Zhihong ZhangSenior Program Officer

June 10, 2011

Additional investment needs in developing countries, by 2030

Mitigation $139—175 billion

Adaptation$75—100 billion

Financing Needs to Deal with Climate Change

… to catalyze sustainable investments

..enhance capacity & policy

… leverage other sources of finance

Climate finance covers additional costs and serves to..

“Baseline”

Private &

Public

Investment

Source: World Bank, 20102

Financial Flows for Climate Actionin Developing Countries

Source: Atteridge et al. (2009). Bilateral Finance Institutions and Climate Change: A Mapping of Climate Portfolios, Stockholm Environment Institute. 3

A growing menu of climate finance instruments

Adaptation

Adaptation Fund

Special Climate Change Fund

Global Facility for Disaster Reduction &

Recovery

Least Developed Country Fund

Mitigation

Clean Technology Fund Carbon Funds

Carbon Partnership Facility

Forest Carbon Partnership Facility

Global Environment Facility Trust Fund

Pilot Program for Climate Resilience

Global Environment Facility Trust Fund

Risk Instruments

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Forest Investment Program

Scaling Up RE Program for Low Income Countries

Climate Investment Funds

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Clean Technology Fund (CTF): Finances demonstration, deployment, and transfer of low carbon technologiesTotal commitment: $4.3 billion

Strategic Climate Fund (SCF): Targeted programs to pilot new approaches and scale-up: Total commitment: $1.9 billion

Approved in July 2008 as an interim instrument, CIF have balanced governance with equal representation from developed and developing countries

Structure

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Clean Technology Fund

Finance scaled-up demonstration, deployment and transfer of

low carbon technologies

Strategic Climate FundTargeted programs with dedicated funding

to pilot new approaches with potential for scaling up

Pilot Program for Climate Resilience

Mainstream climate resilience into core

development planning

Forest Investment Program

Reduce emissions from deforestation

and forest degradation

Scaling Up Renewable Energy

in Low Income Countries

Initiate transformational change by use of renewable energy

$1.9 billion

Investment Plans

$4.3 billion

• Support country and regional development strategies

• Leverage financial products of Multilateral Development Banks

• Stimulate private sector engagement

Design and Operating Principles

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• Partnership among Multilateral Development Banks (AfDB, ADB, EBRD, IDB, and WBG) to support mitigation and adaptation in a coherent and integrated way

• Multi-stakeholder with balanced governance

• Demonstrate scale and transformation

• Leverage public and private sector

• Complementarity with other partners at the country level

• Sunset clause

Pledges to date US$ million eq.

Australia 137

Canada 96

Denmark 24

France 274

Germany 741

Japan 1,190

Netherlands 73

Norway 177

Spain 108

Sweden 83

Switzerland 20

United Kingdom 1,212

United States 2,000

Total $6.1 billion

Clean Technology Fund (CTF)

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• Influence countries’ low carbon development strategies;

• Promote market transformation through policy reforms, economies of scale, enhanced competition and private sector participation, and eventually savings in unit abatement costs; and/or,

• Realize broader employment, business/industrial growth, environmental and social co-benefits that contribute to sustainable development.

Purpose ―To finance programs and projects for

demonstration, deployment and transfer of low carbon technologies with significant potential for GHG emissions savings 　

Scale ―$4.3 billion in concessional financing to help

countries buy down costs of public and private sector investments in low carbon development

Governance ― Trust Fund Committee: Australia, Brazil, China, Egypt, France, Germany, India, Japan, Morocco, Nigeria, South Africa, Spain, Sweden, Turkey, UK, and US

Observers: 4 civil society and 2 private sector, GEF, UNDP, UNEP, and UNFCCC

Measuring Success

Clean Technology Fund (CTF)

Module 19

Accessing the CTF •ODA eligible with active MDB country program

•Investment plan embedded in national development plan

Investment Criteria•Potential for GHG Emissions Savings

•Cost-effectiveness

•Demonstration Potential at Scale

•Development Impact

•Implementation Potential

•Additional Costs and Risk Premium

Endorsed Investment Plans under implementation

Colombia, Egypt, Indonesia, Kazakhstan, Mexico, Morocco, Philippines, South Africa, Thailand, Turkey, Ukraine, Vietnam, Regional (Algeria, Egypt, Jordan, Morocco, Tunisia)

Other Investment Plans

Nigeria, Chile, India

CTF Investment

PlansCTF Investment Plans Endorsed as of March 31, 2010Country CTF

(US$ million)

Private Sector Co-Financing (US$ million)

Other Co-Financing* (US$ million)

Est.Total (US$ million)

Leverage Ratio

(CTF to other sources of financing)

Leverage Ratio(CTF funding/Private Sector)

Colombia 150 1,060 1,596 2,806 1:18 1:7Egypt 300 636 985 1,921 1:5 1:2Indonesia 400 1,100 1,610 3,110 1:7 1:3Kazakhstan 200 535 534 1,269 1:5 1:3MENA CSP 750 1,290 3,564 5,604 1:7 1:2Mexico 500 2,318 3,379 6,197 1:11 1:5Morocco 150 800 1,000 1,950 1:12 1:5Philippines 250 1,100 1,430 2,780 1:10 1:4South Africa 500 540 1,310 2,350 1:4 1:1Thailand 300 1,380 2,583 4,263 1:13 1:5Turkey 250 170 1,680 2,100 1:7 1:1Ukraine 350 230 2,025 2,605 1:6 1:1Viet Nam 250 1,010 2,185 3,445 1:13 1:4

TOTAL 4,350 12, 169 23,850 40,369 Avg. 1:8 Avg. 1:3*Other sources of financing include MDBs, bilaterals, governments, other agencies such as the GEF and CCIG

Strategic Climate Fund (SCF)

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Measuring SuccessSuccess is measured specific to targeted SCF programs

Purpose ―To provide experience and lessons through scaled-up, learning-by-doing programs in sectoral areas or by piloting new approaches to low carbon development and climate change

Scale ―$1.9 billion+ through a range of financing: grants, loans, credits, guarantees, and other support

Governance ―Trust Fund Committee: Australia/UK, Bolivia, Canada, Denmark/Switzerland, Kyrgyz Republic, Germany, Guyana, Indonesia, Japan, Maldives, Netherlands, Norway, Senegal, Tunisia, USA, Yemen + observers (4 civil society, 2 Indigenous Peoples, 2 private sector), GEF, UNDP, UNEP and UNFCCC

SCF: Pilot Program for Climate Resilience

(PPCR)

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Measuring Success • Increased capacity to integrate climate

resilience into development• Increased awareness of vulnerabilities

and potential impacts• Scaled-up investments for broader

interventions and programming• Improved coordination among

stakeholders

Purpose ― To help highly vulnerable countries pilot

and demonstrate ways to integrate climate risk and resilience into core development planning while complementing other ongoing activities.

Scale ― $945 million in pledges, mainly grants with

option to augment with IDA-like resources

Governance ― Sub-Committee: Australia/UK,

Bangladesh, Canada, Denmark/Norway, Germany, Jamaica, Japan, Samoa, Tajikistan, USA, Yemen, Zambia, the Adaptation Fund Board + observers (4 civil society, 2 indigenous peoples, 2 private sector, 1 rep. of community dependent on adaptation approaches), GEF, UNDP, UNEP, UNFCCC

Pilot CountriesBangladesh, Bolivia, Cambodia, Mozambique, Nepal, Niger, Tajikistan, Yemen, Zambia -- 2 regional programs in Caribbean (Haiti, Jamaica and OECS countries) and South Pacific (Tonga, Samoa, PNG).

SCF: Forest Investment

Program (FIP)

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Measuring Success• Effective REDD+ programs• Conservation or enhancement of

existing carbon reservoirs • Effectively address drivers of

deforestation and degradation • Effectively address economic benefits

and incentive systems

Purpose ―To support countries’ efforts to reduce emissions

from deforestation and forest degradation (REDD+) by financing efforts to address the drivers of deforestation. REDD+ includes reducing emission from deforestation and forest degradation, conservation, sustainable management of forests and enhancement of carbon stocks.

Scale ― $542 million in initial pledges

Governance ―Sub-Committee: Australia, Brazil, Democratic

Republic of Congo, Denmark, Indonesia, Japan, Morocco, Nepal, Norway, Romania, UK, and US; observers (2 civil society, 2 private sector and 2 indigenous peoples representatives), FCPF, GEF, UNFCCC, UN-REDD

SCF: Scaling Up Renewable Energy

Program in Low Income Countries

(SREP)

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Measuring Success• Remove barriers to renewable energy • Lead to replication of renewable energy

investments• Increase installed renewable energy capacity in

a country’s energy supply

Purpose ―To pilot and demonstrate the economic,

social and environmental viability of low carbon development pathways in the energy sector by creating new economic opportunities and increasing energy access through the use of renewable energy

Scale ―$334 million in pledges for programs of

capacity building and investments in renewable energy

Governance ―Sub-Committee: Armenia, Bangladesh,

Japan, Netherlands, Nicaragua, Norway, Solomon Islands, Switzerland, Tanzania, United Kingdom, United States, Yemen

Observers: 4 civil society, 2 Indigenous Peoples, 2 private sector, Energy for the Poor Initiative, GEF, UNDP, UNEP, UNFCCC

For More Information

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