National Climate Funds: Learning from the long standing experience

of Asia-Pacific countries

Silvia IrawanPresented in Regional Clinic on the Design and Management of National Climate Funds

Bangkok, 6 September 2012

Background

Asia-Pacific Community of Practice on Climate Finance (incl. e-discussion, case study and regional clinic)

e-Discussion on National Climate Funds (NCFs)• Participants: 167 participants (32 countries) with 30 active

contributors

• Structure of discussion: Run for 10 weeks and guided by a set

of questions posted by a moderator

• Tools: email and UN Teamworks - a collaborative webspace

Case study: 7 cases• Bhutan Trust Fund for Environmental Conservation (BTFEC)

• Cambodia Climate Change Alliance (CCCA) Trust Fund

• China Clean Development Mechanism Fund (CCDMF)

• Lao Environmental Protection Fund (EPF)

• Micronesia Conservation Trust (MCT)

• Thailand Energy Conservation (ENCON) Fund

• Tuvalu Trust Fund (TTF)

Why are countries considering NCFs?• Overcoming the capacity problem & a stepping-stone

• Direct reporting and higher fiduciary standards

• Earmarking of government budget

• Reaching those who need the funds most

• Smart investment & leveraging private finance

Why should countries be mindful about NCFs?

Undermining the soundness of:• fiscal policy• fiscal discipline• transparency

Extra-budgetary funds do not achieve their intended policy goals

Stages: establishment and management of NCFs

Decision making process

Designing Management

Time

Feasibility Criteria

Capacity

Purpose:

Strategic Role

Time and cost effectiveness

Political feasibility

Type of Funds

Name of fund Type of Fund

Bhutan Trust Fund for Environmental Conservation Endowment fund

Lao PDR: Environmental Protection Fund) Endowment & sinking funds

China Clean Development Mechanism Fund Revolving fund

Thailand: Energy Conservation Promotion Fund Revolving fund

Cambodia Climate Alliance Fund Sinking fund

Micronesia Conservation Trust Endowment & sinking fund

Tuvalu Trust Fund Endowment & revolving funds

The Design• Capital

• Legal arrangement

• Governing body

• Beneficiaries

Management features:• Innovative programs

• Project cycle: transparency and efficiency

• Working with beneficiaries

• Performance based monitoring

The establishment of NCFs can be considered when:• Earmark government budget and reach those who otherwise

are likely to be excluded when money is channeled through a

formal government system

• Smart investment of finances and leverage resources from

private sector

The establishment of NCFs should be avoided when:• A duplication of a government function

• Only to pool resources from external and domestic sources to

finance climate actions

Required Time and Resources

Multi-Donor Trust Fund

Endowment FundNationalized sinking

fund

Revolving fund

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