Briefing On Climate Investment Funds

Briefing on Climate Investment
Funds
Bangkok
April 1, 2008
Warren Evans
Director, Environment
Sustainable Development Network
The World Bank Group
Outline
• Progress since Gleneagles (CEIF)

• Towards Strategic Framework on Climate
Change and Development (SFCCD)
• Proposed Climate Investment Funds (CIF)
• Scaling up Carbon Finance
2
Meeting Financing Needs –
Progress since Gleneagles
Update on the Clean Energy
Investment Framework (CEIF)
Reporting on CEIF
Progress Report to October 2007 Annual Meeting

provided details on progress on Action Plan for:
• Energy for growth, with a particular emphasis on access
to energy in Sub-Saharan Africa;
• Transition to a low-carbon development trajectory; and
• Adaptation to the impacts of climate change.
Report also outlined an approach to scaling up actions on climate

change and provides a review of options to further reduce the
financial barriers to support low-carbon and adaptive growth in
developing countries.
4
Sustainable Development @ The World Bank
WBG Key Progress Since Gleneagles
• Access and Low Carbon Energy (1)
– Cumulative energy commitments of over US$11
billion for FY06–FY08 to date are 57% higher than the
energy lending in FY03–05.
– Energy financing to IDA countries also increased
significantly, from annual average of US$0.9 billion
between FY03 and FY05 to an annual average of
US$1.8 billion between FY06 and FY07. But energy
access remains a policy and financing challenge in all
regions, especially in SSA.
– Share of support for low-carbon energy projects up
from 28% in FY03–05 to 40% since Gleneagles.
– GEF and Carbon Finance contributed US$546 million,
or 13 percent. 5
WBG Key Progress Since Gleneagles
• Access and Low Carbon Energy (2)
– RE and EE for the period FY05 to H1FY09 was
US$2.3 billion, exceeding Bonn commitment 1.5
years ahead of schedule
– CEIF low-carbon work extended to other sectors,
such as transport and urban sectors, showing good
potential.
– Two new Carbon Facilities—CPF and FCPF
approved in September 2007
– Pilot program to begin measuring GHG emissions of
the WBG lending portfolio is underway.
6
Adaptation – IDA and Climate Change
results and related work
• CEIF argued for the need for a shift in approach to
adaptation from a largely stand alone, project by project
approach to one where the management of climate risk,
current and future, was regarded as an essential part of
development planning.
• IDA and Climate Change report (2007) shows that the

poorest countries are most vulnerable to climate change
impacts and that such countries need to consider
immediate interventions that will increase their resilience
to climate change.
7
Adaptation
Drought Flood Storm Coastal 1m a Coastal 5m a Agriculture
All low-lying Island All low-lying Island
Malawi Bangladesh Philippines Sudan
States States
Ethiopia China Bangladesh Vietnam Netherlands Senegal
Zimbabwe India Madagascar Egypt Japan Zimbabwe
India Cambodia Viet Nam Tunisia Bangladesh Mali
b
Mozambique Mozambique Moldova Indonesia Philippines Zambia
b
Niger Laos Mongolia Mauritania Egypt Morocco
Mauritania Pakistan Haiti China Brazil Niger
Eritrea Sri Lanka Samoa Mexico Venezuela India
Sudan Thailand Tonga Myanmar Senegal Malawi
Chad Viet Nam China Bangladesh Fiji Algeria
Kenya Benin Honduras Senegal Vietnam Ethiopia
Iran Rwanda Fiji Libya Denmark Pakistan
Note: Bold and grey shaded = high income countries. Light green = IBRD. Non-shaded = IDA-only and blend
countries. The typology is based on both absolute effects (e.g., total number of people affected) and relative effects
(e.g., number affected as a share of GDP). See Annex C for more detail on the indices used.
a. Meters above the seal level.
b. Winter storms. 8
Adaptation- Progress since Gleneagles
• New analytical tools and guidance for assessing and
managing climate risk are necessary.
• Resources made available through the GEF have been
critical in promoting assessments, capacity building and
initial project by project action, but fall a long way short of
the resources required to support comprehensive
adaptation.
• Netherlands, UK, WB partnership on a Global Economics of
Adaptation study to “understand how to identify and prioritize
adaptation measures and to estimate the financial costs of
ensuring national development plans are climate resilient”.
• JBIC, ADB, WB partnership on Adaptation in major Coastal
Cities.
9
Key Lesson since Gleneagles-
Thinking of climate change differently
• Beyond environment—complex and overaching problem
• Affects all aspects of societies—economy, technology, trade, equity,
ethics, security, relations within and among countries
• Financial aspects inceasingly important, both in regard of national budgets
and international transfers- and financing needs are enormous and not
being met.
• Progress on implementing widespread adaptation has been hindered by
the lack of sound estimates of the scope of the task and the financial
implications.
• Requires to run on two legs:
– mitigation—to avoid the unmanageable,
– adaptation—to manage the unavoidable
10
Call for MDB Suppport on Climate Change
• UNFCCC recognizes the need for financial resources- in addition to the
financial mechanism defined under article 11 of the UNFCCC,
paragraph 11(5) stipulates that “developed country parties may also
provide and developing country Parties avail themselves of, financial
resources related to the implementation of the Convention through
bilateral, regional and other multilateral channels”.
• Bali Action Plan- launch “a comprehensive process to enable the full,
effective and sustained implementation of the Convention through long-
term cooperative action, now, up to and beyond 2012.”
• Under Paragraph 1 of Bali Action Plan, Parties decided to address ways
to strengthen the catalytic role of the Convention in encouraging
multilateral bodies, the public and private sectors and civil society,
building on synergies among activities and processes, as a means to
support mitigation in a coherent and integrated manner.
11
Towards a WBG Strategic Framework on
Climate Change and Development
(SFCCD)
12
Towards a WBG Strategic Framework on
Climate Change and Development (SFCCD)
• WBG will maintain the momentum for

implementing the CEIF action plan and
expand its strategic thinking on climate
change, in a more comprehensive, cross-
sectoral manner and in alignment with the
growing needs of developing countries.
13
SFCCD Milestones
– Requested by Annual Meetings 2007 as an evolution
of the Clean Energy investment Framework (CEIF)
– Concepts and Issues development, early
consultations– through March 2008
– Full-scale Consultations – April-June
– Draft Final Paper –July
– Web-based consultations, select meetings per
demand – August-September
– Final paper – Annual Meetings in October 2008
14
SFCCD is about development in the
context of climate change
• Priority of growth, poverty
reduction and MDGs
• Importance of meeting
energy needs of
developing countries
• Development imperative
of helping to adapt to
climate risks
• Resource mobilization in
addition to the current
ODA levels
15
Relation to UNFCCC Negotiations
– Neutral to any party position
– Helping countries understand the impacts of
alternative policies within the UNFCCC
– Piloting innovative instruments and
approaches that help inform the development
of a future regime (e.g. Carbon Finance,
IDA15 as a platform for mainstreaming
adaptation)
– Advocacy and capacity building
16
SFCCD Objective
To integrate climate change and development

challenges, without compromising – and rather
enhancing – growth and poverty reduction
efforts through:
– Country, regional, and global operations
– A multi-sectoral, multi-dimensional approach
– The use of a strong and balanced results
framework
– Working with other development partners
17
Working With Multiple Partners
• UN agencies, UNFCCC Secretariat, GEF
– A common UN-system approach to CC
– Building blocks: mitigation, adaptation, technology, finance
• Other MDBs
– Clean Energy Investment Framework
• Bi-lateral donors
• Initiatives by countries, sub-national (city) governments,
private sector, NGOs
• Scaling up WBG engagement based on its specific
comparative advantages
18
SFCCD Pillars
1. Make effective climate action – both adaptation and
mitigation - part of core development efforts
2. Address the resource gap through existing and
innovative instruments for concessional finance
3. Facilitate the development of innovative market
mechanisms
4. Create enabling environment for and leveraging private
sector finance
5. Accelerate the deployment of existing and development
of new climate-friendly technologies
6. Step-up policy research, knowledge management and
capacity building
19
Dual approach to integrating climate
action into development by :
• Focusing on multiple • Mobilizing
benefits and business concessional finance
opportunities to cover additional
cost
20
WB lending: in sectors with largest
potential for adaptation and /or mitigation
GHG Emissions by Sector, IBRD-IDA Countries Total IBRD-IDA Lending by Sector, FY07
Financial & PSD
Waste Electricity &
Transportation 8%
3% Heat
6% Energy & Mining
20%
5%
Other
40% Transport
19%
Land-Use
Change &
Industry
Forestry
13%
32%
Urban
Development
6%
Other Water
11% Agriculture &
10%
Rural
Agriculture
Development
15%
12%
Numerous opportunities to make a difference; similar situation in IFC

and MIGA: GHG Emissions and IBRD/IDA Portfolio, FY07
21
… similar situation with IFC & MIGA
portfolios
IFC investment by Sector ($ mln), FY07 MIGA Guarantees by Sector ($ mln), FY07
Financial
24%
Infrastructure
44%
Oil, gas & mining

12%
Manufacturing
Tourism,
10%
construction &
Agribusiness services
2% 8%
22
Mobilizing Finance to Cover Additional
Costs
Progress to date: New initiatives:
– Strong replenishment of • WBG+RDBs - Climate
IDA15 Investment Funds (CIF)
– Adaptation Fund under
• Carbon Partnership Facility
special arrangement with
GEF Secretariat • MIGA –carbon credit delivery
– CIEF: Increased volume guarantee
and share of low carbon • IFC- Structured financing
energy lending, in packages blending CF with
partnership with GEF loans and guarantees
– IFC leveraged private • WB Treasury - bonds at
finance by 1 to 5 reduced rates to advance to
– Robust increase in projects with climate benefits
Carbon Finance • Climate Risk Insurance
– Forest Carbon products customized to
Partnership Facility different needs
23
Addressing the Resource Gap:
proposed
Climate Investment Funds
24
Addressing the Resource Gap:
proposed Climate Investment Funds
• Scale of action- need to translate lessons from CEIF and
longer-term GEF pilot and prototype projects and capacity
building, into broader programs which will help transform
economies so that the objective of alleviating poverty and
fostering growth can be met through new ways of
approaching low-carbon growth and enhancing resilience.
• In consultation with interested parties, the WBG and
Regional Development Banks (RDBs) are joining efforts to
establish a portfolio of strategic CIF.
• CIF to complement, build upon and enhance the activities
of other existing instruments, like the GEF, IDA,
International Bank for Reconstruction and Development
(IBRD) and the IFC.
25
Climate Investment Funds: Principles
• Financing needs for climate change are enormous –
widespread recognition that all multilateral institutions must
work with their clients to address this agenda in support of
the Bali Action Plan.
• Climate Change is a development issue, and therefore

MDBs have an essential role to play. The central role of the
GEF and UN agencies in the financial architecture to
address climate change is fully recognized.
• The CIF aims to fill a critical gap: scaling up investments

while transforming development paths of the countries. This
will contribute to promoting an international environment
supportive of a global agreement to address climate change.
26
Building on New Initiatives
• UK Environmental Transformation Fund
• US Clean Technology Fund
• Japan Cool Earth 50
ADB, AfDB, EBRD, IDB and the WBG joined forces to
establish a portfolio of Climate Investment Funds
– Strategic Climate Fund

– Clean Technology Fund
27
Where We Are
Current status:
– Strong interest from several donors
– Support from MDBs
– Demand from countries
– Agreement with GEF and preliminary discussions with UN
agencies and UNFCCC
Ongoing Actions:
– Consultations with recipient countries
– Expand donor base
– Broader and deeper consultations with others (UNFCCC, GEF,
UN partners, private sector)
– Advance design of funds and financial instruments
28
Proposed Funds
Clean Technology Fund

Strategic Climate Fund
29
The Gap in Mitigation Financing
• Absolute financing gap is ~ $100 billion per year

• In long-term, could be filled by combination of:
– growing market for carbon trading (could reach
$100 billion after 2012), and
– policy instruments such as carbon taxes
• In the interim, concessional financing is critical
to catalyze increased flow of commercial capital
in this area
30
Proposed Clean Technology Fund
• Accelerates transformation to low carbon economies
• Finances cost-effective mitigation of greenhouse gas
emissions
– Focus on investments that reduce GHGs at scale or
have demonstration impact that will lead to scale
– Speed and nimbleness essential, given urgency
– Scales-up and replicates lessons of GEF
• Focuses on engaging private sector
• Complements existing financing
• Utilizes the right blend/suite of instruments (concessional
loans, grants, guarantees)
31
Proposed Funds
Clean Technology Fund

Strategic Climate Fund
32
Proposed Strategic Climate Fund
• Composed of Partnerships for targeted

initiatives
– Pilot Program for Climate Resilience
– Ecosystem Services
– Pre-commercial Technologies
– Forest Investment
33
Pilot Program for Climate Resilience
• IDA is strong platform to promote climate-resilient
development. The successful IDA-15 replenishment was
partly testament to that (+42%)
• MDBs have already begun incorporating adaptation concerns
into their programs
• GEF Voluntary Funds:
• Special Climate Change Fund ca. $300 million
• Least Developed Countries Fund
• GEF Trust Fund Strategic Priority on Adaptation
• Adaptation Fund (GEF-administered) could reach:
• ~ $100-500 million through 2012, can increase to
$2 billion per year after 2012.
• Bilateral donors providing additional resources
34
Gaps in Adaptation Financing
• Financing gap: UNFCCC estimates that in 2030,
$28–67 billion/year required to help developing
countries adapt
• Knowledge gaps are impediments to integrating
climate risks into development
• Until large-scale funds are operational, interim
financing is necessary to proceed with adaptation
mainstreaming in development and to build
knowledge base
35
Proposed Climate Resilience Pilot Program
• Pilot and demonstrate ways to mainstream
climate risk management and climate resilience
into core development planning and budgeting
• Pilots will be country-led and build on National
Adaptation Programs of Action (NAPAs)
• Report lessons learned to the Board of the
Adaptation Fund, and share them widely with
IDA and similar programs in MDBs and UN
• Explore how to support country efforts through
international finance, consistent with Paris
Declaration on Aid Effectiveness
36
Proposed Climate Resilience Pilot Program
• Board of Adaptation Fund will be invited to participate in
design and governance
• Primary decision making at country level
• Oversight Committee: developing countries + all recipient
countries, donors, the developing country Co-Chair of the
Adaptation Fund Board, MDBs, UNDP, UNEP, GEF, civil
society
• 5-10 pilot countries to receive scaled-up support
• Pilot countries will be IDA eligible or SIDS
• 3-5 year time frame
– Technical assistance ($1-2 million)
– Additional financial resources to fund investments (up to $100
million per country)
37
Summary: Key Common Features of
Climate Investment Funds
• Support investments based on country-led strategies, and
• Be flexible and efficient to respond to country demand and
provide innovative solutions to mobilize private sector
• Maximize co-benefits, particularly in relation to poverty
reduction and sustainable management of natural resources
and ecosystem services
• Encourage fast-tracking of early action (both mitigation and
adaptation) and market-based solutions to climate change
• Utilize skills and capabilities of international financial
institutions to raise and deliver concessional climate
financing at a significant scale
38
CIF Issues and Opportunities
• In further developing the proposal for climate investment
funds, the MDBs are engaged in extensive consultations
with key stakeholders, particularly potential recipient
countries and other interested parties and advance the
design of funds and financial instruments.
• The final proposal will focus on:
– Supporting UNFCCC Bali Action Plan and consistency with Paris
Declaration
– Country ownership- low carbon growth strategies and NAPAs to
support national sustainable development
– Learning by doing- for example enhancing knowledge base for
Adaptation Fund operations through pilots
– Inclusive, effective and efficient governance
– Optimizing impact
39
Scaling up Carbon Finance
40
Pioneering Carbon Finance
• World Bank’s experience
 A global pioneer and catalyst in the carbon market –
US$180 million Prototype Carbon Fund (PCF)
initiated in 1999, before the Kyoto Protocol became
effective
 BioCarbon Fund: “LULUCF” (Land use, Land use
Change and Forestry) pioneer since 2004, including
for “Reducing Emissions from Deforestation and
Degradation” (REDD) at the project level
 Now managing 10 carbon funds, and over US$2
billion
 16 countries and 66 private sector companies have
made contributions to funds
41
New! Carbon Partnership Facility (CPF)
• Objectives
– Target long-term emissions
– Scale up
– Support strategic, transformational interventions in power sector
development, energy efficiency, gas flaring, transport, urban
development, etc.
• Features
– Programs, away from individual projects
– Partnership between buyers and sellers
– Fostering both demand and supply in uncertain market
– Target size: €5 billion over 5 years; first tranche: €350 million
42
New! Forest Carbon Partnership Facility (FCPF)
• Objectives
– Pilot system of positive incentives for post-2012 that includes
REDD
– Remain neutral to UNFCCC negotiations
– Catalyze / leverage private sector investment to enable scaling
up: $300 million will not save world’s forests
• Features
– Balanced governance structure (developing countries,
industrialized countries and carbon fund participants have
balanced voting rights on Participants Committee)
– Voluntary participation
– Two mechanisms
• $100 million readiness fund for capacity building
• $200 million carbon fund for purchase of emission reductions 43
Forest Carbon Partnership Facility (FCPF)
• Argentina • Malaysia
• Bolivia • Mexico
• Cameroon • Nicaragua
• Central African Republic • Pakistan
34 Requests • Colombia
• Panama
• Costa Rica
for • Dem. Republic of Congo • Papua New Guinea
• Ecuador • Paraguay
Participation/ • El Salvador • Peru
Cooperation • Gabon • Philippines
• Ghana • Republic of Congo
• Guatemala • Senegal
• Guyana • Sierra Leone
• Indonesia
• Sudan
• Kenya
• Thailand
• Laos
• Liberia • Uganda
• Madagascar • Vanuatu 44
Thank You
if you want a copy of this

presentation or the next CIF design
document, then email me at
wevans@worldbank.org
45

Briefing On Climate Investment Funds

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Briefing On Climate Investment Funds

Uploaded by

Copyright:

Available Formats

Briefing on Climate Investment

• Progress since Gleneagles (CEIF)

Progress Report to October 2007 Annual Meeting

Report also outlined an approach to scaling up actions on climate

• IDA and Climate Change report (2007) shows that the

• WBG will maintain the momentum for

To integrate climate change and development

Numerous opportunities to make a difference; similar situation in IFC

Oil, gas & mining

• Climate Change is a development issue, and therefore

• The CIF aims to fill a critical gap: scaling up investments

– Strategic Climate Fund

Clean Technology Fund

• Absolute financing gap is ~ $100 billion per year

Clean Technology Fund

• Composed of Partnerships for targeted

if you want a copy of this

You might also like