Kathmandu, 10 Jun 2020 (Prerna Bomzan): Developing country ministers called for urgent action on climate finance, at a virtual meeting held on June 4 by the secretariat of the UN Framework Convention on Climate Change (UNFCCC).
Egyptian Minister of Environment, Yasmine Fouad, said that governments have to get into discussing the main target of the global climate finance goal required by developing countries based on their needs, and that there was “no luxury of time” to do this.
Maldivian Minister of Environment, Hussain Rasheed Hassan, highlighted the need for grants to the small-island developing states (SIDs), stressing that they were “simply not in a position now to take on any more loans.” The Minister added that SIDs were victims of climate emergency and should not be asked to submit “bankable projects”. “Without easy access to finance, our NDCs (the nationally determined contributions under the Paris Agreement) will be empty paragraphs” which could not be implemented, stressed the Minister further.
The virtual special event titled ‘Effective Delivery of Needs-based Climate Finance’ was held in the form of a multi-stakeholder dialogue as part of the ‘June Momentum for Climate Change’ series of online events, organized by the secretariat from 1-10 June.
The ‘June Momentum’ events are being held under the guidance of the chairs of the UNFCCC’s Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI). According to information on the UNFCCC website, the aim of the online events is to continue exchanging views and share information “in order to maintain momentum in the UNFCCC process and to showcase how climate action is progressing under the special circumstances the world is currently facing”, referring to the COVID-19 pandemic.
(The annual intersessional face-to-face negotiating meetings of the UNFCCC’s Subsidiary Bodies, which are usually held in May or June every year, have now been scheduled to take place from 4-12 October, in Bonn, Germany, due to the pandemic. At the launch of the virtual events on 1 June, Tosi Mpanu Mpanu (from the Democratic Republic of Congo) and Chair of SBSTA, pointed out that the ‘June Momentum’ does not provide a space for negotiations, as this will only take place when governments meet for the Subsidiary Body meetings in October).
The information provided on the website about the June 4 climate finance event, stated that “the objective was to share ongoing efforts and experiences on enhancing developing countries access to international climate funds and strengthen the alignment, mobilization and delivery of support to the identified needs and priorities of developing countries”, in part “to demonstrate the commitment to deliver climate action and ambition in 2020”.
The UNFCCC’s Executive Secretary Patricia Espinosa, in her welcoming remarks to the event, said that the current health and economic crisis caused by COVID-19 “exacerbates climate vulnerabilities of developing countries and drives up their cost of climate action”, while COVID-19 also makes the challenge of accessing climate finance even greater. She emphasized that “developing countries urgently need to access climate finance, especially during these times. The world cannot truly recover better without them; the world cannot fight climate change without them; and we cannot and will not build a better future without them”. Espinosa urged for finding ways to enhance developing countries’ access to climate finance so that “their needs and priorities can be met by climate-friendly financial resources”.
In the segment on ‘high-level remarks’, Egyptian Minister Yasmine Fouad and the German State Secretary at the Ministry of Environment, Jochen Flasbarth spoke.
Minister Fouad underlined the importance of finance as key to unlocking other climate issues and the need to “accelerate” the process especially given the current situation around the world, in an apparent reference to the health pandemic. Recalling the results and decisions from the 2018 meeting of the UNFCCC’s Conference of Parties (COP) in Katowice, Poland, she drew attention to the decision on the “global collective goal for finance” which is based on the “needs of developing countries”. She also referred to the decision relating to the Standing Committee on Finance (SCF), which has been tasked to come up with its “first report” on the “actual needs” of developing countries.
The Egyptian minister stressed that “we need to get into the main target of what are the needs of developing countries” instead of focusing on the procedures, methodology and approach when there’s “no luxury of time”. In this regard, she urged developing countries to provide submissions to the current call by the SCF on the collection of data and information for the SCF’s first report in 2020. “We need to be more focused in finding solutions that are tangible, implementable and realistic to have effective delivery of climate finance for the needs of developing countries”, she concluded.
German State Secretary, Jochen Flasbarth, said “we are fully committed to the USD 100 billion target of climate finance” (by 2020) and highlighted that Germany has a budget line of Euro 4 billion in climate finance in 2020. He further expressed commitment to “continue to provide through 2025, our fair share to global climate financing”. Flasbarth however highlighted that “public finance may never be sufficient” and urged for “private sector” mobilization, also encouraging the role of other actors beyond Parties such as “development financial institutions, commercial financial institutions, institutional investors, and corporate actors”. He shared in closing that the German government has “a recovery package” with “strong commitment to international solidarity”.
The panel discussion that followed, featured a host of representatives from government ministries, UN agencies and other international institutions.
Maldivian Minister Hussain Rasheed Hassan emphasized that “access to finance is a major problem” for SIDs given their capacity constraints, and highlighted the need for simplified access to grants. Sharing the Maldivian experience of the climate change reality clubbed with the COVID-19 pandemic, the Minister reiterated that “it is critical that access to grants is facilitated”, emphasizing that “we are simply not in a position now to take any more loans; we cannot afford to pay loans anymore”.
He added further that that victims of climate emergency should not be asked to submit “bankable projects” and stressed that “without easy access to finance, our NDCs will be empty paragraphs” which cannot be implemented.
Costa Rican Minister of Environment and Energy Carlos, Manuel Rodriguez said that governments must recognize the importance of NDCs and the 1.5- degree C commitment (to limiting temperature rise) in their national economic recovery plans and feared that politicians and governments will go for “simple, magical, short-term economic solutions that may mean more oil and gas”. He proposed that in terms of international finance, multilateral organisations need to support countries with “very clear climate related conditions,” drawing similar reference to the conditions of structural adjustment programmes of the 1990s, imposed by the World Bank. Rodriguez called on countries to “continue to raise ambition on the allocation of resources to NDCs” and stressed that “all finance sectors should seek full alignment with NDCs in all of their operations.” (Rodriguez has recently been appointed as the new chief executive officer [CEO] of the Global Environment Facility).
The outgoing CEO of the Global Environment Facility (GEF), Naoko Ishii shared that the recent GEF Council meeting was dominated by conversations about the “green recovery” and how it could support efforts through its ongoing and upcoming projects. She said that GEF is a grant institution, with each country having its own allocation. Therefore, it was a “mutual responsibility” of both the GEF and the countries to work together to use the grant resources towards green recovery plans and accompanying system transformation.
The Deputy Executive Director of the Green Climate Fund (GCF), Javier Manzanares said that the GCF is supporting developing countries towards green resilient recovery mainly through four measures. First, “minimise” implementation delays related to COVID-19 with “ongoing portfolio” through “adaptive management”. Second, through the readiness programme, the GCF can rapidly respond to country needs in “crafting priority green stimulus measures”, also integrating them within the NDCs as well as “explore new types of financing structure” to capitalise these efforts. Third, through funding proposals which by the next three board meetings, the GCF will be providing an estimated USD 8 billion in investments with approximately USD 2 billion coming from the GCF and the rest in the form of co-financing. Fourth, he shared that “some dedicated initiatives are to be launched before COP 26 (the next annual UNFCCC meeting in 2021) very specifically on equity and guarantee funds and notably for small- and medium-sized enterprises impacted by COVID-19 in the areas of clean electricity, health, agriculture and water management.
Manager of the Adaptation Fund Board (AFB) secretariat, Mikko Ollikainen shared that the recovery must not only be “green” but also “resilient and equitable” highlighting direct access as the hallmark feature of the Adaptation Fund, as well as its grant-based funding and accessibility to vulnerable countries. He said that the growth in new requests for funding every year shows that demand is increasing for adaptation to climate change, with current active pipeline of project proposals submitted but not yet approved amounting to around USD 250 million. Further, he stated that the AFB has consistently tried to keep access procedures as simple as possible, while not compromising on the environmental and social risk management and gender aspects.
CEO of the Agence Francaise de Developpement (AFD) and Chairman of the International Development Finance Club (IDFC), Remy Rioux shared that the AFD passed the EUR 6-billion-mark last year for adaptation finance and now, it has 30% of climate finance on nature-based solutions, while the IFDC has committed USD 1 trillion at the Climate Action Summit held in New York last year. He provided information about the upcoming ‘Finance in Common Summit’ scheduled to take place from 10-12 November this year, which will bring together all public development banks from sub-national to international, with more than USD 2 trillion a year in global investments.
Managing Director of the European Bank for Reconstruction and Development (EBRD), Josue Tanaka shared that the EBRD has a climate finance target of USD 65 billion by 2025, with doubling of adaptation finance and increased mobilization of the private sector to about USD 40 billion annually by 2025, including support to clients to deliver their goal on the Paris Agreement. He said that last year, 46% of their financing was in “green finance” out of which 91% was on climate.
Head of the UN Environment Programme Finance Initiative (UNEP FI), Eric Usher, emphasized the need to move from “green transactions to green institutions”, with “the alignment of portfolios within the institutions as a whole”. He shared about the ‘Net-Zero Asset Owner Alliance’, which is a group of investors of over USD 4 trillion in assets, who have committed to go net zero (in terms of emissions) by 2050. He also shared that over 90% of financing in developing countries is by the banking sector and recently, one-third of the global banking industry has signed up to the ‘Principles of Responsible Banking’ which aims to align one’s businesses with the Sustainable Development Goals and the Paris Agreement.
Director of Climate and Environment at the Department for International Development (DFID), United Kingdom (UK), Vel Gnanendran, called on governments to “stick to the commitments” made in relation to the USD 100 billion per year climate finance target and further shared that last year, the UK had committed to double its climate finance to £11.6 billion in the next five years. He stated that the renewable energy sector is a big priority this year in the context of a green recovery and further stressed on accessibility of finance, building capacity of partner countries, aligning to national needs and being “responsive to what developing countries are saying”.
The virtual special event on “Effective Delivery of Needs-based Climate Finance” was moderated by Aman Lee Amin of the CDC Group (which is the UK’s development finance institution).