Transcript Financing Climate Resilient Development A World Bank

Financing Climate Resilient Development
A World Bank Perspective
Marjory-Anne Bromhead
The World Bank
Some Guiding Principles from African Leaders
 Implement climate change programs to
achieve sustainable development
 Food security and poverty alleviation are
overriding
 Richer countries have financial obligations to
help others achieve resilient growth
World Bank Strategy for Climate Resilient Development
in Sub-Saharan Africa
 Adaptation and disaster risk reduction are an integrated agenda
 Climate variability creates annual losses of 1-2% of GDP, increasing
floods and droughts, adaptation could cost 5-10% of GDP
 There are mitigation and adaptation synergies
 Better land, water & forest management are key to adaptation but
deforestation and land degradation are 65% of Africa‘s CO2 emissions
 Mitigation presents opportunities but increasing energy access is key:
 Only 8% of hydro potential realized , ample solar, cleaner coal is part of
the solution, wood fuels and biomass are key
 Knowledge, capacity building & new technologies are key
 Improved climate knowledge, analysis &
strategy risk insurance, new technologies
for energy, agriculture ..
 Scaled up finance is necessary
 Urgent action is necessary
Development Reduces Vulnerability
 Diversified economies,
strong institutions, sound
land and water
management and urban
planning, as well as
educated, healthy people
reduce country vulnerability
Relative change in length of growing period
(LGP) by 2050 compared to present Source:
Thornton et al. (2006)
World Bank & Climate Finance: Guiding Principles
 Primacy of UNFCCC process in design of climate
finance models
 Supports governance reform to increase developing
countries voice
 Our role: help developing countries access and lend
development/private sector finance and new climate
finance for sustainable development with adaptation
and mitigation benefits
 Our collaboration is through country-led programs
Sources of Finance
 IDA 15 was scaled up in part to
help address climate change
 Disbursements in agriculture,
water supply, flood
management & health were
17% higher 2008 than 20052007
 New instruments complement
development & private sector
finance
Climate-Resilient Development with IDA/IBRD
 Agricultural development policy loan in Ghana (2008) supports
integration of climate risk/adaptation into development agenda
 Himachal Pradesh DPL in N. India supports renewable energy &
adaptation strategies for glacier melt
 Credit to improve transmission of energy from Inga in DRC is
ongoing (more than US$ 200 m)
 Support to sustainable land management, irrigation, safety
net/improved watershed management in Ethiopia (over US$
300 m)
 Arid lands, flood management & natural resource management
programs in Kenya
 Drought risk insurance in Malawi
Financing: New Instruments
WB/MDB Supported Instruments
 Climate investment funds (CIFs)
 Carbon Funds
 Gas-flaring Reduction Initiative
 Global Fund for Disaster Risk Reduction (GFDRR)
Others
Adaptation Fund (2% tax on CDM & voluntary
contributions)
Bi-laterals donors
UN agencies (e.g., UNDP $90M Africa adaptation Program)
African-Union/AfDB/EU (ClimDev Africa)
Norwegian Funding for Avoided Deforestation
Climate Funds
Overall aim: to pilot new financing instruments
and help prepare countries to take advantage of
post 2012 financial architecture, country-driven,
cooperation between MDBs and development
partners, learning is key
Climate Funds
Carbon
Funds (CF)
Climate
Investment
Funds (CIF)
$5-6 billion*
Existing
Funds
(9)
Prototype
Carbon
support,
Spanish
Fund, etc.
~$2 billion
Carbon
Partnership
Facility
(CPF)
Expected $3$5 billion
Forest
Carbon
Partnership
Facility
(FCPF)
$100 million
(readiness)
Ghana, Gabon,
Kenya, DRC,
Liberia and
Madagascar
+ $200 million
Clean
Technology
Fund (CTF)
$5 billion*
($500-700 million
for Africa)
Scaled-up
Mitigation
Mitigation under UNFCCC
framework
* As per November 2008 trustee report
Big 5
China, India,
Brazil,
Mexico, South
Africa
(+ 5-10
additional)
Strategic Climate
Fund (SCF)
$2 billion*
Pilot Program
for Climate
Resilience
(PPCR)
$500 million
Forest
Investment
Fund (FIF)
Target: $500
million
Climate
resilience
Short term
financing
Niger, Zambia,
Mozambique ($3070 million each)
Sustainable
forest
management
(complement
of FCPF)
Under
Design
Scaling-up
Renewable
Energy
Program for
Low-Income
Countries
(SREP) Target:
$250Million
Mitigation
Pilot Program
under
preparation
Mobilizing, Delivering and Leveraging Climate Finance
Possible sources
Median: $400 billion
Mitigation (2030)
$140-657
billion
Adaptation (2030)
$30-90
billion
Catalytic
climate
finance
Median: $75 billion
Current (2009)
funding
~ $10 billion
A huge gap: estimated
needs vs. current resources
Mitigation
US$ 4,620
bln p.a.
(2008)
Adaptation
~ US$9+bln p.a.
CIF
1
CIF
1
CleanClean
Clean
Development
Development
Development
Mechanism
MechanismGEF GEF
Mechanism
0.25 0.25
8
8
8
OtherOther
1+
1+
~ US$1+bln p.a.
LDCF&
LDCF&
PPCR
PPCR
SCCF
SCCF
0.06 0.10.1
0.06
CIF
Adaptation
1 Adaptation
Fund
Fund
Other
0.06
0.06 Other
0.1+
to 0.12
to 0.12 0.1+
GEF
0.25
Catastrophic,
Weather
& Climate
Change
Catastrophic,
Weather
& Climate
Change
Risk
Management
Tools
Risk
Management
Tools
Other
1+
????
World Bank Carbon Funds & Facilities
Total funds pledged = US$ 2.1 billion (16 governments, 67 firms)
 Prototype Carbon Fund. $180 million (closed). Multi-shareholder. Multi-purpose.
 Netherlands Clean Development Mechanism Facility. (closed). Netherlands Ministry of
Environment. CDM energy, infrastructure and industry projects.
 Community Development Carbon Fund. $128.6 million (closed). Multi-shareholder. Small-
scale CDM energy projects.
 BioCarbon Fund. $91.9 million (Tranche 1 and 2 closed). Multi-shareholder. Mainly CDM
LULUCF projects; some REDD and soil carbon.
 Italian Carbon Fund. $155.6 million (closed). Multi-shareholder (from Italy only). Multipurpose.
 Netherlands European Carbon Facility. (closed). Netherlands Ministry of Economic affairs. JI
projects.
 Spanish Carbon Fund. $282.4 million (closed). Multi-shareholder (from Spain only).
Multipurpose.
 Danish Carbon Fund. $69.4 million (closed). Multi-shareholder (from Denmark only).
Multipurpose.
 Umbrella Carbon Facility. $737.6 million (Tranche 1 closed – 2 HFC-23 destruction projects
in China).
Carbon Fund for Europe. $65 million. Multi-shareholder. Multi-purpose. Managed with EIB.
Clean Technology Fund
 Aim is to help high emitting countries transform to
lower carbon growth: US$ 5 billion raised so far
 Programs of about US$ 0.5 billion each approved for
Turkey, Egypt, Mexico & under preparation for
Nigeria and South Africa
 Part of broad-based energy transformation programs
 Focus on energy efficiency, renewables, transport
shifts, urban planning
Pilot Program for Climate Resilience
 Aim is to help vulnerable countries mainstream climate
resilience into development planning: US$ 0.5 billion
raised
 9 countries & 2 sub-regions selected by independent panel
 Niger, Zambia and Mozambique; each country to get US$ 40 to
US$ 70 million, with preparation grants of US$ 1-2 million
depending on readiness.
 Likely to focus initially on key priority sectors (e.g.
agriculture, coastal/urban flooding, watershed
management, capacity building)
 Programs still under early preparation (early lessons learnt
session in late October)
Forest Investment Program
 Aim is to catalyze practical
measures and funding for
Reduction of Deforestation
and forest Degradation
(REDD), and promote
sustainable forest
management
 US$ 260 million raised so far
 Country selection process
has not yet started: will
include range of forest
systems & biomes and
willingness to participate in
REDD
 Operational in 2010
Scaling up Renewable Energy
 The aim is to pilot new approaches to
renewable energy in low income countries
 Fund-raising and design still ongoing
Forest Carbon Partnership Facility
 Aim is to build capacity and prepare
countries to access large-scale REDD post
2012: US$ 107 million raised so far
(UNDP and bank have complementary
programs)
 Countries prepare readiness plan idea
notes then
 Readiness plans with grants of US$ 1-3
million (ethiopia, kenya, uganda,
cameroon, gabon, Congo, DRC, CAR,
Ghana, Madagascar, Liberia)
Carbon Partnership Facility
 Aim is to support strategic programs that
move to low carbon investments
 Target US$ 350 million
 No African countries yet!
Disaster Risk Reduction Facility
 Supports disaster preparedness and disaster
recovery
 Grants in CAR, Ethiopia, Ghana, Ethiopia,
Mozambique, Madagascar, Namibia, Burkina,
Seychelles
Blending of Climate Financing Instruments Necessary
(+)
CF
Grant Funds
C
a
s
h
F
l
o
w
w
Grant funds for
initial breakthrough
Year
CTF
(-)
CF: Carbon Finance; CTF: Clean Technology Fund
Blending of Financial Sources and Policy
Instruments Necessary
Lighting switch
Industry: EE in
cement
Power
generation
from landfill
gas
Grassland
management
Policies and Regulations;
Incentives for Barrier Removal
Carbon finance
Private investments
Technical Assistance;
Capacity Development
Support for R&D
Reforestation
Public financing
Development Financing
Wind
Solar
Project/program needs to be financially solid to be able to deliver real, measurable
and long-term benefits related to the mitigation of climate change
Mainstreaming Climate Resilience into CAS
Ongoing process: Ethiopia, Malawi, beginning in
Senegal, Nigeria, Cameroon, Kenya, Namibia …
Climate resilient
development and
long term
sustainable
development are
one and the same!
Thank you!