International Landscape

1. International Landscape

2. Where does international climate finance matter?

3. Content & Objectives

4. Content • Objective of this session • Climate Finance Definitions & Commitments • Funds related to UNFCCC • Multilateral Funds • Bilateral Funds • Key questions

5. What you can expect from this session: • Get a more detailed understanding of the current state of global climate finance architecture • Reflections on the most recent developments in international finance including the UN Framework Convention on Climate Change • Illustration of the multi-level structure of climate financing: multilateral, bilateral and national

6. Climate Finance Definitions & Commitments

7. Definition (I) According to the Standing Committee on Finance (SCF): • Noclimatefinancedefinitionby UNFCCC • Potential convergence based on the review of the climate finance definitions: “Climate finance aims at reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts.” Source: Standing Committee on Finance 2014

8. Definition (II) UNFCCC agreements state that funding must be: • mobilised by developed countries • provided to developing country parties, taking into account the urgent and immediate needs of those that are particularly vulnerable to the adverse effects of climate change • balanced in allocation between adaptation and mitigation • committed in the context of transparency on implementation, and • scaled-up, new and additional, predictable and adequate. Source: UNFCCC

9. Current rationale climate finance Copenhagen Accord / Cancun Agreements: • Developed (Annex I) countries pledged “new and additional, predictable and adequate” financial resources for developing (non-Annex I) countries • Fast-start Finance Commitment: collective commitment by developed countries to provide new and additional resourcesUS$30 billion in Fast Start Finance between 2010-2012 • Long-term Finance Commitment: from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources of financeUS$100 billion a year by 2020 (UNFCCC Decision 1/CP.16) Source: UNFCCC

10. Global climate finance flows (I) • There are multiple sources of climate finance: • UNFCCC 0,6 USD billion • Multilateral Climate Funds 1,5 USD billion • MDB Finance 15-23USD billion • Climate related ODA 19,5-23USD billion • Other official flows 14-15USD billion • Flows to DCs through public institutions35-50USD billion • All financial flows from developed countries 40-175USD billion • Global total climate finance 340-650 USD billion • (beforeinitial capitalisation of GCF) Source: Standing Committee on Finance 2014

11. Global climate finance flows (II) • There are multiple sources of climate finance: • Government budgets • National development finance institutions • Bilateral development finance institutions • UNFCCC mechanisms • Non-UNFCCC mechanisms • Commercial financial institutions • Corporate actors • Project developers • Institutional investors • Households Sources & intermediaries of climate finance • In 2014, climate finance flows totaled $331 billion. • Public actors provided $137 billion, and private investors provided $193 billion • Most of it was channeled to mitigation ($ 302 billion) Source: Climate Policy Initiative 2014

12. CapitalisationoftheGreen Climate Fund – status quo • Volume: 10.2 billion USD in pledges 2014 - largest public fund dedicated to climate finance • The largest pledges have been issued by the USA (USD3b), Japan (USD1.5b), the UK (USD1.1b), as well as France and Germany (both USD1b each).

13. The global climate finance architecture Source: The Global Climate Finance Architecture. ODI, 2014

14. Institutions in the international climate finance landscape Examples discussed in this presentation UNFCCC Green Climate Fund (GCF) Adaptation Fund (AF) GEF Trust Fund Least Developed Courtiers Fund (LDCF) Special Climate Change Fund (SCCF) Multilateral funds Clean Technology Fund (CTF) Strategic Climate Fund (SCF)with (e.g.) Pilot Program for Climate Resilience (PPCR) Bilateral institutions EU Global Climate Change Alliance (GCCA) UK International Climate Fund (ICF) Note: LDCF and SCCF are managed by the GEF

15. Funds related to UNFCCC

16. Green Climate Fund (I) Mission: • “Given the urgency and seriousness of climate change, the purpose of the Fund is to make a significant and ambitious contribution to the global efforts towards attaining the goals set by the international community to combat climate change.” Resources allocation: • 50:50 balance between mitigation and adaptation over time • A floor of 50% of the adaptation allocation for particularly vulnerable countries, incl. LDCs, SIDS and Africa • total pledges of $10.2 billion (end 2014; still valid July 2015) Investment framework: • Investment criteria: impact potential, paradigm shift potential, sustainable development potential, needs of the recipient, country ownership, efficiency and effectiveness Access modalities and country ownership: • Country ownership through National Designated Authority (NDA) and “no-objection” procedure • Access through accredited1 international, regional, national and sub-national entities 1Based on compliance with a set of fiduciary standards, environmental and social safeguards. Full accreditation cycle should be completed within six months and reviewed after five years. There is a fast track procedure for entities, which have already passed accreditation by either Global Environment Facility (GEF), Adaptation Fund (AF) or Directorate-General Development and Cooperation – EuropeAid of the European Commission (EU DEVCO) Source: http://www.gcfund.org/

17. Green Climate Fund (II) Project approval process: • Project approval process involves NDA, accredited entities and GCF Secretariat, Board and Advisory Panel Readiness support: • Countries may request readiness support Private Sector Facility: • Promoting participation of private sector, in particular local actors, including small- and medium-size enterprises and local financial intermediaries • Agreed that accredited entities with relevant experience can deploy equity and guarantee instruments in addition to grants and concessional loans • A pilot programme for micro-, small and medium-sized enterprises ($200 million) and a pilot programmeto mobilise resources at scale ($ 500 million) were established Source: http://www.gcfund.org/

18. Adaptation Fund (I) Mission: “The Adaptation Fund was established to finance concrete adaptation projects and programmes in developing countries that are parties to the Kyoto Protocol and are particularly vulnerable to the adverse effects of climate change” Total funding pledged: $ 273 million Project grants approved: $ 265 million Countries eligible: see above Access modalities: direct, regional and multilateral access • Project size: • Small size (requesting up to $1 million) • Regular size (requesting > $1million) • Project review criteria include consistency with national strategies, cost-effectiveness, co-benefits, vulnerable groups and gender considerations etc. • Project application process: • Throughout the year on a rolling basis. Source: Adaptation Fund Operational Policies and Guidelines https://www.adaptation-fund.org/

19. Adaptation Fund (II) National institutions required: Role Direct Access Regional & Multilateral Access Country coordination: Designated Authority (DA) Designated Authority (DA) National Implementing Entities (NIE) Regional and Multilateral Implementing Entities (MIE & REI) Implementation: Execution: End project promoters / recipients End project promoters / recipients • Access and country ownership: • Country ownership through Designated Authority (DA) • Access through 11 MIE, 4 RIE, and directly though accredited 17 NIE • NIE accreditation can take 1-13 months (after proposal submission): • Financial Integrity and Management • Institutional Capacity • Transparency, Self-Investigative Powers Source: Adaptation Fund Operational Policies and Guidelines https://www.adaptation-fund.org/

20. Adaptation Fund (III) Source: https://www.adaptation-fund.org/funded_projects/interactive

21. Global Environmental Facility (GEF) Trust fund (I) Mission: “…is a partnership for international cooperation where 183 countries work together with international institutions, civil society organizations and the private sector, to address global environmental issues.” Countries eligible: countries who are eligible to borrow from the World Bank or eligible recipients of UNDP technical assistanceActions supported: mitigation1 (as part of the area of work climate change) • Programmatic Approaches ($5 - $150m) • Small Grants Programs (UNDP) (up to $50,000) • Project size: • Full-sized Projects (> $2m) • Medium-sized Projects (< $2m) • Enabling Activities (< $0.5m) • Support provided: • Mostly grant-based: GEF can only offer finance in a form other than grants in accordance with criteria decided by COP 1 Adaptation activities are funded through GEF-managed Least Developed Countries Fund and Special Climate Change Fund Source: http://www.thegef.org/

22. GEF Trust fund (II) • Project eligibility criteria: • Consistent with national priorities and programs and endorsed by the government • Addresses one or more GEF Focal Areas (Climate Change, Biodiversity, …) • Consistent with the GEF operational strategy • Financing for agreed incremental costs for measures to achieve global environmental benefits • Involves the public in project design and implementation • Project approval process: Each of the four types of GEF projects/programs follow their own project cycles in the approval process. Source: https://www.thegef.org/gef/project_cycle

23. Global Environmental Facility (III) • Access modalities: • Direct access (through accredited GEF Project Agency) • Multilateral access (through the GEF Agencies) • Project application process: • Throughout the year on a rolling basis • National institutions required: Direct Access Multilateral Access Role Country coordination: GEF Operational focal point GEF Operational focal point Implementation: GEF Project Agencies GEF Agencies Execution: End project promoters / recipients End project promoters / recipients Source: http://www.thegef.org/

24. Global Environmental Facility (IV) 14 GEF Agencies Source: http://www.thegef.org/gef/gef_agencies

25. Least Developed Countries Fund (LDCF) Countries eligible: least developed countries (LDCs) Actions supported: • preparation & implementation of National Adaptation Programs of Action (NAPAs) by least developed countries (LDCs) • preparation of the National Adaptation Plan (NAP) process Project size: • Full-sized Projects (> $2m) • Medium-sized Projects (< $2m) Support provided: • Grants Institutions involved: • GEF Operational focal point – endorses project proposals to affirm that they are consistent with national plans and priorities and facilitates GEF coordination • GEF Agencies – endorse project proposal and support project proponent in its development and implementation Source: LDCF / GEF Accessing Resources under Least Developed Countries Fund

26. Least Developed Countries Fund (LDCF) LDCF funded projects, $ million Source: http://www.climatefundsupdate.org/listing/least-developed-countries-fund, accessed on March 17, 2015

27. Least Developed Countries Fund (LDCF)Example: Cambodia NAPA Objective • “to reduce the vulnerability of coastal communities to the impacts of climate change by strengthening policy and science, and demonstrating targeted local interventions to increase ecosystem resilience.” Key tasks • Strengthen institutional capacity in order to assess climate change risks and integrate them into national development policies • Improve adaptation planning in coastal zone • Reduce vulnerability of productive systems • Increase resilience of coastal buffers to climate change Institutions • Implementing agency: UNEP • Executing agency: Ministry of Environment of Cambodia • Partner organizations: Cambodia Climate Change Alliance (CCCA) • Ministry of Water Resources and Meteorology (MoWRAM) • Ministry of Agriculture, Forestry and Fisheries (MAFF) Accessed finance • LDCF : $1.6million • Total project cost: $5.9 million • 2011-2015 Timing Source: Vulnerability Assessment and Adaptation Programme for Climate Change in the Coastal Zone of Cambodia Considering Livelihood Improvement and Ecosystems, LDCF 2014

28. Special Climate Change Fund (SCCF) • Countries eligible: all non-Annex 1 countries, with priority to the most vulnerable countries in Africa, Asia, and the Small Island Developing States (SIDS) • Actions supported: Adaptation (SCCF-A) and transfer of technologies (SCCF-B) • Project size: • Full-sized Projects (> $1m) • Medium-sized Projects (< $1m) • Support provided: Grants • Institutions involved: Same as for the LDCF • Project approval process: Different approaches for full-sized projects and medium-sized projects. For full-sized projects: Development & Submission of Full Project Proposal Submission of Project Concept (PIF) Project Concept Review & Endorsement Project Endorsement & Approval Project proponent GEF Secretariat SCCF Council Project proponent GEF Secretariat SCCF Council (upon its request or due to major project changes after PIF approval) 4 weeks before the Council meeting 2 weeks 2 weeks <18 months Source: SCCF / GEF (http://www.thegef.org/gef/SCCF)

29. Special Climate Change Fund (SCCF) SCCF funded projects, $ million Source: http://www.climatefundsupdate.org/listing/special-climate-change-fund, accessed March 17, 2015

30. Multilateral Funds

31. Countries with major access to multilateral funds (absolute) Source: http://www.climatefundsupdate.org/data

32. Clean Technology Fund (CTF) (I) Context: CTF is one of the two World Banks’s Climate Investment Funds (CIF)1 Total funding available: $5.3 billion Eligible countries: Middle income countries where an MDB has a lending program and/or an on-going policy dialogue with the country. Actions supported: large-scale, country-led projects in renewable energy, energy efficiency, and transport by public and private sector Access through: 5 Multilateral Development Bank (MDB) focal points: AFDB, ADB, EBRD, IDB, IFC, WB Instruments: concessional loans, credit lines, guarantees, technical assistance grants, equity Currently 134 projects for $6.1 billion in: Chile, Colombia, Egypt, India, Indonesia, Kazakhstan, Mexico, Morocco, Nigeria, Philippines, South Africa, Thailand, Turkey, Ukraine, Vietnam and Middle East and North Africa Region 1 The CIF second fund is the Strategic Climate Fund, the latter has three programmes PPCR, Forest Investment Program (FIP) and Scaling up Renewable Energy Program (SREP) Source: https://www.climateinvestmentfunds.org/cif/Clean_Technology_Fund http://www-cif.climateinvestmentfunds.org/dedicated-private-sector-funding

33. Clean Technology Fund (CTF) (II) Funding process: • A country expresses interest in accessing CTF financing • The MDBs concerned together with the national stakeholders conduct a joint mission to prepare the Investment Plan which is approved by the government. • CTF Trust Fund Committee endorses the Investment Plan and agrees on designated MDB • Designated MDB supports preparation of individual projects and submits for CTF approval • Approval and funds commitment by CTF • Implementation and M&E of projects Source: www.climateinvestmentfunds.org

34. Clean Technology Fund (CTF) – country examples Thailand • Investment plan to support achievement of national renewable targets and implementation of the Bangkok Metropolitan Authority‘s target of reducing the city‘s greenhouse gas (GHG) emissions • Total support volume: $300m • 3 programs • Private Sector Renewable Energy Program– loans or guarantees for utility-scale RE investment projects (ADB) • Sustainable Energy Finance – financing and advisory programs for small sized EE and RE projects in various sectors (IFC) • Renewable Energy Accelerator – support private sector investment into early pioneer solar and wind projects (IFC) South Africa • Investment plan to support achievement of renewable energy and energy efficiency (EE) targets • Total support volume: $500m • 3 programs • Renewables Support – construction of 100MW wind and 100MW CSP plants (AfDB/IBRD) • Energy Efficiency Program – lending programs for small sized energy efficiency investments (AfDB/IFC) • Sustainable Energy Acceleration Program – lending and advisory services for sustainable energy investment (AfDB/IFC) Source: www.climateinvestmentfunds.org

35. Pilot Program for Climate Resilience (PPCR) (I) Context: PPCR is funded by Strategic Climate Fund, one of the two of the World Banks’s Climate Investment Fund (CIF) Total funding available: $1.2 billion Eligible countries: priority to highly vulnerable least developed countries Actions supported: countries’ efforts to integrate climate risk and resilience into core development planning and implementation, e.g.: • Improving agricultural practices and food security • Building climate-resilient water supply and sanitation infrastructure • Monitoring and analyzing weather data • Conducting feasibility studies for climate-resilient housing in coastal areas Instruments:grants and concessional finance (near-zero interest credits with a grant element of 75%) Access through: Multilateral Development Bank (MDB) focal points: AfDB, ADB, EBRD, IDB, IFC, WB Source: https://climateinvestmentfunds.org/cif/Pilot_Program_for_Climate_Resilience

36. Pilot Program for Climate Resilience (PPCR) (II) Accessing PPCR: • Priority for highly vulnerable LDCs eligible for ODA and MDB concessional funds, including the Small Island Developing States. • Pilot programmes have been selected based on expert reviews of expressions of interest and proposed criteria for prioritization. • Currently projects in 9 pilot countries and 2 regional programs Examples: • Niger – sustainable land management, social protection, and pilot initiatives aimed at insuring crops against risks from climate variability and change (US$110 million ) • Caribbean region – enhancing hydrometand climate information services, implementing adaptation measures in key sectors, and synchronizing strategic programs for climate resilience of Dominica, Grenada, Haiti, Jamaica, St. Lucia, and St. Vincent, and the Grenadines (US$10 million). • Pacific region – integration and implementation of climate change adaptation and disaster risk reduction measures in 14 Pacific island countries (US$10.6 million). Source: https://climateinvestmentfunds.org/cif/Pilot_Program_for_Climate_Resilience

37. Bilateral funds

38. Global Climate Change Alliance + (I) Countries: most vulnerable to climate change, particularly the LDCs, SIDS, and African countries Pillar 1. Policy dialogue and experience sharing Pillar 2. Technical support in five priority areas • Fostering dialogue between the EU and developing countries on climate policy on the national regional and global level • Technical and financial support: • to integrate climate change into development policies and budgets and to implement adaptation and mitigation interventions • to find the best solutions for tackling climate change – pooling resources, expertise and knowledge • Mainstreaming climate change into poverty reduction and development efforts • Adaptation: improve knowledge on the effects of climate change and the design and implementation of appropriate adaptation actions • Reducing emissions from deforestation and forest degradation (REDD) • Enhancing participation in the global carbon market • Disaster risk reduction (DRR) Source: http://www.gcca.eu/about-the-gcca/how-to-participate

39. Global Climate Change Alliance + (II) • How can governments of developing countries participate? • Government willing to engage in GCCA , should formally express their interest through the EU Delegation to their country. • The EU Delegation, in collaboration with the EC’s headquarters, will check whether the partner country meets the selection criteria for GCCA funding and whether funds are available: • Country has to be among the 73 LDCs or SIDS that are recipients of aid(in line with the official OECD/DAC and UN lists) • Assessment is made of country’s vulnerability to climate change, including importance of the agricultural sector, an estimate of the country’s adaptive capacity using the UNDP Human Development Index, and country’s engagement climate change dialogue. • Funds are then allocated to countries based on availability of resources and on population figures. Should no funding be available, countries may be put on a ‘waiting list’ until new funding becomes available. Source: http://www.gcca.eu/about-the-gcca/how-to-participate

40. Bilateral funds: UK International Climate Fund (I) • Supports national, regional and global programmes: • Adaptation (50%) – for poor and vulnerable countries, including the least-developed countries, small island states and Africa • Mitigation (30%) and forestry (20%) – for regions that have opportunities for reducing emissions in ways that can also reduce poverty and promote sustainable development (priority given to low-income countries, the least-developed countries and some middle-income countries) • Instruments: • Grants • Loans • Guarantees • ODA Source: http://climatefinanceoptions.org

41. Bilateral funds: UK International Climate Fund (II) • Eligibility: • consistent with the DAC definition of ODA and UK commitments on aid effectiveness • results driven both in terms of poverty reduction and climate impacts • use appropriate aid instruments to maximize value for money and impact • take into account development experience and invest in countries with a conducive political and policy environment for taking climate action • open and transparent project performance Source: http://climatefinanceoptions.org

42. Bilateral funds: UK International Climate Fund (III) Examples of ICF supported programmes Programme Objective Coverage Forest Governance, Markets and Climate (FGMC) Programme To reduce the illegal trade in forest resources by addressing forest sector governance and market failures that permit illegal forest practices. Global Climate Public Private Partnership (CP3) programme To create a track record of climate friendly investment performance that encourages further investment and demonstrates results in countries that may otherwise be viewed as high risk investment environments Global Renewable Energy and Adaptation to Climate Technologies (REACT) A special funding window of the Africa Enterprise Challenge Fund, which supports businesses who wish to implement innovative, commercially viable high impact projects in Africa Kenya Tanzania Rwanda Uganda Burundi Source: http://climatefinanceoptions.org

43. Bilateral funds: NAMA Facility (I) Purpose: • Demonstrating a framework for providing tailor-made climate finance for developing countries in the field of mitigation. • Building on existing support by funding the implementation of transformational NAMAs seeking international support, thus delivering concrete results on the ground. • Raising ambition to close the global emissions gap and address the lack of NAMA climate finance. • Facts: • Officially announced by Germany and the UK at COP-18 in Doha • Germany and the UK have jointly committed € 120m of funding • First pilot programme is the Mexico Housing NAMA: EcoCasa programme

44. Bilateral funds: NAMA Facility (II)

45. Bilateral funds: NAMA Facility (III) Project Cycle of the NAMA Facility STEP 1 – Project Outline National government (with DO endorsement) or DO (with national government endorsement) Call for NAMA Support Project Outlines by NAMA Facility Submission of NAMA Support ProjectOutlines Verification of general eligibility criteria and evaluation against ambition and feasibility criteria by TSU In addition an external assessment of the TSU’s project evaluation is conducted Pre-selection of the most ambitious outlines by the NAMA Facility Board Appraisal mandate for pre-approved NAMA Support Projects STEP 2 – Project Proposal In-depth appraisal and submission of NAMA Support Project proposals FC: DO and national implementing partner(s) (e.g. national development bank) TC: DO and national implementing partner(s) (e.g. sector ministry) Evaluation against ambition and feasibility criteria by TSU Final NAMA Support Project approval by the NAMA Facility Board Implementation mandate for approved NAMA Support Projects TSU Technical Support Unit of the NAMA Facility DO delivery organisation FC financial cooperation TC technical cooperation STEP 3 – Project Implementation NAMA Support Project implementation

46. Bilateral funds: NAMA Facility (IV) The selectionof NAMA Support Projects isbased on threesetsofcriteria: • General eligibility • Ambition • Feasibility/readiness Focus: Ambition

47. Screening for relevant funds http://climatefinanceoptions.org

48. Key Questions • Where are the key emerging priority areas on climate action in your country? • How to use international climate finance to catalyse and integrate climate change considerations into core development and investment choices? • How you perceive the complexity of the international climate finance landscape – how are you dealing with it?

49. Thank you for your attention!!!

50. BACK-UP