Financial Mechanisms to address Climate Change Arab Climate Resilient Initiative “Towards...

Financial Mechanismsto address Climate Change

Arab Climate Resilient Initiative“Towards Sustainable Energy – Resources, Challenges & Opportunities”

Manama, Kingdom of Bahrain

Benoit Lebot UNDP Climate Change Advisor

Benoit.lebot@undp.org

22

Venus Earth Mercure

Diameter 12 100 km 12 700 km 5 000 km

Distance to Sun 110 M km 150 M km 50 M km

Temperature 460 °C 15 °C 180 °C

Venus Earth

-36 m

5

The Mediterranean Today

Source: GoogleEarth

6

The Mediterranean 15 000 years ago

-5 °C compared to today average temperatureSource: France 2 Malaterre

.

http://hdr.undp.org

8

2007 2050

Today World Average

South

4.2 tCO2eq/Cap

North16.1 tCO2eq/Cap

2050Target50%

Global Emissions

CO2/Cap/yearUNDP HDR Objective for 2050:

• In the north, - 80% in emissions

•In the south, - 20% in emissions

Arab States

9 tCO2eq/Cap

2020

18%

1%

8%

14%

59%

World Greenhouse Gas Emissions

CH4

N2OF Gas

CO2

From Combustion

CO2

From LUCF

67%3%

0%

10%

20%

CH4

N2O

CO2

From CombustionCO2

From LUCF

Greenhouse gas emissions in the Arab States

Source: CAIT WRI

Source: IPCC AR4, Synthesis Report (shares are for 2004)

All sectors and regions have the potential to contribute

Note: estimates don’t include non-technical options such as lifestyle changes

1

2

3

4

Trend in Green House Gases

Low Carbon Path

Behavior & Waste

EfficiencyRenewable Energy

REDD & Sequestration

Baseline Emissions 62 Gt

BLUE Map Emissions 14 Gt

Contribution of Technology Wedges

15

We are not short of Financial Instruments to address Climate Change:

Sources International NationalPublicFinance

- Official Development Aid- Multilateral Funds (Global Environment Facility, GEF)

- Phase out subsidies on conventional energies- Tax rebates & Tax Credits- Subsidies on Clean Technologies- Low or zero interest rate for loans

PrivateFinance

-Carbon Finance (CDM, voluntary, REDD, ETS…) - Private Equity Funds- Green or White (Energy Efficiency) Certificates- Foundations

- Demand Side Management- New Insurance services- Tax Credit- Green municipal funds

PublicPolicies

- Tax on Financial transaction (Tobin)- Tax on Airline tickets- Global Tax on Carbon- IMF Special Drawing Rights- Wipe out exterior debts

- National Tax on Carbon- Energy Tax- Auctioning of GHG quotas- Feed-in Tariff for Renewable Energy

Policies & barriers

Policies & barriers

GEF, ODAGEF, ODA

IncentivesIncentives

FiTs, taxes, loans, CDM

FiTs, taxes, loans, CDM

Carbon financeCarbon finance

PoAs, sectoral crediting

PoAs, sectoral crediting

Research, development , demonstration

Research, development , demonstration

Technology transfer

Technology transfer

Rating, Labeling, Benchmarking apply to a large number of markets

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Per

cent

age

of M

arke

t

Low Carbon Footprint High Carbon Footprint

6 Steps to move towards a low carbon economy

2. Knowledge & understanding

B ECA D F G

3 .Rating & Benchmarking

R&

D4. Research & Development5. Set Standards6. DSM, $ incentives, CDM….

1. Set Right Price Signal $

Key operational provisions for development from the Copenhagen

Accord:1. $30bn pledged by developed countries between 2010 & 2012 for mitigation and adaptation inclusive.• New and additional• Priority access for SIDS, LDCs, Africa.

2. 2020 Target : $100bn/year• “in the context of meaningful mitigation actions

and transparency”• Come from a wider variety of sources

3. Creation of Copenhagen Green Climate Fund (CGCF) as an operating entity of the financial mechanism• GEF no longer only operating entity• Support all main Bali Road Map areas

Key operational provisions for development from the Copenhagen

Accord:4. Creation of a Technology Mechanism in support of mitigation and adaptation• Country-driven and based on national priorities

5. Establishment of a forestry mechanism around REDD+

6. Monitoring, Reporting & Verification (MRV) of actions and financial flows

21

National Appropriate Mitigation Actions (NAMAs) may condition future financial mechanism

• Developing countries invited to develop low emission development strategies that include NAMAs

• Developed countries will provide financing, capacity building and technology for some NAMAs, although the means for deciding which is unclear

• Supported NAMAs will likely be internationally recorded in a registry, and their implementation monitored, reviewed, and verified (MRV)

UNDP’s message to National Government: Let’s get ready for any future financial mechanism

• Green Fund will not be a silver bullet

• National coordination is essential for governments to access, coordinate, sequence & combine climate finance (e.g. MDCFs next slide)

• National Strategies can guide the flow of funds:=> National Communications to UNFCCC, TNA,

NAMA, NAPA, IF&F…

Multi Donor Trust Fund as a national instrument Comparing 3 possible formats

1National MDTF

2UNDG MDTF

3UNDP TF

Government led Steering Committee with UN as Co-Chair

UN & Government co-chair the Steering Committee

In line with POPP

Who receives the funds

National Entities (for direct access);Part UN Orgs

Part UN Orgs (they can in turn pass resources to national entities)

UNDP (which can in turn passes resources to national entities)

Governance Structure

Government for resources passed-on to national Entities Part UN Org

Part UN Orgs receiving funds

UNDP

Donors 1+ 1+ 1+

Guidance during establishment

UNDP MDTF Office

UNDP MDTF Office

UNDP PB/ DRM

UNDP MDTF Office web-site: http://mdtf.undp.org/

1National MDTF

2UNDG MDTF

3UNDP TF

Strategic Document

Government document

UN document UNDP document

Legal Documents

TORMOA (Gvt and AA)SAA (donors & AA)MOU (PUNO & AA)

TORSAA (donors & AA)MOU (PUNO & AA)

ProdocContr. agreement (donors & UNDP)

Indicative financial size (over 5 years)

> $100 million > $20 to $30 million

> $3 to $5 million

Multi Donor Trust Fund as a national instrument: Comparing 3 possible formats

UNDP MDTF Office web-site: http://mdtf.undp.org/

As Climate Changes, Can We?

Kofi Annan, UN SGWednesday, November 8, 2006

A