Overview of financial sources and access modalities for

Report
Overview of financial
sources and access
modalities for mitigation
actions, including support
for CDM and NAMAs
Regional Workshop on CDM and NAMAs for
Latin America and the Caribbean
31 August – 2 September, Bogota, Colombia
Mateo Salomon
Climate Change and Sustainability Division
Inter-American Development Bank
USD 359 BN
94% towards Mitigation
Financial Mechanism to Support CDM (some examples)
Source: World Bank. 2014. State and Trends of Carbon Pricing 2014
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The NEFCO Norwegian Carbon Procurement Facility (NorCaP) (30 MtCO2e)
UNFCCC Loan Scheme for CDM
Joint Crediting Mechanism (Japan)
Fiscal incentives (ej. Colombia, technology and equipment exempted of IVA)
WB methane pay-for-performance auction facility (reversed auctions)
Domestic Carbon Markets
Voluntary Carbon Markets (76 MtCO2e in 2013)
POSSIBLE FINANCING STREAMS FOR NAMAS
Source: IISD, 2013
Combination
Financing NAMAs: the instruments
 A variety of NAMA financing instruments exist, such as:
- Project financing, structures funds, promotional loans, development
loans, grants, equity instruments, guarantees etc.
 Basic principles of NAMA financing instruments:
- Adaptation to the specific circumstances of the host country to
overcome financial barriers is key
- Instruments need to be sustainable that work beyond first steps of
project implementation
- Affordability of financial instruments is crucial
- Price signals are not enough…
- Availability to potential investors and private sector investors
- Managing risks and attracting private sector investments
riskriskriskriskriskriskriskriskriskriskriskriskriskriskriskriskriskriskrisk
DIFFERENT SOURCES OF FUNDING FOR EACH STEPS OF THE NAMA
PROCESS
Grant / Technical
Assistance
Component of
Loan
Grant / Technical
Assistance
PHASE 1
Identification and
Prioritization of the
NAMA
PHASE 2
Design and
Development of the
NAMA
Concessional
Loan / Private
Sector
Investment
PHASE 3
Implementation of
the NAMA
Key phase to develop the
appropriate mechanisms that
will trigger private
investments
Technical Assistance Programmes (Examples)
-
UNDP Low Emission Capacity Building Programme
-
World Bank Partnership for Market Readiness
-
UNEP FIRM
-
Mitigation and Implementation Network (MAIN) – WB, CCAP
-
…
Bilateral Funds (Examples)
-
NAMA Facility
-
Austrian NAMA Initative (SIDS)
-
French Development Agency
-
…
Multilateral Funds (Examples)
-
Climate Investment Funds
-
Global Environment Facility
-
Green Climate Fund
-
EC Latin America Investment Facility
-
…
www.climatefinanceoptions.org
Climate Investment Funds
GEF-6 (2014 July-2018 June) Climate Change Mitigation Focal Area
Strategic Framework (USD 1,220 million) (DRAFT)
GREEN CLIMATE FUND (GCF)
The Fund will support [developing countries] in pursuing project-based
and programmatic approaches in accordance with climate change
strategies and plans, such as low-emission development strategies or
plans, nationally appropriate mitigation actions (NAMAs), national
adaptation plans of action (NAPAs), national adaptation plans (NAPs)
and other related activities.
- Mitigation and Adaptation windows (Same modality of Access)
- 50:50 balance between adaptation and mitigation during the initial phase of
the Fund.
- Private Sector Facility (PSF) – direct and indirect finance to private
sector
- Readiness Support
- National, Regional and International Implementing Entities (Direct and
International Access)
- Geographical balance
- Grant & Concessional Lending
Financing NAMAs: Role of MDBs
 Multilateral Development Banks
- Trigger and facilitate first steps by providing loans and concessional
funding to prepare and develop NAMAs together with host country
- Help eliminate barriers (technical, regulatory, financial) and riskreturn equation
- Create implicit credit enhancement effect on account of participation
by banks (AAA credit rating)
- Facilitate the access and implementation of climate funds
- Catalyze private investments in NAMAs for long term sustainability
for NAMAs and transformational impact
- Help build institutional capacities for enhanced NAMA coordination
by host countries and help develop national and sectorial plans
- Provide valuable knowledge, regional experience and replicable
best practices
Financing NAMAs: Successful IDB Example: Colombia
Phase 1: Study and Disbursement
National
Development
Bank
Validator
Verifier
Validation of
the project
Application for
project evaluation
Disbursement
approval
Private Bank
Disbursement
Credit
application
form
Credit
application
Grant policies
Hotel/Hospital
Technical and
financial
proposal
Information for
prior diagnostic
Supplier
Insurance Policy
application
Insurance
company
Financing NAMAs: Successful IDB Example: Colombia
Phase 2: Project in Operation
National
Development
Bank
IDB
BID
Report on program
impact
M&V
report
Private Bank
Application for
M&V revision
Credit Payment
Execution policy
Validator
Verifier
Report review
Insurance
company
Hotel/Hospital
Payment of % retained
in accordance with
contract
M&V Report
NO
YES
Supplier
Thank you for your attention!
Gracias por su atención!
Mateo Salomon
Climate Change and Sustainability Division
Inter-American Development Bank (IDB)
[email protected]
Financing NAMAs: 1: New Housing NAMA Mexico (Ecocasa)
Mexican Government
CONAVI
Supervision
International Donor
NAMA Fund (IDB/KfW)
SHF
Subsidized loans
Revolving fund
Trust fund
Trustee (TBD)
Grants
Primary lending
institutions (PLI)
Loans
Banks
PLI
Grants
SCV
to be determined (RUV)
Qualification
0,6% of building costs
Developers
House owners
Financial flow
Monitoring
Information flow
ECOCASA: Program Structure and Financing

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