What to do with the Adaptation Fund? Its role in relationship with the GCF Sunday, 7 December, Swissôtel Lima Benito Müller Director ecbi, MD oxford climate policy european capacity building initiative ecbi european capacity building initiative initiative européenne de renforcement des capacités ecbi for sustained capacity building in support of international climate change negotiations pour un renforcement durable des capacités en appui aux négociations internationales sur les changements climatiques STRATEGIC PROSPECTS FOR THE ADAPTATION FUND european capacity building initiative ecbi Grant award and/or funding allocation mechanisms On-lending and/or blending “Intermediary” Specialized fiduciary criteria “Implementing Entity” • Project preparation and appraisal (from concept to full funding proposal) • Project oversight and control • Monitoring and evaluation • Project-at-risk systems and related project risk management capabilities • Grant award procedures • Transparent allocation of financial resources • Public access to information on beneficiaries and results • Good standing with regard to multilateral funding (e.g. through recognized public expenditure reviews) • Appropriate registration and/or licensing by a financial oversight body or regulator in the country and/or internationally, as applicable; • Track record, institutional experience and existing arrangements and capacities for on-lending and blending with resources from other international or multilateral sources; • Creditworthiness; • Due diligence policies, processes and procedures; • Financial resource management, including analysis of the lending portfolio of the intermediary; • Public access to information on beneficiaries and results; • Investment management, policies and systems, including in relation to portfolio management; • Capacity to channel funds transparently and effectively, and to transfer the Fund’s funding advantages to final beneficiaries; • Financial risk management, including asset liability management; • Governance and organizational arrangements, including relationships between the treasury function and the operational side (front desk). european capacity building initiative ecbi Project management GCF Modes of Engagement: Implementing Entities and Intermediaries GCF Scales of Engagement: Executing Entities Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme european capacity building initiative ecbi Large Executing Entity Medium/Large Project/Programme GCF Fast-track Accreditation Bilateral (EU DEVCO) Local Provincial National AF NIE Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme european capacity building initiative ecbi International AF & GEF MIE/RIEs National Provincial Local Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme european capacity building initiative ecbi International GCF Maximum Entropy Accreditation Adaptation Fund National Local Provincial NIE Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme european capacity building initiative ecbi International MIE/RIEs GCF Enhanced Direct Access (Pilot Phase?) National Adaptation Mitigation Local Provincial NFE Implementing Entity Intermediary Large Executing Entity Medium/Large Project/Programme Micro/Small/Medium Executing Entity (MSME) Micro/Small Project/Programme european capacity building initiative ecbi International • Foreign public sector funding stream consolidation through national gateway (National Funding Entity) • In-country devolved access to the provincial and local level for engaging local stakeholders (communities, MSMEs) The Status Quo Scenario The Fund continues its current interim arrangements with the Global Environment Facility (GEF) and the World Bank, and its lines of accountability and reporting under the authority and guidance by the CMP. The Fund and the GCF are functionally independent from one another. Local Provincial National International Coherence could be enhanced through common guidance NIE european capacity building initiative ecbi • The Institutional Integration Scenario Different degrees of integration between the Fund and the GCF could be envisaged. Possible options may include the Fund serving as: the “Adaptation Window” of the GCF; a specialized instrument or window of the GCF; or a dedicated mechanism based on innovative sources (building on the experience of the CER-monetization process), etc. Local Provincial National International • NIE The AF would not be a “window” or “instrument” under this form of “integration”, it would simply cease to exist. european capacity building initiative ecbi • The AF Board would have no role to play in such an “institutional integration” or rather replication • All Micro and Small project proposals for international GCF funding would instead be administratively approved Why should the AF continue to exist? • “It is fully operational and has a proven record, particularly in providing direct access. Indeed it is the first climate fund to engage in enhanced direct access, providing not only country ownership but country driven-ness. It is currently the only Fund with direct access projects/programmes under implementation; It is also operationally independent and able to perform its functions without extensive external support;” • “Given its unique mandate to address concrete adaptation projects, the Fund can provide targeted and specialised support to project proponents, even for smaller projects in highly localized contexts;” • “Its governance structure allows for greater (recipient) country ownership.” european capacity building initiative ecbi The AF is a multilateral funding instrument tailor-made for and dedicated exclusively to (‘small-scale’) concrete adaptation projects with specialised services that cannot (cost) effectively be provided by wholesale funders. The Operational Linkage Scenario Local Provincial National International AF as GCF Multilateral Adaptation Funding Entity (“Multilateral Funding Window”) NIE european capacity building initiative ecbi Given the legal capacity of the Board, the GCF could conclude agreements with it, limited to certain operational aspects. This modality would allow the GCF to channel some of its operations (and resources) through the Fund (e.g. direct access, concrete adaptation projects). These agreements do not imply any change in the institutional arrangements for the Fund, and could be concluded by the Board regardless of them. GCF Enhanced Multilateral Access International National Provincial Local NIE Multilateral Mitigation Funding Entities european capacity building initiative ecbi Multilateral Adaptation Funding Entity european capacity building initiative ecbi Thank You!