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Regional Workshop on CDM and NAMAs for Latin America and the Caribbean

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

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Regional Workshop on CDM and NAMAs for Latin America and the Caribbean

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  1. Overview of financial sources and access modalities for mitigation actions, including supportfor 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

  2. USD 359 BN 94% towards Mitigation

  3. Financial Mechanism to Support CDM (some examples) • 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) Source: World Bank. 2014. State and Trends of Carbon Pricing 2014

  4. POSSIBLE FINANCING STREAMS FOR NAMAS Combination Source: IISD, 2013

  5. 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

  6. DIFFERENT SOURCES OF FUNDING FOR EACH STEPS OF THE NAMA PROCESS Concessional Loan / Private Sector Investment Grant / Technical Assistance Component of Loan Grant / Technical Assistance Key phase to develop the appropriate mechanisms that will trigger private investments

  7. 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 • …

  8. Bilateral Funds (Examples) • NAMA Facility • Austrian NAMA Initative (SIDS) • French Development Agency • …

  9. Multilateral Funds (Examples) • Climate Investment Funds • Global Environment Facility • Green Climate Fund • EC Latin America Investment Facility • … www.climatefinanceoptions.org

  10. Climate Investment Funds

  11. GEF-6 (2014 July-2018 June) Climate Change Mitigation Focal Area Strategic Framework (USD 1,220 million) (DRAFT)

  12. 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

  13. 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 risk-return 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

  14. Financing NAMAs: Successful IDB Example: ColombiaPhase 1: Study and Disbursement National Development Bank Validation of the project Application for project evaluation Disbursement approval Validator Verifier Private Bank Credit application form Credit application Disbursement Grant policies Hotel/Hospital Technical and financial proposal Information for prior diagnostic Insurance company Supplier Insurance Policy application

  15. Financing NAMAs: Successful IDB Example: ColombiaPhase 2: Project in Operation IDB National Development Bank BID Report on program impact M&V report Private Bank Application for M&V revision Credit Payment Insurance company Execution policy Validator Verifier Hotel/Hospital Payment of % retained in accordance with contract M&V Report Report review NO YES Supplier

  16. Thank you for your attention! Gracias porsuatención! Mateo Salomon Climate Change and Sustainability Division Inter-American Development Bank (IDB) jmsalomon@iadb.org

  17. Financing NAMAs: 1: New Housing NAMA Mexico (Ecocasa) International Donor NAMA Fund (IDB/KfW) Mexican Government CONAVI Supervision SCV to be determined (RUV) Qualification SHF Subsidized loans Revolving fund Trust fund Trustee (TBD) Grants Primary lending institutions (PLI) Loans Banks PLI Grants 0,6% of building costs Developers House owners Financial flow Monitoring Information flow

  18. ECOCASA: Program Structure and Financing

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