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AMCEN
Special Session on Climate Change
Nairobi, Kenya
Financing Climate Change Adaptation and Mitigation:
Key Issues and Options for African Policy-Makers and
Negotiators
Djimingue NANASTA, ENDA
May 2009
[email protected] / [email protected]
Outline of the Presentation
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Background and Rationale
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Review of current climate change financing initiatives
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Key principles of the Convention
Specific concerns for Africa
Description and Analysis of Policy Options
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Existing international financing initiatives
The Clean Development Mechanism (CDM)
The Funding gap in current funding initiatives
Key Principles and Specific concerns for Africa
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Statement of the issue
Background
Revenue raising
Governance
Disbursement
Policy Recommendations and short-term priorities
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Background and Rationale
The Issue
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Financing climate change: a major concern for a Copenhagen deal
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Several proposals put forward to generate new funds
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Need to consider various policy options
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Need for policy recommendations
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Background and Rationale
Background
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Importance of Climate change financing for Africa
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Resources provided by international financing initiatives
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Africa contributes less than 4% of total GHG emissions
Among the most vulnerable to CC
Voluntary contributions will not be enough to adapt or mitigate
Proliferation of financing initiatives
Reliance on voluntary contributions
Less than 15% of pledged funds actually disbursed
Resources provided by carbon market
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CDM proceeds estimated at US$7.4 billion
As of October 2008, only 17 out of 1186 projects located in SSA
Inadequate tool to support Africa’s needs against CC
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Current CC Financing Initiatives
Existing International Financing Initiatives
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Multilateral Initiatives
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Global Environment Facility: SCCF; LDCF; SPA
Adaptation Fund
African Development Bank: CEIF; CBFF
UNDP: UN-REDD Programme (FAO, UNDP, UNEP); MDG Achievement
Fund (MDG-F)
World Bank: Climate Investment Funds
Bilateral Initiatives
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Cool Earth Partnership (CEP, Japan)
Environmental Transformation Fund: International Window (ETF-IW, UK)
Global Climate Change Alliance (GCCA, European Commission)
International Climate Initiative (ICI, Germany)
International Forest Carbon Initiative (IFCI, Australia)
Etc.
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Current CC Financing Initiatives
The Clean Development Mechanism (CDM)
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Twofold aim:
- Mitigation for AI Parties
- Sustainable Development for DCs
Estimated at US$ 7.4 billion
Expected exponential growth
Marginal impact:
- Only 5% of CDM transactions in Africa in 2007
- Poor regional distribution: only 2% of projects globally
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Current CC Financing Initiatives
The Funding Gap in current funding initiatives
Climate change finance in developing countries: costs vs. funds available (per annum)
Sources: www.climatefundsupdate.org, Capoor & Ambrosi (2008), Design to Win (2007)
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Key Principles and Specific Concerns for Africa
Key Principles of the Convention
 Adequate
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New and additional
Equitable
Predictable
Agreed full costs
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Key Principles and Specific Concerns for Africa
Specific concerns for Africa
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Direct access
Coherence
Address adaptation
‘MRV’able
Accountable to the COP
Appropriate: grants vs. loans
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Description and Analysis of Policy Options
Three key functions for any option:
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Revenue raising
Governance
Revenue disbursement
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Description and Analysis of Policy Options
Revenue raising proposals include:
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Auctions of assigned amount units or emission allowances
(Norwegian proposal)
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Uniform global levy on CO2 emissions except for LDCs (Swiss)
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Levy on international bunkers (LDCs)
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Levy on mechanisms of flexibility
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Defined budgetary contributions (G77 and China)
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Hybrids (Mexico proposal)
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Other innovative mechanisms (EU, etc.)
African Group: - Options are not mutually exclusive
- Prioritize a list of the top 3 revenue raising mechanisms
- Need for a legally binding agreement
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Description and Analysis of Policy Options
Policy options for Governance:
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Two possible approaches:
1. A unified international fund approach
2. A System of multiple financing streams
Proposals focus on:
A. Creation of new institutional arrangements
B. Making efficient and effective use of current institutional
arrangements
C. Reforming existing institutional arrangements (e.g. GEF)
African Group:
 Full accountability to COP and direct access
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New financial institution: opposed by AI countries
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Current institutional arrangements likely to continue
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Need to support both reform of existing institutions and
creation new arrangements
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Description and Analysis of Policy Options
Policy options for Disbursement:
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Several approaches:
1. Prioritize mitigation activities
2. Prioritize adaptation activities
3. Mitigation and adaptation
4. Grant or debt-based
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African priorities:
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Adaptation funding must be grant-based
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Need to enhance absorptive and response capacity to funds
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Increased access to funds
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Equitable distribution
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Policy Recommendations
For an international financing mechanism:
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Revenue raising:
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For adaptation finance: support auctioning of AAUs and levies
on bunkers
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Support Mexican proposal if : - financial commitments by DCs
are removed; - linked to other innovative mechanisms
Governance:
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Support creation new arrangements and reform of existing
institutions
Disbursement and use:
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Keep strong push for adaptation funding
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Keep pushing for grant-based adaptation funding
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Keep pushing for direct access and equitable allocation of funds
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Strengthen alliance with other regions/Parties supporting adaptation
e.g. AOSIS
General:
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Keep putting pressure on AI countries to honour their commitments14
under the Convention
Policy Recommendations
Short term priorities
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Integrate CC issues into development:
Need to raise the issue of CC to a high political priority
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Be proactive towards existing public funds: e.g. use of programmatic approach;
develop adaptation projects/ programmmes
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Build response capacity to access and use new funds effectively
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Create carbon market opportunities:
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Improve domestic investment framework
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Bundling of small CDM projects
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Build capacity of regional banking institutions
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Help develop new sectors, e.g. renewable energy; REDD; agriculture
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Establish an African CC investment facility
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An overarching fund with multiple funding streams
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Directly capture funds for adaptation and mitigation
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May include a CDM investment fund
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Thank you!
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