Danish Environmental Assistance and Environmental Conventions
6.1. Global Environment Facility| 6.2 | European Bank for Reconstruction and Development |
History
The Global Environment Facility (GEF) was initiated by donor countries in 1991 as a three-year pilot initiative.
The World Bank, UNDP and UNEP agreed to cooperate as implementing agencies to enhance the global environment by protecting biodiversity, combating climate change, protecting international waters and phasing out ozone-depleting substances in Central and Eastern Europe, which are not eligible for funding under the Montreal Protocol. After the Earth Summit in Rio, it was agreed that the facility should be restructured and established on a permanent basis and made more participatory by involving developing countries in making decisions and implementing projects.
The founding instrument for GEF was agreed in 1994 and establishes GEF as a mechanism for global environmental grant and concessional funding to meet agreed incremental costs of measures within the four focal areas to benefit the global environment.
The facility operates the financial mechanisms of the UN Conventions on Climate Change and Biological Diversity on an interim basis under the guidance of the Conferences of the Parties. Support for phasing out the use of ozone-depleting substances in Central and Eastern Europe is provided in accordance with the principles of the Montreal Protocol and its amendments. International waters are defined as inland and coastal waters shared by two or more states. These are not covered by any global legal instruments, but the facility supports mutual efforts to protect shared rivers, lakes and aquifers, coastal waters and the Washington Plan of Action on the Seas. In addition, GEF helps to implement the Convention to Combat Desertification by making agreed incremental costs of activities concerning land degradation, primarily desertification and deforestation, eligible for funding if they relate to the four focal areas. Under the same circumstances, the council may also agree to make other relevant activities under Agenda 21 eligible. This is relevant for chemicals. In the energy sector, GEF actively seeks to promote energy efficiency and renewable energy.
Funding "agreed incremental costs" to achieve "agreed global environmental benefits" is the core of GEF’s mission and major efforts have been made to find practical ways of working with these concepts in projects, programmes and policies. Estimating incremental costs has caused considerable difficulty in the cooperation between GEF and the implementing agencies, and with recipient countries and project designers. This is due mainly to the problem of defining national and global benefits - not least in biodiversity projects.
An operational strategy has been formulated to guide the actions of the facility and ensure cost-effective use of its resources. The operational strategy defines the mission, strategy and operational principles on which the activities are to be based in the four focal areas and on land degradation. Key features of the strategy include a country-driven approach and the involvement of stakeholders – reflecting the emphasis on consistency with national and regional objectives and initiatives.
The principles of the strategy have been elaborated as 12 operational programmes to guide potential project designers:
 | Four programmes on biodiversity based on the ecosystems approach. |
| Four programmes on climate issues that focus on barriers to energy efficiency and conservation, promoting renewable energy, reducing costs for low greenhouse gas emitting technologies and promoting climate-friendly transportation. |
| Two programmes on water, one waterbody-based and one contaminant-based. |
| Two integrated programmes, one addressing land and water, and one on natural resources management addressing biodiversity and carbon sequestration (climate). |
The funding of ozone projects has been considered a short-term measure with no need for an operational programme. Work is now underway to prepare an operational programme for agricultural biodiversity and a programme to follow up on the Cartagena Protocol on Biosafety. At the same time, GEF will serve as a major part of the Financial Mechanism of the POP Convention, as decided at the INC5 meeting in December 2000.
The council, which is responsible for developing policies and programmes, approving project funding and supervising their implementation, meets twice a year and consists of 32 members, each representing a constituency. Sixteen members come from developing countries, fourteen from industrialised countries and two from Central and Eastern Europe and the Russian Federation. To promote transparency, the NGOs have four observers of their own choice at council meetings and they hold coordinating sessions before each meeting. The work of the council is supported by a secretariat headed by a Chief Executive Officer (CEO). A Scientific and Technical Advisory Panel (STAP), consisting of 12 independent scientists, assists with the continuous development of policies. Every three years, an assembly consisting of all participants is required to review GEF policies and operations. Only one assembly has been held so far - in Delhi in 1998. The next will be convened in 2002 after Rio+10.
During the pilot phase USD 750 million was allocated to 112 projects in 63 countries. When GEF was restructured in 1994, USD 2 billion was pledged by 34 nations to support activities. In 1998, a further USD 2.75 billion was pledged by 36 nations. The third replenishment is due in 2002 and a substantial increase is expected.
By August 2000, a total of USD 3.1 billion had been allocated to 730 projects, with 39% of the funding for biodiversity, 35% for climate change, 14% for international waters and 6% for ozone (where no further allocations are needed). Multifocal funding comprised 6%. As projects are country-driven, no decision has been made by the council as to the distribution of funding between focal areas, but climate and biodiversity are the two main areas. For example, national reporting and development of national strategies under the two conventions are fully financed by GEF.
There is ample opportunity for national and regional co-financing by recipient countries, implementing agencies and other international entities and bilateral donors. The co-financing leveraged by GEF funding has been USD 5.6 billion, bringing the total value of projects to which GEF has contributed to about USD 8.7 billion from 1991 to mid-2000.
It is important to note that GEF does not implement projects, but co-finances the operations of its three implementing agencies to reap global benefits. These agencies are accountable to the council for their GEF-financed activities. The World Bank has administered 60% of the funds allocated so far, UNDP 30% and UNEP 4%, while 5% were administered jointly.
The implementing agencies may execute projects themselves or select other entities as responsible on site. The World Bank uses the Regional Development Banks as executing agencies for many of its projects. GEF is currently seeking to involve UNIDO and FAO as executing agencies to strengthen its ability to deliver results on the chemicals agenda. National and international NGOs are working with UNDP to implement projects, and UNDP has a special small-scale grant programme under GEF to facilitate the speedy execution of minor projects. UNEP’s relatively small role is due to its focus on knowledge. It is not a project organisation.
Two general problems seem to characterise GEF-funded projects to date. Firstly, there is the difficulty of integrating project activities in national policy frameworks that take broader contextual factors into account, such as legal and institutional capacity. Secondly, the effective involvement of stakeholders, nationally and locally, has proven to be a more difficult and lengthy task than initially expected.
In practice, the organisational structure means that the preparation of projects is subject to parallel processes of decision making in the GEF Secretariat and council and in the implementing agencies. Considerable effort has been put into streamlining and coordinating the GEF project cycle to suit the internal procedures of the agencies and to avoid delays. The CEO of GEF has been given a certain margin for making decisions without prior involvement of the council, and quicker procedures have been established for council decision-making between semi-annual meetings.
Some improvements have been made, but too much time still passes between project formulation, approval by the GEF, the commitment of the implementing agency and actual project implementation. Two years is not unusual, and on average more than a year passes before the World Bank and UNDP commit themselves after GEF approval is obtained. Regarding project preparation, it is worth mentioning that the CEO has the authority to grant funding for developing ideas and proposals from a very early stage (the Project Preparation Facility, PPF).
All relevant information on GEF - its structure, entities, policies and programmes, project portfolio, performance reports, evaluations and documentation from council meetings can be found at its internet home page. The information includes national focal points in member countries, regional NGO focal points and relevant contact points for implementing agencies.
Relevant web site: http://www.gefweb.org
6.2. European Bank for Reconstruction and DevelopmentThe EBRD provides direct financing for private sector activities, restructuring and privatisation as well as funding for the infrastructure that supports these activities. Its investments also help to build and strengthen institutions.
The main forms of EBRD financing are loans, equity investments (shares) and guarantees. Project Summary Documents (PSDs) are released for public and private sector projects before the project is considered by the Board of Directors. PSDs are updated if material changes are made to the project following first release.
The EBRD places great emphasis on encouraging the involvement of other sources of financing in its operations, thereby increasing the total resources available to its countries of operations. Technical cooperation funds have an important role to play in supporting the EBRD operational objectives of sound banking, additionality and transition impact. The EBRD functions as the administrator of the Nuclear Safety Account (NSA) and the Chernobyl Shelter Fund (CSF).
The EBRD is directed by its agreement to "promote in the full range of its activities environmentally sound and sustainable development" (Article 2.1vii). The EBRD is the first international financial institution to have been given such a proactive environmental mandate by its founders.
The EBRD recognises that sustainable development is a fundamental aspect of sound business management and that the pursuit of economic growth and a healthy environment are inextricably linked. The bank further recognises that sustainable development must rank among the highest priorities of EBRD activities. The bank will endeavour to ensure that its policies and business activities promote sustainable development, meeting the needs of the present without compromising those of the future.
The overall mission of the Environmental Appraisal Unit (EAU) is to ensure that projects comply with EBRD commitment to environmentally sound and sustainable development. EAU staff screen and review all investment projects and screen all technical cooperation projects submitted to the EBRD Operations Committee, in compliance with the Bank's Environmental Procedures.
The Project Preparation Committee (PPC) is a networking mechanism established at the Second "Environment for Europe" Ministerial Conference in Lucerne in April 1993 to improve coordination and cooperation between international financing institutions (IFIs), donors and countries in transition to promote environment-related investment projects in Central and Eastern Europe and the Newly Independent States. The PPC forms an integral part of the Environmental Action Programme for Central and Eastern Europe (EAP). Specifically, the PPC is a mechanism and market place for identifying co-financing arrangements between donors and IFIs, matching donor grant funds with IFI credits in order to enhance project performance and sustainability. The PPC Secretariat is based at the EBRD in London, and officers are designated to implement the PPC mandate currently located both at the EBRD and the World Bank.
Relevant web site: http://www.ebrd.com