Germany’s International Approach to Climate Change Spotlight on Africa

2

Contents

4 Foreword by the Federal Ministers

6 Germany: A reliable partner for climate protection

10 Germany’s fast start commitment in Africa

12 Project examples

16 Reducing emissions: Creating a sustainable economy, limiting climate change

18 The MENA region – energy as an economic sector

20 Sub-Saharan Africa – expanding the carbon market

21 Thailand – strengthening climate policy

22 REDD+: Reducing emissions from deforestation and forest degradation

24 Brazil – conserving forests, climate and biodiversity

26 Adapting to climate change: Responding to its impacts

28 Pacific island countries – protecting coastlines and water resources

30 India – substantial need for action in rural areas

31 Ghana – innovative insurance schemes for climate change adaptation

32 International climate financing: Innovative instruments

34 Multilateral cooperation: The German contribution

35 Abbreviations

36 Imprint

Dr.NorbertRöttgenFederal Minister for the Environment, Nature Conservation and Nuclear Safety

DirkNiebelFederal Minister for Economic Cooperation and Development

Foreword by the Federal Ministers

Climate change, with its far-reaching effects, has

become one of the greatest challenges facing

mankind today. More frequent natural disasters

and weather extremes, increased water scarcity,

inundated coastal zones and the accelerating

extinction of species are just some of the immedi-

ate impacts felt in developing and industrialised

countries.

It has become clear that the costs of inaction will

by far exceed the costs of climate protection. A key

issue to be addressed in the international climate

process is the question of how to fund climate

action in the developing countries, i.e. mitigation

of climate change by reducing greenhouse gas

emissions and adaptation to its impacts. It is down

to all of us – governments, industry and every in-

dividual – to take urgently needed action to avert

the worst impacts of climate change and limit

average global warming to two degrees Celsius.

But we need this action now - because time is

running out.

In Copenhagen the international community

agreed in principle on additional fast start finan-

cial support for developing countries. This pledge

was reaffirmed at Cancun. Fast start financing

enables developing countries to implement the

measures needed to reduce emissions and adapt

to the changes in climate already taking place,

while also making progress in economic and so-

cial developments.

The investments needed in developing countries

for climate change mitigation and adaptation

can only be effectively deployed if they are made

an integral part of their sustainable national

development strategies. The challenges of climate

protection in developing countries will have

major impacts on their infrastructure develop-

ments (energy and water supplies, urban develop-

ment, mobility, disaster control management),

their agriculture, forestry, and health care sectors.

National development policies must therefore

be aimed at the necessary transition towards low-

carbon and climate-resilient economies.

However, the developing countries need as-

sistance from the international community to

achieve this objective. Today, development

policy and international climate policy alike are

based on shared responsibilities and mutual

5ForewordbytheFederalMinisters

commitments by the partner countries. The con-

cepts of international cooperation must therefore

take account of the partner countries’ own strate-

gies and support them in a coherent and coordi-

nated manner.

For many years Germany has been one of the

major donors to climate protection action in devel -

oping and newly industrialising countries. In

recent years the German Government has system-

atically stepped up its climate commitments in

the developing world. In 2005 Germany's climate

protection investments amounted to 470 million

euros. However, within only seven years, these

almost tripled to an amount of more than 1.2 bil-

lion euros annually (planned for 2011). This sum

includes the German Government’s share of

the commitment made by the industrialised coun-

tries in Copenhagen and Cancun to provide fast

start funds to the amount of 1.26 billion euros for

climate protection measures in developing coun-

tries for the 2010 –2012 commitment period.

In Germany, the financial resources needed to

cover this pledge are partly generated from the

auctioning of emission certificates, a new and

innovative financing mechanism. Emissions trad-

ing revenues are additional funds which are not

paid by the taxpayer but by the polluters.

In 2011 the German Government makes avail-

able additional funds for international climate

protection through the recently created Energy

and Climate Fund, which is a separate fund in

the Federal Budget. It is also financed through

emission trading revenues. These are expected to

increase considerably over the next few years.

In 2011 alone it will be possible to make additional

funding commitments available for climate

relevant measures in developing countries to an

amount of nearly 505 million euros. This inno-

vative source makes Germany well-prepared to

deliver long-term financing.

Moreover, Germany will continue to increase its

investments in international climate protection,

also with a view to longer-term financing needs.

The funding is provided by both the Federal

Ministry for Economic Cooperation and Develop-

ment (BMZ) and the Federal Ministry for the

Environment, Nature Conservation and Nuclear

Safety (BMU). Both ministries support activities

undertaken in their partner countries to reduce

emissions, adapt to the impacts of unavoidable

climate change, and the conservation and sustain-

able management of natural carbon sinks.

The international community will meet in Durban

to agree on the next steps for an effective inter-

national climate architecture. Germany supports

South Africa in its endeavour to organise a suc-

cessful UN Climate Change Conference on the

African continent.

All countries all over the world have to embark on

a climate-compatible development in the future.

A reliable global framework is indispensable as

guidance for national, regional and international

action – it is our responsibility to make this hap-

pen. The key to successful climate protection in

developing countries is a credible and transparent

commitment.

Dr.NorbertRöttgenFederal Minister for the Environment, Nature Conservation and Nuclear Safety

DirkNiebelFederal Minister for Economic Cooperation and Development

6

Germany: A reliable partner for climate protection

A global challenge as significant as climate change

requires global action. The German Government

is continuing to work actively to forge a compre-

hensive international climate agreement which

aims to limit global warming to a maximum of

two degrees Celsius. The successful outcome of

the United Nations Climate Change Conference in

Cancun is still a powerful signal that the inter-

national community can indeed act collectively.

Now it is important to build on this success and

make further, gradual progress based on practical

operational decisions and procedural rules relat-

ing to the mitigation of climate change through

emissions reductions; adaptation to climate

change; reduced emissions from deforestation

and forest degradation (REDD+); technology

transfer; and , finally, the measuring, reporting

and verification (MRV) of climate mitigation ac-

tion and finance. All the various country groups

must make tangible contributions in this context.

The German Government is actively driving the

international climate process with the following

three-pronged-approach: Germany is setting

itself ambitious national climate targets in order

to act as a role model, such as the target of reduc-

ing its greenhouse gas emissions by 40 per cent by

2020 compared with the baseline year (1990). It is

scaling-up its support for developing countries’

mitigation and adaptation efforts. It is providing

fresh momentum for the negotiations, for exam-

ple through the Petersberg Climate Dialogues.

Climatefinancing

One of the most important issues in the current

climate negotiations is financing for mitigation

and adaptation measures. Developing countries

in particular need financial support. At the

conference in Cancun in 2010 the industrialised

countries reaffirmed the commitment they had

made in Copenhagen to provide new and addi-

tional resources to finance measures for combat-

ing climate change. Up to 30 billion US dollars is

to be made available for the period 2010 –2012

with a balanced allocation between mitigation

and adaptation. This fast start finance is designed

to kick start immediate action on climate change

in developing countries. In addition developed

countries committed to a goal of jointly mobilis-

ing 100 billion US dollars a year by 2020 to address

the climate needs of developing countries.

In Cancun, Parties established the Green Climate

Fund as a significant channel for the future de li very

of climate financing. They mandated a Transi-

tional Committee with operationalising the Fund.

The Green Climate Fund should be enabled so that

it can play a catalytic role in assisting developing

7Germany:Areliablepartnerforclimateprotection

countries in their efforts to pursue transforma-

tional low-carbon and climate-resilient develop-

ment pathways.

Fig.1:Germany’scontributiontofaststartfinancing

Mitigation Adaptation REDD+

• Clean Technology Fund: 250 Mio €

• EU/BMU-UNDP Capacity Building Programme on Climate Change: 5 Mio €

• Bilateral projects: 128.4 Mio €

• Pilot Program for Climate Resilience: 20 Mio €

• Adaptation Fund: 10 Mio €

• Least Developed Countries Fund: 45 Mio €

• Special Climate Change Fund: 23 Mio €

• UNEP/UNDP/IUCN Ecosystem-based Adaptation Flagship: 10 Mio € (under preparation)

• Bilateral projects: 124.6 Mio €

• Forest Carbon Partnership Facility: 43 Mio €

• Bilateral projects: 51.9 Mio €

Total:383.4Mio€ Total:232.6Mio€ Total:94.9Mio€

As at 31 August 2011.

Germany’sfaststartcommitment–additional

climatefinancing

Germany will honour its responsibilities: The

European Union is committed to providing an

additional 7.2 billion euros in total during the

period 2010 – 2012 as fast start financing in devel-

oping countries; of this figure, 1.26 billion euros

will come from Germany. The funding is made

available in annually increasing amounts (see

fig. 2). The German fast start funds are deployed

by the Federal Ministry for Economic Cooperation

and Development (BMZ) and the Federal Ministry

for the Environment, Nature Conservation and

Nuclear Safety (BMU) through multilateral and

bilateral channels, supporting activities in the field

of adaptation, mitigation and REDD+. At least 30

per cent, i.e. about 350 million euros, is currently

earmarked each for adaptation measures and

REDD+ projects.

Fig.2:ImplementationofGermany’sfaststartcommitment(inMio€)

361.

5

0

250

500

2010

356

349433

2011 2012

471

commited planned

As at 31 August 2011.

These funds are provided over and above any

previous financing Germany made available for

international action on climate change. In other

words, the funds are additional to the climate-

related support already provided in 2009, as well

as sourced from innovative financing mecha-

nisms, namely the auctioning of emission certifi-

cates in Germany.

For 2010, Germany pledged to provide 356 million

euros for fast start activities. It exceeded this target,

committing a total of 361.5 million euros (see

fig. 2). A total commitment of 433 million euros

is planned for 2011. As at August 2011, 349 million

euros had already been agreed.

Secureclimatefinancethroughinnovative

instruments

Germany uses the revenue from about 10 per cent

of the certificates sold under the European Union

Emission Trading Scheme for climate financing.

This produces roughly a third of Germany’s fast

start contribution. Instruments of this kind spread

the risks across several sources of finance and can

help to increase the reliability of climate financ-

ing. All certificates will be auctioned from 2013

onwards, with the additional revenue being used

for national and international climate finance

activities.

8

Starting in 2011, additional long-term funding

amounting to 505 million euros will be commit-

ted for international climate protection through

a new Energy and Climate Fund. These new

funds will be used to build upon existing climate

policy cooperation with developing and newly

indus trialising countries, as well as to finance the

German Climate Technology Initiative (DKTI).

DKTI provides subsidised financing and grant

funds for technical assistance and promotes

the rapid diffusion of mitigation technologies;

promoting technology is linked with improving

the regulatory framework.

Balanceduseofbilateralandmultilateral

fundingchannelsin2011

Germany uses bilateral and multilateral fast start

financing instruments consistently (see fig. 3).

Fig.3:BreakdownofGermany'smultilateralandbilateralfaststartfinance(inMio€)

Multilateral Bilateral 0

100

200

300

400

304.9

406

As at 31 August 2011.

The funds channelled through multilateral institu-

tions were made available through the Climate

Investment Funds, the Kyoto Protocol’s Adaptation

Fund, the Global Environment Facility, as well as

through the United Nations Development Pro-

gramme and the United Nations Environment

Programme.

Breakdownbythematicarea–

adaptation,mitigationandREDD+

The challenge is to achieve a balanced distribution

of funds across the three areas of mitigation,

adaptation and REDD+ within the fast start period.

Fig.4:BreakdownofhowGermany’sfaststartfinancewasallocated(in%)

13% REDD+

33% Adaptation

54% Mitigation

Total volume of Germany’s fast start finance until 31 August 2011: 710.9 Mio €

As at 31 August 2011.

In 2011 Germany was able to significantly increase

fast start commitments in the area of adaptation;

currently 33 per cent of its fast start financing has

been allocated to the area of adaptation to climate

change. This is a marked improvement from 2010,

when only 21 per cent of the promised funding

was allocated to the area. On the other hand, major

efforts are still needed in the area of REDD+ if the

target allocation of at least 30 per cent (350 mil-

lion euros) is to be reached by the end of the fast

start period in December 2012. Until the end of 2011

Germany will commit another 80 million euros,

of which a significant portion will be allocated to

REDD+.

Bilateralfunds–geographicdistribution

isbalanced

German bilateral fast start funds support mitiga-

tion activities in all regions, with middle-income

countries being one of the priorities. REDD+

projects are being carried out predominantly in

Latin America. By contrast, adaptation to climate

change is being supported in the most vulnerable

countries in all regions, and both multilateral

and bilateral activities focus on least developed

countries.

9Germany:Areliablepartnerforclimateprotection

Fig.5:GeographicdistributionofGermany’sbilateralfaststartcontribution(inMio€)

0

25

50

75

100

Asia

85.0

Africa

86.7

Latin America

66.5

Others*

66.7

* Including global projects. All recipient countries are ODA eligible according to OECD DAC (Organisation for Economic Cooperation and Development / Development Assistance Committee) criteria.

As at 31 August 2011.

Financing–increasetransparency,facilitate

accesstoinformation

Access to information about how to apply for fast

start funding is of decisive importance for car-

rying out climate-relevant projects, particularly

those funded bilaterally. Germany provides infor-

mation on bilateral cooperation opportunities

primarily through its diplomatic missions abroad.

In order to promote transparency of finance,

Germany provides information to the voluntary da-

tabase of the REDD+ Partnership1

1 www.reddplusdatabase.org

and through the

website of its International Climate Initiative (ICI)2.

2 www.international-climate-initiative.com

Developmenteffectiveness–realisingresults

undercountryleadership

As African countries in particular are calling for an

accountable and effective country lead approach

to managing climate finance, German bilateral

cooperation works closely with partner govern-

ments, civil society and the private sector in es-

tablishing a sound policy environment, including

sound accountability frameworks for reporting

on results. On this basis, we not only strive to meet

local needs but also to support local systems, in-

cluding country systems for planning and budget

implementation.

Faststartfinance–outlookfor2012

Looking back at the first years of Germany’s fast

start financing activities illustrates some initial

lessons learned that are valuable for 2012:

• There is still a need to adjust the allocation of

funds by thematic area across the three areas

of mitigation, adaptation and REDD+. Germany

intends to take this into consideration when

selecting projects in the future and will draw

special attention to REDD+ projects.

• Fast start financing offers an opportunity to

implement innovative approaches to cli-

mate financing. Germany will incorporate the

insights gained here when finalising the details

for long-term financing.

• Transparency and easier access to informa-

tion about fast start funding has proved to be

a key factor in its successful implementation.

Germany will therefore continue to upgrade its

communication tools. The international com-

mitment to regular reporting offers a basis for

consistently evaluating and improving Germa-

ny’s fast start financing.

• Innovative financing sources can increase

the reliability of international climate finance.

In international negotiations Germany will

continue to advocate for this kind of financing

mechanism to be developed.

• And, importantly, development and cli-

mate agendas need to be closely integrated.

Fast start financing can help to create a nexus

between poverty reduction and adaptation/

mitigation. For example, cultivation methods in

agriculture that are adapted to climate change

contribute directly to poverty alleviation.

Germany’s fast start commitment in Africa

Mali – Implementing national strategies for climate change adaptation

Ethiopia – National plans for green growth

Tunisia – Protecting coasts in response to climate change

The Congo Basin – Protecting the climate through conservation and sustainable use of forests

Mozambique – Preventing and mitigating disasters

South Africa – Development of a national climate policy

10

11Germany’sfaststartcommitmentinAfrica 11

Since January 2010 the German Government has

committed fast start financing amounting to 710

million euros (as at 31 August 2011). Of this sum,

57 per cent is disbursed via multilateral channels,

while the remaining 43 per cent (305 million

euros) goes to bilateral projects. Africa is a focus

of funding: to date, 20 bilateral projects in the

continent have been approved, or 28 per cent of

the German bilateral fast start commitment up to

now.

Fig.6:Africa’sshareofGermanbilateralfaststartcommitment(in%)

28% Africa

72% Other bilateral

As at 31 August 2011.

Africa also benefits from the multilateral commit-

ments. For instance, Niger, Mozambique and

Zambia are pilot countries within the Pilot Pro-

gramme on Climate Resilience; besides, South

Africa, Morocco and other northern African coun-

tries are partners of the Clean Technology Fund.

Much the same applies to the Least Developed

Countries Fund and the Special Climate Change

Fund of the Global Environment Facility.

Adaptation to climate change impacts is the

definite priority of German bilateral cooperation

with Africa. Adaptation projects are carried out

mainly in sub-Saharan Africa (excluding South

Africa). In contrast, cooperation in northern

African countries and in South Africa focuses on

emissions reduction. The Congo Basin region is

noteworthy for the cooperation projects under

way there to preserve carbon sinks, especially of

forests and other ecosystems.

Fig.7:BreakdownofhowGermany’sfaststartfinancewasallocatedinAfrica(in%)

4% REDD+

56% Adaptation

40% Mitigation

As at 31 August 2011.

Specifically, the German Government works with

its African partners to promote climate change

adaptation as follows:

• Fostering the formulation and implementation

of adaptation strategies, including sectoral

strategies e.g. for water resources management

and agriculture, and their mainstreaming in

national policies and programmes.

• Subsidising interest rates on loans for invest-

ment in adaptation activities, for instance in

flood protection or in agriculture.

• Developing and implementing innovative

insurance products to hedge against the finan-

cial risks in agriculture that arise from extreme

weather events and other consequences of

climate change.

In the field of emissions reduction, cooperation

concentrates on creating a conducive policy

framework for the expansion of renewable ener-

gies, and on investment in tangible renewable-

energy and energy-efficiency measures. Further-

more, Germany provides technical assistance

and capacity buidling to promote the implemen-

tation of national climate policies.

12

Projectexamples

Ethiopia–

Nationalplansforgreengrowth

Ethiopia intends to put its economy on a sustainable and climate-

resilient path. Building on many years of partnership with Ethiopia,

the German Government supports this aim. For instance, in a

project receiving German funding, the partners are analysing

options and are developing an integrated national Low Carbon

Development Strategy (LCDS). Ethiopia is thus demonstrating how

an economy can be put on track towards green growth. The

experience gathered in the process will be presented and debated

in international forums and will thus inject fresh impetus to the

LCDS debate within the United Nations climate process.

The project is assisting the inter-departmental Climate Resilient

Green Economy steering group in its development of a national

Green Growth Roadmap. To this end, the project analyses business-

as-usual scenarios and then compares these to the savings poten-

tials available in six priority sectors (urban development, transport,

industry, agriculture, energy, forest conservation/REDD+) and the

associated costs and macro-economic impacts. The findings provide

the basis for measures on the ground under the national climate

action plan. Moreover, the project advises partners on how to es-

tablish suitable institutional structures and create a measurement,

reporting and verification (MRV) system.

1313

Mali–Implementingnationalstrategiesfor

climatechangeadaptation

The German Government has been supporting the Environment

Ministry of Mali to adapt to climate change impacts since 2009.

Adaptation measures are to be mainstreamed more broadly in

national policies and programmes and carried out. Among other

things, advice has been provided to local partners on the introduc-

tion of a ‘Climate Proofing’ tool. This tool helps decision-makers

make climate change a component of national planning processes

and, by analysing strategic and scientific documents, identify cli-

mate risks and evaluate the need for action. Pilot activities showcase

how adaptation to climate change can proceed in rural areas.

Building on this work, the capabilities of decision-makers are

strengthened, while adaptation methodologies are developed and

local authorities are assisted in implementing adaptation measures.

Furthermore, a comprehensive bilateral programme designed to

develop and implement integrated adaptation strategies is under

preparation and will start in 2012. The programme aims to boost the

adaptive capacity of the country in a fashion that cuts across sectors

and is geared to implementation on the ground.

Tunisia–

Protectingcoastsinresponsetoclimatechange

In Tunisia the coastal zones are vital: they are home to 65 per cent of

the population and the source of 90 per cent of industrial and tour-

istic output. The impact of climate change is already making itself

felt in Tunisia’s coastal region: extreme events such as coastal storms

have increased. This is causing flooding that erodes the protective

flood bank and leads to severe salination of the hinterland through

saltwater intrusion.

Tunisia has responded by adopting a coastal protection programme:

the Plan National contre l’Erosion Marine. Under the programme,

the German Government aims to help Tunisia rehabilitate and

protect selected eroded stretches of coast and beach. Flood banks

and other coastal engineering systems are to be rehabilitated or

reinforced in order to protect the vulnerable hinterland against

flood damage and prevent salination of near-coastal freshwater

aquifers. The overall goal is to restore and maintain the ecological,

economic and touristic value of the coasts as an important asset

f or Tunisian development.

Germany’sfaststartcommitmentinAfrica

14

TheCongoBasin–Protectingtheclimatethrough

conservationandsustainableuseofforests

The Congo Basin is the second-largest contiguous rainforest area

on earth. It plays a critical role in climate protection. Germany

supports the Central African Forests Commission (COMIFAC) and

its Working Group on Climate Change in developing common

positions for climate negotiations as well as regional strategies for

the protection and sustainable use of forests. At the national level,

projects are being carried out to support the further development

and the implementation of corresponding national laws. At the

local level, forest certification ensures sustainable use of the forests.

To protect the forests and their biodiversity, Germany is also directly

involved in various conservation areas, many of which cross borders,

such as the Tri-National de la Sangha (TNS). Germany also supports

the development of climate change scenarios in the Congo Basin to

help decision-makers adapt their natural resource use strategies to

climate change.

SouthAfrica–

Developmentofanationalclimatepolicy

South Africa has voluntarily set itself ambitious climate change

mitigation targets: emissions are to drop by 34 per cent by 2020, and

even by 42 per cent by the year 2025. The German Government has

been supporting this commitment for several years, for instance

through a project designed to build the capacity of the South African

Department for Environmental Affairs (DEA) to engage in analysis,

policy development and consensus-building. An intensive process

of dialogue throughout South Africa’s society, involving the govern-

ment, industry, academia and civil society, determines the direction

taken by this cooperation. The National Climate Change Response

Green Paper was debated prior to its publication at numerous stake-

holder workshops and public hearings. The project is now assisting

the formulation of a White Paper. As part of this process, national

mitigation strategies and environmental policy tools have been

enhanced in close cooperation with the relevant ministries.

The project is making broad-based contributions to the implemen-

tation of South African climate policy. This includes preparations

for the 17th Conference of the Parties (COP 17) in Durban, and the

establishment of a national MRV system.

1515Germany’sfaststartcommitmentinAfrica

Mozambique–

Preventingandmitigatingdisasters

Mozambique endeavours to reduce the risks of disasters in areas

that are particularly vulnerable to the effects of climate change. For

example, due to an increasing number of cyclones, heavy rains and

spring floods in recent years the drainage system can no longer cope

with higher water flows; this leads to major damage.

To support Mozambique’s efforts, the German Government has

set up a programme that works with local governments and the

Mozambican National Institute for Disaster Management to streng-

then a system of disaster prevention and improve disaster risk

mitigation methods and measures.

One component of the programme is implemented in the city of

Beira, Mozambique’s second most important urban centre with

600,000 inhabitants. The port city faces particular challenges due

to its location and vulnerability to climate change. Methods in-

clude risk mapping, early warning and the creation of local Disaster

Reduction Committees that review spatial planning and discuss

municipal priorities for adaptation. Initial activities have been

under taken towards developing an adaptation strategy for Beira.

Renewable energies are essential for reducing greenhouse gas emissions.

16

Reducing emissions: Creating a sustainable economy, limiting climate change

In order to limit global warming to less than two

degrees Celsius above the pre-industrial level,

global greenhouse gas emissions will need to be

at least halved by 2050. This means decoupling

economic growth from greenhouse gas emis-

sions in order to create a sustainable, low-carbon

economy. This will require an enabling policy

setting and access to financing, know-how and

technologies worldwide.

The development and piloting of innovative

technologies and the dissemination of the results

will help to create an ecologically sustainable

and profitable global economy. It will also re-

duce dependency on fossil fuels, create jobs and

support efforts to combat poverty. The German

Government is working closely with developing

countries and emerging economies and is actively

engaged in the following areas:

Drivingclimatepolicyforward

Policy-makers and business leaders everywhere

must create an enabling setting for climate

protection and take corresponding action. The

German Government is supporting its partner

countries in this process. Projects initiated by

the German Government with partner countries

build capacities and develop methodologies and

mechanisms for emissions reduction, with a par-

ticular focus on renewable energies and energy

efficiency. The aim is to develop comprehensive

national climate protection programmes and

support their implementation.

Improvingenergyefficiency,

deployingrenewables

Expanding the use of renewable energies and

increasing energy efficiency can do much to

cut energy consumption and greenhouse gas

emissions. This also reduces local air pollution,

improves quality of life and boosts the economy.

In many cases, however, there is a lack of ac-

cess to modern technologies and little detailed

knowledge about their possible uses. This is often

exacerbated by unfavourable political and eco-

nomic conditions and a lack of financing. Germany

supports its partners by providing policy-makers

and local market participants with advice, training

and access to infrastructure and expertise and by

contributing to financing mechanisms to promote

sustainable investment and pilot projects. All these

activities foster the development and implem-

entation of low-carbon strategies on a broad basis.

17Reducingemissions 17

Expandingthecarbonmarketandemissions

trading

The carbon market is a key instrument for global

climate change mitigation. It puts a price on

emissions, thereby creating incentives for emis-

sions reductions. Projects supported by the

German Government demonstrate the emissions

reduction potential of this instrument and help

to expand emissions trading to more countries,

technologies and sectors. They focus on inno-

vative techniques and project types, such as the

Clean Development Mechanism (CDM) or of

Activities (PoAs). The approach taken safeguards

the social and ecological sustainability of the

carbon market.

Reducingozone-depletinggreenhousegases

Although the Montreal Protocol on Substances

that Deplete the Ozone Layer requires ozone-

depleting greenhouse gases (F-gases) to be

re pla ced by climate-neutral refrigerants, the

proportion of these gases in total greenhouse gas

emissions is rising steadily. This is due to the in-

creasing use of refrigeration and air-conditioning

technology worldwide. This applies particularly

to the developing and emerging economies.

Germany is therefore supporting projects which

promote the switch to natural refrigerants such

as ammonia, hydrocarbons and carbon dioxide.

Developingsustainabletransportandwaste

managementsystems

The need for mobility is steadily increasing

worldwide. In the emerging economies in parti-

cular, the transport sector has made an ever-

increasing contribution to high greenhouse gas

emissions in recent years. The German Govern-

ment is promoting the piloting and dissemination

of innovative drive technologies in the electro-

mobility and hybrid drive sectors. It further

supports the development and implementation

of sustainable transport strategies.

Modern waste management not only conserves

resources and improves local environmental con-

ditions. It can also help to reduce methane emis-

sions, which are a particularly potent climate gas.

Residues from agriculture and the food industry, as

well as organic waste and wastewater from house-

holds, can be used as a resource for the sustainable

production of bioenergy. The German Govern-

ment supports projects which focus on climate-

smart waste management and harness the energy

potential of wastes, particularly organic residues.

Solar power plants generate sustainable energy in Morocco.

18

TheMENAregion–energyasaneconomicsector

With their desert plains, low risk of rainfall and

relatively well-developed road networks and

power grids, the countries of the Middle East and

North Africa (MENA) region have the best possible

conditions to harness wind and solar energy. If

just two per cent of the Sahara Desert were covered

in solar panels, it would generate enough power

to meet the entire world’s energy needs.

The majority of these countries have recognised

the opportunity afforded by establishing renew-

able energies and energy efficiency and have

developed ambitious national expansion plans.

Extensive investments will be made, stimulating

the growth of local industries and services and

leading to greater employment opportunities

and economic development in the future. This

is a great opportunity for the MENA countries,

particularly in the current political situation.

The electricity generation potential in the MENA

region is so immense that besides meeting their

own national energy needs, in the long term these

countries could also export green electricity to

Europe.

Expandingrenewableenergies,increasing

energyefficiency

If these countries are to sustainably increase their

energy security and national value added as well

as protecting the climate, the costs of renewables

in these countries must decrease, the political

and economic framework must be improved, and

know-how developed. The German Government

is therefore supporting investment in renewable

energies and energy efficiency measures in the

MENA countries and is working with relevant

actors in this context. Besides bilateral coopera-

tion, the MENA region is also the target region

for initiatives to promote renewables and energy

efficiency like the Mediterranean Solar Plan (MSP)

of the Union for the Mediterranean, the World

Bank’s Clean Technology Fund (CTF), or the pri-

vate sector’s DESERTEC Industrial Initiative (Dii

GmbH). Germany is the third largest donor to the

CTF, which is providing the MENA region with

750 million US dollars. Dii GmbH promotes the

generation of clean, green electricity in North

Africa and its export to Europe.

19Reducingemissions

Morocco–anambitiousSolarPlan

Morocco is the pioneer country within the MENA

countries. With its Solar Plan, presented in 2009,

the Moroccan Government has sent out a clear

signal that it aspires to be a committed partner in

efforts to move towards a sustainable electricity

supply. The plan provides for the installation, by

2020, of five solar power plants with an overall

capacity of 2,000 MW, with total investment of

around nine billion US dollars. Their output would

be sufficient to cover 18 per cent of current annual

electricity production and save 3.7 billion tonnes

of CO2 emissions per year. The German Govern-

ment has supported Morocco in this sector for over

20 years. Currently, it is supporting the installa-

tion of a 500 MW concentrated solar power (CSP)

plant, as the first reference project in Ouarzazate,

by providing a low-interest loan of 100 million

euros. Morocco’s plan to establish 2000 MW of

windparks by 2020, along with its creation of

agencies to promote renewable energies and

energy efficiency and help establish local indus-

tries and services in this area, are evidence of the

country’s commitment.

Egypt–massivewindenergypotential

Egypt has some of the best wind energy locations

in the world. One of the largest wind farms in Africa

is located at Zafarana. The installation of several

thousand megawatts of power plant capacity

is planned at wind farms in the Gulf of Suez and

Gulf of el Zayt. In designing these projects, the

long-term protection of birds and other migratory

species has been assured. The German Government

has supported and will continue to support Egypt

in all of these projects. The necessary transmission

lines to connect the wind farms to the national grid

are currently being funded by the CTF, which is pro-

viding 150 million US dollars to Egypt. Besides infra-

structural development, the German Government

is promoting the establishment of more favourable

legal frameworks in order to ensure that the full

commercial potential of wind power is realised.

Germany is also continuing to support professional

skills development for plant and grid operators. Egypt is an ideal location for generating wind energy.

Jordan–improvingenergyefficiencyinthe

watersector

Reducing electricity consumption makes the

most significant contribution to climate change

mitigation. The Water Authority of Jordan (WAJ)

is the largest electricity consumer in Jordan,

using about 15 per cent of the country’s total

electricity production, and also produces sub-

stantial greenhouse gas emissions. One reason is

that due to Jordan’s hydraulic conditions, fresh

water must be pumped from the Jordan Valley to

reach the country’s major cities. The operation

of the pumps is often inefficient, and many of the

pumps are poorly maintained, resulting in WAJ’s

extremely high electricity consumption.

Germany is therefore supporting interventions

to make pumping operations more energy

efficient. Support is also being provided for the

Water Authority in order to develop technical

and financial solutions to improve quality stand-

ards and operational management. As a result

of these measures, annual CO2 emission reduc-

tions of 1,500 tonnes are being achieved.

ACAD supports carbon market projects in Africa, for instance with the low-cost and efficient Nuru Lights system.

20

Sub-SaharanAfrica–expandingthecarbonmarket

Emissions trading is one of the most important

weapons in the fight against climate change. And

yet Africa’s total share of projects implemented

under the Clean Development Mechanism (CDM)

is negligible, and very few African countries are

currently benefiting from carbon trading. Sub-

Saharan Africa in particular faces a shortage of

trained project developers and has little experi-

ence in assessing the risks associated with project

implementation. What is more, there are few

tried and tested methods for certifying emissions

reductions under Africa’s specific conditions.

Africa’s financial sector also lacks the capacity and

skills to develop carbon trading schemes. Adding

to these problems, local and regional financial in-

stitutions and investment intermediaries are often

reluctant to take on these financial risks due to

the often very high transaction costs.

Financingprojects,buildingcapacities

The African Carbon Asset Development (ACAD)

Facility, which is supported by the German

Government, aims to overcome these obstacles

and develop local carbon market pilot projects

in Africa. ACAD seeks to build local partners’ skills

and capacities in emissions trading, create a

self-sustaining momentum in the African carbon

market, and mobilise the financial sector in

particular. To that end, it takes on a share of the

transaction costs, provides advisory services for

investors, project developers and local carbon

traders, and supports capacity building through

the provision of training. The projects supported

by the Facility are important pilots which must be

easily transferable. The aim is thus to reduce

transaction costs in the carbon market and open

the way for follow- up projects.

21

Thailand–strengtheningclimatepolicy

Thailand is severely impacted by climate change.

Rising sea levels will put coastal regions, farmland,

coastal fishing and even the capital, Bangkok, at

risk, while inland areas will have to contend with

an increase in frequency and severity of flood

incidents and droughts. Furthermore, Thailand’s

per-capita greenhouse gas emissions are rela-

tively high in comparison to other countries in the

region. Most of the country’s forests have been

cleared, depriving Thailand of important carbon

sinks.

Policyadvice

Germany is supporting Thailand’s efforts to meet

these challenges. Within three projects com-

prising the Thai-German Climate Change Pro-

gramme, the Government of Thailand is receiv-

ing advice on climate policy. The programme’s

centrepiece is a project which assists the Office of

Natural Resources and Environmental Policy and

Planning (ONEP), under Thailand’s Ministry of

Natural Resources and Environment (MNRE), to

establish a coordinating office which will develop

and manage relevant policy measures. The project

advises on the preparation and evaluation of

international negotiations and conferences, on

the development and implementation of the Thai

Climate Change Strategy, and on raising pub-

lic awareness of the challenges associated with

climate change and managing climate data.

Practicalmitigation

The other two projects within the programme

focus on implementing practical mitigation

measures. One of the projects aims to increase

energy efficiency in small and medium-sized

enterprises (SMEs) in key industrial sectors such as

ferrous metal and aluminium casting, glass-

making, textiles and the food industry. The third

project promotes nature-based tourism in

Thailand. It assists Thai partners to incorporate

aspects of climate change mitigation, environ-

mental conservation, and adaptation to climate

change into tourism development plans as part

of a national strategy.

The German government plans to support

additional projects that aim to assist Thailand's

low carbon development in the near future –

for example a project on developing the national

plan for energy efficiency measures as part of

the country's integrated mitigation efforts, elabo-

rating National Mitigation Strategies (NAMAs)

in the building sector, and establishing standards

and criteria for sustainable consumption and

production.

Reducingemissions

The Brazilian rainforest is an important carbon reservoir.

22

REDD+: Reducing emissions from deforestation and forest degradation

Forests, mires and other forms of ecosystems

absorb and store vast quantities of carbon dioxide.

Destruction of these massive carbon sinks releases

enormous amounts of greenhouse gas emissions,

which contribute to climate change. There is an

international consensus that the conservation

of forests and other ecosystems is a cost-effective

way of mitigating climate change and conserving

biological diversity, thereby helping to safeguard

our natural life-support systems. Deforestation

and degradation of forests accounts for as much as

20 per cent of global annual CO2 emissions. Con-

serving forests and other carbon sinks is therefore

a key topic in the international climate process.

The mechanism for reducing emissions from

de fore station and forest degradation (REDD+)

currently under discussion within the UNFCCC

framework is intended to create incentives for

avoiding deforestation and forest degradation

and to keep forests standing as carbon sinks. The

aim is to develop a transparent and verifiable

system for the payment of compensation to forest-

rich developing countries for proven emissions

reductions achieved through forest conserva-

tion and restoration. This approach offers great

potential, also for sustainable economic and social

development in the tropical forest countries.

Germany takes the importance of forests in cli-

mate protection very seriously. At the Petersberg

Climate Dialogue in Bonn and the Oslo Climate

and Forest Conference that established the Interim

REDD+ Partnership in May 2010, the German

Government pledged to provide around 30 per

cent of the 1.26 billion euros announced as fast

start climate financing for REDD+. This amounts to

a commitment of more than 350 million euros for

forest conservation.

Buildingontriedandtrustedmethods

Through its international cooperation, Germany

has played an active and successful role in forest

conservation for many years. Germany was also

involved in setting up and providing start-up

financing for the multilateral Forest Carbon

Partnership Facility (FCPF), which develops key

standards and benchmarks for national REDD+

programmes. On that basis, Germany is already

supporting projects which develop national

strategies for REDD+ and establish the appropri-

ate legal, financial and institutional frameworks

23REDD+

(‘REDD+ readiness’). These bilateral and multilat-

eral projects provide policy advice and technical

expertise, leverage the requisite investment

financing, support institutional capacity building,

and promote knowledge-sharing and the ex-

change of experience. Communities which depend

on forests for their homes, livelihoods and food

supply are involved in this process and their

specific needs are taken into account. In simple

terms, the REDD+ process consists of three

phases, see fig. 8.

Fig.8:ThethreeREDD+phases

Phase 1: ReadinessPreparations of national REDD+ strategies and policies

Phase 2: Implementation and investmentImplementation of national REDD+ strategies and policies, pilot activities

Phase 3: Performance-based paymentsPayments for emissions reductions

Germany’sroleintheFCPF

Germany has been a driving force in establishing,

developing and providing start-up financing for

the FCPF. In this context, it is able to draw on

experience gained with other multilateral forest

conservation initiatives, such as those operated by

the Global Environment Facility (GEF), as well as

its many years of bilateral commitment to tropical

forest conservation. The FCPF supports national

efforts to achieve REDD+ readiness in up to 37

partner countries, and is currently developing

pilot projects for the payment of compensation for

successful reduction of deforestation and its

associated emissions. The FCPF is now successfully

developing quality standards for REDD+ and

provides a key learning platform, benefiting

partner countries, civil society and donors alike.

Conservingbiologicaldiversityandnatural

resources

Besides their climate-stabilising effect, intact

forests provide habitats for numerous species of

flora and fauna. They regulate the hydrological

regime, provide protection from soil erosion,

supply vital resources such as timber, food and

medicinal plants and are thus an important

source of income for indigenous communities and

local populations.

The Convention on Biological Diversity (CBD),

adopted in 1992, plays a key role in conserving bio-

diversity and ensuring that forests are managed

sustainably and can continue to provide eco-

system services. Germany does much to support

CBD implementation.

Forest conservation under REDD+, the preser-

vation of biodiversity and the sustainable man -

agement of forest resources in the interests of

sus tainable development all go hand in hand.

Germany is working to ensure that biodiversity

policies are linked with REDD+ strategies in

order to generate synergies between the UNFCCC

instruments and the CBD, thus facilitating the

efficient and effective use of available resources.

24

Brazil–conservingforests,climateandbiodiversity

The Brazilian rainforest is one of the earth’s most

significant ecosystems and plays an important

role in regulating the global climate. The forests

are a major store of carbon. They are also one of

the world’s largest biodiversity hotspots and pro-

vide a natural habitat for numerous indigenous

communities.

However, the Brazilian rainforest is under threat:

vast tracts of forest have already been destroyed

by burning and illegal logging, motivated among

other things by the need to create grazing land for

cattle ranching and arable land for soya and maize

cultivation, as well as by commercial logging inter-

ests. Mining, dam-building and illegal land-grab-

bing are also increasing the rate of forest clearance.

As a consequence of all these activities, carbon

dioxide emissions are produced in vast quantities,

contributing to global warming. Forest clearance

in the Amazon accounts for almost 60 per cent of

Brazil’s greenhouse gas emissions. The Atlantic

coastal forests (Mata Atlântica) are also important

carbon reservoirs and are under great threat from

forest clearance. Livestock husbandry and arable

farming, the spread of settlements and the growth

of industrial centres also pose major threats to

biological diversity in these species-rich habitats.

Germany:supportingBrazil’sclimategoals

Brazil has set itself ambitious national climate

protection targets: for example, it is committed to

a 38 – 39 per cent reduction in its greenhouse gas

emissions by 2020 compared with 2005. In order

to achieve this target, it aims to decrease the rate

of forest clearance in the Amazon by 80 per cent.

It is also making efforts to meet its commitments

under the Convention on Biological Diversity

(CBD). Close cooperation with Germany’s Govern-

ment underpins Brazil’s efforts to attain these

ambitious goals. Since the mid-1990s, the German

Government has supported a number of projects

focusing on various aspects of forest conserva-

tion. In all, Germany has already provided some

350 million euros to protect Brazil’s rainforest.

During recent years Brazil’s efforts to reduce de-

forestation rates achieved very positive results.

Promotingtransnationaldialogue

Cooperation among the Amazon riparian states is

essential in order to protect the region’s rainfor-

ests. The German Government is therefore provid-

ing support for the Amazon Cooperation Treaty

Organization (ACTO). The Treaty was concluded

by the Amazon countries in 1978 and aims to

promote transnational coordination on matters

25REDD+

relating to the Amazon. Policy advice, knowledge-

sharing and technology transfer help to build

the capacities of ACTO’s Permanent Secretariat

in Brasilia and the regional and national units

in the eight member states. Relevant activities

include the introduction of mechanisms for

developing agreed positions at national, regional

and international level, and the development of

instruments for planning, financing and funding,

which take into consideration the diverse needs

of all stakeholders.

Tree seedlings are used in reforestation projects.

Expandingandmanagingprotectedareas

The projects supported by the German Govern-

ment promote the management and expan-

sion of existing protected areas. They advise the

Brazilian partners on combating forest fires,

on reforestation in buffer zones, the creation

of ecological corridors, and the promotion of

adapted forms of management. Radio stations

and satellite technology help to monitor the vast

tracts of forest and detect illegal logging and

forest clearance activities. As part of the projects,

local stakeholders involved in the on-site man-

agement of the protected areas are provided with

infrastructure and equipment as well as advice

and training, and work with experts to develop

appropriate strategies, management techniques

and instruments. To date, 128 nature reserves

have been established in the Amazon region and

Mata Atlântica, with a combined area of more than

220,000 square kilometres. Monitoring systems

are in place to investigate how forest conservation

can help to reduce greenhouse gas emissions and

promote biodiversity.

Involvinglocalcommunities

In order to safeguard the long-term success of the

protected areas, economic incentives must be cre-

ated for local communities. To that end, more

than 500 small-scale projects have been set up to

develop opportunities for the environmentally

sound and sustainable use of resources by the

indigenous communities. Indigenous territories

can form natural barriers against deforestation

and forest degradation. The indigenous commu-

nities are involved in the designation of the areas

and learn how to defend themselves more effec-

tively against illegal land-grabbing. This helps

to safeguard their livelihoods and conserves the

forests at the same time.

TheAmazonFundinBrazil

In August 2008, the Brazilian Government set

up the ‘Fundo Amazônia’ (Amazon Fund), in

which the Brazilian National Development Bank

(BNDES) acts as a voluntary REDD+ financing

mechanism. The principle is simple: if the annual

deforestation in the Amazon falls below a defined

benchmark value, private and public donors can

reward this performance by making payments

into the fund. In return, the donors receive docu-

ments which confirm the reduction in emissions.

However, these documents cannot be traded and

do not affect international emissions reduction

obligations. Norway and Germany are providing

financial as well as technical support and have

together committed a total of 35.2 million US

dollars for the Amazon Fund in order to bolster

the positive REDD+ trend in Brazil.

Specific agricultural methods support adaptation to climate change.

26

Adapting to climate change: Responding to its impacts

The impacts of climate change are already being

felt all over the world. The direct human impacts

include decreased yields in agriculture, flooding,

threats to water and energy supplies in remote

and coastal regions, and the spread of epidemics.

Global warming is also a factor in the extinction

of endangered species.

Climate change plays a key role in the worsening

of poverty and social tensions worldwide. Due

to their poorer adaptive capacities, developing

countries are affected to a very significant extent

by climate change impacts such as drought, floods

and storms. If they are to respond effectively to

the climate change impacts that can already be felt

and also take preventive measures in anticipation

of future developments, their technical and finan-

cial capacities must be improved.

Developingnationaladaptationstrategies

The primary objective of German climate policy

is to raise partner countries’ awareness of the

impacts of climate change in all spheres of life and

support these countries’ adaptation processes.

In order to initiate the necessary steps towards

adaptation to a changing environment, national

decision-makers must be as well-informed as

possible. In many cases, however, there is a lack of

adequate data about the local impacts of climate

change and few of the skills and infrastructural

capacities needed to develop solutions. As an

initial step, national adaptation strategies can be

prepared, followed by efforts to fully integrate

adaptation into policy-making in the partner

countries and make available the requisite funds

also from national budgets. Together with part-

ners, policy options for the affected areas – such

as water and resource management, nature

conservation, development of infrastructure,

rural development and food security – can then be

formulated. This must include practical adapta-

tion measures such as building dykes, setting up

flood early warning systems, introducing disaster

risk management systems, and establishing ap-

propriate insurance schemes. Above all, however,

building human and institutional capacities and

skills must be a priority.

Takingactionatlocallevel

In cooperation with partners, the German Govern-

ment also supports adaptation to climate change

in developing countries through country-specific

27Adaptingtoclimatechange

and regional interventions. This includes setting

up protected areas for the conservation of cli-

mate-relevant ecosystems, which often also form

the basis of fisheries, agriculture or tourism. Other

measures include piloting weather insurance

schemes, developing new cultivation strategies

for agricultural products, or trialling stress-resist-

ant varieties of crop. In its strategy, the German

Government further aims to utilise the synergies

generated by public-private partnerships. These

alliances are intended to leverage investment and

promote innovation.

Buildingcapacitiesforclimatenegotiations

At international level, the German Government

works to ensure that the developing countries

particularly affected by climate change are able

to represent their interests effectively in the UN

climate process. Seminars are provided as a means

of equipping the partner countries with the spe-

cialist skills that they require in order to develop

their own positions for the climate negotiations

and assert these positions effectively.

Comprehensivefinancing

The countries around the world which are suffer-

ing most from the impacts of climate change only

produce a relatively small proportion of global

greenhouse gas emissions themselves. According

to a recent study by the World Bank, however, it

will soon cost developing countries 75– 100 billion

US dollars a year to adapt to climate change. The

German Government is therefore playing an

active role in multilateral financing mechanisms

such as the Pilot Program for Climate Resilience

(PPCR), which is part of the Climate Investment

Funds (CIFs) managed by the World Bank. Spe-

cialised funds of the Global Environment Facility

(GEF) and the Adaptation Fund (AF), to which

Germany contributes, also provide funding for

capacity building and adaptation measures.1

1 For further information, please see the section on multilateral financing.

Maintainingcapacitytoactinthefaceof

uncertainty

Despite the major progress being made in the

scientific assessment of climate change impacts,

our understanding of its future effects is beset

with uncertainty.

Adaptation therefore also means being able to

respond flexibly to climate change in future.

The partner countries’ adaptation strategies must

be constantly updated in response to new find-

ings in climate research, economic and social

developments and new requirements in affected

areas. The same applies to the German Govern-

ment’s own strategy as well. This dynamic system

presents a new challenge for the partner coun-

tries and German climate policy alike: the partner

countries must be supported in their efforts to

make far-reaching and responsible decisions in the

face of numerous imponderables. Viable networks

are therefore needed to promote exchange

between scientists, experts and policy-makers.

28 Adaptingtoclimatechange

Pacificislandcountries–protectingcoastlinesandwaterresources

For most people in Europe, climate change is still

an abstract concept, but for many communities

in the Pacific Island Countries (PICs), it is already

a reality. Due to their limited land area and low

profile – only a few metres above sea level in

many cases – these scattered islands are defence-

lessly exposed to the natural events which are

becoming more extreme as a result of climate

change. The intensity of rainfall and hurricanes,

for example, is increasing, causing ever more

frequent floods. Waves several metres high then

often batter the coasts or inundate entire areas of

the islands. Periods of drought are also becoming

longer. These effects have serious consequences

for humans and the environment, including the

destruction of crops, salinisation of drinking

water, and coastal erosion, adversely affecting or

even destroying the islanders’ livelihoods, which

depend primarily on agriculture and fisheries.

Acomprehensiveprojectportfolio

Germany supports a number of major climate pro-

tection programmes throughout the Pacific Island

Region. In Micronesia, Palau and the Marshall

Islands, for example, the German Government is

supporting the implementation of the Micronesia

Challenge Initiative. The overall goal of the Chal-

lenge, launched in 2006, is to conserve at least

30 per cent of the near-shore marine resources

and 20 per cent of the terrestrial resources across

Micronesia from the impacts of climate change

by 2020 through the designation of protected

areas. In the Indo-Pacific Ocean, the German Gov-

ernment supports the Coral Triangle Initiative,

launched by six governments in order to conserve

a habitat that sustains around 200 million people.

The waters of the Coral Triangle hold the highest

diversity of marine species in the world. The Initia-

tive aims to conserve this diversity through the

designation of protected areas while increasing

the region’s adaptive capacities to climate change.

Buildingregionalknow-how

In order to achieve sustainable successes, the

support from the German Government is targeted

at all levels – regional, national and local. One of

the main objectives of German-Pacific coopera-

tion, for example, is to strengthen the capacities of

the Secretariat of the Pacific Community (SPC), a

regional advisory body, by sharing climate-related

knowledge and methodologies. As a result, SPC

is now developing its own climate advisory servic-

es and mainstreaming climate change adaptation

in all its programmes.

Marine conservation areas preserve the biodiversity and the livelihood of the local residents.

29

Climate-proofingnationalpolicies

At national level, the German Government assists

its partner countries in their efforts to develop

adaptation strategies and integrate climate change

into their core economic sectors, namely agricul-

ture and forestry, and into land-use planning and

water management. In Tonga, for example, 31

substantive changes have been incorporated into

the new forest policy in order to take account of

the changed realities resulting from global warm-

ing. Tonga is thus at the forefront of efforts in

the Pacific. Similar initiatives are currently being

implemented in Vanuatu and Fiji.

Implementingpilotprojects

It is important, at the same time, to implement

pilot projects at the local level in conjunction with

island communities. On the island of Eua (Tonga),

for example, overexploitation by agriculture

and grazing poses a very serious threat to forest

areas, so these areas are now being fenced off

by the forestry administration with support from

the local community. Afforestation measures

are planned for larger areas of slope at risk from

erosion. A climate-proof land-use plan is being

developed, which will also involve the trialling

of new farming techniques and crops to improve

climate resilience.

Particularly on the more remote and hard-to-reach

islands, however, there is still very little aware-

ness of climate change among local communities.

Comprehensive information and education cam-

paigns are therefore extremely important here.

Climate-related teaching materials are now being

produced in pilot projects and integrated into

the curriculum.

ExtendingtheGermancommitment

Germany’s commitment in the Pacific Island

Countries goes back to 1977. Aware of the transre-

gional effects of climate change, German bilateral

cooperation now focuses on the Pacific region

as a whole, rather than on individual island states.

Germany is providing 30.8 million euros in total

for the current portfolio of climate change adapta-

tion programmes in the Pacific Island Region.

Improved climate risk assessment methodologies help to identify and evaluate climate threats in India.

30

India–substantialneedforactioninruralareas

Much of India’s agricultural land is cultivated

extensively through rain-fed farming. The sub-

continent’s farmers are therefore heavily depend-

ent on the monsoon, which accounts for around

80 per cent of the annual rainfall. However, cli-

mate change could radically alter the monsoon

season in India and cause temperatures to rise

– with catastrophic consequences for farmers.

Heavy rainfall could cause flooding in the south

of the country, while vast areas in the north-west

face the threat of drought. These changes will

impact severely on the most vulnerable section of

Indian society, the rural poor, whose livelihoods

still largely depend on agriculture and forestry.

Agroclimaticdifferences

The Indian Government is aware of the problem

and unveiled a National Action Plan on Climate

Change (NAPCC) in 2008. The Indian states are

also required to formulate their own State Action

Plans on Climate Change (SAPCC), which define

their proposed actions on adaptation to climate

change. A key challenge, in this context, is to take

account of the major agroclimatic differences

within the various Indian states.

In addition to assisting the states in producing

climate action plans, Germany is committing

six million euros to support the Climate Change

Adaptation in Rural Areas of India (CCA RAI)

project in four states: Madhya Pradesh, Rajasthan,

Tamil Nadu and West Bengal. These were selected

as project areas as they are most representative of

India’s diverse range of climatic zones.

Riskassessmentatstatelevel

A key component of the project is developing

appropriate vulnerability and risk assessment

methodologies in order to identify and evaluate

climate and environmental threats, such as

flooding in coastal regions, for example the

Sunderbans, more accurately. This provides the

Indian states with the information they need to

identify those sectors , regions and population

groups that will be partic ularly affected by

climate change in future, enabling them to target

public investment programmes accordingly.

Individualadaptation

As there is little experience in India at present in

dealing with specific climate risks, the project

focuses on implementing pilot schemes in the

31Adaptingtoclimatechange

agriculture and forestry sectors and in coastal

protection. For example, salt-tolerant plants are

being trialled on farmland at risk from saltwater

flooding in West Bengal and Tamil Nadu.

Climateproofinggovernmentprogrammes

The Indian Government is carrying out large-scale

investment schemes in rural areas. Within the

project framework, Germany is supporting the

application of a tool to identify possible climate

risks which could jeopardise the sustainability

of these investment programmes in future. CCA

RAI is the first project to develop, test and promote

climate proofing of large-scale public investment

programmes.

Anewregionalpriority:north-eastIndia

India’s north-east, with its higher altitudes and,

in some areas, high mountains, faces major

problems on a similar scale. On the steep moun-

tain slopes, land that can be used for farming is

scarce. Mudslides are occurring with increasing

frequency after heavy rainfall, accompanied by

massive flooding of fields and entire villages,

destroying harvests. The German Government is

therefore planning to support a further adapta-

tion programme, comprising financial and techni-

cal cooperation, in north-east India, with total

funding of 81 million euros.

Ghana–innovativeinsuranceschemesforclimatechangeadaptation

Ghana is very vulnerable to the impacts of climate

change. By 2100, the mean daily temperature is

expected to increase by three degrees Celsius and

rainfall to decline significantly. As a consequence,

the frequency and intensity of droughts, floods,

and other extreme weather events will increase,

adversely affecting the country’s agricultural sec-

tor: fertile land will be lost, crop yields will decline

dramatically, and farmers’ financial exposure will

increase. At present, it is almost impossible for

the Ghanaian population to protect themselves

against these threats, which put many families’

livelihoods at risk and damage the country’s

economy.

Innovativeinsurancesolutionsofferprotection

fromclimate-relatedcropfailures

The German Government is therefore supporting

a project to develop innovative insurance solu-

tions against financial risks to agriculture caused

by extreme weather events and other impacts

of climate change. These agricultural insurance

products are trialled by local insurance provid-

ers in pilot schemes and then brought to market.

The project also provides advisory services for

insurance companies, facilitates contacts with

international reinsurers, and offers training for

insurers’ employees. In order to raise awareness of

insurance products, basic financial training is also

offered for potential clients. With these interven-

tions, the project aims to create an enabling policy

setting for the deployment of these insurance

products. The meteorological infrastructure is

also being improved in order to support the col-

lection and analysis of data for the calculation of

insurance risks.

The agricultural insurance schemes will improve

income and food security, the supply of credit, and

employment opportunities for the rural popula-

tion in Ghana.

32 Internationalclimatefinancing

International climate financing: Innovative instruments

At the Climate Conference in Copenhagen, the

industrialised countries pledged to support de-

veloping countries in their endeavours to reduce

emissions and adapt to climate change. However,

the 100 billion US dollars to be mobilised annually

for this purpose, starting in 2020, cannot be raised

without the long-term and reliable involvement

of the private sector.

The private sector, however, continues to perceive

that the risks associated with investing in areas

such as expansion of renewable energies and in-

creasing energy efficiency in developing countries

are too high.

Two key questions must therefore be addressed in

this context:

• How can public funds be used to stimulate

private finance flows for climate protection?

• How can public funds be deployed to establish

and improve the general framework for climate

investment by the private sector in developing

countries and emerging economies?

A range of innovative instruments is required

here, their common feature being that they

deploy scarce public funds intelligently in order

to leverage as much private capital for invest -

ment in a low-carbon future as possible. In this

way, every euro from public funds is matched

with a significantly larger volume of funding from

private sources.

Mobilisingprivatecapitaltoprotectthe

climate–apracticalexample

The Global Climate Partnership Fund1

1 www.gcpf.lu

is an instru-

ment for mobilising public and, above all, private

capital for investment in climate change mitiga-

tion in developing and emerging countries. It is a

structured fund that combines public and private

capital. The fund primarily supports finance insti-

tutions (commercial banks and non-bank finan-

cial institutions such as leasing companies) in the

target countries in their provision of funding for

investments in small and medium-sized enterpris-

es (SMEs) and households in the fields of energy

efficiency, renewable energies and reduction of

greenhouse gases. Unlike other conventional loan

facilities aimed at renewable expansion or in-

creasing energy efficiency, this fund operates on a

revolving basis and does not consume the capital.

33

At the same time, the public capital acts as a risk

buffer to mobilise additional – especially private

capital.

A structured fund consists of different risk tranch-

es based on the different categories of share-

holder. Donor capital makes up what is known as

the junior or equity tranche, which is the first to

absorb any losses. Public funds from the German

Government and other donors are allocated to this

tranche. Any further losses are then covered by

the development banks and international finance

institutions that have raised funds on the capital

markets and invested them at their own risk in the

mezzanine tranche. Only as a last resort private

investors in the senior tranche would risk losses.

It is this hedging of risk that creates incentives

for private investors to participate in a fund

that invests in regions they are unfamiliar with

(developing, transition, and emerging countries)

and in innovative sectors (financing for climate

change mitigation).

The Global Climate Partnership Fund was set up

in December 2009 by KfW Entwicklungsbank on

behalf of the German Government. Its profession-

al fund manager – Deutsche Bank – was selected

through an international tendering process. The

fund has already secured pledges from investors

of over 200 million US dollars, and is set to exceed

500 million US dollars by 2014. The Global Climate

Partnership Fund made its first investments in

2011. Its outstanding portfolio will top 100 million

US dollars by December 2011.

Fig.9:StructureoftheGlobalClimatePartnershipFund

Private investors

Development banks/international financeinstitutions

Donors

Senior-Tranche

Mezzanine-Tranche

Junior-Tranche

34 Multilateralcooperation

Multilateral cooperation: The German contribution

In 2011 Germany plans to contribute more than

1.2 billion euros for climate protection in devel-

oping and newly industrialising countries. At

present, the government invests most of these

financial resources in bilateral projects. Comple-

menting multilateral engagements are chosen

strategically to promote innovative and strong

partnerships at a global level. We usually seek to

add value through our own bilateral experience,

thus forging synergies in learning.

Fig.10:MultilateralfundingchannelsforGermany’sfaststartfinance

Thematic Trust Fund for Support to Energy and Environment for Sustainable Development 5 Mio €

Adaptation Fund 10 Mio €

Trust Fund for Ecosystem Based Adaptation 10 Mio €

Pilot Programme for Climate Resilience (PPCR) 20 Mio €

Special Climate Change Fund 23 Mio €

Forest Carbon Partnership Facility (FCPF) 43 Mio €

Least Developed Countries Fund (LDCF) 45 Mio €

Clean Technology Fund (CTF) 250 Mio €

As at 31 August 2011.

GlobalEnvironmentFacility

The Global Environment Facility (GEF) as financial

mechanism for the United Nations Framework

Convention on Climate Change, to date, has

provided more than 2.5 billion euros for climate

projects in 165 countries. Germany is the third

largest donor to the GEF, with a contribution of

347 million euros for the replenishment period

2010 – 2014. Two further Funds which specialise in

financing adaptation programmes are operated

by the GEF: these are the Least Developed Coun-

tries Fund (LDCF) and the Special Climate Change

Fund (SCCF). The German Government is the

largest contributors to these Funds with 115 million

euros to LDCF and 60 million euros to SCCF com-

mitted until 2011.

ClimateInvestmentFunds

The World Bank’s Climate Investment Funds (CIF)

are designed to support rapid and scaled-up financ-

ing of climate projects in developing countries.

Germany has contributed 550 million euros to the

Funds’ total resources of 6.3 billion US dollars.

The CIFs comprise the Clean Technology Fund

(CTF) and the Strategic Climate Fund (SCF). The

35

resources available within the CTF, amounting to

around 4.3 billion US dollars, promote scaled-up

financing for low-carbon technology programmes

to reduce greenhouse gas emissions in advanced

developing countries and emerging economies.

The SCF is divided in various sub-funds such as

the Pilot Program for Climate Resilience (PPCR), to

which Germany contributes 50 million euros.

AdaptationFund

Under the Kyoto Protocol, the Adaptation Fund

is financed from the share of proceeds on Clean

Development Mechanism (CDM) project activities,

amounting to two per cent of certified emission

reductions (CERs). It is anticipated that an esti-

mated 450 million US dollars will be available for

adaptation projects in developing countries

for the period 2010 – 2012. Germany is contribut-

ing at least 10 million euros to the Adaptation

Fund in 2010. The conferral of legal capacity

on the Adaptation Fund Board in Germany also

supports its operationalisation.

Europeancooperation

The European Development Fund (EDF) and the

Development Cooperation Instrument (CI) – the

main financing instruments for the European

Union's development cooperation – also provide

financing for climate projects. Germany is the

largest contributor.

Abbreviations:ACAD African Carbon Asset Development

ACTO Amazon Cooperation Treaty Organization

AF Adaptation Fund

BMU Federal Ministry for the Environment, Nature Conservation and Nuclear Safety

BMZ Federal Ministry for Economic Cooperation and Development

CBD Convention on Biological Diversity

CDM Clean Development Mechanism

CER Certified Emission Eeduction

DCI Development Cooperation Instrument

CIF Climate Investment Funds

COP17 17th Conference of the Parties

CTF Clean Technology Fund

DKTI German Climate Technology Initiative

EDF European Development Fund

EU European Union

FCPF Forest Carbon Partnership Facility

GEF Global Environment Facility

ICI International Climate Initiative

KfW KfW Bankengruppe

LCDS Low Carbon Development Strategy

LDCF Least Developed Countries Fund

MENA Middle East and North Africa

MRV Measurable Reportable Verifiable

MSP Mediteranean Solar Plan

MW Mega Watt

NAMA Nationally Appropriate Mitigation Action

NAPAs National Adaptation Programmes of Action

NAPCC National Action Plan on Climate Change

ODA Official Development Assistance

PICs Pacific Island Countries

PoA Programme of Activities

PPCR Pilot Program for Climate Resilience

REDD+ Reducing Emissions from Deforestation and Forest Degradation

SAPCC State Action Plan on Climate Change

SCCF Special Climate Change Fund

SCF Strategic Climate Fund

SME Small and Medium-sized Enterprise

UN United Nations

UNDP United Nations Development Programme

UNEP United Nations Environment Programme

UNFCCC United Nations Framework Convention on Climate Change

Imprint

Publishedby

Federal Ministry for the Environment,

Nature Conservation and Nuclear Safety (BMU)

Division K I II 7

11055 Berlin • Germany

Email: kiii7@bmu.bund.de

Website: www.bmu.de/english

Federal Ministry for Economic Cooperation

and Development (BMZ)

Bonn Office

Postfach 12 03 22

53045 Bonn • Germany

Email: poststelle@bmz.bund.de

Website: www.bmz.de/en

Date

October 2011

Text

Division K I II 7, Federal Ministry for the

Environment, Nature Conservation and

Nuclear Safety; Division Climate Policy and

Climate Financing, Federal Ministry for

Economic Cooperation and Development;

Programme Office International Climate Initiative;

Karin Adolph

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