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.