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Climate Finance Inflows to South Africa (Mitigation versus adaptation) 28 November 2017

Climate Finance Inflows to South Africa (Mitigation versus adaptation) 28 November 2017. Financing the Transition to a Low-carbon and Climate Resilient Economy and Society.

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Climate Finance Inflows to South Africa (Mitigation versus adaptation) 28 November 2017

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  1. Climate Finance Inflows to South Africa (Mitigation versus adaptation) 28 November 2017

  2. Financing the Transition to a Low-carbon and Climate Resilient Economy and Society • The Climate Change Flagship Programmes, in section 8 of the National Climate Change Response Policy (NCCRP) are South Africa’s response to implementing climate action at a national scale • They provide the greatest opportunity for high impact climate action in the near to medium term, responding to the three key challenges facing South Africa and other countries as global efforts to address climate change intensify: • Demonstrating the course of actions needed to respond to climate change effectively and efficiently unlocking and realising significant social and economic benefits; • Attracting resources at the scale required to enable meaningful transformation, i.e. at the scale that effectively limits atmospheric GHG emissions and/or enables adaptation to the impacts of unavoidable climate change; • Igniting national-scale action at the speed required to respond to climate change, i.e. limiting GHG emissions and/or enabling adaptation change with the necessary urgency • They provide the greatest opportunity for high impact climate action pre-2020

  3. The Climate Change Flagship Programmes and National Climate Change Response Policy • Front-runners in the transition, catalysingsector-wide transformation • Build on existing expertise and experience of key sectors which have extensive experience in implementing climate change relevant policies and measures • Represent an important aspect of the practical implementation of the National Climate Change Response Policy (NCCRP) and National Development Plan (NDP) • Provides a coordination and consolidating structure for enable national-scale implementation – providing the mechanism the implementation of projects or groups of projects

  4. Climate Change Flagship Programmes and South Africa’s Climate Change Response South Africa’s Nationally Determined Contribution to the UNFCCC South Africa’s GCF Country Programme and Investment Framework South Africa’s NDC to UNFCCC CLIMATE CHANGE FLAGSHIP PROGRAMMES South Africa’s Portfolio of Nationally Appropriate Mitigation Actions (NAMAs) National GCF Country Programme South Africa’s NAMA Portfolio

  5. The Climate Change Flagship Programmes and South Africa’s NDC • Economy-wide Financing • Scale and Transformative Action • Institutional Arrangements • Monitoring and Evaluation South Africa is in the final appraisal phase by NAMA Facility fund a National Energy Efficiency in Public Infrastructure and Buildings Programme to be implemented in 2018 as part of the Energy Efficiency and Demand Management Flagship Programme led by the Department of Energy and Department of Public Works

  6. High Climate Change Flagship and the NDC Investment & Implementation Preparation 1 Full-scale Deployment Full Investment Proposal & Business Plan Refining & Detailing Implementation/ Delivery Models 2 Full Feasibility Report 3 Implementation Readiness Prefeasibility Report Assessing viable project ideas for preferred options 4 Low Scoping Report 5 Project Criteria: Flagship Programme Fit & Climate change Impact Concept Note 6

  7. Climate Change Investment & Implementation Preparation Focus Areas Programme Preparation and Support Finance and Operationalise Implementation at Scale Climate Change Flagship Programmes Leveraging Existing Public and Private Finance Pools Integrate all Spheres of Government

  8. Target Beneficiaries of Climate Change Flagship Programmes Pipeline Development Lead Enable

  9. The Climate Change Flagship Programmes and South Africa’s GCF Country Programme • The Climate Change Flagship Programmes currently constitute the majority of South Africa’s GCF country programme proposal pipeline. • The Climate Change Flagship Programme team, in collaboration with the relevant lead partners, is actively involved in the development of 9 funding proposals to the GCF

  10. South Africa’s Green Climate Fund Strategic Investment Framework • The purpose of this investment framework is to ensure that South Africa’s GCF investments are aligned with national climate change priorities

  11. Climate Change Flagship Programmes and GCF Strategic Investment Framework

  12. Linking the GCF to National Climate Change Response Priority Areas and Outcomes (1)

  13. Linking the GCF to National Climate Change Response Priority Areas and Outcomes (2)

  14. Linking the GCF to National Climate Change Response Priority Areas and Outcomes (3)

  15. Linking the GCF to National Climate Change Response Priority Areas and Outcomes (4)

  16. UNFCCC FINANCIAL MECHANISMS • Operating Entities of the Financial Mechanism • Global Environment Facility • Green Climate Fund • Kyoto Protocol “Mechanism” • Adaptation Fund (Revenue levy on CERs)

  17. GLOBAL ENVIRONMENT FACILITY • Capacity Building Programme to Implement South Africa's Climate National System Life (US$ 1,100,000 - Co Financing US$ 2,289,065) (UNEP). To enhance human and institutional capacity related to transparency in South Africa. • Cities-IAP: Building a Resilient and Resource-efficient Johannesburg: Increased Access to Urban Services and Improved Quality of (US$ 8,093,171 - Co-Financing US$ 124,439,330)(Development Bank of Southern Africa) - The project will foster city level resilience, resource efficiency, emission reductions and other co-benefits through area-based pilot demonstrations, systems analysis (food), and improved integrated planning. • Equity Fund for the Small Projects Independent Power Producer Procurement Programme (non-grant) (DBSA) (US$15,000,000 - Co-Financing 147,006,333) - Removing Financial Barriers in the Small Scale Renewable Energy Projects: Establishment of an Equity Fund.

  18. GLOBAL ENVIRONMENT FACILITY • Cleantech Programme for SMEs in South Africa (UNIDO) (US$ 1,990,000- Co-Financing US$ 6,000,000) - Promotion of clean energy technology innovations and innovative clean energy technology entrepreneurship in South Africa through Clean Energy Technology Innovation Competition and Entrepreneurship Accelerator Programme • Energy Efficient Low-carbon Transport(US$1,300,000 - Co-Financing US$ 7,115,000) (UNIDO) - Promotion of the widespread use of electric vehicles (EVs) and non-motorized transport (NMT), and the development of the necessary infrastructure, as part of the Green Transport and Green Cities initiatives of South Africa. • Wind Energy Project (SAWEP) – Phase II (US$ 3,554,250 - Co-Financing US$ 35,667,936) - To assist government and industry stakeholders overcome strategic barriers to the successful attainment of South Africa’s Integrated Resource Plan target of 3,320 MW of wind power online by 2018/2019.

  19. GLOBAL ENVIRONMENT FACILITY • “Improvement of industrial energy efficiency in South Africa through mainstreaming the introduction of energy management systems and energy systems optimization.” (UNIDO) (US$ 5,776,484) - Co-Financing US$ 38,439,000) - To accelerate and expand the introduction of Energy Management Systems (EnMS), Industrial Energy Systems Optimization (ESO), and the Energy Management Standard ISO50001 within the South African industrial (and selected commercial) context in order to realize increased investment in industrial energy efficiency through the wide-scale adoption of the two methodologies and ISO 50001 under (i) enhanced institutional frameworks and regulatory environments, (ii) technical and implementation assistance to industry and (iii) multi-level engineer, technician and operator capacity building programmes.

  20. GLOBAL ENVIRONMENT FACILITY • Promoting Organic Waste-to-Energy and other Low-carbon Technologies in Small and Medium-scale Enterprises (SMMEs): Accelerating Biogas Market Development (UINDO) (US$ $ 4,222,110 - Co-Financing 41,884,888) - Promote market based adoption of waste-to-energy and other low-carbon technologies in small and medium scale industries of South Africa. • Global: Preparation of Intended Nationally Determined Contribution (INDC) to the 2015 Agreement under the United Nations Framework Convention on Climate Change (UNFCCC) (UNEP) (US$ 220,000)

  21. The Adaptation Fund (AF) was established by the Parties to the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC), as a mechanism to finance concrete adaptation projects and programmes in developing country parties. The fund is capitalised mainly from a percentage of proceeds of the Clean Development Mechanism. Future capitalisation in discussion.Adaptation Fund resources are accessed via Multilateral Implementing Entities (MIEs) and National Implementing Entities (NIEs). Initial country cap of USD10 million – but under revisionDirect Access = the Big Innovation of the Adaptation FundSANBI is South Africa’s National Implementing Entity (NIE) of the Adaptation Fund

  22. Building resilience in the Greater uMngeni Catchment, South Africa (USD 7.5 million) • Early warning systems that support local communities and small scale farmers • Climate-proof settlements (built and ecological infrastructure) and informing settlement planning • Climate resilient agriculture • Lessons learnt

  23. uMngeni Resilience Project • High level updates as of October 2017 • An early warning system is now providing farmers with localized information. • Plans are being developed to rehabilitate degraded wetlands and grasslands. • Development of awareness raising material on the projects and the importance of adapting to climate change. • Continued support of Small scale farmers in the project target sites

  24. Taking Adaptation to the Ground: A Small Grants Facility for enabling local level responses to climate change (USD 2.5 million) • Fund at least 12 small grants in predetermined investment windows • Approx. USD100 000 each • Provide ongoing support ** ADCI led study testing downscaling of climate models

  25. Taking Adaptation to the Ground: A Small Grants Facility for enabling local level responses to climate change (USD 2.5 million) • Fund at least 12 small grants • Approx. USD100 000 each • Provide ongoing support Adaptation actions through 3 Investment Windows Climate-smart Agriculture Climate-proof Settlements Climate-resilient Livelihoods 12 small grants in 2 target areas valued at US$ 1.5 million

  26. Small Grants Facility • High level updates as of October 2017 • 11 projects approved projects (6 Nam/5 Mop) • 8 SGR’s contracted • 2 Pipeline projects in development • Interventions include: • Raising climate resilient livestock • Producing climate resilient rooibos tea • Climate smart vegetable production • Investments in water security • Investments in saving schemes • Investments in climate proof infrastructure • 2931* direct project beneficiaries Enhancing Food Security with Climate-Smart Agriculture - Khanimamda

  27. 12 Small Grant Facility Projects Approved to date!

  28. GREEN CLIMATE FUND • Projects Approved: • SCF Capital Solutions: Facility which uses supply chain financing techniques to provide working capital to MSMEs involved in Renewable Energy and energy efficiency projects. (US$ 12.2 million – DBSA has not been able to fulfil the conditions and the project will need to be revised and re-submitted for GCF Board approval) • Catalyzing private sector investment for renewable energy and energy efficiency projects across the developing world – European Investment Bank (Global Project – 30 Countries) US$ 265 million (Potential US$ 10 - 15 million for South Africa)

  29. GREEN CLIMATE FUND • Readiness Funding • Building SANBI’s capacity to develop GCF funding proposals and manage and monitor GCF projects in South Africa (US$ 380,000) • Projects submitted but not yet approved: • SANBI (Adaptation – Enhanced Direct Access) • LandBank (Mitigation – Mobilizing finance at scale) Approximately US$ 40 million • Project Preparation Funding - PPF (up to max of US$ 1.5 million) • Renewable Energy - Solar Photovoltaic (PV) Programmatic Solutions for the South African Public Sector: Rail and Government Buildings Programme. (DBSA) • Municipal Solid Waste Management Programme – (DBSA) • Public Private Sector Energy Efficiency Programme (PPSEEP) (DBSA)

  30. GREEN CLIMATE FUND • Concept Notes • Credit Enhancement Mechanism for non-Sovereign Backed PPAs - To source a first loss/guarantee facility, to be used as a credit support mechanism to support non-sovereign guarantee backed PPAs for RE Projects in South Africa (DBSA – US$ 253 million) • Water Resilient programme with City of Cape Town (City of CT/ DBSA – US$ 77 million grant and US$ 38 million loan )

  31. 8 Strategic Results Areas

  32. MULTILTERAL DEVELOPMENT BANKS – WORLD BANK CLEAN TECHNOLOGY FUND • Eskom’s proposed 100 MW-capacity Upington Concentrated Solar Power (CSP) plant, (CTF = US$ 250 million – World Bank US$ 200 million and African Development Bank US$ 64.4 million) • Development of a utility-scale wind power plant -- Phase 1 of Eskom’s Western Cape Province Wind Energy Facility, consisting of a 100 MW wind farm -- as well as support to pioneer private sector projects amounting to 100 MW new generation capacity - (CTF US$ 100 million – World Bank US$ 50 million and African Development Bank US$ 35.6 million)

  33. MULTILTERAL DEVELOPMENT BANKS – WORLD BANK CLEAN TECHNOLOGY FUND • South Africa Sustainable Energy Acceleration Program - CTF = US$ 77.5 million. This component addresses use of CTF funds to support private sector megawatt scale sustainable energy projects, including cogeneration energy efficiency projects and wind and solar renewable energy projects. More specifically the program seeks to encourage transformation of the private SE sector by establishing a series of direct, project level interventions in the wind, solar and cogeneration sectors, all of which are nascent but offer significant potential in South Africa. • Solar PV (US$ 42.5 million – African Development Bank) • Solar PV (US$ 42.5 million – International Finance Corporation)

  34. MULTILTERAL DEVELOPMENT BANKS – WORLD BANK CLEAN TECHNOLOGY FUND • Scale up energy efficiency investments by catalyzing the expansion of bank lending to the commercial and industrial sectors through lines of credit to commercial banks, contingent financing to foster energy service companies (ESCOs), and financial incentives or risk products to market leaders, such as large industrial customers - CTF US$ 7.5 million. (International Finance Cooperation)

  35. BILATERAL FINANCE Germany • EPBP – Energy Efficiency in Public Building Programme (DoE, DPW, DEA) Euro 4,764,400 (2017 - 2021) • Climate Support Programme (CSP) - Phase III 9 (DEA) Euro 16,000,000 (2017 - 2020) Government of Flanders • Third Country Support Strategy (CSP III) Euro 25 million (2017 - 2021) focusing on Climate Change Adaptation  Norway • Environmental Co-operation Programme Capacity Development Within the SA National Inventory Unit NOK 5 million (Norwegian kroner five million)  (2014 - 2017)  US • LEDS US$ 15 million (2015-2020)

  36. Financial year • Allocation

  37. Objectives of the Green Fund • To support initiatives that will contribute to South Africa’s transition to a low carbon, climate resilient, resource efficient development path. • To address market weaknesses to transition to a green economy by: • Promoting innovative and high impact green programmes and projects, • Reinforcing climate policy objectives through green interventions, • Building an evidence base for the expansion of the green economy, and • Attracting additional resources to support South Africa’s green economy development. • The Green Fund creates the space for catalytic financing • Financial year • Allocation

  38. Green Fund Projects • A total of 55 Projects have been approved (31 Investment, 16 Research and Policy development and 8 Capacity building) • 31 investment projectshave been approved: • 12 projectsare under implementation, • 8projectswere withdrawn and 1 project was cancelled as the projects failed to meet terms and conditions as per approval. • 10 projects have been completed • The total number of jobs created to date is 2 355 with the potential of increasing this number if projects are upscaled • Total allocation from National Treasury since April 2012 equaled R1.195 Billion

  39. Geographical spread of Investment Projects • Financial year • Allocation

  40. Geographic Overview Some investment projects are implemented in more than one province Figures provided here reflect only active and completed investment projects

  41. Green Fund Investment Projects Under Implementation

  42. Green Fund Investment Projects Under Implementation

  43. Green Fund Investment Projects Under Implementation

  44. Green Fund Investment Projects Under Implementation

  45. Green Fund Investment Projects Under Implementation

  46. Green Fund Investment Projects Under Implementation

  47. Green Fund Investment Projects Under Implementation

  48. Green Fund Investment Projects Under Implementation

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