WRI Publications Feed: International Cooperation on Climate & Energy

Greenhouse Gas Mitigation in the EU: An Overview of the Current Policy Landscape

Sarah Parsons — Thu, 29 Nov 2012 18:33:42 -0500

Executive Summary

In 2009, the European Union (EU) pledged a unilateral greenhouse gas (GHG) reduction target of 20 percent below 1990 levels by 2020, rising to 30 percent if “other developed countries commit themselves to comparable emission reductions” (European Council 2009). The EU’s GHG target forms one pillar of a so-called 20-20-20 package that, in addition to the 20 percent GHG reduction, demands a 20 percent share of renewable energy sources in gross final energy consumption along with a 20 percent improvement in energy efficiency by 2020. In addition to its 2020 targets, the EU has also set a long-term GHG reduction goal of 80 to 95 percent from 1990 levels by 2050.

In the context of these goals, this report provides a summary of existing and emerging EU policies that are likely to reduce GHG emissions across the EU. Our analysis focuses on policies that are mandatory or provide a financial incentive, such as the European Union Emissions Trading System (EU ETS) – a cornerstone of EU climate policy – the Renewable Energy Directive, and the Biofuels Directive. We discuss the relationship of these policies to the EU’s GHG and energy targets, and identify key issues to watch in the EU’s evolving policy landscape.

This report draws on projections from the “Energy Roadmap 2050” to assess whether the EU is on track to reach its GHG, renewable energy and energy efficiency targets. We find that the EU is on track to surpass its 2020 GHG reduction and renewable energy targets based on current policies, but that additional measures will be required to meet the 2020 energy efficiency target and the 2050 GHG reduction goal.

New and emerging policies, including the Energy Efficiency Directive, reforms to the EU ETS, and a proposed Energy Taxation Directive, which aims to restructure taxes on energy products, provide options that can begin to bridge this gap. It will be important to monitor these developments, as well as the EU’s positioning in the international community vis-à-vis the possible strengthening of its 2020 target.

The Japanese Fast-Start Finance Contribution

Sarah Parsons — Wed, 28 Nov 2012 12:42:08 -0500

Executive Summary

Developed country governments have repeatedly committed to provide new and additional finance to help developing countries transition to low-carbon and climate-resilient growth. This assessment considers Japan’s efforts to provide “fast start finance” (FSF) between January 2010 and February 2012 in the context of the pledge by developed countries to mobilize USD 30 billion from 2010 to 2012 under the United Nations Framework Convention on Climate Change (UNFCCC). It is part of a series scrutinizing how developed countries are defining, delivering, and reporting FSF.

Given the size of its economy, Japan has a major role to play in delivering FSF.

Japan’s USD 15 billion FSF commitment is one of the largest amongst developed countries, but it is important to consider the contents of this commitment. Japan has played a significant role in global efforts to finance climate change activities in developing countries, and its FSF commitments accounts for almost half of the FSF that developed countries have pledged for 2010-2012. However, it is essential to better understand the broad range of instruments and activities that the government includes in its FSF, as different governments consider different types of finance to constitute FSF, so self-reported figures are not directly comparable between countries.

Other official flows (OOF) such as export and investment insurance, non-concessional loans, and guarantees make up around 40% of Japan’s total FSF contribution so far, and there is some ambiguity around the role of leveraged private finance. OOF amounts to as much as USD 5.1 billion of the USD 13.2 billion mobilized by 29 February 2012 sincethe announcement of the Hatoyama Initiative in September 2009. This includes USD 3.1 billion of leveraged private finance. While the role of leveraged private finance in the Japanese pledge is ambiguous, as discussed in the section on Methodology, we have included it in the analysis presented in this paper.

Japanese FSF is heavily weighted toward mitigation. About 70 percent of Japanese FSF addresses mitigation objectives. Most mitigation finance, in turn, is financed through loans (both ODA and non-ODA), which constitute about 75 percent of the contribution for infrastructure development projects, such as urban transport projects. There is a more even balance between adaptation and mitigation objectives within the grant portion of the FSF contribution (adaptation: 30 percent, mitigation and REDD+: 27 percent, multiple objectives: 43 percent). A significant share of Japanese FSF addresses one or more non-climate objectives in addition to mitigation or adaptation urban transport projects. Asia receives the most FSF among all regions, irrespective of financial instrument type. It is worth noting that the Japanese FSF includes a number of “clean” fossil fuel power plant construction projects, such as a natural gas combined cycle (NGCC) power plant project in Central Asia. There is a need for greater clarity amongst members of the international community about how support for lower carbon fossil fuel facilities should be treated in the context of climate finance.

On balance, it is not clear that the entirety of the Japanese FSF is “new and additional.” While the FSF contribution reflects some new effort to address climate change, it is unclear that the contribution as a whole can be considered “new and additional.” Since the start of the FSF period, Japan has substantially increased international finance that explicitly targets climate change. Some Japanese agencies have also begun integrating climate change into aspects of development assistance and development finance. Applying five different criteria proposed by experts and practitioners, however, the results indicate that at least a portion of the Japanese FSF spend is not new and additional. A significant share of Japanese FSF reflects pre-existing pledges to development assistance initiatives to scale up climate change related finance such as those articulated in the Japan Cool Earth Partnership of 2008. Furthermore, Japan’s FSF cannot be seen as additional to its existing commitments to scale up development finance to 0.7 percent of its GNI.

FSF reporting follows Japan’s standard processes for reporting on conventional development assistance, whose transparency can be strengthened to meet new needs associated with FSF. There is room for improvement in terms of the transparency, accountability and credibility of Japanese FSF. Some of the identified issues may be attributable to the fact that Japanese FSF contains a large number of projects supported by a variety of channeling institutions. This has made it difficult for the government to present a clear overview of Japanese FSF.

The largest issue is that the information on FSF is disaggregated, although project-level information provided by the implementing agencies is detailed. Most of the climate finance projects could not be easily identified without extensive key word research on the websites of implementing agencies. This study identified about 250 likely FSF projects, amounting to USD 11.7 billion or nearly 90 percent of the amount committed by 29 February 2012. At the same time, about 500 FSF projects – most of which are of relatively low monetary value – could not be independently identified.

The Japanese government has already taken steps to strengthen the transparency of Japanese FSF, such as adding information about channeling institutions to the list of FSF projects included in its second submission to the UNFCCC. However, additional information would facilitate an informed discussion of the adequacy of FSF efforts. The following practices would further strengthen the transparency of Japanese climate finance reporting:

Provide a complete list of the projects that have been supported through the Japan FSF spend. Specify the climate finance projects that constitute aggregated numbers in the official documentation;
Include hyperlinks to the relevant webpages that describe the projects that have been supported through FSF in this proposed project list, as this would substantially enhance stakeholder access to information on the FSF contribution and understanding of its objectives;
Compile all information on its climate finance contributions in one easily accessible format, and support access to supporting information on the individual projects that constitute the FSF spend;
Explain the eligibility criteria for the ODA and OOF flows that have been counted towards the FSF contribution;
Work in cooperation with other contributor countries and multilateral institutions to strengthen and harmonize bilateral and multilateral reporting on climate finance.

Summary of Developed Country ‘Fast-Start’ Climate Finance Pledges

Maggie Barron — Mon, 26 Nov 2012 15:41:50 -0500

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Reiterating a pledge made in Copenhagen in 2009, the Cancun Agreements of December 2010 formally commit developed countries to collectively provide resources “approaching USD 30 billion for the period 2010 - 2012” to support developing countries’ climate efforts. This so-called “fast-start” finance will help developing countries, particularly the poorest and most vulnerable, mitigate (reduce) their greenhouse gas emissions, and adapt and cope with the effects of climate change. These pledges also present an opportunity to build trust between developed and developing countries in the international climate arena, in turn fostering progress towards a comprehensive post-2012 international climate agreement.

WRI has synthesized available information on countries’ pledges and measures they have taken to make the pledged resources available to developing countries. The accompanying table sets out both the amounts and the mechanisms by which funding would be delivered. WRI has also looked at how countries indicate whether their pledges will provide “new and additional” funds compared to what they provide as official development assistance. In-depth analysis on a subset of countries’ fast-start finance contributions is available separately.

This table will be continuously updated as more information becomes available.

Q&A on this Analysis

(Updated on November 26, 2012)

Have developed countries met their fast-start finance pledge?

Based on our research, as of November 26, 2012, 23 developed countries and the European Commission have publicly announced their individual fast-start finance pledges, in addition to the European Union’s collective pledge. These pledges total USD 33.92 billion. While this represents a significant step in the right direction, the extent to which these pledges are consistent with internationally agreed principles for fast-start finance is unclear. The Cancun Agreements mandate that fast-start funds have a “balanced allocation between adaptation and mitigation,” be “new and additional,” be “prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States and Africa,” and include “forestry and investments through international institutions.” Because the details of this mandate have not been defined, it is not clear that developed countries’ fast-start finance contributions fulfill these criteria.

Finally, ensuring that pledges are actually delivered will be essential. According to reported information of the pledged funds, USD 28.06 billion has been requested and/or budgeted by the executive bodies of the countries during the fast-start period. In some cases, the legislative bodies have also approved these requests. The actual delivery and implementation of the finance, however, can be complicated to track, and is generally not documented in countries’ fast-start finance reports.

Do the funds have a “balanced allocation between adaptation and mitigation”?

Countries often specify the general objective that their fast-start funds will support. For example, of the USD 1.58 billion mobilized for fast-start by Germany in 2010 and 2011, 48 percent will support mitigation, 28 percent will support adaptation, 21 percent will support REDD+, and 3 percent will support multipurpose activities. In its 2010 fast-start finance report, Germany highlighted the challenges of identifying suitable adaptation projects as the reason for this, and recognized the need to adjust the allocation of funds across the three areas of mitigation, adaptation and REDD+. In the case of both Japan and the United States, a large majority of fast-start finance supports mitigation objectives. The grant-based portion of their contributions, however, gives more balanced consideration to adaptation. Several countries involved in the Interim REDD+ Partnership — a process created parallel to the UNFCCC to ensure effective and sustainable REDD+ (reduced emissions from deforestation and forest degradation) actions over the next few years — have also specified that at least 20 percent of their funds will support REDD+. However, there is no agreed-upon definition among countries of what constitutes a “balanced allocation.”

Are the pledged funds “new and additional”?

“New” funding represents an increase relative to pledges or allocations from previous years. A number of pledges include restated or renamed commitments already made in the past. For example, Japan’s Hatoyama Initiative is a restructuring of the previously announced Japanese Cool Earth Partnership, with some new resources included in the Initiative. Countries such as the United Kingdom and the United States are counting previous commitments to the Climate Investment Funds (CIFs) as part of their fast-start finance pledge. The United States also counts its annual contribution to the Montreal Protocol Fund, a long-standing commitment that dates back more than two decades.

Funds that are “additional” ensure that their delivery does not result in the diversion of funds from other important development objectives. In other words, climate mitigation and adaptation funds should be additional to development aid. Parties to the UNFCCC have not yet achieved consensus on a clear and specific definition of ‘additionality’ that can be applied uniformly to developed country financial pledges. As a result, countries have proposed a variety of methods for defining the additionality of their fast-start finance.

Do the pledges include “investments through international institutions”?

Countries are channeling investments through a mix of multilateral, bilateral, and public-private institutions. Several countries, including Japan and the United States, are channeling a considerable amount of their funds through export credit agencies and other public-private channels. The Climate Investment Funds(CIFs) and the Global Environment Facility (GEF) are the primary multilateral institutions of choice through which other funds will be channeled. The governance of the funds has implications for the effectiveness and perceived legitimacy of the overall climate finance architecture. Developing countries generally prefer that institutions governing finance ensure developing country ownership of funded activities and prioritize funding for climate vulnerable countries. Developed countries tend to emphasize the need to minimize bureaucratic costs and ensure the effective use of resources.

Why is fast-start finance “prioritized for the most vulnerable developing countries, such as the least developed countries, small island developing States, and Africa”?

Countries under the Convention recognize that developing countries are highly vulnerable to climate change impacts because they have fewer resources to adapt to the effects of climate change, which can include increased droughts and floods, rising sea levels, and greater uncertainty in the agricultural sector. Least developed countries (LDCs) and small island developing States (SIDS) in particular are recognized as needing special consideration due to their extreme vulnerability. For these reasons, developed countries have pledged to prioritize fast start funds for the “most vulnerable countries.” Several countries are channeling their fast start finance through the Least Developed Countries Fund or the Adaptation Fund, many are channeling finance directly to SIDS and LDCs, and Australia in particular states that it will channel about one third of its fast-start finance to SIDS and about one quarter to LDCs.

What types of financial instruments are countries using?

There are several different types of financial instruments countries are using to deliver their fast-start finance, including grants, loans, equity, loan guarantees, insurance, and private investments. Many countries have provided some information on the type of financial instruments used. For example, the US reported providing USD 4.7 billion in grants through Congressional appropriations, USD 2.7 billion in development finance and export credits, which mostly take the form of concessional loans. Norway reports that all of its fast-start finance will be grants. Meanwhile, Japan’s fast-start finance includes grants and loans that meet ODA standards, finance in the form of ‘other official flows’, and may also count leveraged private finance, though this is ambiguous. However, reporting on the type of financial instrument used is neither comprehensive nor consistent. For example, little information is reported on the concessionality of the loans when used.

What are the next steps to ensure clarity on the delivery of climate finance pledges in the future?

The UNFCCC system for developed countries to report on the delivery of climate finance faces several challenges, which limit the utility of available data. For example, countries currently use multiple methods for reporting and often provided insufficient information even where requested. To address this, the Cancun Agreements mandate more frequent reporting by developed countries using an enhanced common reporting format.

While these enhanced reporting provisions will be essential for successful tracking of developed country climate financial flows, they will not be ready in time to provide guidance for reporting on the short-term, fast-start finance. In the meantime, the Cancun Agreements invited developed country Parties to submit information to the UNFCCC secretariat, for compilation, on the resources provided to fulfill their fast-start finance commitment by May 2011, 2012, and 2013. Nine developed countries and the EU submitted their reports on or around the most recent May 2012 deadline. While the Cancun Agreements include reporting provisions for fast-start finance, it does not provide guidance on what these reports should include, resulting in reported information that is neither fully comparable, transparent, nor complete, as is demonstrated by the gaps in information in WRI’s fast-start table, the Open Climate Network’s fast-start finance assessments, and in a report by IIED assessing the transparency of the May 2011 fast-start finance reports. The UNFCCC secretariat hosts a fast-start finance module on its finance portal that enhances the comparability of the reports but it remains limited to information provided by developed country Parties. It also does not capture information available on the faststartfinance.org website or on individual donor or recipient websites, or other sources such as NGOs, the private sector or multilateral development banks.

To build trust with developing country counterparts, developed countries should improve their fast-start finance reporting in the future, for example, by including more comprehensive, comparable and transparent information on the following seven elements in their annual fast-start finance reports: scale, method for determining that the money is “new and additional,” channeling institutions, objective, geographic distribution, status of the pledge, and type of financial instrument.

Athena Ballesteros, Emily Chessin, Kirsten Stasio, and Remi Moncel contributed to earlier versions of this Q&A.

Safeguarding Forests and People: A Framework for Designing a National System to Implement REDD+ Safeguards

Sarah Parsons — Mon, 26 Nov 2012 13:41:12 -0500

Executive Summary

Background

Around the world, members of governments, civil society, and the private sector are grappling with how to design and implement initiatives that reduce greenhouse gas emissions by slowing, halting, and reversing forest loss. These efforts have been spurred at least in part by the agreements onlong-term cooperative action (LCA) that Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have made since 2007 in Bali, Cancun, and Durban. In these agreements, Parties stated that reducing emissions from deforestation and forest degradation, conservation and enhancement of forest carbon stocks, and sustainable management of forests in developing countries should be recognized as mitigation actions. Parties also agreed that these actions should be at least partially supported by Annex 1 countries. This series of actions, and the related global mechanism for recognizing and supporting them, comprise the global initiative known as REDD+.

REDD+ has attracted significant attention from governments, the private sector, and civil society, with particular interest in its potential for increasing the resources available for protecting forest ecosystems and promoting sustainable development.

However, to contribute to the sustainable management of forests, REDD+ actions will need to be implemented effectively, equitably, and sustainably. In a 2010 UNFCCC Conference of the Parties (COP) in Cancun, Parties recognized the importance of good governance to successful implementation of REDD+ actions. The Parties agreed on seven UNFCCC REDD+ safeguards, among them transparency, participation, protection of biodiversity, and protection of the rights of local people. If implemented correctly, the UNFCCC REDD+ safeguards can help ensure that REDD+ does not inadvertently harm communities and ecosystems by exacerbating existing inequalities.

The UNFCCC REDD+ safeguards provide broad guiding principles. It is now up to those designing, funding, and implementing REDD+ initiatives to determine how those principles should be put into practice. One option is to put in place a system at the national level. A national system to implement the UNFCCC REDD+ safeguards brings opportunities to strengthen the rules and institutions that currently govern forested lands. These opportunities, however, come with challenges and will require balancing of different costs and benefits. This report lays out a framework to help REDD+ countries develop a national system to implement the UNFCCC REDD+ safeguards. The framework presented here does not provide a ready-made solution, but it does provide a roadmap for navigating some of the choices that can arise during the design and implementation of national systems. The report also provides examples of how Brazil, Indonesia, and Mexico are progressing along this path.

A Framework for Designing a National System

The framework laid out in this report comprises four components: goals, functions, rules, and institutions. Safeguard goals define what the safeguards are meant to achieve. Safeguard functions are the processes by which those goals are achieved. A complete safeguard system supports each goal by:

anticipating potential risks and opportunities associated with national and/or subnational REDD+ actions, such as REDD+ strategies, activities, and projects;
planning to avoid harm and produce benefits to ecosystems and people by addressing social and environmental considerations in the design of REDD+ actions;
managing REDD+ actions by implementing safeguard plans and procedures that will help ensure desired social and environmental goals;
monitoring REDD+ processes and outcomes to demonstrate the achievement of goals, make course corrections, and deal with unanticipated impacts; and
responding to problems and grievances related to the social and/or environmental effects of REDD+ actions.

Safeguard rules and institutions ensure that safeguards are put into practice. A safeguard system’s rules outline the parameters of the system by defining what should or should not occur. In addition to ensuring that the parameters are designed in a transparent and participatory manner, the system’s institutions also ensure that they are thoroughly followed.

Creating a National REDD+ Safeguard System

If a REDD+ country chooses to develop a national system, the UNFCCC REDD+ safeguards provide an initial set of goals for that system. Governments, in collaboration with stakeholders, can add to these goals to meet national needs. They will then need to define how their established goals should be implemented. This task will necessitate defining the rules and institutions responsible for ensuring that all functions of the system are met, including everything from anticipating risks to responding if something needs to be changed.

Before putting in place new rules and institutions for a national system, a government should, together with stakeholders, (a) assess the degree to which existing rules and institutions already provide for the goals and functions of a REDD+ safeguard system and (b) assess risks to achieving safeguard goals given current gaps. After gaining an understanding of existing rules and institutions, a government and stakeholders can determine how to best fill those gaps. As part of any initial assessment, it may also be beneficial to consider the safeguard policies of potential funders in order to enhance coordination and coherence.

Many options are available to fill any gaps identified—in some cases, assessments may show that reforming existing rules, or empowering and strengthening existing institutions, may be the best solution. Alternately, new rules and institutions may need to be developed. Under that scenario, new national laws or policies could be created, new regulations put in place, or new procedures instituted by government agencies. Rules can be specific to REDD+ or apply more broadly. In terms of institutions, new government agencies or new positions within existing agencies could be created, or new responsibilities could be given to nongovernmental or private actors. Responsibility for implementing several of the functions of the safeguard system can be consolidated with one body, or spread out across multiple institutions.

Choices related to rules and institutions come with different sets of costs and benefits. For example, putting in place a new law may provide more long-term stability and greater buy-in from multiple sectors. However, new laws can take time to be approved or require a level of political support in the legislature that does not exist. Consolidating responsibility with one agency can help ensure effectiveness by reducing the need for coordination between agencies, but it may place too heavy a burden on one player and reduce the political buy-in often obtained by having multiple government agencies involved.

The right choice of rules and institutions for implementing the UNFCCC REDD+ safeguards will depend on a nation’s circumstances and may change over time. Evaluating options strategically in a transparent and participatory manner can help actors better utilize resources and plan for the future.

Conclusion

A national system for implementing the REDD+ safeguards can help ensure that all REDD+ activities within a country are covered by adequate safeguard policies. It can be more sensitive to unique national circumstances. It can help national governments coordinate REDD+ activities and their associated safeguard policies. While there will be many, sometimes difficult, decisions to be made by governments and stakeholders about how to design and implement a system that builds trust between all the actors involved in REDD+, the value of undertaking such a process will have benefits well beyond REDD+. This is perhaps the most important reason to invest the time and energy in designing a national system to implement the REDD+ safeguards. Many governments and stakeholders have already expressed the intent to go down this path, supporting them is the intent of this document and hopefully will lead to further enthusiasm and interest in exploring the options for developing national systems.

Monitoring the Receipt of International Climate Finance by Developing Countries

Sarah Parsons — Fri, 07 Sep 2012 10:19:30 -0400

Executive Summary

The 2010 Cancun Agreements and 2011 Durban Outcome call for developing countries to register, monitor, and report on support received, and for developed countries to improve their reporting by using more complete climate finance reporting guidelines. Doing so will enable information on climate change finance from developed countries to be matched with information from developing countries. The lack of detailed guidance makes it difficult for developing countries to decide how to respond to calls to report climate finance received.

This paper explores the challenges faced by three Asian countries, that is, Indonesia, the Philippines, and Vietnam in monitoring finance for climate change. Challenges faced in the three focus countries can be grouped into five categories, and are summarized as follows:

Definitions and Criteria: Countries and donor institutions use a variety of definitions and criteria in identifying climate finance and distinguishing it from other development finance. For the three focus countries, no formal climate finance marker system or definitive guidance exists to help address this definitional issue.
Classifications and Indicators: Sector and activity type classifications also vary widely among donor and recipient institutions, and often do not lend themselves well to climate finance. For example, in the Philippines, there is no energy-specific classification in its current official development assistance (ODA) monitoring system.
Financial Instruments: The type of financial instrument monitored can carry both political implications as well as technical challenges. From a political standpoint, many developing countries and NGOs hold that climate finance—especially adaptation finance—should be delivered primarily in the form of grants. From a technical standpoint, all three countries expressed challenges in monitoring grants, while their loan monitoring systems are fairly developed.
Source: Private finance could potentially play a very important role in international climate finance and its monitoring may be something developing countries could explore for domestic purposes. However, domestic private finance monitoring efforts in the focus countries are often not coordinated with ODA monitoring efforts, nor do they include climate-specific information.
Institutional Arrangements: In the three focus countries, institutional responsibility for the coordination of national climate finance and development of monitoring systems is generally fragmented. Institutional platforms and databases for gathering data on climate finance in particular do not exist. Countries have two options, that is to either modify existing systems or to develop standalone/complementary standardized climate data systems for climate finance.

Despite significant challenges in building their capacity to monitor the receipt of climate change finance, government officials consulted in all three countries expressed an interest in doing so. Such efforts would require several steps, including, for example:

Developing the institutional arrangements and technical platforms necessary to monitor climate finance received. This may include the formation of an interministerial working group on climate finance with an agenda item dedicated to monitoring climate finance, and a complementary (stand-alone) management information system.
Agreeing on and adopting climate finance-specific definitions, criteria, and classifications.
Agreeing on the scope of information to be tracked (type of financial instrument, private versus public, etc.).

Such efforts should be complemented and furthered by support at the international level, both in the form of consistent yet flexible guidance that takes into account the domestic challenges outlined in this paper, as well as financial and capacity building support from developed countries.

The U.S. Fast-Start Finance Contribution

Kevin Lustig — Thu, 17 May 2012 11:54:20 -0400

Executive Summary

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Developed country governments have repeatedly committed to provide new and additional finance to help developing countries transition to low-carbon and climate-resilient growth. This assessment considers U.S. efforts to provide “fast start finance” (FSF) in fiscal years 2010 and 2011 in the context of the pledge by developed countries to mobilize $30 billion1 from 2010 to 2012 under the United Nations Framework Convention on Climate Change (UNFCCC). It is part of a series scrutinizing how developed countries are defining, delivering, and reporting FSF.

Given the size of its economy and its historic responsibility as a top emitter of greenhouse gases, the United States has a major role to play in delivering FSF. Key characteristics of the U.S. FSF contribution are quantified in Figure 1.

The U.S. FSF contribution of $5.1B reflects a positive effort made in challenging political and economic circumstances, but there is more to be done. Congress and key agencies have increased funding for climate change objectives relative to the pre-FSF period, and have begun to integrate climate considerations into ongoing portfolios. The global economic recession and the resulting pressure to cut spending, however, combined with an active subset of policy-makers who oppose U.S. action on climate change, have impeded further increases to climate finance.

The US does not count private finance toward its FSF contribution, but it does count non-grant instruments as well as development assistance. Loans, loan guarantees, and insurance constitute one-third of the U.S. contribution; grants and related instruments (including contracts and grant contributions to multilateral climate funds) account for the rest. Only a minority of the funds examined – 40% for adaptation and 29% for mitigation – support projects that clearly target climate change as a principal objective, although the remainder can in most cases still be expected to deliver climate benefits. (A greater share may principally target climate change, but adequate information was not available to support this conclusion.)

While the FSF contribution reflects some new effort to address climate change, it is unclear that the contribution as a whole can be considered “new and additional.” Since the start of the FSF period, the United States has substantially increased international finance that explicitly targets climate change. Some U.S. government agencies have also begun integrating climate change into aspects of development assistance and development finance. The United States is also counting as FSF projects and programs that it was funding – and that were likely delivering climate benefits – prior to the FSF period. Furthermore, the United States has distanced itself from targets and timetables to increase development assistance, and climate finance appears to be increasing at a significantly faster rate than development assistance.

There is a need for additional transparency and harmonization in reporting. The United States has made significant efforts over the past several years to improve monitoring and reporting on climate finance, as well as on foreign assistance. However, there is room for improvement.

We recommend that the United States:

Publish the criteria it uses to program and identify FSF.
Publish a detailed list of the projects and programs that constitute FSF, including, for each project, the amount, the administering agency, the financial instrument, the recipient country (where relevant) and institution, whether it is supported by core or non-core climate finance, and, to the extent feasible,information on disbursement status.
Identify and explain any discrepancies between such a project list and the total reported FSF sum, and explain how non-grant instruments are counted.
Provide complete information on U.S. FSF in a single document, so that users can avoid the need to download and reconcile over 240 documents to access this information.
Harmonize reporting between the FSF reports and the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) by ensuring that relevant FSF projects are tagged with the appropriate DAC Rio Markers and using consistent project titles between the two reporting systems.
Work in cooperation with other contributor countries and multilateral institutions to strengthen and harmonize bilateral and multilateral reporting on climate finance.

The UK Fast-Start Finance Contribution

Kevin Lustig — Thu, 17 May 2012 11:21:25 -0400

Executive Summary

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Developed country governments have repeatedly committed to provide new and additional finance to help developing countries transition to low-carbon and climate-resilient growth. This assessment considers UK efforts to provide “fast start finance” (FSF) in 2010/11 and 2011/12 in the context of the pledge by developed countries to mobilise funds approaching USD 30 billion from 2010 to 2012 under the United Nations Framework Convention on Climate Change (UNFCCC). It is part of a series of studies scrutinising how developed countries are defining, delivering, and reporting FSF.

The UK has a major role to play in delivering FSF. It is one of the richer economies in the developed world. Like other developed countries, it bears historic responsibility for contributing to the global accumulation of greenhouse gases. Key characteristics of the UK FSF contribution are quantified in Figure 1.

The UK has made a substantial effort to mobilise climate finance. Finance has been channelled through the Environmental Transformation Fund in 2010/11 and through the International Climate Fund (ICF) in 2011/12. GBP 1.06 billion had been spent and committed as of November 2011. It has also committed climate finance beyond the FSF period through the International Climate Fund (ICF), which will spend GBP 2.9 billion between April 2011 and March 2015.

The majority of UK finance is spent by multilateral institutions, in the form of capital contributions. UK contributions of GBP 715 million to the Climate Investment Funds (CIFs) administered by the World Bank in partnership with Regional Development Banks constitute the largest share of its FSF.

*The UK does not count private finance toward its FSF contribution, but it does count non-grant instruments as well as development assistance.** The majority of the projects supported do seem to have climate change as a principal objective.

While the FSF contribution reflects some new effort to address climate change, it is unclear that the contribution as a whole can be considered “new and additional.” Since the start of the FSF period, the UK has substantially increased international finance that explicitly targets climate change. The UK is also counting as FSF projects and programmes that it was funding – and that were likely delivering climate benefits – prior to the FSF period. Much of the funding counted was pledged prior to the FSF period, notably the contributions to the CIFs and Congo Basin Forest Fund. Climate finance appears to be increasing at a significantly faster rate than development assistance.

The UK is relatively transparent about its FSF spend, but more can be done. The UK discloses a list of projects and programmes to which FSF has been directed to interested stakeholders, and to the European Commission (EC) on an annual basis. The UK’s adoption of new transparency standards for its administrative processes is substantially strengthening its performance in this regard. Specifically, it participates in the International Aid Transparency Initiative (IATI) for its official development assistance (ODA) spending. In this context, government departments are now required to disclose the business case for all projects that receive public support. A business case presents the key components and purpose of the programme, and how it contributes to the achievement of relevant government UK strategic objectives. This includes relatively comprehensive information on the institutions receiving funding and implementing projects.

There is a need to improve access to information in practice. The commitment to disclose business cases was made in January 2011 and has not been applied retroactively. In practice, few business cases have yet been made available. We do note some discrepancies between aggregate and project-level reporting, although we recognise that the project list is a snapshot at a given moment in time of the collection of FSF recipients. As new systems to improve reporting and disclosure on the status of programmes funded by the UK government are implemented, we should expect to see higher levels of transparency realised in practice.

We recommend that the UK:

Disclose underpinning project-level spending information alongside aggregate reporting
Ensure that project lists consistently specify the recipient institution for finance to reduce discrepancies and enhance transparency
Work in cooperation with other donors and multilateral institutions to strengthen and harmonise reporting on climate finance, particularly with regards to the status of disbursement
Ensure that business cases for approved projects are publicly disclosed in a timely manner by all ICF implementing departments

Building International Climate Cooperation: Lessons from the Weapons and Trade Regimes for Achieving International Climate Goals

Kevin Lustig — Fri, 04 May 2012 15:42:34 -0400

About this Report

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A conversation about the report with author Ruth Greenspan Bell and Jennifer Morgan, Director, Climate and Energy Program

Tackling global climate change requires countries across the world to engage in multigenerational cooperation (referred to herein as “collective action”) to advance a transition to a near-zero-carbon economy by 2050, in order to keep global average temperature increase below 1.5–2 degrees Celsius in comparison with preindustrial levels. No one country can achieve the necessary emissions reductions alone. If we are to succeed, there must be sustained political engagement across countries to solve difficult conflicts, such as the level of effort versus cost, or equity versus environmental rigor. Issues where agreement is needed include:

Targets, timetables, and actions for reduction—who does what, by when, and how?
Common standards for measuring emissions—what standards, who uses them, and when?
Robust mechanisms to verify the implementation of national actions—what, who, when, and how?

What might negotiators in the third decade of building collective action to address climate change learn from the experience of negotiators who manage other problems that by their nature require global action? This report contributes to this question by examining two such negotiating areas where considerable experience has been gained in devising agreements and institutions. The first is control of weapons of mass destruction, a field relatively unknown in the climate change world. The second, multinational economic arrangements, is more familiar ground but an area that warrants deeper examination. Although such arrangements have not “solved” weapons or economic challenges, notable progress has been made since the middle of the 20th century, and thus these arrangements offer valuable insights for climate negotiators.

Getting Ready: A Review of the World Bank Forest Carbon Partnership Facility Readiness Preparation Proposals

admin — Fri, 23 Mar 2012 10:43:01 -0400

The World Bank administered Forest Carbon Partnership Facility (FCPF) and the UN Collaborative Programme on Reducing Emissions from Deforestation and Forest Degradation in Developing Countries (UN-REDD Programme) are two leading multilateral efforts currently supporting developing countries to become ―ready‖ to reduce emissions from deforestation and forest degradation and enhance carbon stocks (REDD+).

This working paper is the eighth in a series of regular updates reviewing the Readiness Preparation Proposals (R-PPs) submitted by REDD+ Country Participants to the FCPF and the National Programme Documents (NPDs) submitted by UN-REDD Programme countries to the UN-REDD Programme. The analysis is based on a desktop review of each R-PP and NPD in order to understand how countries are considering fundamental issues of forest governance during the readiness phase. We assess whether the documents identify major governance challenges contributing to forest loss, and whether principles of transparency, accountability, participation, and coordination are being applied in the development of REDD+ institutions, systems, and plans.

The 7th meeting of the UN REDD Programme Policy Board and the 10th meeting of the FCPF Participants Committee will be held in Berlin, Germany, from 13-14 October and 17-19 October, respectively. This paper evaluates R-PPs from Central African Republic and Colombia submitted for formal consideration by the FCPF Participants Committee. Draft R-PPs from Guatemala and Mozambique were submitted for informal review, but are not analyzed in this paper. We also review Nigeria’s NPD, which will be considered for funding by the Policy Board.

Assessing Non-Annex I Pledges: Building a Case for Clarification

Maggie Barron — Thu, 01 Dec 2011 13:53:32 -0500

Introduction

Under the UN Framework Convention on Climate Change’s (UNFCCC) Cancun Agreements, both Annex I and non–Annex I Parties have announced a diversity of mitigation targets and actions respectively for emissions reduction by 2020. While Annex I Parties have put forward economy-wide emissions reduction targets, non–Annex I Parties have proposed a variety of nationally appropriate mitigation actions (NAMAs). These non–Annex I actions include economy-wide goals (e.g., business-as-usual goals, carbon neutrality goals, and intensity goals) as well as sectoral actions, project-level activities, and policies (e.g., energy efficiency measures, no-till farming, projects related to mass transport systems, and investments in renewable energy sources).

Although the targets and actions of Annex I and non–Annex I Parties are different in form due to the principle of common-but-differentiated responsibilities and respective capabilities, many are similar in their lack of clarity regarding critical details, assumptions, and methodologies. For example, many of these pledges do not specify aspects such as which sectors or gases are covered, which methodologies are used for estimating expected reductions, if applicable, and/or the role of offsets. Without this and other information, it is challenging to track progress towards fulfillment of pledges, to ensure transparency, to estimate resulting emissions reductions, and to assess whether overall global emissions reductions are adequate for meeting global temperature limits.

For Annex I Parties, these problems should be resolved through the negotiation of common accounting rules. Although beyond the scope of this paper, the design of such rules is a critically important determinant of the regime’s environmental integrity. While common assessment methodologies for non–Annex I countries may be developed in the future, it is unlikely that the 17th Conference of the Parties (COP-17) in Durban, South Africa, will resolve this issue.

There are a number of reasons for this, including the principle of common-but-differentiated responsibilities, the level of complexity of various types of non–Annex I actions, and the lack of experience in this field compared to the common accounting rules developed for Annex I Parties under the Kyoto Protocol from which Annex I Parties can draw. In the absence of a set of provisions similar to those discussed for Annex I, clarification of non–Annex I actions can assist in providing transparency and tracking performance for domestic and international purposes.

While this paper focuses on clarification of non–Annex I actions, we first explain how common accounting rules for Annex I targets resolve the lack of clarity surrounding targets for developed countries. The remainder of the paper is devoted to discussing why and how non–Annex I Parties’ pledges should be clarified. In doing so, we describe the benefits of clarification, as well as the related mandates under the Cancun Agreements. We then outline the specific clarification needs associated with each type of non–Annex I action. It should be noted that this paper focuses only on non–Annex I pledges that are stated in terms of emissions reductions or emissions limitation and not on pledges that are framed in terms of indicators unrelated to emissions (e.g., capacity building initiatives). Lastly, we recommend decisions that can be made in Durban to formalize both common accounting rules for Annex I targets and a clarification process for non–Annex I actions.