Direct access fundamentals: GCF Readiness programme
2 March 2021, Category: All insights, News, Tags: climate finance, direct access, direct access entities, gcf, GCF Readiness
This series examines each of the Green Climate Fund’s (GCF) special assistance programmes to better understand what services are available to Accredited Entities (AEs) and how they can benefit low-carbon projects. The GCF Readiness Programme aims to provide resources to National Designated Authorities (NDAs) to help build capacity and strengthen institutions, allowing them to engage efficiently and effectively with the GCF.
Our 17th edition of our GCF insight report will also seek to answer the question: ‘How effective is the GCF’s direct access modality?’ To be the first to receive a copy of this upcoming report in March 2021, sign up to our Latest Thinking community.
The case for direct access financing
Accessing climate finance resources for low-carbon projects can be very challenging. One of the key features to streamline this process through the Green Climate Fund (GCF) is via direct access. This modality means developing nations can gain access to funding through national entities, allowing resources to be steered to the country directly and therefore circumventing additional obstructions.
To receive direct access, NDAs can nominate institutions, either regional, national or subnational, to receive accreditation to the GCF. Having been vetted, given approval for accreditation and entered the necessary legal agreements, the entity can start to submit proposals for funding for their climate projects.
Enhancing direct access, in turn, allows for the more productive use of funds, empowerment of local groups and builds stronger country ownership, which is a guiding principle of the GCF, explained in Board document 10: “The Fund will pursue a country-driven approach and promote and strengthen engagement at the country level through effective involvement of relevant institutions and stakeholders.” (GCF/B.10/Inf.07)
Table from GCF Enhancing Direct Access Report
We previously explored the importance of country ownership in our 12th edition of GCF insight, spotlighting it as “the political support, active engagement and ‘owning’ of climate change-related initiatives” which plays a pivotal part in delivering long-term impact.
Successfully aligning climate action and new projects with existing policies, such as nationally determined contributions (NDCs) or National Action Plans (NAPs), enhances the strength of projects and increases the likelihood for both funding and delivering lasting transformational change.
The GCF’s special assistance programmes
Nonetheless, even those who gain direct access may struggle with unlocking financial resources due to the wide range of climate finance channels. In a bid to combat this, the GCF has developed forms of special assistance to streamline the process:
- GCF Readiness Programme
- Secretariat support
- Project Preparation Facility (PPF)
- Enhanced Direct Access pilot programme
- Simplified Approval Process (SAP)
In this series, we will be publishing an article on each form of special assistance in order to break down the broad range of climate finance channels and how best to access GCF resources.
GCF Readiness programme: strategy, objectives and disbursement
The purpose of the Readiness Programme is to help build capacity in institutions, strengthen governance and planning frameworks to facilitate lasting change. The GCF has specifically set a target of at least half of the available support to be allocated to highly vulnerable countries, such as developing African states and Small Island Developing States (SIDS).
Activities that fall within the Readiness Programme are varied, as the tool is intentionally flexible, but should emphasise strengthening the capacities of NDAs and Direct Access Entities to improve how they engage with the GCF. In 2019, the GCF Board reaffirmed that the Readiness Programme is “a strategic priority for the GCF to enhance country ownership and access to the GCF” and changed their Readiness Programme Strategy 2019-2021 slightly to improve impact. These alterations included encouraging a national strategy outlook, increasing flexibility, and providing additional assistance for identifying and developing high-impact activities.
Under this new strategy, where countries are more encouraged to tackle barriers hindering them from reaching the ambitious goals of their NDCs or other national action strategies, eligible activities should also seek to fulfil at least one (and preferably more) of the five objectives laid out by the GCF:
- Capacity building for climate finance coordination
- Strategic frameworks for low-emission investment
- Strengthened adaptation planning
- Paradigm-shifting pipeline development
- Knowledge sharing and learning
The funding provided varies depending on each specific project proposal, but the Programme can support up to USD 1 million per country per year for work on institutional capacity building, policy and planning, and programming for investment and up to USD 3 million per country for strengthened adaptation planning, such as the successful development of NAPs.
The GCF’s support for NAPs, as of February 2021, includes 52 approved requests in targeted countries, USD 124.4 million total resources approved, and USD 34.1 million total resources disbursed.
The Readiness Programme as a whole has approved over USD 280 million in resources for 433 requests in 138 countries, with many more projects in the GCF pipeline.
Challenges to direct access
Yet, despite the continued focus on enhancing direct access, the many channels to access climate finance and the process for Readiness support can still be incredibly difficult to successfully navigate, even after successfully navigating the long, and in some people’s view “tortuous” accreditation path. This is especially challenging for entities with limited international climate finance expertise or experience. Typically, an assessment of the country’s needs will form the basis of the initial conceptualisation, where gaps or barriers to climate finance are identified and stakeholder engagement is undertaken. The proposal template will then be completed by an NDA before being submitted for official consideration by the GCF Secretariat. However, this is typically the stage at which most difficulties arise.
To attempt to overcome this, we delivered online training in 2020 on the topic of preparing a GCF Readiness Funding Proposal, and further training will be delivered on these topics in the coming years. The objective of this workshop was to provide a deep dive into the intricacies associated with applying for project funding and to work through potential sticking points. This training highlighted the key features required to produce a successful proposal, including:
- Situational analysis
- Logical framework
- Theory of change
- Filling in the gaps (budget, procurement, implementation and disbursement plan)
By better understanding the processes and thinking deeply about the necessary detail required for a Readiness proposal, the more likely it will be approved by the GCF and the sooner the implementation of readiness activities can begin in line with the proposal, deliverables and budget.
This series is authored by E Co. Senior analyst, Marcus Arcanjo.
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