© 2008 UNDP. All Rights Reserved Worldwide.Proprietary and Confidential. Not For Distribution Without Prior Written Permission.

UNDP Environment and Energy Practice Architecture

2008 RBEC Environment and Sustainable Development Practice Meeting13 October 2008

22

Integrated

Climate Change

Action Plans

at national

and

sub-national

levels

•UNDP-GEF

• Montreal Protocol Unit

• MDG Carbon Facility

• UN REDD Initiative

• Community-Based adaptation

• Energy Access Facility

•Innovative Finance Facility

•Climate Risks Transfer Facility

Policy Advisory Delivery Platforms Project Management Service Platforms

POLICY AND

FINANCING OF SOLUTION CONTINUUM

33

UNDP Environment and Energy Programme

Environmentally Sustainable

Development

Mainstreaming Environmental Finance

AdaptationLocal

Governance

National and

Sub-national Sustainable

DevelopmentPolicies,

Strategies and Plans

Climate-screening UNDP/UN

Development Assistance

UNDP-GEF

MPU/MLF

MDG CarbonFacility

UNREDD

Climate Risks Transfer Facility

Sustainable supply chain

facility

Ecosystem Service Payment

Facility

RegionalApproaches

SCCF/LDCF/AF project

services

Local Energy AccessFacility

Community-Based

Adaptation Facility

Decentralized Cooperation

44

Regional Service Delivery Platforms

Integrated Approaches to CC in Africa

Pacific Climate Change Centre

133 UNDP Country Offices

160+ Client Countries

Local AccessEnergy AccessSGP

Mainstreaming

Water Governance

PEITerritories

Environmental Finance

Green Commodities

CC risks transfer

MDG Carbon REDDPES

Adaptation

Climate Proofing

CD for CC

CBA

Capacity Development

NCSP IW LEARNALM

Global Service Delivery Platforms

Bangkok

Bratislava Pretoria

Dakar

Panama

Cairo

6 Regional Service Centres

5 Regional BureausRBECRBLACRBAP RBASRBA

Bureau for Development PolicyEEG

© 2008 UNDP. All Rights Reserved Worldwide.Proprietary and Confidential. Not For Distribution Without Prior Written Permission.

Avoiding dangerous Climate Change: the need for innovative partnerships, policy and

financing instruments

2008 RBEC Environment and Sustainable Development Practice Meeting13 October 2008

66

Avoiding Dangerous Climate Change:

How much time to do we have to act?

77

Establishing a 21st Century Carbon Budget

Temperatures increase as CO2 emissions rise

Defining dangerous – keeping below a 2 degree C increase in temperature

To keep within 2C threshold CO2e concentration should stabilize at 450 ppm

The UNDP 2007/2008 HDR estimated that the 21st Century carbon budget is set at 1,456 Gt CO2

88

Charting a course away dangerous climate change:

A window of opportunity of 100 months

A sustainable emissions pathway with respect to

1990 is as follows

• The world – cuts of 50 percent by 2050 with a peak by 2020

• Developed countries – cuts of 80 percent by 2050

• Developing countries – cuts of 20 percent by 2050

99

100 Months to Act

0 2010 4030 50

3

1

0.5

2.5

2

1.5

Atmospheric Frontier

Decli

ne r

ate

(%

)

Delay (years)

0 2010 4030 50

3

1

0.5

2.5

2

1.5

Atmospheric Frontier

Decli

ne r

ate

(%

)

Delay (years)

1010

Projected changes in climate for the 21st century

Best estimate of global surface temperature rise by 2100 for low scenario (B1) is 1.8°C (1.1°C~ 2.9°C), and for high scenario (A1FI) is 4.0°C (2.4°C~ 6.4°C).

Projected change in global surface temperature for the 21st Century [Source: Alley et al., 2007]

1111

Scaling Up to Meet the Climate Change Challenge: Is It happening?

5

5.5

6

6.5

7

7.5

8

8.5

9

9.5

10

1990 1995 2000 2005 2010

Fo

ssil

Fu

el

Em

issio

n (

GtC

/y)

CDIACIEAall

A1B(Av)A1FI(Av)A1T(Av)A2(Av)

B1(Av)B2(Av)

0

5

10

15

20

25

30

1850 1900 1950 2000 2050 2100

1212

Source: S. Hallegatte ; J.-C. Hourcade ; P. Ambrosi, Using Climate Analogues for Assessing Climate Change Economic Impacts in Urban Areas, in Climatic Change 82 (1-2), May, 2007, pp. 47-60.

Climate Analogues 2070

1313

Adaptation to Climate Change: a longer term concern?

A recent Report the Hadley Centre in UK warns that the world has at least a 50% chance of exceeding the record year of 1998 every year from 2010 to 2014.

Beyond 2014, the odds ofbreaking the temperature record rise even further, the scientists added.

Source: Science 317, 796 (2007), Image from Hadley Centre

1414

The hotspots of climate change

Source: German Advisory Council on Global Change (WBGU)

1515

Scaling Up to Meet the Challenge:

Is it feasible?

1616

Scaling Up to Meet the Climate Change Challenge: A Technology Scenario

Source: IEA, Energy Technology Perspectives 2008

1717

1818

Industrialmotor systems

EE in buildingsand appliances

EE in transport

Heat pumps

Solar space and water heating

2nd Gen biofuels

CCS: industry, H2 & fuel transformation

CCS: fossil fuel power generation

Onshore and offshore wind energy

Technology timeline, BLUE scenario

Source: IEA, Energy Technology Perspectives 2008

1919

Technology timeline, BLUE scenario (continuation)

Nuclear powerplants

Biomass

Photovoltaicsystems

Concentratingsolar power

Coal IGCC systems

Coal ultra-supercritical steam

cycles

Electric andplug-in vehicles

Hydrogen fuelcell vehicles

Source: IEA, Energy Technology Perspectives 2008

2020

Marginal emission reduction costs for the global energy system, 2050

Source: IEA, Energy Technology Perspectives 2008

2121

Scaling Up to Meet the Challenge: Financial Requirements

• The investment required in energy supply infrastructure worldwide to meet growing energy needs is estimated at $20 trillion over the period 2001-2030 (IEA, 2006). Approximately 50% of this will be in developing countries.

• UNDP estimates that at least US$ 86 billion will be required annually for adaptation to climate change by 2015

• From 1997 to 2005, ODA and investment from development banks for energy averaged US$6-7 billion per year.

• The bulk of the required climate change finance will have to come from citizens and the private sector

2222

Meeting the financing gap

International Schemes National Schemes

FOR INVESTORS

Public and Private Funds

- ODA-Multilateral Funds-Foundations

-Export Credits-Rebates & Subsidies-Tax credits & Tax Free Bonds-Low interest loans

Private Funds -Carbon Finance (CDM, JI, voluntary) -Tradable Renewable Energy Certificates-Weather Derivatives-Insurance Pools

-Tradable Renewable Energy Certificates- Utility DSM-Green mortgages-Green insurance contracts-Tax free climate change bonds-Cat Bonds-Weather Derivatives

FOR PUBLIC AUTHORITIES

-Transaction Taxes (Tobin)- Air Travel Levy- Global Carbon Tax-Debt-for-Efficiency Swaps- Sale of AAUs (and GIS)-Int. non-compliance fees

-Carbon Taxes-Energy Taxes- Auction of Emission Allowances-National Non-compliance fees

2323

Direct investment in sustainable energy is rapidly increasing

2424

Global Investment in Sustainable Energy by Region, 2007

Source: UNEP, NEF, SEFI, 2008

2525

The need to strengthen the capacity of developing countries to access new sources of Finance

Location of CDM Projects • 4 countries (China, India, Brazil and South Korea) account for 70% of CDM projects and 80% of CERs through to 2012

• Sub-Saharan Africa accounts for 2% of registered projects and 5% of CERs through to 2012

• However, the WB estimates a technical potential of 3,200 in Africa, that could provide 170 GW of additional power-generation capacity, more than twice the region’s current installed capacity

Ex: Geographical imbalance in the CDM

2626

Global Investment by Technology, 2007

Source: UNEP, NEF, SEFI, 2008

2727

If the case for investment in clean energy technologies is so strong, why is it not happening?

•A wide range of energy-market failures currently deter investors and end-users from making the capital outlays in low income countries and in energy efficiency (e.g. policy distortions, lack of information, agency issues; etc.)

•To overcome these barriers, capacity of developing countries and EITs must be enhanced to align policy incentives to reward investments on energy efficiency (remove subsidies, S&L, etc.) and to access existing sources of climate change finance.

•Innovative ways will need to be developed to finance adaptation and the incremental capital outlays for E&E upgrades

2828

UNDP Climate Change Strategy

2929

Dimension 1:From policy and institutional change

To attracting investment

Dimension 2:From national to provincial

and local levels

Dimension 3:From mainly mitigation to

an equal balance with adaptation

Dimension 4:From ODA and quasi-ODA toDiversified funding sources

Dimension 5:From public partnerships to privateSector and associations of regions

Dimension 6:From environment sector to

non-environment sectors

Six dimensions for scaling up climate change action

3030

UNDP’s climate change strategy has four pillars

Strengthen capacity of developing countries to

design integrated climate change policies, strategies

and action plans

1

Increase climate resilience and mainstream Climate

Change into UNDP Development Assistance

4Attract and drive private and public investment towards lower carbon

technologies and sustainable land use

practices

3

Enhance the long-term adaptive capacity of

developing countries and promote priority adaptation

action

2

3131

Pillar 1: National Climate Change Policies, Strategies, and Plans

• Enhance Capacity of Decision Makers to Assess the Policy Implications of the Bali Road Map and actively contribute tom the design of the International Regime to Address Climate Change

• Develop capacity to design integrated Climate Change Strategies and Plans at the national and sub-national levels

3232

Pillar 2: Adaptation

• Enhance capacity of developing countries to design and implement policies to integrate adaptation into domestic plans, budgetary and fiscal policies, investments and practices;

• Help countries identify, prioritize and implement short-term “no regrets” adaptation responses involving all stakeholders at national, sub-national and local levels (revised land-use plans, use of drought tolerant crops, enhanced emergency preparedness, etc.)

• Help countries mobilize additional sources of funding for implementing adaptation responses;

3333

Pillar 3: Create market conditions for sustainable development and climate change mitigation

• Markets development to attract and drive direct investment towards lower carbon technologies and sustainable land use practices.

• Through a series of project development facilities (MDG Carbon

Facility, UN REDD, Energy Access Facility, etc.), enable investors to access/combine different sources of finance for climate change.

3434

Pillar 4: Mainstream CC into UNDP Development Assistance

• Promote the human development perspective of climate change at the national, regional and global levels.

• Increased climate-resilience of UNDP/UN development assistance

• Continue to develop the capacity of RC/RRs, Country Directors and UNCTs to facilitate policy dialogue on CC with national public authorities, business community and civil society

3535

The Bali Action Plan and the Road to Copenhagen:

Challenges and Opportunities

3636

Bali Action Plan – important outcomes

•Climate change negotiators met in Bali in December 2007 and agreed on a two-year process to finalize a post-Kyoto regime by December 2009. The key elements are contained in UNFCCC decision 1/C.P.13 on the Bali Action Plan.

•The road map for negotiations laid down four main building blocks: mitigation, adaptation, technology and financing.

•Increasing pressure on the international community to define what “dangerous levels of anthropogenic interference with the climate system” represents. Footnote refers to IPCC GHG emissions for different

concentration stabilization levels.

3737

• The decision calls for quantified emissions reduction targets by all developed countries and mitigation actions in developing countries in the context of sustainable development “that are supported and enabled by technology, financing, and capacity-building, in a measurable, reportable and verifiable manner”

• Discussions in 2008 will focus on means to achieve targets, among:

• Role of REDD (baseline methodologies and other technical issues financing incentives and payment transfers, use of REDD credits by annex I countries to count towards their obligations,impact on communities, etc.);

• Use of sectoral approaches (with developed countries suggesting possible targets and developing countries stressing possible use of this for technology and finance support but not for targets);

• Use of market-based mechanisms and their possible expansion.

Bali Road Map negotiations: Mitigation

3838

• Recognition that SIDS, LDCs and Africa need special attention, that adaptation will, in general, need additional financial support and that capacity is to be built for longer term planning.

• Developed countries strongly support the need for mainstreaming adaptation in development assistance and better understanding of needs.

• While recognition of linkage of adaptation with development, developing countries stress that adaptation cannot be supported only through development assistance and that there is need for considering “additional” and “predictable” financing for adaptation action.

• Proposal by AOSIS for a “risk management” facility / fund and a “special adaptation protocol”.

Bali Road Map negotiations - Adaptation

3939

• Strong linkage between technology and mitigation actions – How to promote the global technology revolution, at acceptable cost, required to stabilize GHG concentrations at a safe level?

• Recognition that access to technology is also needed for adaptation across a variety of sectors; although many technologies for adaptation are already available.

• Differing perceptions exist of what drives technology transfer. Notably, intellectual property rights are discussed as solution from different angles (while some countries suggest a mechanism to transfer IPRs (removal/new fund to buy patents and reduce high cost of many low-carbon technologies, etc.), some developed countries stress that national policies should protect and promote IPRs – strong linkage to discussions in international trade)

• Most discussions focus on how to address financing (new fund, policy and sectoral CDM, etc.) and capacity building needs for development, transfer and uptake of technology and possible governance of a new mechanism.

Bali Road Map negotiations - Technology

4040

• Recognition that existing resources cannot support the dramatic scaling up in mitigation and adaptation action required to successfully address the climate change challenge.

• Developing countries have stressed strongly the importance of balanced governance and effectiveness of new mechanisms (with reference to some of new bilateral funds being launched) and stress to the need for any new funds and instruments to be linked to the UNFCCC process and be supportive of development goals.

• Strong concerns expressed regarding the uneven regional balance of new sources of environmental finance (particularly CDM)

Bali Road Map negotiations - Financing

4141

• Negotiations are likely to include the following issues:

How to scale up and best allocate ODA and what is the potential for the Convention Funds under the financial mechanism, given their small share?

What is the possible role of, and what are the possible incentives to, promote national and international policies and regulations that can stimulate shifts in investment and finance?

What are the possible innovative mechanisms to leverage additional funding and how should these new mechanisms be governed and used?

How to link climate change finance and finance for development and Disaster Response.

Bali Road Map negotiations - Financing

4242

UNDP Preparatory Work for Poznan

•Launch of UNDP Climate Change Strategy (June 2008)

•Launch of the capacity development programme for decision-makers to assess the national socio-economic implications of the Bali Road Map (September 2008 – 18 countries);

•Launch of the UN REDD Programme (September 2008 - 6-9 countries)

•Launch of the Africa Adaptation Programme (October 2008 -21 countries) and Pacific Adaptation Programme (November 2008)

•Launch of the Climate Change and Regions Programme (October 2008 – 9 countries)