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Financing Climate Resilient DevelopmentFinancing Climate Resilient Development
A World Bank Perspective
Marjory-Anne BromheadThe World Bank
Some Guiding Principles from African LeadersSome Guiding Principles from African Leaders Implement climate change programs to
achieve sustainable development
Food security and poverty alleviation are overriding
Richer countries have financial obligations to help others achieve resilient growth
World Bank Strategy for Climate Resilient Development in Sub-Saharan Africa
Adaptation and disaster risk reduction are an integrated agenda Climate variability creates annual losses of 1-2% of GDP, increasing
floods and droughts, adaptation could cost 5-10% of GDP
There are mitigation and adaptation synergies Better land, water & forest management are key to adaptation but
deforestation and land degradation are 65% of Africa‘s CO2 emissions
Mitigation presents opportunities but increasing energy access is key: Only 8% of hydro potential realized , ample solar, cleaner coal is part of
the solution, wood fuels and biomass are key
Knowledge, capacity building & new technologies are key Improved climate knowledge, analysis &
strategy risk insurance, new technologies for energy, agriculture ..
Scaled up finance is necessary
Urgent action is necessary
Development Reduces VulnerabilityDevelopment Reduces Vulnerability
Diversified economies, strong institutions, sound land and water management and urban planning, as well as educated, healthy people reduce country vulnerability
Relative change in length of growing period (LGP) by 2050 compared to present Source: Thornton et al. (2006)
World Bank & Climate Finance: Guiding PrinciplesWorld Bank & Climate Finance: Guiding Principles
Primacy of UNFCCC process in design of climate finance models
Supports governance reform to increase developing countries voice
Our role: help developing countries access and lend development/private sector finance and new climate finance for sustainable development with adaptation and mitigation benefits
Our collaboration is through country-led programs
Sources of FinanceSources of Finance IDA 15 was scaled up in part to
help address climate change
Disbursements in agriculture, water supply, flood management & health were 17% higher 2008 than 2005-2007
New instruments complement development & private sector finance
Climate-Resilient Development with IDA/IBRD Agricultural development policy loan in Ghana (2008) supports
integration of climate risk/adaptation into development agenda
Himachal Pradesh DPL in N. India supports renewable energy & adaptation strategies for glacier melt
Credit to improve transmission of energy from Inga in DRC is ongoing (more than US$ 200 m)
Support to sustainable land management, irrigation, safety net/improved watershed management in Ethiopia (over US$ 300 m)
Arid lands, flood management & natural resource management programs in Kenya
Drought risk insurance in Malawi
Financing: New Instruments
WB/MDB Supported Instruments Climate investment funds (CIFs) Carbon Funds Gas-flaring Reduction Initiative Global Fund for Disaster Risk Reduction (GFDRR)
OthersAdaptation Fund (2% tax on CDM & voluntary contributions)Bi-laterals donorsUN agencies (e.g., UNDP $90M Africa adaptation Program)African-Union/AfDB/EU (ClimDev Africa) Norwegian Funding for Avoided Deforestation
Climate Funds
Overall aim: to pilot new financing instruments and help prepare countries to take advantage of post 2012 financial architecture, country-driven, cooperation between MDBs and development partners, learning is key
Carbon Funds (CF)
Existing Funds
(9)Prototype
Carbon support, Spanish
Fund, etc.~$2 billion
Carbon Partnership
Facility (CPF)
Expected $3-$5 billion
Forest Carbon
Partnership Facility(FCPF)
$100 million (readiness)
Ghana, Gabon, Kenya, DRC, Liberia and Madagascar
+ $200 million
Mitigation under UNFCCC framework
* As per November 2008 trustee report
Climate Investment Funds (CIF)
$5-6 billion*
Clean Technology Fund (CTF)$5 billion*
($500-700 million for Africa)
Strategic Climate Fund (SCF)$2 billion*
Scaled-up Mitigation
Big 5China, India,
Brazil, Mexico, South
Africa (+ 5-10
additional)
Pilot Program for Climate Resilience
(PPCR)$500 million
Climate resilienceShort term financing
Forest Investment Fund (FIF)
Target: $500 million
Sustainable forest
management(complement
of FCPF)Under Design
Niger, Zambia, Mozambique ($30-
70 million each)
Scaling-up Renewable
Energy Program for Low-Income
Countries (SREP) Target: $250MillionMitigation
Pilot Program under
preparation
Climate Funds
Mobilizing, Delivering and Leveraging Climate Finance
CDM & carbon offset markets, sector
crediting
Carbon taxes
Auctioning ofemission rights
Emissioncap and trade
General taxes and other taxes, special funds
“Baseline”Private and public
investment
Catalytic climate finance
Possible sources
US$ 4,620bln p.a.
(2008)
Median: $400 billion
Current (2009)funding~ $10 billion
Mitigation (2030)$140-657billion
Adaptation (2030)$30-90billion
Median: $75 billion
Mitigation~ US$9+bln p.a.
CleanDevelopmentMechanism
8 GEF
0.25
CIF1
Other1+
CleanDevelopmentMechanism
8 GEF
0.25
CIF1
Other1+
CleanDevelopmentMechanism
8 GEF
0.25
CIF1
Other1+
??
0.06 PPCR
0.1
0.06to 0.12
Other0.1+
LDCF&SCCF
AdaptationFund
Catastrophic, Weather & Climate ChangeRisk Management Tools
??
0.06 PPCR
0.1
0.06to 0.12
Other0.1+
LDCF&SCCF
AdaptationFund
??
0.06 PPCR
0.1
0.06to 0.12
Other0.1+
LDCF&SCCF
AdaptationFund
Catastrophic, Weather & Climate ChangeRisk Management Tools
??
0.06 PPCR
0.1
0.06to 0.12
Other0.1+
LDCF&SCCF
AdaptationFund
Catastrophic, Weather & Climate ChangeRisk Management Tools
??
0.06 PPCR
0.1
0.06to 0.12
Other0.1+
LDCF&SCCF
AdaptationFund
??
0.06 PPCR
0.1
0.06to 0.12
Other0.1+
LDCF&SCCF
AdaptationFund
Catastrophic, Weather & Climate ChangeRisk Management Tools
Adaptation~ US$1+bln p.a.
A huge gap: estimatedneeds vs. current resources
World Bank Carbon Funds & Facilities
Prototype Carbon Fund. $180 million (closed). Multi-shareholder. Multi-purpose.
Netherlands Clean Development Mechanism Facility. (closed). Netherlands Ministry of Environment. CDM energy, infrastructure and industry projects.
Community Development Carbon Fund. $128.6 million (closed). Multi-shareholder. Small-scale CDM energy projects.
BioCarbon Fund. $91.9 million (Tranche 1 and 2 closed). Multi-shareholder. Mainly CDM LULUCF projects; some REDD and soil carbon.
Italian Carbon Fund. $155.6 million (closed). Multi-shareholder (from Italy only). Multipurpose.
Netherlands European Carbon Facility. (closed). Netherlands Ministry of Economic affairs. JI projects.
Spanish Carbon Fund. $282.4 million (closed). Multi-shareholder (from Spain only). Multipurpose.
Danish Carbon Fund. $69.4 million (closed). Multi-shareholder (from Denmark only). Multipurpose.
Umbrella Carbon Facility. $737.6 million (Tranche 1 closed – 2 HFC-23 destruction projects in China).
Carbon Fund for Europe. $65 million. Multi-shareholder. Multi-purpose. Managed with EIB.
Total funds pledged = US$ 2.1 billion (16 governments, 67 firms)
Clean Technology Fund Aim is to help high emitting countries transform to
lower carbon growth: US$ 5 billion raised so far
Programs of about US$ 0.5 billion each approved for Turkey, Egypt, Mexico & under preparation for Nigeria and South Africa
Part of broad-based energy transformation programs
Focus on energy efficiency, renewables, transport shifts, urban planning
Pilot Program for Climate Resilience Aim is to help vulnerable countries mainstream climate
resilience into development planning: US$ 0.5 billion raised
9 countries & 2 sub-regions selected by independent panel Niger, Zambia and Mozambique; each country to get US$ 40 to
US$ 70 million, with preparation grants of US$ 1-2 million depending on readiness.
Likely to focus initially on key priority sectors (e.g. agriculture, coastal/urban flooding, watershed management, capacity building)
Programs still under early preparation (early lessons learnt session in late October)
Forest Investment ProgramForest Investment Program Aim is to catalyze practical
measures and funding for Reduction of Deforestation and forest Degradation (REDD), and promote sustainable forest management
US$ 260 million raised so far
Country selection process has not yet started: will include range of forest systems & biomes and willingness to participate in REDD
Operational in 2010
Scaling up Renewable Energy
The aim is to pilot new approaches to renewable energy in low income countries
Fund-raising and design still ongoing
Forest Carbon Partnership Facility
Aim is to build capacity and prepare countries to access large-scale REDD post 2012: US$ 107 million raised so far (UNDP and bank have complementary programs)
Countries prepare readiness plan idea notes then
Readiness plans with grants of US$ 1-3 million (ethiopia, kenya, uganda, cameroon, gabon, Congo, DRC, CAR, Ghana, Madagascar, Liberia)
Carbon Partnership Facility
Aim is to support strategic programs that move to low carbon investments
Target US$ 350 million
No African countries yet!
Disaster Risk Reduction Facility
Supports disaster preparedness and disaster recovery
Grants in CAR, Ethiopia, Ghana, Ethiopia, Mozambique, Madagascar, Namibia, Burkina, Seychelles
Year
Cash Floww
(-)
(+)
Grant Funds
CF
CTF
CF: Carbon Finance; CTF: Clean Technology Fund
Grant funds for initial breakthrough
Blending of Climate Financing Instruments Necessary
Blending of Financial Sources and Policy Instruments Necessary
Lighting switchIndustry: EE in cement
Power generation from landfill gas Grassland management
Reforestation
Wind
Solar
Policies and Regulations; Incentives for Barrier Removal
Technical Assistance; Capacity Development
Carbon financeSupport for R&D
Private investments
Public financing
Project/program needs to be financially solid to be able to deliver real, measurable and long-term benefits related to the mitigation of climate change
Development Financing
Mainstreaming Climate Resilience into CAS Mainstreaming Climate Resilience into CAS
Ongoing process: Ethiopia, Malawi, beginning in Senegal, Nigeria, Cameroon, Kenya, Namibia …
Climate resilient development and long term sustainable development are one and the same!
Thank you!