* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download Module 6 - Budget - Global Climate Change Alliance
Climate change mitigation wikipedia , lookup
Myron Ebell wikipedia , lookup
Global warming controversy wikipedia , lookup
Soon and Baliunas controversy wikipedia , lookup
Michael E. Mann wikipedia , lookup
Climatic Research Unit email controversy wikipedia , lookup
Fred Singer wikipedia , lookup
Low-carbon economy wikipedia , lookup
Climatic Research Unit documents wikipedia , lookup
Global warming wikipedia , lookup
2009 United Nations Climate Change Conference wikipedia , lookup
Heaven and Earth (book) wikipedia , lookup
Mitigation of global warming in Australia wikipedia , lookup
Climate change feedback wikipedia , lookup
Effects of global warming on human health wikipedia , lookup
General circulation model wikipedia , lookup
ExxonMobil climate change controversy wikipedia , lookup
German Climate Action Plan 2050 wikipedia , lookup
Climate change denial wikipedia , lookup
Climate sensitivity wikipedia , lookup
Climate resilience wikipedia , lookup
Effects of global warming wikipedia , lookup
Paris Agreement wikipedia , lookup
Climate change in Australia wikipedia , lookup
Attribution of recent climate change wikipedia , lookup
Climate engineering wikipedia , lookup
United Nations Framework Convention on Climate Change wikipedia , lookup
Climate change in Tuvalu wikipedia , lookup
Climate governance wikipedia , lookup
Economics of climate change mitigation wikipedia , lookup
Economics of global warming wikipedia , lookup
Politics of global warming wikipedia , lookup
Media coverage of global warming wikipedia , lookup
Climate change and agriculture wikipedia , lookup
Climate change in the United States wikipedia , lookup
Solar radiation management wikipedia , lookup
Citizens' Climate Lobby wikipedia , lookup
Carbon Pollution Reduction Scheme wikipedia , lookup
Scientific opinion on climate change wikipedia , lookup
Public opinion on global warming wikipedia , lookup
Effects of global warming on humans wikipedia , lookup
Climate change, industry and society wikipedia , lookup
Surveys of scientists' views on climate change wikipedia , lookup
Climate change adaptation wikipedia , lookup
Global Climate Change Alliance: Intra-ACP Programme Training Module Mainstreaming Climate Change Module 6 Mainstreaming climate change in the budgetary process Ms Isabelle Mamaty Senior Expert Climate Support Facility An initiative of the ACP Group of States funded by the European Union Mainstreaming climate change in the budgetary process Learning objectives: o To better understand the budget formulation process o To learn about the best entry points for integrating climate change into the budgetary process at national level o To provide a brief introduction of existing external sources of finance Expected outcomes: o Increased knowledge on potential entry points for mainstreaming climate change into the national budget process o Increased awareness on importance of ensuring that climate change is included in the budget according to national policy 2 Why mainstreaming climate change in the budgetary process ? 3 Budget consolidation Revenues Expenditures Debt Domestic Revenues Salaries Operational External Revenues including Subsidies and Loan Transfer including International dotations Investmentconsolidated budget 4 Why mainstreaming climate change into budget process ? Climate change is a cross cutting issue and will impact on all sectors any prevention measure in the national budget will have major economic benefits while the cost of inaction may be very high and set back national economies for many years or even decades avoiding the costs associated with climate change impacts liberates national budgets for other development priorities such as education, health… ……However for that to happen there is a need to: raise awareness of all the ministries on the importance of climate change impacts Inform all the ministries on how to define the costs of climate change related measures to be submitted to the budget office 5 Why mainstreaming climate change in the budgetary process? (2) Mainstreaming CC in the budgetary process allows to: o ensure that adequate resources are allocated to high priority mitigation and adaptation measures; o raise additional revenues from taxes, tariffs, and pollution charges related to climate change response measures; o ensure that the unintended effects of budgeted activities in non-environmental sectors don’t exacerbate climate change problems; o balance internal and external sources of funding for climaterelated activities 6 Examples of Climate-related policies and measures increasing or introducing climate-based taxes and charges (like a carbon tax or pollution charges); increasing climate-based subsidies (e.g. for investment in renewable energy) and budget allocations for those subsidies; removing or redesigning perverse taxes and subsidies that exacerbate climate change; increasing budget allocations and tax rebates for activities with favourable climate effects; stipulating climate-based limits or goals as budget rules to govern resource allocation 7 Implications of climate-related policies and measures for public revenue and expenditure 8 Implications of climate change integration on the revenue side Carbon tax / Taxes on highemission activities + - Taxes on Foreign grants & economic other financial activities related to transfers related climate adaptation R to adaptation & & mitigation E mitigation measures V E Reduced taxes on N activities that U shrink or fail to E develop as a result S of adaptation or mitigation policies 9 Growth effects from increased competitiveness Revenues Implications of climate change integration on the expenditure side Subsidies for adaptation & mitigationrelated activities + - Current expenditures Public investment in relation to (capital expenditure) adaptation & in adaptation and/or mitigation activities & R mitigation-related specific infrastructure E infrastructure maintenance V Reduced subsidies for fuel consumption and other highemission activities E N Reduced spending on U care, health E infrastructure S etc. as a replacement result of successful adaptation measures 10 Expenditures Linking the budget to policy objectives and expected results 11 Key stages in the budget preparation Formulation Macro-economic basis Budget policy outline Preparation of revenue and expenditure targets Submission of sector plans within those ceilings Adoption By Parliament Execution By sector Ministries Control, audits Auditor general or similar agencies 12 Linking spending to policy and results, with a medium-term outlook National objectives and strategies Medium-term sector plans Medium-term budget perspective or expenditure framework Annual budget Implementation & service delivery Performance monitoring 13 The medium-term expenditure framework (MTEF) A forward-looking budgetary planning tool covering a 3 to 5-year period o systematically links strategic objectives (national/sectoral) and related outputs/outcomes with actions required to achieve them, corresponding expenditures and resources o supports the prioritisation of expenditures and the predictability of resources o facilitates performance monitoring Can be established at the national level (intersectoral allocations) as well as the sectoral level (intra-sectoral allocations) 14 In practice MTEFs are rather sophisticated tools, and few countries have full-fledged MTEFs The preparation of medium-term projections of national and/or sector expenditures is a good starting point The uncertainties associated with projections and forecasts should be recognised What is the practice in your respective countries? 15 Entry points for climate change mainstreaming 16 Guiding questions for engaging in the budgetary process Are budget planning and expenditures being directed toward the appropriate priorities in view of adaptation and mitigation?* Do recent changes in budget allocations and expenditures provide evidence of increased attention to adaptation to climate variability, disaster preparedness, low-emission development options? Do public investment decisions consider geographical distribution of climate risks and vulnerabilities?** How can the revenue-generating, budget planning and allocation, and expenditure management systems be improved and/or revised to enhance the contribution of relevant economic sectors to adaptation, climate-resilient and low-emission development while supporting poverty reduction? Source: UNDP-UNEP (2011) & World Bank (2008) 17 Climate change at the resource allocation stage The mainstreaming of climate change requires: o reallocating funding to more vulnerable and/or priority sectors and regions o providing funding for adaptation- and/or mitigationspecific plans or activities o adding climate change considerations to the criteria for screening and selecting projects and investments o making room for ‘cross-sectoral’ activities (e.g. DRR) This process typically involves a mix of topdown and bottom-up processes 18 Source: OECD (2009a) Key stages in budget preparation and related entry points (1) Key stages 1. Determination of macroeconomic outlook Impacts of CC on economic activity & growth Key actors Impacts of CC Min. of Finance/Planning, adaptation/mitigation on statistical office,economic centralactivity bank & growth 2. Multi-year strategic planning: medium-term fiscal strategy, medium-term expenditure framework Cabinet,Extra Min.costs of of Finance adaptation / 3. Determination of next year’s: -expected revenues -acceptable level of deficit -global level of expenditures Min. of Finance (Budget Dept, Macroeconomic Dept), Extra revenues / cost Cabinet savings mitigation measures Extra resources required / pledged resulting from adaptation/mitigation 4. Pre-allocation of expenditures Cabinet, Min. of Finance Re-allocation of funds in (Budget among line ministries, according to Dept) support of adaptation/ mitigation objectives policy priorities Key stages in budget preparation and related entry points (2) Key stages Key actors Instructions on costing 5. Preparation/Circulation of budget Min. of Finance (Budget Dept)policies & adaptation/mitigation circular & expenditure ceilings measures 6. Costing of sectoral policies, submission of bids 7. Review of sectoral bids, testing of cost estimates, finalisation of budget estimates 8. Negotiations, followed by endorsement of budget 9. Preparation of appropriation bill and budgetary documents 10. Submission of budget to Parliament – Discussion & adoption Costing & integration of adaptation/mitigation All ministries & government policies & measures agencies Use (Budget of climate risk Min. of Finance Dept), screening procedures Cabinet Prioritisation of adaptation/mitigation Min. of Finance, policies other & measures Ministries/agencies, Cabinet Min. of Finance (Budget Dept) Discussion of adaptation/mitigation Min. of Finance, Parliament policies & measures Keeping track of climaterelated expenditures During budget preparation, implementation, monitoring and reporting, ‘keep track’ of main climate-related public expenditures o Adapt the budget classification o ‘Flag’ incremental climate-related expenditures embedded in ‘non-climate’ programmes This is important for: o monitoring the implementation of climate-related measures in national and sector strategies o reporting to the UNFCCC (national communications) o securing eligibility for funding from specific climate adaptation/mitigation funds 21 Monitoring climate-related finance: climate markers Statistical codes developed by the OECD (DAC) to monitor the amount of aid resources targeted at adaptation and mitigation Could be adapted for application to the national budgets of OECD and non-OECD countries 22 Source: OECD-DAC (2011) Climate markers: eligibility criteria – Adaptation An objective of adaptation to CC is explicitly mentioned in the intervention documentation; and The intervention contains specific measures targeting the following definition: Adaptation intends to reduce the vulnerability of human or natural systems to the impacts of climate change and climate-related risks, by maintaining or increasing adaptive capacity and resilience. This encompasses a range of activities from information and knowledge generation, to capacity development, planning and the implementation of climate change adaptation actions. Climate markers: eligibility criteria – Mitigation The intervention contributes to: o the mitigation of climate change by limiting anthropogenic emissions of GHGs, including gases regulated by the Montreal Protocol; or o the protection and/or enhancement of GHG sinks and reservoirs; or o the integration of climate change concerns with the recipient countries’ development objectives through institution building, capacity development, strengthening the regulatory and policy framework, or research; or o developing countries’ efforts to meet their obligations under the Convention. 24 Climate markers: decision tree Do any of the intervention’s stated objectives match “criteria for eligibility” of Rio Markers? Yes Would the activity have been undertaken without this objective? No Yes No 2 1 0 CC = principal objective CC = significant objective CC not targeted 25 Public expenditure reviews (PERs) 26 Public expenditure reviews (PERs) A tool for analysing how budget resources are planned, allocated and actually spent across competing claims, objectives and priorities PERs can be used as a tool for supporting the mainstreaming of climate change o Track adaptation- and mitigation-related expenditures o But also, importantly: focus on public expenditure’s overall contribution to climate-resilient, low-emission development outcomes 27 Entry points for mainstreaming climate-related aspects in a PER Aspect Issues to consider Budget planning process Role of climate-related considerations in allocation decisions Expenditure trends and categories Actual spending on vs. allocations to: * adaptation- and mitigation-friendly measures * development programmes with a focus on climate risk management, climate-resilient / low-emission development Availability of recurrent funding vs. capital investment for climate risk monitoring and management Budget financing Level of and trends in allocations to climate-relevant sectors and agencies Origin of such allocations (internal vs. external funding) Possibility of increasing resources for climate-resilient development Sources: UNDP-UNEP (2011), World Bank (n.d.) GN4 28 Turning words into action 29 Discussion Questions and answers Mainstreaming climate change in the budgetary process Using Public Expenditure Reviews What are the opportunities to mainstream climate change in the budgetary process in your sector or at your level and what are the institutional and capacity needs in your organisation to do so? 30 Presentation of case studies Presentation of case studies: identification of best practices of mainstreaming climate change into national budget 31 Learning process exercise: Working group Exercise: Examination of a real world budget statement and analysis of the extent to which climate change is mainstreamed in relation to national policy 32 Securing additional financial resources: External resources and public-private linkages 33 Why additional financial resources ? Climate finance can play a crucial role in assisting developing countries in facing climate change impacts and making the transition to low carbon economies The estimates of climate change financing needs of developing countries are as follow *: o mitigation : $500 billion to 1100 billion/year (UNFCC, 2009; World Bank report 2010; UNDESA (WESS, 2010) o Adaptation : 100$ billion to $ 450 billion/year (UNFCC 2007; World Bank 2010; Parry et al. (2009) Copenhagen Accord (2009) includes** : Short term finance of $ 30 billion equally allocated to mitigation and adaptation for 2010-2012 (Fast start) Commitment by developed countries of up to $100 billion for 2013-2020 to address developing countries needs Set up of a Green Climate Fund to help mobilize the committed funding 34 Mobilisation of external financial resources In order to mobilize the existing resources, governments should: o Become familiar with all sources of climate change related funds and set resource mobilization targets for the most promising funds; o Conduct (or request) workshops/seminars on the new sources of funds and the application processes for different ministries; o Consider locating the focal points for external sources of climate funds (such as GEF) in the Ministry of Finance or Planning rather than in a Ministry of Environment; o Issue detailed information to sector ministries on the available funding sources, including accessibility conditions *; and o Ensure that external funds are fully incorporated into national planning processes and not processed as standalone projects. 35 Main sources of external financing (1) Source of funding Activities supported Development cooperation programmes Adaptation and mitigation with a focus on development Least Developed Countries Fund Preparation and implementation of NAPAs Special Climate Change Fund Adaptation (priority objective), technology transfers, mitigation in high-potential sectors GEF Trust Fund’s climate change focal area Mitigation projects, adaptation demonstration projects and ‘enabling activities’ Adaptation Fund Projects and programmes that reduce the vulnerability of communities and sectors to CC Green Climate Fund (operations not yet started) Channel for future multilateral funding for adaptation and mitigation Clean Technology Fund Demonstration, deployment and transfer of lowemission technologies Strategic Climate Fund (SCF) - Pilot Program for Climate Resilience Climate risk and resilience mainstreaming in development planning Main sources of external financing (2) Source of funding Activities supported SCF- Forest Investment Program REDD- related activities, sustainable forest management SCF - Program for Scaling Up Renewable Energy in Low-Income Countries Deployment of renewable energy sources REDD+ (various streams of funding incl. UN-REDD, which promotes the mainstreaming of REDD strategies in national development) Preparation, pilot implementation and deployment of national strategies for reducing emissions from deforestation/forest degradation Prototype Carbon Fund Pioneering approaches to mitigation that contribute to sustainable development BioCarbon Fund Carbon sequestration projects in forests and agroecosystems 37 Main sources of external financing (3) Source of funding Activities supported Forest Carbon Partnership Facility Preparation of national REDD strategies, pilot financial transfers based on verified emission reductions from REDD Carbon Partnership Facility Long-term, post-2012 mitigation projects Global Energy Efficiency and Renewable Energy Fund Energy efficiency and renewable energy projects Global Climate Change Alliance Mainstreaming of CC in poverty reduction and national development strategies Adaptation, DRR, participation in REDD/CDM MDG Achievement Fund, ‘environment and climate change’ thematic area Mainstreaming of environmental issues in national and sub-national policies, planning and investment frameworks Clean Development Mechanism Mitigation projects in developing countries Voluntary carbon markets Mitigation projects Budget support The transfer of financial resources of an external financing agency to the National Treasury Provides extra resources for the national budget o either grants (e.g. EC) or loans (e.g. World Bank) National procedures apply to the commitment and disbursement of funds o implementation via the national Public Financial Management system => reduced transaction costs, increased ownership 39 Overview of EC budget support modalities (1) Budget support is provided in the form of: o good governance and development contracts-> support for core government systems and broader reforms o sector reform contracts-> support for sector policies and reforms o state building contracts-> support transition processes towards development and democratic governance Joint budget support operations are conducted with other donors where such initiatives exist Usually 3-4 year programmes with annual disbursements 40 Overview of EC budget support modalities (2) General eligibility conditions: 1) A well-defined national or sectoral development or reform policy and strategy to which the budget transfer will contribute 2) Stability-oriented macroeconomic framework 3) Credible and relevant programme to public financial management 4) Transparency and oversight of the budget 41 Overview of EC budget support modalities (3) Annual disbursements include two types of ‘tranches’ o fixed tranche: paid in full as long as eligibility conditions are maintained provides an element of predictability o variable tranche: paid in full or in part based on actual performance against an agreed set of criteria and targets (as long as eligibility conditions are maintained) criteria/targets in principle taken from the PAF associated with the supported policy or strategy provides a results-oriented performance incentive 42 National climate funds Several countries have now established a ‘national climate fund’ (trust fund) to: o channel and manage external funding related to CC o leverage existing funds and initiatives (incl. those financed with national resources) o support the mainstreaming of climate-related programmes and projects into national development strategies Expected benefits: o Alignment of external funding with national priorities o Building of national capacities and institutions o Scaling up of the response to climate change 43 Private-public Linkages Many climate change responses, especially in relation to mitigation will involve the private sector (exp. Energy efficiency), therefore government should: Involve private sector representatives to the climate change task-force and/or other national committees/councils; Involve the private sector in setting amended national standards and codes to respond to the challenge of climate change; Assist the private sector to take up climate change responses by providing incentive schemes, and by initiating public-private partnerships Identify and seek the support of private enterprise in national climate change initiatives and in particular, the Clean Development Mechanism. 44 Turning words into action 45 Discussion Accessing external resources to support climate change mainstreaming Setting-up public-private partnerships Using budget support What are the opportunities for accessing external resources to support climate change mainstreaming in your sector? Have you being able to set up public-private partnerships? Have you being able to use budget support? and what are the institutional and capacity needs in your organisation to do so? 46 Recap – Key messages Climate-related policies and measures can impact the national budget in multiple ways There are entry points for mainstreaming climate change at practically all stages of the budgetary process – including at the stage of ex post evaluation (PERs) It is recommended to set up systems to keep track of adaptation- and mitigation-related expenditures Multiple sources of funding exist to support adaptation and mitigation – focus on eligibility and objectives Where conditions are met, budget support is a suitable modality for supporting CC mainstreaming efforts 47 Key references Mickwitz et al. (2009) climate policy integration coherence and governance, PEER Report N°2 OECD (2009a) Integrating Climate Change Adaptation into Development Co-operation: Policy guidance. OECD Publishing, Paris. [Read-only, browse-it edition] Available from: http://browse.oecdbookshop.org/oecd/pdfs/browseit/4309171E.PDF OECD-DAC (2011) Handbook on the OECD-DAC Climate Markers. Organisation for Economic Cooperation and Development, Paris. Available from: http://www.oecd.org/dataoecd/56/18/48785310.pdf Petkova N. (2009) Integrating Public Environmental Expenditure within Multi-year Budgetary Frameworks. Available from: http://www.oecd.org/dataoecd/60/6/42898831.pdf OECD Environment Working Papers no. 7. OECD Publishing, Paris UNDP-UNEP (2011) Mainstreaming Adaptation to Climate Change into Development Planning: A Guide for Practitioners. UNDP-UNEP Poverty-Environment Initiative. Available from: http://www.unpei.org/knowledge-resources/publications.html ODI (Oversees Development Institute), Implementing a Medium-Term Perspective to Budgeting in the Context of National Poverty Reduction Strategies, Good Practice Guidance Note, ODI, London. World Bank (2009) The Costs to Developing Countries of Adapting to Climate Change: New Methods and Estimates. The Global Report of the Economics of Adaptation to Climate Change Study, Consultation Draft. World Bank, Washington DC. useful websites: Carbon Finance website of the World Bank: www.carbonfinance.org Climate Funds Update: http://www.climatefundsupdate.org/ • Thank you • Contact: Dr. Pendo MARO, ACP Secretariat [email protected] or +32 495 281 494 www.gcca.eu/intra-acp 49