Transparent spending of climate finance: Tracking and coding CCA/CCM finance

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4 What you can expect to learn from this exercise:  Understanding of : the concept of tracking mitigation and adaptation finance;  How to: Screen project components for adaptation and mitigation co- benefits. Quantify the commitment amounts for adaptation and mitigation co-benefits.

5  Introduction to coding & tracking adaptation and mitigation finance  Introduction to the fictitious case study  Coding & tracking exercise  Reflections Agenda

6 Introduction: Coding & tracking climate finance Objectives: International donors and investors Build trust and accountability with regard to climate finance commitments and monitor trends and progress in climate- related investment. National governments Certify to contributors and recipients that financial and technical support is reaching those who need it on the ground.

7 Introduction: Coding & tracking climate finance There is a variety of coding & tracking systems among the different donors and financial institutions: UNDP M&E Adaptation Framework: classifications developed to contribute to the M&E framework of UNDP’s Adaptation Programme World Bank PPCR Results Framework: flexible framework to allow for country-driven programmes DFID ICF: designed to measure impact and value for money and to measure results of the International Climate Fund (ICF) OECD DAC Adaptation Marker: introduced by the Development Assistance Committee to identify funding flows related to adaptation

8 Introduction: Coding & tracking climate finance According to the World Bank’s climate finance tracking system, for coding purposes, an activity provides: Adaptation co-benefits if it reduces the vulnerability of human or natural systems to the impacts of climate change and climate variability related risks by maintaining or increasing adaptive capacity and resilience. Mitigation co-benefits if it reduces Greenhouse Gas emissions or enhances their sequestration with regards to a no project situation. Source: The World Bank: Tracking Climate Finance at the World Bank. June 2012The World Bank: Tracking Climate Finance at the World Bank. June 2012

9 Introduction to the fictional case study Setting The World Bank has committed a loan of US$ 37 million for infrastructure investment in the transport, energy, and water sectors of CLIFland. You are part of the project team working on the respective project document. While the World Bank has already approved the project, they have asked for additional documentation showing the share of funding assigned to the relevant project sectors (transport, water, wastewater and energy) and the respective mitigation and adaptation co-benefits. Consequently, you have the task of calculating the share of funding that goes towards the four sectors using the sector codes (see hand-out). Furthermore, you will need to screen the project document for potential adaptation and mitigation co-benefits and assign them to the four project sectors.

10 Exercise – coding & tracking climate finance Now it is your turn to do the exercise!  Break up in groups of 4 people  Follow the instructions of the step-by-step guide which you will find in the hand-out Step 1: Quantify commitment amounts per sector across project (sub-) components. Step 2: Screen each (sub-) component for adaptation and mitigation co- benefits. Step 3: Assign funding for adaptation and mitigation co-benefits to sector codes. Step 4: Calculate the share of funding for adaptation and mitigation per sector code.

11 Case Study Exercise – Coding & tracking climate finance Step 1: Quantify commitment amounts per sector across project components. Use the hand-out “Project Document regarding a Proposed Loan of US$ 46 Million by the World Bank For CLIFland’s Infrastructure Project, March 10, 2014” Sector codes: TP = Transport ● WA = Water ● WW = Wastewater ● EN = Energy ComponentCommitment Sector allocation (%) 1 Road Investments USD TP: 100%

12 Case Study Exercise – Coding & tracking climate finance Step 1: Quantify commitment amounts per sector across project components. Sector codes: TP = Transport ● WA = Water ● WW = Wastewater ● EN = Energy ComponentCommitment Sector allocation (%) Sector allocation ($) 1 Road Investments $ 30 million TP: 100% TP: $ 30 million

13 Case Study Exercise – Coding & tracking climate finance Step 2: Screen each (sub-) component for adaptation and mitigation co- benefits. Component Sector allocation ($)Adaptation co-benefits Mitigation co-benefits 1 Road Investments TP: $ 30 million√x If the respective (sub-) component carries a benefit towards climate change adaptation or mitigation, the respective climate code is assigned. Please note: Climate coding is conservative: if the impact of an action is unclear, then no climate benefit should be accounted for

14 Case Study Exercise – Coding & tracking climate finance Step 3: Assign funding for adaptation and mitigation co-benefits to sector codes Component Sector allocation ($)Adaptation co-benefits Mitigation co-benefits 1 TP: $30 million √ ($30 million) x If a (sub-) component is considered to provide climate adaptation or mitigation co- benefits, then the entire funding supporting this (sub-) component counts towards adaptation or mitigation co-benefits! Unless there is a clear rationale for allocating otherwise (e.g. detailed financing breakdown).

15 Case Study Exercise – Coding & tracking climate finance Step 4: Calculate the share of funding for adaptation and mitigation per sector code SectorSector allocation Adaptation co-benefits ($) Mitigation co-benefits ($) Adaptation co-benefits (%) Mitigation co-benefits (%) TP$30 million $ 0 million100 %0 % WA$ 0 0 % WW$ 0 0 % EN$ 0 0 %

16 Case Study Exercise – Coding & tracking climate finance Suggested solution

17 Case Study Exercise – Coding & tracking climate finance ComponentCommit- ment ($) Sector allocation (%) Sector allocation ($) Adaptation co-benefits ($) Mitigation co-benefits ($) 1 Road Investments TP: 100%TP: √ X $ 0 2 Infrastructure sector strategy TP: 25% WA: 25% WW:25% EN: 25% TP: WA: WW: EN: √ Inst. Capacity Transport sector TP: 100%TP: X $ 0 4 Water & waste water study/plan WA: 50% WW: 50% WA: WW: √ X $ 0 √ Energy Sector EN: 100%EN: X $ 0√ Suggested solution:

18 Case Study Exercise – Coding & tracking climate finance SectorSector allocation Adaptation co-benefits ($) Mitigation co-benefits ($) Adaptation co-benefits (%) Mitigation co-benefits (%) TP$ $ $ ,8 %0,8 % WA$ % WW$ $ $ ,11 %100% EN$ $ $ ,2 %100% Suggested solution:

19 Case Study Exercise – Coding & tracking climate finance Getting CLIF Ready What did you learn from this exercise? What challenges did you face with regards to assigning adaptation and mitigation co-benefits to the respective project (sub-) components? How does your country/ institution track adaptation or mitigation finance as part of its overall expenditures?

20 Coding & tracking climate finance – Next Steps Checklist to get CLIF Ready According to what you learnt from this exercise you could … Check with your institution what the share of adaptation and/or mitigation finance is in relation to its overall expenditures. Check in what way your institution/ country uses climate change tracking or coding frameworks. Check with your institution/ country about a typology of adaptation projects that could be transferred into a coding system.