Bonn Climate Change Conference - June 2015

Co-Facilitator Dany Drouin, Canada, opened the resumed in-session workshop with a recap of the session held on Thursday, 5 June. On collaborative arrangements for managing climate risks, he highlighted: the importance of legal and regulatory frameworks in addressing barriers and the catalytic role played by donor funding; the ability of bespoke financial products to address specific needs such as timing of compensation and identifying opportunities to achieve economies of scale; and the role of the UNFCCC in fostering collaborative arrangements for adaptation finance. On "accessing climate finance: strengthening institutional capacity," he highlighted the importance of a strong relationship between national development banks and local commercial banks, and the need to: further prioritize direct access and adapt the modality to different contexts; engage in facilitated, peer-to-peer support at the national level; and adopt a comprehensive and long-term approach to readiness activities.

Co-Facilitator Zaheer Fakir, South Africa, introduced the topics and presenters. Xavier Agostinho Chavana, Mozambique, and Rafael Marchesini, Brazilian Development Bank (BNDES), presented on policy, legal frameworks, country strategies and priority sectors for investments in climate-resilience. Syed Ahmad, Green Technology Finance Scheme, Malaysia, and Rodrigo Violic, Banco BICE, Chile, presented on the interaction between public and private sectors for scaling-up funding and investments in climate resilience.

Discussing opportunities and barriers for investment in adaptation, Chavana highlighted: differences between the adaptation and disaster risk reduction communities in time horizons and accountability processes, though both seek to increase resilience; policymaking as the entry point to tackle barriers; and the use of Pilot Program on Climate Resilience resources to strengthen existing projects. He also identified lessons learned, including: the need for policies and plans to be approved at the highest possible level; advantages of engaging in policy reform while undertaking projects concurrently; and the use of evidence to support interventions in relevant sectors.

Noting that BNDES has been a key tool in the implementation of industrial policy, Marchesini discussed the bank’s three-pillar strategy consisting of a diversified portfolio of financial instruments, coordination efforts with relevant stakeholders, and a robust sectoral analysis. He also discussed various features of the Amazon Fund which BNDES manages, such as: its results-based payments approach; investment in sustainable production to support adaptation; and its governance arrangements including a guidance committee consisting of different governmental and non-governmental stakeholders. He identified three issues that could inform discussions, including: the development of institutional capacity of both national banks and local-level project implementation institutions; the necessity to coordinate with stakeholders while designing policies, regulations and frameworks; and the importance of good governance structures and transparency. 

Describing the role of the Green Technology Finance Scheme (GTFS) to promote economic growth and social development, Ahmad said the GTFS, through its certificates program, had lowered cost of borrowing and increased access to finance for the private sector. He noted that US$612 million of the Scheme’s US$1 billion had been allocated to 185 projects in energy, waste and water, building, and transport sectors. He identified the private sector’s lack of familiarity with green technologies as the primary barrier, in addition to the added cost of doing due diligence via third parties. As the GTFS is set to expire this year, Ahmad identified two options for the future: a continuation of its mandate; and the establishment of a specialized green financial institution.

Discussing the Adaptation Fund’s decision not to fund Chile’s proposal in 2014, Violic identified a number of barriers for adaptation finance in the private sector, including: lack of policy incentives to reduce vulnerability; lack of preparedness in various aspects of adaptation such as planning, accessing and delivering finance, and monitoring; and lack of a preventive approach due to poor knowledge regarding climate risks as business risks. He also outlined three levels of climate impacts to the private sector: business continuity such as product and service delays; credit exposure based on the sectoral vulnerability of clients; and emergence of new opportunities. He said the short-term policy focus on mitigation needs to change and identified public-private partnerships as a potential solution.

Two breakout groups on policy, legal frameworks, country strategies, and priority sectors for investments in climate-resilience then convened and were moderated by Athena Ronquillo-Ballesteros World Resources Institute (WRI), and Mirko Ivo Serkovic Werner, Peru, respectively.

Presenting the outcomes of the breakout group discussions, Ronquillo-Ballesteros highlighted: the need for long-term investments based on long-term in-country frameworks with strong inter-ministerial coordination; the role of vertical integration integrating climate risks across ministries; the limitations of traditional environmental impact assessments and the need to shift to strategic environmental assessments; and the importance of investing in human capital and leadership.

Noting that policies were not enough to bring in the private sector, Werner said sustainable returns motivate the private sector and discussed how public-private partnerships could be scaled-up. He also highlighted the role of governments in setting standards to encourage measurement of climate risks and discussed how public and donor finance could be used to design financial instruments to bring in the private sector.

Two breakout groups on the interaction between public and private sectors for scaling-up funding and investments in climate resilience were moderated by David Kaluba, Zambia, and Kate Dowen, UK.

Kaluba discussed the wide range of factors that need to be taken into account when discussing the role of the private sector in adaptation such as: the type of sector, such as agriculture or water; the size of private institutions; and the different incentives and needs specific to the institutions concerned. He underlined the role of risk-reducing measures in encouraging private investment. He also discussed the role of mainstreaming climate risks into laws and policies to facilitate investments that are climate-resilient and remove market distortions to encourage investment, and called for greater research and information generation to support decision-making by public and private sectors.

Dowen emphasized the importance of regulatory environments in encouraging the private sector’s involvement in adaptation and stressed the role of the UNFCCC, via the Green Climate Fund and the Adaptation Fund, to facilitate investments. She underlined the need to contextualize the needs of the private sector and avoid adopting a one-size-fits-all approach, and cautioned that short-term political cycles may work against the long-term horizon needed for effective adaptation.

Closing the session, Fakir noted the unique format of the in-session workshop that allows stakeholders from all corners to discuss climate finance issues together. On the next steps, he said the Co-Facilitators and the Secretariat would produce a report of the workshop for consideration by COP 21 and noted that in-session workshops would continue in 2016 in accordance with the mandate provided by COP 20.

This session was moderated by Anne Hammill, IISD, who introduced the NAP Global Network, noting its role in providing better coordination for donor action in supporting NAP planning processes and NAP implementation.

Joyceline Goco, the Philippines, and Gottfried von Gemmingen, Germany, described the Network, noting the aim to integrate climate change into development processes. Goco observed the importance of raising awareness of NAP processes at the national level, and presented three components of the network: a targeted topics forum; global coordination between donors; and in-country coordination, including technical support to strengthen host country leadership. Gemmingen highlighted some goals of enhancing bilateral support for NAPs, including: improving coordination and collaboration among partners; supporting enhanced leadership on adaptation in developing countries; and facilitating learning and exchange on best practices and experiences learned.

Fred Kossam, Malawi, spoke on the NAP process in Malawi, noting that it addresses a number of sectors including agriculture, water resources, gender, forestry and transport. He noted donor coordination challenges including competition among donors for recognition, and managing integration of adaptation into national planning processes. He called for the Network’s support in: running a NAP symposium; training of sectoral teams; and comprehensive stocktaking for the NAP process, climate modeling and risk analysis.

Martina Duncan, Grenada, gave an overview of her country’s NAP process, which began in February 2015 and is supported by USAID and GIZ, underscoring the need to mainstream climate change adaptation into various sectors. She informed participants that Grenada’s NAP draws lessons from Jamaica’s experience, noting that these experiences include the coordination of donors.

Teige Cahill, UK, discussed challenges and opportunities from the perspective of a bilateral agency, namely his country's Department for International Development. He underlined the importance of good communication in mainstreaming the process, noting that funding for NAPs is often in competition with other priority areas such as humanitarian aid and disaster relief. He underscored that donor countries are likely to prioritize processes that demonstrate value for money to justify spending on international development over calls to redirect this money to domestic issues, concluding that the Network represents good value for money in encouraging results-based bilateral financing.

Discussing the next steps for the Network, John Furlow, US, pointed to a ‘target topic forum’ on developing high-level support and sectoral integration set to take place from 1-2 July 2015 in Rio de Janeiro, Brazil, noting that this may be repeated in the future if successful. Discussing the contribution of the Network, he said the aim was to add value and not duplicate results of other organizations, in particular by catalyzing bilateral support to NAP processes.

In the discussion, participants highlighted: the importance of South-South support for NAP development; the need for implementing entities to streamline funding of NAPs and reduce bureaucracy; ways to reduce the reporting burden by developing countries given the plethora of donors; the Network’s role in implementing NAPs after the NAP planning process; and the relationship between NAPs and INDCs. Others considered the emerging challenges working with donors and the revision of Intended Nationally Determined Contributions to include adaptation actions.

Sonja Klinsky, Arizona State University, moderated the session, which considered approaches for incorporating and assessing equity considerations in the INDCs. She presented on the philosophical basis of equity, describing it as a fundamentally social concept. Relating to the utility of equity approaches to climate change, she pointed to finding the balance between carefully defined principles of equity and practical constraints. Klinsky noted five essential concepts of climate equity: global action; responsibilities; capabilities; benefits; and rights.  She underscored the importance of qualitative indicators and suggested the INDCs provided a useful space for countries to justify their specific indicator choices.

David Waskow, World Resources Institute (WRI), presented findings from a new report on building climate equity from the ground up, discussing the implications for incorporating equity issues into INDCs and highlighting that the well-being of individuals and communities should be at the core of climate action. He suggested a capabilities approach to climate policies at the community, national and global level, and presented indicators for measuring a range of capabilities at these levels.

Izzet Ari, Middle East Technical University, presented a set of composite indices to enable equity-based analysis of a fair burden-sharing agreement among countries, based upon the principle of common but differentiated responsibilities and respective capabilities (CBDR-RC). He pointed to the value of the indices in enabling comparison and ensuring equity between countries’ INDCs.

Eliza Northrop, WRI, spoke on her organization’s recent work on the ‘fair and ambitious’ component of INDCs, noting that including a robust and transparent narrative of the reasons behind contributions would increase credibility and enhance international understanding of the national context. She discussed a five-point framework of components to include in INDCs: an initial framing statement; existing country obligations; how the contribution is fair and ambitious in light of national circumstances; how it contributes towards achieving the objective of the Convention; and broader considerations such as ensuring wide participation.

Discussions followed, considering, inter alia: practical implications of philosophical approaches; the opportunity of the INDCs to define new norms for equity approaches; and the influence of indicators on country ambition.

This session was moderated by Lorenzo Santucci, UN Economic and Social Commission for Asia and the Pacific (ESCAP). William Kojo Agyemang-Bonsu, UNFCCC Secretariat, opened the session, noting that quantifying and monetizing NAMA co-benefits in the waste sector can be replicated in other sectors.

Santucci then shared research in the quantification and the monetization of co-benefits of NAMAs in the waste sector, noting that the research is currently being carried out in six countries in Asia. He explained that the co-benefits link mitigation with aspects of the sustainable development goals, and include environmental and health co-benefits derived from the avoidance of pollution.

Abu Hasnat Md.Maqsood Sinha, Director, Waste to Resource Fund, and Iftekhar Enayetullah, Co-Founder, Waste Concern, then presented a paper on valuing the sustainable development co-benefits of climate change mitigation actions, detailing the case of the waste sector. Sinha noted that the aim of the research was to find ways of recovering value from waste as well as providing a pro-poor solution to waste management. Enayetullah detailed the methodology used in the quantification and monetization of co-benefits in recovering organic waste from municipal waste, noting socio-economic co-benefits including job creation, savings from chemical fertilizer subsidies and increase in crop yields. He noted that, when monetized, these co-benefits yield approximately US$94 per tonne of CO2 reduced.

Manuel Cocco, the South Pole Group, highlighted design principles for successful NAMAs including that they: are driven by the value they generate towards domestic national development framework; have a mechanism to transfer value from those who benefit to those who create the benefit; have tangible, accessible and substantial incentives; and require inter-agency cooperation.

Ziaul Haque, Ministry of Environment and Forests, Bangladesh, noted the importance of quantifying co-benefits in order to attract funding, and called for the study to be replicated in other sectors.

Drawing attention to the links between mitigation and adaptation co-benefits, Petrus Muteyauli, Ministry of Environment and Tourism, Namibia, underlined that environmental problems can be solved if viewed through an economic opportunities lens.

Andrés Pirazzoli, Ministry of Environment, Chile, cautioned participants on the risks of monetizing co-benefits and the need to manage expectations around NAMAs and their potential co-benefits. He prioritized the environmental integrity and climate benefits of NAMAs over profit-making opportunities.

Acknowledging the importance of fully describing co-benefits, Jan Peter Schemmel, The NAMA Facility, stressed the importance of co-benefits to “the beneficiaries, not the financial bottom line.”

In the discussion that followed, participants considered, inter alia: the risk of double counting the co-benefits of NAMAs; and the inclusion of gender equality and women’s empowerment as a co-benefit. Some expressed concern that the monetization of co-benefits may create a perverse incentive for donors to only finance “high-yield NAMAs.”