Transcript TGO_20140306 - IGES Publications

Institute for Global Environmental Strategies
Climate Finance
Climate finance trends in Asia
and the implications of
scalability of the Green Climate
Fund on access modality
Yuqing Ariel Yu
Senior policy researcher, Climate and Energy Area
Institute for Global Environmental Strategies (IGES)
February 17th, 2014
1
IGES-Future climate regime
Outline
• Background knowledge about climate finance
• Climate finance trends in Asia
Role of business for enabling sustainable lifestyles
• The implications of scalability of the Green Climate Fund
on access modality
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Scope, terminology, and data sources
• Definition of climate finance
– No globally agreed definition
– The Standing Committee on Finance is working on an operational
definition (decision-/CP.19)
Role of business for enabling sustainable lifestyles
Global climate finance in 2012
Sources
Multilateral climate funds
$1.4b
Bilateral climate funds
$0.2b
Development finance
institutes
$122b
Government budgets
$12b
Private sector
$224b
Adaptation
$22b
$359b
Mitigation
(including
REDD+) $357b
Source: CPI, 2013
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Principles and criteria of public climate finance
• Fund mobilization
–
Equity: common but differentiated responsibilities and respective capabilities (UNFCCC, Art. 2)
•
•
–
–
–
•
Adequacy and predictability in the flow of funds and the importance of appropriate burden
sharing among the developed country Parties (UNFCCC, Art.Role
4.3)of business for enabling sustainable lifestyles
Funding must be adequate, predictable, sustainable as well as new and additional (Bali Action
Plan, Art. 1(e)(i))
Scaled-up, new and additional, predictable and adequate funding shall be provided to
developing country Parties (the Cancun Agreements, Para. 97)
Fund governance
–
–
Transparent and accountable
Equitably represented
•
•
•
Who should pay the cost? The polluter pays
Define a legal obligation for compensatory finance, distinctly different from aid flows
Traditional ODA gives donor countries a bigger voice in funding decisions
Climate finance is compensatory in nature and should be governed based equitable representation of
developed and developing Parties
Fund disbursement
–
National ownership
•
Yuqing Ariel Yu
Meets sustainable development needs in developing countries
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Climate and Energy Area
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IGES-Future climate regime
Institutional arrangements under UNFCCC and climate
finance commitments
• Institutional arrangements
–
–
–
–
The Standing Committee on Climate Finance
The Green Climate Fund
The Global Environment Facility (climate focal area)
Role of business for enabling sustainable lifestyles
The Adaption Fund (Kyoto Protocol)
• Climate finance commitments
– The Fast-start Finance (FSF): Developed countries collectively provide
approximately USD 30 billion during 2010 to 2012 (The Cancun
Agreements).
– The long-term finance: Developed countries collectively provide USD 100
billion annually by 2020 (The Cancun Agreements).
– Provide resources of at least the average annual level of the FSF period
for 2013-2015 (The Doha Gateway)
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
5
IGES-Future climate regime
Role of business for enabling sustainable lifestyles
Climate finance trends in Asia
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
6
IGES-Future climate regime
Scope, terminology, and data sources
• Scope of this study
– Dedicated public climate finance (UNFCCC climate funds, multilateral
initiatives outside the UNFCCC, bilateral ODA)
– Other official flows (OOFs) excluded
Role of business for enabling sustainable lifestyles
– Time scale: 2006-2012
– Countries: East, South, and East South Asian countries
• 8 countries are least developed countries (LDCs)
• 10 countries are non-LDCs
• Data sources:
– IGES FSF database and Climate Funds Update
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Asia received a total of USD10,754.4 million in climate
finance (2006-2012)
•
Climate finance according to thematic activities
0.2% unknown
14.4%
Multi-foci
Adaptation
13.3%
LDCs:
Non-LDCs:
Afghanistan
China
Bangladesh
India
Bhutan
Indonesia
Role of business
for enabling sustainable
Malaysialifestyles
Cambodia
Mitigation
67.2%
4.8% REDD+
Asia
0.9% unknown
0.1% unknown
7.0%
37.5%
Mitigation
Maldives
Pakistan
Myanmar
Philippines
Nepal
Sri Lanka
Vietnam
8.9% Adaptation
4.5% REDD+
Adaptation
47.4%
Mitigation
71.1%
REDD+
7.2%
LDCs
Yuqing Ariel Yu
Mongolia
Thailand
15.4%
Multi-foci
Multi-foci
Lao PDR
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Non-LDCs
Climate and Energy Area
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IGES-Future climate regime
The FSF period saw a ten-fold increase in climate
finance to approximately USD3,500 million annually
•
Yearly distribution of climate finance
USD million (current value)
4000.0
3500.0
3000.0
Role of business for enabling sustainable lifestyles
2500.0
2000.0
1500.0
1000.0
500.0
0.0
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IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Climate finance was not evenly distributed among the
recipient countries
Country distribution of climate finance
5000.0
4500.0
4000.0
3500.0
3000.0
2500.0
2000.0
1500.0
1000.0
500.0
0.0
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Malaysia
Myanmar
Maldives
Bhutan
Mongolia
Lao PDR
Sri Lanka
Cambodia
Nepal
Afghanistan
Pakistan
China
Thailand
Bangladesh
Philippines
Vietnam
Indonesia
Role of business for enabling sustainable lifestyles
India
USD million (current value)
•
Climate and Energy Area
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IGES-Future climate regime
Asia received 68% of funding in the form of
concessional loans
•
Financial instruments
0.9% Others
31.1%
Grants
LDCs:
Non-LDCs:
Afghanistan
China
Bangladesh
India
Bhutan
Indonesia
Role of business
for enabling sustainable
Malaysialifestyles
Cambodia
Concessional loanss
68.0%
Asia
0.5% Others
0.9% Others
Lao PDR
Mongolia
Maldives
Pakistan
Myanmar
Philippines
Nepal
Sri Lanka
Thailand
26.2%
Grants
30.9%
Concessional loans
Grants
68.7%
LDCs
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Vietnam
Concessional loans
72.9%
Non-LDCs
Climate and Energy Area
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IGES-Future climate regime
Mitigation represented the largest share of funding during both
periods and accounted for almost 70% of the money received in the
respective periods
•
Comparisons of themes
0.2% unknown
Multi-foci
5.9%
7.1%
15.0%
Multi-foci
Role of business for enabling sustainable lifestyles
Adaptation
Adaptation
13.7%
17.7%
REDD+
Mitigation
69.4%
The Pre-FSF period
(2006-2010)
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
4.0%
Mitigation
67.1%
REDD+
The FSF period
(2010-2012)
Climate and Energy Area
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IGES-Future climate regime
The composition of financial instruments changed
dramatically before and during the FSF period
•
Comparisons of financial instruments
1.1% Others
0.9% Others
Role of business for enabling sustainable lifestyles
26.9%
Grants
Grants
98.9%
The Pre-FSF period
(2006-2010)
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
72.2%
Concessional loans
The FSF period
(2010-2012)
Climate and Energy Area
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IGES-Future climate regime
The order of recipient countries also changed
Comparisons of recipient countries
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Malaysia
Myanmar
Maldives
Bhutan
Mongolia
Lao PDR
Sri Lanka
Cambodia
Nepal
China
Pakistan
Thailand
Bangladesh
Philippines
Vietnam
Indonesia
Role of business for enabling sustainable lifestyles
India
Myanmar
Lao PDR
Nepal
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Afghanistan
The Pre-FSF period (2006-2010)
Afghanistan
Bhutan
Mongolia
Cambodia
Pakistan
Malaysia
Maldives
Sri Lanka
Bangladesh
Vietnam
Thailand
Philippines
Indonesia
India
USD million (current value)
200.0
180.0
160.0
140.0
120.0
100.0
80.0
60.0
40.0
20.0
0.0
China
USD million (current value)
•
The FSF period (2010-2012)
Climate and Energy Area
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IGES-Future climate regime
The decline of the role of UNFCCC funding and the rise of multilateral and
bilateral initiatives outside the UNFCCC was a notable feature during the
FSF period
•
Comparisons of funding sources
0.9%
Multilateral
7.9%
0.6% LDCF&SCCF
0.3% AF
6.5%
CIFs for enabling sustainable lifestyles
Role of business
Multilateral
29.9%
Bilateral
2.0% GEF5
GEF4
57.7%
89.8% Bilateral
4.6%
LDCF&SCCF
The Pre-FSF period
(2006-2010)
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
The FSF period
(2010-2012)
Climate and Energy Area
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IGES-Future climate regime
Climate finance profile of Philippines
2006-2012
Overview
Thailand
Themes
Instruments
USD Million
Project #
Mitigation
REDD+
Adaptation
Multi-foci
Unknown
Grants
Con loans
Others
396.6
59
363.4
10.4
22.6
0.2
0
226.6
170
0
Sources: IGES et al. 2013; CFU, 2014
Role of business for enabling sustainable lifestyles
The FSF Period (2010-2012)
The Pre-FSF Period (2006-2010)
UNFCCC
Thailand
Outside UNFCCC
GEF4
LDCF&
SCCF
Bilateral
Multilate
ral
14.6
0.9
14.1
0
Subtotal
29.5
UNFCCC
Outside UNFCCC
GEF5
LDCF&S
CCF
AF
CIFs
Bilateral
Multilate
ral
0
0
0
170.2
196.8
0
Subtotal
367
Sources: IGES et al. 2013; CFU, 2014
• Thailand has a strong focus on mitigation.
• Thailand is the largest recipient country of CIFs’ funding in Asia.
• Thailand saw a 12-fold increase in climate finance during the FSF
period.
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Implications
• Different nature of UNFCCC funding and bilateral funding
– UNFCCC funding: GHG emissions level and reduction potential
– Bilateral funding: existing programs and relationships
Role of business for enabling sustainable lifestyles
•
Disbursement rate was low in Asia
– Who have supported for preparation have not further committed to
financing implementation
– The dichotomy of readiness support and implementation support calls for
further coherence and coordination at the UNFCCC level
•
Urgent need for a working definition of climate finance
– Defining mobilized private finance in the context of long term finance
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Role of business for enabling sustainable lifestyles
The Green Climate Fund (GCF)
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Multilateral and bilateral climate funds
GCF
AF: Adaptation Fund (69)
CBFF: Congo Basin Forest Fund (21)
CIFs: Climate Investment Funds
CTF: Clean Technology Fund (413)
FCPF: Forest Carbon Partnership Facility (7)
FIP: Forest Investment Program (18)
GCCA: Global Climate Change Alliance (48)
GCF: Green Climate Fund
GEEREF: Global Energy Efficiency and Renewable Energy Fund (13)
GEF: Global Environment Facility (238)
LDCF: Least Developed Countries Fund (167)
PMR: Partnership for Market Readiness
PPCR: Pilot Program on Climate Resilience (192)
SCCF: Special Climate Change Fund (41)
SCF: Strategic Climate Fund
SREP: Scaling Up Renewable Energy Program (28)
UN REDD: United Nations Collective Program on Reducing Emissions from Deforestration and Forest
Degradation (12)
$$$$$
GEF Trust Fund
GEF4(2006-2010) $$$
GEF5(2011-2014) $$$$
UNFCCC
GEF
$
SCCF
$
AF
Kyoto Protocol
Multilateral
LDCF
UN-agencies
$
UN REDD
$
CTF(2009-2012) $$$$
CIFs
World Bank
Carbon
Finance Unit
The EU
PPCR $$
SCF
(2009-2012)
$$$$
FIP
$$
Role of business for enabling sustainable lifestyles
SREP $
FCPF
$
Fund type
PMR
$
General
$500M-$1B $$
GCCA
$
Mitigation
GEEREF
$
Adaptation
$2B-$10B $$$$
$10B- $100B $$$$$
REDD+
Funding approval in 2012 (USD million)
European Investment Bank
African Development Bank
BFI
Australia
AusAID
Brazil
BNDES
CBFF
$
Fund
BFI
IFCI
IFCI
MAI
FA
Bilateral
Germany
Guyana
Japan
Norway
UK
US
Yuqing Ariel Yu
BMU
Multiple donors
ICI
GRIF
JICA
FSF
NORAD
ICFI
DFID DECC
USAID
Fund size
<$500M $
ICF
GCCI
IGES | http://www.iges.or.jp
Fund
$1B-$2B $$$
AusAID: Australian Agency for International Development
BNDES: Brazilian Development Bank
BMU: Federal Ministry for Environment, Natural Conservation and Nuclear Safety
JICA: Japan International Cooperation Agency
NORAD: Norwegian Agency for Development Cooperation
DFID: Department for International Development
DECC: Department of Energy and Climate Change
USAID: US Agency for International Development
IFCI: International Forest Carbon Initiative
MAI: Mata Atlantica Initiative
FA: Amazon Fund (Fundo Amazonia) (89)
ICI: International Climate Initiative
GRIF: Guyana REDD+ Investment Fund (12)
FSF: Fast-Start Finance
ICFI: International Climate and Forest Initiative
ICF: International Climate Fund
GCCI: Global Climate Change Initiative
Fund type
General
REDD+
Climate and Energy Area
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IGES-Future climate regime
The Green Climate Fund
• The GCF is expected to deliver the lion’s share of the USD 100 billion
annual goal.
• There is no commensurate increase of knowledge and experience
Role of business for enabling sustainable lifestyles
with regard to delivering the scaled-up finance in a way that can
reflect the needs and challenges of developing countries.
• What are the implications of the scalability of the GCF?
– The GCF has to employ a devolved managerial structure for fund
disbursement in order to live up to its envisaged scale.
– The GCF needs enhanced access mode partly because it has to meet the
mandate of operating in a cost-effective way whilst initiating operation
soonest possible.
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
20
IGES-Future climate regime
Proper fund management requires people and the location of staff
members matters
Fund
AF
Net disbursements in 2011 (USD
million)
40
Administrative expenses (USD
million)
5.4
Approximate numbers of
personnel employed
6
GEF*
739
47
94
CIFs
1082
24
8
Source: GCF, 2013a
Role of business for enabling sustainable lifestyles
*GCF (2013a) does not specify whether the numbers in the table counts the size of GEF climate focal area only or the size of GEF as a whole
that includes other focal areas as well. However, the context of the paper implies that the numbers include GEF climate focal area only,
because the paper has no mention of GEF other focal areas.
• The difference of staffing density is not necessarily an indication of
inefficiency or a suggestion of comparison.
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IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
The GCF needs to operate in a devolved way and outsource certain
management functions to accredited intermediaries
GEF
Fund Functions
Strategic
management
Management
Country
coordination
CIFs
GEF Council
The Trustee
Committees
The Trustee
The Secretariat
Financial
intermediation
Multilateral access
Multilateral access
[GEF4/5]
Implementation
Direct access
[GEF direct access pilot]
MIEs/RIEs
Execution
EEs
Financial flow
Financial flow
Proposal submission and contract
Proposal elaboration,
oversight and submission
Proposal elaboration and oversight
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MDBs
NIEs
EEs
Legends:
Yuqing Ariel Yu
Role of business for enabling sustainable lifestyles
Climate and Energy Area
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IGES-Future climate regime
The enhanced direct access modality
• The experience of the Adaptation Fund shows that the administrative
fee for national entities is significantly less than the fees quoted by
multilateral entities.
• The administration of funding should be delegated as much to
national financial entities in developing countries to ensure the GCF to
operate in a cost-effective and streamlined way.
Role of business for enabling sustainable lifestyles
• To operate as soon as possible, the GCF could start with an
enhanced access mode by devolving funding decisions, at least at the
outset, to the existing climate funds under the UNFCCC (i.e., the GEF
and the AF).
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Asia has only two NIEs accredited by the Adaptation Fund
• All multilateral climate finance to Asia was channelled through
multilateral organizations and Asian countries have had zero
experience of directly accessing multilateral climate finance.
Role of business for enabling sustainable lifestyles
• Asia has only two NIEs accredited—the National Bank for Agriculture
and Rural Development in India and the Ministry of Planning and
International Cooperation in Jordan.
– Latin America and Africa have 7 and 6 NIEs accredited by the AF
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Barriers faced by Asian countries in accrediting NIEs
•
Direct access is not an obligation or perquisite to obtain funding from
multilateral climate funds, it offers desirable opportunities to improve financial
integrity and management and consequently better attract resources from
other donor agencies.
Role of business for enabling sustainable lifestyles
•
First, the countries that have a strong need for adaptation in general have had
very limited experience of handling international funding and are lack of
proved record of financial integrity.
•
Second, the long-standing relationship with multilateral implementing entities
(MIEs) may result in a path dependency that precludes the role of NIEs.
•
Finally, developing countries have difficulties in identifying the best suited
institution as the NIE.
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
25
IGES-Future climate regime
National climate funds are NFEs that might be allowed for enhanced
direct access by the GCF and can offer many opportunities for
Asian countries.
Country
Fund name
Bangladesh
Bangladesh Climate Change 2010
Resilience Fund
A coordinated financing mechanism by the Government of Bangladesh, development
partners and the World Bank to address the impacts of climate change
Bhutan
Bhutan Trust Fund for
Environmental Conservation
1991
Supporting environmental conservation in Bhutan by providing grants for
government agencies, local non-governmental organizations, grassroots
communities and qualified Bhutanese individuals for conservation projects.
Cambodia
Cambodia Climate Change
Alliance Trust Fund
2010
Securing external funding for priority interventions to develop technical and
Role of business for enabling sustainable lifestyles
institutional capacity at national and sub-national levels to address current and future
climate related challenges
China
Clean Development
Mechanism Fund
2007
Managing government revenue from CDM projects to provide immediate supports
for line ministries to conduct policy studies, international negotiation, capacity
building and public awareness
India
The Umbrella Programme on 2008
National Resources
Management
A programme based approach wherein different channel partners (agencies) are
being supported for implementing various types of sustainable projects.
Indonesia
Indonesia Climate Change
Trust Fund
2009
Developing innovative ways to link international finance sources with national
investment strategies
Lao PDR
Environmental Protection
Fund
2005
Strengthening environmental protection, sustainable natural resources management,
biodiversity conservation and community development.
Philippines
People’s Survival Fund
2012
Providing long-term finance streams to enable the government to effectively address
the problem of Climate Change
Thailand
Energy Conservation
Promotion Fund
1992
Managing government levies collected on petroleum products to finance the
promotion of renewable energy and energy efficiency
Yuqing Ariel Yu
Establishment year
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Objectives
Climate and Energy Area
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IGES-Future climate regime
Policy recommendations
•
The GCF has to employ a devolved managerial structure to live up to its
envisaged scale. The GCF should allow accredited institutions to make funding
decisions and outsource certain management functions to developing countries for the
sake of cost effectiveness and country ownership. The GCF should allow for enhanced
direct access to meet the mandates of scalability, urgent operation, and cost
effectiveness stipulated in its Governing Instrument.
Role of business for enabling sustainable lifestyles
•
The GCF should avoid making decisions at the project level and devolve certain
funding decisions to the existing institutional arrangements under the UNFCCC
for the purpose of urgent operation. For the interim period that the GCF acquires its
in-house capacity and rationalizes its financial mechanism, it should avoid getting
involved in project- and program-level decision making. Rather, it can accredit the GEF
and the AF as the funding entities for mitigation and adaptation activities, respectively;
and channel funding according to investment plans of the GEF and the AF.
•
The GCF should include capacity building of NFEs as one of the priorities in its
readiness program. The GCF should support building capacity of NFEs at the outset,
in particular by providing sustained funding in its readiness program.
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
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IGES-Future climate regime
Role of business for enabling sustainable lifestyles
Thank you for your attention
[email protected]
Yuqing Ariel Yu
IGES | http://www.iges.or.jp
Climate and Energy Area
28