Download National Funding Entities - European Capacity Building Initiative

National Funding Entities:
Their role in the transition to a new paradigm
of global cooperation
IIASA
International Institute for Applied Systems Analysis
Luis Gomez-Echeverri
ECBI Fellowship Programme
Outline
 Focusing on national climate change financial
arrangements
 The case for national funding entities and institutions
 The complexity of climate change financing
requirements
 National Funds and funding entities
 Sample of funds recently established
 New funds being developed or in the process of being established
 Other existing funds and funding instruments
 Local initiatives on REDD
 Conclusions
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Focusing on national climate change financing
arrangements
why the urgency?
 The focus to date: the global mechanism not local
arrangements
 The Copenhagen promises, if fulfilled, have the potential
of bringing a new fresh source of funding for countries
 The success of this new wave of funds will strongly
depend on what mechanisms are put in place locally
 Questions that arise with the global mechanism - how to
allocate, disburse, and manage – also come up at the
national level but with added complexity
 Several countries taking initiative to establish national
funding entities to tap resources – big CD challenge
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The Case for National Funding Entities and
Institutions
 Potential for exciting new era of global cooperation
 Potential for transition to new model of global financial
transfers – to one with greater devolution
 Timely transition is good news for climate change and
development:
 For development: easier to mainstream into development priorities of countries
 For climate change: will help countries feel as legitimate partners of global effort
 Gradual acceptance of need to shift responsibility to:
 Increase impact by greater ownership and benefit of greater local knowledge
 Address local complexities of climate change within context of development
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The Complexity of Financial Requirements
 Central formulas and rules of global funds most often
not a good match to diversity of financing needs
 Role of national funding entities and institutions as
intermediaries
 Magnitude of climate change needs can not be fully
addressed by UNFCCC - thus need for leveraging other
funds  National funding entities/institutions are best placed to
sort differences of needs and best instruments to meet
 National funding entities/institutions also ones best
placed to ensure that investments are mainstreamed/
integrated into development
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National Funding Entities and Institutions
 A new breed of institutions with very few commonalities
 Designed to meet specific national needs and “politics”
 Most operate off-budget to avoid local complexities and
local politics of national budgets
 Most specifically designed to capture funds from int.
institutions, to mobilize and leverage local funds, and to
mainstream funding to development
 Few lessons learned yet but need to be monitored
 Idea of national funding entities and institutions as local
funding hubs not new
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A Sample of New Funds Established
 Amazon Fund of Brazil
 Bangladesh Climate Change Resilience Fund (BCCRF)
 Brazilian National Fund on Climate Change
 China CDM Fund (CDMF)
 China Funds for the Environment
 Ecuador Yasuni ITT Trust Fund
 Indonesian Climate Change Trust Fund (ICCTF)
 Maldives Climate Change Trust Fund
 Thailand Energy Efficiency Trust Fund
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Funds Established or in Process of Being
Established
 National Strategic Climate Change Trust Fund
 Indonesian Low Emissions Development Financing
Facility
 Indian Clean Energy Fund
 Philippines National Survival Fund
 Costa Rica Green Bond
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Other Funds and Funding Instruments
 Green Investment Schemes – a new breed of carbon
finance mechanisms
 Funds specifically designed to support ESCOs
 Credit guarantees and bridge financing
 Micro finance for off-grid and remote energy supply
 Utilities and Municipalities as financial intermediaries
 Loan guarantees
 Special purpose financing windows
 Institutions being set up as part of new REDD initiatives
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Conclusions
 Greater attention needed on governance and institution
building by global climate change negotiations
 Success of global finance and global cooperation on
climate change dependant on strong local arrangements
 Countries that create strong local institutions are posed
to benefit the most and the earliest
 New and additional funding will pose huge capacity
development challenge that needs to be funded also
 International institutions will continue to play an
important BUT DIFFERENT role creating bridge where
local institutions not yet established, building capacities
and providing technical assistance
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