Download Financing climate-friendly projects in the Balkan region

Financing climate-friendly projects
in the Balkan region
DAC PROJECT
CAPACITY BUILDING IN BALKAN COUNTRIES IN ORDER TO DEAL WITH CLIMATE CHANGE
Prepared by: Stelios Psomas
OVERVIEW OF POTENTIAL FINANCIAL FLOWS
IN THE CONTEXT OF CLIMATE CHANGE
 Domestic savings provide by far the major financial resource for investments in
climate-friendly projects.
 The role of Official Development Assistance (ODA) is likely to be rather limited in the
context of climate change.
 The majority of the new investment opportunities will be taken up by the private
sector.
 The role of the public sector in relation to investments should first and foremost be
the creation of an enabling environment for private sector investment in support of
sustainable development.
 Public funding, in particular official development finance and GEF, will be
supplementary to private funding. Public investment, whether domestic or foreign,
can play a role in those areas where it has a clear comparative advantage, and
where additional social benefits are to be expected.
NEW AND ADDITIONAL FINANCIAL RESOURCES
 Activities Implemented Jointly (AIJ) will continue (as decided in Marrakech
COP7). EU funding for AIJ is anticipated.
 Immediate start of Clean Development Mechanism (CDM). CDM projects can
generate certified emission reductions (CERs) retroactively as from 1-1-2000.
 Institutional framework for Joint Implementation (JI) has been established giving
way for an effective implementation.
 New and additional funding will be provided through:
 Increased GEF replenishment
 A Special Climate Change Fund (SCCF)
 A Least Developed Countries Fund (LDCF)
 An Adaptation Fund (AF)
 Bilateral and multilateral sources
CAPACITY FOR JI-CDM IN THE BALKAN REGION
 Reliable and predictable rules are crucial for the development of the CDM and JI as
valuable tools.
 Institutional infrastructure is needed that:
 provides transparency and accountability,
 fosters closer co-operation between energy and environment agencies, and
 supports market activity.
 Criteria for JI-CDM projects – The view of the NGO community
 Funds should be provided in the form of grants rather than loans.
 Projects should not be accepted for JI-CDM if they are commercially feasible.
 Projects should not be accepted for JI-CDM if they only help to offset government
subsidies which encourage greenhouse gas emissions.
 No projects should be approved which merely implement existing regulations.
Criteria for JI-CDM projects (continued)

JI-CDM projects should be in accordance with countries’ sustainable development strategies.

Environmental impact assessment should be carried out for all JI-CDM projects.

No nuclear projects should be approved.

No JI-CDM sink projects should be approved before the adoption of the IPCC methodology.

Full public access to information should be provided.

Baselines should be reviewed every 5 years.

Credits should be limited to 10 years.

No advance credits given.

Possibilities for using projects with fixed CO2 reduction should be used for comparison of
baselines.

No replacement of foreign aid should be allowed.
INTRODUCING NEW FINANCIAL TOOLS
 The ESCO concept – Third Party Financing (TPF)
 Tradable Green Certificates
 Energy – CO2 Taxation
KEY STEPS TO BE TAKEN
 Liberalization of energy markets guaranteeing at least three things:
 Energy producers (either public or private) are given fair access to the grids.
 Legislation (e.g. in the form of feed-in laws) is put in place guaranteeing fair and secured
prices for clean energy.
 Clean renewable energy is given priority and incentives.
 Political commitment and national targets for renewable energy as well as
greenhouse gas emissions reductions are needed within fixed timeframes.
 Demand Side Management should be given priority and incentives, as energy
efficiency and savings are the best options for both the economy and the
environment.