Managing climate finance through country systems: UK experience

1. Managing climate finance through country systems: UK experience Malcolm Smart Senior Economic Adviser Department for International Development Global Forum on Using Country Systems to Manage Climate Change Finance, 2-3 December 2013, Incheon, Korea

2. What I will cover • How does the UK manage its resources to address climate change? • What international climate finance does the UK provide? • What is the UK’s commitment to using country systems • Support to help build country systems for climate finance • Managing climate finance through country systems

3. How does the UK manage its resources to address climate change? Adaptation Mitigation Act sets the requirements for • Legislates long-term 2050 emissions cut target • Rolling 5-year national carbon budgets – packages of measures • Target-consistent carbon prices in policy/project appraisals • Taxes, ETS to internalise cost of carbon • Not about tracking finance – tracking GHGimpact Climate Change Act National Adaptation Programme UK CC Risk Assessment DECC Defra DfT Public resources Met Office Env Agency Devolved Govts Local Government Parliament Regional bodies Committee on Climate Change Private Sector • Insurance industry • Advice & support to companies See https://www.gov.uk/government/policies/adapting-to-climate-change

4. What international climate finance does the UK provide? The International Climate Fund • What • £3.8 billion over 5 years • Split between 3 Departments (DFID, DECC, Defra) • Spent • through multilateral bodies (GEF, CIFs) • on global progs. • in-country • 3 themes • Issues • Strong focus on private sector • Fast Start pressures • on monitoring & evaluation – results • Mainstreaming CC into other DFID progs Adaptation Low Carbon Devt Forests

5. UK’s commitment to using country systems • Commitment to Busan principle of country ownership • Support to strengthen systems • Considerable use made of country systems where conditions allow: • Partnership Principles • Fiduciary Risk • Strong focus on results and VfM • Issues in choice of climate finance modality for working with Government • Existence of costed national strategy on climate change? • Policy consistency? • Reflected in budgetary allocations? • Able to track the finance? • Results framework? • CF greater fiduciary risks? • ‘new’ partners in govt • no single Min oversight? • doing new things?

6. The UK is helping develop country systems for climate finance East African economics of CC studies & other support for national plans in Rwanda, Kenya (StARK+), Ethiopia CRGE (SCIP), NepalLAPAs, Indonesia low carbon support to Min of Finance, LDCF for NAPAs Supporting state action and other subnational plans in South Asia CPGD Planning & Strategy National development plan MTEF rolling multi-year budget Evaluation Helping Govts’ develop M&E systems - TAMDIIED Tanzania Climate Change Institutional Strengthening Programmeto improve Tanzania's access to climate finance and use it effectively Asia Regional programme supporting strengthening climate finance governance (CPGD) Budget Formulation Audit Monitoring results More generic support to strengthen PFM & accountability Budget Execution Accounting for spend Support for CPEIRs via ODI policy research programme For project info see: http://devtracker.dfid.gov.uk/

7. Managing climate finance through country systems Project using DFID systems Project with clearly specified areas of spend Climate change budget support (DPL-type) Most Degree of Earmarking Least Support to the Implementation Plan for Development Resilient to CC in the Caribbean - £5m via regional body Rwanda – FONERWA £22.5m to National climate fund open to GoR, CSO & private sector Ethiopia - £15m through MoFED as part of ‘CHIP’ None to date • Seek to ensure: • consistency with plans • on-budget Potentially India’s National Rural Employment Guarantee scheme (MNREGA) Other support through Govtwith CC benefits e.g.£344m for Ethiopia Productive Safety-Nets