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Overview of financial sources and access modalities for mitigation actions, including supportfor CDM and NAMAs
Regional Workshop on CDM and NAMAs for Latin America and the Caribbean
31 August – 2 September, Bogota, Colombia
Mateo Salomon
Climate Change and Sustainability Division
Inter-American Development Bank
USD 359 BN
94% towards Mitigation
Financial Mechanism to Support CDM (some examples)
The NEFCO Norwegian Carbon Procurement Facility (NorCaP) (30 MtCO2e) UNFCCC Loan Scheme for CDM Joint Crediting Mechanism (Japan) Fiscal incentives (ej. Colombia, technology and equipment exempted of IVA) WB methane pay-for-performance auction facility (reversed auctions) Domestic Carbon Markets Voluntary Carbon Markets (76 MtCO2e in 2013)
Source: World Bank. 2014. State and Trends of Carbon Pricing 2014
POSSIBLE FINANCING STREAMS FOR NAMAS
Source: IISD, 2013Combination
Financing NAMAs: the instruments
A variety of NAMA financing instruments exist, such as: - Project financing, structures funds, promotional loans, development
loans, grants, equity instruments, guarantees etc.
Basic principles of NAMA financing instruments: - Adaptation to the specific circumstances of the host country to
overcome financial barriers is key - Instruments need to be sustainable that work beyond first steps of
project implementation- Affordability of financial instruments is crucial - Price signals are not enough…- Availability to potential investors and private sector investors - Managing risks and attracting private sector investments
riskriskriskriskriskriskriskriskriskriskriskriskriskriskriskriskriskriskrisk
DIFFERENT SOURCES OF FUNDING FOR EACH STEPS OF THE NAMA PROCESS
Grant / Technical Assistance
Grant / Technical Assistance Component of Loan
Concessional Loan / Private Sector Investment
Key phase to develop the appropriate mechanisms that will trigger private investments
Technical Assistance Programmes (Examples)
- UNDP Low Emission Capacity Building Programme
- World Bank Partnership for Market Readiness
- UNEP FIRM
- Mitigation and Implementation Network (MAIN) – WB, CCAP
- …
Bilateral Funds (Examples)
- NAMA Facility
- Austrian NAMA Initative (SIDS)
- French Development Agency
- …
Multilateral Funds (Examples)
- Climate Investment Funds
- Global Environment Facility
- Green Climate Fund
- EC Latin America Investment Facility
- …
www.climatefinanceoptions.org
Climate Investment Funds
GEF-6 (2014 July-2018 June) Climate Change Mitigation Focal Area Strategic Framework (USD 1,220 million) (DRAFT)
GREEN CLIMATE FUND (GCF)
The Fund will support [developing countries] in pursuing project-based and programmatic approaches in accordance with climate change strategies and plans, such as low-emission development strategies or plans, nationally appropriate mitigation actions (NAMAs), national adaptation plans of action (NAPAs), national adaptation plans (NAPs) and other related activities.-Mitigation and Adaptation windows (Same modality of Access)
- 50:50 balance between adaptation and mitigation during the initial phase of the Fund.
-Private Sector Facility (PSF) – direct and indirect finance to private sector-Readiness Support-National, Regional and International Implementing Entities (Direct and International Access)-Geographical balance-Grant & Concessional Lending
Financing NAMAs: Role of MDBs
Multilateral Development Banks- Trigger and facilitate first steps by providing loans and concessional
funding to prepare and develop NAMAs together with host country- Help eliminate barriers (technical, regulatory, financial) and risk-
return equation - Create implicit credit enhancement effect on account of participation
by banks (AAA credit rating) - Facilitate the access and implementation of climate funds- Catalyze private investments in NAMAs for long term sustainability
for NAMAs and transformational impact - Help build institutional capacities for enhanced NAMA coordination
by host countries and help develop national and sectorial plans - Provide valuable knowledge, regional experience and replicable
best practices
Financing NAMAs: Successful IDB Example: ColombiaPhase 1: Study and Disbursement
Supplier
Hotel/Hospital
Private Bank
National Development
Bank
Information for prior diagnostic
Technical and financial proposal
Credit application
Validator Verifier
Application for project evaluation
Validation of the project
Disbursement
Disbursement approval
Insurance company
Insurance Policy application
Grant policies
Credit application
form
Financing NAMAs: Successful IDB Example: ColombiaPhase 2: Project in Operation
Supplier
Hotel/Hospital
Private Bank
National Development
Bank
Payment of % retained in accordance with contract
M&V Report
Credit Payment
Validator Verifier
BID
Report on program impact
Insurance company
M&V report
YESNO
Application for M&V revision
Report review
Execution policy
IDB
Thank you for your attention!Gracias por su atención!
Mateo SalomonClimate Change and Sustainability Division
Inter-American Development Bank (IDB)[email protected]
Financing NAMAs: 1: New Housing NAMA Mexico (Ecocasa)
International DonorNAMA Fund (IDB/KfW)
SHF Subsidized loansRevolving fund
Trust fund Trustee (TBD)
Grants
Primary lending institutions (PLI)
Loans
BanksPLI
Grants
SCVto be determined (RUV)
Qualification
Mexican Government CONAVI
Supervision
House ownersDevelopers
0,6% of building costs
Financial flow
Monitoring
Information flow
ECOCASA: Program Structure and Financing