Transcript RC-LCDS TACC

Financing
Opportunities for
Climate Change
Mitigation
Katie Dunn
Carbon Finance Technical
Specialist
UNDP, Regional Center Panama
16 March 2011
[email protected]
UNDP’s Role
–UNDP has over 20 years of experience in accessing multiple funding
sources for climate change to address a wide range of national issues,
ranging from institutional capacity building to cutting edge technology
deployment
–A key issue for successful climate change financing is to clearly
understand what type of financing instrument is most appropriate to
achieve a particular goal
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UNDP’s Support to Countries in the area of Climate Change
• Dispursed $1.58b and leveraged $3b in co-financing to support
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sustainable development initiatives
Supports countries to access, sequence, and combine funds to
manage uncertainties of climate change, e.g., LDCF, SCCF,
GEF, national funds, bi-lateral funds
Supported 102 countries to prepare their National
Communications since 1996
Supported 29 LDCs to prepare their NAPAs and access new
financing from LDCF to implement NAPA priorities
Managed 60 SCCF/LDCF projects for non-Annex I countries
Supported 114 countries to prepare NCSAs
Supported 68 countries with their TNAs
Global support to develop capacity for domestic carbon market
and CDM project development
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Current Mitigation Goals and Needs
To avoid global temperature rises of more than 2⁰C above pre-industrial levels and
achieve stabilization of greenhouse gas concentrations at 450ppm we need to
achieve the target of 17 gigatonnes (Gt) of abatement by 2020. 1 Gt = 1 billion tonnes
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Current Mitigation Goals and Needs
A single gigaton of emissions is roughly equivalent to putting 142,857,142 African
elephants into the atmosphere every year (or enough to stretch elephants from
the earth to the moon and halfway back again).
It's also greater than the weight of every human being on the planet. All 6 plus billion
of us.
http://www.projectcatalyst.info/images/2.%20Climate%20Finance/Publications/2.%20Briefing%20papers%20on%20climate%20finance/20091203%20Fina
nce%20Needs%20Briefing.pdf
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Current Mitigation Goals and Needs
• 5 Gt of abatement are possible without behavioral changes in
the developed world in 2020. McKinsey Report
• A further 3 Gt are available in the developing world at negative
cost (mostly through energy savings) and would therefore not
require financing
We must capture another 9 Gt of positive‐cost abatement in the
developing world. These measures will require support from
the developed world. How to finance the incremental costs of
this mitigation is at the core of the climate negotiations.
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Current Mitigation Goals and Needs
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• The total investment required to avoid dangerous climate change is
more than USD 1 trillion per annum, according to the International
Energy Agency (IEA).
• Around USD 400 billion per annum of investment will be required for mitigation
investment in developing countries according to the World Bank.
• The sum of climate-related public sector commitments currently under
negotiation, even if delivered to their maximum ambition, totals around USD 110
billion. The World Economic Forum (WEF)
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Current international funding
Current international funding dedicated to climate action in
developing countries covers only about five percent of their
anticipated needs.
The shortfall is potentially more than USD 350 billion.
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Focus of Approved Funding
Multiple Focus
1.7% $132 million
Adaptation
$1 billion
REDD 4.9%
$386 million
Mitigation
USD$6.4 billion
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Climate Funds
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Adaptation Fund AF
Amazon Fund (Fundo Amazônia) FA
Clean Technology Fund CTF
Congo Basin Forest Fund CBFF
Environmental Transformation Fund International Window ETF
Forest Carbon Partnership Facility FCPF
Forest Investment Program FIP
GEF Trust Fund - Climate Change focal
area (GEF 4) GEF4
GEF Trust Fund - Climate Change focal
area (GEF 5) GEF5
Global Climate Change Alliance GCCA
Global Energy Efficiency and Renewable
Energy Fund GEEREF
Hatoyama Initiative - private sources HIPr
Hatoyama Initiative - public sources HI-
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Indonesia Climate Change Trust Fund
ICCTF
International Climate Initiative ICI
International Forest Carbon Initiative IFCI
Least Developed Countries Fund LDCF
MDG Achievement Fund – Environment
and Climate Change thematic window
MDG
Pilot Program for Climate Resilience
PPCR
Scaling-Up Renewable Energy Program
for Low Income Countries SREP
Special Climate Change Fund SCCF
Strategic Climate Fund SCF
Strategic Priority on Adaptation SPA
UN-REDD Programme UN-REDD
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Funds Pledged vs. Deposited and Dispersed
FUND
Acronym
Pledged
(USD mn)
Deposits
(USD mn)
Approved spend
(USD mn)
Disbursed
(USD mn)
Adaptation Fund
Amazon Fund (Fundo Amazônia)
Clean Technology Fund
Congo Basin Forest Fund
Forest Carbon Partnership Facility
Forest Investment Program
GEF Trust Fund - Climate Change focal
area (GEF 4)
GEF Trust Fund - Climate Change focal
area (GEF 5)
Global Climate Change Alliance
Global Energy Efficiency and Renewable
Energy Fund
Hatoyama Initiative - private sources
Hatoyama Initiative - public sources
Indonesia Climate Change Trust Fund
International Climate Initiative
International Forest Carbon Initiative
Least Developed Countries Fund
MDG Achievement Fund – Environment and
Climate Change thematic window
Pilot Program for Climate Resilience
Scaling-Up Renewable Energy Program for
Low Income Countries
Special Climate Change Fund
Strategic Climate Fund
Strategic Priority on Adaptation
AF
FA
CTF
CBFF
FCPF
FIP
$216.16
$1,027.93
$3,792.00
$82.50
$199.07
$568.20
$202.11
$50.93
$1,492.78
$82.50
$152.27
$110.95
$34.41
$7.10
$1,452.60
$17.42
$11.52
$3.00
$9.46
$7.10
$227.00
$11.72
$10.34
$3.00
GEF4
$1,032.92
$1,032.92
$996.92
$996.89
GEF5
$1,359.38
$0.00
GCCA
$226.12
$224.62
$187.28
$20.51
GEEREF
$169.50
$60.08
$60.08
$0.00
$4,000.00
$11,000.00
$18.30
$519.60
$216.27
$221.46
$1,360.00
$3,960.00
$8.51
$515.61
$67.06
$169.19
$1,360.00
$3,959.89
$5.48
$503.65
$47.60
$141.96
$0.00
$0.00
$0.00
$503.65
$47.60
$141.96
MDG
$89.50
$89.50
$89.50
$70.76
PPCR
$971.75
$305.85
$287.06
$7.72
SREP
$306.50
$23.85
SCCF
SCF
SPA
$147.78
$0.00
$50.00
$110.48
$0.00
$50.00
$97.17
$97.17
$48.91
$48.91
UN-REDD Programme
UN-REDD
$126.04
$94.63
$75.76
$51.36
TOTALS
HI-Pr
HI-Pu
ICCTF
ICI
IFCI
LDCF
$26,340.98
$10,163.84
$9,387.31
$2,255.15
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Climate Finance Website Trackers
Fast-Start Finance: Cooperative initiative lead by the UK and
the Netherlands
UNFCCC: Summary of agreements reached in Cancun,
including Fast-Start Finance & Green Fund
Climate Funds Update: Tracks financial pledges from
developed nations
World Resources Institute: FSF tracking from an independent
NGO
Project Catalyst: Economic analysis of FSF flows to developing
countries
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Fast Start Finance
The Copenhagen Accord outlines a pledge by many
developed countries to support fast start finance funds to
help developing countries adapt to the impact of climate
change and to pursue actions that put them on a lowcarbon development pathway.
The funds will “provide new and additional resources,
including forestry and investments through international
institutions, approaching $30 billion for the period 2010
to 2012 with balanced allocation between adaptation and
mitigation.”
The World Resources Institute (WRI) is currently tracking the FSF pledges
http://www.wri.org/publication/summary-of-developed-country-fast-start-climate-finance-pledges
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The Great Green Hope: Green Climate Fund
The UN Climate Talks in December 2010 concluded with a set of
decisions known as the Cancun Agreements, which included
the establishment of the Green Climate Fund (GCF).
Intended to raise and disburse $100bn a year by 2020 to protect
poor nations against climate impacts and assist them with lowcarbon development. (To address both mitigation and
adaption).
The Fund will have the capacity to provide “direct access” to
national institutions, without the intervention of international
implementing agencies like the World Bank and the United
Nations.
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Green Climate Fund
The Green Climate Fund will initially use the World Bank as a
trustee while giving oversight to a new body balanced between
developed and developing countries: a transitional committee
of 25 developing and 15 developed countries to develop
guidelines for the Board to further develop the detailed rules
after COP17 in Durban.
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Green Climate Fund
Remaining Questions:
• How will countries directly access funds?
• What financial instruments and models will be used?
• Registry system to record financial pledges and climatemitigating actions?
• Will non-governmental groups, the private sector and
international organizations all be allowed to take part?
• Mechanisms to ensure environmental and social standards?
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Green Climate Fund
Designing and making the GCF operational will take some time.
Funds won’t start flowing immediately.
The international community therefore needs to find a way to finance
the gap as many of the vulnerable developing countries and those
least able to cope are already suffering from the devastating
impacts of climate change.
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UNFCCC Loans for Underdeveloped Carbon Markets
Executive Board of the CDM to provide loans to support the
following activities in countries with fewer than 10
registered CDM projects to:
(a) To cover the costs of the development of project design
documents (PDDs);
(b) To cover the costs of validation and the first verification for
these project activities.
Loans are to be repaid starting from the first issuance of certified
emission reductions (CERs).
Implementing Agency TBD
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Carbon Finance to Date
• Initially perceived as the main financial vehicle for mitigation activities in
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the developing world
Has resulted in significant financial flows to non Annex 1 countries for the
transfer of low emissions technology
Has been an important vehicle for deep structural transformations which
will not be reverted
Has involved multiple public and private actors in climate change that
would otherwise not be involved
However, it is increasingly acknowledged that the CDM and carbon
markets are only one piece of the financing puzzle to address climate
change
The total value of the market grew 6% to US$144 billion (€103 billion) by
year’s end with 8.7 billion tCO2e traded
Project-based transactions declined by 54%
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What’s Next in Mitigation Finance
From CDM to Scaled Up Mitigation Mechanisms
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Standardized Baselines
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Sectoral Approach Using Market Mechanisms
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NAMAs supported through crediting or trading
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NAMAs supported through international aid
2020
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What’s Next in Mitigation Finance
Nationally Appropriate Mitigation Actions (NAMAs)
NAMAs are voluntary emission reduction measures undertaken
by developing countries that are reported by national
governments to the UNFCCC. They are expected to be the
main vehicle for mitigation action in developing countries
under a future climate agreement, and can be policies,
programs or projects implemented at national, regional, or
local levels.
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Nationally Appropriate Mitigation Actions (NAMAs)
Three types of broad NAMAs are being proposed:
• Unilateral
Mitigation actions undertaken by developing countries on their
own.
• Supported
Mitigation actions in developing countries, seeking
international support by finance, technology & capacity
building. They will be subject to international MRV procedures
to be adopted by COP.
• Creditable
Mitigation actions in developing countries generating credits
for the carbon market.
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Post 2012 Financing
World Bank’s Umbrella Carbon Facility Tranche 2 (UCFT2)
With initial funding of €68 million, contributed by Deutsche
Bank, GDF SUEZ, and the Swedish Energy Agency, this
Tranche provides the opportunity for existing carbon projects
to continue selling their carbon credits well beyond 2012.
“During a period of regulatory uncertainty, the UCFT2 is helping
to maintain demand for post-2012 carbon credits. It means we
have another tool to help bridge the gap in the carbon
markets,” said Joëlle Chassard, Manager of the World
Bank’s Carbon Finance Unit.
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Thank You
Katherine Dunn
Carbon Finance Technical
Specialist
Environment and Energy Group
UNDP Regional Support Center,
Panama
[email protected]
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