Transcript Financing Climate Change Adaptation and Mitigation in Africa

Financing Climate Change
Adaptation and Mitigation in
Africa
Al-Hamndou Dorsouma
Senior Climate Change Expert
African Development Bank
Media Training – ADF-7
UNCC, Addis Ababa, Ethiopia
8-10 October, 2010
Presentation Outline
 Background
 Status
of existing funds
 Climate
 Future
Change Financing for Africa
of Climate Change Finance
 Conclusion
Background
Climate Change and Africa
Enormous Additional Burden to Development
Managing the unavoidable through adaptation,
and avoiding the unmanageable through
mitigation are the most important challenges.
Climate Change must be rooted in
Development
Development
‘Climate
Low Carbon
Resilient
Dev
Dev
‘Climate
Compatible
Development’
Mitigation
Adaptation
‘Climate
Proofed
Abatements’
Source: Catalyst,
2009
Climate Change Opportunities

Opportunities exist for climate-resilient and a
low carbon growth in Africa

Mainstreaming climate change into
development through sensitive sectors

Promoting a transition to a low carbonintensive economy, through green growth
and use green technologies

Opportunities exist in Africa’s forestry and
energy sectors – tapping into abundant
renewable energy sources
Africa’s priority is Adaptation

For Africa to adapt, it needs:

Enhanced human and institutional capacity

Effective climate information systems

Resilient infrastructure

Adequate financial resources
Status of existing Climate
Change Funds
Status of existing funds
Multilateral funds: largely designed with global
imperatives that do not align with Africa’s needs:


Global Environment Facility (GEF)

Adaptation Fund

Climate Investment Funds

Bilateral Funds

Africa Specific Funds: most of them are new
Global Environment Facility (GEF)

The GEF received a total of $10.885
billion during 4 replenishments.

The amount approved under GEF-5
for 2010-2014 is US$1.3 billion

GEF is composed of:

Least Developed Country Fund ($180 million)
supports the development of NAPAs

Special Climate Change Fund ($120 million )
addresses special needs of developing countries

Strategic Priority: supports projects combining
adaptation and mitigation
Adaptation Fund
Adaptation Fund (AF) uses 2% of CDM projects
to support adaptation
 Direct access for adaptation projetcs in
developing countries

Climate Investment Funds (CIFs)
MDBs’ financing mechanism pending to an
agreement on post-2012 regime.
 Of the $6.1 billion pledged, only about $600
million (<10%) is allocated to adaptation.
 CIFs comprises 2 main funds:




Clean Technology Fund (CTF)
Strategic Climate Fund (SCF)
The SCF has 4 target programmes:



Pilot Programme for Climate Resilience (PPCR)
Scaling Up Renewable Energy Programme (SREP)
Forest Investment Programme (FIP)
The Congo Basin Forest Fund (CBFF)
The CBFF(GBP 100 million) awards grants for
activities that slow and eventually reverse the
rate of deforestation in the Congo Basin Forest
 Hosted by AfDB and supported by the United
Kingdom and Norway
 Over 100 operations financed for
approximately US$ 2.8 billion

Clim-Dev Africa Special Fund
A joint initiative between AfDB, AUC and UNECA
under the ClimDev-Africa programme.
 CDSF is a multi-donor Fund of $135 million
between 2010 and 2012, to finance ClimDevAfrica activities
 The Fund is approved by AfDB in May 2010
 The launching ceremony of the ClimDev-Africa
programme, including the Fund will take place
during the Forum (on October 13rd, 2010)

Sustainable Energy Fund for
Africa (SEFA)
The Danish Government has pledged about
US$56 million over the next 5 years to be
managed by AfDB.
 It is expected that this Fund will support
renewable energy initiatives in the continent
 The Fund is under development

Africa Carbon Facility
The Africa Carbon Facility is in the
process of establishment in response
to the demand from African countries
to engage more in the global carbon
markets.
 The Facility will focus on providing
technical and project management
assistance on the Clean Development
Mechanism (CDM) and Reduced
Emissions from Deforestation and
Degradation (REDD) activities.

Africa Green Fund (AGF)
The AGF is to enable African Countries gain
access to global funds in order to support
climate compatible development in Africa
 The Fund will be operational on date when
US$250 million is pledged, not be later than 31
December 2011
 Potential activities to be funded include
adaptation, enhanced action on mitigation,
technology development and tranfer, capacity
enhancement
 Consultations on the Fund which started in
september continue during the Forum (AfDB
Side Event on the 12 October)

MDBs’ Climate Change Financing
How Do MDBs Generate Climate Finance?
Shareholder Capitalization
Replenishment
Concessional Trust Funds
Capital Market
Climate Change merits careful consideration in
negotiations on these options
MDB Climate Change Finance
How Much is Mobilized (US$ billion)?
2007
2008
2009
2010
10
13.8
15.7
16.2
24.9
35.8
39.5
42.4
2.4
4.4
5.3
5.8
7.5
12.2
14.9
17.4
4.7
7.6
9.4
10.6
15.4
n.a.
28.6
n.a.
36.2
9
41.3
15
Energy
Lending/ Investments
Total cost of projects/
programmes
supported
Energy Access
Lending/ Investments
Total cost of projects/
programmes
supported
Low Carbon
Lending/ Investments
Total cost of projects/
programmes
supported
CTF
Source: MDB Joint Report to the Hokkaido G8 (Richard Stern, 2010)
Regional Distribution of MDB
Climate Change Financing
Shares
2006 2009
2006
2007
2008
2009
2006 2009
Africa
0.8
1.4
1.5
1.3
5.0
12%
Asia/Pacific
1.2
1.5
4.1
3.7
10.6
26%
EMENA
2.6
3.5
3.5
5.3
14.8
37%
LACC
0.9
0.7
1.5
6.8
9.8
24%
Total
5.5
7.0
10.5
17.1
40.1
100%
Region
Africa is least served
Access to Carbon Market
Africa not benefitted from the Carbon Market
Access to carbon market
CDM presently mobilizes only $50-80 million for
Africa over several years.
 1-2% of GDP will be needed each year for
mitigation. That means for Africa, $13-26 billion
per year
 To work effectively in Africa, CDM and other
international markets need to be improved
 For Africa, the scope of carbon market must be
expanded to include land-use changes such as
reforestation and forest preservation through
the REDD mechanism.

Climate Change Finance for
Africa
Current funding is inadequate to help countries
respond to climate change
What Africa Needs to Adapt
Costs of Adaptation to Current and Future Climate in Africa $Billion per year
Enhancing
resilience for future
investment
$50 Billion.
$40 Billion.
Adaptation to
Future Climate
Change
Immediate priorities
and capacity building
$30 Billion.
Accelerated
Development
$20 Billion.
Adaptation to
Current Climate
(development)
but essential for
future resilience
$10 Billion.
Social
Protection
2012
2030
Financing needs for Africa
How Much is Needed?

Africa requires about US$22-31 billion per year
by 2015, and $52-68 billion per year by 2030

Climate-proofing will add 40% to the costs of
meeting the MDGs in Africa

This would require international financial
assistance of some US$ 100 billion a year over
the next decade
Future of Climate Change
Finance
The Copenhagen Accord

Conference of Parties to the United Nations
Framework Convention on Climate Change

COP 15 in Copenhagen, Denmark

New and additional fast-track resources - $30
billion by 2012

Mobilizing additional $100 billion annually by
2020 to address needs of developing countries

Africa’s leadership requested at least 40%
allocated to Africa.
Making climate finance work

Climate finance should be mobilised in the most
efficient manner possible in ensuring long term
predictability

More financing will be required from both
Public and Private sources.

While money from private sector will finance
mitigation and key infrastructure investments,
most of the required expenditure will come
from public sector.

Carbon market to be reformed to address
Africa’s concerns, and finance mitigation in
Africa
Sources of financing

The potential sources of financing include:





National budgets
Innovative finance mechanisms
Reserve assets
Private capital
Examples: levies on aviation and international
maritime transport, in combination with the
developed countries’ emission rights, are the
most attractive options
Sources of financing
The need for additional climate finance doesn’t
obviate the responsibility to ensure that
resources are spent effectively on high-impact
interventions with a transparency and fully
accountability manner
 External resources both public and private
must be mobilized through efficient and
predictable means.

The absoptive capacity of recipient countries
needs to be assessed
Conclusion
Africa has Low Access Rate to Global
Resources
Africa has urgent and enormous needs in
terms of climate change financing for tackling
the impacts of climate change.
Africa Requires Substantial Resources both
from Public and Private Sectors
Thank You
For more information
[email protected]
www.afdb.org