Transcript Climate change and ODA: Towards integration Presentation
Climate change and ODA: Towards integration
Presentation for the APPG on Debt, Aid and Trade June 17th 2009
Prof. Peter Newell School of International Development UEA ESRC Climate Change Leadership Fellow www.clean-development.com
Introduction
Focus on the issue of UK ODA to support
clean energy development
consistent with goal of tackling climate change. “For public investment, the challenge is to shift more funds into
less carbon-intensive
, more
climate-proof
measures
without sacrificing development priorities
” (UNFCCC 2008). In 2007 the UK reported
£4,921 million
as
ODA,
making the UK the
third largest OECD-DAC
donor.
Why climate aid?
Important way of improving levels of
access to energy for the poor
and meeting UK government targets on climate change.
Multiplier effects
of aid: rather than what it will do in and of itself (e.g GEF Trust Fund & LDCF have demonstrated the ability to catalyse larger investments from elsewhere through
co financing)
flows.
(UNFCCC 2008): levering private Aid & additional finance as
‘deal breaker’
climate negotiations-
‘You pay we play’
in the
Proposals for Mitigation Aid The G77+ China proposal
Developed countries provide funding of
0.5% GDP
- mainly for mitigation
Mexican Climate Change Fund proposal
Countries obliged to contribute to the fund on the basis of
emissions
,
population
and
income
- mainly for mitigation. Middle income countries would contribute.
Profile of climate aid
The UNFCCC estimated that additional investment and financial flows of
US $ 200-210 billion
a year will be necessary for mitigation by 2030 (UNFCCC 2007). IPCC (2007) suggests a (wide!) range of between
0.2
and
3.5%
of
global GDP
for
annual mitigation costs
. Looking at costs in excess of the entire global aid budget today (Spratt 2009). Real need for
public financing for innovation in mitigation technologies
at
R&D
and
demonstration stages
. Currently very little public finance is available for these stages.
GEF
typically aimed at the
diffusion stage
and the
CDM
is
stimulating adoption
of technologies.
is
Energy Technologies Institute
could play a role in enabling clean energies (projects on tidal, offshore wind etc).
Adaptation
Range of estimates: US$4-37 billion annually (Stern review) Additional annual investment and financial flows for adaptation are estimated to be
US $ 86 billion annually by 2015 UNDP.
according to the
2007/08 Human Development Report of the
Increase in donor aid to 1% GDP (Stern) Challenge of
new
, assistance by 2015
additional
and
predictable
aid in a) context of financial crisis b) projected failure to even meet 0.7% on development
Adaptation Funding Mechanisms
Under UNFCCC:
Least Developed Countries Fund
Special Climate Change Fund
GEF Trust Fund’s
Strategic Priority for Adaptation
All based on voluntary pledges and contributions from donors- receipt and dispersal rates low.
Adaptation Fund
CDM transactions paid for by 2% levy on
Why Integration?
Real danger that
action in one policy area undermines that in another
: (i) climate change actions and investments miss important opportunities to tackle energy poverty and; (ii) attempts to tackle poverty are inconsistent with action to reduce GHGs, thereby further exacerbating poverty.
Climate change
‘is a massive threat to human development and in some places it is already
undermining the international community’s efforts to reduce extreme poverty
’.
(
Human Development Report
2007-8)
Sustainable Development in a Changing Climate
‘We are disappointed that DFID could not provide us with more evidence of progress it has made since 2002 towards
fully integrating climate change into its poverty alleviation programmes
, especially in Africa’. Critical of emphasis on ‘
one-off projects
rather than clear evidence of a
mainstreamed approach
. We believe that such initiatives should become the
norm
throughout DFID's country programmes. The Department should be able to demonstrate much more clearly that
climate change is informing its policy decisions in all the countries in which it works.’
(
IDC
2009)
Examples of integration failure: EIB
Discrepancy
between EIB’s stated climate change awareness and its overall lending in the energy sector with an ongoing bias in financing fossil fuels. A Bankwatch analysis in 2007 of the EIB’s investments in the energy sector from 2002 to 2006 shows that out of total
EIB energy investments of €23.7 billion
, €11.3 billion went for fossil fuels, while only
€3.0 – 3.6
billion was for
renewable energy
Globally, over half of the EIB’s
transport investments
have gone to
roads
and
air transport
Integration failure: World Bank
World Bank
: During its 2008 fiscal year the WB and IFC increased funding for fossil fuels by 102% compared with only 11% for new renewable energy (solar, wind, biomass, geothermal, small hydro) (
Bank Information Center 2009
)
Less than 30%
of the World Bank’s lending to the energy sector has
integrated climate considerations into project decision-making
late as 2007, more than 50% of the World Bank’s energy-sector portfolio
did not include climate change considerations at all
(
WRI
2008) . As
Extractive Industries Review
It’s own 2004
Extractive Industries Review
called for the Bank to phase out investments in fossil fuels.
"phase out investments in oil production by 2008 and devote its scarce resources to investments in renewable energy resource development, emissions reducing projects, clean energy technology, energy efficiency and conservation, and other efforts that delink energy use from greenhouse gas emissions. During this phasing out period, WBG investments in oil should be exceptional, limited only to poor countries with few alternatives”.
Towards a coherent aid strategy
Integrating climate concerns into aid and state support related to trade and investment: Export Credit Agencies. No project has ever been
denied ECGD support on environmental grounds
.
The combined annual emissions of hydrocarbons from 2 ECGD supported projects, the Baku-Tbilisi-Ceyhan (BTC) pipeline and the Bonny Island liquefied-natural-gas plant in Nigeria output from the whole of the UK
(WWF 2007).
–will result in the emission of 660m tonnes of carbon dioxide, more than the entire annual
Guidelines
as recommended by
Change Act
requiring
EAC
(2008) & amendment to
Climate reporting of carbon emissions
for large-scale projects
. ECGD
prefers
voluntary response.
Need to climate-proof
change & clean development considerations into general environmental &
non-environmental
infrastructural lending & lending.
mainstreaming
climate
UK leverage in a global context
Recipients of DFID multilateral assistance (over 40% of DfiD’s total budget): The
European Commission’s
programme (£991m) development
World Bank
(£493m)
United Nations
(£250m) (Figures for 2007/08:
DFID 2008).
Making the most of UK influence: In
Europe
In Europe
: The European Union as a whole provides over half (57%) of the world’s Official Development Assistance (ODA), £36 billion. The European Commission alone manages 17% of this figure directly, making it the
second largest aid donor in the world
(after the US). In 2008
EIB
approved
€60 billion
in loans- over twice that of the World Bank including
€9 billion
in the energy sector.
Some positive developments
€3 billion
Energy Sustainability and Security of Supply Facility
, authorised in June 2007 by the Governors of the Bank EU
Global Energy Efficiency and Renewable Energy Fund
(GEEREF) was designed in 2006 to support small and medium sized energy projects in order to support sustainable development in developing economies and economies in transition. It offers loans in order to mobilise private investments in energy technologies
€5 million Climate Change Technical Assistance Facility (CCTAF)
provides advance funding for activities associated with the development of project-based carbon credits under the Joint Implementation (JI) and Clean Development (CDM) mechanisms of the Kyoto Protocol on a conditional loan basis.
Making the most of UK Influence: In
the world
UK providing £800 million over three years for international work on climate change through the
International Environmental Transformation Fund
, administered by DFID/DEFRA. Most of this money is to be channeled into the
WB Climate Investment Funds
(£60 million of first £100 million tranche for the Clean Technology Fund) Issue of
ensuring WB financing does not undermine
or overshadow
UN processes for mitigation funding
- sensitivities of developing countries about access & control. IDC (2008) has noted UK government (DfiD) should
make use of all positions available to it
to in the WB to advance a reform agenda- does now have full-time executive director to WB. Rt. Hon. D. Alexander MP, has acknowledged that: …
choices made by institutions”. “as well as providing extra resources, we should aim to exert more influence over the policy
Leadership starts at home
Mixed messages
: In 2002, EIB approved a loan of EUR 390 million to BAA for the Terminal Five development at Heathrow airport.
What’s good enough for you
: Kingsnorth & Malawi ‘In Malawi the market has been coal but 80% of people are without electricity; are we going to turn around to them and say ‘You cannot have this’ or ‘By the way, we can but you cannot?’ (
DfiD Minister
2008)
Future challenges
Demand-driven
: Working with and through NGOs to identify
pro-poor interventions
big difference in tackling poverty & climate change simultaneously.
where aid can make a Improving
donor coordination
need aid most receive it, reduce duplication and ensure value for money.
to ensure those that Improving
policy integration
within government and among international institutions to
maximise impact
and enhance
credibility
Not just about what UK can do alone, but how it can
use its regional and global influence
to shape aid, trade and investment flows.
Support IDC (2008) call for an
audit
of current
bilateral
and
multilateral
funds for available for climate change work that should raise many of these issues.