- GCF now has 20 financial partners to channel cash
- Hopes first projects will be approved November
- Agrees $900m-worth of further pilot funds
The Green Climate Fund on Thursday agreed on 13 new finance partners but drew fire from campaign groups for including Deutsche Bank, a major coal investor.
During the GCF board’s four-day meeting in Songdo, South Korea, it now has 20 so-called accredited entities, tasked with submitting proposals for funding as well as channelling and leveraging tens of billions of dollars to poorer nations to help them tackle climate change.
Most of the partners were intergovernmental banks and agencies including the EBRD and Inter-American Development Bank, but Deutsche Bank was notably the only private institution chosen. More are likely, with the GCF receiving nearly 100 applications.
Deutsche Bank’s approval was criticised by civil society groups due to its heavy involvement in financing coal projects and record on human rights but business observers said such institutions would be needed to tap investors for further finance.
“The GCF needs to change direction away from accrediting controversial big banks that are heavily invested in fossil fuels and thus actually exacerbating climate change,” said 21 of the groups in a statement.
But Abyd Karmali of US bank BAML, one of four active GCF board observers, disagreed with the criticism.
“The GCF needs global banks as partners if it is to succeed in mobilising climate finance via mainstream capital markets,” he said.
The GCF has around $5.5 billion of $10.2 billion pledged mainly by rich developed nations. If the rest comes as expected by year-end board members have said this would be enough to disburse at a rate of around $2.5 billion a year.
It aims to submit to its board “some initial projects” to approve for funding at its November meeting, but last month GCF head Hela Cheikhrouhou said only around $500 million worth of projects, a small fraction of the 120 applications received to date, looked “promising”.
The fund will prioritise projects that are not adequately supported by existing climate finance mechanisms, in particular for cities, land management and the resilience of small island states.
Though the fund is required to split 50-50 its cash between adaptation and mitigation, observers expect carbon-cutting CDM projects and Programmes of Activities (PoAs) to apply and receive at least a small share of the GCF’s money in the next few years.
The GCF Board agreed to hold its next meeting in Livingstone, Zambia on Nov. 4-6.
The board approved a $200 million pilot phase that would fund up to 10 projects via test procedures for allowing national bodies to approve.
At least four would have to be from countries classed as ‘least developing’, small island developing states or African.
“This ‘enhanced direct access’ is intended to devolve decision making to national and sub national entities, which could also include private sector entities like commercial banks in country,” said Karmali.
The GCF will launch a request for proposal (RFP) process inviting projects to bid early next year.
The GCF board also allocated $200 million to establish an additional pilot fund for smaller businesses, and a $500 million pot geared towards mobilising much bigger portions of climate financing.
The three competitive programmes are to be prepared and launched gradually in 2016, 2017 and 2018, the GCF secretariat said in a statement.
By Ben Garside – firstname.lastname@example.org