Policy Brief: Review of Initial GCF Proposal Approval Process Simplified Approach December 2016 Key messages In Center Clean Air Policy s (CCAP) previous inputs on Green Climate Fund (GCF) proposal approval In process CCAP s 1, previous we advocated inputs on significant proposal approval investments process in 1, readiness we advocated significant preparation investments in a readiness streamlined two-stage preparation approval process. a streamlined With respect two-stage mer, approval CCAP process. welcomes With respect launch of mer, Project CCAP Preparation welcomes Facility launch (PPF), of Project steps Preparation taken by Facility Secretariat (PPF), enhance steps taken Readiness by Secretariat enhance Readiness program streamline accelerate disbursements NDAs program streamline accelerate disbursements NDAs delivery partners. delivery partners. Consistent with a two-stage approach, we focus in this note on a voluntary two Board meeting process Consistent proposal with approvals. a two-stage Such approach, an approach we could focus in provide this note GCF on a voluntary proponents two Board an early meeting signal process of Board perspectives, proposal approvals. useful technical Such an approach feedback could provide guidance, GCF a streamlined proponents an way early signal access of Board perspectives, development useful support technical promising feedback concept guidance, notes. For a way Board, early access engagement development in support cycle can promising encourage concept discussion notes. of policy For issues Board, raised early by engagement concepts. in cycle could encourage discussion of policy issues raised by concepts. We also provide considerations a simplified proposal approval process. A simplified approach We also provide considerations a simplified proposal approval process. A simplified approach small-scale activities should clarify reduce technical requirements expedite review small-scale s should clarify reduce technical requirements submission expedite decision-making process. The Board should also consider a simplified process expedite replication of successful programs approaches. Two Board meeting process proposal approvals The GCF approval process should promote high-quality, innovative, country-driven s programs, accelerate access resources. While Fund has made significant progress in approving s this year, many NDAs accredited entities (AEs) note that y are hesitant invest heavily in development of specific s programs bee funding is identified, without assurance that ir efts are aligned with goals stards of Fund. This can act as a hurdle entry that is particularly significant direct access entities. At Ocber 2016 Board meeting, many Board members emphasized need a staged approval process that would allow earlier engagement in cycle in order promote development of high quality proposals. In particular, some Board members advisors inmally discussed possibility of establishing a two Board meeting process with a more malized concept note phase. CCAP welcomes a two Board meeting process, presents considerations an approach that can provide countries AEs with an early signal of Board perspectives through endorsement of promising concept notes, as well as useful feedback development support ir ideas should y wish it bee developing a full proposal. Such an approach could also enable Board exchange views voice concerns earlier in development process. In first stage, concept notes submitted by AEs would be reviewed by Secretariat against GCF investment criteria policies, who would provide Board with a concise summary of ir assessment technical comments. Board members would not approve or reject concept notes at this phase, but 1 See http://ccap.org/assets/gcf-initial-proposal-approval-process-submission-ccap.pdf 1
rar endorse concept notes that demonstrate broad alignment with Fund s objectives stards, as well as have opportunity provide comments AEs. Concept note review endorsement should be simple efficient. For example, Secretariat could present ir recommendations on endorsement Board approval on a no-objection basis. The Board would have opportunity provide comments, only concept notes that raise specific questions or concerns would be addressed during Board session. In ir concept note submission, AEs would have option request preparary support from PPF, be considered without furr application. The Executive Direcr would retain authority approve PPF requests, taking in consideration endorsement outcome Board discussion. In second stage 2, following review of final documents by Secretariat independent technical advisory panel (ITAP), Board would consider full funding proposals, with options approve, defer resubmission, or reject. The outcome of first stage would be without prejudice Board s final decision on full proposal. A two-stage process should in no way be obligary. AEs should be free submit proposals y deem are ready full consideration by Board at any time. Also, a two-stage process would not preclude or targeted support through PPF (e.g., funding a specific feasibility study). Benefits of a two-stage process A stronger pipeline: Early feedback support can promote development of high-quality proposals strategic use of GCF resources. AEs ir country partners can also allocate ir resources efts more efficiently, avoid costly modifications stipulated by GCF once s are fully developed. Learning by doing: By engaging with s early, Board can exchange views on concepts key policy issues y raise in a relatively low-stakes setting. A staged transparent review process can also promote learning AEs, as well as countries entities looking partner with Fund. Innovation: A two-step process presents a relatively low-risk way countries entities bring ward bold ideas, receive assurances from Board, as well as technical feedback support bee continuing development. Country-ownership: A two-step process can give confidence NDAs direct access AEs on country-driven ideas unlock preparary support. The process also encourages AEs engage with NDAs align with country priorities early on, in order demonstrate strong country ownership in first phase. Transparency streamlining: Once a proposal is presented Board consideration, it may be politically difficult turn it down. A transparent staged process can help Board make well-inmed merit-based decisions, provide greater clarity consistency countries institutions looking partner with GCF. The process can also allow greater transparency on Secretariat s processes, without abdicating responsibility of Secretariat. 2 For concept notes endorsed in first stage, consideration of full proposals may occur at subsequent Board meeting, or at a later date depending on time needed development. 2
Considerations an effective two Board meeting process The GCF should ensure a clear effective process first stage that promotes development of strong proposals, including by: Establishing a streamlined process concept note review endorsement: Firstly, requirements concept notes should be simplified clearly defined, ensuring sufficient inmation discern quality at a reasonable cost eft AE. We recommend that guidance is provided on pre-feasibility studies, that a financial model is not required at this stage. Secondly, avoid potential bottlenecks of a two-stage process, Executive Direcr, in consultation with Secretariat co-chairs, could present recommendations Board endorsement on an absence of objection basis, advise Board as which particular concept notes /or related policy issues merit discussion in plenary (e.g., s that are high risk or of special interest Board). Over time, Board may wish accelerate two-step process by considering concept notes endorsement in between meetings. Requiring no-objection: Concept notes submitted in first stage should require a no-objection letter from NDA, consistent with PPF rules. NDAs may find a two-step process a useful way ensure quality of country s GCF portfolio, encourage or require entities pursue this approach. Providing useful feedback on all concept notes: For endorsed concept notes, Secretariat should provide guidance AEs inm development of high-quality full proposals, with inputs from Board. In case a concept note is not deemed ready move on full proposal development, Secretariat should provide feedback on how concept note can be strengned resubmission. Establish a strong technical team review concept notes: The GCF should ensure sufficient staffing resources as agreed by Board in June 2016 1 review submitted concept notes from a widerange of activity areas in a timely way. The ITAP could also play a useful role in providing technical assessments feedback. However, given ir existing obligations review funding proposals, Board might consider limiting role of ITAP in providing feedback concept notes certain types of proposals (e.g., high-risk /or large-scale s). Offer advisory services: In addition preparation funding, GCF should leverage its global network establish a roster of experts that can offer NDAs AEs a range of technical support, financial advice, or advisory services during development process. The GCF should promote efficient well-inmed decision-making by Board, including through a process Board civil society submit comments questions on proposals under consideration, AEs address se inputs. The GCF should: Introduce a mal process technical comments response on full proposals: Board members, as well as civil society, should have a mal period voice concerns ask questions about proposals under consideration. AEs should be given adequate time respond comments, as well as revise ir proposal if necessary. Release comprehensive inmation on proposals earlier: Currently, full proposals must be made available 3 weeks bee a Board decision, at same time as Board receives assessments from Secretariat ITAP (with only latter made public). Proposals assessments should be released at least 6 weeks prior a Board decision, including 2 weeks public comment by Board civil society, 2 weeks responses from AEs, 2 weeks all stakeholders consider final documents. In addition, CCAP recommends that assessments of both ITAP Secretariat be made publically available increase transparency provide useful guidance countries AEs. 3
Allowing deferral re-submission of full proposals: In case where proposals are incomplete or require furr due diligence in order be properly evaluated, Board should have authority defer approval. In se cases, Board should explicitly specify elements be addressed bee re-submission. In general, Secretariat should not present proposals Board consideration where Secretariat or ITAP have substantial unresolved technical questions or concerns. Figure 1: Two Board meeting approval process Stage 1: Concept note review endorsement Submission of concept note Option request preparation support Weeks bee Board meeting 5 weeks Review by Secretariat Submission Board Endorsement 3 weeks Board meeting Stage 2: Funding proposal review approval Submission of funding proposal Weeks bee Board meeting 14 weeks Review by Secretariat ITAP Release of proposals documents 6 weeks Public comment period Board CSO comments (2 weeks) AE response (2 weeks) Final review (2 weeks) Board decision Option deferral re-submission Board meeting 4
Simplified approval process Both Paris Agreement GCF Governing Instrument (GI) emphasize expedited access timely delivery of scaled-up resources mitigation adaptation, with a particular focus on needs of SIDS, LDCs or vulnerable countries. Meeting se objectives will require streamlining delivery of finance small-scale activities, as well as an ambitious, near-term focus on scaling-up replicating successful mitigation adaptation solutions in line with country priorities. To this end, Board should look approve guidelines a simplified proposal approval process that expedites access support : 1) Small-scale activities; 2) Scaling up replicating successful approaches programs. Simplified approvals small-scale activities CCAP recommends that approval process small-scale activities be simplified on two dimensions: Simplified technical requirements submitting a proposal, including feasibility studies or technical documentation; Simplified review process proposals. The Board may wish consider various options, including conducting approvals between Board meetings, or allowing Secretariat or a Board committee approval proposals or recommend proposals approval by Board on a no-objection basis, particularly certain types of s (e.g. micro-sized) 3. In se cases, proposals that present particular risks or concerns would be brought Board discussion in plenary. A focus on development will be key accelerate approvals while maintaining quality stards. To this end, Board may wish encourage or require submission of concept notes small-scale proposals provide early guidance preparation support that can facilitate an expedited review of final proposals. In addition, funding proposals that include grant/technical assistance support conduct additional technical studies or enhance existing analyses studies should be considered, provided sufficient inmation is provided at time of proposal submission support a sound basis decision. CCAP encourages Board consider options a simplified process beyond scope laid out in GCF Decision B.13/20. However, in response se specific points, we make following recommendations: The proportion of GCF contribution tal size: Eligibility a simplified approval process small-scale activities should use existing definition of size, which is based on overall size of investment (e.g. tal size under $50 million, irrespective of GCF contribution). This will help accelerate access resources small scale investments, which will play a critical role in achieving climate development goals in particular adaptation, community-based initiatives, SIDS LDCs yet face investment barriers including high transactions costs. The level of details required full proposal development: CCAP welcomes Board s decision revise proposal application template small-scale activities, simplify requirements feasibility studies or documentation. 4 However, re is a more general lack of clarity around what se analyses should include level of detail required. Theree, GCF should specify requirements full feasibility or studies, as well as how se can be modified smallscale activities. 3 The simplified process is meant apply both micro- small s with low risk. However, CCAP notes that level of simplification may differ a $1 million versus a $50 million. 4 Decision B.13/20 5
The addressing of risks: Project risks are likely be low given that Board agreed apply a simplified approval process small micro scale activities that fall under low-risk ESS category. However, proposals should clearly identify risks demonstrate how y will be addressed monired, demonstrate alignment with GCF policies stards, including environmental social safeguards, disclosure, independent redress mechanism, procurement, risk investment guidelines. While requirements of technical documentation should be simplified, a revised proposal template should retain sections where se elements are addressed. Simplified approvals successful programs replicable approaches To help meet objectives of Fund, GI highlights that Fund will support programmatic approaches, Strategic Plan identifies development of replicable approaches potentially stardized products accelerate deployment of proven approaches. In particular, CCAP sees an opportunity replication expedited access proven climate solutions (e.g. distributed clean energy solutions) where se solutions are not yet deployable on market-rate terms in supported countries. 5 To this end, in line with co-chair s recommendations ahead of 13th Board meeting 6, Board might consider a simplified approach approving sub-s under a larger umbrella program with a clear unifying framework 7, replication of s programs that demonstrate successful outcomes. To operationalize such an approach, CCAP recommends Board take following in consideration: Approval of an overall framework initial sub-s: Key parameters of an overall program or approach could first be approved by Board, ger with an initial set of individual sub-s. Approval of overall framework could be based on a review of a results-based framework, programlevel risk analysis mitigation strategy, financing limits instruments, expected impacts clear explanation how program aligns with GCF objectives country priorities. Streamlined review of subsequent sub-s: Subject moniring evaluation of initial set of s, approval of subsequent sub-s could be streamlined expedited. This might involve a revised funding proposal template that requires fewer details avoids duplication of elements approved in overall framework, as well as a simplified process approval of subsequent sub-s that meet program parameters (e.g., in between Board meetings /or by a Board subcommittee). In some cases, Board might wish allow delegation AEs approval of sub-s over time. For example, AEs that successfully deliver initial sub-s or meet certain conditions agreed on by Board, Board could approve a second program phase that allows AEs make decisions on subsequent s under approved program parameters. In all cases, approval of individual sub-s would require a no-objection letter at time of approval, demonstrated alignment with GCF policies, stards, investment criteria. Addressing s risks: AEs should be obliged report periodically on ir progress in implementing individual sub-s against measurement framework initially approved by Board program objectives. To begin, Board may wish limit expedited approval small-scale, low risk sub-programs of a larger umbrella program or replicable approach. Contact: Hannah Pitt, Center Clean Air Policy (hpitt@ccap.org) 5 See CCAP working paper, Accelerating Access Proven Climate Solutions. http://ccap.org/assets/draft- Accelerating-Access--Proven-Climate-Solutions-CCAP-Ocber-2016.pdf 6 See GCF B.13/13/Rev.01 7 For example, this could be a national program or strategy, regional approaches that address issues that benefit from cross-country coordination, or multi-country programs that address common barriers opportunities. 6