Financing the CDM through international climate finance institutions

Transcription

1 Financing the CDM through international climate finance institutions CDM EB 88 Bonn, Germany, 7 to 11 March 2016 UNFCCC Secretariat SDM programme

2 Procedural background The Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP), in decision 6/CMP.11, encouraged the Board to explore opportunities for financing the CDM through international climate financing institutions and report back at its twelfth session. The CMP also invited the Board to consider an in-session workshop at the forty-fourth sessions of the subsidiary bodies, with transparent and prudent management of CDM resources. Furthermore, this work relates to Goal 2 of the 2016 CDM Management Plan, Nurture policies to broaden demand for, and participation in the CDM, in particular objective 2(c): Further develop the CDM as a tool for monitoring, reporting and verifying the outcomes of mitigation finance. 2

3 Purpose The purpose of this item is to present options to the Board regarding: a) How to respond to the request from CMP to explore opportunities for financing the CDM through international climate financing institutions; and b) The organization of an in-session workshop at the forty-fourth sessions of the subsidiary bodies (SB44) in May

4 Key issues and proposed solutions Two approaches Two mutually complementing approaches could be used to identify and build opportunities for the CDM and international climate finance institutions (ICFIs), including the GCF, to support each other: (a) Top-down opportunities that would be submitted to consideration by the CMP at its twelfth session, such as guidance to the operating entities of the Financial Mechanism; and (b) Bottom-up initiatives that are being developed or planned by ICFIs, some of which may also be accredited by the GCF, and could be expanded or replicated. 4

5 Top-down approach Options include engagement between the GCF and UNFCCC secretariats and between GCF Board and CDM Executive Board to identify ways in which the GCF can support the financing of CDM projects and use CDM s toolbox to its advantage For example, use of CDM methodologies to estimate mitigation outcomes, expertise from the roster of experts, and support in the development of funding proposals/windows. Results from this analysis could be considered by the CMP. 5

6 Bottom-up approach Engagement with selected ICFIs, some of them accredited entities of the GCF, to: a) Identify new opportunities for financing the CDM; and b) Highlight and promote existing initiatives among other institutions, including those without previous CDM experience. Such engagement would, among others: Provide better understanding of how financial instruments are best designed and packaged to assist project participants; Attract additional private capital; and Provide value to the finance sector. 6

7 In-session workshop at SB44 Goal: to capitalize on the presence of negotiators and key officials from several institutions to: a) Identify opportunities and challenges related to financing the CDM; and b) Highlight existing innovative initiatives to finance CDM projects. The workshop could be conducted as a panel discussion comoderated by GCF, SCF and/or members of the Board with presentations by other institution representatives. The workshop could be held as part of the CDM-EB side event or as separate side event at SB44. 7

8 Impacts This work will provide an opportunity to inform policy makers about the potential to finance CDM projects, provide options for using the CDM as a tool for other uses and possibilities of collaboration with the GCF. 8

9 Inputs from stakeholders Results based finance (RBF) parameters are more encompassing and go beyond quantification of emission reductions only. CDM should strive to address these gaps and undergo a reform process to be useful for RBF in particular: exclude project types with low likelihood of additional GHG emission reductions through an exclusion list; establish environmental and social safeguards based on best practice; establish a CDM grievance mechanism and introduce best practice guidance for nationallevel grievance mechanisms; improve the SD tool to increase access to all stakeholders and assess compliance with environmental and social safeguards and applicable laws and regulations; exclude project types with high GHG emissions and those associated with other high environmental and social costs (e.g. fossil fuel projects); strengthen requirements for stakeholder involvement and establish local stakeholder communication channels for case specific matters; seek input from project-affected communities and civil society in the development, implementation and monitoring of projects. 9

10 Recommendations to the Board The Board may wish to: (a) Provide guidance on exploring opportunities for financing the CDM through international climate finance institutions; (b) Agree to request the secretariat to conduct exploratory work in consultation with chair and the vice chair; (c) Agree to host an in-session workshop at SB44 in May 2016 and request the secretariat to make the necessary arrangements in consultation with chair and the vice chair; (d) Request the secretariat to prepare an annex to the Board s report to CMP for consideration at its ninety first meeting. 10

11 Subsequent work and timelines Based on the guidance provided by the Board, an update on activities will be presented through the annual report of the Board to the CMP, for consideration by the Board at its ninety first meeting. Should the Board agree to host an in-session workshop at SB44 in May 2016, it may wish to request the secretariat to make the necessary arrangements as soon as possible. 11

12 Budget and cost The costs for this work are expected to be covered by the resource allocation included in table 5, page 16 of the CDM Management Plan 2016 (EB87, Annex 1). Additional costs for the proposed in-session workshop are expected to low, if conducted as proposed. 12