Scaling up Climate Finance
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Notes of meeting, Washington DC, September 22, 2011
Sponsors: World Resources Institute (WRI), Institute for Policy Studies (IPS), Conservation International (CI), Friends of the Earth/US (FoE), World Bank
Panelists:Andrew Steer (Special Envoy on Climate Change, WB), Rebecca Chacko (Senior Director of Climate Policy, CI), Janet Redman (Co-Director of the Sustainable Energy and Economy Network, IPS), Karen Orenstein (International Policy Analyst, FoE), Clifford Polycarp (Senior Associate, WRI)
CHAIR: Manish Bapna (Interim President, WRI), Representatives from Norway and/or South Africa (Co-Chairs of the Transitional Committee)
This panel discussion will focus on the evolving international climate finance architecture and the need for climate finance to meet the needs of developing countries by catalyzing transformation in their economies. The panel will focus in particular on the design of the Green Climate Fund (GCF) established by Parties to United Nations Framework Convention on Climate Change (UNFCCC) in Cancun last December to support investments in climate change adaptation and mitigation activities in developing countries. A Transitional Committee (TC) has been tasked with leading the design process of the GCF and is expected to prepare its recommendations for the next Conference of the Parties to the UNFCCC in Durban.
The panelists will exchange views on current climate financing needs, overarching principles to guide the Fund’s design, governance and institutional arrangements, operational modalities and relationships with other sources of climate finance, the role of the private sector, as well as civil society engagement and participation. They will also consider how climate finance can catalyze the scale up of investments necessary to urgently address climate change and thus gain greater legitimacy as a mechanism for delivering resources to developing countries.
Andrew Steer
- Was in meeting in Johannesburg, with African agriculture ministers, their message was we are in deep trouble and we need help.
- We are losing the battle right now.
- Tend to think of 100 billion promised in Copenhagen as development finance.
- this is the wrong way to think about it.
- there was trillions in FDI that went to Africa.
- we need to harness this for effective climate finance.
- name of the game is leverage and transformation.
- need to take forward AGF paper on climate finance.
- need to look at innovative sources.
- shame that Kjetyl Lund is nor here.
- green fund not going to get up and running for two years so need alternatives now.
- there is overwhelming demand in dev countries for financial support.
- not much funding available.
- risk lies in period between now and the start of the green fund.
- this is what we need to talk about.
- want to inject a sense of urgency into the debate.
Rebecca Chacko
- need to think about context in which the finance is being discussed. how can we erect the financial flows to deal with this issue.
- looking at mechanisms that already exist and challenges there is a clear need to address these issues.
- everyone is looking at the 100 billion but we are only now beginning to understand the actual costs.
- reality is that we don’t know what’s going on.
- 100 billion is the starting point but not the end point.
- money has been slow to move.
- so far 13 billion dollars has been committed.
- delays in disbursement of fast start funds limits the amount of viable projects.
- challenges we see with fast start finance illustrates challenges we will see in the future
- various funds currently exist.
- lots of multi lateral funds and lots of big lateral funds.
- other mechanisms such as CD and private sector also exist.
- lots of questions on how we should think about alternative finance.
- 100 billion is a new scale in climate finance.
- real challenge ahead of us.
- lots of experience exists.
- lots of pilots in terms of participation and how not to think about participation.
- DCF will need to learn from lessons in the past.
- majority of climate funds are being managed by the world bank.
- concern lies in their management of these funds.
- however world bank is only org that has expertise to manage these funds and is learning from bad practise.
- most financing goes to mitigation.
- how do we get more financing for adaptation.
- other ways to mobilise finance need to be found.
- more funding is going to upper middle income countries than low income countries.
- need consistent application of safeguards.
Clifford Polycarp
- one of the good decisions that came out of Cancun was green fund.
- in doing so created a process for doing so.
- there has been a variety of meetings in this process.
- there will be a report to the co-chairs in Durban.
- key components: where is the money coming from; how will this be organised; what tools will be used; how are projects on the ground going to receive disbursements; how are they going to be accountable
- will the funds come as loans or grants is one element
- how to use money intelligently
- concern about contributing countries and how they will engage
- how the fund is organised becomes key such as thematic windows.
- how do you allocate across countries.
- what type of instruments, consensus around grant but other instruments being used.
- not clear how going to settle.
- results base mechanisms being discussed.
- access and accountability is a key issue for countries.
- how to be accountable is a key issue
- what is link between fund and congress of bodies
- wide range of options and views put forward but not a lot of decisions.
Karen Orenstein
- role of private sector in climate finance.
- two dominant views on private sector.
- most dominant among developed countries is that GCF is for leveraging and crowding in private finance.
- most support of northern countries.
- private sector window for GCF proposed
- dev countries alarmed by proposal and civil society.
- adaptation and mitigation are not profitable.
- need look no further than if record to demonstrate that this would be a disaster.
- excessive focus on leveraging private finance comes at expense of dev effectiveness.
- focus on financial intermediaries meant to deal with OECD bias.
- did not work
- FIs lead to deterioration of safeguards and transparency.
- most FIs based in tax havens.
- strong bias of IFC to large projects in MICs
- two thirds of CDm projects not additional finance.
- few CDm projects actually have anti poverty effects.
- other dominant view on role of private sector is that focus should be at the domestic level.
- this would allow national development strategies to take hold.
- can galvanise action through appropriate regulatory mechanisms.
- private sector profit oriented and not development oriented
Janet Redman
- Eurodad and BWP do a lot of good work :-)
- do we deal with cheap short term solutions or paradigm shift.
- should focus on paradigm shift.
- need to get global fund right.
- always have a sense of urgency.
- governance, climate investment funds real evolution from where we were before. bank should be proud.
- GCF has used that as a model.
- adaptation fund is a better model.
- should be advocating for dev country majority.
- question of the role of the world bank needs to be questioned.
- need to be conscientious about conflicts of interest.
- need to be clear criteria about how interim trustees evaluated at the end of three years.
- secretariat needs to be independent, and sits in a place developing countries feel empowered to control it.
- need a legal personality.
- country ownership, fund needs to be transformation in that it should allow for citizens to own these funds.
- legal obligation here not aid.
- BWP shows that external funds have been to heavy handed in developing internal country policy,
- climate fund needs to deal with participation.
- needs to be a gender component in green climate fund.
- on leveraging private finance:
- important to recognise that while the carbon finance has been better overall, but its still not a place where we are seeing transformation.
- need to be cognizant of experiences in the past and the use of carbon markets to leverage the private sector.
