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KZN Pre-COP17 Summit Inkosi Albert Luthuli ICC, Durban 26 September 2011 KZN Pre-COP17 Summit – Climate Change Finance 0 Financing Climate Change Mitigation and Adaptation Measures Alex McNamara Principal Consultant Camco South Africa Climate Change Finance in Context KZN Pre-COP17 Summit – Climate Change Finance 2 Climate Change Finance in Context • Adequate finance is critical for any low carbon development path • Funding is also key to supporting community livelihoods and adaptation efforts KZN Pre-COP17 Summit – Climate Change Finance 3 Climate Change Finance in Context • To be effective, funding flows need to be: 1. Robust and transparent 2. Support local economic development 3. Ensure ownership by involved parties 4. Encourage additional finance and investment where possible 5. Be matched by an enabling regulatory framework KZN Pre-COP17 Summit – Climate Change Finance 4 Current Types of Funding Available KZN Pre-COP17 Summit – Climate Change Finance 5 Types of Funding Available (Global) • The term ‘climate finance’ can be defined very broadly, and is a fluid concept at present • Globally, typical types of climate finance at present include: • Carbon credits developed and sold under the CDM • Carbon credits developed for sale under the voluntary carbon market • Grants and soft loans provided by donors and multilateral institutions (e.g. the World Bank) • ‘Fast Start’ funding pledges that are slowly being implemented, as agreed under the Cancun Agreements (COP16) • Limited support to developing country adaptation plans, including through the Adaptation Fund KZN Pre-COP17 Summit – Climate Change Finance 6 Types of Funding Available (Local) • In addition, South Africa specific funding sources are in place that are ‘climate finance’ related: • National Treasury – Incentive for Investing in Energy Efficient Equipment • National Treasury – Neighbourhood Development Partnership Grant • SANERI and NRF research grants • Eskom Standard Offer and Standard Product Offerings • Eskom Solar Water Heating Programme • Department of Energy: Renewable Energy Finance and Subsidy Office (REFSO) – Subsidy for Renewable Energy Technology Both global and local funding types are available to South Africa KZN Pre-COP17 Summit – Climate Change Finance 7 Typical Funding Areas KZN Pre-COP17 Summit – Climate Change Finance 8 Typical Funding Areas – Mitigation Mitigation efforts related to: Biomass Forestry and REDD+ Biogas / waste to energy Biofuels Rural electrification Distributed & off-grid power generation Solar Energy storage & conservation Wind Energy efficiency Geothermal Tidal / ocean Hydropower Cleaner transport Other industrial emission reductions KZN Pre-COP17 Summit – Climate Change Finance 9 Typical Funding Areas – Adaptation Adaptation efforts related to: Water security / integrated water resource management Agricultural development / food security Flood and drought protection Coastal protection / managing coastal areas Resilient infrastructure Early warning systems Ecosystem based adaptation Sustainable land management Disaster risk management KZN Pre-COP17 Summit – Climate Change Finance 10 Examples of Projects Financed in South Africa KZN Pre-COP17 Summit – Climate Change Finance 11 CDM Example • Tugela Mill Fuel Switching Project: Fuel switch from coal to biomass (bark) at boiler in Tugela Paper Mill Location: Mandini, KZN Project developer: Sappi Forecast emission reductions: 51,962 tCO2e/year Source: http://cdm.unfccc.int/about/multimedia/stories/i ndex.html Actual emission reduction over initial monitoring period: 22,661 tCO2e/year • South Africa now has 19 registered CDM projects, and Africa has 66 in total KZN Pre-COP17 Summit – Climate Change Finance 12 International Donor Example • University of KZN Biogas Pilot Plant: Project type: pilot project Biogas pilot plant using chicken litter or similar farm waste to produce methane gas for heating, cooking and transportation Approx. 25 jobs to be created Supported under the: ‘Energy and Environment Partnership for Southern and East Africa’ (http://www.eepafrica.org/) Programme funded by the Government of Finland and Austrian Development Agency KZN Pre-COP17 Summit – Climate Change Finance 13 Potential Future Funding Sources KZN Pre-COP17 Summit – Climate Change Finance 14 Potential Future Funding Sources • Existing carbon markets • Scaled up ‘Fast Start’ finance • Green Climate Fund • Nationally Appropriate Mitigation Actions (NAMAs) / Sectoral Mechanisms / Bilateral Agreements • Other international partnerships on priority regional projects • Greater emphasis on the Adaptation Fund: • SANBI recently accredited by Adaptation Fund Board (AFB), and will be able to put forward project proposals • Next AFB meeting to take place in Durban from 12-14 December 2011; civil society dialogue also planned for 11 December 2011 KZN Pre-COP17 Summit – Climate Change Finance 15 Key Challenges KZN Pre-COP17 Summit – Climate Change Finance 16 Key Challenges • South Africa has taken only very limited advantage of the CDM, and • The clock is ticking fast on registering conventional CDM projects in South Africa • SA has also yet to submit a project concept to the Adaptation Fund • Much of the new climate finance architecture is still being set up (e.g. for Fast Start and the Green Climate Fund) and will take time to implement • Therefore, considerable uncertainty regarding how much will be leveraged, by when, and how funds will be disbursed KZN Pre-COP17 Summit – Climate Change Finance 17 Alex McNamara Camco South Africa T: +27 (0)11 253 3400 M: +27 (0)79 699 3284 E: [email protected] KZN Pre-COP17 Summit – Climate Change Finance 18