Exercise: Pros and Cons of National Climate Funds

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What you can expect to learn from this exercise

Get an understanding of :- Which criteria should be considered when deciding on establishing

national climate fund(s)

Gain an awareness of:- The pros and cons of national climate fund(s)

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Overview of the assessment criteria for establishing national climate fund(s)

Group discussions

Presentation of results

Reflections

Agenda

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Making a decision on establishing national climate fund(s)

Source: UNDP 2011UNDP Asia Pacific Regional Center 2012

There are different modalities for channelling climate finance…• Through direct budget support:

- A share of climate finance is already flowing through the formal budget system in a number of countries, e.g. Lesotho, Mauritius, the Seychelles, Solomon Islands, Bangladesh , Nepal, Thailand, etc.

• Using existing funds or public institutions- Creating a special funding window / program for climate change activities within an existing

public fund or bank, e.g. Mexico green mortgage program for energy-efficient housing

• Project finance- Cash transfers are made directly into the bank accounts of the implementing organisations.

Many NGOs receive funding in this way and multi- and bilateral partners provide support to government agencies through similar stand-alone projects

• Setting up national climate fund(s)- Establishing a new institution, specialised in climate change only, e.g. Bangladesh, Rwanda,

Cambodia, etc.

A combination of several modalities is possible and often necessary!

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Establishing national climate fund(s)?

Source: UNDP 2011UNDP Asia Pacific Regional Center 2012

A careful assessment is needed before making a decision on establishing national climate fund(s)

Strategic role Political feasibility

Institutional and human

capacity

Timing Financial sustainability

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Your task

Break up into groups of 4 people Follow the instructions of the step-by-step guide which you will find in the hand-

out

• Step 1: Carefully read the information provided in the hand-out

• Step 2: Select the arguments (pros / cons ) and structure them according to the assessment criteria presented

• Step 3: Think of additional factors based on your experience in your country

• Step 4: Prepare and share a short presentation that summarises your discussion

Now it is your turn to do the exercise!

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• What did you learn from this exercise?

• What aspects or arguments did you find useful for the context of your country? What aspects would present the biggest challenge?

• How do you assess the need of establishing a climate fund in your country?

Reflections

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Checklist to get CLIF Ready

According to what you learned from this exercise you could …

Check what modalities for channelling climate finance are feasible in your country

Check whether a national climate fund would be a competitive option in the policy and institutional context of your country

Next Steps