GCF seeks to have an impact within eight mitigation and adaptation results areas. We are also committed to achieving a balance between funding for mitigation and adaptation initiatives.
GCF strives to ensure that our investments drive a paradigm shift towards low emissions and climate resilience. We consider both mitigation and adaptation as critical parts of the response to climate change, with all eight results areas holding important potential, and will strive to achieve a balance in its portfolio. Our goal is to seek the “sweet spots” between national priorities, potential to deliver concrete climate benefits, cost considerations, and opportunities to deliver co-benefits.
The eight results areas cover both mitigation and adaptation and provide the reference points that will guide GCF and its stakeholders to ensure a strategic approach when developing programmes and projects, while respecting the needs and priorities of individual countries. The results areas have been targeted because of their potential to deliver a substantial impact on mitigation and adaptation.
Agriculture, Forestry and Other Land Use (AFOLU) are responsible for close to a quarter of global greenhouse gas (GHG) emissions. These emissions are predominantly from deforestation and agricultural emissions from livestock, soil and nutrient management. Forests are both a source and a sink of GHG emissions, and are affected by climate change as an ecosystem. The co-benefits of interventions to address forest and climate change are wide-ranging. Tropical forests have the highest carbon density in biomass per hectare. Large swathes of tropical forest remain in certain regions, which is where the highest physical potential for emissions reductions lies. While some countries have successfully reversed trends of forest loss through reforestation and plantations, in many countries countries natural forest continue to be lost at a daunting pace. Deforestation as a mitigation measure has commanded substantial attention in the last decade. Reducing emissions from deforestation and forest degradation may account for a substantial share of global mitigation potential, and offer a wide array of cobenefits. There is broad consensus that efforts made to reduce deforestation offer greater mitigation potential at a lower cost than afforestation and other forest management interventions. Mitigation from forestry and agriculture has a high potential at a relatively low cost. To a large degree, their loss reflects governance and market failures and further emphasises the benefits of reducing forest losses.
Multilateral finance for REDD+ activities accounts for a small percent of total climate finance. Some funding have been dedicated to finance action on forests and climate change, but most of these are in support of “readiness” activities aimed at laying the groundwork for performance based payments for action. There is also a clear need to engage the private sector on REDD+ action given that many of the drivers of deforestation are linked to private activity related to agriculture and timber. Yest despite high expectations, there is limited track record in raising significant private finance to execute forest and land use-related activities.
Creating and sustaining an enabling environment for REDD+ can involve forest governance reform, land use rights clarification and reform, and removal or creation of subsidies. GCF efforts towards meeting the potential from forest activities will need to be context specific. For example, activities in some countries may focus around drivers linked to large-scale agriculture and unsustainable timber harvest, while small-scale agriculture would be a key driver in others. These contexts include the extent to which there is clarity on land use rights, and the quality of forest governance, alongside the extent to which high level development policy encourages activities that drive deforestation. There is good potential for GCF to utilise REDD+ results-based payment mechanism, in an effort to build on and foster new political momentum in order for the key countries to stick with the progress that has been made.
Increasing the efficiency of buildings and appliances offer significant mitigation and economic returns. The adoption of better technologies, energy-efficient designs, as well as introducing incentives that change behaviour can help reduce energy use. Consumers further benefit from energy efficiency measures by reducing household costs spent for energy. There is a need to rapidly improve the efficiency of energy consumption, but the high upfront costs associated with these investments need to be addreseed. There is a high potential for energy efficiency across countries and sectors.
Energy efficiency programmes have been a significant focus for existing mitigation funds, reflecting a growing recognition of their increasing commercial viability. Nevertheless, they represent a relatively smaller focus of international climate finance so far. The potential for energy efficiency and green building construction in developing countries remains untapped. GCF's potential value includes support to developing and piloting innovative instruments that scale up available financing for larger scale investments, potentially in partnership with efforts to strengthen policy, pricing, standards and other incentives for efficiency.
Ecosystem services are the benefits to humans that arise from the interactions between components of an ecosystem, including provisioning, regulating, cultural and supporting services. Climate change will further impact natural systems, affecting the flow of ecosystem services. Climate change is the driver of ecosystem degradation, the impact of which was increasing most rapidly, although there is uncertainty about scope and the specific economic implications of this change. Holistic investments in ecosystem services is complex since it involves many systems over different scales, and interacts with national considerations such as land use rights, environmental governance and policy responses. Often, hybrid measures combining ecosystem-based and traditional approaches can be most effective and efficient.
Ecosystem-based adaptation (EbA) offers flexible and cost-effective measures to address risks at multiple scales. Ecosystem services have been shown to reduce exposure to natural hazards and build adaptive capacity. There is a strong economic case for investing in EbA and ecosystem-based approaches. Further, there are obvious linkages with other results areas of the Fund. Existing ecosystem-based adaptation is being funded in a small number of cases through existing climate funds. While there are projects that focus on the role of forests in ecosystem services, less attention has been paid to the impact of climate change on coral reefs, the longer term viability of which is likely to be threatened. Such projects may be of particular relevance in SIDS, where threats of climate change to coastal ecosystems are large. Coral reefs and coastal ecosystems protect communities from storms and erosion, reducing damage costs and potentially saving lives. The costs of seawalls or other hard infrastructure may well be more than the cost of protection of the existing reefs that serve similar functions.
With a reliance on fossil fuels, electricity generation is one of the largest contributors to global greenhouse gas emissions. There is an urgent need to step up efforts to shift investment towards renewable and low emission sources of energy. Investments in these fronts can also offer related benefits, including the improvement of air quality and health, as well as the creation of new jobs and industries. There are two complementary but distinct dimensions of reducing emissions from energy production. The first is to support increases in large-scale deployment of low carbon electricity as an alternative to conventional fossil fuels, including scaling up the deployment of generation technologies such as wind, solar, hydro and geothermal, as well as by supporting "energy smart technologies" such as more responsive grid infrastructures and power storage. The second is to seize the mitigation potential associated with increasing access to low emission energy technologies. Such interventions are relevant in areas where people are still using biomass for cooking and/or lack access to electricity.
Through its projects, GCF is contributing to low carbon climate resilient pathways through a wide range of renewable energy projects, from solar power to supporting private investments in the renewable energy space. GCF provides funding to help countries sustainably increase the share of renewables in the generation mix. Part of GCF's ambition is to increase access to clean energy and ensure future energy generation pathways are those with an increased share of renewables.
Climate change is expected to have major effects on health and well-being, as well as food and water systems, in developing countries. A changing climate will affect all aspects of food security, mainly as a result of disruptions to agriculture and food production systems. Food and water disruptions as a result of climate change may in turn result in health impacts: these three result areas are therefore quite interconnected. Climate change further exacerbates the risks of hunger and malnutrition through extreme weather events including sea level rise and accelerated glacial melt which have the potential to destroy crops and critical infrastructure. Climate change will likewise result in further scarcity in water. Renewable surface water and groundwater resources are expected to be significantly reduced in some regions, as will freshwater withdrawals for agricultural, industrial and domestic use. Timings and quantities of precipitation are expected to be far less predictable, affecting agricultural production. Finally, the health of water systems is linked to the health of ecosystems, including oceanic systems and terrestrial systems such as rivers.
All three of these result areas are very closely linked to development efforts, and it may often be challenging to distinguish climate-related components from wider efforts to strengthen food, water and agriculture systems in developing countries. Adaptation funds, among these three result areas, have prioritised water activities, while food and health have received less attention. It is clear that GCF can potentially take multiple entry points into supporting better outcomes. These include support for environmentally and socially sustainable climate-smart agriculture, which can reduce food security risks as well as pressures on water supply. Efforts to improve the resilience of cities can also deliver integrated outcomes in this result area, by improving water sanitation and management systems and infrastructure within urban areas.
GCF projects support the increased resilience of infrastructure and the built environment to climate change threats by building climate-strengthened cities
Infrastructure in both urban and rural areas is subject to significant risks in the face of climate change. It is at the heart of the climate change mitigation challenge: efforts to reduce emissions from energy, buildings, transport and cities require fundamental shifts to the way in which relevant infrastructure services are built and delivered. Efforts to increase the resilience of water supply systems can also affect relevant infrastructure choices. The challenge for the Fund will be to help shift investment decisions so these facilities are both less emission-intensive, and more resilient to climate impacts. Reducing basic service deficits and building resilient infrastructure systems can reduce exposure to hazards and vulnerability to climate change. Developing countries face particular challenges raising finance for infrastructure. Perceptions of country risk and the long time frames of the investments involved compound the challenge.
Infrastructure cuts across multiple result areas of GCF. One obvious risk to infrastructure from climate change is in coastal areas as a result of sea level rise and flooding. In some regions, a large percentage of populations are particularly affected by sea level rise and flooding due to their elevation and proximity to coastal areas. This is especially true in countries with substantial delta regions or those with large urban populations. In addressing development needs, massive infrastructure investments are underway in some countries. Strengthening the resilience of these investments to climate change and ensuring their coherence with the imperatives of realising low emission and climate resilient pathways in the long term is a key challenge. Through a focus on financing climate-compatible cities, GCF may be able to help support an integrated approach to infrastructure that offers both resilience and mitigation benefits. However, the risk of “maladaptation,” or investments that do not support the ability to respond to climate change impacts, needs to be managed carefully.
GCF projects promote the increased resilience of livelihoods of people, communities and regions at the risk of being ravaged by climate change.
Livelihood comprises the capabilities, assets and activities required for a means of living. A livelihood is sustainable when it can cope with and recover from stresses and shocks, maintain or enhance its capabilities and assets, while not undermining the natural resource base. Climate change compounds the complexity of efforts to secure sustainable livelihoods, acting as a threat multiplier. The incidence of weather events and climate extremes will have increasing livelihood impacts, both ruinous, as well as more minor shifts in patterns of rainfall, or short periods of extreme weather. The incidence of extreme events can place a high burden on national systems which ultimately shape adaptive capacity. People’s vulnerability to natural hazards and their capacity to cope, manage and respond to disasters is dependent upon different social, economic cultural and political processes: people are affected in different ways. A growing number of people and assets are in areas prone to hazards, and are therefore exposed to disasters. As a result of increased exposure and vulnerability to natural hazards, the total number of people dying in disasters globally has increased in the past few years.
Climate change will create new poor between now and 2100 in all economies. Climate variability, change and extreme events are an additional burden to those in poverty. Large populations of poor are presently concentrated in regions that largely depend on agriculture for livelihoods. This means that efforts to strengthen the resilience of the agriculture sector, and those who depend on it for their livelihoods, may offer major impact potential for GCF. Support for livelihood enhancement has increasingly focused on increasing resilience, or the ability to avoid significant deterioration or restore one’s livelihood quickly after a shock. The need to mainstream climate risk into national development policies has attracted increasing attention in this context, as have the linkages between adaptation and disaster risk reduction programming. Further, the potential for expanded access to insurance, particularly for people for whom there is presently very limited access to insurance, has attracted attention. There is also scope to use social protection programmes to help to support poor communities to deal with challenges and impacts that are linked to climate change through “adaptive social protection” programmes. The need to support and nurture “autonomous adaptation” of people, communities and private sector actors is also recognised. Other livelihood initiatives include: diversification of livelihoods, migration, food storage, communal pooling, market responses, and saving, credit societies and systems of mutual support. Many of these require some resource investment at the outset that climate finance could support.
Transport contributes a significant share of global CO2 emissions, with trends predicting a twofold increase by 2030. Growth in emissions will accelerate with increasing demands for travel. Transport will have a distinct impact on future emissions, and there is an urgent need to encourage compact, connected urban forms linked by sustainable transit solutions, instead of sprawling, car-dominated and high-emission development. Motorisation trends vary substantially across and within regions: the use of private cars might grow fast in some countries, while others are dominated by two-wheelers. Some countries have introduced more sustainable transport systems such as Bus Rapid Transports (BRT), but there remains a need to scale up their reach, coverage and functionality.
Low carbon transport programmes account for a growing share of the mitigation finance provided through existing climate funds. The largest volumes of private investment in transport are observed in Latin America as well as South Asia and Eastern and Central Europe, suggesting that there may be opportunities in directing that investment towards lower emission and more resilient approaches. This also suggests that the Fund may be well served to find niche approaches to supporting mitigation through the transport sector. Countries are developing mitigation actions that target emissions from the sector, either from the adoption of new technologies and approaches, as well as from modal shifts and more sustainable approaches to transport and infrastructure planning.