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					                                       Financing
                                 Opportunities for
                                  Climate Change
                                       Mitigation




                   Katie Dunn
    Carbon Finance Technical
                    Specialist
UNDP, Regional Center Panama
                16 March 2011
    Katherine.dunn@undp.org
UNDP’s Role

 –UNDP has over 20 years of experience in accessing multiple funding
  sources for climate change to address a wide range of national issues,
  ranging from institutional capacity building to cutting edge technology
  deployment

 –A key issue for successful climate change financing is to clearly
  understand what type of financing instrument is most appropriate to
  achieve a particular goal




                                                                            1
        UNDP’s Support to Countries in the area of Climate Change
• Dispursed $1.58b and leveraged $3b in co-financing to support
    sustainable development initiatives
•   Supports countries to access, sequence, and combine funds to
    manage uncertainties of climate change, e.g., LDCF, SCCF,
    GEF, national funds, bi-lateral funds
•   Supported 102 countries to prepare their National
    Communications since 1996
•   Supported 29 LDCs to prepare their NAPAs and access new
    financing from LDCF to implement NAPA priorities
•   Managed 60 SCCF/LDCF projects for non-Annex I countries
•   Supported 114 countries to prepare NCSAs
•   Supported 68 countries with their TNAs
•   Global support to develop capacity for domestic carbon market
    and CDM project development

                                                                    2 2
                        Current Mitigation Goals and Needs
To avoid global temperature rises of more than 2⁰C above pre-industrial levels and
   achieve stabilization of greenhouse gas concentrations at 450ppm we need to
   achieve the target of 17 gigatonnes (Gt) of abatement by 2020. 1 Gt = 1 billion tonnes




                                                                                            3 3
                                Current Mitigation Goals and Needs
A single gigaton of emissions is roughly equivalent to putting 142,857,142 African
   elephants into the atmosphere every year (or enough to stretch elephants from
   the earth to the moon and halfway back again).

It's also greater than the weight of every human being on the planet. All 6 plus billion
    of us.




   http://www.project-
   catalyst.info/images/2.%20Climate%20Finance/Publications/2.%20Briefing%20papers%20on%20climate%20finance/20091203%20Fina
   nce%20Needs%20Briefing.pdf

                                                                                                                          4 4
                   Current Mitigation Goals and Needs



• 5 Gt of abatement are possible without behavioral changes in
  the developed world in 2020. McKinsey Report

• A further 3 Gt are available in the developing world at negative
  cost (mostly through energy savings) and would therefore not
  require financing

We must capture another 9 Gt of positive‐cost abatement in the
 developing world. These measures will require support from
 the developed world. How to finance the incremental costs of
 this mitigation is at the core of the climate negotiations.

                                                                 5 5
                      Current Mitigation Goals and Needs


                                       $$$$

• The total investment required to avoid dangerous climate change is
  more than USD 1 trillion per annum, according to the International
  Energy Agency (IEA).

• Around USD 400 billion per annum of investment will be required for mitigation
  investment in developing countries according to the World Bank.

• The sum of climate-related public sector commitments currently under
  negotiation, even if delivered to their maximum ambition, totals around USD 110
  billion. The World Economic Forum (WEF)




                                                                                    6 6
                    Current international funding

Current international funding dedicated to climate action in
  developing countries covers only about five percent of their
  anticipated needs.

The shortfall is potentially more than USD 350 billion.




                                                                 7 7
              Focus of Approved Funding




Multiple Focus           Adaptation
1.7% $132 million        $1 billion

                                REDD 4.9%
                                $386 million




       Mitigation
       USD$6.4 billion




                                               8 8
                                Climate Funds
•   Adaptation Fund AF                      • Indonesia Climate Change Trust Fund
•   Amazon Fund (Fundo Amazônia) FA             ICCTF
•   Clean Technology Fund CTF               •   International Climate Initiative ICI
•   Congo Basin Forest Fund CBFF            •   International Forest Carbon Initiative
•   Environmental Transformation Fund -         IFCI
    International Window ETF                •   Least Developed Countries Fund
•   Forest Carbon Partnership Facility          LDCF
    FCPF                                    •   MDG Achievement Fund –
•   Forest Investment Program FIP               Environment and Climate Change
•   GEF Trust Fund - Climate Change             thematic window MDG
    focal area (GEF 4) GEF4                 •   Pilot Program for Climate Resilience
•   GEF Trust Fund - Climate Change             PPCR
    focal area (GEF 5) GEF5                 •   Scaling-Up Renewable Energy
•   Global Climate Change Alliance GCCA         Program for Low Income Countries
•   Global Energy Efficiency and                SREP
    Renewable Energy Fund GEEREF            •   Special Climate Change Fund SCCF
•   Hatoyama Initiative - private sources   •   Strategic Climate Fund SCF
    HI-Pr                                   •   Strategic Priority on Adaptation SPA
•   Hatoyama Initiative - public sources    •   UN-REDD Programme UN-REDD              9
                                                                                     9
1010
       Funds Pledged vs. Deposited and Dispersed
                                                    Pledged        Deposits       Approved spend     Disbursed
                FUND                      Acronym
                                                    (USD mn)       (USD mn)       (USD mn)           (USD mn)
Adaptation Fund                           AF             $216.16        $202.11             $34.41         $9.46
Amazon Fund (Fundo Amazônia)              FA           $1,027.93         $50.93              $7.10         $7.10
Clean Technology Fund                     CTF          $3,792.00      $1,492.78          $1,452.60       $227.00
Congo Basin Forest Fund                   CBFF            $82.50         $82.50             $17.42        $11.72
Forest Carbon Partnership Facility        FCPF           $199.07        $152.27             $11.52        $10.34
Forest Investment Program                 FIP            $568.20        $110.95              $3.00         $3.00
GEF Trust Fund - Climate Change focal
                                          GEF4         $1,032.92      $1,032.92            $996.92       $996.89
area (GEF 4)
GEF Trust Fund - Climate Change focal
                                          GEF5         $1,359.38          $0.00
area (GEF 5)
Global Climate Change Alliance            GCCA           $226.12        $224.62            $187.28        $20.51
Global Energy Efficiency and Renewable
                                          GEEREF         $169.50         $60.08             $60.08         $0.00
Energy Fund
Hatoyama Initiative - private sources     HI-Pr        $4,000.00      $1,360.00          $1,360.00         $0.00
Hatoyama Initiative - public sources      HI-Pu       $11,000.00      $3,960.00          $3,959.89         $0.00
Indonesia Climate Change Trust Fund       ICCTF           $18.30          $8.51              $5.48         $0.00
International Climate Initiative          ICI            $519.60        $515.61            $503.65       $503.65
International Forest Carbon Initiative    IFCI           $216.27         $67.06             $47.60        $47.60
Least Developed Countries Fund            LDCF           $221.46        $169.19            $141.96       $141.96
MDG Achievement Fund – Environment and
                                          MDG             $89.50         $89.50             $89.50        $70.76
Climate Change thematic window
Pilot Program for Climate Resilience      PPCR           $971.75        $305.85            $287.06         $7.72
Scaling-Up Renewable Energy Program for
                                          SREP           $306.50         $23.85
Low Income Countries
Special Climate Change Fund               SCCF           $147.78        $110.48             $97.17        $97.17
Strategic Climate Fund                    SCF              $0.00          $0.00
Strategic Priority on Adaptation          SPA             $50.00         $50.00             $48.91        $48.91
UN-REDD Programme                         UN-REDD        $126.04         $94.63             $75.76        $51.36
                               TOTALS                 $26,340.98     $10,163.84          $9,387.31     $2,255.15


                                                                                                                   1111
                 Climate Finance Website Trackers

Fast-Start Finance: Cooperative initiative lead by the UK and
  the Netherlands
UNFCCC: Summary of agreements reached in Cancun,
  including Fast-Start Finance & Green Fund
Climate Funds Update: Tracks financial pledges from
  developed nations
World Resources Institute: FSF tracking from an independent
  NGO
Project Catalyst: Economic analysis of FSF flows to developing
  countries



                                                            1212
                                           Fast Start Finance
The Copenhagen Accord outlines a pledge by many
  developed countries to support fast start finance funds to
  help developing countries adapt to the impact of climate
  change and to pursue actions that put them on a low-
  carbon development pathway.

The funds will “provide new and additional resources,
  including forestry and investments through international
  institutions, approaching $30 billion for the period 2010
  to 2012 with balanced allocation between adaptation and
  mitigation.”
  The World Resources Institute (WRI) is currently tracking the FSF pledges
  http://www.wri.org/publication/summary-of-developed-country-fast-start-climate-finance-pledges


                                                                                                   1313
               The Great Green Hope: Green Climate Fund

The UN Climate Talks in December 2010 concluded with a set of
  decisions known as the Cancun Agreements, which included
  the establishment of the Green Climate Fund (GCF).

Intended to raise and disburse $100bn a year by 2020 to protect
   poor nations against climate impacts and assist them with low-
   carbon development. (To address both mitigation and
   adaption).

The Fund will have the capacity to provide “direct access” to
  national institutions, without the intervention of international
  implementing agencies like the World Bank and the United
  Nations.
                                                                     1414
                       Green Climate Fund



The Green Climate Fund will initially use the World Bank as a
  trustee while giving oversight to a new body balanced between
  developed and developing countries: a transitional committee
  of 25 developing and 15 developed countries to develop
  guidelines for the Board to further develop the detailed rules
  after COP17 in Durban.




                                                              1515
                        Green Climate Fund

Remaining Questions:

• How will countries directly access funds?

• What financial instruments and models will be used?
• Registry system to record financial pledges and climate-
  mitigating actions?

• Will non-governmental groups, the private sector and
  international organizations all be allowed to take part?

• Mechanisms to ensure environmental and social standards?
                                                             1616
                          Green Climate Fund

Designing and making the GCF operational will take some time.

Funds won’t start flowing immediately.

The international community therefore needs to find a way to finance
  the gap as many of the vulnerable developing countries and those
  least able to cope are already suffering from the devastating
  impacts of climate change.




                                                                       1717
           UNFCCC Loans for Underdeveloped Carbon Markets

Executive Board of the CDM to provide loans to support the
  following activities in countries with fewer than 10
  registered CDM projects to:
(a) To cover the costs of the development of project design
  documents (PDDs);
(b) To cover the costs of validation and the first verification for
  these project activities.

Loans are to be repaid starting from the first issuance of certified
  emission reductions (CERs).

Implementing Agency TBD

                                                                      1818
                             Carbon Finance to Date

• Initially perceived as the main financial vehicle for mitigation activities in
    the developing world
•   Has resulted in significant financial flows to non Annex 1 countries for the
    transfer of low emissions technology
•    Has been an important vehicle for deep structural transformations which
    will not be reverted
•   Has involved multiple public and private actors in climate change that
    would otherwise not be involved
•   However, it is increasingly acknowledged that the CDM and carbon
    markets are only one piece of the financing puzzle to address climate
    change
•   The total value of the market grew 6% to US$144 billion (€103 billion) by
    year’s end with 8.7 billion tCO2e traded
•   Project-based transactions declined by 54%

                                                                                   1919
                What’s Next in Mitigation Finance

From CDM to Scaled Up Mitigation Mechanisms

•    Standardized Baselines

•    Sectoral Approach Using Market Mechanisms

•    NAMAs supported through crediting or trading

•    NAMAs supported through international aid




                                                    2020
2121
                                    What’s Next in Mitigation Finance

Nationally Appropriate Mitigation Actions (NAMAs)

NAMAs are voluntary emission reduction measures undertaken
 by developing countries that are reported by national
 governments to the UNFCCC. They are expected to be the
 main vehicle for mitigation action in developing countries
 under a future climate agreement, and can be policies,
 programs or projects implemented at national, regional, or
 local levels.




                                                                   2222
            Nationally Appropriate Mitigation Actions (NAMAs)


Three types of broad NAMAs are being proposed:
• Unilateral
  Mitigation actions undertaken by developing countries on their
  own.
• Supported
  Mitigation actions in developing countries, seeking
  international support by finance, technology & capacity
  building. They will be subject to international MRV procedures
  to be adopted by COP.
• Creditable
  Mitigation actions in developing countries generating credits
  for the carbon market.
                                                                   2323
                                               Post 2012 Financing



World Bank’s Umbrella Carbon Facility Tranche 2 (UCFT2)
 With initial funding of €68 million, contributed by Deutsche
 Bank, GDF SUEZ, and the Swedish Energy Agency, this
 Tranche provides the opportunity for existing carbon projects
 to continue selling their carbon credits well beyond 2012.

“During a period of regulatory uncertainty, the UCFT2 is helping
  to maintain demand for post-2012 carbon credits. It means we
  have another tool to help bridge the gap in the carbon
  markets,” said Joëlle Chassard, Manager of the World
  Bank’s Carbon Finance Unit.

                                                                 2424
Thank You

                   Katherine Dunn
         Carbon Finance Technical
                        Specialist
    Environment and Energy Group
    UNDP Regional Support Center,
                          Panama
         Katherine.dunn@undp.org




                                     25

				
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