“oportunidades y retos del financiamiento climático internacional ” - maria paz cigarán

Challenges and Oportunities of International Climate Finance

Seminario BID – BNDS-ALIDE-ABDERio, 27 August, 2013

María Paz Cigarán

DEFINITION AND SCOPE: What is Climate Finance and how much do we need?

FINAL REMARKS

HISTORY AND UPDATE: What originated it and where are we?

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FLOWS AND TRENDS:Where do resources come from and go to?

BARRIERS AND OPORTUNITIES:What challenges need to be overcome from an int. & nat. perspective?

What are we addressing on this PPT?

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FINAL REMARKS


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FLOWS AND TRENDSWhere do resources come from and go to?

BARRIERS AND OPORTUNITIES:What challenges need to be overcome from an int. & nat. perspective?


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What is International Climate Finance?

World Resources Institute:Used to describe financial flows

from developed to developing countries for climate change

mitigation/adaptation activities

Principles: Scaled up,New and Additional, Predictable, Adequate ; TransformationalFSF $30 billion 2010-2012LTF $100 billion by 2020

Landscape of Climate Finance, 2013: Project-level financing data is as close as we can get to emission reductions, enhanced climate

resilience, and a stronger enabling environment.

Climate finance refers to local, national or transnational financing, which may be drawn from public, private and alternative sources of financing (…) critical to addressing

climate change because large-scale investments are required to significantly reduce emissions (…) equally important for adaptation. In accordance with the principle of common but differentiated responsibility and respective capabilities set out in the Convention, developed country Parties (Annex II Parties) are to provide financial

resources to assist developing country Parties in implementing the objectives of the UNFCCC. (UNFCCC)

What amount of resources are needed?

ADAPTATION

$10s- $100s billionper year (UNFCCC) USD 200 – 210 billion

to reduce CO2 eq emissions by 25 % below 2000 levels in 2030 (UNFCCC)

MITIGATION NEW TECHNOLOGIES

USD 140 – 175 billion for developing countries (WB)

Gradual investment in energy of USD 36 trillion in 2012-2050 - or USD 1 trillion per year (IEA)

Developing countries would need 300 by 2020, and 500 by 2030 to limit their emissions (WRI)

USD 10 trillion of aditional investment in energy in 2030 and USD 26 trillion of gradual shift of investment (3GE)

Duplicate speed of technology difussion (3GE)

$145 trillion of investment in low carbon resilient infrastructure (3GE)

900 billion per year until 2050WRI, wp2013


FINAL REMARKS


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FLOWS AND TRENDS:Where do resources come from and go to

BARRIERS AND OPORTUNITIES:What challenges have to be overcome from an int. & nat. perspective?


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What is the outlook for Paris 2015?• Cancun: GCF is created• Agreement under DP: new and universal GHG reduction instrument with

legal force by 2015 for the period beyond 2020. Further raise the existing level of action and stated ambition.

• Doha: The finance in the period between 2013 and 2015 should equal or exceed the average annual level with which countries provided funds during the 2010 to 2012 fast-start finance period (a total of USD 30 billion.) This is to ensure there is no gap in continued finance support while efforts are otherwise scaled up.– Governments will continue a work programme on long-term finance during

2013 to identify pathways for mobilizing scaled-up finance to reach the 100 billion target by 2020. A high-level roundtable on finance is planned for COP19/ CMP9 in Warsaw so that ministers can provide general guidance.

• “Bottom up approach” – need to start consolidating and scaling best practice

What is the outlook for Paris 2015?

• Review: Governments launched a robust process to review the long-term temperature goal, which is to start in 2013 and conclude by 2015, aimed at providing a reality check on the advance of the climate change threat and the possible need to mobilize further action.

• Pathway for institutional arrangements for Adaptation• Programme on market mechanisms • Clarify ways to measure deforestation• Registry and Programme to build climate action capacity• Economic diversification activity (took note)

Specific Climate Finance Instruments: Unfccc and derived

CIF: Climate Investment Funds ICI: international Climate Initiative

ICF: International Climate Fund The NAMA Facility


FINAL REMARKS


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BARRIRES AND OPORTUNITIES:What challenges have to be overcome from an int. & nat. perspective?


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Climate Finance: General Outlook (1)

• USD 364 mil millones en 2010/2011. – Aumentó pero aún lejos de la inversión requerida para 2°C (AIE: inversión gradual en

energía 36 USD billones en 2012-2050 - o USD 1 billón por año).

• Fuentes: – Sector privado (USD 217-243 miles de millones) de países desarrollados. – Sector público (USD 16-23 miles de millones) como catalizador para privado y como

ayuda al desarrollo (de 9.5 miles de millones a 23)

• Intermediarios, en especial los bancos nacionales de desarrollo y comerciales cumplen papel importante en levantamiento y canalización de fondos (USD 110-120 miles de millones), y en la creación de un entorno propicio para la inversión del sector privado.

• Instrumentos: USD 293-347 MM instituciones financieras con interés de propiedad (el dinero que tiene que ser devuelto).

– Intermediarios públicos habilitan proyectos que serían inviables a través préstamos concesionales y donaciones.

Source: Climate Funds Update

Sources and mitigation end uses

Country source End use (mitigation)

Usos: Economías emergentes destinatarios principales, y fuentes importantes (un tercio de inversiones de mitigación a China, Brasil e India).


FINAL REMARKS


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Challenges (1)

At an international level: • An insufficient amount, target, speed: Is 100 billion enough?

– Lack of climate finance mobilization: developed and developing– Lack of notion of pathways/roadmap

• Lack of coherence and coordination among different institutions and bodies under the convention – Various source institutions / international burocracy /different rules and

procedures • Mechanisms/decisions do not match specific country needs

– Adaptation vs. mitigation: what if 2015 agreement not ambitious?– Local needs not necessarily match global (try to standardize, not a flexible

approach)– Innovation promotion? Who takes the risk?

• Unpredictable carbon pricing• Lack of trust & transparency Private sector window in GCF and readiness approach

Challenges and oportunities (2)

At a national level:• BAU is the current option:

– Growth without constraints, perception that environment is an additional burden

– lack of clear signals to promote LCD

• How much do we need? What do we prioritize? What instruments should be promoted

• Institutional coordination and capacities to be strengthen• Up front cost and risks

NDB: – knowledge on national investment conditions– Bridge: government/private sector– Fiduciary standards

Challenges and opportunities (3)


FINAL REMARKS


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• Influencing from a practical perspective:

– Play an active role: Influence the international climate finance architecture

– Use this as an excuse for your further strengthening: new strategic vision and role for development (under a new risk/opportunity)

– Work with national institutions and stakeholders to create the enabling environment

A window of oportunities (1)

• Build the case– Cases that work: what would be needed to scale it to meet a

national target– COP20 (2014) in Lima: bring practical ideas to the table

• Innovate for adaptation: – Gap for credit approval – the most vulnerable– Catalyse resilient investment

• Create evidence based systems • Direct access

A window of oportunities (2)

Thank you!www.libelula.com.pe

http://www.libelula.com.pe/

“oportunidades y retos del financiamiento climático internacional ” - maria paz cigarán

Economy & Finance