25 July 1997
ENGLISH ONLY
UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE
SUBSIDIARY BODY FOR IMPLEMENTATION
Sixth session
Bonn, 28 July - 5 August 1997
Item 5 of the provisional agenda
1. In addition to the submissions already received (see
FCCC/SBI/1997/MISC.3), a further submission has been received from
the United States of America.
2. In accordance with the procedure for miscellaneous documents,
this submission is attached and is reproduced in the language in
which it was received and without formal editing.
FCCC/SBI/1997/MISC.3/Add.1
GE.97- 70204
Paper No. Page
1. United States of America 3
At the fifth session of the SBI, Parties asked the Secretariat to
request submissions from Parties on their experience with the GEF as
the entity operating the Convention's financial mechanism. The views
of the United States are outlined below.
The United States continues to believe that the the GEF should be
designated as the permanent operating entity of the Convention's
financial mechanism. GEF fulfils the requirements of Article 11 of
the Convention, and it has successfully established operations in the
climate change focal area. Although there is much work ahead, the GEF
has overcome numerous obstacles that typically face new institutions.
It is also doing well in addressing problems unique to its global
environment mission, its relationship with the Climate and
Biodiversity Conventions, and its integration of work by the World
Bank, UNDP, and UNEP.
We believe the GEF has been responsive to Convention Guidance,
despite the difficulties of applying, in a timely and thorough
manner, a somewhat disorganized flow of guidance to a complex system
of project operations involving, ultimately, thousands of people
around the world. It has incorporated operational strategy-related
guidance from COP-1 (discussed below), and it has acted consistent
with guidance on the other issues raised in Decisions 11/CP.1 and
12/CP.1 such as strengthening research and technological
capabilities, improving public awareness and education, clarifying
eligibility criteria, supporting Stage I adaptation activities, etc.
Beyond actions responding to enabling activities-related guidance in
COP decision 11/CP.2 (noted below), the GEF has addressed other
guidance in that decision by enhancing the "transparency and flexible
and pragmatic application of its concept of incremental cost on a
case-by-case basis."
The GEF has developed a detailed Operational Strategy (COP
Decisions 11/CP.1 and 12/CP.1). It then developed three detailed
Operational Programs for the climate change focal area: "Removal of
Barriers to Energy Efficiency and Energy Conservation;" "Promoting
Adoption of Renewable Energy by Removing Barriers and Reducing
Implementation Costs;" and "Reducing the Long-Term Costs of Low
Greenhouse Gas Emitting Energy Technologies." A fourth Operational
Program for the transport sector in currently under
development.
In order to accelerate work on enabling activities, the GEF
Council established expedited project development procedures and
budgeted resources to meet funding needs for national communications.
(Document GEF/C.9/Inf.5 provides guidelines for non-Annex I
communications, based on Convention guidance; procedures for enabling
activities; formats for enabling activities project proposals; and
other materials to facilitate countries' access to assistance.) As a
result, 48 countries currently have individual enabling activities
projects approved, several small island states are benefitting by
special regional projects, and thirty-four additional countries have
received partial assistance through regional and global projects.
Moreover, the rate of enabling activities project approvals has
increased considerably, with 22 individual project approvals in the
first six months of 1997 versus 23 in all of 1996.
The GEF Secretariat and Implementing Agencies have worked
extensively to further facilitate access to assistance for enabling
activities, ranging from workshops to intensified engagement with
countries that have not yet developed satisfactory proposals. These
steps have been needed since few countries responded to formal
requests from the GEF Secretariat and Implementing Agencies in early
1996 for enabling activities proposals.
In short, the GEF has acted in full consistency with enabling
activities-related guidance in COP decision 11/CP.2. It has sought
actively to facilitate support for timely, high quality national
communications by non-Annex I Parties, supported endogenous
capacity-building, provided for country specific needs, and
considered upon request joint approaches for countries with similar
needs. It has also assisted interested countries in developing the
national planning capability to develop high quality proposals for
climate-related investment projects.
The GEF Secretariat and Implementing Agencies are working hard to
help countries identify and prepare effective GEF-eligible projects.
We note and appreciate the combined outreach efforts of the
Secretariats to countries, including the two workshops held at the
March 1997 meetings of the Subsidiary Bodies. As mentioned above, the
GEF has worked with interested countries to ensure that the enabling
activities process serves to facilitate development of future
investment and capacity-building projects that are well integrated
into countries' overall economic development strategies. In cases
where project proposals have not been accepted, the reasons often lie
in pricing, regulatory, and institutional weaknesses in the proposing
country that jeopardize project success.
The GEF Council has approved over $640 million in grants for roughly 110 projects (does not include numerous enabling activities approved under expedited procedures or the GEF's "multi-focal" projects with climate components). These GEF grants are leveraging considerable additional funding. For example, of $671 million in GEF grants approved by the end of 1996 for implementation by the World Bank -- of which the majority is for climate change -- the Bank reports that an additional $3.3 billion is being leveraged. Projects cover a broad range of approaches to combating climate change while supporting countries' economic development needs. Notable examples include:
The Brazil Biomass Power Commercial Demonstration and Biomass Power Generation projects will help commercialize advanced, clean power plant technologies that use renewably grown wood and crop waste as a fuel feedstock for electric power generation, using the biomass integrated gasification/gas turbine (BIG/GT) technology.
The Philippines (Leyte-Luzon) Geothermal project uses $30 million from GEF to leverage over $1 billion in additional bilateral and private sector investment in one of the world's largest renewable energy projects.
The Zimbabwe Photovoltaics for Household and Community Use project advances an important model for environmentally sustainable rural electrification in Africa and other regions using solar energy, a viable alternative to conventional power plants and traditional fuels which will directly benefit people at the local level. The project develops local businesses to support a sustainable market for solar home systems.
The Mexico High Efficiency Lighting project reduces energy waste and power plant greenhouse gas pollution by stimulating the market for energy efficient lights. It has outstripped all expectations, transforming markets almost 40% faster than expected rates. Training and trade development elements of the project enhance technology development and Mexican capacity to design and implement energy conservation programs. A $10 million GEF grant leveraged over $13 million in cofinancing.
The Fund for Renewable Energy and Energy Efficiency
will use $30 million in GEF funding to leverage an equity
fund with target capitalization of $110 million and a lending
facility of $100 million to expand private sector investment in
energy efficiency and renewables energy, perhaps the most
important factor for transfer of cutting edge energy end-use and
generation technologies. This is the first major international
fund for these sectors.
The GEF is relatively new and is in the midst of detailed
evaluations of overall performance. However, the GEF's 1996
Project Implementation Review (document GEF/C.9/Inf.7) presents
positive indicators for GEF portfolio performance. Despite the
particular complexity of global environment projects,
disbursements from UNDP are only marginally slower than UNDP's
overall portfolio and that Bank disbursements have occurred
earlier and more quickly than disbursements for non-GEF projects.
The Review also found that the GEF is making progress in reducing
the time between approval of projects and the beginning of
implementation. The Bank has thus far found only 6% of its GEF
projects "at risk," versus 24 % at risk in its non-GEF environment
portfolio. The GEF is following the World Bank's example of
reviewing lessons learned from existing projects, to help ensure
that future projects quickly incorporate the best available
knowledge.
It has streamlined several project cycle for more efficient
provision of financial and technical support and to enhance the
overall effectiveness of projects.
In addition to accelerating the enabling activities process,
procedures for project preparation grants and medium-sized project
(MSP) grants been streamlined. Most grants under $1 million bypass
some steps necessary for larger projects and can be approved by
the GEF CEO without waiting for Council voting. The progress in
reducing time between project approval and implementation provides
evidence for improvement in administrative
procedures.
In order to ensure that GEF projects and policy are shaped with
the best available knowledge, the GEF has established a Scientific
and Technical Advisory Panel (STAP). STAP maintains close contact
with the world's premier climate experts, drawing on a roster of
hundreds of scholars and development practitioners in dozens of
countries. It has strong links with the IPCC, the Convention
Secretariat, and the SBSTA.
Strong communication and cooperation appears to have developed
between the Convention Secretariat and the GEF Secretariat. Not
only do representatives of each Secretariat participate in the
relevant meetings of the two bodies, but staff maintain ongoing
informal contact on a host of issues. This has facilitated smooth
incorporation of Convention guidance into GEF operations and helps
coordinate decisionmaking between the COP and the GEF Council. A
mutually agreeable memorandum of understanding (MOU) has been
developed following careful work over the last two years. At its
July, 1995 meeting, the GEF Council approved the MOU, which was
jointly prepared by the two Secretariats. At its second session in
July, 1996, the Conference of the Parties (COP) approved the MOU
in Decision 12/CP.2. At its December, 1996 meeting, per Decision
13/CP.2, the SBI approved the annex to the MOU and referred it to
the GEF Council prior to consideration by the COP at its third
session. At its April, 1997 meeting, the GEF Council approved the
MOU's annex on the determination of funding necessary and
available for implementation of the Convention.
Given the points outlined above, the United States believes
that agreement of the MOU and its annex overcomes the final hurdle
to designation of the GEF as permanent operating entity of the
financial mechanism. Like all institutions, the GEF faces a
constant challenge to improve itself. Addressing this challenge
plays an important role in keeping institutions healthy and
effective. We are confident that the current evaluations of GEF
performance will identify a number of opportunities to enhance the
GEF's function, such as in better mainstreaming protection of the
global environment into regular development assistance and country
plans. We look forward to working with other countries in helping
the GEF seize those opportunities. Nonetheless, it is clear to us
that the GEF is the most qualified institution worldwide to
operate the Convention's financial mechanism, and we urge that the
COP adopt the GEF as the permanent operating entity of the
financial mechanism at its third session.