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Governance & Access

Climate Finance in East Africa: Stories and Lessons

This post originally appeared on the Climate Development and Knowledge Network's (CDKN) website.

Having recently left the bustling streets and warm hospitality of Addis Ababa, Ethiopia, I’m taking a moment to reflect on all that I have learned at CDKN’s workshop on “Climate Finance in East Africa.” Representatives of government departments and research institutes from Ethiopia, Kenya, Rwanda, Tanzania, and Uganda--as well as members of the donor community and international think-tanks--reflected on their experiences and the challenges faced in mobilizing and effectively deploying climate change finance.

I was inspired by the sense of optimism and confidence among participants as they discussed the ways in which their countries are tackling the climate change challenge. And I was struck by the effort and considerable progress that these East African countries have already made, despite limited resources and numerous obstacles.

Climate Action in East Africa

For example, last month Kenya launched a holistic national climate change action plan, following a comprehensive planning process that brought together all key government ministries, subnational governments, civil society, the private sector, and development partners.

5 Steps to Improve the World Bank’s Social and Environmental Safeguards

The World Bank’s annual spring meetings take place this week in Washington, D.C. One big topic on the agenda is how to update the World Bank’s “safeguard” policies. Created in the early 1990s, these policies ensure that the Bank considers the social and environmental effects of proposed projects. For example, the safeguards require those borrowing money to assess the project’s environmental impacts and to compensate households who are negatively affected.

The full suite of safeguards is now under review for the first time. Among other things, the Bank hopes to make its safeguard policies reflect changes in the global economic and political landscape that have occurred in recent decades.

World Bank Safeguards vs. National Safeguards

One question on the table is how the World Bank safeguards should interact with national systems already in place in recipient countries. Since the creation of the Bank’s safeguards, many countries have strengthened their own rules and institutions to ensure that large-scale projects are implemented in a manner that protects people and the environment. These include, for instance, laws requiring environmental impact assessments, or government agencies to oversee land use changes. Relying on these domestic systems can potentially improve protection of people and the environment. National laws, for example, allow governments and citizens to work within their own familiar structures, and they’re sometimes more appropriate for local circumstances than Bank policies.

An Action Plan for Environmental Justice in Latin America and the Caribbean

UPDATE, 4/19/13: Fourteen Latin American and Caribbean (LAC) countries adopted an ambitious Plan of Action to improve access rights on April 17, 2013. Read WRI's press release for more details about the Plan of Action for the LAC Principle 10 Regional Declaration.

Without the right laws and safeguards in place, development can come at the expense of the environment and local communities. This point is especially evident in Latin America and the Caribbean (LAC). Newspapers across the region regularly document conflicts over land and natural resource use, hydroelectric power development, oil exploitation, expansion of agriculture into virgin forests, and the disruption of indigenous practices.

Many of these conflicts occur because countries lack strong laws and practices that encourage the public’s access to information and early participation in government decision-making. Without these laws in place, citizens can’t legally obtain information on projects like proposed oil wells or highways—or engage in the decision-making processes about developing and approving these projects. Governments can then make decisions without considering the impact on local citizens. The resulting social, environmental, or health costs often fall disproportionately on the affected communities. (See our video, "Sunita," for more information on the need for access to information laws).

But the situation in the LAC region could be poised to change, depending on what happens at a meeting this week. Representatives from 13 countries and two observer countries will meet with civil society groups in Guadalajara, Mexico, to finalize a two-year action plan on implementing the LAC Principle 10 Regional Declaration. If attendees come up with a strong plan, several LAC countries will come closer to adopting a plan for improving environmental justice and public participation rights across the region.

Without Land, What Would a Farmer Do?

Rural farmers depend on land and natural resources for food, income, and their physical well-being. But what happens when national or local governments prevent rural people and communities from farming their land?

All governments have the authority to restrict the use of private land, usually for public interest purposes, such as environmental management or biodiversity conservation. In these cases, the affected individuals should be compensated for their losses even though the land remains theirs. Problems arise when governments routinely restrict the use of private property for ordinary government business or for meeting short-term political ends. With weak rights to their property and insecure tenure arrangements, local people stop investing in their land and natural resources. In many countries, governments restrict the use of private property without consulting the landholders or providing compensation. With courts too expensive to access, poor people have few opportunities for recourse.

3 Ways to Unlock Climate Finance

Ministers and senior officials from developed countries will gather this Thursday in Washington, D.C. to tackle one of the world’s foremost challenges: how to mobilize private sector capital to reduce greenhouse gas (GHG) emissions in developing countries and help them adapt to climate change’s impacts. The meeting, organized by the U.S. State Department, comes on the heels of another meeting of climate finance experts and researchers in Paris, organized by the Organisation for Economic Cooperation and Development (OECD).

This global attention on climate finance comes at a critical moment: Research shows that the world will need to invest at least $5.7 trillion in clean water, sustainable transport, renewable energy, and other green infrastructure annually by 2020 in order to keep global temperature rise below 2 degrees Celsius, thus preventing climate change’s worst impacts. We’re currently directing only about $360 billion annually toward these activities.

While these discussions are necessary, what’s more important is whether or not ministers and officials are talking about the right issues and asking the right questions. Addressing three questions—on the correct investment figures, the most effective policy and financing tools, and the importance of collaboration—will be critical to ensure that the April 11th Ministerial Meeting on Mobilizing Climate Finance achieves meaningful results.

Why Is Climate Finance So Hard to Define?

This is the first installment of our blog series, Climate Finance FAQs. The series explores the often nebulous world of climate finance, providing clarity on some of the key terms and current issues. Read more posts in this series.

Surprising as it may sound, there is no standard definition of climate finance. In fact, there are many differing views on what type of funding constitutes climate finance, how it should be delivered, and how much money developing nations will need to mitigate climate change and adapt to its impacts. This vortex of information can be confusing to navigate. Here, we'll do our best to break down all of the components that define “climate finance.”

Defining Climate Finance: Broadly to Narrowly

In its broadest interpretation, climate finance refers to the flow of funds toward activities that reduce greenhouse gas emissions or help society adapt to climate change’s impacts. It is the totality of flows directed to climate change projects—the same way that “infrastructure finance” refers to the financing of infrastructure, or “consumer finance” refers to providing credit for purchases of big-ticket household items.

The term is most frequently used in the context of international political negotiations on climate change. In this context, climate finance—or international climate finance—is used to describe financial flows from developed to developing countries for climate change mitigation/adaptation activities, like building solar power plants or walls to protect from sea level rise. This interpretation builds off the premise that developed countries have an obligation to help developing countries transform their economies to become less carbon-intensive and more resilient to climate change.

Lord Nicholas Stern Identifies 3 Obstacles to International Climate Action

Six years after the release of the landmark Stern Review on the Economics of Climate Change, Lord Nicholas Stern revealed yesterday the most challenging hurdle ahead for international climate action. Overcoming this obstacle is not a matter of figuring out the scientific or policy pathways needed to curb climate change—nor is it determining what technologies to adopt or what investments must be made. “What’s missing is the political will,” said Stern.

The famed economist elaborated on this problem during an address yesterday hosted by WRI and the International Monetary Fund (IMF), “Fostering Growth and Poverty Reduction in a World of Immense Risk.” Dr. Andrew Steer, WRI’s president, and Christine Lagarde, managing director of the IMF, provided opening remarks, articulating the serious economic and human risks climate change poses. Stern focused on the main hurdle to mitigating these risks—political will.

The problem, according to Stern, reflects a lack of understanding in three main areas: climate change’s real risks, the benefits of an alternative pathway, and the need for collaboration and mutual understanding.

Lessons from Thailand: Mobilizing Investment in Energy Efficiency

Developing countries will need about $531 billion of additional investments in clean energy technologies every year in order to limit global temperature rise to 2° C above pre-industrial levels, thus preventing climate change’s worst impacts. To attract investments on the scale required, developing country governments, with support from developed countries, must undertake “readiness” activities that will encourage public and private sector investors to put their money into climate-friendly projects.

WRI’s six-part blog series, Mobilizing Clean Energy Finance, highlights individual developing countries’ experiences in scaling up investments in clean energy and explores the role climate finance plays in addressing investment barriers. The cases draw on WRI’s recent report, Mobilizing Climate Investment.

The development of Thailand’s energy efficiency sector is an interesting case study. It demonstrates how strong government leadership combined with strategic support from international climate finance can drive the transition toward an energy-efficient economy.

In the early 1990s, Thailand’s economy was growing rapidly at 10 percent per year; the power sector was growing even faster. The government recognized that conserving energy would provide a low-cost way to meet its citizens’ rising demand for energy.

4 Ways the Green Climate Fund Can Support "Readiness" for Climate Finance

Research shows that developing countries will need about $531 billion of additional investments in clean energy technologies each year in order to limit global temperature rise to 2° C above pre-industrial levels, thus preventing climate change’s worst impacts. While developed countries have pledged to provide $100 billion of climate finance per year, this amount is well below what’s needed to help developing nations mitigate and adapt to climate change.

So how can countries bridge this funding gap? The answer lies in part on how well developing countries implement “readiness” activities, as well how effectively developed nations and international institutions like the Green Climate Fund (GCF) can mobilize finance to support them.

The Need for Readiness

To attract investments on the scale required, developing country governments must provide an attractive investment climate—one that encourages public and private sector investors to put their money into climate-friendly projects like solar and wind energy. On their end, developed countries need to offer financial and technical support for “readiness” activities that create the right conditions for said investments. Readiness includes any activity that makes a country better positioned to attract investments in climate-friendly projects or technologies. A few examples include: developing a policy to promote energy efficiency in industry; passing a law that gives a new or existing institution the mandate to promote renewable energy; conducting an assessment of a country’s wind energy resources; or strengthening a bank’s capacity to lend to small businesses in low-carbon sectors. International institutions such as the GCF can play a big role in supporting readiness activities, thereby helping developing nations attract the investments that will help them transition onto a low-carbon, climate-resilient development path.

Civil Society Groups Help Make Electricity Affordable and Sustainable

Worldwide, one out of every five people lacks access to modern electricity. Affordability, quality of service, and social and environmental impacts pose great challenges in providing people with the power they need for lighting, cooking, and other activities. Good governance involving open and inclusive practices is essential to overcoming these pressing obstacles.

This is part one of a four-part blog series, “Improving Electricity Governance,” which explores the key components involved in making electricity decision-making more open, inclusive, and fair. The series draws on the experiences of WRI’s Electricity Governance Initiative, which are documented in a new report, “Shining a Light on Electricity Governance.”

Access to electricity poses major challenges in India. Service varies considerably across the country. In some regions, fewer than 40 percent of people have access to electricity, while half of all rural households lack access to power. These issues will become more challenging as demand for energy is expected to double by 2020. The country will need to figure out how to provide affordable, reliable power in ways that benefit both people and the planet.

But India has a powerful ally in overcoming these electricity challenges: civil society organizations (CSOs).

People’s Monitoring Group on Electricity Regulation Steps In

In the state of Andhra Pradesh, the People’s Monitoring Group on Electricity Regulation (PMGER), a partner with WRI’s Electricity Governance Initiative (EGI), acts as an advocate for affordable, reliable power. The organization is a consortium of NGOs whose constituencies include farmers’ organizations, environmental and development advocacy groups, electricity advocacy groups, workers’ unions, and research organizations. PMGER ensures that Andhra Pradesh’s electricity decisions are fair, effective, and made with citizens’ best interests in mind.

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