What enables effective international climate finance in the context of development co-operation?

Results from an OECD Survey*

Presentation by Stephanie Ockenden Economist/Policy Analyst Development Co-operation Directorate, OECD

*

Source: Zou and Ockenden (

forthcoming

2013)

Introduction: • Background

– – Climate Finance Effectiveness: Paris & Busan.

Rational for survey & approach

• Key insights from our survey

– – Common understanding on pre-conditions Areas of divergent views

• Summary

Climate finance is the means to the end; impacts and effectiveness are key…

Aid Effectiveness & Paris Declaration Principles Busan Partnership for Effective Development Co-operation commitment on climate finance

* Source: The Paris Declaration “Pyramid” ,

OECD.

**

Source:

Paragraph 34, Busan Partnership for Effective Development Co-operation, December 2011.

• •

Support national climate change policy and planning Where appropriate – using national country systems

•

Share lessons

What enables effective international climate finance in the context of development co-operation?

Climate finance has

•

many dimensions :

Domestic • Domestic • International development finance • Private • New & Innovative Range of Sources Range of Stakeholders Variety of levels •Recipients, Providers, Supporters •Climate & development communities •CSO & Private sector • International • National • Local • Project

Survey:

32 stakeholders (recipients, providers and supporters) from across the climate and development community

Introduction: • Background

– – Climate Finance Effectiveness: Paris & Busan.

Rational for survey & approach

• Key insights from our survey

– – Common understanding on pre-conditions Areas of divergent views

• Summary

Insights from survey: Significant common understanding on pre-conditions for effectiveness related to developing and using country systems: Recipients Providers Supporters 1) National climate change plans and strategies, mainstreaming climate change into development and aligning finance behind national priorities 2) In-country co-ordination across ministries, setting roles and responsibilities and co-ordination across donors 3) Establishing tracking and monitoring systems and feasibility of using country systems to channel climate finance (i.e. budget support)

Tracking finance flows Monitoring results Channeling through country systems

4) Capacity building: Country access and readiness to absorb finance channelled through international climate funds 5) Engagement with civil society, local government and the private sector

*Source: Zou and Ockenden (2013)

Challenges and opportunities with using country systems – driving divergences:

Trends: Positives & Opportunities: Barriers & Challenges: Absence of national climate change plans and limited readiness is a barrier Issues of knowledge, awareness and attitudes Donor’s – high priority to track climate finance  general budget support may not always be a feasible modality Emergence of extra budgetary National Climate Funds, Regional and Global Funds Support for national plans & capacity building Where national and local plans exist – examples of donors aligning behind these Some “intermediary” funds – developed to be handed over once domestic systems ready Duplicative? Less efficient?

More efficient in achieving climate results?

Just an interim fix? A stepping stone?

Consideration regional & global strategies and coordinated efforts … *Source: Zou and Ockenden (2013)

Introduction: • Background

– – Climate Finance Effectiveness: Paris & Busan.

Rational for survey & approach

• Key insights from our survey

– – Common understanding on pre-conditions Areas of divergent views

• Summary

In summary:

     

Significant common ground

on international climate finance - following aid effectiveness principles and use of country systems

Key pre- conditions

for effective climate finance and effective use of country systems: National plans, readiness, co-ordination, stakeholder engagement and tracking and monitoring of finance and results - very country and context specific Significant

timing & sequencing issue

with climate finance – urgency scale up finance and act on climate change vs. need to build capacity and readiness High emphasis on

donor accountability and tracking

of climate finance & implication that general budget support not always a feasible modality Emergence of extra-budgetary NCFs – are these more or less effective?

Private climate finance, new sources and instruments may require

new considerations

. These are not always unique to climate finance – likely to be topic of debate in financing post 2015 development agenda…

THANK YOU!

For more information:

[email protected]

OECD DCD Environment and Development Homepage www.oecd.org/dac/environment-development OECD DAC-CRS: Methods and data on climate change financing www.oecd.org/dac/stats/rioconventions.htm