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.

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.

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 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

The local-global link in adaptation financing

Alice Caravani attended the recent Community Based Adaptation Conference (CBA8) in Kathmandu, Nepal, organised by IIED. In this opinion piece for ODI she reflects on experiences with adaptation financing in Nepal, and steps that can be taken to better align the priorities and decisions of international donors with the needs of those on the ground.

More than meetings: the way forward on climate finance

Smita Nakhooda, ODI

At the COP 19 in Warsaw, Christiana Figueres sent governments back home with a command: “Governments, and especially developed nations, must go back to do their homework so they can put their plans on the table ahead of the Paris conference”. What exactly does it mean? On finance, it means that developed countries must walk the walk and help developing countries respond to climate change.

Hopes were high at the beginning of 2013 for a “Finance COP”: that when parties to the UN Framework Convention on Climate Change met in Warsaw at the end of this year, they would be able to make new progress on this sticky issue.  With the new year almost upon us, what has happened so far and what is the way forward?

A quick look backwards

Developed countries have always had obligations to provide finance to help developing countries respond to climate change, because developing countries have done less to cause climate change and still confront pressing poverty reduction challenges. In 2010 developed countries agreed to mobilise US$100 billion per year in new and additional finance from public and private sources to support developing countries to respond to climate change. As a demonstration of good faith, they would deliver US$30 billion in Fast Start Finance (FSF) between 2010 and 2012, with a focus on scaling up support for adaptation to help vulnerable developing countries, particularly small island developing states and African nations, deal with the impacts of climate change. Developed countries managed to meet – and indeed to even exceed– these commitments.

Last year’s UNFCCC meetings in Doha did not give countries much clarity on the medium term outlook for finance. A year-long technical work programme on long term finance grappled with the difficult underlying issues, such as the need for developing countries to introduce domestic policy processes to mobilise new sources of finance , as well as the policy, regulatory and institutional conditions that need to be addressed to enable greater private investment in the solutions to climate change.  It highlighted the need for a political dialogue on how to respond to finance needs. The Doha Gateway extended this work program, and also agreed to convene a High Level Ministerial Dialogue on Climate Finance. It also confirmed the need to make rapid progress in operationalising the Green Climate Fund.

So what do we have to show for the “Finance COP”?

Several countries did come forward with new pledges of finance at Warsaw. The leadership of European countries on this agenda, despite their significant economic and financial challenges at home, is noteworthy. A number of these countries, particularly Germany, committed US$104 million to the Adaptation Fund of the Kyoto Protocol, allowing it to meet its rather modest 2013 fundraising target of US$100 million. The UK has been a particularly significant actor: it has created a dedicated mechanism to deliver finance through its International Climate Fund, and has recently increased the amount of finance it will make available from £2.9 billion by 2015 to £3.87 billion by 2016. Together with the US and Norway, it committed US$280million for a new World Bank managed program to promote sustainable forest landscapes, in an effort to attract private investment to activities that reduce emissions from unsustainable land use practices. Japan committed US$16 billion in finance for developed countries in the context of announcing that it would not be able to meet its original GHG emission reduction targets. But this finance, similar to the funding it committed during the FSF period, is expected to be largely delivered as concessional and non-concessional loans. Much of it will help support Japanese companies to do business in climate-relevant sectors. However, while one of its objectives could have been to position climate change as a centrally important issue for Ministries of Finance, the Ministerial was dominated by Ministries of Environment.

The negotiated language on long term finance takes a small step forward by setting an implicit “floor” for public climate finance commitments by “Urg[ing] developed country Parties to maintain continuity of mobilization of public climate finance at increasing levels from the fast-start finance period”. It calls for a “substantial share” of public finance to support adaptation activities. And it “recognise[s]” the commitment to mobilise US$100 billion from public and private sources by 2020 “in the context of meaningful action and transparency”.

The outlook for 2014: a lot of homework to be done (and it will have to be done in capitals)

But it does not offer much more than that, despite repeated calls from developing countries on pathways to scaling up, and the proposal of a mid-term target of $70 billion per year. It does, however, “request” developed countries to prepare biennial submissions on how they will increase support, and to provide any available information on pathways. The Standing Committee on Finance will prepare its first biennial assessment of climate finance flows. Such an effort has the potential to offer some needed clarity on what should “count” as climate finance, and to offer a better sense of the current finance for adaptation and mitigation activities, including from the private sector.

In addition, the COP called for a rapid progress in finalising the operationalization of the Green Climate Fund. The fund has the potential to fill important gaps in the current climate finance architecture, supporting institutions in developing countries to incorporate climate change into their investment and development planning processes, and helping them to harness and direct private investment into low carbon and climate resilient options. The “historic opportunity” that the GCF presents was stressed by World Bank President Jim Yong Kim at its launch in Song Do earlier this year.

Finally, parties “decided” to convene a biennial high level Ministerial Dialogue on Climate Finance, informed by the new spree of technical meetings on climate finance that are poised to get underway, starting at COP 20 in Lima. The Climate Summit that the UN Secretary General will be convening in September 2014 may be an important stepping stone in the lead up to COP 20, if governments and actors including business and civil society are able to pledge ambitious action.

But it will take a lot of work, at home in capitals, for next year’s busy calendar of international technical meetings and high level political summits, to yield meaningful results. For Figueres’s wishes to come true, this will require us to convince policy makers and their constituents in developed countries that finance to help developing countries respond to climate change can make a real difference, and can be used effectively to deliver meaningful global benefits.

Climate finance highlights since July 2013

Climate Funds Update data is now current as of October 2013.[1] This brief note highlights new developments including pledges, approvals, and disbursements.

New Climate Finance pledges July 2013 – November 2013:

Pledges and deposits have been fairly static. The US has made the largest new deposits of USD 176 million to the Clean Technology Fund (CTF). The UK has also increased its deposit to the CTF by USD 7 million since June 2013, but no other significant changes have been registered for other countries.

New approvals and disbursements July 2013 – November 2013:

Funds are getting down to work, and USD 1.2 billion was approved for new projects since July,   although only about USD 195 million was disbursed.

ppt chart for post

  • Mitigation funds have been most active, in particular the CTF with USD 835 million of new funding approved, primarily targeting India through three concessional loans financing a large-scale solar park in Rajasthan, a national energy efficiency programme, and hydropower development in Himachal Pradesh
  • The GEF5, under the UNFCCC, also approved a considerable amount of funding (USD 125 million) for 41 new projects in 10 different countries. Mexico received the largest new approval with a USD 17 million grant for the Sustainable Energy Technology Development project.
  • The Pilot Program for Climate Resilience (PPCR) approved additional US$ 200 million for adaptation finance for 8 full size projects and 6 project preparation grants.  The largest project is the US$ 45 million for Strengthening the Resilience to climate change in the Rio Grande Basin and National capacity for Managing Climate change in Bolivia;
  • Finally, about USD 48 million of new REDD+ finance has been approved by the Amazon Fund and the Congo Basin Forest Fund (CBFF).


For an overview of key trends in dedicated climate finance in 2013, please take a look at the ODI HBF report 10 Things to Know About Climate Finance in 2013. CFU users may also be interested in our review of lessons from the Fast Start Finance period for long term climate finance, and our studies of the effectiveness of multilateral climate funds.

[1] Data was confirmed by fund managers in September and October 2013