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Gender and Climate

Change Financing
Coming out of the Margins
Mariama Williams
mariamaw@hotmail.com
Gender and Climate Change Financing:
Towards Engendering the Post 2012 financing
Regime

Facts, background, controversy surrounding financing Climate change
(UNFCCC objective) Equity issues in climate change financing
Gender: adaptation, mitigation and technology (addressed in module 4-6)
Legitimacy for en-gendering climate change financing: equity basis of UNFCCC
Key messages
Part I: Gender and Financial Markets: brief over view
Myths about women and finance( whole group exercise)
Stylized facts on gender and global finance & the state of play in Climate finance
Part II the architecture and governance framework of climate change
financing
Public financing - Private sector financing (Carbon Financing)
Other forms of Private sector financing - Innovative Financing
Small Group exercise with article on Gender and climate change financing, Philippines
case study
Part III. Details on specific Financing Mechanisms and Instruments
NAPA/NCs - CDM/REDD/LULUCF - MDG carbon facility/ Microfinance
Small Group exercise with Bangladeshs and Burundis NAPA- financing exercise
Part IV.
Summary/Post 2012 regime/Principles for gender sensitive financing framework
Proposals for Gender-sensitizing Climate Change Financing
Coming soon: Gender and climate finance resources from GGCA
Engendering Climate Change
Finance


Firewood or forest?


Aim:
1. To develop understanding of the institutional
architecture and governance of the climate change
financing mechanisms, particularly as it relate to gender
equality and womens empowerment outcomes
2. To utilize this understanding to advocate for gender
equality in the distribution and mobilization of climate
financing funds; and to ensure that mobilization of funds
do not thwart womens empowerment projects.
I. Background: The bare facts

1.Financing need for climate change:
UNFCCC: US $262.15 billion - $615.68 billion per year by
2030 (UNFCCC 2008)
G77 and China (August 2008): Initial minimum: US $278.82 -
$557.64 billion per year (approximately equal to 0.5 1% of
Annex I countries total GDP 2007)
2. Climate related funds under GEF, UNFCCC financing arm:
$10.03 billion - 10.25 billion plus a further $18.95 billion may
be forthcoming from bilateral ($6.68 billion) and multilateral
initiatives ($12.27 billion).
This is 1/10th of the minimum estimated requirement.
3. GAP in financing: amount pledged is too low relative to the scale
of financing needed
4.There is a serious need to find alternative/innovative sources of
funding for both adaptation and mitigation.
Adaptation deficit/development deficit/sustainable development
Background
5. Scaled up financing to fill the gap should come from
New and additional (to existing ODA flows)
No double counting of ODA and climate financing
Rationale:
0.7% of GNP target for ODA
UNFCCC obligated to provide financing support for developing countries implementation of
UNFCCC. Funding is supposed to be: adequate, additional, appropriate, equitable and predictable
( the Bali-5 principles).
Adequate: (compensation, not loans or other forms of debt incurring instruments).
Additional: New (not counted as part of ODA flows),
Appropriate: (polluter pays).
Equitable: (based on principle of common but differentiated responsibility and respective
capacity).
Predictable: (long term guaranteed flow of funds).
Financing should be consistent with the principle and obligations of the Convention
The rich countries have accepted, in principle, their responsibility for their predominantly large
carbon foot prints and their historical role in the creation of the factors most implicated with rising
atmospheric green house gases.
Under Kyoto, the rich countries committed to decrease GHG by 6-8% below 1990s level, the
developing countries were exempted from this.
What is at stake: is just how much they are willing to put on the table? For how long? And, if
and when, should more be required of the middle income and poorer nations?
II. Controversies in climate change financing

A. Tug of war overThe adaptation deficit/development deficit:
Mitigation v. Adaptation: wither development.
-Single-minded focused on stabilizing or decreasing GHG emissions and engendering
the transformation to low carbon economy.
Would seem to have shunted development to the back burner.
To what extent can funds be segmented (isolate) for climate change from
development, when in fact, the context of the developing countries, the two are
inextricably intertwined. This is an issue for both adaptation and mitigation.
Climate change is:
a) not fundamentally a technical issue (it is also behavioral and structural) and
b) cannot be simply a matter of funding purely techno-centric climate change
initiatives isolated from the underlying concerns of economic development, poverty,
gender and social inequality.
The adaptation discussion, itself, is a disguise form of managing the tensions around
development (and all that it encompasses) and the climate change policy & financing
framework.
The nature of the development-climate change nexus:
Controversies in climate change financing

The nature of the development-climate change nexus:

(i). The key developmental problematic, in the face of climate change, is the
transformation and growth of the productive sectors of the economy from one that is
mainly oriented to fossil based energy sources towards a low carbon economy.
(ii). There are also critical questions about how rapidly should the de-carbonization
occur and who should pay for it.
Clearly, either rapid or slower paced de-carbonization poses significant constraints
on economic growth and development in the south.
It also has implications for all of the productive sectors of the economy from
agriculture, fishery, and forestry to industrial and services which also impinge on
trade, industrial and service development, gender equality and poverty reduction
policies and programs.
Social development issues are also impacted: choices must be made about the
location, financing and climate proofing of housing and other human settlements,
food self sufficiency and access to essential services (health care, sanitation, water).
This raises the issue of land-use, land use change and the distribution of economic
and social resources between women and men and among different communities.
Controversies in climate change financing

B. What needs to be funded ?

Adaptation activities have been historically and systematically under
funded
Infrastructure (for all activities need to be funded)
It is already the case that in the developing countries 70-80% of the
damages caused by weather is to infrastructure, compared to 40%
in developed countries, (Hart 2007).
Annual adaptation costs for developing countries is estimated to
range anywhere from $4-37 billion, (Stern 2006), $28-$67 billion
2030 (UNFCCC 2007) and to $86 billion, 2015 (UNDP 2007).
The cost of mitigation is estimated to be about $ 176 billion to $200
billion.
Adaptation
Adaptation: 1) increase resilience;
decrease impact of disasters 3) coping and
relief to experience when damage occurs.
UNDP 2007: annual adaptation investment
need will be $86 billion by 2015
World Bank: $10-40 billion by 2030 (WB
2009)
Controversies in climate change financing

Equity issues in climate change financing

What is the most just and equitable distribution of the costs and burdens
of the adjustments to climate change?
Top 20% of the worlds population absorb 80% of its natural resources.
Ecological foot print
Impact of CC on poor, women and indigenous peoples
Expectations by developing countries:
Need for the re-allocation of global distribution of emission rights and
obligations and compensation for losses and adjustment burdens.

The North pays for and subsidizes the Souths climate change
engendered transformation to a low carbon economy.

The North should pay the extra cost of climate change mitigation.
Specifically, the south has consistently maintained that the North
compensate it for its overuse of environmental space. reference
Controversies in climate change financing

D. HOW? Funding delivery mechanisms.

Developed countries prefer to use:
Own bilateral channels or multilateral financial institutions such as
the World Bank
-Market driven private sector financing
Developing countries find that use of non UNFCCC channels:

1) Weakens UNFCCC;
2) Distort the process and rationale for the financial flows as donor
financing through non and
3) Violates the compensation principle.
Note: Developing countries also have a problem with GEF*. But it is
preferred to non UNFCC channels such as the Bank which exposes
them to potential debt accumulation and policy conditionalities
II. Gender and Climate Change essential
linkages

A. (Adaptation, mitigation and technology (addressed in
module 4-6)

B. Legitimacy for en-gendering climate change financing

CEDAW
BPFA (strategic objectives F.1, para 167, F.4 (b) para 176; para
165k,)
ECOSOC
MEAs (Agenda 21 (chap 24), CBD, CDD) CSW 52
MDG (#3)
the Equity basis of UNFCCC
Gender and Climate Change essential linkages
The Equity principle of UNFCCC provides more than an
adequate basis for integrating a gender equity approach
into climate change financing.
The UNFCCC as the normative framework for climate change
financing has provisions for equity and enshrines the rights of
developing countries to develop in a steady state path.
Subsequent COP decisions have consistently re-affirmed the idea
of targeting to the most vulnerable.
However, there is no refinement on what exactly these are:
countries, regions, villages, individuals (Garnaud 2009).
The well accepted notion of differential potential across regions,
communities (and individuals) to cope with climate induced changes
along with differential vulnerabilities and adaptive capacities raises
the question of equity and justice (TERI).
III. Key Messages
To successfully adapt and mitigate the potential climate change upheavals to their lives women
and girl will require increasing stocks of resources well beyond the current levels.
They will also require continuous access to more dynamic flows of savings and credit to enable
them to implement measure to climate proof and build climate resilience into their daily activities
and livelihood domains.
There is a two-way intertwine between gender equality, womens empowerment and successful
achievement of the climate change objectives of UNFCCC.
Climate change financing by providing resources and open up the process for greater
engagement and benefit flow to projects that are gender sensitive may reinforce the trend
towards gender equality and women s empowerment. This will also improve the outcome of
climate objectives.
Climate change financing, if it creates loss of access and control over land and forest resources or
otherwise exacerbate womens access to resources, will further marginalize women. This will lead
to counterproductive outcomes of climate objectives.
Therefore, climate change financing instruments, mechanisms and processes must be made
gender sensitive and conducive to the achievement of gender equality and womens
empowerment goals.
The increasing focus on market driven financial instruments to manage climate poses dilemma for
gender equality and womens empowerment. Financial markets are notorious for the rigidity of
gender norms and gender biases which works to the disadvantage of women, especially poor
women.
Thus great care and attention needs to be focused on market activities and in ensuring the
gender sensitive government regulations of the climate change financing market.
Key Messages
Mitigation funding streams will present more challenges for integrating a gender perspective. But
through focused attention on CDM and REDD, there is scope for redirecting the focus to
community-based and womens empowerment programmes.
In the case of the carbon markets, more equitable burden sharing of the adjustment costs and
benefits of transition to a low carbon economy could be enhanced by resort to governmental
incentives such as tax breaks, grants and outright set aside programs for women and or
indigenous groups.
Carbon financing such as micro-finance and MDG carbon funds along some of the initiatives of
regional development banks are evolving potentially useful pathways to really flexible
development and gender sensitive climate financing oriented mechanisms.
Governments play an important role in the market, and can redirect it towards gender- and
development-friendly outcomes.
A key element in any program must include education, training and human resource development
in the area of adaptation, mitigation and technology for girls and women.
Gender advocates should focus attention on threshold issues such as the financial, time and
physical resource costs of adapting to climate change that is incurred by particular groups of
women such as agricultural food producers and fisher folks.
A gender sensitive climate risk assessment framework can be used to make these costs more
visible. This can help to provide the basis for securing funding for gender equality objectives and
womens economic empowerment in the context of the emerging climate change financing
architecture.
Such approaches are critical to the design, implementation of NAPAs and National
communications strategies as well as the RAF and similar climate change financing assessment
instruments.
Key messages
Gender analyses, gender audits and gender impact
assessments are important tools for promoting gender
equity in access to, and gender equality outcomes of
climate change funds in IFIs, regional, bilateral and
national levels.
There is a need for greater coherence of national and
donor gender policy with development and climate
change financing.
Gender analysis and perspective must be integrated into
the more progressive reform proposals for COP 15; in
particular, those that seek to promote poverty
eradication and sustainable development
Part I: Gender and Financial
Markets: brief over view

Climate change financing occurs within the framework of
the parameters, challenges and constraints of the global
financial market. This is especially important given the
emphasis on the role of private sector financing in the
climate change financing process. Therefore it is
important to understand the gender dynamics and
dimension of this market.
Stylized facts on gender differential outcomes in the
global financial market
Gender issues in climate change financing
Myths about women and finance whole (group exercise)
Gender Myths and Gender Realities
Underlying Global Finance

Dominant Myths and Assumptions.
Women are less capable of economic success than menservice and
credit to women is different from men
Women are risky borrowers
Women borrow for consumption without capacity for repayment
Realities
Women, in developing countries, have higher repayment rates than men
(97% higher).
Women also borrow for short term liquidity purposes and have long run
cash flow for repayment.
Womens so-called consumption goods such as refrigerators and stoves
are often transformed into capital goods that produces other goods (ice,
cooked food and services such as storage) that are sold in the informal and
household economies.
Womens ability to build capital and move into higher value activities are
often blocked by asymmetry of information and high transactions costs.
Gender Segmentation in the Global
financial markets

Women tend to demand smaller loans than men
Women tend to give credit to women
Women borrow from special programs
Women face higher interest rates: this is a function of
gender based adverse selection in borrow.
In addition, womens lessened access and excess
demand for credit (due to quantity rationing as opposed
to price allocation) lead to higher interest rates
Stylized facts about gender and finance

Pervasive inequalities between women and men in
access to financial services--particularly credit.
Although a growing number of policies and programs
are arising to address the needs of the growing number
of women business owners and their enterprises
worldwide, access to finance is still the single biggest
obstacle facing women entrepreneurs. The International
Financial Corporation
Collateral requirements, high transaction costs, limited
mobility and education, and other social and cultural
barriers contribute to women's inability to obtain credit
(Holt and Ribe 1991, and World Bank).
Stylized facts about gender and finance


Financial market interface with gender is characterized by:

I. Under-representation of women in financial decision-making
(Men dominate decision-making in global finance, )

ii. Increase gender gaps in the economic positions of women and men
(women have less access to credit, financial assets and information than men;
women may also higher interest and other cost than men for similar services)
iii. Inefficient resource allocation in financial markets due to gender discrimination
(women face adverse selection insurance products and flow of investment funds
and the allocation of economic resources)
iv. Gender-based instability of financial markets
(Male rent seeking behavior generate moral hazard and crises in the financial market
Which may more negatively impact women in terms of unemployment and adjustment
Other adjustment burdens)
Under-representation
Men dominate decision-making in global finance, but
women experience the greatest negative effects of these
decisions (Grown et al. 2000).
Womens under-representation in the formal sector is
due to legal, regulatory, and socio-cultural barriers (IFC).
The predominant decision makers in many climate
change institutional processes are men (bureaucrats,
technical analysts, NGO representatives, extension
workers and influential leaders at the community level,
Boyd 2002).
Men are biased towards providing technical solutions to
the climate change problem and many men have little
understanding of, or regard for, the concerns or interest
of women (Boyd 2002).
Increase Gender Gaps
the segmentation of financial markets, high administrative and
transaction costs on the supply side (credit institutions) as well as
on the demand side (individual female borrowers as compared with
male borrowers) work to the detriment of women. Women face a
triple jeopardy:
1) lenders may operate from a risk assessment framework that
assigns high probability of default to small producers, many of
whom are women;
2) high administrative costs of extending and recovering small loans
appropriate to the scale of economic activities and

3) gender asymmetries in the flow of information about credit
markets (carbon market, funding mechanisms).
Inefficient Resource Allocation in Global and
Climate Finance
Inefficient Resource Allocation in Global and Climate Finance: The
World Banks CIFs financing mechanisms (in operation in Azerbaijan and
Georgie) injected inefficiency into the existing climate change architecture,
which has negative impact on women (Zuckerman, Gender Action).
Perlata (2008, the Philippines): CDM mechanism manifest an inordinate
reliance on market based solutions that excluded the poor.
[This resulted from CDM processes being cumbersome and costly rendering
small scale project with strong poverty alleviation impacts unviable and
making it difficult for the poor to participate (Perlata 2008).]
Carbon offset and carbon credit does not provide an adequate stream of
accessible financing for the multitudinous and damaging impacts of climate
change in the South.
A focus on sinks, renewable energy, energy efficiency, GHG capture and
storage, bio sequestration, all of which are centered on large scale capital
intensive projects, may in fact have negative impacts on the women and
indigenous groups, in terms of its impact on their access to resources and
ownership tenure over land and other natural assets.
Inefficient Resource Allocation in Global
and Climate Finance
Carbon offset and carbon credit needs to be weighted in
terms of their effectiveness and efficiencies regarding
social development against carbon taxes and other non
market based adaptation financing measures.
Carbon credits are not naturally issued for the things
women do. Many womens enterprises face significant
structural impediments that impede their ability to
function as sellers of carbon credit/offset. Apart from the
aforementioned inefficient tendency of carbon offsetting,
many womens projects.
Inefficiencies as evidenced by the backlog of projects,
the low level of funding proposal through funding
pipelines and the fact that after quite a number of years
many projects are still in a pilot phase.
II. The nature and scope of global Climate
change financing

Reference point: Financial and investment flow

Goal of Climate change financing architecture:
Manage the risk of:
Adapting (to climate change induced weather events---loss
and damages)
Mitigate climate change (reduction of GHG emissions) and
furthering the transition to low carbon economy.
Approaches to climate change financing (financial
resource mobilization)
Public Financing, private financing and public private
partnerships
Public Financing
The public dimension of the climate
change financing architecture includes: 1)
the United Nations (UNFCCC/GEF), 2) the
World Bank, 3) Other multilateral financial
and development financing institutions, 4)
a host of bilateral donors and 5) National
governments.

Public financing Mechanisms
Flexible Mechanisms

Under Kyoto, Annex I countries, which are supposed to meet targets primarily with national measures, can have
recourse to three market based mechanisms. These are emissions trading (or carbon trading), the clean
development mechanism, and joint implementation.

Market Based Mechanisms under Kyoto
Emissions trading: Emissions trading, as set out in Article 17 of the Kyoto Protocol, allows countries that have
emission units to spare - emissions permitted them, but not "used" - to sell this excess capacity to countries that
are over their targets. Thus, a new commodity was created in the form of emission reductions or removals. Since
carbon dioxide is the principal greenhouse gas, people speak simply of trading in carbon. Carbon is now tracked
and traded like any other commodity. This is known as the "carbon market."
The Clean Development Mechanism (CDM): defined in Article 12 of the Protocol, allows a country with an
emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an
emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction
(CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets. A
CDM project activity might involve, for example, a rural electrification project using solar panels or the installation
of more energy-efficient boilers.
Joint Implementation (JI): The mechanism known as joint implementation, defined in Article 6 of the Kyoto
Protocol, allows a country with an emission reduction or limitation commitment under the Kyoto Protocol (Annex
B Party) to earn emission reduction units (ERUs) from an emission-reduction or emission removal project in
another Annex B Party, each equivalent to one tonne of CO2, which can be counted towards meeting its Kyoto
target. Joint implementation offers Parties a flexible and cost-efficient means of fulfilling a part of their Kyoto
commitments, while the host Party benefits from foreign investment and technology transfer.
Source: UNFCCO data base
Bilateral and multilateral financing mechanisms for mitigation and
adaptation in developing countries
($ million, exchange rates of November 2008)
Name Total USE Notes
Under the United Nation
s
Framework Convention On climate change, UNFCCC

GEF -4 1,030 M Time frame: 2006-2010, $352 million already committed
as of Dec. 2008
Sustainable Forest
Management
154 M Special program under GEF-4 for land use, land-use
change and forestry.
Strategic Priority on
Adaptation (SPA)
50 A Pilot program on adaptation of the GEF Trust Fund. All
resources have been allocated
Special Climate Change
Fund (SCCF Adaptation
90 A Include pledges as of December 2008. $68 has been
allocated to 15 projects as of November 2008. Operated
by GEF.

Least Developed
Countries Fund (LDCF)
Adaptation Fund
172


400-
1,500
A


A
Include pledges as of December 2008. $91.8 has been
received as of November 2008. Operated by GEF.

Time frame: 2008-2012. As of October 2008, $91.3 was
available (Four million CERs at 17.5 per CER).
Bilateral and multilateral financing mechanisms for mitigation and
adaptation in developing countries
($ million, exchange rates of November 2008)
Multilateral
Forest Carbon
Partnership, FCP (World
Bank)
300 M
Provides grants and loans. Timeframe
2008-2020.
Global Facility for Disaster
Reduction and Recovery
(GFDRR)
84 A
Provides grants. Timeframe 2007-2010.
Targets high-risk low and middle income
countries to mainstream disaster
reduction in development strategies
UN Program on Reduced
Emissions from
Deforestation and
Degradation (UN-REDD)
35 M Provides grants. Administered by
the UNDP. Norway, trough its
Climate and Forest Initiative, is the
first donor with US$12 million.
Sustainable Energy and
climate Change Initiative
(SECCI)
29 A,M
Provides grants and loans. The fund
backs major investments in the
development of biofuels, renewable
Multilateral contd
Climate investment
Funds (CIF):

Clean Technology
Fund




Strategic Climate
Fund
6,340

4,333






2,006


M






A,M
Timeframe: 2009-2012. Administered
by the World Bank.

Provides grants and loans. The Fund
was funded by the United States to
be administered by the World Bank
($2 billion), and the United Kingdom
and Japan have pledged the
additional resources.

Provides grants and loans. This
includes the Forest Investment
Program ($58 million) and Scaling-up
Renewable Energy ($70 million) for
mitigation; and the Pilot Program for
Climate Resilience ($240 million) for
adaptation.
Bilateral
Bilateral
Cool Earth
Partnership
(Japan)
10,000
A,M
Provides grants and loans. Timeframe:
2008-2012. Up to $2 billion to improve
access to clean energy, and US$8 billion
for preferential interest rate loans for
mitigation projects.
Climate and
Forest Initiative
(CIF, Norway)
2,250 M Provides grants. Timeframe: 2008-
2012. Pledged US$102 million to
the Amazon Fund.
International
Window of
Environmental
Transformation
Fund (ETF-IW,
UK)
1,182




A,M Provides grants and loans.
Timeframe: 2008-2010. Most of the
funds will be allocated trough the
WBs Climate Investment Funds.
Amazon Fund
(Brazil)
1,000 M
Norway has pledged US$102. Dona-
tions to be administered by the Brazilian
National Development Bank.

Bilateral
International
Climate Initiative
(ICI, Germany)
764 A,M Provides grants. Funding for the initiative will
be generated from auctioning 10 percent of its
allowances from the EU-ETS. It has earmarked
up to 120 million for the next five years.
International
Forest carbon
Initiative (IFCI,
Australia)
129 M Provides grants. Timeframe 2007-2011. As of
November 2008, US$50 million were allocated.
UNDP-Spain MDG
Achievement Fund
Environmental
and Climate
Change Thematic
Window
90 A,M Provides grants. Timeframe 2007-2011. As of
November 2008, US$50 million were allocated.
Provides grants. Timeframe: 2007-2010. Spain
has pledged 528 to the Fund and US$90
million has been allocated for the Environment
and Climate Change thematic window.
Bilateral


Global Climate
Change Alliance
(GCCA, EC)
76 A,M
Provides grants. Timeframe: 2007-2011.
Targets most vulnerable countries (least
developed countries and small islands)
Notes. A: Adaptation; M: Mitigation. Source: UN DESA 2009 (adapted and
updated from Porter et al 2008 and UNFCCC 2007).
National Financial instruments
(incentives)
~Direct payments ~ Tax reductions
~subsidies
~Price supports ~Feed in tariffs Rebates
~Grant programmes
~Loan programmes Bonds
~Production incentives
~Government purchasing programmes~Insurance
programmes
~Equity investments, including venture capital
Source: Tirpak et al 2008
II. Private Financing (Market based
mechanisms)
The private sector network includes foundations, venture capital funds, private
carbon funds and a network of exchanges. The private sector network includes
foundations, venture capital funds, private carbon funds and a network of exchanges
Currently the private sector finances over 80% of climate change related activities in
the three broad areas of clean energy technology, renewable energy and carbon
financing.
Private sector actors may invest in physical assets in agriculture, forestry, mining
and industries. These are long term (direct/equity) investments.
Firms also invest in the carbon sector in carbon tracking, carbon trading, capture and
storage technologies
Private sector actors (commercial banks, investment banks, utilities, industrial, and
Insurance companies, investment houses, bond traders and hedgefunds) invest in
short and long term financial assets include:
a) assets such as bonds, loans, stocks certificate, and venture capital that finance
direct investments in plants, equipment and facilities;
b) a variety of climate risk (carbon and weather) products such as crop insurance and
catastrophe bonds;
c) assets that hedge against the future such as weather derivatives; and
d) emission trading instruments (CERs) in the carbon market
Private Sector Financing
There are also a growing network of
international development agencies
(UNDP- MDG carbon fund), non profit
including civil society organizations (acting
as Aggregators, consultants, trading
agencies) and philanthropic organizations
who are active players in the market for
private sector financial and investment.
Private Sector Financing
Micro finance is being seen as a a vehicle for
mobilizing private resources for sustainable
development, including climate change.
Grameen Bank has already begun to extend loans
for clean energy products, such as solar home
systems, with spin-offs to micro-enterprises,
while further opportunities exist in cleaner
cooking products and biofuels (DESA, 2009
p.19)
Market Mechanism and the CDM

The CDM and its associated Kyoto mechanisms facilitate Annex B parties to meet the
commitments of the Protocol via domestic emission reductions, sink enhancements, and the
purchase of allowances and credits, for 2008-2012.
CDM enables a project to generate CERs in order to mitigate climate change in Non Annex I
parties; it is the second largest carbon trading market.
It has managed to leverage and catalyze a number of projects and process in developing
countries. These include the engagement of the MDG, in terms of the MDG Carbon Facility, micro
finance as well as regional development banks into carbon trading activities.
Under the CDM, buyers from developed countries can acquire Certified Emission Reductions
(CERs) for each tonne of greenhouse gas that is prevented from entering the atmosphere as a
result of a CDM project in a developing country.
CDM can be used for any project-based activity which results in a reduction of greenhouse gas
emissions compared to the baseline activity.
A baseline is the level of greenhouse gases that was emitted (or assumed to be emitted) before
the start of the project, and serves as the basis for determining project emissions reductions.
As of end-2007, proceeds from the sale of emission credits from over 4, 000 CDM projects in the
pipeline amounted to about $7.4 billion, a 50% increase in value over 2006, and triple in value
from 2005. (This is relatively small compared to the overall carbon market, which has risen
sharply over the past few years, reaching $60 billion in 2007 or six times its value in 2005.)


The Carbon Market
CDM sectoral Distribution
CDM geographic Distribution
Challenges with CDM
CDM suffers from:
the lack of sustainable projects or those with the most co-benefits (like poverty reduction, UNDP)
CDM projects dont meet the needs of less developed countries, nor of people who are at the end
of the poverty chain the majority of whom are women.
CDM projects involve high transaction cost and high risk for small scale projects, which are
important for poverty reduction and womens participation.
There is insufficient preparatory finance for project development, heavy initial up front costs and
too long a time horizon for securing long term financing and turn around of project. Upfront
financing Is needed to cover: the completion of feasibility studies, issuance of permits, securing
of long-term finance, and actual construction and commissioning, These factors have led to CDM
financing become a constraint on the flow of projects in the carbon market.
Ultimately, the high transaction costs associate with CDMs process of elaborating a project
development design, meeting the expenses of a Designate Operating Entities and other
registration requirements for a CDM project is neither feasible nor cost effective for most small
scale women operated projects. In effect, the current CDMs cumbersome and time consuming
process is not gender or development friendly and needs to be radically reform or eliminated.
This defeats one of the main purposes of the CDM, to stimulate investment in less carbon-
intensive growth.
Only special CDM projects programmes in LDCs such as community
development climate fund, bio Bio Carbon Fund (BioCF) and Africa Assist may provide a chance
for participation in the international CDM market .
Reform of CDM
There is a concerted push for reform of CDM in at least the following
directions:
Streamlining of applications
Focus on smaller projects
Replace its project focus with a programmatic and/or policy focus,
Shorter funding cycles
Lower transaction costs
It is hope that through such corrective measures the CDM can generate a
greater impact in developing countries.
CDM reform could be good for gender equality and poverty reduction.
Especially if it focus on household energy, food processing, environmental
services and natural resource management.
Increase the voices of women and community
Allow for more bundling/aggegators which are gender inclusive.
Eg: Grameen Shaki.
Innovative Financing and Gender

Proposals include for up-scaling funds and reform of the post 2012
climate change architecture are numerous. A sampling of some of
the ones that would seem to be amenable to or important to
consider from a gender equality perspective include:

International financial transactions such as CTT (at a rate of 0.5%
taxes on carbon transaction this could yield $50 billion);
International levies on emissions from international maritime transport and
aviation/air travel.
International/national auctioning of assigned amounts unitslevy on the
proceeds from international emissions trading.
Strategic allocations of proceeds using existing mechanisms and enhance
absorptive capacity at the domestic levelthis is for of adaptation
mainstreaming; governance
North should dedicate 1% of national stimulus package (totaling
$1.3 billion in two years) to developing countries to deal with after
effects of global financial crisis and climate change.
Innovative Financing & Gender
Innovative financial instruments beyond carbon tax and auctioning
of AAUs such as tax on international air traffic and maritime levy as
well as various types and kinds of climate insurance are worth
discussing. But it is important that thorough social and gender
assessments of the likely impacts and the possible mechanisms for
passing through the fund in order to facilitate targeted gender
equality interventions are well thought out.
An adaptation levy on international emissions trading might be one
way of ensuring a predictable flow of financing for specialized
women funds.
In the case of insurance, risk management models, on their own,
are not inherently gender neutral and will be implemented in a
financial system riddle with gender biases, gender distortions and
asymmetries that might create even more disadvantages for
women, as a group, relative to men. There is therefore need for
gender analysis of such approaches with appropriate safeguards
built into climate insurance schemes.
A tentative framework for assessing the gender
sensitivity of current financing mechanism and new
reform oriented proposals
Less than burden some criteria for accessing all funds.
Positive incentive (no economic or other forms of policy conditionalities).
Technology that is gender, social and development friendly and that
protects the web of life and promotes ecological security (no disruption of
geochemical science, carbon cycle, nitrogen cycles); adequate attention to
traditional knowledge and seek to improve and enhance their effectiveness.
(For example, rainwater harvesting, recharging of ground well and
facilitating sustainable agriculture and development).
Balance between Adaptation and Mitigation in prioritizing funding. (In the
case of developing countries, especially the least developing countries and
SIDs, there may have to be a tilting in favour of adaptation.)
Mix of market based and non-market based financing mechanism to ensure
equity of outcomes for the poor, the majority of whom are women
Promote and ensure the resiliency of the household economy

Towards a gender sensitive and gender
equitable climate change financing system

Recommendations

First, reform of the current set of mechanisms, such as CDM, must start with a gender
sensitive perspective that seeks to re-oriented these mechanisms. In the first case,
they should operate on a less than burdensome criteria This means eliminating the
often onerous prerequisites, costly financial and human resource applications,
registration, monitoring and evaluation processes.
Secondly, mechanisms, such as REDD, must be designed to handle small to medium
scale activities with moderate economies of scale. This include outreach to micro,
small and medium sized firms owned and operated by women that are working in
the area of adaptation and mitigation and technology development. It should also
seek to ensure womens and indigenous peoples access, control and ownership of
land and forests.
Third, financing mechanism must promote and ensure household and community
infrastructure that ease mens and womens time burden and reduce or eliminate
their vulnerability to climate events. This includes the financing of technologies and
renewable energies for the household sectors.
Fourth, there must be a focus on food self sufficiency and rural infrastructural
development. This applies to both adaptation and mitigation financing.
Towards a gender sensitive and gender
equitable climate change financing system

Fifth, many of the recommendation above can be achieved by up scaling
funding and creating special windows in the existing funds. In the case of
CDM, there is need to widen its scope of operation to include more diverse
project activities and sizes.
Sixth, new funds can be designed under carefully devised gender sensitive
guidelines with expedited process, and to include special windows for
MSMEs pooled projects that involves womens collaborative activities. A
special set of Trust funds geared to projects that seek to bring to light and
mitigate events and factors that contributes to the vulnerability of women
and girls to climate events should be established. This include developing
and supporting gender sensitive vulnerability assessment, gender sensitive
climate risk diagnostics. Such funds should also have sub components that
subsidies insurance premiums for crop and catastrophic damages to homes
and businesses owned by poor women and men. Trust funds should also
promote the provisioning of ICTs and training programs that teaches
women how to rehabilitation and repair damaged household and
community infrastructure post climate change weather induced events.
Seventh, gender sensitization of all NAPAs and National Communications
strategies.
Eighth, Research on the gender differentiate impacts of different types of
national and global climate change financing instruments such as cap and
trade, carbon tax, and subsidies.


Photo credits

X-ray fireworks (debris of an exploded star) - known as supernova
remnant "E0102" for NASA's Chandra X-Ray Observatory.

Great Black Spot (bruise in Jupiters cloud) July 23 2009
NASA, ESA, H. Hammel (SSI), Jupiter Impact Team

Firewood or forest: A girl from the Benet community. Credit: Wambi
Michael/IPS

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