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41st Annual Meeting of the Board of Governors of the Caribbean Development Bank 25-26 May 2011, Port of Spain

SEMINAR ON CLIMATE CHANGE

UNLOCKING CLIMATE CHANGE FINANCING –CONSTRAINTS AND OPPORTUNITIES

Presented By

Mr. Selwin C. Hart

Building Blocks Outcome1. Shared Vision and a

long term global goalLong term global goal < 2CReview of adequacy by 2015 - 1.5C?

2. Mitigation Targets Deferred to 2011Transparency addressed

3. Adaptation Adaptation Framework & CommitteeLoss and Damage work program

4. Finance Green Climate Fund; Transparency on Fast Start Funds; Standing Committee

5. Technology Development

Institutional Framework agreed

6. Capacity Building Institutional Framework Deferred

7. Legal Form Deferred

8. Future of the Kyoto Protocol

Deferred

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Outcome Details

1. Fast- Start Finance • Developed countries re-commit to provide $30 billion between 2010-12 with priority for LDCs, SIDS and Africa and balanced between adaptation and mitigation• Transparency on access

2. Green Climate Fund • Under the guidance and accountable to the COP• 24 Member Board (12 developed and developing countries with representation from SIDS and LDCs)• 40 Member Transitional Committee (TC) to design this Fund before COP-17 in Durban (Dec.)• Interim Trustee – World Bank

3. Standing Committee • To assist in improving coherence and coordination among different finance channels and the MRV of finance• Roles and functions are to be further defined

4. Long-Term Financing Sources • Report of the UNSG’s Advisory Group on Finance noted•No agreement on a way forward

Finance Outcomes

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Under-financing- Developed countries have failed to honour their commitments under the Convention to assist the most vulnerable – There is a huge gap between what is needed, what will be needed in the future, and what is presently available.

Insufficient financing and investment for concrete adaptation and mitigation projects and activities – Many plans little support.

Burdensome criteria associated with accessing available sources of financing

Absence of tools to measure the true economic costs associated with adaptation

Size matters– Small markets represent a barrier to the mobilization of private investment

High vulnerability to external economic shocks –e.g. food and energy crises and natural disasters which can immobilize an entire State

Limited access to domestic resources in SIDS

Climate change represents an additional challenge to the developmental aspirations of SIDS

Limited capacity in SIDS

Financing Challenges Faced by SIDS

1. Responsive and sensitive to the need of developing countries esp. SIDS and LDCs;

2. Address the historical imbalance in allocation of support between adaptation and mitigation;

3. Enhance implementation of concrete action on the ground esp. on adaptation

4. Adopt processes and project cycles that do not place an undue burden on developing countries.

5. Ensure simplified and direct access to financing6. Implement strategic prioritization of financial resources for the

urgent and immediate needs of developing countries that are particularly vulnerable to the adverse effects of climate change, especially LDCs and SIDS.

7. Environmental integrity - projects funded by the GCF should result in net emission reductions and assess how projects contributed to global emission reduction goals;

8. Be a major player and be instrumental in rationalizing and harmonizing the universe of Climate Change financing;

9. Mobilize and leverage unprecedented amounts for climate action (USD100bn and more) from various sources, but in the same time ensure predictability and sustainability of resources

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Expectations for the GCF

• Held its initial meeting in Mexico City 28-29 April

• Agreed that the TC will be chaired by Mexico, South Africa and Norway

• The TC also agreed that it would organize its work in four work streams to be facilitated by a developed and developing country as follows:– WS1: Scope and guiding principles: Spain and Barbados– WS2: Governance and institutional arrangements:

Switzerland and Democratic Republic of Congo– WS3: Operational modalities: Australia and Pakistan– WS4: Monitoring and Evaluation - Sweden and

Bangladesh

• Agreed on the configuration of its support Unit which is staffed by representatives from the UNFCCC, IFIs, UNDP, GEF, UNEP, Regional Development Banks

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Work of the Transitional Committee

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Fast – Start Financing

Country Committment (USD million) Period

Australia 633 2010-2012

Canada 411 2010

EU (incl. EC USD 211 million) 10100 2010-2012

Iceland 1 2011-2012

Japan 15000 2010-2012

New Zealand 72 2010-2012

Norway 1000 2010-2012

Switzerland 159 2010-2012

US 1704 2010

Total 29,0802010-2012

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Fast Start Financing Pledges

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Fast Start Financing – New and Additional

• FSF should not set a bad precedent for LTF: new and additional, access, priority, balance.

• No evidence to suggest that priority access is being given to the most vulnerable (SIDS, LDCs, Africa) or that countries are seeking to ensure a balanced allocation of these funds between adaptation and mitigation. use of a lack of information provided so far by developed countries.

• Access to FSF is opaque as the major part flows through bilateral channels and there are no agreed or standardized procedures to apply for these funds, mostly developed countries distribute them at their discretion.

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Fast Start Financing

• Caribbean Countries should:– intensify efforts at accessing and utilizing available

financing through bilateral sources and existing institutions e.g. Adaptation fund;

– Improve information flow between Ministries on the availability of financing;

– Better integrate climate change considerations in sectoral planning

– Intensify engagement in the ongoing climate change negotiations including finance and planning ministries

• CDB– Work with borrowing members on the above– Become engaged in the ongoing work of the TC to design

the Green Climate Fund; as well as the ongoing negotiations in the UNFCCC

– Seek to become the main conduit for providing climate finance to the region.

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Conclusion