2014 cop20-ccxg-adaptation-side-event-jane-ellis
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OECD side event at COP 20 on the role of the 2015 agreement in mobilising climate finance and enhancing action on adaptation
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2014 cop20-ccxg-adaptation-side-event-jane-ellis
- 1. The role of the 2015 agreement in mobilising climate finance COP20 side event 4 December 2014 Jane Ellis, OECD Jane.ellis@oecd.org Based on a paper of the same title by Takayoshi Kato, Jane Ellis and Christa Clapp Climate Change Expert Group www.oecd.org/env/cc/ccxg.htm
- 2. Presentation Outline Four different ways in which the 2015 agreement could mobilise climate finance o International institutional arrangements o Enabling environments o Financial instruments o Role of MRV Conclusions 2 Climate Change Expert Group
- 3. Four ways the agreement could help to mobilise climate finance In many cases, the 2015 agreement could facilitate mobilisation of climate finance indirectly The agreement could contribute to long-term shift of financial flows towards “green” in different ways The new agreement Intl. Institutional Arrangements In-country Enabling Environments Financial Instruments & Tools Enhancing transparency and MRV 3 Climate Change Expert Group Mobilising climate finance
- 4. Intl. Institutional Arrangements International institutional arrangements under UNFCCC: oNeed to be responsive to rapidly changing circumstances, while minimising duplication of work. oNeed to build on current climate finance framework What could the agreement do? • Encouraging operating entities to consider implications of thematic and geographical balance (also elaborating what “balance” is). • Facilitating better co-ordination and co-operation among institutions financing climate interventions. • Also, enhancing synergies with non-UNFCCC institutions. • Streamlining allocation processes by the operating entities. 4 Climate Change Expert Group
- 5. In-country Enabling Environments EEs are essential for attracting investment, and better accessing, managing and using climate finance. All parties to enhance push and pull factors for enhancing enabling environments. In practice, push and pull factors are often inter-linked. e.g. Push factors of enabling environments can be important for enhancing some pull factors. 5 Climate Change Expert Group
- 6. PULL FACTORS What could the agreement do? • Encouraging Parties to establish predictable and transparent enabling environments . • Urging Parties to put price on carbon in a coherent, stable and sustainable manner. • Encouraging co-ordination of domestic institutions in partner (recipient) countries. • Helping to strengthen ownership of recipient countries (with support for fiduciary, environmental and social standards). Encouraging Parties to set timelines for such improvements. 6 Climate Change Expert Group
- 7. PUSH FACTORS What could the agreement do? Encouraging reduced fragmentation of international climate finance by reiterating the agreement on the Global Partnership for Effective Development Co-operation. Encouraging Parties to facilitate inter-agency co-ordination within and between contributing countries. Encouraging Parties to further use innovative sources of climate finance in addition to “conventional” public climate finance sources such as Official Development Assistance (ODA). (e.g. Market based approaches, funds raised by carbon pricing policies, Financial Transaction Taxes (AGF, 2010)). 7 Climate Change Expert Group
- 8. Financial Instruments & Tools How to use financial instruments and tools are case-specific. But the agreement could indirectly contribute to the use of full range of financial instruments and tools by… What could the agreement do? • Explicitly encouraging the use of the full range of relevant financial instruments, tools and vehicles. • Providing opportunities for information exchange on the use of financial instruments and tools. • Encouraging the further involvement of multiple financial instruments/tools and multiple actors. 8 Climate Change Expert Group
- 9. Enhancing transparency and MRV MRV is key to building trust among countries. In the new agreement, MRV could be more elaborated and broadened its scope. What could the agreement do? • Using MRV as a tool to generate more information as well as disseminate information on results from interventions MRV Broadened Elaborated • Elaboration on methodologies of MRV to address issues 9 Climate Change Expert Group
- 10. Conclusions The 2015 agreement can: o Directly influence Financial Mechanism of Convention o Exhort Parties to act in a specific way (e.g. how to allocate international climate finance) o … but only indirectly influence private climate finance providers The agreement could help to green investments by: o Facilitating countries’ work on strengthening the push and pull factors for enabling environments o Encouraging Parties to identify opportunities to improve efficiency in delivering climate finance o Facilitating trust-building among countries by enhanced MRV 10 Climate Change Expert Group
- 11. Thank you! For further information: www.oecd.org/env/cc/ccxg.htm www.oecd.org/env/cc/financing.htm 11 Climate Change Expert Group
- 12. (e.g.) A process for enhancing enabling env.in recipient countries Encouraging Parties to work together for durable and flexible enabling environments in recipient countries. Process flows Feedback or interaction Climate policy instruments Setting predictable and stable policy goals Investment policies Human capital Aligning policies with national development goals 12 Climate Change Expert Group In-county Institutional capacities Monitoring and evaluating Revisiting and updating policy goals and/or instruments Feedback Feedback Source: Based on Kato et al. (2014), OECD (2014a), OECD (2014b), OECD (2013a), GIZ (2013), OECD (2013b) and Corfee-Morlot et al. (2012)
Notas del editor
- Previous studies by the CCXG and the OECD …explored how developed countries could effectively, efficiently and accountably mobilise climate finance. This study …builds on these analyses to explore how a 2015 agreement could contribute to further mobilising climate finance. …by examining: International institutional arrangements. Enabling environments. (iii) Financial instruments. (iv) Measurement, Reporting & Verification.
- Shifting public and private investment from brown to green is an essential part of addressing climate change. A new international climate change agreement to be adopted at COP 21 has the potential to play a significant role in sending signals to countries and private investors to make such shift . Some countries argue that quantitative targets in the agreement has a direct influence on mobilising climate finance. Other countries argue that quantitative targets themselves are not enough and including them may not be very helpful for making the long-term investment shift. So this presentation focuses mainly on the indirect ways that the 2015 agreement could to help mobilise climate finance. Although it is indirect, such influence could contribute to long-term shift of financial flows towards green investment by covering the following four aspects. 1. International institutional arrangements for climate finance: how can improved coordination and streamlining improve mobilisation? 2. What can the 2015 agreement to do enhance in-country enabling environments, both in terms of push and pull factors? 3. Financial instruments and tools that can be used for mobilising climate finance 4. Measurement, Reporting and Verification, or MRV.
- Circumstances of international climate finance has significantly changed from its early years in 90s. Significantly more climate finance is flowing. From a greater number of sources. And also a greater number of instruments, e.g. green bonds. Initial capitalisation of GCF is taking place, and this represents a huge increase in the level of climate finance managed under the financial mechanism under the UNFCCC . International institutional arrangements under the UNFCCC needs to be responsive to such rapidly changing circumstances. There are already a range of institutional arrangements inside and outside the UNFCCC. For instance, the Operating Entities of the Financial Mechanism, a number of public and private international climate funds, multilateral and bilateral development banks, and private investors, all of which play the important role in mobilising and delivering climate finance. Also a risk of duplication of work between existing arrangements, which should also be minimised. Already discussion under UNFCCC: For instance the SCF and GCF for the future arrangements under 2015. We’ve heard a lot in these negotiations about balance, particularly between mit and ad. It could be useful to think more about what this actually means. Should an agreement try and encourage climate finance interventions with multiple benefits? If so, will this be facilitated by earmarking a specific proportion of finance for a specific activity? Should an agreement encourage efficiency in spending international climate finance, and if so, what impact would this have on the geographical balance of where the money is spent? Facilitating better co-ordination and co-operation amongst institutions financing climate interventions in order to minimise duplication of work and maximise the synergies between different institutions. Streamlining the steps in climate finance allocation processes by the operating entities under the Convention to improve efficiency and effectiveness of managing climate finance. Enhancing synergies and complementarity between institutional arrangements outside and inside the Convention.
- EEs are essential for attracting investment and better accessing, managing and using climate finance. In order to structure discussion, the paper outlines two factors for enhancing enabling environments, which are, push factors and pull factors. Push factors mean policies and regulations mainly to help attract investment and effective implementation of climate finance interventions. Pull factors mean policies and regulations mainly in contributing countries to help mobilise climate finance for the us in recipient countries. In practice, push factors and pull factors are often interlinked.
- Encouraging Parties to establish predictable, transparent and responsive in-country enabling environments, which could include: predictable and stable policy goals; using a range of policy instruments; aligning climate finance interventions with national development goals; monitoring and evaluating the results, and adjusting the intermediate goals and policies aimed at achieving a low-carbon resilient economy in the light of evolving scientific, technological and economic factors. Urging Parties to put a price on greenhouse gas (GHG) emissions in a coherent, stable and sustainable manner with mechanism(s) that increasingly reflect the social costs of GHG emissions and to phase out inefficient subsidies for fossil fuels. Encouraging Parties to better co-ordinate their domestic institutions to access, manage and use climate finance in an effective manner. Encouraging Parties to collaborate to enhance fiduciary, environmental and social standards to enable the greater use of their domestic systems to channel and deliver climate to the final user, which in turn could enhance ownership of international climate finance. Encouraging Parties to set timelines for improving the pull factors for enabling environments in the 2016-2020 period.
- Global Partnership for Effective Development Co-operation, agreed during the 4th High Level Forum on Aid Effectiveness, Busan (2011).
- - Providing opportunities for information-exchange on the use of financial instruments and tools (especially newer or innovative ones), which could build greater confidence among private investors. - Encouraging the further involvement of multiple financial instruments/tools and multiple actors (e.g. financial intermediaries, technical experts, civil society organisations and other public and private entities) in financing and implementing a climate action.
- MRV is key to building trust between countries, but there are many gaps in the MRV of climate finance. This is particularly true for private climate finance, which accounts for the majority of N-S climate finance flows. If we can get a better handle on what CF is flowing, and how effective it has been, this could encourage further finance to flow. However, this would require a large expansion of the current mandate of MRV of climate finance (and more broadly of other means of implementation). So it may take time and a step by step approach. Encourage further reporting of information on international public climate finance provided to developing countries, as well as the amount of private climate finance that this has mobilised, could help build trust between countries that climate finance is flowing at significant levels and identify promising ways of scaling up mobilised climate finance. Using MRV as a tool to generate and disseminate information on results from particular climate finance interventions, instruments or funds. This could facilitate a learning process on how climate finance can be accessed, managed and used in an efficient and effective manner, which in turn may encourage increased use of successful approaches, and therefore greater mobilisation of climate finance. Encouraging a balance between costs of and benefits from implementing MRV.
- COP motto is to ensure that all voices are heard.
- Effective forms of enabling environments might vary over time, as development stage of a recipient country may be changing.