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Joint MDB Climate Finance Tracking Approaches

Joint MDB Climate Finance Tracking Approaches. Mafalda Duarte – Chief Climate Change Specialist, AfDB Claudio Alatorre – Senior Climate Change Specialist, IDB. Joint MDB COP18 Side-Event Hosted by the African Development Bank Doha, 5th December 2012, Renaissance Hotel. Outline.

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Joint MDB Climate Finance Tracking Approaches

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  1. Joint MDB Climate Finance Tracking Approaches Mafalda Duarte – Chief Climate Change Specialist, AfDBClaudio Alatorre – Senior Climate Change Specialist, IDB Joint MDB COP18 Side-Event Hosted by the African Development Bank Doha, 5th December 2012, Renaissance Hotel

  2. Outline • Why is Climate Finance Tracking Important? • Some Background… Current Tracking Systems • Joint MDB Adaptation Finance Tracking Approach • 2011 MDB Adaptation Finance Numbers • Joint MDB Mitigation Finance Tracking Approach • 2011 MDB Mitigation Finance Numbers • Next steps

  3. Why is Climate Finance Tracking Important? • In order to build trust and accountability with regards to climate finance commitments, and to monitor trends and progress in climate-related investments • For AfDB it is also important because it will… • support better project design; • allow us to track and report climate finance flows internally and externally; • facilitate the assessment of results from climate investments; • facilitate the mobilization of resources from capital markets.

  4. Some Background… Current Tracking Systems • UNFCCC National Communications: Annex II countries report funding activities to developing countries to promote CC mitigation and adaptation. Non-Annex I countries requested to provide information on support received. • OECD “Rio Markers”: mitigation since 1998, adaptation since 2010. Coders have three options: that adaptation/mitigation is a “principal objective”, “significant objective”, or “not targeted to the policy objective” (OECD). • …in which sense do MDBs want to go beyond these efforts?...

  5. Joint MDB Climate Finance Tracking Approaches • The joint MDB approaches are work in progress aimed at assisting MDBs and other organizations • Reporting is linked to the MDBs’ financial commitments • All types of resources are eligible for reporting irrespective of origin - including both the MDBs’ own resources as well as the MDBs’ managed investments • To prevent double counting, all external resources are clearly separated from the MDBs’ own resources • All types of instruments deployed (debt, equity, guarantees, technical assistance and grants) are included

  6. Joint MDB Climate Finance Tracking Approaches • Classification is made ex-ante project implementation: • The qualification of a project under this methodology does not imply evidence of the eventual delivery of climate change benefits. Inclusion is not a substitute for project-specific ex-post evidence of benefits, and projects seeking to demonstrate such effects must do so through project-specific data. • Classification can be made at the level of project components, sub-components or activities

  7. Joint MDB Adaptation Finance Tracking Approach • The MDB approach for adaptation is based on the following principles • It is purpose, context and activity based. A project must fulfill three design process criteria for finance to be reported. It must: • Include a statement of purpose or intent to address or improve climate resilience in order to differentiate between adaptation to current and future climate change and good development; • Set out a context of climate vulnerability (climate data, exposure and sensitivity), considering both the impacts from climate change, as well as climate variability related risks; • Link project activities to the context of climate vulnerability (e.g., socio-economic conditions and geographical location), reflecting only direct contributions to climate resilience.

  8. Joint MDB Adaptation Finance Tracking Approach • It follows a conservative approach: • To incentivize good adaptation projects to speed up transition to resilient communities and systems; • Activities that do not explicitly meet all the above criteria are not included in reporting. • Project activities should: • Address current drivers of vulnerability, especially in poorest countries or communities when specifically designed in response to climate risks; • Build resilience to current and future climate risks; • Incorporate climate risks into investments, especially for infrastructure with a long lifespan; • Incorporate management of climate risk into plans, institutions and policies.

  9. Examples of Application of the 3 Criteria CV&C: Climate variability and change

  10. MDB Adaptation Finance, 2011 (USD M) • Total MDB adaptation finance in 2011 applying the approach retroactively was USD 4.5 billion. • Given that the data are for a single year, they should not be used to make any judgments regarding the MDBs’ commitment and engagement in delivering adaptation finance.

  11. Joint MDB Mitigation Finance Tracking Approach • The MDB approach for mitigation is based on the following principles • It is activity-based, namely, it focuses on the type of activity to be executed, and not on its purpose, the origin of the financial resources, or its actual results. • Mitigation activities considered in this joint approach are assumed to lead to emission reductions, based on past experience and/or technical analysis. • Some activities provide both mitigation and adaptation co-benefits. As a result, the financing for adaptation and mitigation should not be added together to prevent double counting.

  12. MDB Mitigation Finance, 2011 (USD M) • Total MDB mitigation finance in 2011 applying the approach retroactively was USD 19.6 billion.

  13. Next Steps • In May 2013 the MDBs will jointly report 2012 figures; • Operationalization of the approach by each MDB; • Evaluation of its application in 2011 to fine-tune the approach and its application; • Engagement with OECD and other institutions dealing with MRV of climate finance; • Support to non-Annex I countries.

  14. Joint MDB Working Group Focal Points • Adaptation • Mafalda Duarte, AfDB, m.duarte@afdb.org • Charles Rodgers, ADB, crodgers@adb.org • Alfred Grunwaldt, IDB, alfredg@iadb.org • Craig Davies, EBRD, daviesc@ebrd.com • Nancy Saich, EIB, n.saich@eib.org • Vladimir Stenek, IFC, vstenek@ifc.org • Philippe Ambrosi, WB, pambrosi@worldbank.org • Mitigation • Mafalda Duarte, AfDB, m.duarte@afdb.org • JiwanAcharya, ADB, jacharya@adb.org • Andreas Biermann, EBRD, biermana@ebrd.org • Matthias Zoellner, EIB, m.zoellner@eib.org • Claudio Alatorre , IDB, calatorre@iadb.org • Lucas Bossard, IFC, lbossard1@ifc.org • Philippe Ambrosi, WB, pambrosi@worldbank.org

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