A New Architecture for Climate Finance Must Encourage Private Sector Investment

Posted on December 15, 2018 by bencanellys

“Give a man a fish, and he eats for a day. Teach a man to fish, and he eats for the rest of his life.” In relation to climate financing, the Green Climate Fund (GCF) and Developed Country Parties, do both, and neither particularly well. The recent IPCC 1.5 report has taken away all room for delay: the GCF cannot waste its valuable funding on unaccountable, inefficient disbursements. We need a financial architecture that will let us move much faster than we are.

This COP has highlighted Developing Country Parties’ concerns that they won’t have the capital to meet the requirements of the Paris Agreement. More specifically, that they won’t have the funds to help pay for losses and damage expected from climate change and that they cannot afford to build the necessary infrastructure, such as renewable energy sources and other low-carbon technologies, that the IPCC 1.5 report warns are necessary.

The GCF relies on Developed Country Parties’ pledges to provide that funding. However, these Parties are hesitant to invest and bear the risk for the costs of climate change. Additionally, they are hesitant to grant funding to countries that are technically “developing,” yet have emerged as economic powerhouses.

This hesitation is exacerbated by irresponsible use of funds by the GCF. Experts argue that the use of climate grants, which make up 47% of the GCF’s activities to date, rather than direct investment, are a misallocation of public funds. They can actually harm markets by pushing out small-scale private actors, often going to those who could afford it anyway. Instead, GCF capital should be blended with government money in order to attract private investors and encourage market growth.

Private investors are hesitant to invest in the face of unfamiliar risk. This includes vulnerabilities to extreme weather, droughts, and rising sea levels for coastal economies, but also inaction by governments that will exacerbate these effects. However, private investors are often moving into these markets anyway, which are slowly becoming more viable as investment options. To encourage this, public funds from the GCF and governments should be used to leverage investment from private actors. Instead of being given freely, by themselves, in the form of grant disbursements, proponents argue that they should only be committed in cases where they can encourage private investment at 10x or higher.

Many Developing Countries, LDCs, and SIDS require foreign aid to kick-start these markets. Private investment must be encouraged as part of that funding. There is simply not enough public funding to tackle the problem alone.

Where Do We Grow From Here?

Posted on December 3, 2018 by elizabethm

The historical first workshop on the Koronivia Joint Work on Agriculture (KJWA) took place on the second day of COP24. The discussion focused on the modalities for implementing the outcomes of the five in-session workshops on issues related to agriculture and other future topics that may arise from this work. There was more than what met the eye happening. The workshop revealed across-the-board concerns the parties had going forward.

The decision, 4/CP.23, requests the SBSTA/SBI to jointly address issues related to agriculture, working with constituted bodies (CBs) under the Convention. Representatives of the CBs presented information on the following questions:

What is the general mandate of the constituted body?
How has the work of the constituted body contributed to Parties’ implementation of work on agriculture?
How can the work of the constituted body help Parties to advance their work on agriculture?

The Adaptation Committee (AC) seeks to advance Parties’ work in agriculture by incorporating an agriculture lens into an upcoming technical paper on linkages between mitigation and adaptation. Additionally, the AC provides guidance to the Nairobi Work Programme on potential agriculture-related activities. Kenya proposed the questions “how do we see using Nairobi Work Programme to help agriculture or what can we do differently? Make it useful? To receive knowledge?” Kenya continuing, “what can we do as parties and the KJWA that can advance agriculture? How do we implement the outcomes of the five workshops? How can we help you?”

The Least Developed Countries Expert Group (LEG) are working on supplemental guidelines based on water, gender, agriculture, etc. Their percentage distribution of NAPA projects = 21% agriculture and food security. The European Union (EU) asked the question “how do you see the contents of 5 workshops useful to your work?” Uganda, looking at the key elements identified by the workshops, sought answers to “how can we increase the access of knowledge for farmers from the five workshops?” “How can we improve connectivity?”

The Standing Committee on Finance (SCF) has improved the coherence and coordination of climate change finance delivery. In SCF forums, agriculture has been addressed as well as forestry. “From the presentation, looking at the investment, how do you see the committee engaged in KJWA?” Kenya asked. Further, Uruguay inquired, “the reduction of emissions should be considered in agriculture, so how can we ensure that emission reduction is not an obstacle for implementation?”

The Climate Technology Centre and Network Advisory Board (CTCN) discussed how the CTCN can support a country’s agricultural systems by enhancing agricultural and rural development. CTCN can identify appropriate technology-neutral approaches that make agriculture more resilient. In response, Kenya explains “you are aware of the five topics and the last two require technology development and transfer under Koronivia. Has the CTCN considered the outcomes and topics under KJWA? What can parties do? How do we send a message to you to incorporate the topics discussed here?”

Concerns going forward are apparent and have only minorly been addressed. The only known going forward is the procedure. The Koronivia workshop will be meeting again on Wednesday.

STAY TUNED FOR MORE.

Adapting the Adaptation Fund under the Paris Agreement

Posted on November 28, 2018 by achristian

The future of the Adaptation Fund (AF) is among the dicey climate finance issues to watch as Parties seek to complete negotiations on the Paris Agreement Rulebook over the upcoming 2 weeks. While it is small, with total cumulative receipts of only $737 million, the AF is highly regarded and widely celebrated for the “relevance, efficiency and effectiveness of its work” and its “contribut[ion] to transformational change.”

The AF was created under the Kyoto Protocol, and thus subject to the CMP, not the COP. The requisite decision to have it serve the Paris Agreement came in 2017 at CMP13.

On the eve of the Katowice climate change conference, concerns remain about whether, in its new life, the AF will retain the unique and innovative features that have made it so vitally important to developing countries. In particular, developing countries want to preserve:

Direct access (not having to access funds through multilateral institutions)
Grants-based funding
Full cost accounting of country-driven projects/programmes, and
A developing country majority on the AF board.

Negotiators have been grappling with two divisive issues that will impact these characteristics: 1) the AF board composition, and 2) how the Fund will be resourced.

The 16-member AF board currently includes 2 representatives from the 5 UN regional groups, 1 each from the small island developing states (SIDS) and Least Developed Countries (LDCs), and 2 each from the UNFCCC’s Annex I Parties and non-Annex-I Parties.

A proposal to eliminate the differentiation between Annex I and non-Annex I Parties and expand donor country representation on the board emerged during APA 1-6 in Bangkok in September. Developing country Parties want the make-up to remain unchanged and are pushing back hard. They fear undue donor country influence not only on funding decisions, but also on multiple other important aspects of governance and operations.

As for resources, a percentage of proceeds from the marketable emission reduction credits of the Kyoto Protocol’s Clean Development Mechanism (CDM) initially funded the AF. With CDM proceeds drying up in recent years, the Fund has had to seek voluntary contributions – not a sustainable mode. Currently, the Fund has only ½ of the resources needed to meet the amount requested in the most recent round.

While, across the board, Parties support establishing new innovative mechanisms to serve as revenue sources, most developing countries also want to continue the original model and link AF resourcing to the Article 6 international crediting mechanism(s) that will emerge from negotiations. Developed country Parties, don’t want to give up any value of the credits they secure from funding mitigation projects in other countries, and some have wondered why the Adaptation Fund should be continued at all, given that the Green Climate Fund provides adaptation financing. That perspective has little traction, and we are likely to see some rich engagement about resourcing.

Two just-released publications will certainly impact any climate finance negotiations: 1) the 2018 Biennial Assessment (BA) and Overview of Climate Finance Flows * (from the Standing Committee on Finance), and 2) the 2018 Emissions Gap Report of the UN Environment Program (Executive Summary is here).

According to the BA, climate finance flows to non-Annex I Parties reached a new high of $74.5 billion in 2016, still far short of the $100 billion per year by 2020 developed countries committed to provide and mobilize. Characteristically, too, adaptation funding remained less than 40% of that for mitigation in public climate finance flows for 2015-2016, with adaptation funding a rarity in private finance.

The emissions gap is the difference between the GHG emission levels needed to keep global temperature rise below 2°C or 1.5°C in 2100 (compared to pre-industrial levels) and the global GHG emission level the NDCs are expected to achieve if fully implemented by 2020.

Two of the many key messages from the Emissions Gap Report giving the climate community pause are that:

The “gap has increased significantly in comparison with previous estimates” and
“Global greenhouse gas emissions show no signs of peaking.”

Given the prospects ahead, poorer countries are expected to be unwavering on a strong funding foothold for the Adaptation Fund and a path to grow it.

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Photo credits: 1) https://www.adaptation-fund.org/; 2) Leolintang/iStock by Getty Images; 3) http://www.famu.edu/index.cfm?PreMed&ADVISORYBOARD; 4) https://www.customtermpapers.org/free-term-papers/term-paper-emissions-trading/; 5) https://indicaonline.com/blog/ways-marijuana-dispensaries-save-money/; 6) https://www.unenvironment.org/resources/emissions-gap-report-2018. Featured image: https://grist.org/climate-change/2011-08-25-neoliberalism-and-climate-change-adaptation/

(*The 2018 BA is a complex compilation that covers climate finance flows in 2015 and 2016, examines trends from 2011-2014, explores gains in measurement, reporting and verification of these flows, and considers the implications for global goals and efforts.)

Show Us The Money!

Posted on November 1, 2018 by achristian

Tension in the global climate finance community is mounting as the Katowice climate change conference approaches. The September effort to advance the Paris Agreement Work Program (PAWP) exposed deep historic divides on climate finance (reported here, here and here). And though the Green Climate Fund Board thankfully “righted its ship” a bit in October (see our close look here), the relief did not ease the larger systemic angst.

At its core, climate finance is a highly political issue. For the most part, rich societies are suffering far less from climate change impacts than poorer ones, and have far more resources with which to respond to those impacts. Poor countries need substantial help from the developed world to do the same. Yet, many developed countries are not inclined to make the enormous financial investments required to address global climate change for outcomes that won’t be realized until the distant future and that will mostly benefit other countries. We get a glimpse of this reality in Climate Scoreboard’s just released Global Report #8, on which we reported yesterday.

Since the adoption of the UNFCCC, developed countries have committed to and provided some, but not nearly enough, climate finance to help developing countries meet the costs of mitigating and adapting to climate change. Their collective target of $100 billion/year by 2020, established in the 2009 Copenhagen Accords and reiterated in the Paris Agreement decision (1/CP.21), falls hundreds of billions short of predicted needs for mitigation and adaptation in developing countries. (Numbers are hard to come by, but the World Economic Forum projected a few years ago that $700 billion/year in climate investment will be required by 2020, while UNEP has estimated annual adaptation costs alone could reach $500 billion by 2050.) Additionally, many are questioning the likelihood that even the $100 billion/year by 2020 will be realized (see here, here and here).

All of this adds up to a lot at stake for climate finance in Katowice in December, where Parties have promised to bring the Paris Agreement implementation guidelines across the finish line.

One of the most contentious climate finance issues we have been tracking is whether Article 9.5 will be fully operationalized. It stipulates that developed country Parties, and others as they can, “shall” communicate, in both quantitative and qualitative terms, financial resources they intend to provide to developing country Parties (ex ante support). However, decision 1/CP.21 calls only for identifying the information Parties will report, and not the modalities to be used in accounting of those resources.

Some feel this was an oversight in the rush to adopt the Paris Agreement back in December 2015, since it is unusual for a COP to decide what Parties are to report without also deciding how the information will be reported and used. For instance, for Article 9.7, decision 1/CP.21 sets in motion identifying both the what and how Parties will report on financial resources they have provided and mobilized through public intervention (ex post support).

Developed country Parties contend that Article 9.5 is sufficiently clear and that no action is required. They want to use the existing general guidelines from 3/CP.19 for the biennial submissions they were requested to make on “scaling up climate finance from 2014-2020.” Notably, only 7 Parties and the EU made such submissions.

Developing country Parties assert that predictability and transparency are at the heart of Article 9.5 and that it must be fully operationalized by also specifying accounting modalities. In particular, Parties should decide how the information will be compiled, made publicly available, transmitted to the global stocktake, and be subject to technical review, none of which is addressed by the earlier general guidance on reporting ex ante support.

Currently, the battle for and against establishing modalities for Article 9.5 is being played out under agenda item 8a of the Ad Hoc Working Group on the Paris Agreement (APA).

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Stay tuned for more posts on climate finance issues for COP 24/CMA 1-3. And, may all Parties show up rich in political will.

Green Climate Fund Approves $1B in New Projects

Posted on October 24, 2018 by amandac

On October 21, 2018, the Green Climate Fund (GCF) Board concluded its 21st meeting by approving 19 new projects, totaling $1.038 billion. This board meeting comes right after the IPCC released the Special Report on Global Warming of 1.5°C (SR1.5) (which we posted on here and here) and a little over a month before COP24. As UNFCCC Executive Secretary Patricia Espinosa told GCF Board Members at the start of their meeting, “Never has there been more need for multilateral cooperation. And never has finance played a more central role to the overall climate regime itself.”

GCF was set up by UNFCCC in 2010, as part of the Convention’s financial mechanism. When the GCF began to gather resources in 2014, developed countries, and some developing, pledged $10.3 billion. Initial mobilization lasts until 2018, while the Fund remains open for further contributions during this time from both public and private sources.

The GCF is designed to focus on climate change adaptation and mitigation, in part as a reaction to the broader mandate of the Global Environmental Facility (GEF), the original operating entity of the UNFCCC’s financial mechanism. “The Fund pays particular attention to the needs of societies that are highly vulnerable to the effects of climate change, in particular Least Developed Countries (LDCs), Small Island Developing States (SIDS), and African States.” Another key point GCF makes is that “[o]ur innovation is to use public investment to stimulate private finance, unlocking the power of climate-friendly investment for low emission, climate resilient development. To achieve maximum impact, GCF seeks to catalyse funds, multiplying the effect of its initial financing by opening markets to new investments. The Fund’s investments can be in the form of grants, loans, equity or guarantees.”

When addressing the importance of this most recent GCF Board meeting, Executive Secretary Espinosa underscored that its outcome will impact the outcome of COP24: “Success here means sending a clear and unmistakable message of trust to developing countries that they can have confidence in the process going forward.” Espinosa’s remarks were well taken as the GCF approved the 19 proposed projects. See the full list of approved projects and monetary breakdown here.

Her comments came after the preceding GCF Board meeting failed to deliver its mandate. This contentious July 2018 meeting resulted in the resignation of GCF Executive Director, Howard Bamseyand, and no new project approvals. Tensions ran high at this meeting for several reasons. The first two had a direct impact on the Fund’s bottom line: the United States decided in 2017 to halt $2 billion of its Obama administration $3 billion pledge and inflation rates reduced the present value of commitments made in 2014. In addition, policy gaps for prioritizing the numerous applications whose requests exceed the GCF’s capitalization hampered Board Members’ ability to make the tough selection decisions. The GCF currently has $10 billion pledged out of the $100 billion promised for 2020.

The GCF has been plagued with issues and controversy for the past year. In February 2018, GCF had a board meeting that approved $1 billion in projects. Although the willingness of GCF to approve more projects is hopeful, civil society organizations and parties saw it as problematic, given that the GCF has difficulty dispersing money for projects already approved. As of December 2017, the fund has only released roughly $150 million, or less than 6% of the nearly $3 billion it had committed up to that point. The GCF reported in the February 2018 meeting that this funding is going toward the 18 projects that are under implementation. The Board had approved of 53 projects by the February meeting. So what is taking so long for the Board to disperse funding? Who is receiving this funding? And how is the GCF now reporting that there “39 projects under implementation, worth $1.6 billion in GCF resources that are being deployed as climate finance in support of developing countries’ climate ambitions under the Paris Agreement?” The jump from 18 to 39 projects under implementation in eight months seems either overambitious or over-reported. The biggest question here is how these 39 projects are receiving their funding after the turmoil of the GCF in the past eight months. To take from Espinosa’s remarks again, “The outcome of [the October Board meeting] of the GCF will impact those negotiations in Katowice.”

Looking toward COP24: The GCF submitted a report to the UNFCCC on Sept. 17, 2018, for consideration at the upcoming COP24. Table 14 included in its Annex VII lists all projects approved by the Board to receive funding from the GCF as of July 31, 2018. In this table, the GCF does not report what has been dispersed, only the GCF funding and total project value.

Wheels of climate change policy roll on in Bonn

Posted on May 25, 2017 by achristian

While angst about the pending Trump decision on the Paris Agreement (PA) remained a subtext of the annual intersessional climate meetings that wrapped up last week in Bonn, Germany, the technical work trundled on.

More than 3,300 (negotiators, observers [including a VLS delegation], plus secretariat and other agency staff) participated in:

the 46th sessions of the Subsidiary Body for Scientific and Technological Advice (SBSTA) and Subsidiary Body for Implementation (SBI),
the 3rd part of the first session of the Ad Hoc Working Group on the Paris Agreement (APA1.3),
several COP-mandated companion events (e.g., indigenous peoples, climate finance reporting, capacity building), and
more than 90 side events.

Photo by IISD/ENB | Kiara Worth

The Earth Negotiations Bulletin gave its usual comprehensive (if dry) lowdown of the meetings. By many reports (here, here, here, and here), the negotiations moved rather smoothly. In particular, positions on APA agenda items got clarified, even though negotiating texts are still out of reach. The APA must deliver a Paris rulebook by December 2018.

Aside from the Trump question, the media coverage (e.g., here, and here) spotlighted the contentious tussle over conflict of interest (read: corporate/fossil fuel industry influence on climate policy). But that shadow side of the SBI’s imperative to “further enhance the effective engagement of non-Party stakeholders,” was not the only thing we watched.

A few of our observations:

APA round table. (Photo by IISD/ENB | Kiara Worth)

APA round tables got a thumbs up for the airing and clarifying of views and could speed introduction of “contextual proposals” for PA rulebook pieces. Five will be held ahead of COP23, though observers will be excluded.

Parties are determined to understand, manage and capitalize on the linkages between Paris Agreement articles, and between the APA work and PA work of the subsidiary bodies. This is important and rich ground for cohesiveness.

More frequent interventions are coming from the new “coalition” of 3
Marcia Levaggi, Argentina, speaking on behalf of Argentina, Brazil and Uruguay (Photo by IISD/ENB | Kiara Worth)

contiguous South American countries – Brazil, Argentina and Uruguay. They constitute 3 of the 4 members of Mercosur, the Southern Common Market, which is on track to a free trade agreement with the European Free Trade Association. We’ve known them as part of multiple different negotiating groups: G77+China (all 3); Coalition of Rainforest Nations (Argentina, Uruguay); BASIC (Brazil); Like-minded Developing Countries (Argentina); and BRICS (Brazil, Russia, India, China, South Africa). We’ll be keeping an eye on this development.
The Long Term Climate Finance workshops (LTF) may catalyze concrete COP consideration of strategies to address the confusing
Breakout during LTF event. (Photo by IISD/ENB | Kiara Worth)

multi-lateral climate finance architecture and developing countries’ challenges in accessing finance. (See the World Resources Institute new pub out on this issue.)
The SBSTA’s agriculture agenda item hopped on a rollercoaster, disrupting the 4-year stalemate between developed and developing countries over adaptation vs mitigation. The excitement generated by delegates’ Week 1 mantras (“very substantive dialogue,” “feels like a family”) landed with a thud in the end. No mature elements moved forward to the SBI; nor was an agriculture work programme recommended. We do see slightly positive prospects looking ahead, given the Co-Facilitators’ non-paper. Stay tuned for our deeper dive on this.

The Gender Action Plan workshop wasn’t covered by anyone, but you’ll get the in-depth story with our next post.

Next up? Thank you, Carbon Brief, for the chart of steps toward COP23.

Adaptation and Climate Resilience – Help Wanted

Posted on December 21, 2016 by achristian

A recent National Academy of Sciences (NAS) half-day seminar – Climate Change Adaptation Investments and Measuring Effectiveness – considered a pressing suite of interrelated issues. As Timmons Roberts of Brown University (one of the moderators) stated, “[t]his seminar is not an academic exercise.” Developing countries urgently need climate change adaptation help and they want and need to know if the commitments from developed countries are being met.

Their concerns go back to a key premise for the Paris Agreement (PA) – developing countries agreeing to compromise their own fossil fuel industrialization (a faster, less expensive path toward poverty reduction than leaping over it into renewables) in exchange for the promise of greater support for both mitigation and adaptation. This weighed heavily last month in Marrakech, especially with release of the controversial Climate Finance “Roadmap” by a subset of OECD countries just before the climate conference. In addition to objections to the Roadmap’s methodology (we touched on this here), the much greater support documented so far for mitigation over adaptation flew directly in the face of the balance between the two that had served as another “ground rule” for achieving PA consensus.

With that backdrop, this NAS seminar featured academic, investment, agency, and civil society perspectives from around the world that explored:

How adaptation action is counted, financed and evaluated, including in the context of climate resilient development;
The challenges of adaptation investment decision-making within competing and sometimes overlapping contexts (e.g., the relationships of strict criteria to vulnerability reduction to resilience building, and of adaptation finance to climate finance to development finance); and
How the effectiveness of adaptation activities and resilience building can and should be measured.

The discussion helped illuminate an evolution of terminology, concepts and experience at the intersection of adaptation science, practice and policy. The response to climate change is no longer just about mitigation and adaptation. The PA’s purpose (laid out in Article 2) clearly broadens that response to include climate resilience, while also omitting “adaptation” from the language on finance flows (i.e., making them “consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”).

This evolution is confounding decision-making around support and evaluation, which is in turn impacting the accounting of adaptation finance and the capacity of on-the-ground communities to adequately deal with climate change.

These are a few of the key takeaways drawn from the robust presentations and discussion:

The ultimate goal is that of reducing vulnerability, and the strategy is to build dynamic climate resilience (not just resilience to a certain set of conditions). Thus, resilience, as a goal, should be embedded into adaptation interventions/projects of every kind, with regular reviews tied to the results of resilience building activities.
A shared system of resiliency principles is needed to guide financial support and implementation, as opposed to a unified definition of adaptation (as crafted by a cadre of multi-lateral development banks) or a host of different definitions (currently being utilized by a broad set of agencies).
There is no convergence across the wide-ranging landscape of indicators of success and their associated metrics; but tapping other fields (e.g., evaluation) and establishing linkages between developers and implementers can significantly address this issue.
Lessons to date point to adopting flexible adaptation pathways and success indicators that: a) account for all system resources (economic and non-), and b) rely on iterative, stakeholder-sensitive decisions over time (built-in learning, decision-making under uncertainty).

Let’s hope these and other lessons rapidly translate into credible, applicable guidance capable of assuring finance support accountability and long-term effectiveness of on-the-ground interventions. Developing countries need both.

A Numbers “Crunch” – Trump & The UNFCCC

Posted on November 17, 2016 by achristian

Like most every other institution around the globe, for a while now, the UNFCCC has been called on to do more with less. This is clearly reflected in the Executive Secretary’s recent budget presentations that report contributions to UNFCCC trust funds have declined significantly for at least the last 5 years. In fact, 2016 contributions are just 43% of the 2012 level. And all the while, the COP has added new tasks, including, most recently, the raft of work associated with the 2015 Paris Agreement.

At a COP22 informal session on November 11, Espinosa shared that the Secretariat, with its mandated zero-growth budget, will be unable to fully deliver on its current mandates. So, all countries are being called on to meet their full commitments and to increase their voluntary contributions.

It just so happens that the U.S. is a big piece of this budget picture, contributing (as of October 21) more than 20% of the total $30.3 mill* in 2016 receipts for the 3 non-Kyoto Protocol related funds. These include the Trust Fund for the Core Budget (with country-specific contribution levels based on UN-determined proportions) and two voluntary funds: Trust Fund for Supplementary Activities and Trust Fund for Participation in the UNFCCC Process (the latter to help developing country Parties attend COPs and other meetings).

And, of course, there is the ongoing U.S. climate funding via appropriations from Congress, development finance, and export credit, which totaled $2.6 billion in 2015. That was before $500 million was transmitted to the Green Climate Fund earlier this year in partial fulfillment of the $3 billion U.S. promise (that constitutes 30% of that fund’s total pledges). All of it adds up to a very big number in the climate finance world.

Then, on November 8, from stage right: enter President-elect Trump.

While the potential impact on the climate regime is about more than money (check out our Monday story), the finance implications are indeed great. Considering Mr. Trump’s campaign pledges, the Republican Party’s platform position, and the Transition Team’s recent statements, when it comes to climate funding, those calculators only subtract.

Many negotiators and high-level ministers attending COP22 from around the world have been cautioning against hasty speculation on U.S. policy post-January 20, 2017. Behind the scenes, however, and certainly within the Secretariat, the number crunching has doubtless turned to nail biting.

* Based on 11/17/16 EUR-USD exchange rate

(Image credits: Calculator = seocopywriting.com; Diverging costs/revenue= smallbiztrends.com; Scissors & currency= neatoday.org)

LDCs – Concern, yet hope, entering Week 2 of COP22

Posted on November 15, 2016 by achristian

At the end of the first week, many were expressing concern that Marrakech’s purported COP of Action wasn’t measuring up for the world’s most vulnerable countries. Yesterday morning, Least Developed Countries (LDC) Chair, Tosi Mpanu Mpanu, identified troubles on key issues of ambition, adaptation / loss & damage, and climate finance. In particular, he noted that:

The Paris Agreement rulebook development is being stymied and strong action on pre2020 commitments is not materializing.

Adaptation needs of the most vulnerable, exploding as a result of inadequate mitigation by developed countries for decades, are not being addressed in a balanced manner, with even the adaptation registry being complicated. And, foot dragging on other seemingly simple decisions, such as the review of the Warsaw International Mechanism for Loss and Damage (WIM), is eroding trust and confidence that the global community will concretely respond to the very real and devastating losses and damages increasingly suffered by poor countries on the front lines of climate change impacts.

Developed countries have been blocking the Paris-mandated inclusion of the Adaptation Fund in the Paris Agreement rulebook, and the developed country recent “roadmap” to reach the promised $100 billion/year by 2020 lacks credibility – – unfortunate circumstances in the face of developing countries’ low-carbon climate resilient development needs now estimated to collectively exceed $4 trillion.

Work did continue yesterday, while heads of state and ministers arrived for the high-level segment. By the end of the day, among some positive developments were two improved draft decisions on the WIM (here and here). (More on these to come.) Additionally, the Green Climate Fund expedited grants for Liberia’s and Nepal’s National Adaptation Plans. Climate finance remains a hot topic on this week’s COP22 agenda, in particular, the upcoming High-Level Ministerial Dialogue on Climate Finance; so, hope remains for new and encouraging news on that front. (Check back with us on this, too!)

Photo credits: Action Time courtesy www.afd/fr; Informal negotiations courtesy iisd enb

Filling the Gap: A Bangladeshi Climate Fund for Loss & Damage

Posted on November 7, 2016 by Beth Bootz

http://www.iisd.ca/climate/cop22/enbots/7nov.html

Photo by IISD/ENB | Mike Muzurakis

On the opening day of COP22, Practical Action and Lund University organized the first side event on loss and damage (L&D), titled Loss and Damage Perspectives and Options. At the event, presenters focused on the typologies, risks, and community-level effects of L&D. A theme during the discussion was that L&D was a difficult concept to define, because it means many different things to many different communities. Some communities are facing new issues that have never come up before while other communities are facing the same issues repeatedly but with increasing severity. Despite the different effects that L&D can create, one constant remains: a lack of financial mechanisms to deal with the full range of L&D issues.

Following these discussions, Saleemul Huq, Director at the International Centre for Climate Change and Development, spoke about Bangladesh’s Climate Change Trust (BCCT). During his presentation, Huq spoke about how the trust functions, explaining that funds are allocated to the trust each year and that only two-thirds of those funds get distributed every year. The remaining one-third is saved in the trust for emergency purposes; however, the committee that administers the trust has yet to define what would constitute an emergency, so those funds accumulate in the fund each year. Recently, Bangladesh decided to use the remaining funds in the BCCT to create a national mechanism for L&D—making strides toward filling the aforementioned financial gap. Huq mentioned that Bangladesh is planning to announce the proposed action during the COP next week, in the hopes that others may learn from their initiative or want to contribute to their valiant effort.

SCF, Meet Loss and Damage

Posted on April 12, 2016 by achristian

The Warsaw International Mechanism (WIM) on Loss and damage (L&D) is going on a somewhat surprising date this year with the Standing Committee on Finance (SCF). The job of the SCF is to assist the UNFCCC Conference of Parties (COP) in conducting its climate finance functions. The job of the WIM is to enhance action and support to address loss and damage in developing countries particularly vulnerable to climate change impacts. (We’ve covered the WIM and L&D extensively, e.g., here, here and here.)

The reason this ‘date’ is interesting is that nowhere in any COP decisions is the SCF directly instructed to engage the issue of L&D or pursue a close relationship with the WIM. Climate finance language is strictly aimed at mitigation, adaptation, and building capacity and enabling environments for those. Yet, sometime in mid-2016, the SCF will hold its annual Forum designed to advance communication and information exchange as well as linkages. And, this forum’s topic will be: “Financial instruments that address the risks of loss and damage.”

It is true that, at COP19, Parties asked the SCF to “further enhance its linkages with the Subsidiary Body for Implementation and the thematic bodies of the Convention.” It is also true that, at COP21, Parties decided to endorse the SCF’s 2016-2017 workplan, which included this year’s Forum. But the guardian may not realize what seriousness (mischief?) might come of this liaison between two of its wards.

The WIM’s Executive Committee actually made the first move at SCF’s 11^th meeting in October 2015, requesting the ‘date’ based on an aspect of its 2-year workplan approved by COP20. And, while the WIM might not have looked like the SCF’s type, there apparently was enough chemistry for a quick “Yes.” Earlier this month, at the SCF’s 12^th meeting, the 20 Committee members reviewed input from multiple stakeholders and got the plans rolling.

What makes this kind of engagement between the SCF and the WIM important, is that, even though the Paris Agreement includes a distinct article on L&D (quite a significant outcome), it contains no provision for financing efforts to address this critical climate change issue. Thus, the SCF giving its attention to L&D could be extremely influential.

One clear way this can happen beyond the exposure and focus of the forum, is through the 2016 Biennial Assessment and Overview of Climate Finance Flows (BA), on which the SCF began work during its 12th meeting. The BA is a comprehensive compilation used to support the COP’s climate finance responsibilities. Not surprisingly, L&D received no attention in the 2014 edition. It most certainly will in the 2016 BA, with the Forum’s attention to this substantive issue.

Where Parties take it from there will tell a lot about the prospects for these two. Will the SCF and WIM really bond? Will they decide to go steady? Might there be a real future for L&D under the climate finance wing of the climate regime? Some are undoubtedly dreaming of wedded bliss!

The GCF – Can We Count On It?

Posted on April 1, 2016 by achristian

In 2009, as we reported earlier, developed country Parties to the UNFCCC committed to jointly mobilize $100 billion/year by 2020 to help developing countries address their climate change needs. The Green Climate Fund (GCF) – the designated heavy lifter for this goal – was created by COP16 in 2010. Its purpose is to fund developing country efforts to mitigate and adapt to climate change through “low-emission and climate-resilient development.” (See our coverage of the private sector role in the GCF here, and co-financing efforts toward the $100 billion goal here.)

The GCF, now with pledges of just $10.3 billion, became fully operational in 2015. However, as of the start of 2016, only $1.6 billion was reported actually in hand, and none of the $168 million the GCF Board approved for the first 8 projects at its November meeting had been distributed. (We reported on the U.S.’s $3 billion pledge here, the first $500 million of which has now been deposited into the Fund.)

The Fund’s goal for 2016 is to distribute $2.5 billion. Its press release also reports a package of current proposals worth $1.5 billion, with 22 projects totaling $5+ billion in the proposal pipeline. (A conflicting update from the Asian People’s Movement on Debt and Development (APMDD) reports $6.2 billion in 124 proposals and concepts in the 2016 pipeline, including 22 that are approval ready.) In either case, that 2016 goal is a high bar.

The GCF Board made some foundational progress at its 12^th meeting in early March in Songdo, Korea, including adopting its first Strategic Plan (SP) and a 2016-2018 action plan. (The final SP had not been released as of this posting, but the draft can be found here.) It also accredited 13 new entities (some with pending status), which will bring the total accredited to 33. Additionally, the Board authorized its first Project Preparation Facility grant ($1.5 million to Rwanda). This new and evolving facility is designed to support developing country accredited entities in creating highly fundable projects.

The Green Climate Fund has its critics. Hallway talk at COP20 in Lima buzzed about the potentially reckless pace UNFCCC Executive Secretary Christiana Figueres had set for the Fund’s scaling up. Governance questions arose soon after. Now, Small Island Developing States and others are facing onerous and highly bureaucratic accreditation hurdles for accessing it. Leading up to the March meeting, civil society voiced strong objections to the limited meeting access, and to the potential accreditation of international banking giants HSBC and Crédit Agricole.

Unfortunately, the Board’s emerging accreditation strategy, intended to address concerns, wasn’t ready for prime time by the March meeting. In related action, the Board awarded pending accreditation to HSBC and Crédit Agricole – both with substantive conditions to be met before final approval. One of these for HSBC, according to APMDD, is getting a positive report from the U.S. federal monitor’s review of the corporation’s money laundering reforms. (That report’s release is currently delayed until a federal appeals court ruling). Interested readers can find the accreditation assessments in appendices of the report of the Board’s decisions.

On a definite positive note, after considerable discussion, the Board ultimately agreed to live webcasting of its meetings in an 18-month experiment, beginning in June

As the GCF story unfolds, let’s hope for lots of transparency and lots of pledges turning to lots of cash. The developing world is counting on it.

Civil Society keeps the heat on for climate ambition

Posted on December 8, 2015 by achristian

As countries seek to arrive at a mutually acceptable text for the Paris Outcome this week, there is a lot of focus on ambition to reduce emissions, and on financial support to help developing countries mitigate and adapt to climate change. In fact, these are among the key high-level political issues that must be resolved. It is hoped that tomorrow’s new draft text from minsters will bring some clarity on these issues.

Civil society has been working hard to help move the needle in favor of stronger ambition and greater equity through action leading up to and at this COP.

As we reported earlier (here and here), among its contributions to the conversation is a recent report by a powerhouse group of NGOs in climate change work – Fair Shares: A Civil Society Equity Review of INDCs. INDCs are countries’ intended nationally determined contributions, statements of planned actions for mitigation (and, in some cases, adaptation) covering the next 10 or 15 years, that they voluntarily submitted prior to COP21, in keeping with COP Decision 1/CP.19 in 2013 and 1/CP.20 in 2014. (See our last week’s and previous posts related to INDCs)

With negotiations on “level of ambition” in a seemingly precarious state, we thought it helpful to reiterate the stark reality of the shortcoming of the INDCs. These pledges represent wide-ranging levels of commitment that together, according to UNEP and others, won’t achieve the emissions reductions essential for a habitable planet. There is, in fact, a deeply alarming gap. The Fair Shares report is not alone in stating that, “even if all countries meet their INDC commitments, the world is likely to warm by a devastating 3°C or more.”

The report’s assessment is based on the maximum carbon we can have in the atmosphere to provide the world “a minimal chance of keeping warming below 1.5°C and a 66% chance of keeping it below 2°C.” Its INDC analysis utilizes 2 parameters: 1) historical responsibility (based on the cumulative emissions of a country); and 2) capacity (based on national income “over what is needed to provide basic living standards”) – with these given equal weight in the calculation. The methodology appropriately accounts for “a breadth of perspectives” related to income and time benchmark complexities.

Key findings for the 10 countries covered in the report are that Russia is not contributing at all to its fair share, and that Japan, the U.S., and the EU are all falling short at levels of just 10%, 20%, and slightly more than 20% of their fair shares, respectively. Conversely, the mitigation pledges of most developing countries “exceed or broadly meet their fair share,” even though the pledges of many of those are conditional.

Enter climate finance! Notably, the “fair shares” of many of the wealthy countries are beyond what they can achieve domestically. To ‘balance the books,’ so to speak, developed countries could ramp up actions to meet their own fair share, and make clear commitments to aid developing countries in achieving theirs.

It will take scaled-up and fair cooperation among countries to address the inequitable distribution across countries’ emission reduction pledges and close the emissions reduction gap. It is uncertain if COP21 Parties will achieve this.

Thankfully, civil society is keeping the pressure on.

What’s next and who makes it happen at COP21?

Posted on December 7, 2015 by achristian

At COP21 on Saturday, December 5, the ADP transmitted the draft Paris Outcome (the Agreement, as we’ve called it all year) and its accompanying Decision to the COP. The text still contains many bracketed phrases (choices to be made), and there are key outstanding issues, such as on long-term goal, the timing of review of pledges, the provision of support to developing countries, loss and damage, and principles of equity and differentiation. (Be sure to see our posts from Week 1 for more details).

In its first action, the COP established the Comité de Paris (the Paris Committee), chaired by COP21 President, Laurent Fabius, to conduct informal consultations to facilitate achieving agreement by mid-week. These “informals” will cover thematic areas, and thus help to tackle cross cutting issue concerns such as differentiation, ambition, and adaptation/loss&damage. These launched on Sunday, and resumed today with closed meetings, along with bi-lateral meetings arranged by co-facilitators of each issue area to pursue compromise.

We will get a sense of the potential for progress at the Committee’s first Plenary tonight, where facilitators will share today’s outcomes by articulating their “assessment[s] of the possible concepts for solutions.”

The agreed upon facilitators, ministers from member Parties, are being paired for these consultations, and have received guidance from the COP President. Their mandate is clear: “Bridge differences with a focus on issues that require solutions to enable a timely and successful conclusion of the Paris Outcome.” And each duo has been given its “key issues.”

Stay tuned!

Will some be left behind? The significance of climate finance

Posted on December 3, 2015 by madhavi

For countries on the front lines of climate change, access, availability, and urgency of funding needs are significant. As an example, rising sea levels in Senegal and Gambia have already impacted agricultural production. Saltwater intrusion into agriculturally productive lands has reduced food production. Further, warming temperatures and resulting increased length of seasons have heightened health risks associated with vector borne diseases. The impoverished state of these countries does not position them to to enter world markets to offset domestic deficiencies through imports. The conditions they face cannot be attributed to a random occurrence, though. Instead the plight of Senegal and Gambia and many other least developed countries (LDCs), as well as small island developing states (SIDS), and landlocked developing countries (LLDCs) is one of significant challenges.

In spite of not being large emitters, the effects of climate change are disproportionately high for these countries; unlike developed countries, these countries have made negligible contributions to the increased speed of climate change, as presently observed. They are the poor, vulnerable, low-emitter nations that are negotiating for the right for climate finance from the developed world. However, funding for mitigation and adaptation projects has been limited. Recent commitments for funding, though on the surface robust to the casual observer, have not inspired confidence across all LDCs, SIDS, or LLDCs.

On Monday, the starting day of COP21, eleven developed countries made commitments to the Least Developed Country Fund (LDCF). Total pledges to the LDCF totaled $248 million. The sum was an auspicious signal, a numeric gesture in parallel with the phrase “no one left behind.” However, at a side event on the same day of the announcement, LDCs commented on the difficulty of accessing funding, the rigorous nature of the application process, and the limited appearance of urgency from funding bodies. Two days later, on Wednesday, at another side venue, other LDCs commented on the difficulty of access to funding and the need to develop national climate finance strategies. Cambodia noted that the prospects of international financing are good but the modes of financing remain uncertain and the process is slow. The Gambia noted that demand for LDCF resources exceed the funds available for approved projects.

Some observers have voiced that funding is perceived by the developed world as financial aid when it should be viewed as the promotion of the common good. A communal perception could foster access and availability of funding provided from developed countries to developing countries in a more expeditious manner.

Mary Robinson, the former President of Ireland, noted in her remarks in Monday, following the LDCF funding announcement, that climate change is a global problem, stating, “Climate change is a problem for all.” She went on to advocate, “The agreement itself needs to be people-centered. The needs of LDCs need to be heard.” At the close of the third negotiating day, it was not clear whether the needs of LDCs were being considered under no one left behind.

In the remaining twenty-four hours of the first phase of COP21, discussion will continue with respect to language that would expedite funding. Additionally, the amount of aggregate funding available to developing countries from 2020 onward remains outstanding. In a few more days the group work of COP21 will set the trajectory for climate finance as the world sets its course to recalibrate its relationship with the planet. The decision will be significant and will send a strong signal with respect to the balance of developing country needs and developed country committment.