Transforming Transportation 2010
Next Steps after Copenhagen:
Opportunities and Challenges in
the Transport Sector
January...
Inter-American Development Bank
Sustainable Energy and
Climate Change Unit
(ECC)
Table of content
1. Investments and financial flows needed for adaptation
2. Additional investment and financial flows in ...
Adaptation measures will require additional I&F flows; several tens
of billion $ per year (estimates between 40 to 170 bil...
2. Additional investment and financial flows for 2030 in
adaptation per sector (SRES A1B and B1)
Global: Overall needs ide...
• Private sources of funding can be expected to cover
a portion of the adaptation costs in several sectors. In
particular ...
4. Funding for adaptation
 UNFCCC Funds:
 GEF:
 Enabling activities: adaptation in the context of national
communicatio...
4.1 Special Climate Change Fund (SCCF)
Eligibility and framework to allocate
funds
Governance
Support
services
Implementat...
4.2 Least Developed Country Fund (LDCF)
Eligibility and framework to allocate
funds
Governance
Support
services
Implementa...
4.3 The Adaptation Fund (AF)
Eligibility and framework to allocate
funds
Governance
Support
services
Implementation Source...
4.4 Climate Investment Funds: Structure of the Funds
Clean Technology Fund (CTF)
(US 5.1 Billion)
Objective: To promote in...
4.4.1 Climate Investment Fund – Objectives
• Demonstrate potential for transformational change – at country / sectoral lev...
• Pilot and demonstrate approaches for integration of climate risk and
resilience into national and sector planning
• Stre...
4.4.3 Bolivia – Water resources pilots & PPCR
IDB Support with SECCI funds (under
preparation):
Design and implement demon...
4.4.4 PPCR – Caribbean Pilot
Jamaica
program
Haiti
program
Regional
program
Dominica
program
St. Lucia
program
St. Vincent...
4.5 IDB-SECCI
SECCI Products 2007 - 2008
Financial Products Non-Financial Products
Technical
Cooperation
Projects
53 Confe...
4.5.1 IDB’s Strategic lines of action in Climate
Change
Mitigation
Adaptation
i. Knowledge Development
ii. Institutional S...
4.5.2 SECCI Adaptation activities by country
Source: Mainstreaming climate change adaptation into development sectors;
Rev...
4.5.3 SECCI Adaptation activities by activity-
type
Source: Mainstreaming climate change adaptation into development secto...
 Parties “took note” of the Copenhagen agreement - a pledge by
developed countries to provide 30 billion $ a year for cli...
6. Innovative sources of finance
Proposals Estimated revenues
Extension of the 2% levy on CDM to other Market
Mechanisms
D...
• The funds that are currently available under the Convention
and the Protocol are small compared to the magnitude of
the ...
www.iadb.org/secci
Contact information:
Maria Netto, mnetto@iadb.org
Alfred Grünwaldt, alfredg@iadb.org
Sandra Valencia, s...
Overview of Climate Finance mechanisms for Adaptation
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Overview of Climate Finance mechanisms for Adaptation

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By Alfred Grunwaldt. Presented on Day Two of Transforming Transportation. Washington, D.C. January 15, 2010. www.transformingtransportation2010.org

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  • Clean Technology Fund (CTF) and Strategic Climate Fund (SCF) to promote low carbon and climate resilient growth and development
    Amount: US$ 6.1 billion pledged for 2009/10 UK, US, Australia, Germany, Japan, Netherlands, Norway, Switzerland, Sweden, France
    More detail
    Strategic Climate Fund (SCF) 7 Donor countries contributing around $1 billion:
    » Australia, Germany, Japan, Netherlands, Norway, Switzerland, and the UK
    Clean Technology Fund (CTF) 7 Donor countries contributing around $5 billion:
    » Australia, France, Germany, Japan, Sweden, the UK, and the US
  • Climate Resilience:
    Ecosystems perspective
    Climate resilience could be understood as “the capacity of a system to tolerate climate disturbances without collapsing into a qualitatively different state”
    Social-systems perspective
    Climate resilience could be understood as “ the capacity to anticipate climate impacts and plan for the future
  • Important to highlight that: In order achieve the objectives of the ‘regional pilot’ it is crucial to maintain constant interaction and sharing of processes, activities and lessons learned among the tracks (regional and countries)
  • Overview of Climate Finance mechanisms for Adaptation

    1. 1. Transforming Transportation 2010 Next Steps after Copenhagen: Opportunities and Challenges in the Transport Sector January 15, 2010 Overview of Climate Finance mechanisms for Adaptation January 15, 2010 Washington, DC
    2. 2. Inter-American Development Bank Sustainable Energy and Climate Change Unit (ECC)
    3. 3. Table of content 1. Investments and financial flows needed for adaptation 2. Additional investment and financial flows in 2030 in adaptation per sector 3. Sources of investment and financial flows 4. Funding for adaptation 4.1 Special Climate Change Fund 4.2 Least Developed Country Fund 4.3 Adaptation Fund 4.4 Climate Investment Funds SCF PPCR 4.5 Sustainable Energy and Climate Change Fund, SECCI 5. From Copenhagen to Mexico 6. Innovative sources of finance 7. Potential of Convention and Protocol funds
    4. 4. Adaptation measures will require additional I&F flows; several tens of billion $ per year (estimates between 40 to 170 billion $)*  Amounts are large in absolute terms, but small relative to global GDP and investment  Development patterns need to be changed now, because investment decisions taken today will affect greenhouse gas emissions of the future.  Existing climate change funds would need to be enhanced at a greater scale  Creating climate change safe future will require:  Shifts in investment patterns,  Scaling up funding,  Optimizing the allocation of existing funds. 1. Investments and financial flows needed for adaptation *Source: UNFCCC, Assessing the costs of adaptation to climate change; a review of the UNFCC and other recent estimates, 2009
    5. 5. 2. Additional investment and financial flows for 2030 in adaptation per sector (SRES A1B and B1) Global: Overall needs identified in this study correspond to 0.2 – 0.8 % of global investment flows or 0.06- 0.21 % of projected GDP in 2030. Developing countries: USD 28 to 67 billion in 2030. Amount large in absolute terms, but small relative to GDP and investment Sector Global (billion USD) Share of developing countries Agriculture, forestry and fisheries 14 50 % Water supply 11 80 % Human Health 5 100 % Coastal zone 11 40 % Infrastructure 8−130 25 % Source: UNFCCC, Assessing the costs of adaptation to climate change; a review of the UNFCC and other recent estimates, 2009 UNFCCC estimates of global investment costs for adaptation
    6. 6. • Private sources of funding can be expected to cover a portion of the adaptation costs in several sectors. In particular in the AFF and Infrastructure sector where investment in privately own physical assets would be needed. • However, public resources are expected to play a predominant role in all adaptation sectors. • National measures will be needed to encourage/support private sector adaptation and additional sources of funding dedicated to adaptation will be needed. 3. Sources of investment and financial flows
    7. 7. 4. Funding for adaptation  UNFCCC Funds:  GEF:  Enabling activities: adaptation in the context of national communication  SPA (funding as part of the GEF trust fund – follow the principle that projects shall have global benefit)  Special Funds under the Convention:  SCCF  LDCF  Adaptation Fund under the KP  Multilateral Funds: Climate Investment Funds (CIF), MDBs (example of SECCI in IADB), etc.  Bilateral Funds
    8. 8. 4.1 Special Climate Change Fund (SCCF) Eligibility and framework to allocate funds Governance Support services Implementation Source and levels of funds All developing countries that are Party to the Convention SCCF priority is adaptation planning and measures in climate-sensitive sectors. Co-financing required Council under the GEF GEF secretariat / GEF implementing and executing agencies Through GEF framework – implementing agencies Voluntary contributions by donors About $ 100 million pledged
    9. 9. 4.2 Least Developed Country Fund (LDCF) Eligibility and framework to allocate funds Governance Support services Implementatio n Source and levels of funds Under LDCF, LDCs receive support for the preparation of NAPAs as a framework for further funding of immediate needs LDCs receive funding for some portion of the urgent needs identified in NAPAs LDCF prioritizes “urgent and immediate” adaptation needs LDCF supports NAPA preparation, and priority NAPA activity implementation. Council under the GEF GEF secretariat GEF implementing and executing agencies Through GEF framework – implementing agencies Voluntary contributions by donors About $200 million pledged
    10. 10. 4.3 The Adaptation Fund (AF) Eligibility and framework to allocate funds Governance Support services Implementation Source and levels of funds All developing countries that are Party to the Kyoto Protocol Concrete adaptation projects or programmes Allocation of resources take into account: • Level of vulnerability • Level of urgency and risks arising from delay • Ensuring access to the fund in a balanced and equitable manner • Lessons learned in project and programme design and implementation to be captured • Securing regional co-benefits to the extent possible, where applicable • Maximizing multi-sectoral or cross-sectoral benefits • Adaptive capacity to adverse effects of climate change Adaptation Fund Board GEF secretariat World Bank as trustee Through “Accredited executing agencies” “Direct access” to National Implementing Entities (NIE) 2 % share of proceeds of CDM Voluntary contributions by donors Depending on quantity and price of CERs (until 2012). Assumingly $ 80−300 million per year
    11. 11. 4.4 Climate Investment Funds: Structure of the Funds Clean Technology Fund (CTF) (US 5.1 Billion) Objective: To promote investment in clean energies Clean Technology Fund (CTF) (US 5.1 Billion) Objective: To promote investment in clean energies Strategic Climate Fund (SCF) (US 1.0 Billion) Objective: to support targeted programs aimed at providing financing to pilot new approaches at a specific climate change challenge or sectoral response. Strategic Climate Fund (SCF) (US 1.0 Billion) Objective: to support targeted programs aimed at providing financing to pilot new approaches at a specific climate change challenge or sectoral response. Climate Investment Funds (US$ 6.1 Billion) Pilot Program for Climate Resilience (PPCR) Forest Investment Program (FIP) Program for scaling-up renewable energy in low income countries (SREP)
    12. 12. 4.4.1 Climate Investment Fund – Objectives • Demonstrate potential for transformational change – at country / sectoral level • Scale-up investments moving from project to programs - accelerate public and private investments • Seeks to maximize co-benefits of poverty reduction and sustainable development • Utilize and leverage skills and capabilities of Multilateral Development Banks • Ensure public and private sector activities compliment and leverage each other • Foster learning-by-doing and effective knowledge management to ensure sharing of lessons at national, regional and international levels • Support and inform UNFCCC >2012 financial architecture discussions
    13. 13. • Pilot and demonstrate approaches for integration of climate risk and resilience into national and sector planning • Strengthen capacities required to integrate climate resilience into development / vulnerable sectors • Scale-up and leverage climate resilient investment, building on other ongoing initiatives • Enable learning-by-doing and sharing of lessons at country, regional and global levels • Regional PPCR pilots to also strengthen cooperation and capacity at the regional level – to support national and regional development planning and processes. 4.4.2 Objectives of the Pilot Program for Climate Resilience, PPCR
    14. 14. 4.4.3 Bolivia – Water resources pilots & PPCR IDB Support with SECCI funds (under preparation): Design and implement demonstrative adaptation measures on water sector in the Altiplano: • drought: water collection, small dams, micro-irrigation, water usage efficiency, etc. • flooding: riverbed protection with retaining walls, water flow deviation, etc. • disaster risk prevention: protection of watershed heads, recuperation of micro- watersheds with active erosion, slope stabilization, early warning systems, etc. Pilot Program on Climate Resilience (PPCR) Objectives • Pilot and demonstrate approaches for integration of climate risk and resilience into national and sector planning • Strengthen capacities required to integrate climate resilience into development / vulnerable sectors • Scale-up and leverage climate resilient investment, building on other ongoing initiatives • Enable learning-by-doing and sharing of lessons at country, regional and global levels Preliminary identification of Priority sectors: • Water resources • Food Security • Health - DRM – as cross sectoral Lessons learned from pilots will serve as bases for: • Development of PPCR’s Strategic Program for Climate Resilience • Scale-up adaptation measures in priority sectors
    15. 15. 4.4.4 PPCR – Caribbean Pilot Jamaica program Haiti program Regional program Dominica program St. Lucia program St. Vincent & Grenadines program Grenada program Activities will proceed along two tracks: • Country-based investments in highly vulnerable countries: - Haiti - Jamaica - 4 small island states from the Organization of Eastern Caribbean States (Dominica, St. Lucia, St. Vincent and the Grenadines, and Grenada) Thematic approach towards Integrated Coastal Zone Management (ICZM) with emphasis placed on coastal development (includes vulnerable coastal settlements, infrastructure and ecosystems) • Region-wide activities: focused on: - climate monitoring, - institutional strengthening - capacity building and knowledge sharing
    16. 16. 4.5 IDB-SECCI SECCI Products 2007 - 2008 Financial Products Non-Financial Products Technical Cooperation Projects 53 Conferences 12 Investment Grant Projects* 0 Memorandums Of Understanding 6 Policy Based Loans 1 KCPs 2 CIF Investment Plan 1 Full Time Expert Advise on CC 4 SECCI Products: 1. Operation Related Activities: involve the use of financial products in the areas of Climate Change and Sustainable Energy such as: - Technical Cooperation - Investment Grants Activities are aimed at mainstreaming CC into the Bank’s operations by including climate change dimensions into new or ongoing projects 2. Institutional Strengthening Activities: involve activities for institutional strengthening in CC and SE Policies of borrowing countries. Includes: - Knowledge and Capacity Building Products - Climate Change Dissemination Activities (i.e. Conferences and Workshops on CC), and Partnership Development and Trainings. 2 funds: • SECCI-IDB • SECCI-Multi-donor Fund * New guidelines for the implementation of Investment Grants were approved in early 2009
    17. 17. 4.5.1 IDB’s Strategic lines of action in Climate Change Mitigation Adaptation i. Knowledge Development ii. Institutional Strengthening iii. Sector Guidelines/Climate Proofing iv. Sectoral Lending in Key Areas v. Scaling-up Investment
    18. 18. 4.5.2 SECCI Adaptation activities by country Source: Mainstreaming climate change adaptation into development sectors; Review of work in progress and work plan for 2010-2012, IDB 2009
    19. 19. 4.5.3 SECCI Adaptation activities by activity- type Source: Mainstreaming climate change adaptation into development sectors; Review of work in progress and work plan for 2010-2012, IDB 2009
    20. 20.  Parties “took note” of the Copenhagen agreement - a pledge by developed countries to provide 30 billion $ a year for climate change till 2012 and 100 billion $ by 2012 and of the establishment of a “Green Climate Fund”  Funds are to be distributed through mitigation, adaptation, technology and REDD  Still to be decided / clarified:  Legal status of the “Copenhagen agreement” will become formally applicable and how  Under which form / finance will the 30 $ billion be pledged for  What will be the share of finance for adaptation  What will be the governance of the new fund and how will this be linked to existing mechanisms (such as CIF, GEF, Adaptation Fund, etc.)  Detailed disbursement modalities 5. From Copenhagen to Mexico
    21. 21. 6. Innovative sources of finance Proposals Estimated revenues Extension of the 2% levy on CDM to other Market Mechanisms Depends on size of carbon markets – based on current size: $ 10 – 50 million a year Auction of allowances for international aviation and marine emissions $ 20 – 30 bio a year for both marine and aviation, if applied globally. Access to renewable programmes in developed countries 5% share of renewable energy programmes in developed countries = $ 500 million a year Auction of Assigned Amount Units Auction of 2% of AAUs for 25-40% reduction by 2020 at USD 25 price could bring about $ 5 bio a year. International air travel levy Levy of 5 euro on first and business class tickets – about $ 13 bio a year. International Maritime Emission Reduction Scheme: Fee of $ 10 per tonne of CO2 globally = $ 3bio a year Funds to invest foreign exchange reserves Voluntary allocation of up to 5 per cent of foreign exchange reserves to a fund – about $ 100 billion a year “Carbon taxes” applied globally Levy of $ 2/tCO2. Applied globally could generate $ 48 billion a year. Debt-for-clean-energy Swap No estimation available. Nationally Appropriate Mitigation Actions No estimation available. Source: United Nations Framework Convention for Climate Change, UNFCCC
    22. 22. • The funds that are currently available under the Convention and the Protocol are small compared to the magnitude of the needs identified in this study. • The funds that are managed by the GEF (SPA, LDCF and SCCF) that are available for adaptation projects currently are about USD 275 million worldwide. • The Adaptation Fund could receive USD 80 300 million per‑ year for the period 2008–2012. • Assuming a share of proceeds for adaptation of 2 per cent continues to apply post 2012, the level of funding could be: – USD 100–500 million per year for a low demand; – USD 1–5 billion per year for a high demand. • New sources of funding need to be identified! 7. Potential of Convention and Protocol funds Summarizing……
    23. 23. www.iadb.org/secci Contact information: Maria Netto, mnetto@iadb.org Alfred Grünwaldt, alfredg@iadb.org Sandra Valencia, svalencia@iadb.org

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