In Bonn and Beyond, Gender-Responsive Climate Finance Means More than Numbers

By Liane Schalatek

As the international climate community comes together from November 6-17 for this year’s climate summit, the COP23 in Bonn, a lot of attention will be focused on the fact that this is the first COP presided over by a small island developing state, Fiji. Climate finance – what is delivered, who delivers it, how to increase the amounts mobilized and whether loss and damage is already occurring in developing countries around the world can be addressed with financial support – will likely capture most of the public attention during the two weeks of climate negotiations.

Much less of a spotlight in Bonn and beyond, however, will be on another set of climate finance relevant issues such as addressing what the normative framework should be for mobilizing, governing and disbursing climate finance in a way to ensure it addresses the needs and supports the rights of communities and people on the ground in developing countries and benefits women and men equally. What does such a normative framing and a push for the gender-responsiveness of climate finance mean for the global climate finance architecture and some key public actors, such as the Green Climate Fund? Some answers and recommendations to this set of interwoven questions are delivered by four new information briefs that ODI and the Heinrich Böll Stiftung North America have released as part of an annual update of their Climate Finance Fundamentals (CFF) briefing series.

These briefings are available as PDFs here:

The issue of gender equality and women’s empowerment and its relation to climate efforts, in particular, remains one of the more hidden topics in the international climate process. This despite the fact that the gender dimension of climate change has for years been addressed as a standing item under the UNFCCC. Some major advances in including gender considerations have been made since COP16 was held in Cancun in 2010, which had declared that gender equality and the effective participation of women are important for all aspects of climate change. The Paris Agreement, which will shape climate implementation efforts from 2020 onward, also anchored gender equality and the empowerment of women as a core principle in its pre-amble. Yet, while mandating gender-responsive adaptation and capacity-building efforts – and thereby confirming the dominant narrative of women as climate change victims – the Paris Agreement failed to integrate gender-specific language in its mitigation, technology or finance articles, and thus neglected to prominently acknowledge and support the role of women as key agents in addressing climate change without whom the implementation of the Paris Agreement is bound to come up short. Hidden on the agenda of COP23 under ‘gender and climate change, for which women and gender advocates active in the negotiations have elaborated key demands, is one possible outcome of the COP23 talks in Bonn that could contribute to significantly change this. Parties are considering for the first time a time-bound Gender Action Plan (GAP) for the UNFCCC, which would designate key actions and indicators for progress in gender mainstreaming the international climate process and related climate actions. An important focus of this GAP is intended to be on means of implementation, especially technology development and transfer as well as finance, as key sectors to achieve this goal. Any UNFCCC GAP, however, will only be successful if there are dedicated resources for its implementation. This is far from secured as the UNFCCC Secretariat has to rely on voluntary contributions by Parties for these efforts, and thus likely will come up short of what is needed.

Astonishingly, given the apparent difficulty in the UNFCCC negotiations to consider gender dimensions adequately, in the climate finance negotiations the UNFCCC’s Financial Mechanism is ahead of the Convention, so much so that some observers have called it a case of ‘the tail wagging the dog’. The Financial Mechanism’s two operating entities, the Global Environment Facility (GEF) and the Green Climate Fund (GCF) – which will also serve in the same function for the Paris Agreement – both have dedicated gender policies and separate gender action plans. Efforts to integrate gender in the GEF date back to 2011 when a gender mainstreaming policy was adopted and were tied to the 6th replenishment period (FY15-18), which saw the elaboration of the GEF’s Gender Equality Action Plan. And the GCF as the new kid on the public climate finance block even started out with a mandate to integrate gender prominently anchored in its governing instrument, making clear from the beginning and before the first money was disbursed that gender considerations would affect all GCF funding decisions, irrespective of whether they support mitigation or adaptation. This made the GCF the first climate fund in the global finance architecture to integrate a gender dimension from the outset by anchoring gender mandates in key operational policies governing accreditation of implementation partners, the investment criteria determining which proposals would come up for Board consideration, or their performance measurement. This happened before the GCF’s own gender policy and action plan – currently under review – were approved in March 2015 and before the GCF Board considered the first funding proposals in October 2015, just weeks before Paris. The Kyoto Protocol Adaptation Fund – which is aiming to serve as an operating entity for the Paris Agreement – likewise approved a gender policy and a multi-year gender action in 2016 and now prominently highlights support of gender equality as part of its new medium term strategy (2018-2022).

Outside of the UNFCCC, the Climate Investment Funds (CIFs) have worked over the years to improve the CIF’s operations in terms of gender-responsiveness and increase their accountability for gender outcomes, since a first CIF gender review in 2013 found significant shortcomings in their consideration of gender, especially in the mitigation-focused Clean Technology Fund (CTF). A new CIF gender policy and an action plan in its second phase may remedy this.

All this is not to say that there would not be room for significant improvement in gender integration in existing climate funds: A 2017 GEF gender mainstreaming evaluation shows that the majority of its climate change project and program proposals remain gender-blind or largely gender-unaware. And in the GCF, where a mandatory gender and social impact assessment is required for every proposal and should be ideally accompanied by a project-specific gender action plan, not all project proponents submit analysis and plans that reflect a thorough think-through or provide a budget integrating sufficient financial and human resources for a gender-responsive implementation. The GCF Board in approving a rewrite of the gender policy and action plan should follow the example of the Adaptation Fund Board which has shown a willingness to send funding proposals back to its implementation partners if gender is not adequately considered. Making such meaningful gender integration a condition of project approval in the GCF – and other climate funds – will ultimately not only change the way funding decisions are made and implemented, but will fundamentally alter the focus of its funding operations. This is a surefire way to ensure that climate financing is guided by a normative set of principles in a way that is fair and equitable and puts the equal rights of men and women as empowered climate actors and beneficiary at its center.

Climate Funds Update highlights: May 2017

The biggest news in the last few weeks has been the US’s withdrawal from the Paris Agreement. One impact of this withdrawal is uncertainty over the delivery of the remaining $2 billion from the US’s $3 billion pledge to the Green Climate Fund (GCF).  In response, however, many US state governors, mayors, university presidents, and businesses have reaffirmed their commitment to climate action. Some are in talks to become official parties to the Paris Agreement and submit climate pledges under the Non-State Actor Zone for Climate Action (NAZCA) mechanism for sub-national entities, in a bid to match and continue the commitments that the US government does not fulfil. The outcome of these talks could be a game changer for increasing climate support across the US and mobilising greater private sector involvement.

The Bonn climate talks in May also reaffirmed the need for both public and private sector involvement in achieving global target. Key discussions took place in Bonn around the ‘rulebook’ for the implementation of the Paris Agreement, which must be finalised at COP24 in 2018, the Facilitative Dialogue and Global Stock Take processes for monitoring and reporting of climate action, and contention over the Adaptation Fund (AF).

In the wake of these and other key developments in climate action, there have been some interesting movements in climate financing. We have undertaken our May 2017 round of updates to the Climate Funds Update database, which monitors the donations to, and disbursements of financing by the key climate funds. This data can be found on the Climate Funds Update website. In this blog, we’ll summarise the main changes since the last update in November 2016.

The biggest pledges and deposits since November 2016=> money coming from donors to the funds

Only modest additional pledges have been made to climate funds since November 2016. From the funds reported in CFU, the largest increases in pledged amounts have been to the Adaptation Fund (of approximately $70 million) and the Pilot Program for Climate Resilience (PPCR) (of approximately $35 million).

The Adaptation Fund received new contributions of $2.9 million from the Brussels Capital Region, $6.7 million from Flanders (Belgium) and $58.9 million from Germany (bringing their total contributions to the AF to $4.9 million, $7.8 million and $223.9 million, respectively). The PPCR received an increased funding pledge from the United Kingdom of $37 million (bringing the UK’s total contribution to the PPCR to $525.9 million).

Also of note, the Green Climate Fund (GCF) has received a number of small pledges since November 2016: $0.5 million from Cyprus, $4.8 million from Flanders and $10.9 million from Wallonia, two regional governments in Belgium, and $1.3 million from the city of Paris, the first municipal government to make a pledge to the GCF.

Leading project approvals since November 2016=> money going out of the funds

The Green Climate Fund (GCF) has approved the largest amount of new project funding since our last update in November 2016, committing $1,046 across 16 projects. Six of these projects target climate adaptation and six target mitigation, while four cut across both objectives. The largest new project is providing $250 million in equity and $15 million in grant funding towards ‘GEEREF NeXt’, the new phase of the Global Energy Efficiency and Renewable Energy Fund. The GEEREF is a fund of funds that seeks to act as an anchor investor for renewable energy and energy efficiency projects in developing countries, drawing in private investors by allowing them to diversify their risk across multiple projects and technologies. Three further new GCF projects each have over $100 million in approved financing each: the ‘Simiyu Climate Resilient Development Programme’ in Tanzania, ‘Catalyzing Private Investment in Sustainable Energy’ in Argentina, and the ‘Renewable Energy Financing Framework ‘project in Egypt. In the latter two projects, funding primarily consists of concessional loans. The GCF is making use of a greater diversity of financial instruments than has been traditional for climate funds, offering equity and guarantees in addition to grants and concessional loans in an attempt to better address project-specific investment barriers (see infographic 3 on ODI’s 10 things to know about climate finance in 2016).

The Adaptation Fund (AF) has approved $68 million across 35 projects since November 2016. Ten of these projects, averaging $7 million in funding, actively seek to reduce vulnerability and build resilience. The remaining approvals are for $10,000 to $50,000 technical assistance grants under the AF’s Readiness Programme for Climate Finance, which aims to build the capacity of National Implementing Entities (NIEs) to address environmental, social and gender-related risk management (see Adaptation Fund, 2016). The AF has recently approved projects, such as the ‘Integrated approach to physical adaptation and community resilience in Antigua and Barbuda’s northwest McKinnon’s watershed’, which include provisions directed at improving financial and technical access for micro-, small- and medium enterprises (MSMEs). MSMEs are an underserved group with a large potential to undertake adaptation activities; the AF, along with the GCF and a handful of other climate funds are leading the way in increasing the targeting of adaptation activities through this sector.

Since November 2016, funds have approved $389 million for adaptation projects (a 9% cumulative increase), $657 million for mitigation projects (7% increase), $163 million for REDD+ projects (7% increase), and $274 million for multiple foci projects (16% increase) (Fig.1).

Figure 1: Thematic distribution of new project funding since November 2016 (USD millions)

2017 Blog Fig 1

In geographic terms, the Sub-Saharan Africa and the Latin America and the Caribbean regions have attracted the largest amounts of new multilateral climate finance over the last 6 months (Fig. 2).

Figure 2: Geographic distribution of new project funding since November 2016 (USD millions)

2017 Blog Fig 2

Climate Funds Update highlights: November 2016

Alice Caravani and Sejal Patel

The UNFCCC COP21 in Paris left high expectations for COP22 in Marrakesh to deliver a ‘concrete road map’ for mobilizing the $100 billion in climate finance for developing countries by 2020.

The Climate Finance team at ODI has been analysing the latest trends in mobilising public international climate finance through the:

This summary describes the main changes in funding provided by the international climate funds monitored on the CFU website that have happened since last year.

 

The biggest pledges and deposits in 2016: the funding flowing from donors to the funds

Norway, the United Kingdom and Germany are the countries that announced the biggest new commitments (or pledges) in 2016. In particular: Norway to the Amazon Fund ($598 million), the UK to the Scaling Up Renewable Energy Program (SREP) ($679 million) and Germany to a number of funds for a total of $275 million.

However, this year countries have made more efforts in delivering what was promised in Paris at COP 21 by increasing the funding actually deposited into the funds. Notably, $5.67 billion has been deposited into the Green Climate Fund (GCF); $3.25 billion of which by the United States and $1.5 billion each from both the United Kingdom and Japan.

 

Leading project approvals in 2016: the funding going out of the funds

The GCF has approved the largest amount of funding this year, with 19 new projects totalling $1 billion. This value is equal to the combined project approvals of all the Climate Investment Funds. The approved GCF projects cover renewable energy, water management and several projects spanning more than one sector. The Sustainable Energy Financing Facilities project, located in 10 countries over the African, Asia-Pacific, and Eastern European regions is the largest program approved since 2003 and is funded through a grant of $34 million in addition to a concessional loan of $344 million. It aims to deliver climate finance to the private sector at scale through Partner Financial Institutions.

 

Thematic focus

2016 has been particularly mitigation driven, with increases of 50% in mitigation project approvals (excluding REDD+) ($851 million), 31% in multiple foci ($535 million) and 18% in adaptation projects ($315 million). REDD+ projects have only attracted around $16 million (1%). However, some of the multiple foci projects approved by the GCF such as the Sustainable Landscapes in Eastern Madagascar, include forests and land use as a results area.

The largest adaptation project approved this year ($38 million grant) is also a GCF project –Strengthening the Resilience of Smallholder Farmers in the Dry Zone to Climate Variability and Extreme Events through an Integrated Approach to Water Management, based in Sri Lanka.

 

Regional highlights

Sub-Saharan Africa and Asia have attracted the largest amounts of multilateral climate finance approved, respectively $630 million and $506 million, in the last 12 months, out of a total in approvals of $2.8 billion. In Asia, 82% of new approvals have been directed towards mitigation projects. There has been a greater range of projects in Sub-Saharan Africa, with 43% of new approvals towards adaptation projects, 39% towards mitigation projects, and 17% going to multiple foci projects.

Morocco, host of COP 22, is the largest recipient of the MENA region, with 5 new projects, totalling $44 million. $39.8 million of which comes from the GCF for the Development of Argan Orchards in Degraded Environment, largely supported by the Moroccan government through its NAMA. However, Morocco, has been dominating the funding allocated to the region (with 59% of total MENA funding) since 2003. The three largest projects in Morocco are funded by the CTF, including a $238 million concessional loan for the Noor II and III Concentrated Solar Power project, which is a large-scale solar power investment programme.

 

SIDS

In 2016, $146 million was approved for projects in SIDS. 55% of this amount was for projects in the Caribbean SIDS, 32% in the Pacific SIDS, and 13% in the Africa, Indian Ocean, Mediterranean and South China Sea (AIMS) SIDS. Guyana, Samoa and Maldives are the largest SIDS recipients, receiving between $70 and $80 million each.

 

As expected, the most active fund this year has been the GCF. It has substantially increased its project approvals, and is meeting the balanced adaptation and mitigation allocation target.  This is an important positive sign, particularly in light of the relatively lower share of adaptation finance approved by the other climate funds in the last 12 months.

 

 

Climate Funds Update highlights: May 2016

The Paris Agreement necessitates a gear change in progress on the ground

In December 195 nations came together in Paris to secure an historic global climate agreement. The question of who should foot the bill for implementing the agreement was always at the core of the negotiations, and especially so for poorer countries with little historical culpability and urgent development imperatives.

Talks held in Bonn, Germany over the past fortnight were the first official meeting of parties to the UN climate convention since the euphoria of COP 21‘s close in December. Now that agreement has finally been reached the world’s focus must shift from negotiating to getting on with the task at hand.

Paris sent a strong signal with respect to finance with countries announcing US$ 1.5 billion in new pledges to climate funds, and reaffirming their commitment to scale up climate finance from a 2020 floor of $100 billion per year. Rich countries must deliver on these commitments if they are to maintain the mutual trust needed to foster momentum for the rapid low-carbon and climate resilient transition required.

Climate Fund’s Update has just completed its first refresh of climate fund data since before the Paris conference. This note highlights some of the most notable developments that we have observed.

The climate finance architecture is still in flux

The new Green Climate Fund (GCF) is now the largest climate fund in the world, and bears a significant weight of expectation as the primary channel for delivering public finance to help low-income and emerging economies implement their climate plans.  Donors are increasingly delivering on their financial pledges, with $2.85 billion now paid into the fund (28% of the $10.26 billion pledged in total).

The GCF will be under much scrutiny this year as it seeks to demonstrate the ability to program transformative and effective projects at scale. The fund approved a first $160 million for eight projects back in September, and has set itself an ambitious target of increasing this figure to $2.5 billion of total approvals by the end of 2016.

Noteworthy increases in pledges for other funds at Paris included $248 million for the Least Developed Countries Fund from eleven donors, $78 million to the Adaptation Fund from countries including Germany, Japan and Monaco, and $339 million to the Forest Carbon Partnership Facility.[1]

The Climate Investment Funds managed by the World Bank and implemented through regional development banks have been making the case for continued funding, despite the original intention of donors that these funds ‘sunset’ once the GCF was up and running. The Pilot Program for Climate Resilience, a component of the CIF, has for instance supported seven new countries to develop investment plans and invited another nine to do the same, despite having no unallocated resources available to put towards potential projects. The CIF argue that their track record and pipeline of further projects justify continued donor support.

Climate funds increase support for solar power and rural energy access

The Clean Technology Fund approved the largest new projects by size over the last six months, with over $570 million in new activities receiving the go ahead. Much of this funding was targeted at scaling up solar power in India, with several projects aiming to develop transmission infrastructure for large solar parks and another $125 million project supporting the National Punjab Bank to provide cheaper-than-market loans for the installation of rooftop solar panels on commercial and public sector  buildings.

Liberia and Vanuatu could not be more different in many respects, but one thing they do share is a very low rate of access to energy. Both countries received approval at the end of 2015 for their first projects under the Scaling-up Renewable Energy Program, which seeks to demonstrate the viability of renewable energy for tackling critical energy access challenges in low-income countries. The $25 million Liberian project seeks to scale-up renewable energy-powered mini-grids in rural communities, while Vanuatu’s $7 million grant will be used to replace dirty diesel generation with hydro-power and to extend the reach of the electricity grid on two of its main islands.

Support grows for diverse adaptation activities in Sub-Saharan Africa

The Least Developed Countries Fund has also been busy recently. Since our last update in October the fund, which provides grants to help the world’s poorest countries adapt to climate change, has approved US$ 69 million for new projects in 11 countries, largely in Sub-Saharan Africa.

These include a $5.2 million grant to strengthen the resilience of ‘Natural Reserve Communities’ in four regions of Senegal. The project will involve reviewing local development plans to incorporate climate adaptation priorities, supporting local governments to establish grant schemes for community adaptation measures, and improving the ability of community-established savings unions to lend for adaptation activities.

Another newly approved project will work with the Environment Protection Agency of Sierra Leone to develop better models for understanding the impacts of coastal climate risks, support the strengthening of related policy and coordination mechanisms, and fund pilot adaptation investments to better protect coastal infrastructure and community assets.

[1] The increased LDCF figure is not yet reported on the Climate Funds Update dataset as the official pledge figures are yet to be published.

Better data can help international forest finance flow

In this blog Marigold Norman of the Overseas Development Institute discusses what improved capacities for producing reliable data on forest cover mean for access to international REDD+ finance.

http://www.odi.org/comment/9879-better-data-can-help-international-forest-finance-flow

International REDD+ architecture

International REDD+ architecture

What counts? Understanding where we stand on climate finance

Smita Nakhooda, Team Lead for Climate Finance at ODI, sheds clarity on the different ways of counting climate finance flows – with some pointers that could help policy-makers get to grips with this contentious issue.

http://cdkn.org/2015/09/feature-what-counts-understanding-where-we-stand-on-climate-finance/?loclang=en_gb

Key variables for assessing what counts as climate finance

Key variables for assessing what counts as climate finance

Getting it together: institutional arrangements for coordination and stakeholder engagement in climate finance

Vyoma Jha, Centre for Policy Research (CPR)

Countries around the world are establishing arrangements to direct public finance and international investment towards climate change mitigation or adaptation. CPR and ODI have been working with researchers in Colombia, India, Indonesia, the United Kingdom and Zambia to understand how these work. While the economic circumstances, and the policy framework for action on climate change are diverse these countries have one thing in common: they all have multiple institutions involved in directing finance into climate-compatible solutions.

In this context, a crucial question for international institutions seeking to support countries to achieve to climate-compatible development is: how do we engage diverse national stakeholders, and foster better coordination among them? This is a key question for National Designated Authorities that are entrusted with facilitating national engagement with the new Green Climate Fund (GCF). The GCF for its part has the potential to take more sophisticated and effective approaches to engaging with national counterparts. Our research suggests that there is no single, perfect institutional arrangement to mobilise and deliver climate finance. Any efforts to strengthen coordination around climate finance must contend with messy domestic landscapes, and diverse actors.

Emergence of arrangements for ‘docking’ or ‘mainstreaming’ climate finance

In most countries (developed and developing alike), climate change has primarily been the purview of Ministries of Environment. Ministries of Finance are increasingly engaged on this agenda as well. Both have a vital role to play. Beyond the arrangements within the government, a vast range of institutions outside of government play an important role in implementing efforts to respond to climate change: the private sector, civil society organizations. In some cases these arrangements have been created to ‘dock’ international or external climate finance in the national system. In others, they aim to ‘mainstream’ climate considerations into core policy and associated investment decisions and financial frameworks. Finding a way to bring these arrangements together is a key challenge for international institutions, including the Green Climate Fund.

Scale of available finance: an incentive for better coordination

Changes in structure do not necessarily change behaviour: it is the incentives for coordination that matter. The scale of available finance around which an arrangement is structured can be a significant factor in determining whether it supports “mainstreaming” or “docking”. For example, in many cases inter-agency bodies have been created to make decisions around programming relatively small volumes of finance from the Global Environment Facility; but their traction and influence with mainstream investment actors (such as Ministries of Finance, development banks, and the private sector) has been modest. On the other hand, while Ministries of Finance have engaged around the more substantial sums of finance available through the World Bank’s Climate Investment Funds, coordination with other ministries, civil society and other stakeholders has not been a given: it has taken dedicated time, resources, and support.

A new template for broad-based action

Operational coordination may be complex even when driven or mandated at the highest level of government. Therefore, how coordination is led, matters as much as who leads it. Working arrangements that create space for ministries with responsibility for economic and financial decision-making to partner with Ministries with requisite expertise and mandate to address climate change and environmental issues are needed. These institutional arrangements on climate finance must also create opportunities for diverse stakeholders to input into climate change and finance-related decision making.

Strengthening domestic engagement with international finance

Access to international finance may be structured to help empower lead agencies to convene key domestic actors. But taking such action takes time, resources, and dedicated capacity. A sound understanding of the domestic institutional landscape is imperative to avoid further marginalisation of the climate financing processes from domestic climate policy processes and mainstream investment in relevant sectors. Flexibility is essential. Improved coordination may benefit from:

  • The availability of adequate funding (whether from domestic or international sources) that creates sufficient incentives for key actors to come together and engage over a reasonable time period
  • Proactive leadership of the anchor ministry in efforts to bring ministries of environment, finance, local government and national financial institutions together
  • A robust analysis of stakeholders in the national climate response, their interests and the strengths and weaknesses of existing working arrangements, taking account of relative mandates and resourcing

Accountability to both domestic and international stakeholders for active engagement with the range of relevant stakeholders.

The synthesis paper: ‘Getting it together: institutional arrangements for coordination and stakeholder engagement in climate finance’ can be found here.

Increasing the transparency of climate-related development finance flows: publishing detail on over 7,000 projects in 2013

Stephanie Ockenden, OECD Development Cooperation Directorate

Climate change and development are intrinsically linked, and external development finance flows have a critical role to play in supporting this transition.  Achieving an efficient and effective allocation of this finance will be critical to support our climate change goals and to ensure the most vulnerable are reached.

Improved statistics on climate-related development finance can support this, through providing information to facilitate greater co-ordination and allocation of finance.  Better data also has a significant role to play given the current “climate politics”.  Climate finance will be one of the critical elements contributing to a new global agreement to tackle climate change.  Whilst climate-related development finance flows are much broader than the UNFCCC USD 100 billion goal, many parties draw in part on these data to meet their commitments.  Robust statistics promote consistency, comparability and transparency, and this in turn will support parties in their monitoring and reporting to the convention to deliver greater accountability and help build trust.

Taking one giant step towards more robust statistics, the OECD Development Assistance Committee (DAC), in collaboration with the MDBs and other international organisations, presents for the first time an integrated picture of bilateral and multilateral external development finance flows targeting climate change objectives in 2013.

In doing so, a significant boost to transparency is achieved by making available on-line a wealth of data, including information on over 7,000 development finance activities, contributing to over USD 37 billion of climate-related development finance in 2013.

Going forward the OECD DAC is working in collaboration with other partners to further improve the quality, coverage, communication and use of these environmental development data.

We invite you to access detailed project-level information and interact with our new 2013 climate-related development finance statistics!

Visit http://oe.cd/RioMarkers for more information

The coordination of climate finance in India

Vyoma Jha, Centre for Policy Research

The Indian government recently announced the enhancement of solar energy targets under the National Solar Mission to 100 GW by 2019 as compared to the initial aim of 22 GW by 2022, targeting nearly US$100 billion in renewable energy investments over the next five years. It also established a National Adaptation Fund with an initial funding of Rs.100 crore (approximately US$16 million) as budgetary support towards climate change. While this flurry of activity indicates a commitment on part of the government towards low-carbon and climate resilient development, it also establishes a strong case for identifying the existing and future sources of climate finance to support such activities.

Increasing role of ‘climate’ in mainstream policy and investment decisions

Well-defined policies in the solar energy and energy efficiency markets, triggered by national climate policy, have spurred climate related finance through a variety of domestic and international, both public and private, sources. Most significantly, there has been an emergence of major public and private sector banks and development finance institutions in supporting climate mitigation or adaptation related efforts, lending itself to a ‘mainstreaming’ of the climate agenda within national financial actors. However, there still remains a need to engage these diverse sub-national and financial actors in national agenda setting around accessing international funds.

With no formal coordinating mechanism around climate finance in India, multiple processes for financing thrive within the country that can be broadly categorized into two distinct arrangements – one, mobilizing funding labelled climate finance, and two, mainstreaming public finance that has climate benefits. Our latest study on ‘The coordination of climate finance in India’ suggests the national climate finance landscape is highly fragmented with a wealth of stakeholders at the national and sub-national level, in both the public and private sectors playing important roles. The government needs to recognise these roles and engage these stakeholders, in order to develop a clearer sense of opportunities and priorities using both domestic and international finance.

Making good use of international ‘climate finance’

Key findings from India’s past experiences accessing international climate funds suggest that while Ministry of Environment and Forests (MoEF) is the obvious choice for making decisions on climate-related activities requiring funding, the Ministry of Finance (MoF) is better suited at negotiating large sums of international funding as it is the nodal department for receiving financial assistance from multilateral and bilateral funds. In the context of the Green Climate Fund (GCF), where India continues to play an important role in its operationalization, it is imperative that the two ministries work closely if finance accessed through the GCF is to make its way into domestic efforts on climate in a meaningful way.

One idea that has attracted a lot of interest is the creation of a new National Climate Fund, which could channel international funding. However, India already has a lot of climate funds – for instance, the coal cess-driven National Clean Energy Fund that has done little to scale up investment in clean energy though it is now getting to work; the National Adaptation Fund created during the last national budget – and Indian stakeholders will need to develop a strategy for how best to make use of the available funds to channel new and additional funding through international funds.

Ways forward on coordination around climate finance in India

A concerted strategy needs to emerge around how India could effectively link existing channels of national and international climate finance. One useful immediate step could be for the Climate Change Finance Unit and MoEF to initiate a process of engagement and interaction with other line ministries, state government, banks and businesses to consider options for maximising strategies and optimising the use of international finance from the GCF. This could help the National Designated Authority of the GCF to develop and maintain a steady roster of projects or programmes that would require new or supplemental funding.

The central objective of any national coordination mechanisms around climate finance should be to encourage the incubation of fundable ideas from relevant actors, particularly beyond the core governmental set up, about how to take meaningful domestic actions on climate change. For India, engagement with the GCF presents an opportunity to take much needed steps to better integrate international funding with emerging national development objectives in the context of a climate response.

Climate Finance Fundamentals 2014

Sam Barnard, ODI

The UNFCCC COP20 kicked off this week in Peru. Day by day more negotiators and observers are arriving at ‘el Pentagonito’, the Peruvian army headquarters in Lima where this year’s conference is being held, in the hope of making progress towards the global climate agreement billed to be signed in Paris in November of next year.

Finance is high on the agenda. Developed country governments have agreed to provide resources to support the efforts of developing countries to adopt low-carbon development trajectories and build resilience to climate impacts that are already starting to incur real economic and social costs.

Against this backdrop, ODI and the Heinrich Böll Foundation have released the 2014 edition of the Climate Finance Fundamentals: a series of concise briefs detailing the essentials on the key issues under discussion around climate finance. These include the progress being made towards getting the new Green Climate Fund up and running, trends in finance for mitigation, adaptation and REDD+, as well as regional briefs on how climate finance is flowing to assist countries in different parts of the world to tackle the specific challenges they face. We provide an overview of the architecture for climate finance delivery that has evolved over the past ten years, as well as the crucial need to incorporate gender considerations into climate fund interventions.

So what are the headline stories?

The Green Climate Fund has made big steps this year to becoming fully operational. The official pledging meeting in Berlin last month brought pledges up to $9.3 billion. Additional pledges have also been announced this week, making the GCF the largest multilateral fund in the world. It will now have to demonstrate its ability to use this money effectively by financing a portfolio of impactful projects.

The amounts of finance approved by climate funds for both mitigation and adaptation projects have risen substantially, indicating that the project development cycles of existing funds, and particularly the Climate Investment Funds under the World Bank, are starting to pick up steam. Dedicated adaptation funds and mitigation funds have now approved over $3 billion and $6.6 billion, respectively. Similarly, approvals by funds focusing on Reducing Emissions from Deforestation and forest Degradation (REDD+) grew by 65% in the last 12 months to nearly $1.1 billion.

Regional highlights

The largest sums of finance have been approved for projects in Asia and Pacific and Latin America and the Caribbean. In both of these regions this funding is heavily skewed towards supporting mitigation, primarily through renewable energy and energy efficiency projects. Nevertheless, funding for adaptation is growing steadily. Sub-Saharan Africa is the only region for which spending by climate funds on adaptation ($1.03 billion) exceeds that on mitigation ($834 million). In contrast to spending on mitigation, this adaptation finance is highly disperse, with the majority flowing through the Least Developed Countries Fund to support 126 projects in the region.

Globally, some particularly vulnerable countries such as Nepal, have received significant resources from dedicated climate funds to increase their resilience, but it will be crucial to ensure that the most vulnerable countries, including the small island developing states (SIDS) are not left behind.

The biggest single approval in the last year was the $238 million concessional loan from the Clean Technology Fund for the Noor II and III Concentrated Solar Power project in Morocco, which is the latest project to be approved under a concerted large-scale solar power investment programme in the Middle East and North Africa.

The Climate Finance Fundamentals draw on data compiled at Climate Funds Update, the leading source of information on the money flowing to and from dedicated climate funds. They can be downloaded in English, Spanish and French at www.climatefundsupdate.org.