Trends in financial flows and ongoing work on innovative financing for the development and transfer of technologies Daniele Violetti Programme Officer, Technology Climate Change Secretariat (UNFCCC) UNFCCC seminar on the development and transfer of environmentally sound technologies for adaptation to climate change Tobago Hilton, Trinidad and Tobago, June 2005

I. Funding targeted to climate change II. Financial flows outside the UNFCCC III.Work on innovative financing IV. Follow-up activities and next steps Outline of the presentation

Funding targeted to climate change Bilateral activities of Parties Multilateral activities, e.g. The Global Environment Facility in the period provided around USD 1.35 billion in grants to climate change activities and another 6.2 billion has been leveraged Many others multilateral financial opportunities, e.g. World Bank carbon financing, Regional Banks, etc.

Funding targeted to climate change The Special Climate Change Fund will finance projects relating to technology transfer and adaptation (34 USD million, 1 pledged for TT) LDC Fund, implementation of NAPAs (33 million, 11 spent) Financial flows generated by JI/CDM projects (2% of CDM proceedings for the Adaptation Fund) Private sector investments

Funding targeted to climate change Information provided by Annex II Parties in their third National Communications

Funding targeted to climate change Information provided by Annex II Parties in their third National Communications

Financial flows from OECD countries Climate change-related ODA by sector from 1998 to 2000 (US$ million) A DAC study shows that $2.7 billion annually are spent for climate change-related aid – representing 7.2 percent of ODA commitments Source: OECD DAC

Public and private financial flows Financial flows to low and middle income countries Official flowsPrivate flows Loans bilateral/ multilateral Grants bilateral/ multilateral Debt flows FDI/ Portfolio equity flows

Trends in public and private financial flows to developing countries Source: Global Development Finance, World Bank.

Aggregate financial flows from 1990 to 2003 Source: Global Development Finance World Bank. Trends in financial flows

Net foreign direct investment (FDI) by region (2003) Source: Global Development Finance World Bank.

Workshop on innovative financing SBSTA 19 requested the secretariat to organize a workshop on innovative options.., and to report on the findings of the workshop to SBSTA 21; SBSTA 20 requested the EGTT to consider the outcomes of the workshop and the workshop report prepared by the secretariat with possible recommendations for consideration by SBSTA 21 The workshop took place on September 2004 in Montreal, Canada (FCCC/SBSTA/2004/11)

Conclusions from the workshop Technology needs assessments: they should form the basis for the development of strategic plans to move the technology transfer process forward Toolkits and handbooks: on innovative/non-innovative financing of technology transfer projects are necessary for improving project preparation and assessment to international standards. It would be appropriate to develop a list of existing tools, software and models appropriate to financing technology transfer projects and to identify their gaps Training and capacity-building: capacity-building and training programmes could be developed using the above mentioned “tool kits and handbooks”

Conclusions from the workshop Enabling environments: Establishing the necessary enabling environments, including removing barriers remains an essential element not only in relation to financing but also to the overall process of technology transfer Risk management: The provision of adequate tools for risk management would be useful to mitigate risks and to improve the quality of projects Dialogue: Continue dialogues with the private sector, engaging both public and private sector financial institutions, SMEs and entrepreneurs could be a future focus especially in developing countries, as well as ECAs;

Conclusions from the workshop Several “new” investment instruments and institutes can play an important role in TT, e.g. the role of ECAs, and the innovative approaches brought about by the CDM and JI. Also, Seed financing provided by donors has been indicated as an important instrument to stimulate technology transfer. Financing is not a “bolt-on” element, which can be added at the end of a process, but must be secured and embedded early in the process Adaptation: the issue of financing the transfer of technologies for adaptation could be considered within the EGTT work programme and the forthcoming seminar on technologies for adaptation

The EGTT work programme for 2005 includes the organization of a follow-up workshop The secretariat will organize the workshop in October 2005 The aim is to find solutions to reach financial closure of proposals drawn from the results of the technology needs assessments Continue to engage the private sector in the process Outcomes of the workshop will be presented at SBSTA 23 A technical paper on innovative financing for SBSTA 24 The Practitioner’s Guide to be prepared for SBSTA 25 Follow-up activities

Is there a fundamental difference in funding adaptation and mitigation? If yes, what? Is there sufficient funding available? Where and how can be accessed? Are the results of the technology needs assessments relating to technologies for adaptation attractive for the financial community? If no, how can they be made more attractive? How can the private sector be engaged? Issues for reflections

THANK YOU!