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INTERNATIONAL CLIMATE FINANCE
TAKING STOCK OF BILATERAL, PRIVATE, & HYBRID
FINANCING INITIATIVES FINANCING INITIATIVES
Acropolis BeFind – Financing for Development
KLIMOS WORKSHOP Brussels, April 28, 2013
Emilie Bécault
Axel Marx
Context
Overall Purpose
A MAPPING EXERCISE/ OR INVENTORY
“non-multilateral” financing initiatives involved in providing and/or
promoting climate finance to developing countries
BILATERAL FINANCING
INITIATIVES
PRIVATE FINANCING
INITIATIVES
HYBRID FINANCING
INITIATIVES
Structure of the report
1. INTRODUCTION
2. INTERNATIONAL CLIMATE FINANCE: A CONCEPTUAL TOOL BOX
3. BILATERAL FINANCING INITIATIVES
3.1 Introduction
3.2 Bilateral financing institutions (BFIs): definition and typology
3.2.1 Bilateral development cooperation agencies
3.2.2 Bilateral development banks (BDBs)
3.2.3 Bilateral environmental/climate funds
3.3. Climate financing from BFIs: estimates, distribution, and instruments 3.3. Climate financing from BFIs: estimates, distribution, and instruments
3.3.1 Bilateral climate-related development assistance
3.3.2 Bilateral development banks
4. PRIVATE FINANCING INITIATIVES
4.1 Introduction
4.2 Institutional investors
4.3 Private sector carbon funds
4.4 Philanthropic initiatives
5. HYBRID (PUBLIC-PRIVATE) FINANCING INITIATIVES
5.1 Introduction
5.2 Mobilising private finance: key instruments
5.3 Multi-stakeholder (financing) partnerships
5.4 Hybrid Carbon funds
6. CONCLUDING REMARKS
Conceptual Tool Box
KEY CONCEPTS OF CLIMATE FINANCE
SOURCES FLOWS INITIATIVES INSTRUMENTS PRINCIPLES
Primary origins of
the funds (e.g.
private, public,
hybrid, int’al
domestic, regional)
The volume of
funds that are
committed and/or
disbursed by a
financing
institutions/
Organizational
entity or institution
(formal or
informal) set up to
channel or mobilise
funds for specific
Instruments,
mechanisms used
by financing
initiatives or actors
to disburse funds
The norms
/principles that
guide the choice
and design of
financing
instruments and institutions/
initiatives or actors.
funds for specific
international
cooperation
purposes.
instruments and
initiatives. They
help justify the
burden-sharing
among actors.
CF: Public money,
private money,
donations from
individuals and
philanthropies
CF: global total climate
financial flows;
public/private flows
from developed to
developing countries;
flows from ODA/OOF;
flows from multilateral
funds; flows from
UNFCCC funds.
CF: Bilateral financing
institutions (BFIs);
multilateral financing
institutions; Climate
specific funds (e.g.
global donor funds set
up by UN agencies or
the EU; Regional and
national recipient
funds;) private
funds/initiatives, PPPs.
CF: e.g. grants,
concessional loans,
guarantees, equity,
debt swap, bonds etc..
They can be combined
depending on the
institution; they have
their own advantages
and disadvantages.
CF: e.g. polluter pays
principle; ability to pay
principle; additionallity
principle; user pays
principle; equality
principle;
precautionary
principle; common but
differentiated
responsibilities
principle etc…
Bilateral Financing Initiatives
BILATERAL FINANCING INITIATIVES
Bilateral cooperation
agencies (i.e. bilateral
donors)
Bilateral development
banks (BDBs)
Bilateral climate-specific
funds
� Primary channel of public
climate finance to developing
countries (esp. in terms of
� Ex: Agence Française de
Développement (AFD); the
Japan International
� Key funds:
• UK Int’al Climate Fund (ICF);
• Germany Int’al Climate countries (esp. in terms of
adaptation)
� Recent estimates: ODA: USD
21.9 bn (17% of total ODA)
(43% primary objective)
OOF : USD 682 m for 2013
� Regional distribution: mainly
to Asia
� Challenges:
• Limitations of the OECD DAC
monitoring system and the Rio
markers.
• Challenges of reconciling
development and climate
objectives
Japan International
Cooperation Agency (JICA); The
German Development Bank
(KfW)
� Similar activities than BCAs but
different mandates and use of
private sources of fund.
� Recent estimates: 2012
climate related finance to
developing countries: USD 14
bn
� Principally concessional loans
and for mitigation activities in
Asia.
� Challenges: difficult to track;
only a few studies exist.
• Germany Int’al Climate
Initiative (ICI);
• Norwegian Int’al Climate and
Forest Initiative (NICFI);
• Japan: Fast Start Finance
� Main purpose: demonstrate
willingness and ability to
finance global actions on
climate change
� Support programmes by dev.
agencies and IOs
� Flows are included in the
OECD DAC reporting system to
avoid double counting
Private Financing Initiatives
� Private finance: main source of global climate finance
� Estimates for 2013: USD 193bn (58% of total global climate financial flows)
� Substantial challenges of tracking private climate finance
• Lack of common definition
• Complexity and diversity of flows• Complexity and diversity of flows
• Confidentiality concerns of corporate actors/lack of transparency
• No established systems for monitoring, reporting and verifying (MRV)
� What is generally included? : FDI ; Portfolio investments; Mobilized private investments; Carbon market payments; Voluntary climate funds; Private donations ; Corporate initiatives ; Payments for low-carbon products.
Corporate Initiatives of Institutional Investors
� A potentially important source of climate finance
INSTITUTIONAL
INVESTORS
TYPES OF INVESTMENT
ASSETS
INVESTMENT CHANNELS
Pension funds
- Defined benefit
- Defined contribution
Corporate equity
Corporate debt (Bonds)
Project equity
Direct investment
- In corporate securities
- In projects - Defined contribution
Other pension assets
- Pension reserve funds
- IRAs, insurance contracts, etc.
Insurance companies
- Life, reinsurance
- Property and casualty
Sovereign wealth funds
Foundations & endowments
Investment managers
Project equity
- Levered
- Unlevered (whole asset)
Project Debt
- In projects
Through intermediaries
- Investment managers
- Private equity funds
- Infrastructure funds
- Other pooled investments
vehicles
Institutional Investors Initiatives on Climate Change
� Regional / Global groups of institutional investors with specific focus on climate-related investments.
• Objectives/activities:
– catalyse /mobilise greater investments in low-carbon/climate resilient projects
– knowledge building/sharing with other actors (esp. governments)
– seek to promote greater leadership on climate finance– seek to promote greater leadership on climate finance
• Main groups:
� (EU) Institutional Investors Group on Climate Change (IIGCG)
� (North America) Investor Network on Climate Risk (INCR)
� (Australia) Investor Group on Climate Change (IGCC)
� (Global) P80 Group (pension funds)
� (Asia) The Asian Investor Group on Climate Change (AIGCG)
� (Global) Climate Wise (group of insurance companies)
Hybrid Financing Initiatives
� Global public-private partnerships: voluntary cooperative arrangements
between various actors from both the public sector (states, IOs, cities,
regions) and private sector (for profit and non-profit).
� Three types of partnerships :
1) Knowledge partnerships 1) Knowledge partnerships
2) Standard-setting partnerships
3) Implementation/Capacity building/Service delivery partnerships
� Key question: are some global PPPs involved in climate finance and how?
Public-private (financing) partnerships (?)
� Only a few global PPPs focus on financing (esp. renewable energy)
• The Renewable Energy and Energy Efficiency Partnership (REEP)
• The Renewable Energy Policy Network for the 21st century (REN21)
• The Capital Market Climate Initiative (UK Government)
• BNDES Amazon Fund
• The Climate Group
• The Global Energy Transfer Feed-in Tariffs Programme
• The Forest Carbon Partnership Facility (FCPF)
• Finance for Resilience Initiative
• The Global Climate Partnership Fund
Concluding Remarks and Next Step
� This study provided an inventory of different types of initiatives involved
in global climate finance to developing countries.
� Four main issues:
1) Methodological, definitional, and data challenges.
2) Need to scale up private finance for adaptation2) Need to scale up private finance for adaptation
3) Issues of impact and effectiveness
4) Barriers to private investments: new role for the public sector ;
public-private partnerships; and global knowledge networks.
� Next step
– Case studies of specific initiatives: especially PPPs (REEP and REIN 21)
• Impact and role in partner countries of Belgium