Climate strategies - Mitigation

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Contents & Objectives

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• Objective of this session

• LEDS and NAMA overview

• NAMA Facility

• Country examples

• Key questions

Content

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What you can expect to learn from this session:

• Get familiar with the importance of strategies in the field of climate change mitigation and for future climate finance

• Understand the concepts of

• Low Emission Development Strategy (LEDS) and

• Nationally Appropriate Mitigations Actions (NAMAs)

and their relevance for climate finance

• See examples of countries who developed or are implementing their NAMA

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Why do we need strategy & planning?

Strategy & plans can help to…

set concrete objectives, ideally based on rigorous data assessment and forecasts

outline how to achieve the objectives in the most cost-effective way and with which co-benefits through specific short- and mid-term actions

give guidance as

to with what kind of policy mix these objectives should be achieved,

what climate finance resources are needed and

what kind of international support is necessarySource: http://mitigationpartnership.net/

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Overview Low-Emission Development Strategies (LEDS) and

Nationally Appropriate Mitigation Actions (NAMA)

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Low-Emission Development Strategies (LEDS)

LEDS …

are generally used to describe forward looking national economic development plans or strategies that encompass low emission and/or climate resilient economic growth;

first emerged under the United Nations Framework Convention on Climate Change (UNFCCC) in 2008;

can advance national climate change and development policy in a more coordinated, coherent and strategic manner, e.g. by enhancing coordination across different ministries;

can improve communication with other stakeholder groups such as businesses and civil society, and increase public awareness of climate change science and policy;

can help guide the diversification of an economy (e.g. away from fossil fuels); inform the international community in a variety of ways, e.g. by identifying priority actions

for funding to the international community.

Source: UNFCCCAdelphi

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Low-Emission Development Strategies (LEDS)

Essential LEDS elements are …

A long-term strategic vision Baseline GHG emissions analysis and projections Mitigation opportunities and costs / Prioritization of key mitigation sectors and measures Identification of policies and measures and definition of targets Cost and financing of the LEDS

Source: OECD

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Development of NAMA concept

Nationally Appropriate Mitigation Actions (NAMA) are “voluntary actions taken by developing countries to reduce GHG emissions” (UNFCCC)

201120102009 2012 2013

…voluntary (not legally binding!) …nationally determined

NAMAs are…

The NAMA concept has been gradually developed

Source: UNFCCCAdelphi

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Connection of LEDS and NAMA

NAMA should be… …embedded in an over-

arching low emission development strategy (LEDS)

…in line with economic development and poverty eradication priorities

…in accordance with the capabilities and social and economic conditions of the country

…measurable, reportable and verifiable

Source: GIZUNFCCCAdelphi

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NAMA and CDM

NAMA are… diverse in nature, e.g. they

may be National goals or

strategies Sectoral policies or

programmes Projects/actions

from this perspective, NAMA may even comprise CDM-like activities

CDM are … …defined in Article 12 of the

Kyoto Protocol. It allows a country with an

emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries.

Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets.

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Co-benefits of NAMA

Economic co-benefits: Jobs generated Infrastructure investment Development or diffusion of technology Financial co-benefits

Environmental co-benefits: Protection and efficient utilization of natural resources Reduction of noise, odours, pollutants

Social co-benefits: Improvement of labor conditions and human rights Promotion of education Improvement of health and safety Poverty alleviation Engagement of local communities Empowerment of women

Source: Sustainable Development Impacts of NAMAs: An integrated approach to assessment of co-benefits based on experience with the CDM, UNEP Riso Center 2013

Benefits of the Clean Development Mechanism 2011, UNFCCC 2012GIZ 2013

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Developing NAMA in 10 steps: GIZ Tool

Source: GIZ

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Financing NAMA: Key resourcing questions

Identifying the financing needs of the NAMA:

• What are the barriers to be addressed regarding the proposed action under the NAMA? What are the key elements of finance to achieve the objectives of this activity?

• What financing mechanisms in existing budget may be utilised to finance NAMAs? Will NAMA require funding in addition to existing public finance budget?

• Which elements are commercially viable, which elements require additional support?• What are the funding gaps and what kind of instruments are needed from bilateral and

multilateral, domestic public and private sector?

Source: Harnessing the potential of NAMA Financing, E3G presentation 2014Resourcing NAMAs – Stepping stones in a national climate financing strategy, E3G 2014

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Financing NAMA: Key resourcing questions (cont.)

Various types of NAMA finance available from international partners to gov’ts

• Project level financing as part of a programme e.g. green credit lines• Budget support and development policy loans• Multi-donor trust funds, pooled funds• Grant / technical assistance for project and programme development

Source: Harnessing the potential of NAMA Financing, E3G presentation 2014Resourcing NAMAs – Stepping stones in a national climate financing strategy, E3G 2014

19Source: UNFCCC NAMA database

Financing NAMA: some current funding optionsSectors Support type Funding typeTitle Regions

All NAMA preparation • Grants• Loans

International Climate Initiative (IKI)

All

All NAMA preparation • Grants• Concessional loans

Climate-related ODA funding

All

All NAMA preparation and implementation

• Grants Global Environmental Facility (GEF)

All

All NAMA implementation

• Grants• Concessional loans• Guarantees

NAMA Facility All

Energy supply and transport

NAMA implementation

• Grants• Guarantees• Equity

EU-Africa Infrastructure Fund (ITF)

Africa

All NAMA implementation

• Grants• Loans

Green Climate Fund All

Energy, industry, forestry, transport, waste

NAMA preparation • Grants• Guarantees• Equity

Neighborhood Investment Facility

Eastern Europe, Middle East, North Africa

Energy supply, buildings

NAMA preparation • Grants• Carbon finance

Austrian NAMA Initiative

Africa

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Financing NAMA: some current funding options (continued)

Sectors Support type Funding typeTitle Regions

All NAMA preparation • Loans, guarantees, equity, carbon finance

Spanish NAMA Platform

All

All NAMA preparation • Grants• Carbon finance

NEFCO Carbon Finance and Funds

Asia Pacific, Latin America & Caribbean

All NAMA preparation • Grants• Concessional loans

ODA for Climate Change Measures

All

All NAMA preparation and implementation

• Grants, loans, concessional loans, guarantees

Inter-American Development Bank (IDB)

Latin America & Caribbean

Energy supply and transport

NAMA implementation

• Grants• Loans

Latin American Investment Facility (LAIF)

Latin America and the Caribbean

Source: UNFCCC NAMA database

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Supported NAMA

Source: UNFCCC NAMA database

From Country NAMA Type of support

Supported Amount

Support for Activities related to sustainable Management of Forests

Georgia Adaptive Sustainable Forest Management in Borjomi-Bakuriani Forest District

Financial 1,940,492

Global Environment Facility (GEF)

Azerbaijan Nationally Appropriate Mitigation Actions for low-carbon end-use sectors

Financial 100,000

Kazakhstan Nationally Appropriate Mitigation Actions for Low-carbon Urban Development

Financial 5,930,000

ODA for Climate Change Measures (Japan)

Serbia Introduction of metering system and billing on the basis of measured consumption in district heating systems

Capacity building

0

Use of Solar energy for domestic hot water production in one heat plant

Capacity building

0

Expansion of existing city heating network Technology 960,000NAMA Facility Colombia Colombia TOD NAMA Financial 18,500,000Spanish NAMA Platform

Uruguay High Integration Program of Wind Energy Financial

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NAMA Facility

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Financing NAMA: International German-British NAMA Facility

Founders: Germany and the UK (2012)Denmark EU (2014)

Total commitment: 2012 - $70 million

2013 - $50 millionProjects supported: implementation of transformational

NAMAs in developing countriesSupport instruments: financial (grants, concessional loans and guarantees) and technical cooperation Calls for proposals: see http://www.nama-facility.org/Next Call: April 2015

Source: http://nama-facility.org/

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Financing NAMA: International German-British NAMA Facility

Projects under appraisal:

• Chilean Self-supply Renewable Energy (SSRE) NAMA • Costa Rica Low Carbon Coffee NAMA• Indonesia NAMA SUTRI• Peru Sustainable Urban Transport NAMA• Tajikistan Forestry NAMA• Thailand RAC NAMA and Burkina Faso Biomass Energy NAMA

Source: http://nama-facility.org/

Projects supported: • Colombia Transit-oriented Development (TOD) NAMA• Mexico Sustainable Housing NAMA

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NAMA Facility project criteria

Eligibility criteria

Source: http://nama-facility.org/

Ambition criteria Feasibility criteria

• Formal requirements• Submission by a qualified

institution• Endorsement by national

government• Cooperation with qualified

delivery organization• Readiness for starting

NAMA implementation • Adequate time-frames• Financing €5-15 million• Concept for phase-out of

international support• Qualification as ODA given

Potential for transformational change

National and international

embeddedness

Mitigation ambition

Financial ambition

Sustainable developments co-benefits

Project structure

Long-frame and monitoring and

evaluation

Project finance

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NAMA Facility project criteria: transformational change

Source: http://nama-facility.org/

Projects are considered as conducive to transformational change if they: contribute to enabling either a significant evolution in terms of scope (e.g. scaling-up or

replication), or enabling a faster and/or a significant shift from one state to another; have a catalytic effect and include mechanisms to ensure the sustainability of the

impacts, local ownership and political will, the involvement of the private sector and the use of innovative technologies and approaches, and;

allow for systematic learning processes.

The concept of transformational change towards sustainable low-emission development is a rather new concept it will likely be adjusted as knowledge evolves..

Further reading: NAMA Facility (2014): Potential for Transformational Change, NAMA Facility factsheet Wuppertal Institute (2014): Capacity Building for Transformational Change in

International Climate Finance

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Country examples

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Colombia example: Transit-oriented Development NAMA

Short description

Transformation of urban development in Colombia through transit-oriented urban development (TOD) to reduce growth in car traffic by 25–36%

Linking climate, transportation and housing investment and policies Financial and technical assistance instruments, public-private partnerships to

address market barriers and attract to private TOD investment Duration: 2014-2016

Institutions Partner ministries: Ministry of Transport,Ministry of Environment & Sustainable

Development,Ministry of Housing

Delivery organizations: Financiera de Desarrollo Territorial S.A. (FINDETER),

Center for Clean Air Policy (CCAP)

Accessed finance

NAMA Facility: €14.9 million FINDETER: $20 million

Source: http://nama-facility.org/http://ccap.org/

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Mexico example: NAMA for Sustainable New Housing

1 Ministry of Environment and Natural Resources (SEMARNAT), Ministry of Agrarian, Territorial and Urban Development (SEDATU), Secretariat of Finance and Public Credit (SHCP)Source: GIZ, CONAVI

Mexican climate change

policy

Special Climate Change Programme: reduce 51 Mt CO2e per year by 2012, including “efficient housing and green mortgages”

Mexican Sustainable Housing NAMA

Sector: New residential housing for low-income familiesInvestors targeted:

• Households• Housing developers

Financial incentives:

• Low-cost loans• Grants

Objective: Emission reductions through facilitating private investment into sustainable housing

Mexican housing policy

National Housing Programme: construct 6mn homes by 2012, 1mn of which must be sustainable

Institutional set-up:

International donors

National Housing Commission

(CONAVI)

Unified Housing Registry (RUV)

Trust fund for grants

Mexican government1

NAMA Fund

Federal Mortgage Company (SHF)/

Subsidized loans revolving fund

Financial intermediaries

Financial intermediaries

Housing developers

Households Information flowFinancial flowMonitoring

More info here

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Mexico example (cont.): financing structure of the Housing NAMA

1 Inter-American Development Banks (IDB), Clean Technology Funds (CTF), Latin American Investment Facility (LAIF)Source: www.perspectives.cc

Investment Grants (EUR 6.5m)

Technical Assistance Component(EUR 2.3m)

Grant Component (EUR 6.5m)

Financial Intermediaries

Households Green Mortgage

Housing developers

Loan Component(EUR 159.2m)

Green Mortgage(EUR 39.8m)

Bridge Loans(EUR 119.4m)

Financial Intermediaries

TA Ecocasa(EUR 1.8m)

TA Passive House(EUR 0.5m)

Low Carbon Housing Passive Houses

Inputs

Instruments

Outcomes

Implementation

Ordinary loan from the IDB1

Concessional loans from CTF

and KFW

Grants from CTF

Grants from LAIF

Grants from LAIF

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Chile example: Self-Supply Renewable Energy (SSRE) NAMA

Key sectors: • Agro-industry: livestock, dairy, fruit and wine

• Retail: supermarkets, shopping centers

• Tourism: hotels

Regions: Entire country

Investors targeted:

• Private sector• Public sector (hospitals, schools,

universities, large public buildings)• ESCOs

Financial incentives:

• Low-cost loans• Grants

Objectives: • Uptake of self-supply renewable energy systems

• Contribute to national emission reduction targets and energy security

Source: Development of a NAMA proposal for Self-supply renewable energy (SSRE) in Chile, Ecofys 2013

Outreachcomponent

Pre-investment grant for pre-feasibility studies

Technical support component

Financial component

Outreach and awareness raising• Public

awareness campaign

• Technology shows and demonstrations

• Regional and local events

Self-Supply Renewable Energy Systems NAMA in Chile

Training and capacity building

Fund for renewable energy investments• Subsidized loans

at favorable rates and repayment terms

• Grants of up to 20% installation cost

Knowledge exchange

Technical help desk

Grid connection support

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Chile example (cont.): financing structure of the SSRE NAMA

Source: Development of a NAMA proposal for Self-supply renewable energy (SSRE) in Chile, Ecofys 2013

International donors

Center for Renewable Energy (CER)(approves all projects, disburses

grants)

Chilean economic developmentagency (CORFO) + International

development banks(contribute senior debt)

+

Financial Institution(contributes senior debt, disburses

loans)ESCOs and vendors(engineering and

construction)

End investors in target sectors

NAMA Grant Fund NAMA Guarantee Fund

Project loans

ESCOs

Technical warranty

Insurance company

Grants

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Key questions

• What is the status of LEDS in your country?

• Which NAMAs have been or are being developed in your country?

• What financing sources do you envisage for implementation?

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Thank you for your attention!!!

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List of references and recommended readings:

CCAP, 2013. Identifying Potential Sources for NAMA Finance

Ecofys, 2013. Annual Status Report on Nationally Appropriate Mitigation Actions (NAMAs)

Ecofys, 2013. Development of a NAMA proposal for Self-supply renewable energy (SSRE) in Chile

E3G, 2014. Strategic National Approaches to Climate Finance Report on scoping work in Peru, Chile and Colombia on national climate finance pathways and strategies

E3G, 2014. Resourcing NAMAs. Stepping stones in a national climate financing strategy

GIZ, 2013. Low-Emission Development Strategy (LEDS). Factsheet

GIZ, 2013. LEDS tool

GIZ, 2013. NAMA tool

GIZ, 2013. Nationally Appropriate Mitigation Action (NAMA). Factsheet

GIZ, 2012. The Climate Finance Cascade: A NAMA financing mechanism in a nutshell

GIZ 2011. Supported NAMA for Sustainable Housing in Mexico. Mitigation Actions and Financing Packages

IISD, 2013. Developing Financeable NAMAs. A Practitioner’s Guide

UNEP Riso Center, 2013. Understanding the Concept of Nationally Appropriate Mitigation Action

UNFCCC, 2013. Guidance for NAMA Design. Building on Country Experiences