KfW : COMPARISON RIO-MARKER & MDB APPROACH - BY MILENA BREISINGER - OECD 16-09-2013 Paris

Bank aus Verantwortung

Tracking Climate Finance:

Comparison Rio-Marker and MDB Approach

Milena Breisinger

Competence Center Environment and Climate

KfW Development Bank

Definitions „Climate Finance“: IPCC WG III - Chapter 16 „Crosscutting Investmend and Finance“ (draft)

Finding: There are no agreed definitions for climate investment and

climate finance.

Chapter definitions:

Climate finance includes all financial flows whose expected effect is to

reduce net greenhouse emissions and/or to enhance resilience to the

impacts of climate variability and the projected climate change.

The incremental investment is the extra capital required for the initial

investment for a mitigation and/or adaptation project vis-à-vis a reference

project.

The incremental cost is the difference of the net present values of a

mitigation and/or adaptation project vis-à-vis a reference project.

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Climate Finance: Trends and Portfolio Implications (September 2013)

Objective: Reduce or limit GHG emissions

Objective: Increasing adaptive capacity and resilience

Projects, programs and policy

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placeholder text.

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MDB - Methodology

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Gear Wheels Alternative Approaches for Tracking Climate Finance

OECD DAC Rio Marker - Methodology

Positive list climate mitigation activities

Criteria for adaptation activities

Specifically for financing activities


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Approach to Assess KfW Portfolio Data for Individual Climate

Components (in Analogy to MDB Approach)

1. Tentative manual project by project assessment according to mitigation

components or adaptation criteria

› Some components are seen as essential to enable a project, including:

› Core hardware investment for most KLM2/KLA2 and many KLM1/KLA1

projects included, also auxiliary systems such as water rehabilitation systems

for solar power plants, staff training to operate and monitor plants etc.

› Other components were excluded such as:

› Construction of access roads, combined project old/new transmission lines

where exact components could not be differentiated

2. Check of 0 Rio marked projects according to project briefs

› Identified projects that could fulfill positive list or criteria

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KfW Development Bank: Analysis of Portfolio 2012 Projects marked as Rio Mitigation and Adaptation 1 & 2

5

202

103

0

50

100

150

200

250

300

350

Total amount of projects committed

Marked Rio

Not marked Rio

2.8

3.5

Volume in bn. USD


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Projects Marked as Rio Mitigation or Adaptation 1 or 2 Including Projects Marked as Rio Mitigation or Adaptation 0

6

Am

ou

nt

in U

SD

0

500

1000

1500

2000

2500

3000

3500

MDB OECD DAC

Additional

KLA1/1

KLA1

KLA2

KLM1/1

KLM1

KLM2

KLM2/KLA2 counted as 100%

KLA1 or KLM1 as 50%

relevant components

counted 100%

0.7

0.6

0.5

1.9

1.7


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Results

Results for both approaches differ by 10% for KfW portfolio in 2012

› Both approaches address climate finance rather than incremental

investments or incremental costs

› The practical implementation of both methodologies relies on similar tools

(pos/neg-lists)

› MDB methods more resource intensive and inconsistent with established

reporting system under OECD/DAC, uncertain accuracy gains

IDFC group uses for 2012 Mapping OECD DAC Definition and a positive list for

mitigation plus criteria for adaptation as explanation / guidance

Follow up analysis will shed more light on pros/cons and potential fields of

convergence of underlying tools

Harmonised OECD-DAC positive lists and guidance on criteria desirable

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Thank you!

Any questions?

Contact:

Milena Breisinger

Competence Center Environment & Climate

KfW

Palmengartenstrasse 5–9

60325 Frankfurt am Main

Germany

Tel.: +49 69 7431 - 1092

Fax: +49 69 7431 - 3796

[email protected]

mailto:[email protected]

KfW : COMPARISON RIO-MARKER & MDB APPROACH - BY MILENA BREISINGER - OECD 16-09-2013 Paris

Economy & Finance

Transcript of KfW : COMPARISON RIO-MARKER & MDB APPROACH - BY MILENA BREISINGER - OECD 16-09-2013 Paris