inclusive stakeholder consultations. Countries’ broad support for accreditation of direct access entities, either accredited or to be accredited. Our main objective of the week was to help countries and entities development their work programmes.

Concept of country programme: Potential NDC investment strategy Country investment priorities with GCF National climate change strategies and plans Self-assessment and Action Plan And this links to the framework for each country’s NDC strategy which could be articulated in the form of a country programme. The starting point for each country would be the national climate change strategies and plans that may already exist or in the process of development: NAMAs – NAPAs – NAPs – TNAs – INDCs – LEDS. Aligned with the Fund’s results and investment framework. The process is led by the NDA (or focal point) through an ongoing consultative process with public stakeholders (national and subnational), and private sector and civil society stakeholders. Through such a process, the country can develop its framework to guide a diverse range of stakeholders on the countries priorities vis-à-vis the Green Climate Fund.

onakoulima@gcfund.org web | greenclimate.fund