The International Institute for Sustainable Development (IISD) provides the September update on global developments in climate finance.
September 2016 Climate Finance Update: Readiness and Access Get a Boost, Stranded Assets Get under the Spotlight
During the month of September, climate finance was highlighted at the highest level, during the Group of Twenty (G20) Summit and the General Debate of the 71st Session of the UN General Assembly (UNGA 71). Readiness and access support received a major boost through the establishment of two major initiatives, underpinned by millions of US$ in funding. The UNFCCC released several reports in the run-up to the UN Climate Change Conference in Marrakech. Studies by an investor coalition and a regional development bank explored climate risk in investments and stranded assets.
In the Paris Agreement, agreed upon by 195 UN Member States in December 2015, countries agreed to make “finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development.” Developing countries will receive financial resources for both mitigation and adaptation actions, while developed countries are expected to continue to lead in mobilizing climate finance from a variety of sources, with public funds playing a significant role in reaching the previously agreed US$100 billion annual target by 2020. Monthly IIDS RS Climate Finance Updates aim to help track multilateral financing to support the finance goal agreed under the UNFCCC, which will in turn contribute to the implementation of Sustainable Development Goal (SDG) 13 (Take urgent action to combat climate change and its impacts).
Meetings at Political and Technical Levels Highlight Green, Climate Finance
The month kicked-off with the G20 Summit, taking place in Hangzhou, China, from 4-5 September, where G20 leaders reaffirmed their commitment to “sustainable development and strong and effective support and actions to address climate change.”
During the Summit, the G20 Green Finance Study Group (GFSG) launched its ‘G20 Green Finance Synthesis Report’ and the Nordic Council of Ministers (Norden) released the report ‘Green Financing – The Nordic Way,’ which documents the region’s experiences and practices in green financing.
Also coinciding with the G20 Summit, the Climate Investment Funds (CIF) announced it had prepared two reports intended for G20 Finance Ministers, through the G20 Climate Finance Study Group (CFSG): ‘The G20 CFSG Toolkit’; and ‘The G20 Outlook.’
UNGA 71 opened on 20 September, with a number of countries expressing their support to the Paris Agreement and highlighting domestic implementation efforts over the one-week general debate. On climate finance, they called for, inter alia: greater ambition; an equitable distribution of resources and capital from the Green Climate Fund (GCF); its full operationalization; faster disbursement of funds; and fulfilment of commitments to the GCF.
Held in parallel with the start of UNGA 71, the Climate Group’s Climate Week NYC hosted a number of events in New York, US, focusing on climate finance.
Other high-level meetings in the month of September included the Global Green Growth Week 2016, which saw a number of events focused on green finance, and the African Ministerial Conference on Ocean Economies and Climate Change, which deliberated on an ‘African Ocean Economy and Climate Action Agenda’ that would include an ‘African Oceans Finance Package.’
Also in September, the European Investment Bank (EIB), the Moroccan Government and the Union for the Mediterranean (UfM) organized a multi-stakeholder conference in Rabat, Morocco, that discussed climate change financing requirements and project financing tools in the Mediterranean region.
Climate Finance, UNFCCC Budget Documents Released Ahead of COP 22
The UNFCCC Secretariat and a number of relevant bodies released reports that will be taken up by 22nd session of the Conference of the Parties (COP 22) to the UNFCCC and the 12th session of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol (CMP 12) in Marrakech, Morocco, from 7-18 November 2016. These are summarized in a separate IISD RS story.
New GCF Executive Director Assumes Office, Provisional Board Meeting Agenda Released
In institutional news, on 29 August, Javier Manzanares (Spain) officially assumed the position of the GCF’s Executive Director ad interim and will remain in the position until the ongoing selection process for a permanent Executive Director is complete. Previous Executive Director Hela Cheikrouhou was recently nominated as the Tunisian Minister for Energy, Mining and Renewables.
It was announced that the 14th meeting of the GCF Board will take place from 12-14 October 2016 in Songdo, Republic of Korea. The meeting will be webcast live, and the provisional agenda of the meeting (GCF/B.14/01/Drf.01) has been made available on the GCF website.
Support to Climate Finance Readiness, Access Continues
In late August, representatives of the Nordic Development Fund (NDF) and the GCF met in Songdo, the Republic of Korea, to discuss areas of cooperation, in particular climate finance readiness activities.
In mid-September, NDF and the Asian Development Bank (ADB) inaugurated the Project Readiness Improvement (PRI) Fund, which is aimed at: helping countries strengthen climate adaptation and mitigation components of investment projects; improving project design- and procurement-readines; and reducing start-up and implementation delays. The PRI Fund, which is set up as a multi-donor fund, received a €7 million contribution from the NDF.
The UN Environment Programme – DTU Partnership (UDP) held a five-day workshop in Amman, Jordan, aimed at strengthening the country’s capacity to access international financing for national climate technology priorities.
In September, the Adaptation Fund continued its series of readiness workshops with an event in Rabat, Morocco. The workshop, which brought together approximately 50 participants from countries of the Middle East and North Africa (MENA) region, was aimed at enhancing readiness and access in the region’s countries, and also sought to gather momentum for countries on the road to COP 22.
Commonwealth Seeks to ‘Unlock Billions,’ Trillions Needed in Asia
On 21 September, the Commonwealth Finance Access Hub was launched in New York, US. The Hub, hosted by the Government of Mauritius, was set up to “palliate the deficiency in information on climate finance and to assist particularly in the preparation of bankable projects” by assigning climate finance advisers for a period of one to two years in recipient countries to help host ministries identify and apply for funding streams. The Hub, which is expected to “unlock billions in climate finance for developing countries,” will be supported by a AUD1 million grant from Australia, a £1 million grant from the Commonwealth Secretariat and in-kind support from Mauritius.
Meanwhile, in Asia, a report by the Asia Investor Group on Climate change (AIGCC), titled ‘Investing for the Climate in Asia,’ found a “significant shift toward embedding climate risk and responsible investment into core business activities.” However, the report also notes that “much remains to be done, with financial regulators needing to take steps to help catalyse the shift to low carbon investment in order to reduce systemic risks and improve competitiveness.” The report further underlines that keeping in line with the 2°C target will require US$7.7 trillion between 2014 and 2035 for renewable energy and energy efficiency in China, India, Japan and South East Asia.
The report was released in Singapore on 6 September to mark the launch of the AIGCC as a member of the Global Investor Collaboration on Climate Change. The AIGCC founding members are Cathay Financial Holdings, BlackRock, Armstrong Asset Management, AustralianSuper, Generation Investment Management, Brawn Capital and the International Financial Corporation.
IDB Reports on Climate Risk and Stranded Assets, PMR Releases China Carbon Market Monitor
The Inter-American Development Bank (IDB) launched a study titled ‘Stranded Assets: A Climate Risk Challenge,’ which seeks to improve understanding of the topic to support the design and implementation of related risk management strategies in the Latin America and Caribbean region. According to IDB, stranded assets have “taken on increasing importance” due to declining technology costs of renewable energy and the momentum generated by the Paris Agreement.
The World Bank Partnership for Market Readiness (PMR) published the fifth issue of its ‘China Carbon Market Monitor,’ which covers market activity from April to June 2016. The PMR reports on, inter alia, on the establishment of China Carbon Market Capacity Building Centers in six Chinese cities, aimed supporting China’s transition to a national emissions trading system (ETS), expected to launch in 2017.
Disaster Resilience and Recovery, Adaptation, Forests, Bio-fertilizers Receive Funding
Disaster Risk Resilience and Recovery, Adaptation
Bhutan will receive a US$3.8 million grant from the World Bank for its Hydromet Services and Disaster Resilience Regional Project. Supported through funds from Japan and the EU, the project will seek to build the country’s capacity for hydromet services and disaster preparedness.
Myanmar will receive a US$10 million grant from the ADB for rebuilding infrastructure in Chin state that was damaged by heavy rains and landslides triggered by Cyclone Komen in 2015.
The Adaptation Fund reported that five community-based small grant projects had received project development support through the Community Adaptation Small Grants Facility in South Africa.
Thailand will receive a US$3.6 million grant from the World Bank’s Forest Carbon Partnership Facility (FCPF) for developing of strategy and build capacity to reduce emissions from deforestation and forest degradation (REDD+).
The European Bank for Reconstruction and Development (EBRD) announced it is supporting the uptake of sustainable and climate-friendly agricultural inputs through a €24 million loan to Elephant Vert, a Morocco-based producer of bio-fertilisers, bio-pesticides and bio-stimulants. The EBRD estimates the resulting switching away from chemical fertilizers to result in avoided GHG emissions of more than 150,000 tonnes of CO2 equivalent per year.
Lessons in Climate Change Fiscal Management, Adaptation
In September, Pakistani and Chinese experts and practitioners convened over four days to discuss improved budgeting and financial management under increasing impacts of climate change. The South-South exchange, funded by the UK, was facilitated by the UN Development Programme (UNDP). The talks addressed, inter alia, how to collect better data on climate change-related spending and improve fiscal management, with an eye to mobilizing more climate finance.
The World Bank highlighted lessons learned from its technical assistance support to enhancing capacity for disaster risk management and climate change adaptation in Panama. The project has resulted in the development of the first Disaster Risk Finance and Insurance Framework in Latin America, and strengthened Panama’s subnational-level emergency preparedness and response capacity.
In the Andes, the World Bank has supported a regional US$33.6 million project involving Bolivia, Ecuador and Peru, which employed super computer-generated climate change scenarios to deploy targeted adaptation investments with the aim of strengthening agricultural practices, improving irrigation infrastructure and reducing water losses for the water distribution system of large urban areas. Trained government agency staff, completion of project plans and the ability of project partners and beneficiaries to maintain investments were identified as factors that will condition efforts going forward.