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)

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 Introduction:

Climate finance is the means to the end; impacts and effectiveness are key… 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 Aid Effectiveness & Paris Declaration Principles 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 : Variety of levels Range of Sources Range of Stakeholders Recipients, Providers, Supporters Climate & development communities CSO & Private sector Domestic International development finance Private New & Innovative International National Local Project Survey: 32 stakeholders (recipients, providers and supporters) from across the climate and development community

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 Introduction:

Insights from survey: Significant common understanding on pre-conditions for effectiveness related to developing and using country systems: RecipientsProvidersSupporters 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) Monitoring results 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 Tracking finance flows Channeling through country systems *Source: Zou and Ockenden (2013)

Challenges and opportunities with using country systems – driving divergences: *Source: Zou and Ockenden (2013) Absence of national climate change plans and limited readiness is a barrier Issues of knowledge, awareness and attitudes Barriers & Challenges: 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 Duplicative? Less efficient? More efficient in achieving climate results? Just an interim fix? A stepping stone? Positives & Opportunities: 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 Consideration regional & global strategies and coordinated efforts… Trends:

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 Introduction:

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: OECD DCD Environment and Development Homepage OECD DAC-CRS: Methods and data on climate change financing