WELCOME

USAID APPROACHES FOR RESPONDING TO CLIMATE CHANGEEASTERN AND SOUTHERN CARIBBEAN REGIONAL CLIMATE SYMPOSIUM

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PROGRAMScaling Up Financing for Clean Energy, Sustainable Landscapes, and Climate Adaptation

Dr. Eric Hyman Environmental Economist, DDI/Center for Economics and Market Development

Climate Change and the Bureau for Resilience and Food Security

Ann VaughanSenior Advisor for Climate Change, Bureau for Resilience and Food Security

Natural Climate Solutions at USAID

Dr. Noel GurwickSenior Climate and Land Advisor, DDI/Center for Environment, Energy, and Infrastructure

Energy and Climate Change Jamila AmodeoSenior Energy Advisor, DDI/Center for Environment, Energy, and Infrastructure

Closing Remarks Clinton WhiteRegional Representative, USAID Eastern and Southern Caribbean Mission

Musical Performance Jabari Browne, musician from Barbados

https://medium.com/google-earth/mangrove-monitoring-in-google-earth-engine-4d6f6be8d7fc 7

SCALING UP FINANCING FOR CLEAN ENERGY, SUSTAINABLE LANDSCAPES, AND CLIMATE ADAPTATION

Dr. Eric HymanDDI/Center for Economics and Market Development

HOW DEVELOPMENT ASSISTANCE ORGANIZATIONS CAN HELP

• Challenges in scaling up financing to meet large needs of developing countries

• Private sector financing increasingly important •

Development assistance organizations have limited resources for direct financing and can facilitate blended andprivate sector financing

• Improve the policy, regulatory, andmacroeconomic enabling environment

• Public and private sector capacity development• Develop or support financial instruments and markets

• Criteria for selection of options• Scale and replicability• Impact• Value for money

• Examples in clean energy, sustainable landscapes, and climate adaptation, but broader applicability

• https://pdf.usaid.gov/pdf_docs/PA00WB55.pdf

DEVELOP CAPACITY OF BANKS TO INCREASE CLEAN ENERGY LENDING

• Provide toolkits and TA to help banks assess market and profitability of CE lending

• Clean Energy Lending Toolkit

• AILEG developed and piloted (https://pdf.usaid.gov/pdf_docs/PA00JS5M.pdf)

• CEADIR translated into French (https://pdf.usaid.gov/pdf_docs/PA00MMK8.pdf) and Spanish (https://pdf.usaid.gov/pdf_docs/PBAAF209.pdf)

• CEADIR used to train banks in 4 Central American and 8 West African countries

SUPPORT CLEAN ENERGY INNOVATION LABS AND BUSINESS INCUBATORS• Business incubators: Space, training, consulting, and/or financing for early-stage companies• Innovation labs design and test new solutions and facilitate collaborations• USAID Development Innovation Ventures Program (DIV)

• Tests and scales up creative solutions to development challenges with high-impact potential in any sector and country where USAID operates

• Open to not-for-profit and for-profit organizations in any country (only sub-awards for government agencies)

• Rolling application review process for tiered grants based on Annual Program Statement• Stage 1: Proof of Concept (Up to $200,000)• Stage 2: Testing and Positioning for Scale (Up to $1,500,000)• Stage 3: Scaling (Up to $5,000,000)• Evidence Grants (Up to $1,500,000)

U.S. DEVELOPMENT FINANCE CORPORATION • Established in 2019 to consolidate capabilities of the Overseas Private Investment

Corporation (OPIC) and USAID Development Credit Authority (DCA)• Expanded investment cap to $60 billion and increased focus on development impact• Equity Financing: New authority for direct equity and support for investment funds• Debt Financing: Direct loans and loan guarantees of up to $1 billion for up to 25 years, with

specific programs targeting small and medium U.S. businesses• Political Risk Insurance: Coverage for up to $1 billion for losses from currency

inconvertibility, government interference, political violence, and terrorism.• Reinsurance to increase underwriting capacity

• Technical Development: Feasibility studies and technical assistance for project identification and preparation

SUPPORT FINANCING PLATFORMS: PRIVATE FINANCING ADVISORY NETWORK (PFAN)

Renewable Energy and Energy Efficiency Partnership and UNIDO

Source: https://www.unido.org/our-focus-safeguarding-environment-clean-energy-access-productive-use-climate-policies-and-networks/private-financing-advisory-network-pfan

SUPPORT GREEN BOND ISSUANCE• Tradable debt securities for investments with environmental

benefits• Meets Green Bond Principles of the International Capital

Market Association• Issued by governments, multilateral or national development

banks, or corporations• Minimum size $80 - 100 million to attract investors and

reduce transaction costs• May require aggregation and warehousing of loans from

multiple sources• Lower interest rates not available yet in nascent market• May be easier to sell to impact investors and financial

institutions• Sector-specific guidance from Climate Bonds Initiative developed

or pending

STATUS OF SECTOR-SPECIFIC GUIDANCE ON GREEN BONDS

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GREEN BOND ROADMAP • Prepared for Peru government development

bank interested in expanding access to capital for forestry and environmental lending

• Steps in developing a green (climate) bond• Market analysis• Design of a climate bond framework• Preparation of the offer and issuance• Post issuance• Green bond principles• Climate bond information form• Application and agreement for a climate bond

SOURCE: Laird and Hyman 2020

PAYMENT FOR ENVIRONMENTAL SERVICES: CLOUD FOREST BLUE ENERGY

• Pay for results financing for better land and water management in Latin America

• Downstream hydropower owners pay for measured water supply and quality benefits

• Finance and implement improved sediment management for hydropower dams

• Global Innovation Lab for Climate Finance supporting Conservation International and Nature Conservancy

• Stage 1 (2017-2019): R&D to identify watershed of potential interest

• Stage 2 (2020-2025): Demonstrate business case and raise $30 million of blended finance

• Stage 3 (2026 on): Commercial roll-out

SOURCE: https://www.climatefinancelab.org/project/cloud-forest-blue-energy-mechanism/

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PROMOTE IMPACT INVESTMENT FUNDS: ALTHELIA CLIMATE FUND• Began in 2014 for sustainable landscapes in Africa and Latin America• USAID Development Credit Authority (DCA) loan guarantee of $133.8 million • $118 million closed-end investment fund with 20 public and private investors

• Credit Suisse, Church of Sweden, FMO Bank, European Investment Bank, and AXA• Acquired by Mirova Natural Capital Ltd.

• Fully committed to 12 investments in 2017• Investments generate returns from commercial production and sale of carbon credits• Target rate of return to fund = 8%• Environmental benefits

• 2.1 million ha under improved management for conservation • Protected habitat for 102 threatened species • 22.4 million tCO2e emissions avoided (34.2 million tCO2e by 2021)

https://borgenproject.org/usaid-supports-althelia-climate-fund

PROMOTE IMPACT INVESTMENT FUNDS: LIVELIHOODS VENTURES FUNDS• For-profit environmental and social investment company based in Paris

• Selects, co-designs, finances, and monitor NGO projects in developing countries• NGOs receive loans to work with communities• NGOs repay loan costs by signing over carbon credits (no cash repayments)• Investors receive certified carbon credits (Gold Standard or Verra) over 10-20 years• NGOs received bonus for higher-than-expected carbon credit deliveries

• Livelihoods Carbon Fund 1 launched in 2011 • €40 million invested in 9 projects (no donor funding)• 130 million trees planted, 120,000 improved household stoves, 10 million tCO2 sequestered

• Livelihoods Carbon Fund 2 launched in 2017 (€100 million, no donor funding)• Carbon Funds 1 and 2 received capital from companies interested in carbon emission reduction credits

(mainly in EU)• Plans for Carbon Fund 3 to also source capital from for-profit, carbon credit investors

RECENT TRENDS IN REDD+ AND CARBON MARKETS• Jurisdictional or nested program under national REDD+ strategy (not individual projects)• Jurisdictional commodity sourcing standards and certification (Verra and Forest Carbon Partnership

Facility Carbon Fund)• New domestic compliance markets (California and Colombia) and ambitious country targets

(Netherlands)• Higher carbon prices for REDD+ than on voluntary markets (and large variation in voluntary market

prices)• Shareholder pressure on transnational corporations for ambitious mitigation targets• Many countries working on nesting REDD+ projects within jurisdictional approach (including Forest

Carbon Partnership Facility’s Carbon Fund)• Other countries incorporating projects into national REDD+ and NDCs• Increasing global commitment to restoration (e.g., Norway)• Increasing developing country interest in reforestation (e.g., Ethiopia and India)

NEW FUNDING SOURCES FOR REDD+• CORSIA: International Civil Aviation Organization’s new

sectoral cap-and-trade program

• Voluntary 2021-2026

• Mandatory 2027-2035

• Guidance currently under development

• Only allows jurisdictional REDD+ to avoid leakage

• Cannot be double counted toward country NDCs

• California’s Tropical Forest Standard

• Criteria for jurisdictional offset credits that reduce GHG emissions in tropical forests

• Eligibility for California’s cap-and-trade programImages: https://www.icao.int/environmental-protection/CORSIA/Pages/default.aspx; https://ww3.arb.ca.gov/cc/ghgsectors/tropicalforests.htm

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TRAINING LINKS ON ADAPTATION FINANCE FOR SUSTAINABLE LIVELIHOODS

• Training PowerPoint slides and videos on climate vulnerability and adaptation in general and for key sustainable livelihoods value chains in Madagascar: https://pdf.usaid.gov/pdf_docs/PA00TWQ3.pdf

• Public sector financing sources and instruments: https://dec.usaid.gov/dec/content/Detail.aspx?ctID=NDNiNDMyMGMtMmFmMi00YzgzLWEzOTAtOTllNTc0NGMxNTdk&rID=MzUz

• Climate project examples from across the world and lessons learned: https://dec.usaid.gov/dec/content/Detail_Presto.aspx?ctID=NDNiNDMyMGMtMmFmMi00YzgzLWEzOTAtOTllNTc0NGMxNTdk&rID=MzQ2

CLIMATE FINANCE READINESS: ADAPT ASIA-PACIFIC PROJECT PREPARATION FACILITY

• Helped governments prepare proposals for external financing

• Connected implementers to financing sources• Strengthened government capacity to manage

climate finance• Guide can help governments and NGOs prepare

grant proposals and loan applications and leverage private investment for climate adaptation

AECOM International Development (2017)

SUPPORT WEATHER-INDEXED INSURANCE

• Partner with domestic insurance and international reinsurance companies to provide weather-indexed insurance for farmers or renewable energy generation facilities

• Fixed payments set in advance• Payments tied to predetermined weather or

hydrological measurements (triggers) at specified reporting stations

• Lower transaction costs than damage-based insurance since no claims adjustment process to set payments for specific clients

Feed the Future Innovation Lab for Markets, Risk, and Resilience

• Index Insurance Innovation Initiative

• Improving weather forecast accuracy and dissemination, building farmer confidence that insurance will reduce their losses

CLIMATE CHANGE AND RFSAnn VaughanSenior Advisor for Climate Change, Bureau for Resilience and Food Security

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Outline1. What does RFS do?

2. What are the big climate moments in 2021 and how can RFS, the agency and you engage?

❖ USAID Commitments from Climate Leaders Summit

❖ USAID’s new partnership, including in the insurance space

❖ Looking ahead to COP

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AM RFS VISIONA resilient and prosperous world for all.

RFS MISSIONPartner to advance inclusive agriculture-led

growth, resilience, nutrition, and water security, sanitation, and hygiene (WASH) to

accelerate self-reliance and protect progress.

GOALTo lead and support USAID’s efforts to

strengthen and improve the resilience, food security, and water security, sanitation, and

hygiene of individuals, communities, and countries to sustainably reduce global

hunger, poverty, and malnutrition.

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Climate Leaders Summit

White House Announcements included the Climate Ambition Initiative:

● The Department of State and the U.S. Agency for International Development (USAID), working with other agencies, will coordinate U.S. government efforts to support countries around the world to enhance and meet their climate goals in ways that further their national development priorities.

USAID Deliverables at the Leaders SummitSix Deliverables:

1. Energizing a Net-Zero Asia2. Advancing a Clean Energy Future in Southern Africa3. Accelerating Natural Climate Solutions4. Mobilizing Private Investment for Climate Solutions5. Release New USAID Climate Change Strategy at COP266. Supporting the Agricultural Innovation Mission for Climate

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USAID Climate Finance High Level Targets

Goal 1: Leverage an investment of $250 million to attract $3.5 billion in private sector financing by

2025

Goal 2: Support pathways to projected net zero emissions for up to 20 developing economies to achieve dramatic reductions in projected emissions by 2030.

Goal 3: Help 20 climate vulnerable countries double the private sector funds leveraged toward resilience and adaptation goals by 2025.

Goal 4: Assist 20 countries to mobilize up to 20 percent of

needed funding

USAID at the Climate Leaders Summit

5. Release New USAID Climate Change Strategy at COP26

USAID commits to developing a new Agency climate change strategy by November 1, 2021 to be released at COP26. The Strategy will guide the Agency’s efforts to target climate change resources strategically, ramp up climate change mitigation and adaptation efforts, and further integrate climate change considerations into international development and humanitarian assistance programs across all sectors.

6. Supporting the Agricultural Innovation Mission for Climate

USAID will support the U.S.’s leadership in Agricultural Innovation Mission for Climate (AIM4C) including through investments in the CGIAR system to accelerate global agricultural innovation and the use of climate smart technologies by smallholder farmers. The AIM4C initiative will be advanced at the UN Food Systems Summit in September 2021 and launched at COP26 in November 2021.

USAID at the Climate Leaders Summit

G7 Press Release:

USAID EXPANDS THREE MULTILATERAL PARTNERSHIPS TO HELP COUNTRIES VULNERABLE TO CLIMATE CHANGE

• InsuResilience Global Partnership

• Risk-Informed Early Action Partnership

• Global Facility for Disaster Reduction and Recovery (GFDRR)

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Food Systems SummitFood Loss and Waste: an example of engagement at the Food Systems Summit

● Food Systems contribute ~30% of all global emissions… yet present an opportunity for co-benefits, including nutritional benefits

● According to FAO studies, the loss levels for cassava, a staple food for food security in the Caribbean, reaches of up to 23% in Guyana and 20% in Trinidad and Tobago, while up to 20% of tomatoes are wasted in Saint Lucia, 27% in Trinidad and Tobago and 34% in Guyana

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Scaling Up Renewable Energy (SURE)

Strategic Energy

Planning

Integrate emerging considerations into traditional planning processes to improvepower sector performance

Competitive Procurement

of RE

Procure clean energy at competitive prices and promote private investment

Grid Integration

of RE

Systematically address grid integration issues toavoid costly curtailment of renewables and other sources

Circular Economy of

RE

Support the transition toward a more circular economy for renewable energy

RE Innovation

Fund

Harness open innovation and partnering approaches

COP 26

Roll out of Climate Change StrategyFormally joining AIM4C

...What does ESC want to do?

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HOW CAN LAND HELP SOLVE THE CLIMATE CRISIS?

Dr. Noel GurwickSenior Climate and Land Advisor, DDI/Center for Environment, Energy, and Infrastructure

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Griscom et al. 2020

. Tg CO2e / yr .

How Can Land Help Solve the Climate Crisis?

. Tg CO2e / yr .

How Can Land Help Solve the Climate Crisis?

Griscom et al. 2020

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Global Drivers of Deforestation

Rice and Cattle: Methane

https://ccafs.cgiar.org/news/five-non-mitigation-benefits-alternate-wetting-and-drying

How Can Land Help Solve the Climate Crisis?

. Tg CO2e / yr .

Griscom et al. 2020

QUANTIFYING TROPICAL WETLAND BIOMASS AND CARBON STOCKS

CarbonCarbon

Carbon

Geographic Scope• 40 countries engaged to date, including:

https://www.cifor.org/library/3749/protocols-for-the-measurement-monitoring-and-reporting-of-structure-biomass-and-carbon-stocks-in-mangrove-forests/

The SWAMP ProtocolA scientifically sound approach for measuring and monitoring mangrove carbon

Adopted internationally:2013 Supplement to the IPCC Guidelines for National GHG Inventories: Wetlands

Adapted locally/regionally:E.g., regional field guide for East Africa

Assessing the Vulnerability of Mangroves

Steps towards Blue Carbon mitigation under NDCs inLatin America and the Caribbean

Manual Para La Medicion Monitereo y Reporte... Taller regional de Carbono Azul

Ambitious Climate Mitigation Delivers Development Outcomes

• Mitigation—reducing emissions and removing CO2 from the atmosphere—is needed to stabilize the climate and reach net zero

• Ambitious mitigation sustains development gains—we cannot adapt our way out of extreme climate change

• USAID’s mitigation work focuses on energy and land use, which comprise > 90% of emissions

• Mitigation helps countries prosper by seizing valuable economic opportunities for climate smart growth

ENERGY AND CLIMATE CHANGE

Jamila AmodeoSenior Energy Advisor, Environment, Energy and Infrastructure Office, USAID Bureau for Development, Democracy and Innovation

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Impact of the Power Sector on Climate ChangeThe power sector is the largest source of energy-related CO2 emissions accounting for 2/3 of global emissions. Within the power sector coal represents 30% of global energy-related CO2 emissions. (World Research Institute, 2019).

USAID programs Expanded Grid Supply of Clean Energy:• Scaling Up Renewable Energy (SURE) • USAID-NREL Partnership

Strengthened Energy Utility and Sector Performance:• Strengthening Utilities and Promoting Energy Reform (SUPER) • Energy Utility Partnership Program (EUPP) • Energy Regulatory Partnership Program (ERPP)

Bilateral and Regional Programming• Caribbean Energy Initiative (CEI)

NREL - USAID Partnership: Global technical platforms

NREL - Greening the Grid ToolkitsThe Grid Integration Toolkit provides state-of-the-art resources to assist developing countries in integrating variable renewable energy into their power grids.

The Distributed Photovoltaics (DPV) Toolkit provides resources to support developing countries in addressing barriers to safe, effective, and accelerated deployment of distributed solar power.

The Renewable Energy Zone (REZ) Toolkit helps power system planners and other stakeholders to connect areas of cost-effective renewable energy generation to the grid through the REZ transmission planning process.

The Energy Storage Toolkit offers curated resources and guidance on integrating commercially available energy storage technologies into the power system.

The Electric Vehicle (EV) Toolkit provides information and guidance materials to support safe, effective and accelerated deployment of EVs.

Distributed Energy Resource Cybersecurity Framework (DERCF)

Strengthening Utilities and Promoting Energy Reform (SUPER)

1Setting the AgendaThrough host country meetings identify areas to support achievement of low carbon pledges and targets in the respective NDCs and related NAMAs and other sector policies and strategies

2Planning InterventionsIdentify what strategies and programs need to be developed to incorporate climate change priorities

3Taking ActionDesign projects that can help counterparts prepare their power sector and energy infrastructure for climate change

The Energy Utility Partnership Program (EUPP)EUPP strengthens the capacity of utility participants in USAID-assisted countries to effectively manage and operate power systems, run financially viable businesses, adopt new business models, and integrate diverse energy resources to improve utility performance and increase energy security.

Business Innovation Partnership: A select group of partner utilities will receive support from experienced business process and change management facilitators, coaches and utility mentors to tackle a specific challenge within the organization.

Illustrative pilot projects include:

• Internet of Things and Digitalization• Grid Modernization• Energy Management Systems• Cybersecurity

Energy Regulatory Partnership Program (ERPP) Improve regulatory frameworks and support regulators, with the goal of creating a favorable enabling environment for investment and growth.

NARUC’s volunteers are dedicated to the principles that utilities should provide safe, reliable, economic, and environmentally sustainable electricity service.

Practical Guide to Regulatory Treatment of Mini-Grids

Practical Guide to Women in Energy Regulation

Four regulatory primers on the Cost-Reflective Tariff Toolkit have been published to date: 1. Communications & Stakeholder Engagement; 2. Regulatory Accounting; 3. Cost of Capital & Capital Markets; and 4. Rate Design (2020-2021)

The Caribbean Energy Initiative (CEI)Focuses on bolstering the resilience and performance of energy systems across the region, recognizing the critical role that the stable and reliable supply of energy plays in the daily economy of the region as well as during the recovery phase from the impacts of disasters.

Improved utility

performance

Accelerated private sector investment in

modern power systems

Enhanced energy sector

resilience through regional

cooperation

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WHY CEI? Challenges in the Region

Outdated Regulatory Framework

Lack of Integrated Planning

Ambitious NDC 2030 Goals for reducing GHG/CC

High dependence of non- renewable sources

Lack of ProcurementTransparency

Overcoming Losses

Financing shortage and bottlenecks

High cost and unreliable service to end users

Infrastructure Vulnerability

High level of Subsidies Energy subsidy in 2018: RD$

18,267MM = US$361MM

Bahamas - Dorian70,000 Homeless

(45%)

María Storm Puerto Rico80% of the system down

11 months to rebuild

*

The Caribbean Energy Initiative (CEI)Achievements to Date

● SUPER project supported St. Lucia’s regulator and other stakeholders in drafting and leading discussions on the draft Electric Grid Code. Also supporting the Barbados regulator to develop and implement public outreach campaign to promote national goal of reaching 100% renewable energy by 2030.

● Cybersecurity and digitalization webinars and technical assistance with CARILEC under NREL partnership have started.

● Study of potential for LNG use as baseload power in ESC close to completion.

● Global Engendering Utilities program is ongoing with DR utility, EDESUR.

● BIP under the Energy Utility Partnership Program (EUPP) is starting its partnership with utilities in DR and Jamaica.

For more information on the USAID Eastern and Southern Caribbean Regional Climate Symposium, visit:

https://www.climatelinks.org/ESC-Regional-Climate-Symposium

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