Green Climate Fund Readiness Programme
The Green Climate Fund (GCF) is a newly established financial mechanism under the United Nations Framework Convention on Climate Change (UNFCCC). It intends to provide financing for climate change mitigation and adaptation measures from OECD to non-OECD countries whereas the benefiting countries can access the fund directly.
To make non-OECD countries ‘ready’ for the GCF, UNEP, the United Nations Development Programme (UNDP) and World Resources Institute (WRI) started with the German GCF Readiness Program in nine countries. The Program is expected to offer needs-oriented support to countries for accessing and using GCF funds.
The Centre is supporting the implementation in Benin, Colombia and Ghana and is currently negotiating with UNEP on capacity building measures for the Philippines, El Salvador and Kenya. The Centre’s engagement in the Program focuses on support for engaging the private sector in developing countries to support climate change investments.
Activities in Ghana
To implement UNEP’s GCF Readiness Programme in Ghana the Centre is collaborating with the financial sector, especially microfinance institutions (MFIs), to work out financing possibilities for climate smart products (e.g. clean energy solutions, irrigation technology). The first activity undertaken in the framework of this project was the establishment of a detailed market analysis which showed that Ghana has a well-developed financial sector with more than 400 MFIs, but only a few provide financing for climate smart products. After a kick-off meeting in June, Carola Menzel and Andrea Bode, Senior Project Managers at the Centre, held a workshop for MFIs in October in Accra on “Strengthening national public and private MFIs to finance activities addressing climate change” and provided information on risks and opportunities of climate change adaptation, the potential for clean energy in rural areas as well as financial needs for adaptation and mitigation measures in Ghana. Suitable solutions (e.g. solar home systems, treadle pumps) were presented and the MFIs’ experiences in these fields were discussed. During their Ghana mission Ms. Bode and Ms. Menzel also conducted individual meetings with representatives of MFIs, the Ghanaian Microfinance Association (GHAMFIN) and technology providers. Overall, the Ghanaian MFIs are well aware of climate change, how this affects their clients and themselves and the need of adapting their financial products to climate change. However, a lack of knowledge about the market and its technology providers as well as on how to initialize climate smart financing, hinder them to take prompt action. To address these issues the team decided to further promote climate smart financing and to establish connections between MFIs and technology providers. Thus, in April 2016, a second climate smart financing workshop for MFIs was organized by the Centre Team with support from GHAMFIN and UNDP. Technology providers of solar home systems, small scale biogas technologies and sustainable irrigation pumps were invited to present their product portfolio. Four of them joined the workshop to demonstrate their products and provide information on prices as well as case studies on how financing of their systems could work and how they would have positive impacts on the MFI’s client’s income. The aim of this activity was to familiarize the participating MFIs with the climate smart market, to bring together MFIs and technology providers and to give them the opportunity to discuss cooperation possibilities. With about 75 participants from MFIs and positive feedback from their side the workshop’s outcome can be judged as successful. To further support small scale climate mitigation and adaptation measures the next step of the GCF Readiness Programme is to help MFIs in developing climate smart financing products through technical assistance. As not all MFIs can be supported in the framework of the programme two to three institutions will be chosen through an idea competition. The team is currently waiting in eager anticipation for the MFIs submissions.
Activities in Colombia
In Colombia the team is implementing the project in close collaboration with the Government of Colombia (GoC) through the National Planning Department and the Colombian Banking Association through the ‘Green Protocol’, a voluntary commitment by Colombian banks to promote sustainable development in their institutions. The aim of the project is to develop innovative financial mechanisms that support climate friendly investments in six sectors: agriculture, energy, industry, transport, construction & housing and water. To this end, six sectorial working groups have been established to support the team throughout the project. Following an analysis of the six sectors, the Centre team will provide recommendations for financial mechanisms. The Centre’s involvement is expected to end in 2016 while the implementation of selected pilot mechanisms will be carried out by GoC in the course of 2017.
Activities in Benin
The Programme in Benin was officially launched at the occasion of a workshop in March 2016 facilitated by UNEP, UNDP and the General Directorate for Climate Change (DGCC), with opening words from the Minister of Environment. Attendees included representatives from the Ministry of Environment, the National Fond for Environment and Climate (FNEC), several line ministries and government agencies, the donor community and the private sector. The Centre team will work both with the Beninese financial sector and with the FNEC to build and reinforce their capacities in the field of climate finance. A country mission will take place in June where the team will conduct interviews with banks, microfinance institutions as well as FNEC, the DGCC, donors, and private sector actors. This will allow the team to assess the needs of the financial sector in terms of climate finance and those of the FNEC which seeks for accreditation as a national implementing entity for the GCF. Following th capacity building needs assessment, the team will will provide capacity building to selected financial sector stakeholders to reinforce their climate finance readiness and assist the FNEC with the elaboration of its long-term strategy.