Climate Finance Gaps and Challenges

Transcription

1 Climate Finance Gaps and Challenges Yuqing Ariel YU Senior Policy Researcher Institute for Global Environmental Strategies Regional Collaboration Centre for the Asia-Pacific Region

2 Regional Collaboration Centre for the AP region RCC Bangkok is a partnership between the United Nations Framework on Climate Change (UNFCCC) Secretariat and the Institute for Global Environmental Strategies (IGES). RCC Bangkok Institute for Global Environmental Strategies 604 SG Tower 6F, 161/1 Soi Mahadlek Luang 3, Rajdamri Road, Patumwan, Bangkok 10330, Thailand RCCbangkok@unfccc.int 2

3 Synergy and difference between climate finance and SD finance Conventional development interventions (i.e., sustainable livelihoods, social protection, disaster risk reduction) can strengthen resilience and adaptive capacity. The Busan Building Block on Climate Finance and Development Effectiveness (2011): To ensure effectiveness of CF, its use needs to be led and owned by recipient countries and recipient countries should be use the finance in line with their strategic priorities. Climate change should be fully integrated into national and sectoral development plans and be channeled into public financial management systems. The new and additional principle: Funding should be additional to existing ODA commitments to avoid the diversion of funding for development needs to climate change actions. Existing aid classification indicators are insufficient to separate climate finance classified as ODA from national contributions labelled as non-oda. 3

4 Gap 1: Funding scale gap Cancun Agreements: mobilizing jointly USD 100 bn per year by 2020 Flows to developing countries (SCF, 2014): Through public institutions: USD35-50 bn All financial flows (including both public and private flows): USD bn (close to the lower bound) INDC funding request by 2030 (UNEP-DTU, 2015): Mitigation: USD trillion Adaptation: USD 1.4 trillion 4

5 Gap 2: Definitional gap UNFCCC does not have a definition of climate finance. Parties use different operational definitions for reporting. Developed Parties: Common tabular format Clarity on point-of-measurement (committed vs. disbursed) Definition of multilateral climate fund (cc-specific vs. cc-related ) Clarity on core contribution Definition and method of accounting private finance Developing Parties: No common format Receipt, types, and use of climate finance Domestic strategies for scaling up climate finance and enhancing the enabling environment 5

6 Gap 3: Data gap The lack of reliable project-level data for private investments beyond renewable energy results in a heavy bias toward renewable energy in the global landscape of climate finance. Flow Methodology Result (USD bn) CPI s Global Landscape Public Source & intermediaries Governments DFIs Climate funds Gov t: DFIs: 131 CFs: 2 Private Project Renewable energy RE: 243? =Total: EE: (IEA, 2015; HSBC, 2014) Forestry: 4.2 6

7 Gap 4: High debt costs for climate/sd/green projects Min 25% Median 75% Max a) Lending interest rate [%] b) Share of internal funds[%] EAS EAS PAS PAS SAS SAS OECD c) 1. High lending interest rates 2. Excessive reliance on internal funds Requiring collateral [%] OECD d) Value of collateral [%] EAS EAS PAS PAS SAS SAS OECD OECD Source: Enterprise Surveys (2014); World Bank Data (2014). Statistics refer to the year 2013 or the most recent year available. 3. Heavy burden imposed by collateral requirements 7

8 Gap 5: Uneven thematic distribution of finance Adaptation finance ranges from 11% to 24% (SCF, 2014). There is evidence that adaptation finance has been increasing. The Climate Public Expenditure and Institutional Review (CPEIR) notes that spending patterns have changed over the years. In fact, while the greatest share of expenditure was initially tilting toward adaptation in the countries assessed, the progressive trend is toward mitigation (UNDP, 2015). In July 2015, a group of MDBs and the International Development Finance Club adopted the Common Principles for Climate Change Adaptation Finance Tracking. 8

9 India Indonesia Vietnam Philippines Bangladesh Thailand China Pakistan Afghanistan Nepal Cambodia Sri Lanka Lao PDR Mongolia Bhutan Maldives Myanmar Malaysia USD million (current value) Gap 6: Uneven geographic distribution of finance The largest share (38% to 53%) of funding from multilateral CFs, FSF and climate-related development assistance has been directed to the countries of the AP region (SCF, 2014). The LDCs collectively represented 10% of the total finance received Source: CFU (2014); IGES et al. (2013) Renewable energy investments mainly take place in China (USD 83.3 bn), Japan (USD 35.7 bn), and India (USD 7.4 bn) (GTR, 2015). The other 10 AP countries attracted USD 100 million in renewable energy finance in

10 Gap 7: Institutional arrangement gap The Climate Public Expenditure and Institutional Review (CPEIR) is one of the few known studies that review public spending on CC activities and institutional responsibilities in selected developing countries. 19 ministerial CCC; 11 non-ministerial agencies Under utilized Thailand The mechanism that oversees coordination on how resources might be allocated and effectively utilized among gov t agencies is missing. Source: UNDP (2012) 10

11 INDC country map By 1 October, 119 INDCs were submitted, covering 146 countries and per cent of global GHG emissions in Source: UNEP (2015) 11

12 INDC and emissions gap INDCs present a real increase in the ambition level. However, the submitted INDCs are far from enough and the emission gap in 2025 and 2030 will be significant and ambitions need to be enhanced urgently. Source: UNEP (2015) Further actions for closing the gap: Enhanced EE in industry, buildings and transport Expanded use of renewable energy below3.5 <3-3.5 International collaborative initiatives (i.e., C40 Cities): GtCO 2 e in 2020 Forest-related actions: REDD+ theoretical potential up to 9 GtCO 2 /yr 12

13 A regional approach for CC cooperation and SD Climate specific regional initiatives: Asia Pacific Partnership on Clean Development and Climate (APP); Asia Pacific Adaptation Network (APAN) Regional cooperation on energy: regional gas grids in East Asia; regional cooperation on hydropower; the Pacific Appliance Labelling and Standards (PALS) program in Pacific Island Countries Technology-focused CC cooperation: ASEAN+3 Energy Security Forum; APEC Energy Working Group Regional hubs for technology cooperation: Asia Energy Efficiency and Conservation Collaboration Centre (AEEC), the Asian and Pacific Centre for Transfer of Technology (APCTT). Reginal cooperation could play an enhanced role, particularly if it explicitly incorporates mitigation objectives in trade, infrastructure, and energy policies and promotes direct action at the regional level (IPCC, 2014). 13

14 Thank You 14