WRI Publications Feed: Open Climate Network

The German Fast-Start Finance Contribution

Sarah Parsons — Thu, 09 May 2013 16:27:15 -0400

Summary

Industrialized countries have repeatedly committed to provide new and additional finance to help developing countries transition to low-carbon and climate-resilient growth. This assessment addresses German efforts to provide “fast start finance” (FSF) as a contribution to the pledge by developed countries to provide 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 scrutinizing how developed countries are defining, delivering, and reporting FSF.

Germany has increased climate finance in recent years and met its self-defined FSF pledge. According to the government’s FSF reporting, from 2010-2012 Germany provided a total of EUR 1.29 billion (approximately USD 1.7 billion) for climate action in developing countries that was counted towards FSF. Germany has therefore slightly exceeded its FSF pledge for the period 2010-2012. Even before the start of the FSF period, Germany was already providing significant funding for climate change-related activities in developing countries, particularly for renewable energy and energy efficiency. It therefore started from a relatively high climate finance baseline. Moreover, FSF is only a part of what the German government provides in climate-related finance for developing countries. Overall, Germany has increased delivery of international climate finance when compared to climate-related spending prior to the FSF period: In 2011, Germany committed about EUR 1.8 billion in total for climate finance, an increase from EUR 470 million in 2005.

Germany’s FSF is roughly evenly distributed be¬tween bilateral and multilateral cooperation. Out of the EUR 1.29 billion, EUR 585 million was channelled through multilateral funds. The largest single channel is the World Bank-administered Climate Technology Fund (CTF), which received EUR 375 million from Germany from 2010-2012. Substantial amounts of funding were also transferred to adaptation-related multilateral funds and the Forest Carbon Partnership Facility. Two federal ministries, the German Federal Ministry Economic Coop¬eration and Development (BMZ), and the German Federal Ministry Environment, Nature Conservation and Nuclear Safety (BMU), are responsible for the disbursement of FSF resources. Nearly half of this funding has been channelled through the German development cooperation agencies GIZ and KfW. Relatively few resources were delivered directly to developing country domestic institutions.

Germany FSF has primarily supported general mitigation (45 percent), and efforts to reduce emissions from deforestation and degradation (26 percent), while 28 percent supports adaptation. Germany aimed to provide 50 percent of its climate finance for mitigation, 33 percent for adaptation activities, and 27 percent (EUR 350 million) for REDD+. The Copenhagen Accord sought a balance between adap¬tation and mitigation (including REDD+) during the FSF period. Adaptation has received less finance than expected at the outset of the FSF period. Overall, most German FSF resources have been allocated to the regions of Africa (34 percent) and Asia (29 percent). Additionally, roughly 60 percent of all adaptation finance and 50 percent of bilateral adaptation finance has been allocated to Small Island Developing States, Least Developed Countries, and African countries.

The majority of Germany’s FSF is provided through grants. Loans are provided to the CTF, and account for about 29 percent of the overall FSF contribution. Germany is relatively transparent about its FSF. Through BMU and BMZ, the German government publishes lists of the FSF projects it supports, reporting on the recipient country, project name, project description, objective, amount, implementing agency, financial instrument, and expected project duration. It also reports to the European Commission (EC) on an annual basis. In addition, Germany has commissioned a study on lessons learned from FSF for long-term finance. However, official reporting would be strengthened through the inclusion of information on the actual disbursements and on project impact.

Germany is one of the few countries which has applied and published a specific definition of “new and additional” for its FSF. Germany only counts those funds towards FSF which were committed in addition to a 2009 baseline (as part of Official Development Assistance, or ODA, spending) and/or which are generated by new financing sources, namely the auctioning revenues under the EU ETS. Nonetheless, some of the financial resources counted as FSF were pledged before the FSF period: for example, Germany pledged finance to the CIFs in 2008, but only funding delivered from 2010 onwards was counted as FSF. All German FSF is counted towards ODA. However, Germany has yet to meet its commitment to provide 0.7 percent of its Gross National Income as ODA, and in fact its ODA contributions have recently declined. Also, Germany’s climate finance is committed in the context of a complementary commitment to scale up finance for biodiversity under the Convention on Biodiversity (CBD). It will be important to monitor reporting against both of these commitments in order to understand whether pledges have been duplicated or recycled.

Most of the projects counted towards FSF seem to have a principal or at least significant climate objective. An independent application of the Organisation for Economic Development (OECD) climate markers to the FSF projects suggests that the vast majority of projects seems to have a clear climate element, based on limited project informaiton. However, a focus on only bilateral projects reveals that the share of principally climate-driven projects may be lower than bilateral projects committed to other climate objectives. Furthermore, an assessment of the incremental climate change costs that are covered through the projects is not available.

Germany is one of the few developed countries to have committed climate finance beyond the FSF period. At COP18, Germany pledged to deliver EUR 1.8 billion in climate finance in 2013, an increase from the EUR 1.4 billion delivered in 2012.1 These funds will come from the general budget and from the “Sondervermögen Energie und Klimafonds” (“Special Energy and Climate Fund”). This separate budget structure is financed by auctioning revenues from the EU Emission Trading Scheme (EU ETS). The current low prices of carbon, however, may reduce available climate finance beyond 2012.

With regard to reporting on international climate finance, we suggest the following actions to further in¬crease transparency:

Continue to publish annual, project-level information after the close of the FSF period. Reporting systems could be updated to reflect the parameters of the new United Nations Framework Convention on Climate Change (UNFCCC) common reporting format (for example, by specifying the sectors to which funding is directed). It could also seek to improve reporting on the actual state of implementation of projects, and actual disbursement of committed funds. Therefore, Germany may explore practical options for providing some project-level information on the results of at least the larger programs funded in real time, e.g on the basis of the project reporting that is required of implementers (such as through annual or evaluation reports).
Provide additional information on which projects are funded by which ministries.
Provide more detailed financial information on projects that meet commitments to increase both climate and biodiversity finance to provide greater clarity on synergies, and assure that finance has not been double-counted. Such reporting can also be related to climate finance reporting under the OECD climate markers, in order to ensure consistency with FSF reporting.
Further strengthen and harmonize reporting and transparency standards for implementing institutions, in particular dedicated multilateral climate funds. Ger¬many can support progress to this end as a member of the governing bodies of these funds.

With regard to Germany’s international climate finance approach as a whole, we offer the following recommendations:

Continue to work to increase support for adaptation, with the goal of achieving a greater balance between adaptation and mitigation.
Explore ways to work more closely with recipient country-based institutions through its delivery of climate finance. This may need to be accompanied by capacity building support in order to increase these countries’ capacity to access such funding and use it effectively.
Explore options to ensure that increasing climate finance as part of efforts to deliver ODA does not reduce support available to help countries address development challenges as a whole. In the German case, the fact that ODA has been declining while climate finance increases at a relatively rapid rate presents a particular challenge.
Consider options to find more reliable sources of climate finance. The German climate finance approach has been largely sourced through the revenues from emission-trading. Nevertheless, there is a need for all countries to further scale-up climate finance in order to meet agreed goals of mobilising USD 100 billion from a mix of public and private sources by 2020. Options might include multilateral efforts to strengthen the EU ETS through increased EU mitigation targets, as well as the deployment of other innovative sources, such as financial transaction taxes or revenues from international transport. A clear pathway for scaling up climate finance would help create greater predictability of finance, and help generate trust and ambition in developing countries.

The U.S. Contribution to Fast-Start Finance: FY12 Update

Sarah Parsons — Tue, 23 Apr 2013 14:06:17 -0400

Summary

As part of the international climate negotiations, developed country governments committed to provide developing countries with “new and additional resources, including forestry and investments through international institutions, approaching $30 billion in the period 2010-2012 with balanced allocation between adaptation and mitigation.” This fact sheet considers U.S. efforts to provide “fast-start finance” (FSF) over the full three-year period, drawing primarily from program data presented in the State Department’s report series, “Meeting the Fast Start Commitment.” The fact sheet is part of a series of analyses on FSF contributions, and updates a May 2012 working paper quantifying total U.S. contributions to the global FSF commitment.

Over the FSF period, the United States has reported roughly $7.5 billion, or about 20% of the global self-reported total flows of FSF. Notable attributes of the U.S. FSF contribution include:

The levels of finance fluctuated over the three-year period, with the largest volume in FY11. This is related to variations in spending on the part of key agencies such as the Overseas Private Investment Corporation (OPIC) and the Millennium Challenge Corporation (MCC).
Over the three-year period, a significant share of the U.S. portfolio supported clean energy in Asia. OPIC and the U.S. Agency for International Development (USAID) played key roles in administering finance, and finance was channeled via a combination of grants and loans, guarantees, and insurance.

Transparency has improved in FY12 reporting, but there is room for further improvement. In addition to implementing the new international reporting requirements adopted at Doha, the following actions would help support verification of aggregate figures, as well as coordination and accountability:

Publishing a detailed, disaggregated, annual list of projects and programs;
Using the Foreign Assistance Dashboard as a platform for sharing information;
Aligning reporting under the United Nations Framework Convention on Climate Change (UNFCCC) with reporting to the Organisation for Economic Co-operation and Development (OECD); and
Continuing to work with other countries and multilateral institutions to strengthen and harmonize reporting systems.

A Critical Decade for Climate Policy: Tools and Initiatives to Track Our Progress

Sarah Parsons — Wed, 06 Mar 2013 19:13:21 -0500

Summary

The last five years have seen both broad and deep advancements in national policies to mitigate future greenhouse gas (GHG) emissions. The next five years will be instrumental in ensuring that these policies are implemented effectively, creating sustained change that will achieve gigatonne-scale GHG reductions, and laying the foundation for countries to move ahead with ever more ambitious approaches to reduce GHG emissions and limit the dangers and costs of a changing climate.

In order to support effective development and implementation of climate policies, a suite of policy tracking tools and initiatives is evolving, with a variety of characteristics tuned to address different questions and audiences. Underlying these efforts is the observation of metrics related to climate policy development, adoption, implementation, and/or effect. These initiatives seek to complement the measurement, reporting, and verification (MRV) processes under the United Nations Framework Convention on Climate Change (UNFCCC), promoting accountability for governments to set and meet ambitious yet feasible goals and targets, identifying barriers and facilitating course corrections when necessary, and ultimately supporting overall policy progress and effectiveness.

Government and intergovernmental organizations are the key actors who adopt and implement policies and actions; however, independent analysts, non-governmental organizations (NGOs), and the private sector play a vital role from the early stage development of climate, energy, and land use policies on through to adoption and into implementation, in order to ultimately achieve the desired GHG reductions. In this context, the field of climate policy tracking can serve to:

Build and maintain political momentum, and offer technical analysis and design principles.
Provide independent estimates of likely policy effects as well as risks, strengths, and uncertainty.
Spread shared learning and best practices between countries or sectors to improve efficacy.
Juxtapose policy portfolios with reduction pledges, abatement potential, and climate needs.

In order to succeed in this role, a complete climate policy tracking landscape needs to fulfill a range of functions, which may then be tailored to particular needs and questions. Successful efforts will have many things in common. Ongoing and continuous monitoring of policy progress should be coupled with evaluations of policy effectiveness and appraisals of likely and expected outcomes of policy trajectories. A combination of quantitative and qualitative inputs and outputs are necessary both to measure expected outcomes and progress toward milestones, but also to recognize the non-linear and imprecise nature of policy development and implementation.

This paper represents an initial effort by our institutions to broaden our collective lens and learn more from each other and our peers in the climate policy tracking community. We will supplement this analysis in the future, and aim to convene practitioners on a regular basis. Given our current understanding of the climate policy tracking landscape, we offer the following observations:

The climate policy tracking community has developed a diverse portfolio of methodologies and frameworks to address a range of policy tracking needs.
Nevertheless, information about climate policies remains patchy. In particular, there is little coordinated monitoring of policy implementation (in contrast to policy adoption) or of policies currently under development. Geographies are unevenly covered and quantifications and projections are often inconsistent.
Many climate policy tracking efforts are conducted by international organizations and target the needs of an international audience, though some good examples exist at the country level.
Technical abatement potential serves as a useful goalpost but lacks political and policy context.

Drawing from this body of work, we offer the following recommendations for other practitioners, funders, and governments:

Deepen monitoring and evaluation of policy implementation and policies under development, drawing on existing methodologies and frameworks.
Strengthen climate policy tracking at the country level—in partnership with national organizations—while maintaining internationally focused efforts.
Enhance coordination and collaboration among climate policy tracking practitioners, including with regard to ongoing refinement of methodologies, coordinating deployment of methodologies to answer priority questions, and communicating results.
Continue to scope out emerging issues, including country- and sector-specific tracking efforts, the intersection of independent tracking with biennial reports and biennial update reports under the UNFCCC, and the need to develop a more nuanced understanding of abatement potential to inform ambitious yet feasible goals against which to track progress.

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

Sarah Parsons — Tue, 11 Dec 2012 11:39:44 -0500

Executive Summary

Domestic legislation – the Climate Change Act 2008 – commits the United Kingdom to an 80 percent emission reduction by 2050 on 1990 levels, and to a system of 5-year carbon budgets to progress toward that target. These carbon budgets require UK emission reductions on 1990 levels of 34 percent by 2020 and 50 percent by 2025. The Carbon Plan, published in December 2011, sets out the UK Government’s plans to keep within its carbon budgets. An independent body – the Committee on Climate Change – advises the government on the setting of carbon targets, and reports to Parliament annually on progress. The UK also has commitments under EU-wide emission reduction targets.

This report summarizes key UK policies already enacted and in development that are likely to reduce greenhouse gas (GHG) emissions across the UK, discusses the implications of the current policy scenario for the country’s GHG trajectory, and identifies issues to watch going forward. Policy measures currently in place to reduce UK GHG emissions include the EU Emissions Trading System (EU ETS), a key policy lever covering emissions from power generation and energy-intensive industry; the EU Renewable Energy Directive, under which the UK has a target to increase the share of renewables in final energy to 15 percent in 2020; and energy efficiency programs for residential buildings, requirements to reduce average new car and van emissions, and a range of other measures across the rest of the economy, not covered by the EU ETS.

Our analysis and the government’s own projections suggest the UK is on course to meet its carbon budgets out to 2022 – and, consequently, its share of the EU’s commitment under the UNFCCC. Meeting the fourth carbon budget (2023–27), however, will require a further acceleration of emission reduction, suggesting the need for emissions in the third budget period (2018–22) to be significantly below the legislated level. To secure such an outcome requires strong and timely implementation of additional measures, with quicker delivery than in the past.

If future carbon budgets are to be met, progress in emission reduction must accelerate. The government is moving forward with plans to reform the electricity market through a system of long-term contracts designed to give greater confidence in investment in low-carbon generation. A new flagship energy efficiency policy – the Green Deal and Energy Company Obligation – is being introduced. It is not clear whether this will deliver on the required scale. Looking forward, key issues will be around the strength of implementation of policies currently being developed (especially electricity market reform and the Green Deal) and the review of the fourth carbon budget (covering emissions in 2023–27), which the government plans to undertake in 2014.

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.

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

Sarah Parsons — Thu, 29 Nov 2012 18:11:27 -0500

Executive Summary

In 2009, at the 15th meeting of the Conference of the Parties, President Barack Obama pledged to reduce U.S. greenhouse gas (GHG) emissions “in the range of a 17 percent emission reduction by 2020 compared with 2005 levels.” To date, this pledge is not enshrined in or supported by any domestic law. However, a variety of federal policies and programs are directly and indirectly reducing GHG emissions. In addition, U.S. state and local governments have authority to adopt GHG-reduction policies, and some are taking noteworthy actions.

In the context of the U.S. GHG reduction goal, this report examines key existing and emerging federal policies that are likely to reduce GHG emissions in the United States. Pages 10-12 also provide examples of policy actions being taken by U.S. states. For federal policies, our discussion focuses on those that are mandatory or provide a financial incentive, such as the American Recovery and Reinvestment Act of 2009 (ARRA), tax credits for renewable energy, and new standards for passenger cars and trucks. These programs, and others that are considered in the pages that follow, will drive significant reductions in U.S. GHG emissions.

Will this be enough to meet U.S. GHG reduction goals? Although this report does not provide an exhaustive assessment of U.S. policies, U.S. government GHG projections suggest that additional policy action is likely to be necessary for the United States to achieve the president’s GHG reduction target and continue significant emissions reductions after 2020. At this time, no promising initiatives are being considered in the U.S. Congress to drive further reductions in GHG pollution.

However, federal agencies already have the authority to do more, and have begun to take action. Additional policies such as standards for existing power plants, additional energy efficiency standards for appliances and equipment, and policies that reduce HFC consumption, can drive additional reductions in 2020 and beyond. WRI is conducting a separate analysis to quantify the possible reductions from these policies and to examine their impact on the United States’ 2020 reduction target. Moving forward it will be important to track action on these and other policies.

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.

Delivering on the Clean Energy Economy: The Role of Policy in Developing Successful Domestic Solar and Wind Industries

Sarah Parsons — Wed, 14 Nov 2012 14:57:39 -0500

Executive Summary

Data Explorer Tool

The release of this paper is accompanied by the launch of an interactive Data Explorer Tool, which enables users to view, chart, and compare underlying data from our research.

Users can explore data for a specific country–or see how that country stacks up against others–in terms of correlating select “benefits” (manufacturing, domestic installations, and jobs) with changes in key national policies. In addition to pulling out raw data, the tool allows users to uncover the stories inside the numbers: For example, how does the growth in wind manufacturing capacity in China compare to the U.S. over the past 10 years? And what key policies were introduced in both countries over that period?

The renewable energy industry is expanding to meet the needs of a large and growing global market for clean and secure energy. This growth is likely to continue, with electricity production from non-hydro renewable energy sources expected to grow more than eight-fold from 2009 to 2035, if countries implement their existing commitments, and draw nearly US$3 trillion in investment. In this globalized industry, no single country has a monopoly on the supply chain or the opportunities to benefit from this expansion.

Competition is fierce and the industry is changing rapidly. Energy—and electricity in particular—is a highly policy dependent market, strongly shaped by regulation, incentives, and public goals. There are a number of different factors that drive policymakers to consider the development of domestic renewable energy industries including energy security, environmental considerations, providing more universal access to energy, and as an economic development opportunity. Now, many policymakers are weighing how to take advantage of improvements in the renewable energy global supply chains that include lower costs, higher quality equipment, and improved performance to deliver domestic energy more cheaply, while still nurturing and protecting domestic industries that create highly visible “green jobs.”

These two goals—creating robust and growing domestic industries and delivering affordable domestic energy—are both central to business-as-usual economic development. Doing both in the context of reducing greenhouse gas (GHG) emissions and other environmental impacts delivers on the promise of green growth in the energy sector. In nearly every country, it is politically very difficult to pursue one of these goals to the exclusion of the other. There is little political patience with using public resources to support a highly import-dependent clean energy deployment strategy, while raising energy costs, including to support domestic manufacturing or subsidize technologies, is equally politically challenging.

The renewable energy industry seems to offer opportunities to meet energy and economic development goals, but is there evidence that this promise has come to fruition? If there is, how did policymakers help deliver those results for their countries? This paper focuses on solar PV and wind industries in China, Germany, India, Japan, and the United States and provides a historical cross-country analysis, drawing from individual country cases, which aims to:

Determine which policies have been introduced to support the broader value chain—research and development(R&D), manufacturing, installation, and power generation—of the solar PV and wind industries in each country;
Track the trends in industry development in terms of size, installed capacity, jobs created (where available), and equipment prices (where available); and
Analyze how countries are finding success in both creating a healthy domestic industry and delivering low-cost, domestic clean energy.

This working paper emerges from a collaboration of five leading research institutions: World Resources Institute(WRI), Institute for Global Environmental Strategies(IGES), Öko Institut, Renmin University of China, and The Energy and Resources Institute (TERI), based in the target countries. Researchers at each institution reviewed and gathered information from domestic and international data sources to create a richly nuanced but still comparable review of the development of these industries.

The assessment attempts to uncover in particular how policymakers have cultivated successes. Countries have pursued a range of policies to accomplish these goals and there is now sufficient history in the solar PV and wind industries to begin to draw conclusions about whether countries have met their goals and what policy steps have been effective along the way.

Open Climate Network Analysis

Kevin Lustig — Thu, 17 May 2012 12:16:37 -0400

WRI Publications Feed: Open Climate Network

The German Fast-Start Finance Contribution

Summary

The U.S. Contribution to Fast-Start Finance: FY12 Update

Summary

A Critical Decade for Climate Policy: Tools and Initiatives to Track Our Progress

Summary

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

Executive Summary

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

Executive Summary

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

Executive Summary

The Japanese Fast-Start Finance Contribution

Executive Summary

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

OpenClimateNetwork.org

Q&A on this Analysis

Have developed countries met their fast-start finance pledge?

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

Are the pledged funds “new and additional”?

Do the pledges include “investments through international institutions”?

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

What types of financial instruments are countries using?

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

Delivering on the Clean Energy Economy: The Role of Policy in Developing Successful Domestic Solar and Wind Industries

Executive Summary

Data Explorer Tool

Open Climate Network Analysis

Use the list to the right to explore available analysis from the Open Climate Network »