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Luis Gomez-Echeverri ECBI Fellowship Programme

National Funding Entities: Their role in the transition to a new paradigm of global cooperation. Luis Gomez-Echeverri ECBI Fellowship Programme. Focusing on national climate change financial arrangements The case for national funding entities and institutions

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Luis Gomez-Echeverri ECBI Fellowship Programme

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  1. National Funding Entities: Their role in the transition to a new paradigm of global cooperation Luis Gomez-Echeverri ECBI Fellowship Programme

  2. Focusing on national climate change financial arrangements The case for national funding entities and institutions The complexity of climate change financing requirements National Funds and funding entities Sample of funds recently established New funds being developed or in the process of being established Other existing funds and funding instruments Local initiatives on REDD Conclusions Outline 2

  3. The focus to date: the global mechanism not local arrangements The Copenhagen promises, if fulfilled, have the potential of bringing a new fresh source of funding for countries The success of this new wave of funds will strongly depend on what mechanisms are put in place locally Questions that arise with the global mechanism - how to allocate, disburse, and manage – also come up at the national level but with added complexity Several countries taking initiative to establish national funding entities to tap resources – big CD challenge Focusing on national climate change financing arrangements why the urgency? 3

  4. Potential for exciting new era of global cooperation Potential for transition to new model of global financial transfers – to one with greater devolution Timely transition is good news for climate change and development: For development: easier to mainstream into development priorities of countries For climate change: will help countries feel as legitimate partners of global effort Gradual acceptance of need to shift responsibility to: Increase impact by greater ownership and benefit of greater local knowledge Address local complexities of climate change within context of development The Case for National Funding Entities and Institutions 4

  5. Central formulas and rules of global funds most often not a good match to diversity of financing needs Role of national funding entities and institutions as intermediaries Magnitude of climate change needs can not be fully addressed by UNFCCC - thus need for leveraging other funds - National funding entities/institutions are best placed to sort differences of needs and best instruments to meet National funding entities/institutions also ones best placed to ensure that investments are mainstreamed/ integrated into development The Complexity of Financial Requirements 5

  6. A new breed of institutions with very few commonalities Designed to meet specific national needs and “politics” Most operate off-budget to avoid local complexities and local politics of national budgets Most specifically designed to capture funds from int. institutions, to mobilize and leverage local funds, and to mainstream funding to development Few lessons learned yet but need to be monitored Idea of national funding entities and institutions as local funding hubs not new National Funding Entities and Institutions 6

  7. Amazon Fund of Brazil Bangladesh Climate Change Resilience Fund (BCCRF) Brazilian National Fund on Climate Change China CDM Fund (CDMF) China Funds for the Environment Ecuador Yasuni ITT Trust Fund Indonesian Climate Change Trust Fund (ICCTF) Maldives Climate Change Trust Fund Thailand Energy Efficiency Trust Fund A Sample of New Funds Established 7

  8. National Strategic Climate Change Trust Fund Indonesian Low Emissions Development Financing Facility Indian Clean Energy Fund Philippines National Survival Fund Costa Rica Green Bond Funds Established or in Process of Being Established 8

  9. Green Investment Schemes – a new breed of carbon finance mechanisms Funds specifically designed to support ESCOs Credit guarantees and bridge financing Micro finance for off-grid and remote energy supply Utilities and Municipalities as financial intermediaries Loan guarantees Special purpose financing windows Institutions being set up as part of new REDD initiatives Other Funds and Funding Instruments 9

  10. Greater attention needed on governance and institution building by global climate change negotiations Success of global finance and global cooperation on climate change dependant on strong local arrangements Countries that create strong local institutions are posed to benefit the most and the earliest New and additional funding will pose huge capacity development challenge that needs to be funded also International institutions will continue to play an important BUT DIFFERENT role creating bridge where local institutions not yet established, building capacities and providing technical assistance Conclusions 10

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