Transcript Climate resilience

Combining public financing and marketbased instruments to improve climate
resilience
Best practices in Latin American cities
Marcela Tarazona, Senior Consultant, Oxford Policy Management
15 May 2012
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Outline
 Introduction
 An integrated approach to urban climate resilient
interventions
 Typology of funding sources available to cities
– National sources
– Local sources
– Private sector
– International finance
 Recommendations
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Introduction
 Strategic importance of cities:
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Occupy 1.5 per cent of the world’s area
Produce half of the worlds’ GDP
75% of LAC’s population lives in cities
 Cities and climate change:
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More than 80% of the world’s GHG emissions
80% of global adaptation costs will be urban
 Cities are not receiving sufficient access to climate finance
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Outline
 Introduction
 An integrated approach to urban climate resilient
interventions
 Typology of funding sources available to cities
– National sources
– Local sources
– Private sector
– International finance
 Recommendations
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Integrated approach to urban climate resilient
interventions
 Cities need an integrated approach to climate change intervention that
combines a set of financial instruments and resources
 Climate finance can provide important additional resources for climate
change activities
– Improve access to national sector programmes
– Expand local fiscal resources based on prioritized sector investments
within urban development plans
– Increase private investment and PPPs
– Add international finance (promising new mechanisms)
– Use Municipal Climate Change Action Plans as a strategic and
operational instrument to integrate investments and diverse sources
of finance
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Outline
 Introduction
 An integrated approach to urban climate resilient
interventions
 Typology of funding sources available to cities
– National sources
– Local sources
– Private sector
– International finance
 Recommendations
6
Typology of funding sources available to cities
 Sources of climate funding for cities can be divided in four
broad categories:
– National sources
– Local sources
– Private sector
– International finance
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Sources of national finance
 Improve access to national sector programmes
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Access to national programmes in various sectors to fund
local projects (solid waste, transportation, environment,
health, and disaster risk management )
Access to lines of credit through national development
banks
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Expand local fiscal resources
 Examples of local economic instruments and policies in key sectors
Energy, efficiency
Energy, renewable
Solid waste
Sustainable transport
Urban greening
Water
Waste water
Land use
Agriculture
Climate resilience
Disaster risk management
Land use and forestry
Mitigation
Trading of emission reduction by energy savings
(ETS); reduction of fuel subsidies
Subsidies to clean energies
Collection charges for solid waste pickup
Road pricing, tax incentives, parking pricing
Subsidies to green buildings
User fees for wastewater treatment, metering and
pricing to encourage water conservation
User fees for municipal water
Zoning for high density, property taxes for energy
efficient high density development
Adaptation
Tax incentives, environmental labelling laws
Local economic development strategies
Property taxes in most vulnerable areas; relocation
through buy out programme
Property taxes in green areas
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Increase private investment and PPPs
 Insurance:
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Cover the risks of high-severity, low-frequency events for
individuals, public institutions, and private entities (MultiCat for
Mexico)
 PPPs:
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Used for public services: public transport, water supply,
infrastructure management (highways)
 Guarantees:
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Used to improve investor confidence in cases of risk
(Barranquilla, Colombia, $63M, Sociedad Acueducto / IFC
credit guarantee of 25%)
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International finance: main climate funds that benefit
urban climate resilient investments
Fund
Size
11 funds and facilities entrusted with $2.5
billion
CDM
Clean Technology Fund (CTF): $4.5 billion
programmed for 13 investment plans
Climate
Investment
Funds
Goals
Evolving mechanism tool that should reactivate regulated
carbon markets benefiting urban climate investments.
Cities can access CDM funds through the sale of
certified emission reductions (CERs) to carbon funds.
Scaled-up demonstration, deployment, and transfer of
low-carbon technologies. Major urban mitigation
(transport and energy) investments in Mexico and
upcoming in Chile.
The Strategic Climate Fund: Pilot Program for
Climate Resilience (PPCR) ($1 billion)
Forest Investment Program ($587 million for
eight pilot countries)
Program to Scale up Renewable Energy for
Low Income Countries (SREP, $318 million for
six pilot countries).
Urban upstream planning support and city-based
investments possible to integrate into national plans now
being formulated in agreed pilot countries.
Preparation and financing of implementation of National
Least Developed Countries Fund (LDCF): $223 Adaptation Programs of Action to address the most
UNFCCC GEF- million
urgent adaptation needs in the least developed
administered
countries.
Special Funds
Special Climate Change Fund (SCCF): $148 Adaptation and mitigation projects in all developing
million
countries, with a large emphasis on adaptation.
Support activities that reduce the adverse effects of
$300–600 million by 2012
climate change (pending their applicability to urban11
Adaptation
settings).
Fund
International finance (cont.)
 However, there are barriers for cities to access climate
funds (see next presentation)
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Most international climate funding will be channelled through
national governments
Limited awareness of the funds existence and its components
Long implementation period
Difficulty to comply to monitoring reporting and verification
(MRV)
Need of co-financing
Difficulties in project development
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International finance (cont.)
 Multilateral and Bilateral Development Banks
 IADB
Technical cooperation and lending in key urban sectors (transport,
WSS, energy, housing)
– New Emerging and Sustainable Cities Initiative (ESCI):
 Environment / climate change
 Urban development
 Fiscal sustainability
 World Bank
– Technical assistance (GHG index, Energy efficient cities grants, Eco2
cities pilot audit, probabilistic DR assessments); loans (DR financing,
urban environmental policy, CAT-DDO, solid waste management)
 CAF
– Through the Latin American Carbon, Clean and Alternative Energies
Program (PLAC+e), CAF contributes to the mitigation of the problems
arising from climate change and promotes the use of clean and
alternative energies in Latin America.
–
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Outline
 Introduction
 An integrated approach to urban climate resilient
interventions
 Typology of funding sources available to cities
– National sources
– Local sources
– Private sector
– International finance
 Recommendations
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Recommendations
 Integrated approach to urban
climate resilient interventions
 Climate Change Action Plans
Outline general climate
resilient development goals
– Complemented with other
sector planning documents
– Combine sources
 Use Municipal Plans as a
strategic and operational
instrument to integrate
investments and diverse
sources of finance
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Recommendations
 Finance tends to move toward cities that are better managed and
that provide more comprehensive and consistent information to
the public
 Create an enabling financial environment  access to climate
finance
– Assessment, measurement, reporting, and verification
– Regulation, plans, and policies
– Fiscal incentives
– Inducement prizes and public recognition of corporate
responsibility
 Cities should be recognized as important potential partners and
implementers of climate resilient projects in NAPAs and NAMAS
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