Download Powerpoint - Climate Finance and Markets

What is Climate Finance ?
Facilitator Name, Group
Date
in collaboration with the Institute for Policy Studies
and the Heinrich Boell Foundation
Objectives
• Understand the variety of definitions of climate
finance and their implications
• Develop individual/organizational definition of
climate finance
• Understand the basic flows and architecture of
international climate finance institutions
• Understand the main proposals for raising climate
finance, develop criteria to evaluate fairness and
effectiveness of proposals
Introductions
• Name
• Country/region
• Affiliation (movement, organization, etc.)
• What are the climate-related fights, projects,
policies or institutions that you work on?
• Additional objectives for today?
Guiding questions
• What is climate finance? What are the main frameworks and
definitions?
• What do we think are the important principles that should
guide climate finance?
• How do these principles influence what we think should
‘count’ as climate finance in a political, ethical and/or legal
sense?
• What are existing climate finance flows and institutions, and
how do they measure up to our principles?
• Who can – and should be able to – access climate finance and
how?
What does climate change
look like locally?
• How is climate change impacting your
community?
• How are people in your community dealing
with climate change?
What does climate finance pay for?
What is climate finance?
La Mata & La Ventosa Wind Park
•A flagship climate finance
project in Oaxaca, Mexico
•The project received $140
million in loans from
development finance
institutions
•Its 27 wind turbines will
generate up to generate
67.5MW of electricity per
year, all of which will go to
Walmart
La Mata & La Ventosa Wind Park
La Mata & La Ventosa Wind Park
Implications of financial flows
• Misleading “leveraging” claims to give World
Bank’s Clean Technology Fund and leverage
model credibility
• Non-additionality of Clean Development
Mechanism credits means more total emissions
La Mata & La Ventosa Wind Park
“With the pretext of advancing
renewable energy, big
corporations are occupying our
land with windmills. Agriculture,
particularly corn plantations, is
the essence of our region, and
will be completely displaced by
the wind farm projects”
- Bettina Cruz Velázquez
Climate Finance
PURPOSE
“Adaptation”
Dealing with the impacts and
effects of climate change
“Mitigation”
Shifting to sustainable
(and equitable and
democratic)
development pathways
The Need: How much will climate change
cost in developing countries?
1200
$1,100
1000
800
Billions
600
USD$
$450
400
200
$46
$100
$71
$15
$24
0
2011 floods in
Thailand
2011 floods in
Pakistan
2012 SuperStorm
Sandy
Adaptation
annually
Mitigation annually
Copenhagen
commitment
fast start finance
Framework
climate finance obligations
What is climate debt?
Climate Debt
The basic idea…
Emissions Debt
• Assuming all peoples have equal right to
access the atmosphere, developed countries
have polluted more than their fair share with
GHGs
Compensation:
• reduce emissions and lower existing
concentrations of greenhouse gases
• ensure atmospheric space for development in
poorer countries
Development Debt
• Developing countries entitled to opportunities
for development, providing basic services, and
economic independence
• Need access to technologies and funding for
R&D and implementation -according to their
worldview- to achieve development within
restricted atmospheric space
Adaptation Debt
• Impacts have real-world economic
and development impacts
• Responsibility to compensate all damages
• Full compensation for the negative impacts
and opportunity costs
• Investment (with funding and technology) in
the prevention of major impacts
Migration debt
• People forced to migrate because of physical
and economic dislocation cause by climate
change
Compensation:
• Drop restrictive migration policies, receiving
climate migrants with dignity
• Recognize human and cultural rights of
migrants
Climate debt = Compensation
Compensation for climate debt should be done
in multiple, complementary ways:
• Reduce and reabsorb GHG emissions
• Transfer of technology and knowledge
• Changing immigration laws to offer new
homes for climate migrants
• Financing – not aid or charity model
Framework for Climate Finance Obligations
UNFCCC – Article IV
“Developed country parties shall provide such financial
resources, including for the transfer of technology, needed
by the developing country Parties to meet the agreed full
incremental costs of…”
•
•
•
•
•
implementing measures to reduce emissions
management and conservation of sinks
preparing for adaptation
integrating climate change into other national policies
promote cooperative research, exchange of information and
education and awareness-raising
• developing inventories and reporting on emissions and sinks
Framework for Climate Finance Obligations
UNFCCC – Article IV
The extent to which developing country Parties will
effectively implement their commitments under the
Convention will depend on the effective
implementation by developed country Parties of
their commitments under the Convention related to
financial resources (with economic and social
development and poverty eradication as priorities)
Framework for Climate Finance Obligations
UNFCCC
Enhanced action on the provision of financial resources
and investment means:
• Adequate, predictable and sustainable financial resources and
support
• New and additional resources
• Official and concessional funding
• Incentives for implementation of national mitigation strategies and
adaptation action
• Innovative funding (especially for adaptation)
• Mobilization of public and private sector funding and investment
• Financial and technical support for capacity-building in the
assessment of the costs and financial needs
Bali Action Plan (2007)
Defining “climate finance”
Given the need, frameworks and obligations,
how should we – from a climate justice
movement perspective – define climate
finance in our demands and advocacy?
Defining “climate finance”
No agreed definition but is commonly understood as covering the
financial resources used to mitigate climate change and support
adaptation to climate change impacts in developing countries.
Contentious issues:
• Geographical scope
• Types of sources and instruments
• Scope of activities
• Incremental cost vs. investment capital
• Gross vs. net flows
• Additionality
A useful distinction? climate-specific vs. climate-relevant finance
Defining “climate finance”
• Transfer of public resources from North to South to cover
the costs of dealing with the long-term impacts of
climate change. - IPS Glossary Climate Finance Terms
• Article 4.3 commits “annex II” countries to provide “new
and additional financial resources” for the “full
incremental costs” of addressing climate change. –
UNFCCC
• Covers additional costs and is a catalyst to leverage
private and public resources, open economic
opportunities, and enhance development policy and
finance. – World Bank
Defining “climate finance”
• ‘Climate-specific finance’: capital flows that target lowcarbon or climate resilient development, both
international public or private financing flows, also
domestic;
‘Climate-relevant finance’: broader set of capital flows
(public or private) that will influence (positively or
negatively) emissions and/or vulnerability to climate
change in developing countries. – Climate Policy
Initiative
• Describes funding that can be used to support climate
change mitigation and adaptation activities. – German
Ministry of Economic Cooperation & Development
Defining “climate finance”
• Funds that will be transferred to developing countries to
cover their investments in mitigation and adaptation. –
Global Economic and Governance Program, Oxford
University
• An effort to support developing countries by providing
funding from the developed world to assist these countries
in mitigation and adaptation, and to embark on green
development paths, specifically those monies under
discussion in the UNFCCC. – Conservation International
• Born of the ‘polluter pays principle,’ the idea that
industrialized countries have contributed the most to global
warming and should therefore compensate developing
nations for the costs they face as a result of climate change.
– Transparency International
Defining “climate finance”
• How would you/r organization define ‘climate
finance’?
• What are some principles that climate finance
should follow?
• Given the obligations and principles, what do
you think should (and shouldn’t) ‘count’ as
climate finance?
Climate justice principles
•
•
•
•
•
•
•
•
•
Obligatory, automatic, predictable public funding
New and additional resources
No loans or debt-creating instruments
No conditionalities or ‘tied aid’
Obligatory – recognizes historical responsibility according to
“Polluter Pays Principle”
Transparent and accountable
Uphold the right of peoples and countries of the South to
determine the allocation and use of climate funds
Equity and non-discrimination of allocation across and within
countries
Peoples participation and right to information
Climate finance flows
Challenges to tracking climate finance
• Complex, lack of common definitions
• Lack of common framework for measuring,
reporting and verifying climate finance
• Gaps in data and limited coordination in data
gathering
• Different goals of tracking efforts
Climate Finance
FLOWS
PRIVATE
MULTILATERAL
World Bank, ADB
etc
BILATERAL
as part of ODA
within the context of
UNFCCC
South Countries
DEVELOPING COUNTRIES
DOMESTIC
ALLOCATIONS
Climate finance flows
$97bn – but not to be confused with the $100bn of the
Copenhagen Accord
– Not all additional
– includes some developing countries and domestic
money
– includes public and private sources
– includes incremental costs and capital investment
Source: Climate Policy Initiative
Climate finance flows
• Private funding: $55bn direct, $20bn
‘leveraged’ ($75bn)
• Public finance: from national budgets
($21bn)
• Voluntary carbon markets, philanthropic
contributions: < $3bn
Source: Climate Policy Initiative
Climate finance flows
$93bn out of $97bn is used for mitigation
measures; only a very small share goes to
adaptation efforts
• Adaptation: public funds ($4.1bn)
• Mitigation: private sector ($57bn), public
funds ($25bn)
Source: Climate Policy Initiative
Climate Finance
FLOWS
PRIVATE
MULTILATERAL
World Bank, ADB
etc
BILATERAL
as part of ODA
within the context of
UNFCCC
South Countries
DEVELOPING COUNTRIES
DOMESTIC
ALLOCATIONS
within the context of the
UNFCCC
UN Framework Convention on Climate Change
Global Environment Facility
(GEF)
Adaptation Fund (AF)
Special Climate Change Fund
(SCCF)
Green Climate Fund
GCF
LDC Fund
South Countries
DEVELOPING COUNTRIES
“Fast Start
Finance”
Copenhagen Accord (2009)
Climate Finance Commitments
Developed countries pledge
– New and additional resources up to $30 billion 2010–2012
(Fast Start Financing)
– Jointly mobilize $100 billion per year by 2020
(variety of public, private, bilateral, multilateral, and ‘alternative’
sources)
Green Climate Fund – channel significant share of new
multilateral funding for adaptation
within the context of the
UNFCCC
UN Framework Convention on Climate Change
Global Environment Facility
(GEF)
Adaptation Fund (AF)
Special Climate Change Fund
(SCCF)
Green Climate Fund
GCF
LDC Fund
South Countries
DEVELOPING COUNTRIES
“Fast Start
Finance”
Fast Start Finance
Fast Start Finance
Fast Start Finance commitment - $30bn “new and additional”
finance between 2009-2012, balanced between support for
adaptation and mitigation activities.
•
•
•
•
•
•
•
•
$28.22 billion pledged, $23.6 billion committed
Requested and/or budgeted = $16.23 billion
Delivered and implemented = not clear
Only 20% allocated for adaptation
Oxfam estimates <5% additional
Not prioritized for the most vulnerable developing countries
Mainly bilateral, not through international institutions
<50% in form of grants
Fast Start Finance
How do these examples of Fast Start Finance
measure up when compared to our definition
and principles of climate finance?
What other information would you need in
order to assess these projects or programs?
within the context of the
UNFCCC
UN Framework Convention on Climate Change
Global Environment Facility
(GEF)
Adaptation Fund (AF)
Special Climate Change Fund
(SCCF)
Green Climate Fund
GCF
LDC Fund
South Countries
DEVELOPING COUNTRIES
“Fast Start
Finance”
Green Climate Fund
Established at 2010 UN climate summit in Cancun,
Mexico under the guidance and accountable to the
UNFCCC to deliver finance for low-emissions,
climate-resilient sustainable development in
developing countries.
Host country: South Korea
Board: 24 members of the GCF board, half
developed/developing countries, accd to country
groups
Sub-funds: Windows for mitigation and adaptation,
Private Sector Facility
Green Climate Fund
Trustee: World Bank interim, competitive bidding process
for permanent
Access: direct access for through national
implementation entities working with National
Designated Authorities; private sector also granted
direct access
Active Observers: 2 active observers from CSOs and
private sector organizations (South & North)
Sources: Fund does not have a fundraising role, and
therefore will be ineffective without sufficient levels of
financial flow, which have not yet been identified.
Green Climate Fund
Pressing Issues
• Purpose - meet the needs of impacted communities, maximize
profit/PS involvement, or maximize GHG reductions
• Channel for CPH $100bn? Civil society says all public, additional
contributions to the Fund, no loans or investments with
expected returns
• Business model – overemphasis on private/financial sector,
governance structures, who benefits, will investments expect
returns
• World Bank role - interim trustee, technical asst, capacity
building
• Relationship with the UNFCCC
Green Climate Fund
Pressing Issues
• Equitable and non-discriminatory allocation and
disbursement of funds across countries
• Relationship to national structures - respect for sovereignty
and self-determination of countries and peoples
• Civil society participation (esp impacted peoples) at all
levels
• Compliance with international principles and standards on
human rights, environment, rights of indigenous peoples,
women and others
Sources of climate finance
Criteria for fair & effective
climate finance sources
Sources of climate finance
Financial transaction tax
Carbon tax
Fossil fuel subsidy reallocation
Aviation fuel levy
Maritime bunker fuel levy
Assigned amount unit auctions
Climate special drawing rights
Big questions remain…
• How do we measure ‘effectiveness’ of the
money that does flow?
• What makes an investment successful,
replicable and scalable?
• What is the right role for public finance?
When is private sector finance appropriate?
• What does this mean for our movements?
Wrap-Up & Evaluation
• Has this session created a useful space to
reflect on what we want and want we need
from climate finance?
• If not, what do you think is needed to get at
these questions?
• Are there basic concepts about climate
finance that you wanted to learn more about
that didn’t get addressed here?
Thank you!