Green Climate fund increases funding to developing countries based on Technology Needs Assessments

More and more countries are receiving funding from the Green Climate Fund based on their national Technology Needs Assessments (TNAs)

September 24, 2018

The newly released annual report from The Green Climate Fund (GCF) shows an increased focus on supporting projects and country programmes based on developing countries’ own climate technology priorities.

GCF has specifically supported 13 TNA-based activities, four of those are full scale projects, that will directly reduce emissions by 4.4 million tons of CO2 throughout their life span.

“More than 70 % of the developing countries having a TNA has already used it to inform their NDC. It’s really encouraging to now see an increasing number of countries also utilizing their TNAs for accessing further support and funding for implementation, not least from the GCF,” says Sara Trærup, project manager for the global TNA project at UNEP DTU Partnership.

The TNA project assists developing countries determine technology priorities for mitigation of and adaptation to climate change. Since 2010, more than fifty developing countries has conducted a TNA.

Broad use of Technology Needs Assessments

As part of the Financial Mechanism of the UNFCCC, the GCF is intended to be a centrepiece in the efforts to raise Climate Finance for the achievement of the Paris Agreement. The GCF recommends that countries use their TNAs as one of the building blocks for applications for funding both through using readiness funds, project preparation facility support, and through developing GCF country programmes.

The 13 TNA-based projects cover all three areas, and in the four full-scale projects alone, more than 217 million USD will be invested in climate technology. Investments that benefit several million people and positively impact job creation, pollution levels and several other SDGs.

“The TNA has never been a means in and of itself, but rather a tool for countries to establish favourable conditions and mobilize investments for accelerating the deployment and diffusion of the technologies they need to combat and adapt to climate change. It is very encouraging for countries that completed their TNA process, to see that the GCF is recommending them to use their TNA outputs to develop their GCF country programmes and develop proposals,” says Jonathan Duwyn, TNA advisor and manager at UN Environment.

Alignment with TNA as criteria for investments in technology projects

In its seventh report to the upcoming climate change conference (COP24), GCF lists several criteria and assessment factors relevant to support to low-emission or climate-resilient technologies. One of these criteria is directly linked to the TNA project:

“Contribution of the programme or project to country’s priorities for low-emission and climate-resilient development and demonstration of alignment with technology needs assessments”

Among the 13 TNA-based projects that have been approved for GCF funding there is a venture fund for mini-grids in Kenya and Rwanda, an initiative to strengthen the human and ecological resilience of agricultural systems in Jordan, as well as readiness proposals and entire country programmes built on TNAs.

For Sara Trærup, the increase in activities building on TNAs that receive GCF funding is not just good news, but shows a trend in GCF focus:

“In recent months we have heard at several occasions, GCF express how TNAs are seen as a very important tool for implementing country driven processes and projects. GCF recognises that TNAs enhances the quality of the proposals and ensures country driven and local ownership behind proposed projects.”

Armenia: Energy efficient retrofits

In Armenia a project focusing on improving energy efficiency through building retrofits, addressing high levels of energy poverty and high use of imported fossil fuels for heating, has received GCF funding.

The project constitutes an investment of almost 30 million USD, where GCF funding covers two thirds.

The project will lead to sizeable energy savings and emission reductions (up to 1.4 million tons of CO2 in direct and 4.4 million tons in indirect emission savings), green job creation and energy poverty reduction. It will directly benefit over 200,000 people and will catalyse private and public sector investment of approximately USD 100 million.

Mongolia: First private entity accredited to GCF

Mongolia is opening new energy efficiency and renewable energy opportunities for its small companies at the same time as encouraging greater business participation by women, thanks to the country’s TNA and GCF funding.

The TNA found that high investment costs made it difficult for small businesses to access energy efficient and renewable energy technologies.

To address this situation, XacBank, the first private sector direct access entity to be accredited by the GCF, put together their proposal to the GCF for a business loan programme. The country’s TNA outputs developed under the guidance of the UNEP DTU Partnership played a vital part in preparing the successful proposal.

XacBank’s program seeks to directly address financial barriers by lowering interest rates with co-financing of USD 19,5 million from the GCF to extend its existing USD 40 million business loan programme helping local companies cut their greenhouse gas emissions.

The project is expected to reduce greenhouse gas by almost 150,000 tons of CO2 each year, resulting in cleaner air and reduced related health impacts from fossil fuel pollution. It will decrease total national energy consumption, with the aim of lowering energy prices for consumers.

In addition, the GCF has approved another XacBank proposal, again building on Mongolia’s TNA, of a value of almost USD 9 million for financing a 10MW solar power plant.

Determining local priorities and getting international funding

Technology is key to achieving the goals set forth in the Paris Agreement: Lower the emission of CO2 and halting the rise on global temperatures.

Since 2009, with UN Environment and funding from the Global Environment Facility, UNEP DTU Partnership has worked with more than 50 developing countries to determine how climate technology can best help them. This summer saw the beginning of a new round of TNAs with another 23 developing countries, mainly least developed countries and small island developing states, joining the process.

UNEP DTU Partnership and UN Environment will continue to work with developing countries around the world to not only determine their technology needs, but to assist in getting funding from international institutions such as GCF.

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