A year after its inaugural meeting, the Board of the Green Climate Fund (GCF) left its fifth meeting in Paris earlier this month with a collective sense of urgency. The GCF is expected to become the main vehicle for disbursing climate finance to developing nations, so the decisions made at this most recent meeting significantly impact the future of climate change mitigation and adaptation. Encouragingly, Board members stepped up to the important task before them, making progress across several key issues. Their decisions made it clear: The GCF’s inception phase (referred to officially as "the interim period") is over—the focus now is on funding it and launching its operations.
While leaders in Washington, D.C. grapple with a potential national economic crisis, in Florida, mayors and citizens are taking action—on climate change and sea-level rise, that is. Florida Atlantic University (FAU) will host its second annual Sea Level Rise Summit this week, bringing together national and international experts to discuss the impacts of sea-level rise and storm surge on local and national economies.
Communities across the world continue to experience weather-induced food shortages due to drought, floods, devastating wildfires, and other climate change impacts. This week, the Board of the Green Climate Fund (GCF)is meeting to discuss how the GCF will receive and disburse money through various financial inputs and instruments.
While working on tracking adaptation finance for our Adaptation Finance Accountability Initiative project, we often get the question “What is adaptation finance?” or “What counts as adaptation finance?” To our embarrassment, we still don’t have a clear answer to either question, other than “Well… finance that funds efforts to adapt to the impacts of climate change qualifies as adaptation finance.”
We aren’t the only ones who struggle to define the very issue on which we work. Even some of the definitions that the Organisation for Economic Cooperation and Development (OECD) and multilateral development banks are developing do not provide a complete answer to the question of what types of investment are considered to be adaptation finance.
We decided to do some soul-searching on this subject. While it’s still too complicated to provide a cut-and-dry definition of adaptation finance, we identified three common traits surrounding the issue: Adaptation finance is context-specific, dynamic, and not just about finance.
“The time to act is now… We cannot afford to do nothing.”
This was the message of Mayor Will Sessoms from Virginia Beach, VA, delivered last Friday at a conference on "Adaptive Planning for Flooding and Coastal Change." Like so many cities along the Atlantic coast, Virginia Beach is at the frontlines of climate change, experiencing impacts like sea-level rise and recurrent coastal flooding. But as we learned at the event, the city and its surrounding communities are emerging as leaders in engaging in initiatives to address these issues.
“We are not as well prepared as we need to be to address the full scope of projected realities in the year 2100” Mayor Sessoms stated, “and we can, and must, make continued improvements.” His message was echoed by a group of bipartisan mayors and state delegates, city planners, legal experts, and university scientists. They stressed that while state and federal governments often struggle to move beyond the political debate of whether manmade climate change is happening, residents of the Tidewater area of Virginia are focused on developing a robust response to rising seas and recurrent coastal flooding.
Mayor Sessoms’ sentiments paralleled the earlier statements of Democratic Mayor Paul Fraim from Norfolk, VA that "[t]his is one of the greatest threats of our lifetime,” and “a threat that we can no longer afford to ignore."
If you want to know how to grow crops in the face of climate change, drought, and land degradation, ask Ousséni Kindo, Ousséni Zoromé, or Yacouba Sawadogo—three farmers in Burkina Faso’s Yatenga region.
Policy makers, researchers, and NGO representatives gathered earlier this year at a workshop in Ouagadougou, Burkina Faso to discuss strategies on combating food insecurity and adapting to climate change. Attendees at the event—organized by the group Network for Participatory Approaches to Research and Planning (Réseau MARP Burkina)—heard from several of Burkina Faso’s farmers on how they produce food on degraded lands. The farmers and participants provided interesting insights into climate-smart agriculture methods—including how to scale up these practices throughout the nation.
As I prepare to take part in an event on hurricanes and extreme weather in Miami, Florida later today, it’s clear just how much climate change threatens the state’s local communities. Florida is the most vulnerable U.S. state to sea-level rise, with seas projected to rise along the state’s coast by as much as 2 feet by 2060--threatening valuable infrastructure, homes, and communities. Even Superstorm Sandy--which had the greatest impacts in New York and New Jersey--caused significant damages along Florida’s east coast while centered miles offshore. Rising seas contributed to Sandy’s storm surge and tidal surges, causing flooding throughout Miami-Dade County and sweeping away portions of State Road A1A in Fort Lauderdale.
But as overly concerned as I am of the climate change impacts Florida faces, I’m also encouraged. Florida has something that few other states have: A bipartisan collaboration to address global warming’s disastrous impacts.
Advancing effective, equitable adaptation finance systems to build resilience in a changing climate
Delegates at the April UNFCCC intersessional in Bonn, Germany made some encouraging progress. As negotiators gather again this week, it’s important that they build on this progress and take action on two key topics: raising ambition, and establishing core elements of the 2015 international climate action agreement.
Indeed, there’s an even greater sense of urgency since delegates met for the April intersessional. The world crossed a perilous and alarming threshold, with atmospheric carbon dioxide levels exceeding 400 ppm, a level that has not been experienced in at least 800,000 years and possibly not for millions of years. Plus, this may be the last intersessional before COP 19 in Warsaw in November. Negotiators must move forward on raising ambition and establishing the 2015 Agreement if COP 19 is to have a successful outcome.
Raising Ambition Now
The need for countries to make more ambitious emissions-reduction commitments remains self-evident—even more so, now that the world has exceeded 400 ppm of atmospheric carbon dioxide. In Bonn, negotiators are set to focus on the transformation of the energy system.
The Climate Investment Funds (CIFs), one of the world’s largest dedicated funding facilities for climate change mitigation/adaptation projects, have now been in operation for five years. It’s a good time to step back and evaluate what lessons we’re learning from these important sources of climate finance.
WRI recently did just that, inviting a group of representatives from countries accessing CIFs funding to speak at our offices. It became clear from the discussions that while some valuable progress has been made, there is still plenty of room for improvement. In particular, lending institutions involved with the CIFs could deploy climate finance more effectively by fostering a stronger sense of country ownership over mitigation/adaptation projects.
The Good News: Climate Investment Funds Are Contributing to Change on the Ground
We’re starting to see some countries make progress on implementing climate change mitigation and adaptation projects with funds from CIFs programs (see text box). Panelists at the WRI event highlighted a few examples:
How can we make climate change adaptation measures more effective? I recently traveled to Dhaka, Bangladesh to discuss ways to address that very question.
I took part in the 7th annual Community-Based Adaptation Conference (CBA7), hosted by the International Institute for Environment and Development (IIED) and the Bangladesh Center for International Studies. The conference provides a forum for organizations working on climate change adaptation to come together, learn from each other, and identify shared interests and needs. The organizations involved mainly work at the grassroots level with poor and vulnerable people in the developing world, but the conference also attracts a growing number of government representatives.
One of the conference’s main themes was that stakeholders at the local and national levels must work together to foster locally grounded, community-based adaptation efforts. I elaborated on this theme in a video interview with IIED. Check it out below.
This post was co-authored with Jenna Blumenthal, an intern with WRI's Climate and Energy program.
As U.S. government officials take stock of last week’s Ministerial Meeting on Mobilizing Climate Finance and prepare for upcoming UNFCCC talks in Bonn, WRI’s Open Climate Network (OCN), along with Climate Advisers and the Overseas Development Institute, are taking a look back at U.S. efforts on climate finance. (See our new fact sheet).
Back in 2009, developed countries pledged to provide $30 billion in climate finance by the end of 2012 in order to help developing countries implement low-carbon, climate-resilient development initiatives. This funding period—which took place from 2010 to 2012—is known as the “fast-start finance” period.
Our analysis reveals two sides to the U.S. contribution of roughly $7.5 billion in fast-start finance: On one hand, it represents a significant effort to increase international climate finance relative to previous years, in spite of the global financial crisis. On the other, it is not clear that the entirety of the contribution aligns with internationally agreed principles, which stipulate that the finance be “new and additional” and “balanced” between adaptation and mitigation. In any case, the United States, along with other developed countries, is now faced with the challenge of scaling up climate finance to developing countries to reach a collective $100 billion per year by 2020.
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 alloc
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.
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.
Now is a critically important time for the world to focus on climate finance. Developing nations—those least responsible for causing global warming but most vulnerable to its impacts—need funding to adopt clean energy, protect infrastructure from sea level rise, and engage in other adaptation and mitigation strategies. But these activities are costly—the world will need to figure out how to fund them now in order to protect countries from future climate change.
The problem is that it’s hard to draw attention to a topic that’s difficult to understand. The issue of climate finance is decidedly complex. Several entities--think-tanks, banks and other financial institutions, international institutions, governments, and public sector agencies--are involved in myriad activities related to climate finance. Understanding how they operate, interact, and contribute can be confusing. Even the vocabulary that defines climate finance can be inconsistent, abstract, and nebulous at times. These complexities make climate finance an issue that’s hard for people--even experts, sometimes --to wrap their heads around.
Introducing the Climate Finance FAQs Series
That’s where WRI’s new blog series, Climate Finance FAQs, comes in. Our experts will attempt to shed light on basic climate finance issues through a series of blog posts. By explaining these topics in plain language, we can make climate finance more accessible--and hopefully, draw broader attention to the pressing issue of how to pay for climate change mitigation and adaptation.
UPDATE 4/11/13: After this blog post was published, the OECD released updated figures for 2010 and 2011. The data still shows a decrease in commitments for adaptation, mitigation, and climate finance, as this blog post states. However, adaptation expenditures were 3 percent higher in 2011 than in 2010, as opposed to unchanged. (View updated figures.) The changes in the numbers are a result of donors entering new data for previous years or updating their old data. Preliminary data for 2012 shows that aid to developing countries continued to fall. Detailed figures for 2012 will be released in June 2013.
At the 2009 U.N. climate change conference in Copenhagen, developed nations committed to provide a collective $100 billion per year by 2020 to help developing countries mitigate greenhouse gas emissions and adapt to climate change’s impacts. Recently, the Organization for Economic Co-Operation and Development (OECD) released some surprising new data on this pledge. The figures indicate that developed nations’ recent climate finance contributions have fallen rather than risen toward the level of their 2020 commitment.
A Look at the New OECD Data
The OECD is a consortium of 34 wealthy countries. Among other joint initiatives, it provides a platform to monitor and share statistics on aid flows and climate finance contributed by its members. Most OECD members report both their climate finance expenditures and commitments using the “Rio Markers” (see text box), and the OECD secretariat periodically makes these numbers public. OECD members’ climate finance contributions represent a significant portion of the collective $100 billion commitment, so the numbers reported by the OECD give a good indication of developments in the climate finance field.
Surprisingly, new OECD numbers show that while adaptation expenditures in 2011 remained the same as in 2010, expenditures for mitigation activities decreased. Plus, the total commitment for climate finance decreased from $23 billion in 2010 to $17 billion in 2011.
While a “commitment” refers to the total amount of money a country will spend on an adaptation/mitigation project over a multi-year period—which is reported at the beginning of a project—an “expenditure” refers to the amount a country spends in a particular year on adaptation/mitigation activities. In January 2013, the OECD updated its data for 2011. It is difficult, of course, to predict or analyze trends based on only two years of data (the only data that’s currently available on OECD climate finance commitments). But given developed nations’ agreement to scale up climate finance significantly by 2020, this decrease is surprising—and could be concerning.
As the world continues to feel the effects of drought, sea level rise, and more volatile weather, it’s clear that adaptation efforts have never been more imperative. These initiatives are critically important in order to protect communities—especially in impoverished places—from the worsening impacts of climate change.
WRI’s Vulnerability & Adaptation team has been working to ensure that adaptation is a central component of the international development agenda. Over the past few years, WRI and its partners have conducted practical research and analysis on three continents across a broad spectrum of adaptation topics, including monitoring and evaluation; case studies on information use for adaptation; the role of national institutions; and a broad set of decision-making principles for a changing climate. But what have we learned from the results of these efforts? And how can we ensure that global adaptation efforts are conducted effectively and efficiently?
We recently stepped back and evaluated the work we’ve done to try and answer these questions. One of our clearest conclusions is that much remains to be learned about “what works” in adaptation. The results of our efforts point toward five areas of long-term, practical, applied research that could help provide a foundation for effective adaptation moving forward: adaptation success, critical thresholds, adaptation options, information systems, and institutions.
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.
In a little more than one generation—by the time your grade-schoolers will be seeing their own kids off to school—our planet will be home to 9 billion people. This will create an unprecedented demand for water, food, and energy--and stress the supporting infrastructure required for life in the 21st century. How are we to meet this demand while respecting planetary boundaries? And importantly, how will we pay for it?
A recent publication by the Green Growth Action Alliance (G2A2), aims to provide some answers. WRI and others provided guidance, case studies, research, and data to the publication, The Green Investment Report: The ways and means to unlock private finance for green growth. The findings were discussed widely at the recent World Economic Forum meeting in Davos.
Under current OECD growth projections, the world will need to invest $5 trillion annually until 2020 in the water, agriculture, telecommunications, power, transport, buildings, industrial, and forestry sectors. However, solely delivering this investment to maintain “business-as-usual” economic growth will not lead the world onto a sustainable growth path. We need to find ways to “green” our growth to cope with resource scarcity and alleviate risks from climate change and environmental degradation. Greening this investment will require a mix of appropriate policies and capital. The lion’s share will need to come from the private sector, given the scale required.
The “Green Investment Report” estimates that an additional $700 billion will be needed annually to green the business-as-usual investment in the global economy. This is a large sum, but relatively insignificant compared to the cost of inaction as negative environmental impacts increasingly take their economic toll.