Download Trends in financial flows and ongoing work on innovative

Trends in financial flows and ongoing work
on innovative financing for the
development and transfer of technologies
Daniele Violetti
Programme Officer, Technology
Climate Change Secretariat (UNFCCC)
UNFCCC seminar on the development and transfer of environmentally sound
technologies for adaptation to climate change
Tobago Hilton, Trinidad and Tobago, 14-16 June 2005
Outline of the presentation
I.
Funding targeted to climate change
II.
Financial flows outside the UNFCCC
III. Work on innovative financing
IV. Follow-up activities and next steps
Funding targeted to climate change
• Bilateral activities of Parties
• Multilateral activities, e.g. The Global
Environment Facility in the period 19952003 provided around USD 1.35 billion in
grants to climate change activities and
another 6.2 billion has been leveraged
• Many others multilateral financial
opportunities, e.g. World Bank carbon
financing, Regional Banks, etc.
Funding targeted to climate change
• The Special Climate Change Fund will
finance projects relating to technology
transfer and adaptation (34 USD million, 1
pledged for TT)
• LDC Fund, implementation of NAPAs (33
million, 11 spent)
• Financial flows generated by JI/CDM
projects (2% of CDM proceedings for the
Adaptation Fund)
• Private sector investments
O
th
er
vu
ln
er
zo
ne
s
ab
ili
ty
sta
l
149.6
127.3
89.0
602.8
174.3
514.1
856.0
880.4
500.6
395.8
90.8
98.2
143.7
76.5
131.9
150.4
183.4
3000
Co
a
ac
i ty
-b
ui
ld
in
g
In
du
st
ry
te
ul
tu
re
1998
W
as
gr
ic
1997
Ca
p
A
395.7
373.1
314.3
657.3
703.1
1000
Fo
re
st
ry
500
57.4
1,850.2
1,894.3
2000
sp
or
t
1,069.6
2500
Tr
an
gy
1500
En
er
USD millions
Funding targeted to climate change
• Information provided by Annex II Parties in
their third National Communications
2,617.3
1999
0
Funding targeted to climate change
USD millions
• Information provided by Annex II Parties in
their third National Communications
4000
3500
3000
2500
2000
1500
1000
500
0
3,675.4
3,567.4
3,220.4
1,843.6
1,182.0
1,608.4
Mitigation
1997
1998
Year
Adaptation
1999
Financial flows from OECD countries
Climate change-related ODA by sector
from 1998 to 2000 (US$ million)
Other
13%
Transport
30%
General environment
protection
17%
Forestry
4%
Agriculture
2%
Source: OECD DAC
Energy
34%
• A DAC study shows that $2.7 billion annually are spent for climate change-related
aid – representing 7.2 percent of ODA commitments
Public and private financial flows
Financial flows to low and
middle income countries
Official flows
Loans
Grants
bilateral/
multilateral
bilateral/
multilateral
Private flows
Debt flows
FDI/
Portfolio equity
flows
Trends in public and private financial
flows to developing countries
Type of flow (US$ billion)
1995 1996 1997 1998 1999 2000 2001 2002 2003
Aggregate net resource flow
237.2 284.6 324.2
Official development finance
53.0 40.8 38.4
Grants
32.6 31.3 25.3
Loans
20.4
9.5 13.2
Bilateral
9.4 -5.6 -6.6
Multilateral
11.1 15.0 19.8
Total private flows
184.2 243.8 285.8
Debt flows
56.6 88.6 92.2
Commercial banks (M-L term) 26.5 34.2 43.9
Bonds (M-L term)
28.5 46.1 38.2
Others
1.7
8.3 10.0
Foreign direct investment
95.5 109.5 171.1
Portfolio equity flows
32.1 45.7 22.6
Source: Global Development Finance, 2004. World Bank.
266.4 236.7 193.7 206.1 190.6 228.2
60.9 42.2 22.8 54.8 35.3 28.0
26.7 28.5 28.7 27.9 31.2 34.3
34.2 13.7 -5.9 26.9
4.1
-6.3
-3.2 -2.2 -6.8 -7.7 -10.6 -12.8
37.4 15.9
0.9 34.6 14.7
6.5
205.5 194.5 170.9 151.3 155.3 200.2
23.4
0.1 -3.9 -28.1
3.2 50.6
52.4
-5.1
-5.8 -10.2
-3.9
-6.6
39.7 29.8 16.5 12.2 12.7 33.1
-68.7 -24.6 -14.6 -30.2 -5.6 24.1
175.6 181.7 162.2 175.0 147.1 135.2
6.6 12.6 12.6
4.4
4.9 14.3
Trends in financial flows
Aggregate financial flows from 1990 to 2003
US$ billion
350
300
250
200
150
100
50
0
1990
1991
1992
1993
1994
1995
1996
Official development finance
Source: Global Development Finance 2004. World Bank.
1997
1998
1999
2000
Total private flows
2001
2002
2003e
Trends in financial flows
Net foreign direct investment (FDI) by region (2003)
Latin America and
Caribbean
27%
Europe and Central
Asia
19%
Middle East and
North Africa
1%
Sub-Saharan Africa
6%
South Asia
4%
Source: Global Development Finance 2004. World Bank.
East Asia and the
Pacific
43%
Workshop on innovative financing
• SBSTA 19 requested the secretariat to organize a
workshop on innovative options.., and to report on
the findings of the workshop to SBSTA 21;
• SBSTA 20 requested the EGTT to consider the
outcomes of the workshop and the workshop
report prepared by the secretariat with possible
recommendations for consideration by SBSTA 21
• The workshop took place on 27-29 September
2004 in Montreal, Canada
(FCCC/SBSTA/2004/11)
Conclusions from the workshop
• Technology needs assessments: they should form the basis for the
development of strategic plans to move the technology transfer
process forward
• Toolkits and handbooks: on innovative/non-innovative financing
of technology transfer projects are necessary for improving project
preparation and assessment to international standards. It would be
appropriate to develop a list of existing tools, software and models
appropriate to financing technology transfer projects and to
identify their gaps
• Training and capacity-building: capacity-building and training
programmes could be developed using the above mentioned “tool
kits and handbooks”
Conclusions from the workshop
• Enabling environments: Establishing the necessary enabling
environments, including removing barriers remains an essential
element not only in relation to financing but also to the overall
process of technology transfer
• Risk management: The provision of adequate tools for risk
management would be useful to mitigate risks and to improve the
quality of projects
• Dialogue: Continue dialogues with the private sector, engaging
both public and private sector financial institutions, SMEs and
entrepreneurs could be a future focus especially in developing
countries, as well as ECAs;
Conclusions from the workshop
• Several “new” investment instruments and institutes can play an
important role in TT, e.g. the role of ECAs, and the innovative
approaches brought about by the CDM and JI. Also, Seed
financing provided by donors has been indicated as an important
instrument to stimulate technology transfer.
• Financing is not a “bolt-on” element, which can be added at the
end of a process, but must be secured and embedded early in the
process
• Adaptation: the issue of financing the transfer of technologies for
adaptation could be considered within the EGTT work programme
and the forthcoming seminar on technologies for adaptation
Follow-up activities
• The EGTT work programme for 2005 includes the
organization of a follow-up workshop
• The secretariat will organize the workshop in October
2005
• The aim is to find solutions to reach financial closure of
proposals drawn from the results of the technology needs
assessments
• Continue to engage the private sector in the process
• Outcomes of the workshop will be presented at SBSTA 23
• A technical paper on innovative financing for SBSTA 24
• The Practitioner’s Guide to be prepared for SBSTA 25
Issues for reflections
• Is there a fundamental difference in funding adaptation
and mitigation? If yes, what?
• Is there sufficient funding available? Where and how
can be accessed?
• Are the results of the technology needs assessments
relating to technologies for adaptation attractive for the
financial community? If no, how can they be made
more attractive?
• How can the private sector be engaged?
THANK YOU!