Innovative Sources of Funding for SLM: Climate Change Financing Mechanisms Saveis Joze Sadeghian Advisor Climate Change Finance Programme , Global Mechanism 5th October 2010, China

Links between Climate Change impacts and Desertification

Examples of Climate Change impacts on the agricultural, forestry and land use sector

Climate Change Responses and Finance needs

Voluntary Carbon Market Climate Change Financing - Mitigation Strategies Instruments Internal measures Joint Implementation Mitigation (Kyoto Protocol) Emission Trading Flexible Mechanisms UNFCCC Clean Development Mechanism (CDM) REDD (Post Kyoto-2012) + Voluntary Carbon Market Adaptation Fund (AF) Adaptation Funds Special Climate Change Fund (SCCF) Adaptation Least Developing Countries Fund (LDCF) Bilateral and Multilateral financing

Climate Change Mitigation: Role of Agricultural, Rural and Land Use sector 1/1 Where do GHG emissions come from in the agricultural, rural and land use sector? Household cooking Biomass and waste Agricultural waste Land degradation Animal waste Deforestation

Reducing emissions by… Climate Change Mitigation: Role of Agricultural, Rural and Land Use sector 2/2 Reducing emissions by… …reducing fertilizer use …anaerobic digestion of waste …avoiding deforestation …modifying livestock management …using renewable energy …improving energy efficiency …increasing sequestration or conservation of carbon

Carbon Markets 1/3 Regulated Market (Kyoto): Clean Development Mechanism (CDM) $$$ + Technology Transfer Annex I Countries – Gaps in meeting targets after domestic mitigation measures Non-Annex I Countries Certified Emissions Reductions (CERs) SLM activities that capture carbon and thus generate CERs Approved CDM Methodologies ONLY!

Carbon Markets 2/3 Voluntary Carbon Markets $$$ + Technology Transfer Anyone: Governments, NGOs, Individuals, Private sector Anyone Voluntary markets with standards in agriculture: Voluntary Carbon Standard (VCS) and Chicago Climate Exchange (CCX) Verified Emissions Reductions (VERs)) SLM activities that capture or avoid GHG and thus generate carbon credits Voluntary Market Standards

Agriculture, Forestry and other Land Use (AFOLU): Project Examples Biogas and methane recovery Fertiliser switch or management in order to reduce N2O emissions Cropland and grazing land management: Soil conservation (e.g. no-till farming) Livestock management Forestry Afforestation / Reforestation Agroforestry Primary forest conservation (Reduced Emissions from Deforestation and forest Degradation - REDD) Rural Energy Energy efficiency Renewable energy Biofuels and fuel switch Kyoto + Voluntary Voluntary only

Voluntary Carbon Market Climate Change Financing: Adaptation Strategies Instruments Internal measures Joint Implementation Mitigation (Kyoto Protocol) Emission Trading Flexible Mechanisms UNFCCC Clean Development Mechanism (CDM) REDD (Post Kyoto-2012) + Voluntary Carbon Market Adaptation Fund (AF) Adaptation Funds Special Climate Change Fund (SCCF) Adaptation Least Developing Countries Fund (LDCF) Bilateral and Multilateral financing

Climate Change Adaptation: Role of Agricultural, Rural and Land Use Sector

Sources of adaptation funding: Adaptation Funds GEF Funds Extent of Benefits Scope of Focus Focus Areas Size (m US$) Eligibility Strategic Priority for Adaptation (SPA) Global Environmental Biological diversity, climate change, international waters, land degradation, POPs 50 Non-Annex 1 Least Developed Countries Fund (LDCF) Local, regional, or global Developmental Health, agriculture, water, infrastructure 115 Only LDC in Non-Annex 1 Special Climate Change Fund (SCCF) Local, regional or global Adaptation Fund Community, regional or national Full adaptation cost of projects and progs. to address the adverse effects of climate change Water resources, agriculture, coastal zone management and marine resources, ecosystem management. 500 (estimate) “Particularly vulnerable” developing country Parties

Other sources for adaptation funding Bilateral Funding GCCA Global Climate Change Alliance European Commission € 50 millions 2006- 2010 MDG Spanish MDG Fund Spain € 90 millions 2008-2011 Cool Earth Japanese Cool Earth Partnership Japan US$10 billions 2008-2012 NORAD Rainforest Initiative Cooperation Development Agency of Norway Norway € 560 millions The European Commission’s GCCA will address mitigation, adaptation and poverty reduction via a proposed partnership with developing countries that will include the provision of both technical and financial assistance. In addition, it aims to provide an informal forum that will facilitate negotiations for a post-2012 climate agreement. The GCCA also plans to add value by acting as a clearinghouse mechanism to coordinate the international adaptation initiatives of EU member states. The UK’s ETF-IW has two kinds of objectives. The first process objectives relate to transforming how finances are delivered. These include facilitating moves toward additional finance provided in a programmatic way; avoiding aid proliferation and ensuring coherence; and piloting models that will feed into the UNFCCC negotiation process and the Kyoto Adaptation Fund. The second set are thematic objectives that include supporting poverty reduction, providing environmental protection and tackling climate change in developing countries by addressing unsustainable deforestation, access to clean energy and activities that support adaptation. Most of the finance available under this initiative will be channeled through the World Bank’s Climate Investment Funds (CIF) Facility, although early support to the Congo Basin Conservation Fund has been provided to address uncontrolled deforestation in that region. The Spanish MDG Fund, which includes a thematic window on Environment and Climate Change, will support efforts to reduce vulnerability to climate change and poverty reduction. The fund will support (i) interventions that improve environmental management and service delivery at the local and national level, (ii) activities that will increase access to new financing mechanisms and (iii) efforts to enhance adaptive capacities. The Japanese Cool Earth Partnership has three priorities: (i) establishing a post-Kyoto framework that will ensure the participation of all emitters and aim at fair and equitable emission targets; (ii) strengthening international environmental cooperation, under which Japan will provide assistance to help developing countries achieve emissions reductions and to support adaptation in countries suffering from severe climate change impacts; and (iii) supporting innovation that will focus on the development of innovative technology and a shift to a low carbon society. The German International Climate Initiative has three objectives: (i) supporting sustainable energy systems, adaptation and biodiversity projects related to climate change; (ii) ensuring that investments will trigger private investments at a greater magnitude; and (iii) ensuring that financed projects will strategically support the post-2012 climate change negotiations. For this purpose, it will also support multilateral activities and funds focusing on adaptation and forest management. The Norwegian NORAD Rainforest Initiative is not a fund as such, but a pledge of earmarked funding to be allocated through the national budget. It will support the conservation of rainforests by promoting large-scale forest protection and the development of forest-based carbon management. More general measures will include support for adaptation and promoting clean energy in Africa. New Finance for Climate Change and the Environment Gareth Porter, Neil Bird, Nanki Kaur and Leo Peskett July 2008 Multilateral Funding i.e. World’s Bank Climate Investment Funds (i.e Strategic Climate Fund – Pilot Programme for Climate Resilience) Private Sector Funding i.e. Adaptation Private Sector Initiative

Voluntary Carbon Market REDD CDM Voluntary Carbon Market REDD Reducing Emissions from Deforestation and Degradation Agriculture/Land use/Land use change Energy Afforestation/ Reforestation Agriculture/Land use/Land use change Energy Agriculture/Land use/Land use Change Ecosystems Coastal Zones Water Adaptation

Thank You! Saveis Joze Sadeghian Climate Change Programme Global Mechanism of the UNCCD s.sadeghian@global-mechanism.org