1. Global Environment Facility (Prepared in September, 2011)
GEF Investment in Climate Change Mitigation and Sound Chemicals Management
Dr. Ming Yang Sr. Environment Economist / Climate Change Specialist
Global Environment Facility
October 5, Trinidad
(Prepared in September, 2011)

2. Outline
The GEF
GEF’s 20 Years’ Investment in Climate Change Mitigation and Sound Chemicals Management
GEF 5 Resources and Strategy in Climate Change Mitigation and Chemicals Investment
Case Studies on GEF Investments
Key Points in GEF5 Project Development

3. The GEF

4. The GEF Secretariat GEF’s Operation:
Based in Washington, D.C, the GEF Secretariat reports directly to the GEF Council and Assembly, ensuring that their decisions are translated into effective actions.
GEF’s Mission: A mechanism for international cooperation for the purpose of providing new, and additional, grant and concessional funding to meet the agreed incremental costs of measures to achieve agreed global environmental benefits
The GEF is the Financial Mechanism of the UNFCCC, CBD, Stockholm Convention, UNCCD and the Nagoya Protocol. The GEF also provides assistance to International Waters and the Montreal Protocol. The GEF provides Secretariat Services to the Adaptation Fund Board.

5. The GEF
10 Agencies
Under the Ongoing Reforms of the GEF, additional agencies, including qualified National Entities will be added to the GEF Agencies.
Over 2,700 projects
182 participating countries, private sector, and civil society
US$ billion as of June 2010
US$ billion as of June 2011

6. GEF 20 Years’ Investment in Climate Change Mitigation and Chemicals

7. 20 Years – Financing for Climate Change Mitigation
GEF Trust Fund invested about US$3 billion in over 150 countries
Mitigation
Adaption
Technology Needs Assessments
National Communications to the UNFCCC

8. 20 Years – Financing for ODS and POPs
GEF Trust Fund invested about US$613 million including
$ 187 million in ODS
26 ODS projects
19 individual countries and 6 regional projects
$ 426 million in POPs
219 POPs projects
Over 154 countries

9. 20 Years – Catalyzing investment
Catalytic
Leveraged more than US$18 billion in co-financing on its US$3 billion of investments in CC
Leveraged more than US$875 million in co-financing on its US$ 613 million of investments in ODS/POPs
US$ 179 in ODS
US$ 696 in POPs
Cost-effective
Over 2.5 billion tonnes of CO2 avoided
The ODS portfolio of the GEF additionally eliminated GT of CO2 Equivalent.
About US$ 1.2 per ton CO2
You may need to revise the cost effectiveness figure with the value of reduction from the ODS Portfolio.

10. Distribution of GEF Approved 851 CC Projects in Regions

11. Distribution of GEF US$ 179 million in 25 ODS Projects

12. Distribution of GEF US$ 696 POPs Projects

13. Continued Financing Climate Change Mitigation: Strategic Objectives for GEF-5 (2010-2014)
Demonstration, deployment, and transfer of innovative low-carbon technologies
Market transformation for energy efficiency in industry and the building sector
Investment in renewable energy technologies
Energy efficient, low-carbon transport and urban systems
Conservation and enhancement of carbon stocks through sustainable management of land use and forestry (LULUCF)
Enabling activities and capacity building

14. Continued Financing ODS and POPs: Strategic Objectives for GEF-5 (2010-2014)
Phase out POPs and reduce POPs releases;
Phase out ODS and reduce ODS releases; and
Pilot sound chemicals management and
mercury reduction.

15. GEF 5 Resources and Strategy in Climate Change and Chemicals Investment

16. Increased Resources in Climate Change (US$ million)

17. Utilization of the GEF funds in POPs 1991-2010

18. Climate Change Allocation in GEF 5 STAR
$ million

19. GEF 5 Set-aside Funds for Climate Change and Chemicals
Climate Change Total: US$272 million (US$1360 million X 20%)
National Communications and Technology Needs Assessments (US$80m)
Global and regional technology centers and network (US$42m)
Incentives for countries to participate (with STAR) in global and regional projects (US$20m)
Global and regional projects (targeted research, etc.) (US$10m)
Support for carbon finance (US$20m)
Sustainable Forest Management/REDD + incentives (US$100m)
ODS and POPs Total: US$35 million for national communications

20. Key Points in GEF’s Project Development

21. Full-sized projects (> $1 Million)
Council approval of Work Program*
CEO endorsement of project
GEF Agency approval of project**
GEF Agency completion of project & implementation start***
It will be useful when presenting this slide to discuss what a PIF is and the 18 month project cycle.
* Work Program consists of PIFs cleared by the CEO
** GEF Agency approval of project signifies start of project implementation
*** Project completion follows terminal evaluation and financial closure

22. Medium-sized projects (< = $1 Million)
Single –step Approval
Agency submits final MSP project document for CEO approval*
GEF Agency completes implementation followed by evaluation and financial closure
Two-step Approval
(if PPG is needed)
Agency submits PIF/PPG for CEO approval
Agency submits final MSP project document for CEO approval*
GEF Agency completes implementation followed by terminal evaluation and financial closure
* Agency approves MSP after CEO approval of the project and starts implementation.

23. Country endorsement (by Country National Operational Focal Point)
All Project Identification Forms should have endorsement of Operational Focal Point when submitted to GEF for clearance (in case of full-sized projects) or approval (in case of medium-sized projects requesting project preparation grants)

24. Review criteria for FSP/MSP
Country eligibility and ownership;
Agency’s Comparative advantage;
Resource availability;
Project consistency;
Project design;
Baseline of the project;
Incremental costs of the project;
Project co-financing;
Monitoring and evaluation; and
Agency’s responses to comments and reviews.
For combining GEF and MLF funding for HPMPs the MLF funded portion can count as part of the baseline project

25. Project baseline
Project Baseline: Activities that would happen without GEF’s investment
The costs of the baseline activities: to be covered by normal development expenditures such as government budgets, bilateral aid, the private sector, NGO resources, and loans from international financial institutions, including IDA and the Multilateral Fund.
The impacts of the baseline activities (GHG emissions and global environmental benefits): to be estimated through historical projects and/or trend analyses

26. Alternative project and incremental costs
Alternative Project: Activities that would happen with GEF’s investment
Incremental costs of the alternative project may include
technology licensing;
procurement of equipment and engineering services;
acquisition of additional natural resources, such as land for wind farm development;
training for professionals to manage new technologies, etc.
Net incremental costs can be negative
Unit Cost
Long run average cost – HCFC chillers
Net incremental cost
Net incremental cost
Long run average cost – NON-HCFC chillers
Operation years
Year 1
Year 2

27. Example of baseline and GEF investment scenarios

28. Case Studies on GEF Investments in EE and ODS

29. Case study 1: Commercialization of CFC-Free Refrigerators in China
GEF Financing
9.86 ($mn)
Co-financing Total
Government
Private
Other
32.29 ($mn)
1.38
29.72
.20
Ratio of co-financing
1: 3.3
GHG Emission Mitigation
42 (million tCO2e)
Cost of carbon reduction
US$1/tCO2e)
Increased Efficiency of Household Refrigerators
29%
(weighted average)
Institutional Framework and Governance Impacts
Transformed the refrigerator market by promoting energy efficient models
Reduced GHG and CFC emissions via CFC-free appliances

30. Case study 2: Financing Energy Efficient Building Chillers in Thailand
GEF Financing
2.50 ($mn)
Co-financing Total
Government
Other
2.73 ($mn)
0.26
2.47
Ratio of Co-financing
1: 1.1
GHG Emission Mitigation
1.224 (million tCO2e)
Technology Transfer
17 CFC-based chillers replaced
New Chiller Installations Per Year
25% in 2005; by 2010 two-thirds of remaining inefficient chillers were replaced
Institutional Framework and Governance Impacts
Achieved target energy savings and ozone depleting substances reduction
Demonstrated successful replacement of CFC chillers with non-CFC chillers for further replication

31. Case study 3: Promotion of HCFC-free Energy Efficient Refrigeration and Air-Conditioning Systems in the Russian Federation
CEO Endorsed 2010
GEF Financing
18.2 ($mn)
Co-financing Total
40.0 ($mn)
Ratio of Co-financing
1: 2.2
Expected GHG
Emission Mitigation
15.6 (million tCO2e)
Expected Institutional Framework and Governance Impacts
Introduce more energy efficient designs through technology transfer in the refrigerator and air conditioning manufacturing sectors
Building capacity for greater market share of energy efficient technology through greater consumer awareness and demand
Meet 2015 Montreal Protocol target by reducing electricity consumption and GHG emissions from the commercial and industrial sectors

32. GEF Co-financing Total of cash and in-kind resources committed by:
governments,
other multilateral or bilateral sources, private sector,
NGOs, project beneficiaries, and concerned GEF agencies.
Essential for meeting the GEF project objectives
It would be useful to include here the concept of the baseline project and baseline financing which is essentially the co-financing.

33. Historical GEF Co-financing (US$ million) Ratio in climate change mitigation 3:18
In GEF 5, the expectation is that the co-financing (baseline financning) be at least 1:4. For LDCS and SIDS this requirement will be applied on a case by case basis.

34. Key for HCFC/EE project development
Policy and regulation of the government;
Involvement of multilateral and local commercial banks;
Development of energy service companies (ESOCs);
Incentives to technology users;
Capacity building and development for technology users and commercial bank professionals;
Removing other barriers; and
Working together.

35. Conclusions (1) GEF’s achievements in climate change
Financial mechanism for the UNFCCC
US$3 billion, over 850 projects, 150 countries
Leveraged US$18 billion co-financing in climate change projects
Mitigated about 2.5 billion tons of CO2
GEF’s achievements in ODS and POPs
Invested US$ 613 million
Leveraged US$ 875 co-financing
Mitigated GT of CO2 Equivalent

36. Conclusions (2) Looking forward Climate Change GEF5 (2010-2014)
US$1.36 billion in climate change
Six strategic objectives
Greater positive impacts on global environment benefits
Baseline and co-financing are important in project development
Looking forward ODS and POPs GEF5 ( )
Three strategic objectives
More funds available
Developing projects that meet strategic objectives of CC, ODS, and POPs has high priority in the GEF. Linkages can be made with ODS and Hazardous Waste Management and ODS and Energy Efficiency.

37. Thank you for your attention!