THE GREEN CLIMATE FUND: GREAT EXPECTATIONS. Héla Cheikhrouhou, Executive Director, Green Climate Fund Secretariat

Transcription

1 THE GREEN CLIMATE FUND: GREAT EXPECTATIONS Héla Cheikhrouhou, Executive Director, Green Climate Fund Secretariat The 15 th William G. Demas Memorial Lecture, Caribbean Development Bank Georgetown, Guyana 27 May 2014 Dr. Smith, thank you for the gracious introduction. Ms. Bell-Lewis, thank you for the warm welcome. The Hon. Mr. Samuel Hinds, Prime Minister of Guyana, The Rt. Hon. Dr. Denzil Douglas, Prime Minister of Saint Kitts and Nevis, The Hon. Dr. Ashni Singh, Minister of Finance, Guyana, and Chairman of the Caribbean Development Bank Board of Governors, The Hon. Mr. Reuben Meade, Premier of Montserrat, Dr. Warren Smith, President of the Caribbean Development Bank, Honourable Ministers, Governors of the Caribbean Development Bank, Directors of the Board, Excellencies, Distinguished Guests, Ladies and Gentlemen, All protocols observed, Good evening. It is an honour and a privilege to deliver the William G. Demas Memorial Lecture tonight. I would like to extend my deep appreciation to the Caribbean Development Bank and the Government of Guyana for the invitation to join you this evening. And thank you for the warm hospitality you have shown me, which the Caribbean is known for around the world. I would also like to thank Mr. Selwin Hart, who has been deeply involved in the establishment of the Green Climate Fund and who first suggested that I speak to you this evening. Let me finally thank all of you gathered here this evening for your interest in climate change, the greatest challenge of our century. Great expectations: what we can expect The science of climate change is clearer and more accurate than ever: Page 1 of 9

2 Global warming is a fact; Humans have caused the greater part of it; Warming is, for the most part, irreversible; Most of the heat is going into our oceans; and Never before have we witnessed the rates of ocean acidification that we are seeing at present. As a global community, we will soon have to choose the future we want: In order to stay below 2 C of warming, the world must effectively become carbon negative, and most fossil fuels the driving force behind many economies and much of our development must be replaced by renewables and clean forms of energy. The central theme of my talk today is our great expectations. Great expectations in terms of what science now confirms we can expect. Great expectations in terms of what might happen as result of what we do not know. And a great expectation for the institution that governments around the world have put in place to address these issues: the Green Climate Fund. Climate change is a compounded challenge: an interconnected web of action and reaction. As a whole, these results and consequences pose arguably the biggest challenge humankind has ever faced. And as climate change impacts people, it impacts development. Consequently, a very distinctive human face of climate change emerges which many of us already recognize no matter what our vantage point. Taking decisive action on climate change depends far too often on whether or not and to what degree we understand climate change and its impact. So, what can we expect? The most recent publication by the Intergovernmental Panel on Climate Change (IPCC) on the physical science basis states that the warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. It is extremely likely, the IPCC report states, that human influence has been the dominant cause of the observed warming since the mid-20 th century and that most aspects of climate change will persist for many centuries even if emissions of CO2 Page 2 of 9

3 emissions are stopped. This represents a substantial multi-century climate change commitment by past, present and future emissions of CO2. Between 1900 and 2010, the average surface temperature of the Earth rose by 0.8 C. The concentration of CO2 in the atmosphere increased at a rate of 2 ppm (parts per million) per year. While current climate data is alarming, we have not yet seen the full rise in temperature that will occur as a result of the CO2 we have already emitted. According to climate scientists, even if CO2 were stabilized at the level of 390 ppm, where it stood four years ago, there would be at least another 0.6 C in the pipeline. This delayed response, known as climate lag, is caused by the thermal inertia of our oceans. A scientific paper published in 2010 estimated this climate lag at about four decades. This has profoundly negative consequences for our planet. With such a time lag between cause and effect, the average temperatures over the last decade are the result of emissions during the 1960s and early 1970s. Similarly, this also implies that we might not know the full extent of the impact of our emissions over the last two decades until the 2040s. While we may expect worse to come, the effects are already devastating. Climate change already affects us all. The fewer resources you have to mitigate these impacts, the greater you are affected. As always, the poor, the vulnerable and the disenfranchised are disproportionally impacted. Conservative estimates in the recent IPCC data predict a likely global sea level rise of 74 centimetres by 2100, threatening the survival of millions of people living in coastal cities around the world and entire island nations through increased risk of flooding and coastal erosion. In the Caribbean, the concern of small island developing States is all too familiar the devastating effects of hurricanes have been witnessed by many. Although Caribbean nations have contributed little to the release of the greenhouse gases that drive climate change, they will pay a heavy price for global inaction in reducing emissions. According to a Tufts University report published after the 2007 IPCC study and comparing an optimistic rapid stabilization case with a pessimistic business-as-usual case, the cost of inaction in the Caribbean will have dramatic consequences in three key categories: hurricane damages, loss of tourism revenue and infrastructure damage due to sea-level rise. Page 3 of 9

4 The costs of inaction would amount to 22 per cent of gross domestic product for the Caribbean as a whole by The costs of inaction would reach an astonishing 75 per cent or more of GDP by 2100 in Dominica, Grenada, Haiti, Saint Kitts and Nevis, and Turks and Caicos. Excellencies, ladies and gentlemen, it is obvious that in these high waters, business as usual will not cut it. Inaction and business as usual are no longer an option. Under current pledges and commitments, warming is likely to reach 4 C by the end of this century and 2 C as early as Decisive action based on strong political will and accompanied by sufficient resources financial and otherwise is imperative in addressing the negative impacts of climate change through both adaptation and mitigation. Only through cooperation, collaboration, a common vision and aligned political will, can we rise to the great expectation of finally winning the battle against climate change. The challenge is huge, and the expectations are certainly great. So what can the Green Climate Fund do to meet those expectations? First, let me give you some background on the Fund. The Green Climate Fund is a new multilateral fund that was agreed at the sixteenth session of the Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UFCCC) held in Cancun, Mexico. The Fund s purpose is to make a significant contribution to the global efforts to limit warming to 2 C by providing financial support to developing countries to help limit or reduce their greenhouse gas emissions, and to adapt to the unavoidable impacts of climate change. Our vision is to devise new paradigms for climate finance, maximize the impact of public finance in a creative way, and attract new sources of public and private finance to catalyse investment in adaptation and mitigation projects in the developing world. By catalysing public and private funding at the international, regional, and national levels through dedicated programming in climate change mitigation and adaptation, and as a driver of climate resilient development, the Green Climate Fund is poised to play a relevant and timely role in climate action globally. So, how are we going to do that? Page 4 of 9

5 Well, we are working through collaboration: the Fund is a joint endeavour between developed and developing countries who are equally represented on our Board. Over the last years, the Board has been putting in place the policies and procedures needed for a robust, efficient and effective Fund. Those measures are all needed before we can be ready for action. It has not been easy. We are talking about creating a new multilateral financial institution, capable of catalysing the vast sums of financing which UNFCCC Parties have agreed is necessary, from both public and private sources. Indeed, in 2009, there were calls to scale up climate finance, to reach $100 billion per annum by The preparatory work of the Fund has been hard, and we have had some difficult discussions between the developing and developed countries about how we should be structured, where our priorities should lie, how we should be accountable, and how to secure maximum impact in our work. Eight months ago, the Board agreed that there were several essential elements which had to be put in place before we could open our coffers to receive funding. We called these the essential eight and we set ourselves the ambitious target of agreeing all of them by the end of our May 2014 Board meeting. Our May Board meeting was just last week. We had a week of meetings which lasted up to 16 hours per day. We knew that the expectations were high and that the Board needed to satisfy them. But as I stand here before you today, I am proud to tell you that we have agreed all of the necessary elements, and that the Fund is now ready for business! I think that we surpassed the expectations of many in reaching agreement on so many issues, and I would like to tell you a little bit about the design of the Fund, our principles, policies, structures, and working methods. The Fund s design The Fund will channel concessional climate finance to both the public and private sectors. Initially the Fund will be open to receive grants from public and private sources, as well as capital contributions and concessional loans from public sources. In terms of how those resources will be allocated, the Board has agreed that during its initial phase: The Fund will aim for a 50:50 balance between mitigation and adaptation over time; The Fund will aim for a floor of half of the adaptation allocation for particularly vulnerable countries, including least developed countries, small island developing States and African states; Page 5 of 9

6 The Fund will also work with the private sector through its Private Sector Facility, which will receive a significant allocation of funds, in order to provide incentives that encourage low-emission and climate-resilient investments by the private sector. The Board has established rigorous fiduciary principles and standards as well as environmental and social safeguards to govern all of our activities. We have also adopted policies which will guide the Fund s financial risk management and investment decisions. These include ensuring that in its initial stages, grant contributions will significantly exceed loan amounts. The Fund will measure its impact through an initial results management framework, which will set targets for our activities. Our activities on mitigation will aim to have a strategic impact by incentivizing lowemission energy access and power generation, low-emission transport, energyefficient buildings, cities and industries, and sustainable land use and forest management. On adaptation we will aim to increase climate-resilient sustainable development, and will focus strategically on increasing resilience of the most vulnerable people and regions, including health and well-being and improving food and water security, as well as increasing the resilience of infrastructure and buildings, and ecosystems themselves. How to work with the Fund One lesson from development experience is the need to ensure that developing country partners exercise ownership of climate change funding and integrate it into their own financial allocation mechanisms. The Governing Instrument of the Fund stipulates that it will adopt a country-driven approach and strengthen programme coherence and stakeholder coordination at the national level. So how will this work? Funding proposals will be submitted through national designated authorities or NDAs, who will be the interface between each country and the Fund. They will communicate the country s strategic priorities for financing low-emission and climate-resilient development across its economy. NDAs will be the primary source of information about the Fund at the national level, so it will be important to ensure close coordination with your local NDAs. Nomination of NDAs has already begun. For example, this role will be played for Antigua and Barbuda by the Environment Division of the Ministry of Agriculture, Lands, Housing and the Environment, with the assistance of the Debt Management Unit within the Ministry of Finance, The Economy and Public Administration. The Secretariat will assist eligible countries, along with their appointed NDA, in defining their strategic framework for interaction with the Fund. Page 6 of 9

7 We will also work to establish a network of accredited national, regional and international implementing entities and intermediaries to intermediate the resources of the Fund and oversee implementation. Recipient countries will have direct access through accredited national or regional implementing entities which they propose, as long as these implementing entities meet certain standards. Each eligible country will be encouraged to select at least one intermediary or implementing entity. In the case of the Caribbean countries, one example could be the entity that has brought us together this week, the Caribbean Development Bank. Proposals may come from a variety of sponsors or executing entities in-country (public, private or not-for-profit entities). They will need to work with an accredited intermediary or implementing entity. We encourage the use of programmatic approaches and regional approaches to have truly impactful proposals. The implementing entity or intermediary will appraise the funding proposal to assess the entire project or programme s viability from climate change, environmental, social, gender, economic and financial points of view in order to ensure alignment with the Fund s activity-specific decision criteria. Following this, an analysis and recommendation from the Secretariat would support a Board decision. As the Fund becomes operational, we will develop supporting materials for implementing entities, such as funding proposal appraisal toolkits. Operational readiness As you can see, setting up the Fund not only involves work by the Board and the Secretariat. And we recognise that we need to give guidance to those who want to work with us. In this regard we are also focusing on readiness support to developing countries. The readiness workload will be greater during the start-up phase of Fund operations, but it will always be needed as member countries continue to fully develop project and programme proposals and to strengthen their institutions. The Fund will make readiness grants to countries through accredited entities available to both public and private entities. Readiness grants would also go to regional and national intermediaries, to enhance direct access. Resource mobilization Page 7 of 9

8 I said that we are ready for business: and the next business on our agenda is our initial resource mobilization, having agreed on the principles, policies and structures necessary. We will be holding an initial resource mobilization meeting by the end of June. We are counting upon pledges primarily from developed countries in order to make the Fund a success, and I am confident that now that the Fund has taken the necessary decisions, public funders will recognise that the time is right to move to a significant capitalization. As global leaders gather in New York in September, and the COP ministers later in Lima, the Executive Secretary of the UNFCCC has signalled that at least $10 billion would be required for the initial capitalization. Call to action Excellencies, ladies and gentlemen, let s take a moment to reflect. Climate change is not an isolated occurrence. Manifestations of climate change are everywhere. From the arctic to the desert. From small islands here in the Caribbean to the most urbanized cities in the world. And while governments, policy-makers and investors equivocate, climate change has a multiplier effect. We now know what to expect from a changing climate. Science has raised the alarm. The IPCC has confirmed that the effects of climate change are both costly and consequential. So what can you do what can we do together to move from great expectations to bold and decisive actions? First: Get ready. Create the readiness for a paradigm shift. Readiness for a paradigm shift is not simply a set of policies to encourage lowemission investment, or a climate action blueprint. It is a mindset for moving forward, a vision that is aligned with that of the Green Climate Fund. Foster this shared vision and develop the political will, within your own countries and regionally, to make a paradigm shift more achievable. Engage your stakeholders, encourage cooperation between local public and private actors, and collaborate with your neighbours. Test the waters and initiate projects. Invest in the climate strategically. Diversify your climate portfolio, but do not diversify your attention and resources. Second: Renew and invest in new opportunities Page 8 of 9

9 Investing in a low-emission, climate-resilient future will bring benefits including less poverty, improved public health, reduced pollution, more liveable cities and fewer lives and assets lost through natural disasters. It will also mean cleaner, more efficient and less costly energy. Small island countries have access to solar and wind energy, geothermal energy particularly on volcanic islands and ocean renewable resources such as tides, waves, and currents. 90 per cent of small island states are in the tropics, where solar energy can generate less intermittent power. Six Caribbean countries, including Dominica, Saint Kitts and Nevis, and Saint Lucia, have signed up to a renewable island initiative, the Ten Island Renewable Challenge, to transition from fossil fuels to clean, sustainable renewable power generation, energy storage systems and greater energy efficiency. Although there are policy and market barriers to overcome, particularly in attracting large- scale investment, transitioning towards renewables can be possible for small island developing States. Third: Fulfil great expectations Living up to expectations is never easy. Excellencies, ladies, and gentlemen, let our great expectations not be an impediment to our urgently needed actions. The task before us is monumental. The risk of failure may be high. But the more we come together, the more we act in unison and synchronicity, the greater our chances of success. Everyone has a role to play: The Fund has to be flexible and responsive. Developing countries must come up with compelling, strategic proposals. Developed countries have to scale up their financial and technological support. And we must all demonstrate hope and anticipation on the pathway to low-emission and climate-resilient development. Thank you for your attention. Page 9 of 9