Introduction to GCF Funding for Projects Lao PDR National Dialogue GEF-GCF Vientiane, 12-14 Feb 2019 Janie Rioux, Agriculture and Food Security Senior Specialist Chibesa Pensulo, Water Specialist Green Climate Fund

Outline GCF allocation and results areas Investment criteria Business model Project cycle and assessment Funding windows Portfolio overview Examples of projects in the region

GCF Allocation Framework 50/50 split between adaptation & mitigation Geographic balance 50% of adaptation resources for SIDS, LDCs and African States Significant allocation to Private Sector Facility Sufficient resources for readiness activities Grant equivalent term

GCF eight Strategic Result Areas To promote a paradigm shift to low- emission and climate- resilient sustainable development

Six Investment Criteria against which proposals are assessed Impact potential Paradigm shift potential Sustainable development potential Country ownership Efficiency & effectiveness Responsive to needs of recipients Potential to contribute to achievement of Fund's objectives and result areas Catalyze long-term impact beyond a one-off investment Wider economic, environmental, social (gender), health co-benefits Degree to which the project fits within the beneficiary country’s existing policies, climate strategies and institutions Economic (and financial) soundness, as well as cost-effectiveness and leveraging of co-financing Vulnerability and financing needs of beneficiary country and extent to which the project addresses vulnerable groups

Financial Instruments Concessional Loans Grants Reimbursable grants Equity Guarantees 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

75 entities accredited to date A Diverse Network of Partners 75 entities accredited to date Antigua & Barbuda China Fiji Morocco Namibia Morocco Bangladesh Senegal China Korea Argentina India Rwanda Indonesia India Kenya Mongolia Bangladesh Ethiopia Peru South Africa

Proposal Approval Process 1- project idea 2- concept note 3- funding proposal submission 4- proposal review and assessment Secretariat + Panel 5- Board decision 6- Legal arrangement From project origination to Board approval Schematic on the Fund’s proposal approval cycle Generation  Concept Note Funding Proposal Iterative process between the NDA or focal point, the accredited entity and the Fund’s Secretariat until funding proposal is finalized For the NDAs and focal points, it culminates with the issuance of a ‘no-objection letter’ Analysis/Recommendation  Decision Decision by the Board of the Fund based on analysis by Secretariat and independent Technical Advisory Panel

Accredited Entity NDA Funding Proposal Review Process Stage 1 Completeness check and preliminary review Completeness of documentation and level of detail Technical soundness Climate rationale Accredited Entity Stage 2 Inter-Divisional Secretariat Assessment Technical assessment Performance against investment criteria Compliance with GCF safeguards & policies Stage 3 Independent Technical Advisory Panel Technical assessment Performance against investment criteria Stage 4 Submission to the GCF Board

Completeness of Funding Proposal Package Project documentation: Funding Proposal No-objection letter from the country NDA Feasibility study -> providing climate rationale, proposed options, economic & financial analysis Detailed budget and procurement plan Logical framework Stakeholder consultations Environmental and social impact assessment, and management plan Gender assessment and action plan Risk assessment and management framework

Project Preparation Facility PROJECT PREPARATION FACILITY (PPF) Support for project / programme development What is on offer? Especially micro-to-small size projects Up to USD 1.5M per project preparation request Accredited entities, especially direct access, submit requests How to apply? Request submitted with project / programme concept In conjunction with no-objection letter from NDA / focal point Secretariat assesses concept against investment criteria What is assessed? Also assesses request for justification of needs & GCF policies GCF Executive Director approves request

Simplified Approval Process (SAP) Eligibility criteria Ready to be scaled-up, with potential for transformational impact GCF funding of up to USD 10 million Minimal to no environmental & social risks 1 There are the three eligibility criteria for SAP projects and programmes. The first criterion is that the project should be ready to be scaled up and have the potential for transformational impacts, promoting a paradigm shift to low-emission and climate-resilient development. If the proposed project is already tested and has proven its impacts through a previous project, and that it is ready to be scaled up, then it is the good case for SAP. At the level of funding proposal, the AE should demonstrate the pathway to transformation through the theory of change approach, at the “paradigm shift potential” section of the investment criteria.   The second criterion is that requested GCF funding should be up to USD 10 million. This doesn’t mean that the overall project size should be 10M. With the co-financing, the total project cost can be over 10M. The last criterion is that the project should have minimal or no environmental and social risks. At the GCF, this is equivalent to ESS category of C or intermediation 3. I will talk about the ESS part a bit later. 2 3

SAP - What has been simplified? Standard project/programme SAP project/programme Preparation Full studies & appraisals Lengthy funding proposals (average 70 pages) Simpler documents to prepare (e.g. pre-feasibility study, ESAP, etc.) Review Case-by-cases (depending on the complexity of the project structure/design) Aim for: 2 weeks for CNs 4 weeks for FPs Rolling-basis review both by Secretariat & ITAP Approval At regular Board meetings (3-4 times a year) At regular Board meetings; In-between Board decision to be considered Disbursement Average 407 days until 1st disbursement Piloting faster disbursement Since the launch of the SAP, we have received a lot of questions about what has been actually “simplified”. Simplification can be done at four stages of the proposal approval process, as you can see in the table, preparation, review, approval and disbursement. In short, we have done a lot of simplification for the AEs and NDAs on the preparation side, and we are working to expedite our processes for review, approval and disbursement.   On the preparation side, the standard projects require full set of documents including full feasibility studies, environmental and social impact assessment or management plans depending on the ESS risk category of the project, detailed economic and financial analysis, and so on. Because of the heavy information required, the funding proposal usually goes for an average of 70 pages of length when completed due to many detailed sections and sub-sections. In the case of SAP, we need much lesser documents. For example, pre-feasibility instead of feasibility study is sufficient, and environmental and social action plan would be enough in case there is any activities that require mitigation measures in terms of environmental and social risks are foreseen. On the review side, review by the Secretariat takes time on a case-by-case basis, depending on many variables such as complexity of the project design. For the SAP proposals, we aim to revert back to the AEs and NDAs within 2 weeks in the case of concept notes and 4 weeks for the funding proposals. We also review on a rolling-basis. For both standard proposals and SAP proposals, Board’s consideration and approval take place at the regular Board meetings which take place 3 to 4 times a year. We are however working to bring in in-between Board decision for approval of SAP proposals. This was unfortunately not considered by the Board at B.20, but we hope this to be discussed and approved by the Board at the next Board meeting. Since the first approval of the funding proposals at B.11, it was reported that an average of 13 months to disburse funding to AEs. For the SAP, we aim to reduce this time and the SAP is monitoring this process to fully operationalize this.

Request for Proposals for REDD+ Results-Based Payment Size of envelop: USD 500 million Eligibility period of results: 31 December 2013 (time of adoption of the Warsaw Framework for REDD+) until 31 December 2018 Financial valuation of results: USD 5 / tCO2eq GCF payable amount: a country can submit more than one proposal up to maximum 30% of the total envelop Application period: from October 2017 until the last meeting of the Board in 2022 More information: www.greenclimate.fund/how-we-work/redd  

GCF Private Sector Strategy Take more risk to crowd in finance for paradigm shift e.g. (i) local currency financing and (ii) more equity / less debt II. Support the development of climate-compatible financial systems e.g. (i) readiness, financing for national climate banks and (ii) support to build capital markets for “green” securities III. Act as a “market maker” for sector transformation e.g. (i) strengthened GCF Country Programs and (ii) targeted programs and RFPs to implement national sector priorities IV. Improve impact and engagement with PS e.g. Project cycle (“notification”) and accreditation reforms

Portfolio Overview 93 projects and programmes $4.6 billion GCF funding and $11.7 billion co-financing 272 million people with increased resilience 1.4 billion tonnes CO2eq avoided Status as of B.21

Examples of approved projects in the region Cambodia : Climate-friendly agribusiness value chains sector project (ADB) Cross-cutting (adaptation) project: $30M grant, $10M loans, $100M co-financing 1.4 M beneficiaries, and 240 K tonnes of CO2eq avoided Bhutan: Bhutan for Life- support forest management and protected areas (WWF) Cross-cutting (mitigation) project: $27 M grant, and $90M co-financing 35M tonnes of CO2eq avoided, and 145 000 beneficiaries Vietnam: Scaling up energy efficiency for industrial enterprises (World Bank) Mitigation project: $75M guarantee, $11M grant, $400M co-financing 120 M tonnes of CO2eq avoided

Approved Projects www.greenclimate.fund/projects/browse-projects

For more info, visit www.greenclimate.fund Janie Rioux GCF Agriculture and Food Security Senior Specialist jrioux@gcfund.org Chibesa Pensulo GCF Water Specialist cpensulo@gcfund.org