Difficulties within the UN Green Climate Fund will bleed into sensitive negotiations on climate change next week in Bangkok

A proposal to establish a similarly structured trans-national Western Climate Fund to receive contributions for the multilateral funds of the Paris Agreement, in particular the LDCF, from States and Provinces in or around the Western Climate Initiative (WCI).

Submission on Common Timeframes for NDCs by TRINIDAD AND TOBAGO AND BELIZE 

A Brief History

Oxford Energy and Environment Comment

Proceedings of the 2009 Oxford Fellowship and Seminar ecbi Report

Architecture at gouvernance ecbi note de politique generale

A far-reaching debate on the use of auction revenue from (EU) Emissions Trading.

Devolution of funding decisions to designated national/regional climate change funding entities Oxford Energy and Environment Comment

Adaptation Quick Start Funding at the Cross Roads Oxford Energy and Environment Comment

Renegotiating the role of civil society in the governance of climate finance OIES EV 50

Some thoughts put together by the 2010 ecbi Fellowship ecbi Report

It Must be Said! blog

CDKN Policy Brief

 It Must be Said! blog 

Preliminary Thoughts

OCP Blog

OCP/ecbi Submission to the Standing Committee on Finance

What needs to be done for Durban (COP 17) Oxford Energy and Environment Brief

An Overview of the UNFCCC Negotiations 

This brief examines the gap in adaptation finance that must be bridged in order to fulfill the values of the Paris agreement, with a focus on regions such as Southeast Asia that are at particular risk from the effects of climate change. It also discusses new adaptation finance commitments from governments and the private sector; the landscape of existing adaptation finance channels and initiatives onto which these commitments build; and the undiminished role of developed countries—such as the United States, Japan, EU countries, and others—to facilitate an increase in adaptation finance as the Paris era begins.

The Green Climate Fund was launched in late 2013 and is set to play a key role in disbursing some of the $100 billion per year pledged to flow annually to developing countries by 2020 in support of climate action. A key question for the GCF Board concerns the rules for allocating its funds. Resource allocation is a very tricky business, both technically and politically. However, it is by no means a new one. Considerable experience has been accumulated not only by other international funding institutions, but also in domestic contexts, and the GCF can draw lessons from this experience. During the past six months, Benito Müller worked with other analysts to pull together some of these lessons, and form recommendations for the GCF Board. Here is a summary of our findings and recommendations. This publication is available in both Spanish in English.

A report from the Commonwealth Expert Group on Climate Finance to the Commonwealth Heads of Government Meeting 2013. The report sets out practical steps to unlock climate financing for small and vulnerable states worldwide. The Expert Group brought a wealth of expertise and experience from around the Commonwealth to bear on this issue, led by the Chair, HE Bharrat Jagdeo, former President of Guyana. The Report provided 5 key recommendations for consideration: a) improve transparency and accountability around commitments and pledges; b) improved access to existing sources of climate finance; c) focus leader-level attention to strengthen national planning systems; d) support the UNFCCC process and the post-2015-development framework; and e) support the reform of the global economy to support climate needs.

From the 8th International Conference on Community Based Adaptation to Climate Change, 24-30 April 2014. It outlines shared principles to achieve CBA, strengthening international and national finance for local adaptation, and engaging non-state actors in local finance.

This paper provides an overview the People’s Survival Fund (PSF) and finding the right balance with access modalities and institutional arrangement for the fund.

The Board of the Green Climate Fund (GCF) is currently in the process of designing “access modalities” as part of the fundamental Fund architecture. Over the last few months, the focus of this exercise has slowly but significantly turned towards the idea of “Enhanced Direct Access” (EDA) through “Funding Entities” (FEs) ? as envisaged in paragraph 47 of the GCF Governing Instrument (GI). This idea is by no means new.2 Indeed there exists a considerable literature considerable on the topic, but it was only at the most recent GCF Board meeting in Nusa Dua, Indonesia, that the idea was given centre stage in a workshop on “Country Ownership and Enhancing Direct Access” organised by the Indonesian host of the meeting.
The aim of this Guide is to provide a rough idea of what this Enhanced Direct Access modality is meant to be and how it relates to some of the other, more traditional modalities and approaches such as the “Programmatic Approach”. As such it is meant to be complementary to the recent ecbi Policy Brief on “Devolved Access Modalities"

This report proposes to develop a policy menu to strengthen the ambition to mitigate greenhouse gases that integrates best practice policies with support options. The policy menu would enable countries to identify, sign up for and receive support to implement proven policies and concepts in high impact areas.

The ideal split between public and private sources of climate finance has been left deliberately ambiguous in the major meetings on the subject. This blog argues that the promised $100bn should all come from public funds, rather than split with the private sector, and suggests how governance arrangements could be made most effective and legitimate.

Background Papers for 7th GCF Board meeting in Songdo, 19-21 May 2014

Comment on Initial Proposal Approval Process (GCF/B.07/03)

There are several climate funds already in operation before the establishment of the Green Climate Fund (GCF). This paper draws on the analysis of climate funds relevant for climate change activities in Africa to improve stakeholders understanding of what should be different with the GCF in Africa. The analysis indicates that projects financed by climate funds are predominantly small-scale with high transaction costs. The mean amount of total approved projects in Africa is US$7.21 (28.41) million. Over 95% of these projects is funded with grants. The mean disbursement ratio for the projects is 34.9% (45.4) and the mean initial disbursement lag is 1.9 years (1.2). To enhance scalability of projects and predictability of funds, African countries will have to work with the GCF to diversify financial instruments away from grants to loans and private capital to finance medium- and large-scale projects. The analysis also indicates that African countries should rally behind a position for ‘additionality’ of financial flows from the GCF that is realistic. Outsourcing fund management (including risks analysis and due diligence) activities of national funding entities to domestic financial institutions (FIs) will help reduce the expense ratio and enhance mainstreaming of climate finance in FIs in Africa.

In their Scenario Note on the sixth part of the second session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action (ADP), the ADP Co-chairs emphasized that “it is essential to use the October session to make significant progress in clarifying and advancing the content of the 2015 agreement, to build bridges and to work together on outstanding issues. In particular, it will be important in the October session, to further clarify and flesh out the operational aspects of the agreement. Key challenges that will need focussed attention in our work include: deepening the understanding on the longer-term cycle of contributions/commitments, including its periodicity (length) and the functions of the steps proposed, such as any periodical consideration or assessment and review”

This ecbi/OCP Concept Note introduces the idea of a Dynamic Contribution Cycle as a contribution to the debate on these issues.

This report compares the costs of low-carbon electricity and low-carbon transportation systems with current systems.

International equity/distributive justice (a fair share for each recipient country) and global efficiency (biggest global bang for the buck) provided the bang in question is well defined for all the relevant activities are both legitimate resource allocation objectives that need to be addressed.

Generally, efficiency and equity cannot be achieved simultaneously through a single allocation which is why the proposed way forward is to deal with the two objectives in separate allocations, whereby each funding envelope is divided into two (not necessarily equal) sub-envelopes: one guided purely by efficiency, and the other purely by equity considerations. The exact nature of the allocation methods in the two sub-envelopes and their relative size will depend on the funding theme.

This Submission focuses on the allocation of adaptation resources in the context of taking account of recipient country needs. While it is possible to estimate adaptation funding needs of countries, it is not straightforward, if at all possible, to compare adaptation activities with respect to their cost-effectiveness: there is no globally comparable 'bang' in this context. This is why adaptation resources should be allocated principally in proportion to adaptation funding needs (in conjunction with the basic floor allocations)

A clear deal on climate finance is paramount to the complex structure of a new global agreement on climate change. It would facilitate effective action on adaption and help emerging economies to take on mitigation commitments, yet there remains a significant gap between the global goal of USD 100 billion per year to support mitigation and adaptation and the actual pledges by countries. This LRI briefing paper offers some proposals for binding provisions in a new legal instrument. It touches on compliance and enforcement, but mainly focuses on textual options that clearly signify parties’ intention to enter into legally binding commitments. The authors do not advocate any particular solution or amount, and there are numerous other possible approaches.

EurActiv France reports on how the Green Climate Fund will be launched later this year, but so far without capitialisation from the EU, India, or China. France promised to contribute, and called on its partners to do the same.

A Legal Note which considers the legal options for creating such a space for Quantified Emission Limitation and Reduction Obligations (QELROs) in the Paris Agreement. In particular, it explores the legal feasibility of having an annex to a Treaty/Protocol where Parties could inscribe targets which would automatically become legally binding.

This Climate Finance Fundamental provides a snapshot of the operationalisation and functions of the Green Climate Fund. The Fund’s role in a post-2020 climate regime remains to be clarified, and both the scale of its resourcing as well as the effectiveness with which it functions will shape this role.

Renewable energy financing in emerging economies faces particularly daunting challenges, but there are creative policy solutions that could potentially reduce the
cost of renewable energy support by as much as 30%. This report looks at two potential solutions: a) reducing the cost of using debt sourced from the developed world; and b) improved the cost-effectiveness of domestic renewable energy support programs.

The Green Climate Fund (GCF) was launched in late 2013 and is set to play a key role in disbursing some of the $100 billion per year pledged to flow annually to developing countries by 2020 in support of climate action. A key question for the GCF Board concerns the rules for allocating its funds, as Benito Muller, Managing Director of Oxford Climate Policy, explains.

This OIES Energy and Environment Working Paper is the third and final study on resource allocation which Benito Müller has been engaged in over the past year – the previous papers being on the Allocation of (Adaptation) Resources: (September 2013) and on Quantity Performance Payment by Results: (July 2013). This Working Paper looks at the lessons to be learned, in particular for the Green Climate Fund, from the Performance-Based Allocation (PBA) system of the World Bank’s International Development Association (IDA), and the Resource Allocation Framework (RAF) as well as the System for Transparent Allocation of Resources (STAR) of the Global environment Facility (GEF).

Summary (excerpt)

Transforming the energy infrastructure towards low-carbon technologies in both industrialized and developing countries is a critical part of the global greenhouse gas mitigation efforts that are necessary to limit dangerous climate change. Renewable Energy Feed-in tariffs (REFIT) have been crucial policy instruments to rapidly expand renewable electricity generation in Europe, and have been taken up in a rapidly increasing number of countries outside Europe in the last years. This policy paper argues that the Green Climate Fund (GCF) should become a key UNFCCC vehicle to support further diffusion of REFITs in developing countries to a level that mobilizes the hundreds of gigawatts of renewable energies required for a 2° C stabilization scenario. The GCF aims at making a “significant and ambitious contribution” to these efforts, guided by the principles of the UNFCCC. As the GCF is currently still emerging, we offer institutional design options that would allow facilitating rapid implementation, provided there is a sufficient capitalization.

This OIES Energy and Environment Brief looks at lessons from fiscal transfer mechanisms, i.e. instruments used to allocate central tax revenue to sub-national governments, for the allocation of (adaptation) resources by the Green Climate Fund.

Over the past few years, there has been a rapid increase in new national institutions providing funding for climate change mitigation and adaptation activities. To date, more than 30 countries are in the process of establishing or putting into operation national funding entities dedicated to climate finance – or national climate funds. This discussion paper is based on lessons learned from GIZ’s work on the ground. It examines its experiences in carrying out capacity development measures and technical assistance to offer insight into the new generation of funding entities.

This paper highlights some of the promising new approaches from the private sector and think tanks for how public resources could be used to mobilize private investment to maximal effect.

Blog post from the International Institute for Environment and Development. As developing countries transition towards low carbon economies, governments must take difficult decisions about how they should scale up their renewable energy sectors. Initiatives, such as the Scaling-up Renewable Energy Programme (SREP), aim to catalyse investments in renewables, often with outside support from the private sector. But they face tough choices between investing in proven or novel low-carbon technologies, and between large-scale and small-scale approaches.

As National Adaptation Planning processes are beginning to unfold in many countries, this paper draws on experiences of programs outside the UNFCCC such as Climate Investment Fund’s Pilot Program for Climate Resilience (PPCR). One of the key components of PPCR is to mainstream climate resilience development into development planning. The paper shares some early lessons from a cross-country assessment of experiences and trends in PPCR approaches in implementing its programmatic cycle, prioritisation of programs for mainstreaming, institutional strengthening, and supporting mainstreaming. These trends also give clear evidence that climate readiness of the countries and strength of institutional arrangements significantly influenced the way PPCR has approached different participating countries.

Sequencing can be absolutely key to the success of negotiations. This article proposes a three stage approach based on the sequencing used in the Kyoto Protocol.

Review Note on background paper GCF/B.06/05 for the Sixth Meeting of the Green Climate Fund Board

Pre-GCF Board Meeting Luncheon Discussion on Country Ownership and Enhancing Direct Access

Hosted by the Ministry of Finance of the Republic of Indonesia on 17 February 2014 in Nusa Dua, Bali

Pre-GCF Board Meeting Luncheon Discussion on Country Ownership and Enhancing Direct Access

Hosted by the Ministry of Finance of the Republic of Indonesia on 17 February 2014 in Nusa Dua, Bali

In this draft discussion note, prepared for Pre-GCF Board Meeting Luncheon Discussion on “Country Ownership and Enhancing Direct Access” on 17 February 2014 convened by the Indonesian host of the sixth GCF Board meeting, Benito Müller and William Pizer present some lessons from existing practice regarding two closely related devolved access modalities, namely the programmatic approaches and enhanced direct access.

To illustrate these lessons, they use a number of Exhibits contributed by Sophie de Coninck, Dan Morrow, Gonzalo Serrano de la Rosa, and Anju Sharma.”

Dr Müller is Director Energy and Climate Change at the Oxford Institute for Energy Studies, a recognized independent centre of the University of Oxford, and Managing Director of Oxford Climate Policy. Prof Pizer is at the Sanford School of Public Policy and Faculty Fellow at the Nicholas Institute for Environmental Policy Solutions at Duke University. He formerly served as a Deputy Assistant Secretary at the US Treasury, managing the multilateral environmental accounts.

The Climate Investment Fund (CIF) is a funding channel designed to assist developing countries pilot low emission and climate resilient development approaches. As the fund unfolds, lessons can be gathered from the early stages of the programme. IIED is undertaking case studies of selected countries participating in two Strategic Climate Fund (SCF) programmes, one of which is the Pilot Programme for Climate Resilience (PPCR). This country report looks at the status of PPCR in Bangladesh. These initial reflections point to areas where further in-depth political economy analysis will be needed to understand how planning and implementation decisions are made and be able to attribute the real cause behind observed trends.

Climate Investment Fund (CIF) is a funding channel designed to assist developing countries pilot low emission and climate resilient development approaches. As the fund unfolds, lessons can be gathered from the early stages of the programme. IIED is undertaking case studies of selected countries participating in two Strategic Climate Fund (SCF) programmes - one of which is the Scaling up Renewable Energy Programme (SREP) in Ethiopia and Nepal. This country report looks at the status of SREP in Ethiopia. These initial reflections point to areas where further in depth political economy analysis will be needed to understand how planning and implementation decisions are made and be able to attribute the real cause behind observed trends.

This article draws on lessons learned from existing multilateral financing mechanisms and the need to mainstream climate finance into development. It proposes a business plan for the GCF that aims to combat climate change and create development opportunities in unison.

Crunch time for the Green Climate Fund

By Christa Clapp Head of Climate Finance, CICERO, Germana Canzi Head of Programme and Marketing, Climate Strategies

Despite laudable aims of helping the world’s poorest cope with climate change, the Green Climate Fund has no shortage of critics. What must it do to ensure that its good intentions translate into tangible outcomes?

Submission to the GCF Board with regards to the Strategy on Accreditation

This submission is in response to the 18 April invitation by the Green Climate Fund (GCF) Secretariat for submission of inputs on the strategy on accreditation in relation to the questions in the report of the Accreditation Committee on the progress on developing a strategy on accreditation.

After examining the current state of affairs, this submission concludes that:
(i) in the longer term, the best limitation strategy is to set a cap on numbers of accredited entities, and
(ii) in the short-term, the most effective way to mitigate the existing imbalances (as well as to incentivise the “signature” Enhanced Direct Access modality) is to grant top priority accreditation to nation-wide entities submitting an EDA pilot proposal.

Governor’s speech at the Regional Dissemination Forum on Green Financing in Dhaka, Bangladesh.

Developed countries committed to mobilise jointly USD 100 billion a year in climate finance by 2020 for climate action in developing countries. Five years after the initial commitment was made at COP15 in Copenhagen in 2009 and six years ahead of the target date of 2020, this report provides a status check on the level of climate finance mobilised by developed countries in 2013 and 2014.

Presentation on the future of the LDCF made at the UN Campus in Bonn.

Presentation by Benito Müller to the Least Developed Countries (LDC) Group Thematic Expert meeting in planning for the LDC Group Strategy 2015 in Bonn
16 April 2015

This brief history of Enhanced Direct Access traces the idea back to a number of historic precursors, such as the Kreditanstalt für Wiederaufbau (KfW under the Marshall Plan, the World Bank Kecamatan Development Program in Indonesia, and the Brazilian Amazon Fund. It then follows how the idea evolved under the Bali Action Plan, the Transitional committee for the design of the Green Climate Fund (GCF) and finally, the GCF Board, culminating in the establishment of a GCF EDA Pilot Phase.

http://www.globalhealthaction.co.uk/climate-change/hope-for-the-best-pre...

The recent elections have had a sobering effect on expectations regarding US federal actions on climate change, although true to form, President-elect Trump seems to be changing positions on the hoof as he trots along.
 
This blog looks at the likely negative impact of the US elections on American climate finance for developing countries, and looks at how they could be mitigated at least to some degree through sub-national innovative finance.

Final draft Leaders’ Joint Statement on Climate Change and Clean Energy, EU-China summit 2 June 2017 Brussels, published at:

http://www.climatechangenews.com/2017/06/02/eu-china-statement-manifesto...

Personal letter of appreciation to Massachusetts State Senator Mike Barrett from UNFCCC Executive Secretary Patricia Espinosa

EXECUTIVE SUMMARY

Multilateral climate funds play a key role in using public finance to help drive the economic and societal transformation necessary to address climate change. There is growing pressure for policymakers to make the architecture of funds more effective and coherent.

This report examines seven key multilateral climate funds and recommends operational and architectural reforms to improve their ability to deliver low-emissions and climate-resilient development

Submission on the Review of the Functions of the Standing Committee on Finance

We propose that the SCF, in its resource mobilization function, develop a Work Plan on Alternative and Innovative Sources of Finance (similar to the existing Work Plan on MRV of Support) – possibly implemented through the Long-Term Finance Work Programme under the aegis of the SCF – with the aim to produce regular (biennial) reports to the COP and the CMA to feed, inter alia, into the biennial ministerial roundtable on climate finance

On the evening of 14 March 2017, the ecbi convened a seminar on resource mobilisation for the Adaptation Fund at La Redoute in Bad Godesberg, Germany. The seminar was co-hosted by Michael Kracht, incoming Chair of the Adaptation Fund Board, and Benito Müller, ecbi director. It was attended by members and alternates of the Adaptation Fund Board, as well as representatives of the Adaptation Fund Secretariat and Trustee.

After a welcome by the incoming Chair, Müller gave an introductory presentation on "Mobilising Resources for the Adaptation Fund", discussing three problems facing the resource mobilisation efforts of the Adaptation Fund:
(i) the drying up of the original core funding source, the share of proceeds from the Clean Development Mechanism;
(ii) the danger of voluntary donations being diverted to the Green Climate Fund to make up for the shortfall, expected after the reneging by the new US administration; and
(iii) administrative overheads involved in national contributions to small funds.

Müller proposed that the Adaptation Fund receive core funding from the Green Climate Fund, under programmatic access. In this context, he proposed that the Board, as soon as possible, request the Secretariat and the Trustee to prepare all the necessary documents necessary for a Board decision to speedily launch an accreditation process with the Green Climate Fund, if it desired, after the issue of whether the Adaptation Fund “may serve the Paris Agreement" is resolved at the next climate conference in November 2017.

The second presentation of the evening on "Potential linkages between the AF and the GCF" was given by David Eckstein, Climate Finance and Investments Policy Advisor, Germanwatch. This was followed by a presentation entitled "You've got the Power! Accrediting the AF to the GCF" by David Rossati, Lecturer at the Law Salford Business School, UK. Rossati explained the independent legal opinion he provided for a recent OCP/ecbi Discussion Note "Time to Decide! The Adaptation Fund after Marrakech", regarding whether the Adaptation Fund Board has the power to initiate accreditation with the GCF, and he discussed some issues arising from the recent update of the Adaptation Fund Secretariat paper on Potential Linkages Between the Fund and the Green Climate Fund.

In the final presentation of the evening, Müller introduced the “Oxford Crowdfunding for Adaptation Initiative” that the ecbi team has initiated, to tap into socially responsible corporate air travel. Müller estimated that if properly marketed, the scheme could provide the Adaptation Fund with US$ 125 million per annum.

Draft (8 February 2017) OpEd arguing for contributions by American states and cities to multilateral climate finance, in particular the UN Least Developed Countries Fund, given the cessation of Federal finding under the trump administration

ecbi Policy Brief, March 2015

National and international finance is increasingly becoming available in developing countries to address climate change for both mitigation and adaptation. However, existing (domestic) arrangements for climate finance are often dispersed and fragmentary, and lack clear goals and strategies, therefore allowing for neither efficiency nor accountability.

This paper examines the governance arrangements for climate finance in India, and proposes the creation of an Indian National Climate Fund to pool climate finance from different national and international sources, to channel it to the State and local levels.

The Fund should seek to “consolidate without centralisation”, and to devolve decision-making on the use of climate finance to local governments. In addition to defining a common vision and principles for climate finance, such a National Funding Entity should aim for coherence with national development goals strategies, and integration across sectors; distributive justice, to ensure that climate finance reaches those who need it most, and that their needs are prioritised; and a balance between different thematic areas (such as mitigation, adaptation, capacity building etc.). It should also review progress continuously, and make mid-course corrections where necessary.

What is the future of adaptation financing under a new global climate agreement and beyond the UNFCCC? What role will an actor such as the Kyoto Protocol Adaptation Fund, which strengthened country ownership by pioneering direct access, play as a result of ongoing efforts to rationalize the global climate finance architecture with the full operationalization of the Green Climate Fund (GCF) as a new major player?

These are some of the questions that were put to the participants of a discussion meeting convened by the Heinrich Boell Foundation North America and the European Capacity Building Initiative (ecbi) on 7 December 2014 (during UN Climate Conference in Lima/Peru). The conversation was kicked off with a short presentation by Benito Mueller on the future of the Adaptation Fund (available at http://www.eurocapacity.org/public/chronicle.shtml).

This meeting report was produced jointly by the Heinrich Boell Foundation and Oxford Climate Policy, on behalf of ecbi.

There is little regional data on private investment in CCD beyond that to renewable energy. This paper applies a methodology to address this data gap and to support greater understanding of the role of public incentives in shaping private investment in climate relevant sectors. Because of the granularity needed to understand private investment choices as they relate to CCD, the paper focuses on lessons learned from analysis of four countries and two sectors: Uganda and Namibia’s energy sectors and Zambia and Tanzania’s agricultural sectors. Cross-cutting findings suggest there remains a significant gap in support to the diffusion of decentralised and smaller-scale technologies (hard and soft) which are particularly relevant for Africa. Also, creating the enabling environment for private investment in CCD requires greater support at market level and increased policy coherence within climate relevant sectors, including public support to market-level information collection and dissemination.

A user-friendly guide to financing options for forests and climate change including an introduction to climate financing, generating proposals, delivery and institutional arrangements.

Developed countries have relied heavily on aid budgets to fulfill their pledges to boost funding for addressing climate change in developing countries. However, little is known about how interaction between aid and other ministries has shaped contributors’ diverse approaches to climate finance. This paper investigates intra-governmental dynamics in decision-making on climate finance in seven contributor countries (Australia, Denmark, Germany, Japan, Switzerland, the UK, and the US). While aid agencies retained considerable control over implementation, environment and finance ministries have played an influential and often contrasting role on key policy issues, including distribution between mitigation and adaptation and among geographical regions.

This guide from the Climate Finance Advisory Service provides negotiators with a synopsis of the key climate finance discussions undertaken in 2014 under the United Nations Framework Convention on Climate Change (UNFCCC). It aims to inform negotiators and stakeholders who are interested in the different climate finance agenda items and deliverables at the 20th Conference of Parties (COP20) to be held in Lima, Peru. Furthermore, it assesses possible outcomes in Lima that can prepare the way for the new global agreement on climate change, which will be agreed at the COP in Paris in 2015.

Adapting to and mitigating climate change will affect most sectors of our economies. Addressing this problem will require us to rethink our future investment trajectories across the board. Many government agencies and institutions are involved, as well as businesses, civil society, local institutions and communities. Each one of these has its own particular mandates, interests and priorities. Many countries have begun to establish institutional arrangements to direct public finance and investment towards solutions to climate change.

This paper analyses the arrangements that have emerged in Colombia, India, Indonesia, the UK and Zambia to draw lessons on the conditions that facilitate or impede coordination across institutions and actors. It seeks to deepen our understanding of what drives existing arrangements for coordination around climate change-related policy and climate finance.

Should the Adaptation Fund seek accreditation with the Green Climate Fund?

What should be the role of the Adaptation Fund in the post-2015 climate finance regime? In particular, what should be its relation with the Green Climate Fund? This blog by Benito Müller argues that it makes sense for both the AF and the GCF to harness their complementarities by making the AF the main multilateral “retail outlet” of the GCF for concrete small and micro adaptation projects, particularly under the regular direct access modality, as pioneered by the AF. For this to happen, the AF Board must (i) become an accredited intermediary (‘funding entity’) of the GCF, and (ii) arrange a ‘complementarity MOU’ with the GCF.

OCP/ecbi Think Piece

Having been established more than a decade ago to address the urgent and immediate needs of the Least Developed Countries (LDCs) especially vulnerable to the impact of climate change, the Least Developed Countries Fund for Climate Change (LDCF) still struggles to obtain adequate and predictable funding. The Global Environment Facility, the operating entity of the LDCF, has been unable to program LDCF resources at the level of around US$200 million per year, as proposed in the Programming Strategy for the LDCF.

More generally, this Think Piece by Benito Müller argues, a success at the UN Climate change summit Paris in December will require a significant finance package which is not ad hoc, but rather provides genuine longer-term predictability. In addition to using the proceeds of new international market mechanisms, we think there is also a need to look at innovative sources at the national and sub-national level.

At present, the most promising candidate in this respect is the proposed EU Financial Transaction Tax, aimed to enter into force by the end of the year, with an estimated annual revenue of €37 billion, earmarked for development aid, fighting epidemics and climate change.

However, there are other, sub-national options that need to be explored, in particular where national options are politically unrealistic or insufficient. California could thus decide to use part of the revenue from auctioning allowances for its emission trading scheme. Over the last couple of years this revenue has been steadily increasing to a level (over $1bn in FY14-15) where it might well be politically feasible to use part of it to cover a significant share of the $200 million per annum considered to be the strategic resource requirement of the LDCF.

It is imperative that the recently launched GCF strategic planning process focus not only on strategic objectives and the like, but also on institutional and governance architecture, and in particular on enhancing complementarity, effectiveness, and efficiency through a division of labour between the GCF as wholesale agent, and other funding entities as specialized retailers, be it in-country (preferably) through Enhanced Direct Access, or through designated international funds, in particular those that will be serving the financial mechanism of the new Paris Agreement.

At the tenth meeting of the GCF Board (July 2015), the Accreditation Committee was requested to work on a strategy on accreditation, “examining efficiency, fairness and transparency of the accreditation process, and the extent to which current and future accredited entities will enable the Fund to fulfil its mandate.” This blog argues that for reasons of efficiency and fairness, the strategy will need to pursue two strategic objectives, namely:

- achieving a fair balance between international and direct access entities, and
- ensuring that the GFC is not suffocated by overwhelming numbers of accredited entities.

After examining the current state of affairs, the blog proposes that in the short-term, the most effective way to mitigate the existing imbalances (as well as to incentivise the “signature” Enhanced Direct Access modality) would be to grant top priority accreditation to nation-wide entities submitting an EDA pilot proposal.

Developed country climate finance is generally regarded as quid pro quo for developing country mitigation action, and vice versa. In the Copenhagen Accord, for example, developed countries commit themselves to a goal of mobilizing jointly USD 100 billion dollars a year by 2020 to address the needs of developing countries … in the context of meaningful mitigation actions and transparency on implementation. The latter was provided through developing country ‘Copenhagen pledges’ (Nationally appropriate mitigation actions of developing country Parties).
What could be the equivalent finance quid in Paris for the developing country Intended Nationally Determined mitigation Contributions (INDCs)?

If, following the example of the Copenhagen pledges, the INDCs currently submitted are meant to be one-off occurrences, then some new overall finance goal for 2025/30 might be sufficient. If, however, the (I)NDCs are meant to be part of an enduring contribution cycle then it stands to reason that the ‘finance quid’ needs to have a similar periodic structure. This Concept Note argues that the most pragmatic and effective option for such a periodic finance instrument would be the establishment of a Paris Replenishment Cycle for the UNFCCC Financial Mechanism. This, it is argued, would satisfy many of the long-standing developing country demands, in particular the key demand for more predictability.

Working draft paper featuring 22 climate-related projects, programs, and policies to inform the Green Climate Fund and lessons for their financing strategies.

Not every decision has to come from the top. In fact, the drive to reduce greenhouse gas emissions would be greatly enhanced if international organizations like the Green Climate Fund chose ambitious national programs and allowed countries the flexibility to select for themselves in which communities investments would be made. This opinion piece discusses the logic behind enhanced direct access the Green Climate Fund.

Policy interest in the cost of adaptation is growing, but compared to the mitigation literature adaptation cost research is still in its infancy. Global adaptation cost estimates from more recent studies range from around $25 billion a year to well over $100 billion by 2015-2030. The wide range is symptomatic of the poor state of knowledge. Important knowledge gaps remain both in terms of scope (whether all relevant impacts are covered) and depth (whether, for a given impact all relevant adaptation options have been considered). The omissions introduce biases in both directions, upward and downward, but it is likely adaptation costs have been underestimated so far.
Adaptation is only one part of the overall response to (and therefore the costs of) climate change. The total burden of climate change consists of three elements: the costs of mitigation (reducing the extent of climate change), the costs of adaptation (reducing the impact of change) and the residual impacts that can be neither mitigated nor adapted to. The annual adaptation cost estimates reviewed here cannot be directly compared with the other two cost elements. Making that comparison would require an integrated model that takes into account the total impact of greenhouse gases over their lifetime in the atmosphere.

Policy interest in the cost of adaptation is growing, but compared to the mitigation literature adaptation cost research is still in its infancy. Global adaptation cost estimates from more recent studies range from around $25 billion a year to well over $100 billion by 2015-2030. The wide range is symptomatic of the poor state of knowledge. Important knowledge gaps remain both in terms of scope (whether all relevant impacts are covered) and depth (whether, for a given impact all relevant adaptation options have been considered). The omissions introduce biases in both directions, upward and downward, but it is likely adaptation costs
have been underestimated so far.

Adaptation is only one part of the overall response to (and therefore the costs of) climate change. The total burden of climate change consists of three elements: the costs of mitigation (reducing the extent of climate change), the costs of adaptation (reducing the impact of change) and the residual impacts that can be neither mitigated nor adapted to. The annual adaptation cost estimates reviewed here cannot be directly compared with the other two cost elements. Making that comparison would require an integrated model that takes into account the total impact of greenhouse gases over their lifetime in the atmosphere.

Adapting to and mitigating climate change will affect most sectors of our economies. Addressing this problem will require us to rethink our future investment trajectories across the board. Many government agencies and institutions are involved, as well as businesses, civil society, local institutions and communities. Each one of these has its own particular mandates, interests and priorities. Many countries have begun to establish institutional arrangements to direct public finance and investment towards solutions to climate change.

This paper analyses the arrangements that have emerged in Colombia, India, Indonesia, the United Kingdom (UK) and Zambia to draw lessons on the conditions that facilitate or impede coordination across institutions and actors. It seeks to deepen our understanding of what drives existing arrangements for coordination around climate change-related policy and climate finance.

Germanwatch Briefing Paper
September 2012

SUMMARY

In response to the launch of the OECD "Adaptation Marker" in 2010 and the first complete Creditor Reporting System dataset published in March 2012, this paper examines the credibility of the marker. Our assessment reveals that far less projects than the donor countries reported are in fact relevant to what can be considered climate change adaptation. In brief, we find that roughly 65 % of all activities listed in the original OECD dataset are unrelated to adaptation or at least do not state adaptation as principal or significant objective. Further, from the remaining 35 % only about half of the projects are coded correctly while most of the remaining activities are over-coded. Through this analysis the paper highlights that the current reporting system is prone to overestimation due to several significant insufficiencies. To make the data more reliable and the marker more credible, the OECD as well as the donor countries should work towards indispensable improvements of the guidance for applying the marker.

OECD/IEA working paper

The paper analysis two issues 1) how the international community counts both public and private financial flows towards the $100 bn commitment, and 2) how to track these flows. To collect robust, consistent and comparable data from countries and entities the paper provides definitions or guidelines on terms such as additionality and mobilisation. On additionality: following the UNFCCC negotiations in Durban 2011 there is no detailed guidance as to what types of financial flows might be counted, nor on how to count them; and on mobilising: they explain what is meantby climate finance being “mobilised”, and how it can be demonstrated. This is provided as context for enabling the development of a Monitoring, Reporting and Verification framework for tracking climate finance flows. The paper focuses on which financial flows might count towards the $100 bn by identifying more political questions and suggest technical elements which can improve the tracking system. Table 2 in the paper provides a good overview of available data and systems. The paper elaborates important questions and implications for multiple sources, instruments, intermediaries and recipients involved in providing or receiving climate finance summarized in Table 3 – 12. Table 13 summarises the challenges for developing a robust tracking system.

This publication by the Inter American Development Bank discusses the unique role that National Development Banks could play in scaling up private financing for climate change mitigation projects through the intermediation of international and national public climate finance in their respective local credit markets and the conditions that would be needed for them to be most effective. It draws from experiences in international climate finance and best practices, processes, and products of NDBs within the Latin American and Caribbean region. Overcoming barriers to private sector investments is critical, and international climate finance can play a critical role in this regard.

This report aims to advise governments on how to create and improve domestic enabling conditions to shift and scale-up private sector investments in green infrastructure, to finance a transition to a LCR economy and greener growth. This report advances a “green investment policy framework” taking infrastructure investment as a starting point and looking only at climate change mitigation and adaptation.

This paper examines the evidence from existing channelling of development and climate finance via private sector instruments to identify the probable risks and benefits of such approaches. The particular aim of this paper is to stimulate debate within the UK context.

This discussion paper provides an overview of the concept of direct access to climate finance and focuses on three main components of the public architecture used to deliver international public finance from global funds. The different institutional arrangements can cover the following functions: fund manager or strategic oversight body implementing body (sometimes referred to as a supervisory body) and an executing body (chapter 4). The role of the fund manager is to take funding decisions and to channel funds to the approved project proposals. The implementing body’s responsibility is to identify, evaluate, propose, oversee and appraise programmes or projects for the Board. The executing bodies receive funding to implement the projects. Furthermore, the experience with this financing modality in other global funds (the Kyoto Protocol Adaptation Fund, the Global Alliance for Vaccines and Immunisation (GAVI), and the Global Fund to fight AIDS, tuberculosis and malaria (the Global Fund)is reviewed.

Wealthy nations are still not meeting their Copenhagen climate finance pledges. While we await the final numbers from a few contributors, reports to the UNFCCC in May 2012 show that only two of the ten contributors committed their 'fair share' of fast-start climate finance, assess on their capabililty and their responsibility for the problem. The US, EU and Iceland committed half or less of their fair share. The result is that only $23.6bn has been committed, short of the $30bn pledged. Only one-fifth of climate finance supports adaptation in developing countries, in spite of promises to 'balance' it with mitigation funding. It is past time to meet the long-agreed principles: new and additional, predictable, and adequate climate finance.

Oxford Energy and Environment Brief
February 2013

At the second meeting of the Green Climate Fund (GCF) Board in October 2012, India announced they would prepare a submission with regards to the Board deliberations on a business model for the GCF. A consultation meeting was held in New Delhi on 15-16 February 2013 for which Benito Müller (Director Energy and Environment, OIES) was asked to contribute one of three background papers, focussing on access modalities and disbursement instruments. This Oxford Energy and Environment Brief is based on this background paper.

Contents

1. Section A: Introduction to Climate Finance
2. Section B: Kenya National Climate Fund
3. Section C: Absorptive Capacity Development Plan
4. Section D: Carbon Trading Platform
5. Section E: Investment Climate for Climate Investment
Annexes
1. Annex A: Current and future international climate finance architecture: implications for Kenya’s financing mechanism
2. Annex B: Development Partner Climate Change Activities in Kenya
3. Annex C: Government of Kenya Climate Change Activities
4. Annex D: Analysis of the Carbon Market Landscape in Kenya
5. Annex E: Developments in international carbon markets: implications for Kenya’s carbon finance policy
6. Annex F - National Funding Entities: existing practice and lessons for Kenya
7. Annex G - National CDM governance: existing practice and lessons for Kenya
8. Annex H - Carbon Trading Platforms: International Experiences and Lessons for Kenya

This study was commissioned by the Swiss Federal Office for the Environment (FOEN) and was prepared by the University of Zürich (Switzerland). This first attempt of analyzing flows of climate finance from the private sector in Switzerland provides a number of initial findings, some of which are:

• Estimating private climate finance mobilized by Switzerland is very challenging because of missing definitions, and no established measuring, reporting and verification (MRV) systems

• It is not possible to assign a monetary value to several private sector activities with climate benefits, e.g. research & development, training or transfer of climate-friendly technologies to developing countries

• Based on questionnaires filled by the private sector, the study identifies at least CHF 0.2-0.8 billion of private finance that is annually mobilized by Switzerland and contributes to climate change mitigation and adaptation activities in developing countries.

• Based on likely Swiss shares of global figures, private climate finance mobilized by Switzerland is estimated at CHF 0.5-2.7 billion per year.

• As long as no international definitions are available, it seems to be warranted to focus on the flows to be included in the 2014 biennial update report to the UNFCCC private finance mobilized by governmental agencies.

• For other flows, it may be recommendable to wait for international decisions that provide the necessary guidance on which private flows are to be considered before building up costly MRV systems.

• MRV is just one of two key questions in relation to private finance as part of long-term climate finance. The second, and for the climate regime the most important question is how to mobilize private finance for climate change mitigation and adaptation in developing countries.

In this brief we explore the options and implications for developed countries within this changing climate finance paradigm. It is structured as follows:

• The first section outlines the background policy context for the climate finance debate;

• The second section explores the extent to which Fast Start Finance commitments have been met. It sets out some of the key challenges in making this assessment, as well as some of the problems faced by developed countries in what can be considered a “learning by doing” phase; and

• The final section identifies nine key challenges that developed countries face as they enter the new climate finance paradigm, and within the context of the diffculties encountered in the first period.

This paper describes an approach to measuring the effectiveness of the national systems that underpin public climate finance delivery. It assesses three interlinked elements of government administration: the policy environment that supports climate change expenditures, the institutional architecture that determines relevant roles and responsibilities, and the public financial system through which climate change-related expenditures are channelled. It identifies key principles of effective climate finance delivery for each of these three elements, and formulates criteria and indicators that reflect a progression towards compliance with those principles.

The CDM is in crisis. Registrations of new projects have fallen significantly, prices of credits have fallen to record lows of around €0.30, and there are regular reports of companies, skills and expertise leaving the market. A number of commentators have recommended the establishment of a fund to support the CDM. This report analyses the market impact of different designs of a ‘CDM capacity fund’.

At the 16th Conference of the Parties (COP) in 2010, developed countries formalised a collective climate finance commitment made previously in Copenhagen of “mobilising jointly USD 100 billion per year by 2020 to address the needs of developing countries...from a wide variety of sources, public and private, bilateral and multilateral, including alternative sources” (UNFCCC, 2010). However, there is currently no definition of which “climate” activities, flows, or other interventions could count towards the USD 100 billion; what “mobilising” means; or even which countries are covered by this commitment.
At present, official systems in place to track climate finance mainly focus on public outflows from developed countries. The greatest uncertainties relate to private and South-South flows to developing countries as well as domestic flows.

This paper focuses on the issue of private climate finance mobilised by developed countries in the context of the USD 100 billion commitment. It examines different definitions used by actors to quantify the level of private climate finance mobilised by their interventions, as well as the methods used to track private climate finance.

International shipping and aviation account for approximately 5% of annual anthropogenic CO2 emissions and this is projected to increase in the coming decades. To address these emissions, market-based measures (MBMs) have been proposed to the International Maritime Organization (IMO) and the International Civil Aviation Organization (ICAO) by some of their Member States.

As MBMs raise the costs of aviation and maritime transport, they impact economies due to increased prices for passenger travel and exported and imported goods. The main objectives of the study were to:

(i) Assess the economic impacts of a number of MBMs on selected case study countries and globally; and

(ii) Determine the possible, and most effective and efficient tools to address or reduce these impacts, where they are deemed undesirable.

The study focuses on a selection of case study countries which, based on their economic structure, were anticipated to be negatively impacted by MBMs for international shipping and aviation.

The GCF is an important climate fund that is currently being designed by the GCF Board. One persistent issue, however, has been the transparency of the GCF Board itself. This blog discusses some of the suggestions and failures to make the meetings more open and transparent overall.

This presentation provides a history and structure of the Sustainable Island Resource Framework Fund; as well as its key objectives.

Proposal for relocating the Adaptation Fund under the United Nations Framework Convention on Climate Change.

Bangladesh Climate Change Resilience Fund (BCCRF) is an innovative partnership between the Government of Bangladesh, Development Partners and the World Bank to address the impacts of climate change.

Information Note on the Green Climate Fund Business Model Framework The Governing Instrument of the Green Climate Fund stipulates: The Board will consider additional modalities that further enhance direct access, including through funding entities with a view to enhancing country ownership of projects and programmes. Unfortunately, it does not elaborate further either on the concept of ‘enhanced direct access’ nor on the notion of a ‘funding entity’. The aim of this note is to fill this semantic lacuna, and give a brief overview of a concrete example of the latter.

This OIES Research Paper by Benito Müller, Samuel Fankhauser, and Maya Forstater looks at the possibility of using Quantity Performance (QP) instruments for 'wholesale' mitigation funding through enhanced direct access to the Green Climate Fund (GCF)

The Paper carries out an evaluation of such instruments in this context with respect to three key objectives of the GCF, namely, to promote a paradigm shift towards low-emission and climate-resilient development pathways, to achieve economic efficiency in directly securing emission reductions at cost, and to support equity in the distribution of resources. Based on this evaluation, the paper concludes that QP instruments can be used in conformity with these objectives, provided they are used as a complement to other funding instruments.

It ends by putting forward two examples of how QP instruments could be used in such a 'wholesale' fashion

The paper sheds light on the potential of the EU ETS as a finance instrument. How EU ETS revenues could help meet the financial needs for climate actions and current problems. In particular, the question of earmarking ETS revenues for climate finance.

The paper contains seven case studies from EU member states.

Together with civil society groups in developing countries, Oxfam, the Overseas Development Institute, and the World Resources Institute are launching the Adaptation Finance Accountability Initiative (AFAI). Building on ongoing work to monitor and strengthen accountability for adaptation finance, AFAI will initially focus on four countries in collaboration with CSOs there: the Zambia Climate Change Network, Clean Energy Network (Nepal), Climate Action Network Uganda, and Institute for Climate and Sustainable Cities (Philippines).

Abstract

Significant investments are needed to support the global transition to a lowcarbon, climate resilient future. Current finance flows fall short of global financing needs, and massive scaling up is needed to unlock additional financial resources and foster a sustainable investment pathway. Overcoming barriers to private sector investments is critical, and international climate finance can play a catalytic role in this regard. National development banks (NDBs) have a unique role in this context, both complementing and catalyzing private sector players.
NDBs have a privileged position in their local markets, strong knowledge of and long-standing relationships with the local private sector, a good understanding of local barriers to investment, and opportunities and vast experience in long-term investment financing. This paper discusses the unique role that NDBs could play in scaling up private financing for climate change mitigation projects through the intermediation of international and national public climate finance in their respective local credit markets and the conditions that would be needed for them to be most effective. It draws from experiences in international climate finance and best practices, processes, and products of NDBs within the Latin American and Caribbean region.

Brief Summary

This discussion paper addresses and raises different questions regarding what kind of private finance could be included in the 100bn USD of climate finance, which developed countries committed to mobilize annually by 2020. It argues that not all kinds of private climate finance should be included in the 100bn USD but rather that there is a need for a clear definition on which private finance to include. In addition, it refers to what kind of state action is needed to account the private finance towards the “100bn USD”-commitment (resp. towards the state's share of this commitment). Besides the requirement for a certain level of state involvement, it must be ensured that no double counting with other commitments occurs and hence no finance flows of the carbon market should be accounted. And finally it argues that with regard to both private and public finance flows only net flows should be accounted. Further it raises questions regarding a categorization of different instruments (e.g. grant, concessional loans, guarantees) towards public or private finance. Overall, as much public finance as possible should be provided in order to on the one hand invest into areas which have difficulties for attracting private finance and on the other hand use public funds in a way which can mobilize effectively much more private finance for climate action; therewith lowering the gap between the finance needed and the finance provided.