THE GREEN CLIMATE FUND AND NATIONAL CLIMATE PLEDGES LEADING TO PARIS Ned Helme, President

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1 THE GREEN CLIMATE FUND AND NATIONAL CLIMATE PLEDGES LEADING TO PARIS Ned Helme, President August 5 th, 2015 Energy Sector Transformation Dialogue Sacramento, California Dialogue. Insight. Solutions.

2 OUTLINE The international context Opportunities in the energy sector Intended Nationally Determined Contributions The Green Climate Fund Next steps

3 THE INTERNATIONAL CONTEXT Parties to the United Nations Framework Convention on Climate Change (UNFCCC) to sign an agreement in Paris (December 2015) where all nations commit to action. Countries are to put forward Intended Nationally Determined Contributions (INDCs) prior to negotiations in Paris Some developing countries will include both unilateral targets and more ambitious goals conditional on international support. The Green Climate Fund (GCF) is the incentive for action - will be one of the principal sources of finance for developing country mitigation and adaptation. CCAP 2

4 THE INTERNATIONAL CONTEXT: RECENT MAJOR WORLD PLEDGES ON CURBING EMISSIONS *As of July 20, countries representing 56% of global emissions have put forward INDCs* US: 26-28% reduction below 2005 levels by 2025 China: Emissions to peak around 2030, aim to peak early. 20% of Primary Energy from Non-fossil fuels by 2030 European Union: 40% reduction below 1990 levels by 2030 Mexico: Unconditional: 25% below BAU by 2030 Conditional: 40% below BAU by 2030

5 OPPORTUNITIES IN THE ENERGY SECTOR For many countries, the electricity sector is a major source of emissions Many developing countries face significant challenges: Meeting rising electricity demand Maintaining system reliability Mitigating emissions Accessing affordable financing for energy sector investments Meaningful action in the energy sector will be a key part of achieving targets set out in INDCs post-paris The GCF provides an opportunity for countries to access concessional financing for ambitious proposals in the sector CCAP 4

6 INDCS: AN OPPORTUNITY INDCs are countries contributions to a 2015 agreement, which will take effect in 2020 The total impact of INDC mitigation contributions will determine whether world is on track to meet climate goals in Several non-climate benefits flow from the development and implementation of an INDC Benefits of developing an INDC Potential for Funding Fighting Climate Change Sustainable Development Benefits Demonstrating Leadership INDC Capacity Building CCAP 5

7 THE PARIS AGREEMENT: A FRAMEWORK FOR CONTINUOUS IMPROVEMENT The Paris agreement will likely set up a process for updating country contributions, rather than one-time pledges Convergence is growing around 5 year contribution periods (i.e. if first contribution is for 2025, 2 nd is for 2030, etc.) Policymakers can consider transformative longer term energy reforms in addition to meeting current INDC targets 4. Implementation, periodic updating 3. Inscription of contribution INDCs 1. Presentation 2. Review and Negotiations CCAP 6

8 FROM INDCS TO ACTION Supported target Unilateral target Sector target Sector target Investment Policies Public International Private Public Domestic Benefits of moving from high-level quantitative target to concrete implementation plans: Identify the most cost-effective mitigation opportunities Provide clear signals to businesses to encourage private investment Identify and develop proposals for international support (e.g. the GCF), and increase likelihood sufficient funds will be raised to meet supported target CCAP 7

9 THE INTERNATIONAL CONTEXT: CLIMATE FINANCE IS FLOWING Green Climate Fund (GCF) $10.3 Billion USD pledged to date First round of funding expected November 2015, 60% must be spent by 2017 to start next financial pledges This translates to 100 $30 million projects or 10 $300 million programs annually Eventual goal: $100 billion by 2020, counting both public contributions and catalyzed private sector investments NAMA Facility 8 projects pre-approved in 2 rounds of funding so far Supports projects 5-20 million Up to 85 million to be disbursed in the Third Call for Proposals, which closed in July 2015 EC and Denmark have joined NAMA Facility CCAP 8

10 GREEN CLIMATE FUND: BACKGROUND Financial mechanism of the UNFCCC Independent secretariat and 24 member board, equal developed and developing country members Achieving a paradigm shift to low-carbon, climate-resilient development is overarching goal and distinguishes GCF from other climate funds 50:50 balance between mitigation and adaptation Private Sector Facility to leverage private sector capital Funds to be delivered through accredited entities Proposals selected through competitive process based on 6 key criteria (similar to NAMA Facility criteria)

11 GCF ACCREDITATION All GCF funds will be delivered through accredited entities Can be multilateral and bilateral development banks and IFIs, or regional, national, and sub-national entities. 20 entities accredited so far, including: World Bank, ADB, AFD, KfW, CAF, UNDP, UNEP, IBD, EBRD, Deutsche Bank, Acumen Fund 9 national and regional institutions Role of accredited entities: Prepare proposals Implement projects and programs Ensure adherence to GCF safeguards and policies Conduct MRV and reporting Structure financial instruments and deliver financing CCAP 10

12 TRANSFORMATIONAL NAMA PROPOSALS Mitigation & Sustainable Development Host country-driven Combines dual goals of substantial GHG mitigation and sustainable development Paradigm shift policy action Transformative sectoral policy changes Designed to address barriers to implementation Financial Mechanism Financial mechanisms designed to catalyze private sector investment

13 GCF SELECTION CRITERIA Six selection criteria reward ambitious and transformational proposals in the context of sustainable development Criteria Description 1. Impact potential Mitigation and adaptation impact 2. Paradigm shift potential Contribution to transformational shift toward lowcarbon, climate-resilient development 3. Sustainable development potential Wider benefits and priorities (economic, social and environmental) 4. Needs of the recipient Vulnerability and financing needs of beneficiary country and population 5. Country ownership Beneficiary country ownership of and capacity to implement a funded project or program 6. Efficiency and effectiveness Economic and financial soundness of program or project

14 ENERGY SECTOR TRANSFORMATION AND THE GCF Energy sector transformation is well-suited to meet the GCF selection criteria, including: Impact potential: emissions reductions and climate resilience of energy sector Paradigm shift: leapfrogging traditional utility-centric, supply-focused electricity generation models Sustainable development benefits: energy security, job creation, cost savings, air quality improvements, balance of trade, energy access Efficiency and effectiveness: with upfront concessional financing, many renewable energy investments can be cost-competitive with fossil fuel alternatives CCAP 13

15 GCF PROPOSAL APPROVAL PROCESS Calls for proposals and rolling submissions (Secretariat) Concept note (voluntary) (Intermediary or project owner, in consultation with NDA. Feedback from Secretariat) Feedback in 2-4 weeks Preparation and appraisal, no-objection, submission to the Secretariat (Intermediary, NDA) Completeness check (Secretariat) Analysis and recommendation to Board (Secretariat and technical advisory panel) 1-2 weeks 4-6 weeks Board decision 3 weeks Legal arrangements (secretariat and IE/intermediary) Letter of commitment (Interim trustee) CCAP 14

16 GCF READINESS SUPPORT Board committed up to $30 million to help prepare developing countries to effectively engage with the Fund capped at $1 million per country This includes : Development of country work programs compatible with existing national climate policy frameworks, including NAMAs Development of initial pipelines of project and program proposals Support for NDAs and/or country focal points, and preparing domestic entities for accreditation Can be carried out by national, subnational, regional and international entities selected by NDA or Secretariat in case of regional or international ones

17 NEXT STEPS: THE ROAD TO PARIS, AND BEYOND Negotiators will continue to develop 2015 agreement Countries will submit INDCs by October 2015 Countries should consider how an energy sector transformation can help them meet or exceed their climate goals Countries should consider how the GCF and other sources of climate finance can help achieve this transformation To be considered at the 1st GCF spring board meeting in 2016, full proposals should be submitted at least 13 weeks in advance (likely by early December) CCAP 16

18 THANK YOU For more information, please visit us at

19 TRANSFORMATIONAL NAMAS Are host country-driven efforts to reduce GHGs and advance sustainable development. Apply technical assistance to surmount implementation barriers and foster replication. Finance catalytic projects for short-term results. Transform policies to sustain GHG reductions. Mobilize private investment through financing mechanisms that change the risk-return equation. Leverage public investments (e.g., infrastructure) Create a pipeline of investments for private sector, development banks and climate financiers. CCAP 18

20 WHAT MAKES A PROPOSAL TRANSFORMATIONAL? Policies & development goals Economic & GHG impact Financial Mechanism CCAP 19