Distr.
GENERAL
FCCC/SBI/1995/3/Add.1
17 August 1995
ENGLISH ONLY
SUBSIDIARY BODY FOR IMPLEMENTATIONFirst session
Geneva, 31 August - 1 September 1995
Item 3 (b) of the provisional agenda
Paragraphs Page
I. INTRODUCTION 1-2 2
II. WORK PROGRAMME 3-4 2
III. INCREMENTAL COSTS AND FINANCING MODALITIES 5-9 2
IV. ARRANGEMENTS BETWEEN THE CONFERENCE OF THE
PARTIES AND THE GLOBAL ENVIRONMENT
FACILITY 10-12 3
GE.95-
Paragraphs Page
V. DRAFT OPERATIONAL STRATEGY 13-14 5
A. Enabling activities 15-17 5
B. Long-term mitigation measures 18-22 6
C. Short-term mitigation measures 23-24 7
D. Research 25-27 7
1. The Council of the Global Environment Facility (GEF) has held
two meetings in Washington D.C since the first session of the
Conference of the Parties (COP 1), the first, from 3 to 5 May and the
second, from 18 to 20 July 1995.
2. Among issues addressed at these two meetings, the following are
of particular relevance to the Convention. Related GEF Council action
is presented below for the information of the Subsidiary Body for
Implementation (SBI). (GEF Council decisions are reflected in
italicized text.)
3. At its May meeting, the Council considered a work programme of
project proposals in the climate change, biodiversity and ozone
depletion focal areas contained in GEF document
GEF/C.4/3.(1) Among climate change
project proposals were ten projects on enabling activities, including
the joint training programme (CC:TRAIN) carried out by the United
Nations Institute for Training and Research and the UNFCCC
secretariat, and two preferential investment projects.
4. The Council reviewed and approved the work programme
proposed in document GEF/C.4/3. ... The Council requested the
Implementing Agencies to develop the projects in the approved work
programme further, taking into account comments raised by the Council
and any subsequent technical written comments to be submitted within
three weeks of the Council meeting. In reviewing the work programme,
the Council noted that certain projects raised policy issues that the
Council will need to consider further in the context of future work
programmes....
5. At the same session, the Council considered a note prepared by
the GEF secretariat on incremental costs and financing modalities,
contained in GEF document GEF/C.2/6/Rev.2. Section I of that note
outlines approaches to estimating agreed full incremental costs and
section II provides an analysis of barriers to implementing measures
that would protect the global environment and also examines proposals
regarding financing modalities such as grants, concessional financing
and contingent financing.
6. The Council recognized the need for a flexible application
of the concept of incremental costs. When considering such issues as
domestic costs and benefits, the Council recommended that the notion
of environmental reasonableness be a guiding principle so as not to
penalize progressive environmental action in recipient
countries.
7. The Council noted that Part II of the paper on financing
modalities required serious consideration by the Council before
approval of non-grant approaches to financing of GEF activities. The
Council agreed that should an interesting idea for non-grant
financing in a GEF activity emerge, that idea could be considered by
the Council as to whether it merited further
development.
8. The GEF Council reviewed document GEF/C.2/6/Rev.2 and
approved the approach on estimating agreed incremental costs set out
in Section I of the document, subject to the comments agreed to
during the Council meeting. The Council requested the GEF Secretariat
to develop operational guidelines to implement this approach in
consultation with the Implementing Agencies. Taking into account
guidance from the Conferences of the Parties of the Convention on
Biological Diversity and the Framework Convention on Climate Change,
the GEF Secretariat and the Implementing Agencies were requested to
incorporate the policy and related guidelines into their project
preparation, and in particular, in negotiations with recipient
countries on the agreed incremental costs of GEF financed
activities.
9. The Council also reviewed the proposed financing modalities
presented in Section II of the document. The GEF Secretariat was
requested to develop further the proposals for additional financing
policies, taking into account the comments made during the Council
meeting, and to prepare a policy paper for consideration by the
Council at its meeting in April 1996. In preparing the paper, the GEF
secretariat was requested to reflect the operational strategy to be
adopted by the Council in October 1995.
AND THE GLOBAL ENVIRONMENT FACILITY
10. As indicated in document FCCC/SBI/1995/3, at its July meeting,
the Council considered the Draft Memorandum of Understanding that was
prepared following consultations between the two secretariats, as
well as a Draft Memorandum of Understanding between the Conference of
the Parties to the Convention on Biological Diversity and the GEF
Council.
11. The Council reviewed document GEF/C.5/8, Arrangements with
the Conventions, including the Draft Memorandum of Understanding
between the Conference of the Parties to the Convention on Biological
Diversity and the Council of the Global Environment Facility
regarding the Institutional Structure Operating the Financial
Mechanism of the Convention and the Draft Memorandum of Understanding
between the Conference of the Parties to the United Nations Framework
Convention on Climate Change and the Council of the Global
Environment Facility. The Council noted with appreciation the
significant progress that had been made by the secretariats of the
conventions and the Secretariat of the GEF in preparing the draft
memorandums.
12. The Council also requested the GEF Secretariat to review
with the two convention Secretariats the drafting of the memorandums
with a view to promoting consistency in the drafting of similar
provisions, taking into account the written comments submitted by
Council Members.
13. At the same session, the Council considered a draft
operational strategy contained in GEF document GEF/C.5/3. That draft
operational strategy (which was submitted to the Council for review
and comments), included an operational framework applicable to all
focal areas and chapters on the specific focal areas of biodiversity,
climate change and ozone depletion. (Preliminary drafts of
operational strategies for international waters and land degradation
had already been submitted to the Council at its February 1995
meeting).
14. The proposed operational strategy for climate change covers
enabling activities, long-term mitigation measures, short-term
mitigation measures and research. The draft operational strategy was
prepared in response to guidance by COP 1 for a mixed strategy
combining activities aiming at either long-term cost-effectiveness or
short-term cost-effectiveness. Its main elements, reflecting recent
adjustments, are summarized below.
15. Enabling activities are the foundations for addressing climate
change through country-driven activities. The concept of enabling
activities was delineated in the course of the Convention negotiating
process. Enabling activities related to the communication of
information under Article 12.1 of the Convention comprise planning
and endogenous capacity-building, including institutional
strengthening, training, research and education, that will facilitate
implementation of effective response measures, in accordance with the
Convention. Enabling activities for complying with the obligations of
Article 12.1 may be financed on the basis of "agreed full costs". In
the short term, planning for adaptation in the context of the
formulation of national communications is also envisaged, and this
includes studies of possible impacts of climate change and the
identification of options for implementing the adaptation provisions
- especially the obligations contained in Article 4.1(b) and Article
4.1(c) of the Convention and relevant capacity-building.
16. Enabling activities aim at providing support to countries in
understanding the scientific, technical, legal and financial aspects
of climate change activities, in systematically assessing their
options and in planning their mitigation and adaptation
responses.
17. An integrated operational framework would be developed that
would set out (a) elements of enabling activities; (b) the database
of activities completed, under way or planned; (c) cost norms; and
(d) proposed activities.
18. Long-term mitigation measures would be implemented through
long-term operational programmes that would sequence activities and
concentrate resources in order to reduce greenhouse gas emissions by
as much as possible in the long term. Most of the measures to be
supported would be policy initiatives, public and private
investments, capacity-building in the conservation of and
substitution for fossil fuels, and for the creation, protection and
enhancement of sinks.
19. With programme objectives that are explicit and able to be
monitored, an operational programme would provide a rational
operational basis for (a) selecting projects from among
country-driven proposals; (b) relating the constituent elements of
the programme, which would help meet programme objectives; (c)
showing how any claimed "demonstration" or other programmatic effects
are to be obtained and evaluated; and (d) evaluating the
effectiveness of the GEF.
20. Mitigation measures in such operational programmes could be
grouped under (a) support for the use of available technologies, and
(b) measures to open or expand markets for relevant technologies,
through provision of information, support for local
capacity-building, and establishment of policies that attract private
and public capital investments in the local use of these
technologies.
21. Proposals for long-term operational programmes would be
developed that would be:
(a) Consistent with the guidance of the COP of the
UNFCCC;
(b) Technically the most promising, in accordance with the latest
scientific and technical assessments of the Intergovernmental Panel
on Climate Change and the Scientific and Technical Advisory Panel
(STAP);
(c) Cost-effective; that is, their components are chosen to meet
the programme objective at the least cost; and
(d) Consistent with the other operational principles of GEF; that
is, they meet the essential GEF principles of sustainability, country
integration, information provision, complementarity, and
facilitation.
22. As an initial step, three illustrative operational programmes,
for which it is anticipated that proposals may be developed, are
envisaged:
(a) Renewable energy markets
(b) Energy conservation and energy efficiency markets
(c) Low greenhouse gas-emitting technologies
23. In some cases, there will be project proposals that are not
part of a long-term operational programme but which would still be a
very cost-effective precaution to reduce greenhouse gases (GHGs) in
the short term. Such proposals would be "too good to miss" because of
their cost-effectiveness - that is, they have a low unit abatement
cost (UAC).
24. The criterion of a UAC ceiling could be applied to the
schedule of country-driven opportunities for mitigation. Options with
modest positive UACs, that is, below the threshold used as a
short-term cost-effectiveness criterion, would be eligible as
cost-effective means to reduce GHGs in the short term.
25. Limited funds would be provided for highly targeted research
efforts in recipient countries, including:
(a) Highly site-specific research and monitoring on climate change
and its effects; and
(b) Application of climate change mitigation measures in countries
other than the ones in which they had been developed.
26. An operational programme for research would be developed only after the Council had approved an overall policy on research.
27. The Council reviewed document GEF/C.5/3 on a preliminary
draft operational strategy. The Council noted that the document is a
"work in progress", and confirms its expectation that the operational
strategy would be approved at its October meeting. In this regard,
the Council requested the GEF Secretariat to continue its efforts, in
consultation with the Implementing Agencies, STAP, and the convention
secretariats to prepare a revised draft text of the operational
strategy for review by the Council at its meeting in October 1995. In
preparing the revised document, the GEF Secretariat was requested to
take into account the comments made by the Council, including written
comments submitted by the Council Members. Council Members were
invited to submit written comments on the draft operational strategy
to the GEF Secretariat as early as possible.