Transcript Climate finance

Global Climate Change Alliance:
Informing the International Climate Debate
Making climate finance effective: strengthening
national public financial management and budgetary
systems
Neil Bird
Research Fellow
Climate and Environment Programme
Overseas Development Institute
Climate finance in the context of the UNFCCC
Climate finance:
Accepted as being •
important, yet
there is no
internationally
recognised
definition of
‘climate finance’ or
climate change
expenditures
Climate finance is
a combination of
national and
international
financial resources,
drawn from public
and private
sources, mobilised
for addressing
climate change.
Climate finance in the context of the UNFCCC
The GCCA is fully
committed to aid
effectiveness
principles
Climate finance and
its relationship to aid:
The Copenhagen
Accord (2009) called
for “scaled-up, new
and additional,
predictable and
adequate funding” for
developing countries.
Principles of aid
effectiveness
 Ownership
 Alignment
 Harmonisation
 Managing for results
 Accountability
 Predictability
 Transparency
 Conditionality
Principles of climate
finance
 Ownership
 Polluter pays
 Additionality
 Adequacy
 Accountability
 Predictability
 Transparency
 Timeliness
Global climate finance architecture
Global climate finance architecture
• lack of coherence, complexity, fragmentation and
lack of coordination
Current
challenges
• the functioning of the GEF, in relation to its
associated with
perceived lack of compliance with COP guidance,
existing
the absence of independent assessment of its
financial
performance, and the dominance of developed
arrangements
countries in its governance structures
Where can the
GCCA add
value?
• the lack of transparent and clear rules for the
reporting of climate finance flows from bilateral and
multilateral donors; and
• inequality of opportunity in access to CDM funding
GCCA knowledge sharing
Areas of GCCA experience
1. PFM systems: Strengthening of public financial management
systems for improved management of climate finance
2. Tracking: Tracking of climate finance flows and climate-related
public expenditures
3. Budget support: Delivery of climate change support through
partner countries’ budgets
4. Climate funds: Support for the setting up of national/regional
climate funds
5. Private finance: Strengthening of the enabling environment for
catalysing private finance/investment
GCCA knowledge sharing – PFM systems
The national budget is seen as the key mechanism for prioritising public
interventions across the whole of government, subject to technical,
cultural and political influences
The budget cycle: planning, execution, reporting, and oversight
applied at both central and local government levels
GCCA experience:
• Budget classification reform (Cambodia)
Major area of national & development partner activity:
• Lessons to be learned from development finance
E.g. Public Expenditure and Financial Accountability
Assessments (PEFA)
GCCA knowledge sharing – Tracking
• Budget
classifications lack
codes to identify
climate finance
• International climate
finance may be
disbursed in the
form of extrabudgetary projects.
• New diagnostic tool
to identify relevant
expenditures: the
CPEIR
GCCA knowledge sharing – Tracking
Analyses of
spending on
climate-related
activities will
only be possible
if a system to
identify climate
spending is put
in place
GCCA knowledge sharing – Budget Support
GCCA is providing
climate-related
general budget
support in four
countries to assist
the mainstreaming
of climate change
Country
Lesotho
Objectives
National policy and strategy development
Mauritius
National strategy mainstreaming
Seychelles
National strategy implementation
GCCA is also providing
climate-related sector
budget support in four
countries to assist
adaptation planning
Country
Bhutan
Objectives
Adaptation in the RNR sector
Guyana
Coastal zone management
Rwanda
Adaptation in the land sector
Samoa
Adaptation in the water sector
Solomon Islands National strategy implementation
GCCA knowledge sharing – Budget Support
GCCA experience
• GCCA budget support programmes build on pre-existing EU and partner
country experience of implementing general and/or sector budget
support. This aids the decision to use budget support for climate-related
actions, because it implies that fiduciary and macroeconomic assessments
have already been conducted, and activities are under way to strengthen
PFM systems.
• ‘Managing for results’ is important for budget support programmes, using
indicators from national monitoring systems. However, selecting suitable
disbursement criteria has proved to be an arduous task.
• Technical assistance can be a useful complement to budget support
operations and therefore justifies closer attention.
GCCA knowledge sharing – Climate Funds
GCCA experience
• GCCA has supported the establishment of
the Bangladesh Climate Change
Resilience Fund.
• National climate funds tend to take a lot
of time to operationalise, due to the
complexity of setting up procedures that
guarantee transparency, accountability
and a fair distribution of resources.
• They also often channel only a small
share of the amounts needed to address
climate change.
GCCA knowledge sharing – Private Finance
Known challenges
• The leveraging of climate-related private investment
requires a conducive ‘enabling environment’ in recipient
countries.
• Typical barriers to private investment that also affect
investment in low-carbon, climate-resilient projects
include: unclear and unstable public policies, regulatory
barriers, poor infrastructure, ineffective public services,
corrupt practices, poor education and training of the
workforce, political instability, and economic risks.
GCCA knowledge sharing – Private Finance
GCCA experience
GCCA support for improvements in the investment climate has so
far focused mainly on support for the development of clear
national climate-related policies, strategies, legal and regulatory
frameworks .
• Mauritius: A clear legal framework for private investment in
energy efficiency measures
• Rwanda: Security of tenure to incentivise landholders to
manage their land sustainably
• Seychelles: enabling national participation in the CDM
GCCA knowledge sharing
• Greater clarity is urgently needed over the
definition of climate change expenditure
Some issues to
be considered
to improve
national climate
finance delivery
• The expected rapid growth in climate finance
and attendant governance and management
issues need to be considered in the design and
execution of climate change programs
• International support is now forthcoming, but
this raises the issues of sustainability and how
such support should be channelled
• Capacity of local government to handle large
amounts of climate expenditure needs to be
assessed for implementation programmes
GCCA knowledge sharing
Two questions
to initiate
discussions
• What is your experience of the results todate with national climate finance delivery?
• what recommendation(s) would you make
to climate change negotiators and the
international development community to
make climate finance delivery more
effective?