Climate Investment Funds Monitor 8


21 October 2013

Read a pdf version of CIFs Monitor 8

Criteria for CIFs expanding

Despite the CIF’s ‘sunset clause’ requiring their dissolution once a new architecture for climate finance is in place, 70 more countries have expressed interest in accessing CIF funding according to the CIF 2012 annual report. In the October/November meetings the different funds will discuss the proposal Approaches and criteria for considering potential new countries. The proposal recommends principles to guide the selection process, including for it to be “transparent and based on clear criteria”; “contribute to the core objectives of the program”; “take into account the need to generate lessons”; and “have the potential to successfully implement the CIF programs and achieve expected impacts.”

Furthermore, the paper proposes two options for steps to select new countries, to be agreed on in the meeting. In both options, an agreement for new countries to join would first need to be agreed, followed by approval of selection criteria and a scorecard template. The main difference is that under the first option a call for an expression of interest would be issued to countries meeting CIF general and programme-specific eligibility criteria, while under the second option countries on the approved list would be invited to prepare a “lighter version” of an investment plan.

Graph 1: Total CIF investment plans endorsed and projects approved 2009 – 2013

[Source: 2009-2012 figures from CIF annual reports. 2013 figures are projections from CIF FY14 Business Plan and Budget.]


CIF evaluation

The CIF evaluation launched in 2012 aims to assess the development and organisational effectiveness of the CIFs and to document lesson learning for “the benefit of the Green Climate Fund” (see CIFs Monitor 7, 6). This includes analysis across nine thematic areas: relevance; efficacy; efficiency, financial additionality, and leverage; sustainability; CIF governance and management; administrative efficiency; national planning and consultation processes; monitoring and evaluation; and safeguard mechanisms.

A June inception report set out the scope of the evaluation, data collection methods and the key areas of interest. The final draft evaluation report will be prepared based on desk-based research and country visits between July and October 2013. From early December it will be open for comments from the trust fund committees and sub-committees, CIF administrative unit, MDBs, and observers. The final version of the report is expected to be completed by the end of December.

A July final interim report included key preliminary findings on the different funds. On the CTF the report noted that “just three investment plans mention poverty reduction or cost savings for low-income households. These data make it difficult to see how CTF is prioritising investments that ‘help accelerate access to affordable, modern energy or transport services for the poorest.’ ” On gender it noted that the CIF gender review “found that gender considerations in programmes supported by the CTF are generally overlooked in both the strategic planning outlined through the country investment plans and in the project planning outlined in the individual project and programme documents. This is perhaps not surprising as there is no mention of gender in the CTF guidelines for investment plans.”

Whilst acknowledging that in some countries there was a clear link between the PPCR and existing national adaptation plans, the final interim report noted “in yet other countries — although consultations have taken place to develop the SPCR [Strategic Program for Climate Resilience] — there is not clear evidence in the SPCRs that PPCR has catalysed national dialogue sufficiently to develop a national vision for transformational change. Instead, these SPCRs seem to directly borrow the language from the PPCR design and guidance documents. In these countries, the SPCRs seem to have struggled with the ideal of being country-led.”

On FIP it noted “The FIP guidelines alone do not provide solid guidance on how to identify programmatic interventions that will have a good likelihood of delivering reduced GHG [greenhouse gas] emissions from deforestation and forest degradation and enhanced forest carbon stocks on a larger scale.” It did conclude that “the majority of the programs or projects in the reviewed seven pilot countries are justified (in FIP plans) as being transformative”. It also said further work was needed to validate whether there were co-benefits for forest dependent communities in livelihoods and biodiversity conservation.

On SREP the final interim report noted that: “In Africa, the majority of the population resides in rural areas with very little electrical power infrastructure”, concluding that “to address poverty it must invest in increasing energy access in rural areas targeting productive (including household) uses of electrical energy.”

In an October response the MDBs and the CIF administrative unit raised concerns that no opportunity was provided to “correct facts and clarify technical issues before the publication of the report.” Furthermore, they emphasised “major achievements of the CIF partnership”, including its contribution to scaled up climate finance. Under “clarifications and areas of improvement” they argued that while the report correctly identified that “transformation is an important long term goal” for the CIFs, it gave it “undue emphasis”, since it is only “one of several overarching goals”. While they recognised that there is no “strict definition of transformation” but it varies “in different contexts and circumstance”, they asked the evaluators to “clarify how they are interpreting “transformation” in their assessment of the CIF investment plans.” They also criticised a number of other details in the report, such as the questioning “of the role of MDBs in development of CIF policy and strategy documents”, instead underlining “the importance and usefulness of the close collaboration”. They also disagreed with the interim reports’ caution that “lessons learnt from CIF project implementation may be too late to influence the design of the Green Climate Fund [GCF]”, arguing instead that “lessons learned in the evolution of the CIF institutional structure and operational procedures could be useful for the design of the GCF”

Gender review

A final version of the CIFs gender review, discussed at the previous joint CTF/SCF meeting in November 2012, (see CIFs Monitor 7), was approved at the April meeting. One of the few changes made to the final document was to extend the gender scorecard to all funds “to help advance gender equality across the entirety of the CIFs”, rather than just CTF and SREP. The scorecard will be used to judge if the CIFs are meeting minimum standards on gender and promoting gender mainstreaming. It was also agreed that a gender specialist will be hired to provide support (technical, priority setting, monitoring and evaluation) to CIF stakeholders to mainstream gender and to develop a CIF Gender Action Plan.

Civil society observers

At the April meeting civil society observers (see Annex page 28) were invited to submit a proposal and budget for the CIFs observer strategy for consideration at the November meeting. The proposal argues civil society engagement and its contribution is crucial given that the “CIF is moving from designing of investment plans to implementation”. An indicative budget is presented for a total of $174,500. $20,000 of this would be for a consultant to prepare a document on how to enhance stakeholder engagement at the country level by the 2014 CIF spring meetings.

According to the proposal the benefits of this engagement would be increased transparency, sharing of best practice and coordination. The document proposes observer consultations prior to CIF meetings, increased capacity building for observers, strengthening of coordination between the CIF observers and national stakeholders, meaningful engagement of stakeholders at regional level, translation of CIF decisions and documents, and resources to cover developed country observers travel costs.

Private sector engagement

The efforts to increase private sector engagement in the CIFs have made further progress. Calls for proposals for the new private sector set-asides for the PPCR, FIP and SREP, to facilitate an increased share of funding to the private sector through a competitive process, were launched after the May meetings. The first set of applicants has been assessed by appointed expert teams, and the nominees will be discussed for final approval in the October/November sub-committee meetings. Most have requested loans rather than grants.

For PPCR, one regional and six country proposals have been shortlisted for approval, a further four were recommended with conditions (see page 16). For FIP, four proposals have been shortlisted, with a further four recommended, subject to further information (see page 20). For SREP, six proposals have been shortlisted, with a further three requiring further work, and subject to further funding becoming available (see page 25). However, CTF’s proposal for a “global private sector programme” raised concerns in the May meeting and has been revised into a Dedicated Private Sector Programs proposal with suggested sub-programmes for discussion and decision on which ones to move forward with in the October meeting (see page 9).

Update on the Green Climate Fund (GCF)

The GCF is due to be fully operational by 2014, with an aim to channel $100 billion in climate finance a year from 2020, but so far just $9 million has been pledged and $7.5 million has been deposited. There is still a lack of clarity about where funds will come from and whether they will be sufficient for developing countries mitigation and adaptation needs.

At its last meeting in Paris in early October the GCF board made decisions on the initial results areas and on performance indicators. The GCF board decided the results management framework should include measurable, transparent, effective and efficient indicators” on “how the fund addresses economic, social and environmental development co-benefits and gender sensitivity”.

Ahead of the Paris meeting nearly 200 civil society organisations sent a letter to the GFC board calling for developed countries to meet their obligations under the UN Framework Convention on Climate Change to provide climate finance and said this should be for a “shift to sustainable, equitable low-carbon development pathways”. The letter specifically mentioned the importance of the ‘do no harm’ principle, respect for human rights, transparency and recommended that investments should not go via international financial intermediaries.

The Climate Investment Funds (CIFs) are one channel to transfer climate finance. There are a range of other mechanisms that are already operating or are in their pilot phase. This diagram below presents many of the climate finance initiatives in one place.

The architecture of the funds (climate funds update)

Click to enlarge

Source: Climate Funds Update: The architecture of the funds

The CIFs in context – Key climate change trends

IPCC confirms unprecedented climate change caused by human activity

In September the UN Intergovernmental Panel on Climate Change (IPCC) published a summary report confirming the climate is changing and that the main cause is human activity.

No final decisions on global climate finance architecture

Progress at the UN negotiations on climate change (UNFCCC) continues to be slow leading to a lack of clarity over the future of the international climate finance regime. There are low expectations for the next Conference of the Parties (COP 19) to be held in Poland in November 2013. A potential final agreement at the 2015 COP could decide whether the CIFs continue independently, end or are merged with the GCF.