Presented by Monthip Sriratana, Ph.D. at the First High-Level Follow-up Dialogue on Financing for Development in Asia and Pacific.
President of Regional Council of Asia and the Pacific
International Council of Women
Climate finance needs to be equitable, gender responsive, environmentally and socially sound and prioritize the needs of the poorest and most vulnerable group in societies, including the elderly and disabled. There must be targeted allocation of climate finance to the local level, as well as the establishment of Measurement, Reporting and Verification (MRV) systems that track funds channeled to communities. The most vulnerable segments of society often include a preponderance of women, and so financing policies and procedures must take into account the gender components of climate finance. The Green Climate Fund (GCF), by preparing a specific gender policy that requires proposals to incorporate gender considerations, is a very welcome step and a good example for other international and national climate finance entities. GCF would set a good example if it prioritizes national and local entities in the queue for accreditation process instead of international agencies.
The budget process at the national and sub-national levels can help mainstream climate concerns into public expenditure. It can also help to develop performance allocations so that financial impacts can be maximized. Capacity building supports to strengthen governance frameworks at national and sub-national levels are essential. International financial and development entities can play a key role here.
National climate financing frameworks that include mechanisms to link top-down with bottom-up community driven planning and budgeting are essential, especially for Climate Change Adaptation (CCA) finance. It is equally essential that MRV systems is developed that are both effective and easy to use so that funds provided to CCA and Climate Change Mitigation (CCM) activities are spent effectively in places where they are most needed.
Climate finance will not be effective without stronger mechanisms in many Asia and the Pacific countries for effective public consultation and participation. In many countries, public participation needs to graduate from a concept to a widespread practice that is undertaken by professionals specifically trained in this field.
It is essential that there is country and local ownership over climate programs and their financing. This means that international climate finance needs to be catalytic, i.e., it needs to support a government, subnational entity, private sector actor, NGO or other domestic entities advance their capacity for green growth and climate resilience.
International climate finance entities, while providing capacity building support, should build on existing efforts in the region and studiously avoid “recreating the wheel”. Countries in this region have experience in testing and implementing climate public expenditure reviews (with support from UNDP and others); climate budget tagging; monitoring frameworks that measure CCA success; developing climate fiscal and financing frameworks; integrating climate finance in public financial management; and tracking domestic expenditure as well as external climate finance, without creating new debt. We need financial help to learn from and expand these experiences through networking, training and other learning interactions among the countries in the region.
International institutions need to come up with an agreed definition of climate finance. Without this, accurately tracking and scoring climate finance at the international and national levels is difficult. The different methodologies to track climate finance need to be harmonized so that we can better understand climate finance internationally and domestically.
Adequate attention should be paid to accountability for climate finance. We need assistance to develop accountability frameworks that indicate whether sufficient climate finance is going to the most vulnerable people; whether most funds are directed at nationally/locally agreed highest priority climate threats; whether actual climate expenditures match the stated allocations; and whether the results of the financed climate action meet expectations. We need help in employing methods that incentivize politicians, CSO’s, community leaders and others to work together in strengthening accountability and transparency. We note that Pakistan and Nepal have done preliminary Climate Change Integration Index (CCII) assessments, which are being used to highlight policy gaps relevant to developing national climate change financing frameworks. CCII is a new UNDP tool that it is helping countries assess how well climate change is integrated into national budgeting and public financial management systems.
Climate finance is only worthwhile when worthwhile projects are available for financing. Right now, most countries would be hard pressed to show a strong pipeline of quality project proposals for funding. More assistance is needed from development agencies to government and non-government actors to develop these pipelines. The new GCF mechanism for supporting project development in both mitigation and adaptation is a welcome step in this direction.
There are significant opportunities to increase domestic funding for climate change action. Support is needed to develop a screening tool for government (and private sector) investment portfolios that will allow them to view all investments through a climate lens, identifying priority climate change needs prior to finalizing major investment decisions. Countries should commit to ensuring climate finance that qualifies as ODA is part of the overall aid budget and raising overall aid budget at the same rate. This would be a first step towards stopping the diversion of existing aid to climate finance and making additional to existing aid promise such and 0.7 ODA/GNI.
Financing for cities will be crucial. They are the source of most GHG emissions as well as where many or most vulnerable people are situated.
Assistance is needed to ensure that the most vulnerable are addressed and have a role to play in national Climate Change plans, especially National Adaptation Plans (NAPs) and the development and implementation of Nationally Determined Contributions (NDCs), and a small grant facility is needed for reaching directly communities affected by Climate Change.
Uruguay provides a good example of how international and domestic blending of funds can lead to transformative change. Uruguay went from having virtually no wind generation in 2007 to installing the most wind per capita of any nation in 2014. By 2015 it had installed 581 WM of wind capacity, providing an average of 17 percent of total electricity generation over the year. Wind energy is now cost competitive in the nation and is displacing the most expensive fossil fuel generation. It aims to generate 38 percent of its electricity from wind by the end of 2017. They did this by among other things addressing regulatory barriers and creating a well-designed auction system for renewable energy development, catalyzing private sector investment. In 2007, Uruguay secured an initial grant of $1 million from the Global Environment Facility, delivered through the UN Development Programme, and put up $6 million in co-financing from its national budget. This funded the Uruguay Wind Energy Programme, which ran until 2012 and focused on policy reform and technical capacity building. Strategic investments such as this would be invaluable in Asia-Pacific countries that are ready to undertake transformative change.
As a footnote to the Uruguay example, Thailand also had an opportunity to create transformational climate finance when it used a petroleum tax to create a revolving fund and provide a sustainable source of financing for energy efficiency, but the Thai economy has so far been unable to decouple GDP growth from energy consumption, and so success in energy efficiency has eluded them to date. This is an example of where international development partners could potentially step in to help a country in the region take the extra step that will bring them across the transformational threshold.