Media Training – ADF-7 UNCC, Addis Ababa, Ethiopia 8-10 October, 2010 Financing Climate Change Adaptation and Mitigation in Africa Al-Hamndou Dorsouma Senior Climate Change Expert African Development Bank

Presentation Outline  Background  Status of existing funds  Climate Change Financing for Africa  Future of Climate Change Finance  Conclusion

Background

Climate Change and Africa Managing the unavoidable through adaptation, and avoiding the unmanageable through mitigation are the most important challenges. Enormous Additional Burden to Development

‘Climate Proofed Abatements’ Adaptation Mitigation Development Low Carbon Dev ‘Climate Resilient Dev ‘Climate Compatible Development’ Source: Catalyst, 2009 Climate Change must be rooted in Development

 Opportunities exist for climate-resilient and a low carbon growth in Africa Mainstreaming climate change into development through sensitive sectors Promoting a transition to a low carbon- intensive economy, through green growth and use green technologies Opportunities exist in Africa’s forestry and energy sectors – tapping into abundant renewable energy sources Climate Change Opportunities

Africa’s priority is Adaptation  For Africa to adapt, it needs: Enhanced human and institutional capacity Effective climate information systems Resilient infrastructure Adequate financial resources

Status of existing Climate Change Funds

Status of existing funds  Multilateral funds: largely designed with global imperatives that do not align with Africa’s needs: Global Environment Facility (GEF) Adaptation Fund Climate Investment Funds  Bilateral Funds  Africa Specific Funds: most of them are new

Global Environment Facility (GEF)  The GEF received a total of $ billion during 4 replenishments.  The amount approved under GEF-5 for is US$1.3 billion  GEF is composed of: Least Developed Country Fund ($180 million) supports the development of NAPAs Special Climate Change Fund ($120 million ) addresses special needs of developing countries Strategic Priority: supports projects combining adaptation and mitigation

Adaptation Fund  Adaptation Fund (AF) uses 2% of CDM projects to support adaptation  Direct access for adaptation projetcs in developing countries

Climate Investment Funds (CIFs)  MDBs’ financing mechanism pending to an agreement on post-2012 regime.  Of the $6.1 billion pledged, only about $600 million (<10%) is allocated to adaptation.  CIFs comprises 2 main funds: Clean Technology Fund (CTF) Strategic Climate Fund (SCF)  The SCF has 4 target programmes: Pilot Programme for Climate Resilience (PPCR) Scaling Up Renewable Energy Programme (SREP) Forest Investment Programme (FIP)

The Congo Basin Forest Fund (CBFF)  The CBFF(GBP 100 million) awards grants for activities that slow and eventually reverse the rate of deforestation in the Congo Basin Forest  Hosted by AfDB and supported by the United Kingdom and Norway  Over 100 operations financed for approximately US$ 2.8 billion

Clim-Dev Africa Special Fund  A joint initiative between AfDB, AUC and UNECA under the ClimDev-Africa programme.  CDSF is a multi-donor Fund of $135 million between 2010 and 2012, to finance ClimDev- Africa activities  The Fund is approved by AfDB in May 2010  The launching ceremony of the ClimDev-Africa programme, including the Fund will take place during the Forum (on October 13rd, 2010)

Sustainable Energy Fund for Africa (SEFA)  The Danish Government has pledged about US$56 million over the next 5 years to be managed by AfDB.  It is expected that this Fund will support renewable energy initiatives in the continent  The Fund is under development

Africa Carbon Facility  The Africa Carbon Facility is in the process of establishment in response to the demand from African countries to engage more in the global carbon markets.  The Facility will focus on providing technical and project management assistance on the Clean Development Mechanism (CDM) and Reduced Emissions from Deforestation and Degradation (REDD) activities.

Africa Green Fund (AGF)  The AGF is to enable African Countries gain access to global funds in order to support climate compatible development in Africa  The Fund will be operational on date when US$250 million is pledged, not be later than 31 December 2011  Potential activities to be funded include adaptation, enhanced action on mitigation, technology development and tranfer, capacity enhancement  Consultations on the Fund which started in september continue during the Forum (AfDB Side Event on the 12 October)

MDBs’ Climate Change Financing Shareholder Capitalization Replenishment Concessional Trust Funds Capital Market How Do MDBs Generate Climate Finance? Climate Change merits careful consideration in negotiations on these options

MDB Climate Change Finance How Much is Mobilized (US$ billion)? Source: MDB Joint Report to the Hokkaido G8 (Richard Stern, 2010)

Region Shares Africa % Asia/Pacific % EMENA % LACC % Total % Africa is least served Regional Distribution of MDB Climate Change Financing

Access to Carbon Market Africa not benefitted from the Carbon Market

Access to carbon market  CDM presently mobilizes only $50-80 million for Africa over several years.  1-2% of GDP will be needed each year for mitigation. That means for Africa, $13-26 billion per year  To work effectively in Africa, CDM and other international markets need to be improved  For Africa, the scope of carbon market must be expanded to include land-use changes such as reforestation and forest preservation through the REDD mechanism.

Climate Change Finance for Africa

Current funding is inadequate to help countries respond to climate change

What Africa Needs to Adapt

Financing needs for Africa

 Africa requires about US$22-31 billion per year by 2015, and $52-68 billion per year by 2030  Climate-proofing will add 40% to the costs of meeting the MDGs in Africa  This would require international financial assistance of some US$ 100 billion a year over the next decade How Much is Needed?

Future of Climate Change Finance

 Conference of Parties to the United Nations Framework Convention on Climate Change COP 15 in Copenhagen, Denmark  New and additional fast-track resources - $30 billion by 2012  Mobilizing additional $100 billion annually by 2020 to address needs of developing countries  Africa’s leadership requested at least 40% allocated to Africa. The Copenhagen Accord

Making climate finance work  Climate finance should be mobilised in the most efficient manner possible in ensuring long term predictability  More financing will be required from both Public and Private sources.  While money from private sector will finance mitigation and key infrastructure investments, most of the required expenditure will come from public sector.  Carbon market to be reformed to address Africa’s concerns, and finance mitigation in Africa

Sources of financing  The potential sources of financing include: National budgets Innovative finance mechanisms Reserve assets Private capital  Examples: levies on aviation and international maritime transport, in combination with the developed countries’ emission rights, are the most attractive options

Sources of financing  The need for additional climate finance doesn’t obviate the responsibility to ensure that resources are spent effectively on high-impact interventions with a transparency and fully accountability manner  External resources both public and private must be mobilized through efficient and predictable means. The absoptive capacity of recipient countries needs to be assessed

Conclusion Africa has Low Access Rate to Global Resources Africa has urgent and enormous needs in terms of climate change financing for tackling the impacts of climate change. Africa Requires Substantial Resources both from Public and Private Sectors

Thank You For more information