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Financing for climate change – meeting the challenge Mirey Atallah Cairo, November 2010.

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Presentation on theme: "Financing for climate change – meeting the challenge Mirey Atallah Cairo, November 2010."— Presentation transcript:

1 Financing for climate change – meeting the challenge Mirey Atallah Cairo, November 2010

2 2 The Global Climate Change Financial Architecture National Implementin g entities Innovative Climate Finance (sources and governance under negotiation Multilatera l Cooperatio n Bilateral Cooperatio n CSOs/NGO s Official Development Assistance ‘New and additional’ climate finance Industrialise d countries ODA commitmen t Industrialised countries commitments to ‘new and additional’ finance for climate change Total finance available for climate change mitigation and adaptation initiatives Industrialised countries emission reduction obligations Foreign Direct Investment Government Cooperation Budgets Private Sector Domestic Budget Carbon Markets CDM Levy funding the Adaptation Fund Bilateral Finance Institution s UNFCCC Multilater al Finance Institution s Source: Adapted from SEI 2009 Private Cooperation Finance Capital Markets National Financial Institution s

3 3 New Financial Investment by Region, 2002-2008,$ billions

4 4 Mitigation and Adaptation: Complementary Risk Management Strategies or Two Sides of the Same Coins? Cost of abatement (marginal cost) rises Benefit of abatement (marginal benefit) falls Optimal abatement path necessary Economically optimal timing

5 5 Estimated costs of adapting to climate change Assessment byAnnual cost $ bnIn UNDP (2007)862015 UNFCCC (2007)28-672030 World Bank (2006)9-412008 Oxfam (2007)>502008 Stern Review (2006)4-372008 20-40% of ODA and concessional finance are subject to CC risks; Cost of addressing this risk would be $1-8billion/year Source: World Resources Institute, 2007

6 6 Catalyzing Environmental Finance Global Environment Trust Funds GEF Trust Fund Montreal Protocol Multilateral Fund SCCF, LDCF, Adaptation Fund Market based & Innovative Sources of Financing Carbon Finance (CDM/JI, VC, sectoral credit + financing) Insurance + other risk financing Innovative mechanisms (e.g. IFIs, air levies etc…) UN/UNDP E&E Trust Funds (TF) MDG Spanish Fund, E&E TF Multi/bi lateral funds WB: CIF, FCPF, CPF Japan CEP, Norway CFI, Germany ICI, Australia IFCI Institutional & Corporate Finance Private equity funds Green bonds New UNFCC Related Funds REDD fund (s) Fast Start Funds (s) COP green climate fund (M/A, REDD, TT, CD) Technology mechanisms $6 - 8 billion $ Amounts available in developing countries (2010-2014) $15 billion $400 billion $200- 500 million $80 billion $75-150 billion Foundations/Private Coorperation UNF, Packard, Gates, Rockefeller $4 billion

7 7 Potential Sources of Climate Change Financing Public finance from climate sources Phase out of regressive fossil fuel subsidies AAU auction proceeds Emission Trading Schemes (ETS) auction proceeds Carbon taxes Marine and aviation/bunker fuel levies Offset levies Public finance from non-climate sources ‘Tobin’ tax, taxing revenues from financial transactions Leveraging of IMF Special Drawing Rights Carbon markets Other international financing proposals Debt for clean energy swap International Lottery

8 8 GEF CLIMATE CHANGE MITIGATION - more transformational impact, programmatic approaches and sectoral issues GOAL: support developing countries and economies in transition toward a low- carbon development path Promote demonstration, deployment, and transfer of advanced low- carbon technologies Promote market transformation for energy efficiency in industry and buildings Promote investment in renewable energy technologies Promote energy efficient, low-carbon transport and urban systems Conserve and enhance carbon stocks through sustainable management of land use, land- use change, and forestry (LULUCF) OBJECTIVES Enabling Activities and Capacity Building Direct access

9 9 Under the convention Nationally Appropriate Mitigation Action National Adaptation Plans Sectoral approaches: REDD and REDD+ Energy Transport Insurances


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