The FINANCIAL — The Asian Development Bank (ADB) and the Green Climate Fund (GCF) on August 17 signed an Accreditation Master Agreement (AMA) that will allow ADB to access and administer GCF funds and scale up the bank’s climate financing to its developing member countries.
The agreed AMA—a framework agreement detailing the overarching rights and obligations of an accredited entity and GCF—will enable ADB to access a new funding source to further increase its climate mitigation and adaptation efforts in Asia and the Pacific.
“The Accreditation Master Agreement between the GCF and ADB will open the way to deeper collaboration between our institutions,” said ADB General Counsel Christopher Stephens. “Working together with the GCF, we will build a robust pipeline of climate projects that support the development and climate objectives of our developing member countries.”
GCF works exclusively with accredited entities to support climate mitigation and adaptation projects and programs. Today’s signing of the AMA is the conclusion of ADB’s accreditation process—approved in March 2015—that enables ADB to apply for GCF funding for all sizes of projects, as well as all environmental and social risk categories. These funds would be in addition to ADB’s own commitment of providing climate financing of $6 billion per year by 2020, according to ADB.
“As the dynamo of global economic growth, with Asia Pacific continuing to record the world’s strongest growth, this region has a key role to play in tackling climate change,” said Acting GCF General Counsel Raul Herrera. “The vital importance of Asia in meeting the climate challenge, along with GCF’s mandate to pursue transformative low-emission and climate-resilient development across the planet, means a shared strategic approach between GCF and ADB in this area is essential.”
GCF also commended ADB for highlighting in its own study how sensitive the Asia and Pacific region is to climate change. A Region at Risk: The Human Dimensions of Climate Change in Asia and the Pacific, an ADB report released in July, indicates climate change could diminish the major achievements made during the past few decades in lifting large numbers of people living in the region out of poverty.
Access to GCF financing starts with a submission by ADB of a funding proposal, followed by its review and approval by the GCF board. GCF financing may include a combination of public and private sector initiatives and provide a range of financing instruments such as grants, loans (including concessional loans), equity, and risk mitigation instruments such as guarantees.
In November 2015, GCF approved a first $31 million climate adaptation grant for ADB’s Fiji Urban Water Supply and Wastewater Management Project that will benefit a third of the country’s population of 860,000. The grant to Fiji was among the first group of projects approved by the GCF Board. GCF has also approved a $12 million grant for the Cook Islands Renewable Energy project along with a $5 million grant for a regional technical assistance to seven Pacific Island countries to transition to renewable energy.
ADB’s current GCF accreditation is valid until March 2020, subject to reaccreditation every 5 years.
GCF, based in Songdo, is a global fund created to support the efforts of developing countries to respond to the challenge of climate change. It was established in 2010 by 194 governments to limit or reduce greenhouse gas emissions in developing countries and catalyze a flow of climate finance to invest in low-emission and climate-resilient development. As of June 2017, 42 countries and one city have signed contribution agreements with GCF worth $10.1 billion out of the $10.3 billion pledged.