OECD Climate Change Financing

8/6/2019 OECD Climate Change Financing

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chan e

Key outcomes & questions

from recent OECD work

Jan Corfee-Morlot, Environment Directorate

([email protected])

,

([email protected])

1



. Some thoughts on why, what and how to

to track climate finance

. stat st cs on a ows targete toclimate change mitigation and adaptation

2



OECD work on climate finance focused on a

number of questions

How to improve effectiveness of international climate

finance? What goals and pathways for climate change support ?

• Finance, capacity building and technology support

What is the baseline for climate change finance today?• How much money in absolute and relative terms is already flowing to

How to develop a comprehensive system of MRV of

su ort to build trust and accountabilit ?

What do we know about the GHG performance of these

flows?

3



The domestic policy framework is central to drivingprivate investment and a target of international

“support”INTERNATIONALINTERNATIONAL CLIMATECLIMATE

CHANGECHANGE SUPPORTSUPPORTDOMESTIC FRAMEW ORK DOMESTIC FRAMEW ORK

FOR FOR MITIGATION & AD APTATIONMITIGATION & ADAPTATION

Technology

Enabling environment

for investment

apac ty u ng

FinanceInvestment & climate

policy framew orks

Social change Institutional change Technological change

GHG EMISSIONGHG EMISSION REDUCTION & CLIMATE RESILIENCEREDUCTION & CLIMATE RESILIENCE

Source: Adapted from Corfee-Morlot, Guay & Larsen 2009

4

A central goal of international public climate finance is to work in partnership withdeveloping countries to build capacity and momentum to integrate climate change

considerations into domestic policy frameworks



Multiple origins and channels for climate

TOTAL MITIGATION

• North-South, South-South and

domestic are relevantSUPPORT

PUBLIC-

• Public, private and public-private

• Public finance is bilateral or

RELEVANT

(ODA) PRIVATEMITIGATION-RELEVANT

(FDI&DEBT)PUBLICPUBLIC

MITIGATIONMITIGATION--SPECIFICSPECIFIC

CD MCD MINVESTMENTINVESTMENT

, -

• Private flows are much greater

than public flows e.g. CDM

• Not much is known about the

GHG performance of the largest

“ ” PUBLIC & PRIVATE

Source: Corfee-Morlot, Guay & Larsen 2009

5



Mitigation “relevant” sectors and mitigation“specific” flows

North-South investment flows, mitigation specific and other mitigationrelevant in 2007: total est. about 310 billion USD

FDI mitigationrelevant

CDMInvestment estimates

Miti ation

ODA mitigationrelevant

MDB mitigation specific

itigation specific

specificUSD10-50 bn(without “green” FDI)

MDB mitigationrelevantExport

creditsmiti ation

ODA 'Rio Markers'mitigation specific

GEF

relevant

Source: Corfee-Morlot, Guay and Larsen 2009

tracked for GHG performance



How much do mitigation relevant flows representcompared to total flows?

Mitigation specific and mitigation relevant ODA, Export Credits and FDI todeveloping countries (average 2003-2005, thousands)

250.000,0

300.000,0

200.000,0

Mitigationspecific

Other

100.000,0

150.000,0relevant

Not mitigationrelevant

50.000,0

-

ODA Export credits FDISource: OECD-DAC 2006, OECD 2007c, UNCTAD 2006 – as compiled and cited in Corfee-Morlot, Guay and Larsen 2009

relevant – a few hundred billions of USD per year7



Understanding climate support in context

Mitigation specific Other mitigation relevant

Definition Financial support that targets GHGmiti ation in develo in countries

General financing for development that shapesmiti ation otential ace and amount of futureemissions

Amount Roughly USD 10-50 billion per year(without FDI)

Several hundred billion USD per year

Type

ExamplesPublic or Public-Private

Multilateral: GEF, Climate change funds;Bilateral: ODA, non-concessional loans;

Private (mainly), Public-private

FDI, international private loans, etc. in carbon-intensive sectors. Lar est shares of bilateral

official export credits (ECA); CDM ODA,OOF, ECA and multilateral flows.

Monitoring •Lacks consistency, and/or regularity ofre ortin

•FDI lacks GHG mitigation markers

•No centralized, comprehensive systemeven for public finance.

•No institution in charge of monitoring.

•No formal definition of “mitigation relevant”

•Confidentiality issues - no formal tracking

private/CDM flows.

•No methodology to track what is “green” or

emission intensity of these flows.



Different qualities and availability of information

Public Finance Private Finance

Financial DataSources

Mitigation specific and relevantMitigationspecific

Mitigationrelevant

Bilateral ODA & Multilateral ODA CDM FDI

Rio markers OECD-

institutional datasources/systems

OECD

CRS

CRS,

MDBsWorld Bank

UNCTAD, OECD

by sourcecountry

++ - - ++

by recipient ++ - + ++

by purpose + - + -

-

Source: adapted from Corfee-Morlot , Guay and Larsen 2009



Many outstanding methodological questions

– Public Finance Private Finance

Miti ation s ecific and relevant Miti ation s ecific Miti ation relevant Sources

Bilateral ODA, funds &

other (ECAs)

Multilateral ODA

& otherCDM FDI

Existinginstitutional datasources/systems

Rio markers – OECD CRSOECD CRS,

MDBsUNEP-Risoe , World

BankUNCTAD, OECD

Other relevantdata, ongoingresearch

WRI , Project Catalyst (fast start)Climate Funds Update (HBF & ODI), etc

UNFCCC, othersRINGOs

UNEP/SEFI,UNCTAD, OECD

•ODA: How to improve Rio Markers, eg tobetter account for “climate change” portion of

projects?

•What / how shouldfinancial flows for

CDM be accounted

•How to define whatis “green”? Data

confidentiality?

Keymethodologicalquestions

•Bilateral vs. multilateral flows: how to avoid

double counting?

• “ ”

•CER revenues vsCDM investment

•Whether and how to

monitor carbonintensity?

data into the system

or in pipeline)? If

investment,international?

•Who can create &

manage “green” FDIdata system?



50 D

Estimated CDM investments by

40

45

i o n s o f U

30

35 B i l l

Projects entering the pipeline

20

25

Projects registered Value of CERs(primary transactions)

10

0

2003 2004 2005 2006 2007Source: Seres and Haites 2008 ‐ revised estimates based on personal communication with authors. World Bank

Clean Development Mechanism: two different ways to accountfor total CDM investment flows over time.

for value of CERs.

Investment differs from the “value of CERs” approach which is better understood as return on investment.

Investments may not be fully attributable to CDM, no data on unilateral and no separation of domestic &international



OECD climate finance work

some ey messages

u c un ng mpor an u pr va e nves men as egreatest influence• Need to use ublic finance to direct and levera e investment

Domestic policy frameworks are central to attract, directand “green” private investment

A comprehensive system of MRV needed to build trust,deliver accountability• -

party to party reporting)

• Dual accountability needed (both recipients & donors reporting)

• rac mu p e mens ons .e. or g n source, goa , en -po n s ; exante & ex post for verification purposes

• Transparency, public access essential – civil society as watchdogs

• Include private flows (e.g. at least CDM, possibly green FDI)12



PART 2:

OECD statistics on aid flows

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OECD statistics on aid flows targeted to

c mate c ange m t gat on an a aptat on

o mar ers - a es eve opmen s:

• Quality review of Rio marker data undertaken in 2009

• New adaptation marker applicable to as from 2011 reporting on 2010flows

• Task Team will continue discussions on quantification of marker data

(systematically):• non-DAC bilateral donors and multilateral agencies’ outflows;

• on- pu c un ng non-concess ona oans to eve op ngcountries)

In the context of work to improve DAC statistics on non-ODApublic and private flows, proposals on how to capture:

• Public funds used for leveraging private climate finance

• Climate finance extended throu h officiall su orted ex ort credits as aminimum, “climate-relevant” flows)

14



Official bilateral commitments (2003-2008 bnUSD)

of which USD 17bn/year is mitigation relevant

140000

120000

80000

100000

Industry, Mining, Construction

Agriculture, Forestry, Fishing

60000

Energy

Transport & Storage

Water Supply & Sanitation

Not mitigation relevant

20000

40000

0

2003 2004 2005 2006 2007 2008

Source: OECD DAC-CRS database 2010.

15Mitigation relevant ODA is not necessarily ‘green’



Mitigation specific bilateral ODA commitments –

Rio markers

• 8% of total ODA (2008)

• Climate change specific aid doubled between 2007 and 2008

• Annual average commitment 2003-2008 : $4.5 bn

USDmillion

6000

7000

8000

9000

25%

14%

Energy

2000

3000

4000

5000

11%

8%nv ronmen

Transport & Storage

Water & Sanitation

Forestry

0

2006 2007 2008

Principal objective

- -

20%

Other

16

Rio Markers system: 2 (mitigation as “principal objective”); 1 (“significant objective”); 0 (mitigation “not targeted”)

June 2008: Rio Markers became mandatory for DAC members



Official Long Term Export Credits by Sector (2002-2008)31.2 billion USD/year (average)

Energy9%

Transport & Storage45%

Sanitation

1%

Not MitigationRelevant

12%

Industry22%

Mineral Resources& Mining

ons ruc on

1%

Forestry

2%

8%

-

Export credit operating largely in carbon-intensive sectors

ECs rovided officiall b OECD members to develo in countries

, ,

Long term repayment: 5 years or more

Statistics with same level of disaggregation as ODA 17



What role for OECD “DAC statistics”?

some concluding thoughts DAC system / Rio Markers is a good basis to build

on for a broader system System can be extended to provide consistent

statistics on:

• Multilateral flows• Non-DAC donors e. . Arab donors

• Non-ODA (eg export credits) as well as ODA

track private climate relevant/specific flows

18



Thank you!

For more information:

. .

www.oecd.org/dac/stats

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