Climate Change Expert Group (CCXG) Global Forum | 15 March 2016

Raphaël JACHNIK

Climate Change, Biodiversity and Water Division Environment Directorate

Experience to date and next steps to estimate private finance mobilised for climate action in developing countries

A range of information needs

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Big picture ⋅ Closing the climate investment gap: financing

needs vs. financing flows ⋅ Are the trillions needed in infrastructure

investment shifting from brown to green? ⋅ Inform effectiveness of public interventions

in mobilising climate investment

International climate negotiations ⋅ Developed countries’ collective commitment

to mobilise USD 100bn annually by 2020 ⋅ Individual reporting by Parties ⋅ Standing Committee on Finance’s Biennial

assessment and overview of flows

UNFCCC provisions for reporting mobilised private finance

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COP17 biennial reporting guidelines “19. Recognizing that the goal of mobilizing the financial resources (…) includes private financial sources, Annex II Parties should report, to the extent possible, on private financial flows leveraged by bilateral climate finance towards mitigation and adaptation activities in non-Annex I Parties, and should report on policies and measures that promote the scaling up of private investment in mitigation and adaptation activities in developing country Parties.”

COP21 Agreement text “7. Developed country Parties shall provide transparent and consistent information on support for developing country Parties provided and mobilized through public interventions biennially in accordance with the modalities, procedures and guidelines to be adopted by the Conference of the Parties (…). Other Parties are encouraged to do so.”

Source: UNFCCC (2015), Paris Agreement, http://unfccc.int/meetings/paris_nov_2015/items/9445.php: UNFCCC (2011), Report of the Conference of the Parties on its seventeenth session, Addendum. Part two: Action taken by the Conference of the Parties at its seventeenth session, http://unfccc.int/meetings/durban_nov_2011/meeting/6245/php/view/reports.php

Illustration of the drivers of private finance

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Multilateral public guarantee

Domestic public loan

Private loan

Private equity

Domestic feed-in tariff

scheme

Bilateral public technical assistance

Investment conditions

How much private finance was mobilised? By what?

→ Boundaries → Causality → Attribution

Good progress on data availability to report on private finance mobilised directly by donors’ public climate finance

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Instrument/mechanism Bilateral public finance Multilateral public finance

Grants

Concessional loans

Non-concessional loans

Credit lines

Direct equity

Fund-level equity

Guarantees

Coverage Complete Comprehensive Partial Very partial Not reported yet

Source: OECD (2015), “Climate finance in 2013-14 and the USD 100 billion goal”, a report by the Organisation for Economic Co-operation and Development (OECD) in collaboration with Climate Policy Initiative (CPI). http://www.oecd.org/environment/cc/OECD-CPI-Climate-Finance-Report.htm

Debt

Equity

Degree of private co-finance data availability per public finance instrument

Pilot estimates of direct private finance mobilisation…

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…by development finance institutions

Available at: http://www.oecd.org/env/researchcollaborative

…at country level

…at collective level

Aggregate estimates towards the USD 100bn goal

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Source: OECD (2015), “Climate finance in 2013-14 and the USD 100 billion goal”, a report by the Organisation for Economic Co-operation and Development (OECD) in collaboration with Climate Policy Initiative (CPI). http://www.oecd.org/environment/cc/OECD-CPI-Climate-Finance-Report.htm

Climate finance provided and mobilised by developed countries for climate action in developing countries (USD billion)

Thematic unbalance across sources (not just private)

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Thematic split of climate finance provided and mobilised by developed countries for climate action in developing countries in 2013-2014

Source: OECD (2015), “Climate finance in 2013-14 and the USD 100 billion goal”, a report by the Organisation for Economic Co-operation and Development (OECD) in collaboration with Climate Policy Initiative (CPI). http://www.oecd.org/environment/cc/OECD-CPI-Climate-Finance-Report.htm

Way forward for measuring and reporting the mobilisation effect of public climate finance?

· Develop and institutionalise methodologies for specific public finance instruments/mechanisms

· Optimise synergies between climate and development finance communities

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· Explore possibilities to start collecting data to capture the mobilisation effect of developing country public finance

A need to capture the catalytic effect of capacity building and policy-related interventions

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Development and trialling of methods

at project level

Case study-based exploratory

research

Testing of empirical (econometric)

techniques

Available at: http://www.oecd.org/env/researchcollaborative

Key implications for reporting

Data/confidentiality restrictions for private finance imply less granularity in publicly-available data than for public

→ Accept a certain level of aggregation of private finance data reported

Addressing issues of causality and attribution key to avoid double counting but will be assumption-based

→ Find a careful balance between accuracy and practicality

Difficult to quantify the catalytic (indirect) effect of capacity building and policy-related interventions

→ Allow reporting format to possibly take different form e.g. indicators

Donor country support provides part of picture to understand what has mobilised private investment

→ Leave door open to report private finance mobilised by all interventions

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For further information

+33 1 45 24 16 89 || raphael.jachnik@oecd.org

www.oecd.org/env/researchcollaborative

Climate Change Expert Group (CCXG) Global Forum | 15 March 2016