Our Common Future Under Climate Change

International Scientific Conference 7-10 JULY 2015 Paris, France

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Thursday 9 July - 17:30-19:00 UPMC Jussieu - ROOM 107 - Block 24/34

4404 - Climate finance: New sources, new instruments, more effects?

Parallel Session

Sources and instruments for climate finance

A. Torvanger (CICERO, Oslo, Norway)

Abstract details
Sources and instruments for climate finance

A. Torvanger (1)
(1) CICERO, Oslo, Norway

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Long-term investments in climate-friendly and climate change resilient infrastructure, buildings and energy is essential to both mitigate greenhouse gas emissions and adapt to climate change impacts. Such climate finance is particularly in need in many developing countries due to limited economic resources and expected impacts from climate change. Direct government contributions can help, but a large share of the agreed 100 Bill. USD annually from 2020 for climate measures in developing countries can only realistically come from the private sector.


What is the status of sources and channels of long-term climate finance? I present a new status report on the most promising sources of climate finance. Relevant sources are public carbon-related revenues (taxes and emissions trading), carbon offset markets, international transport, removal of fossil subsidies, direct budget contributions, finance development institutions, private flows, green bonds, ‘debt-for-climate’ swaps, and export credits.


What can developed country governments do to catalyze private sector investment in developing countries? There is a range of de-risking interventions and instruments available, from credit enhancement to guarantees.


Green bonds finance low-carbon or climate-robust projects. Private sector investment in green bonds has tripled in each of the last two years. Pension funds, insurance companies, and socially responsible investors are increasingly investing in green bonds. Can the momentum of the green bond market be harnessed to make a real difference to the climate and for climate finance in developing countries? Can Green Bonds funding be combined with multilateral climate finance such as the Green Climate Fund?


Key issues discussed are:

  • What are the most promising sources of climate finance?
  • What is the scope for government de-risking of private finance?
  • What government measures are most efficient to stimulate private finance?
  • To what extent can Green Bonds make a difference in climate mitigation and adaptation?
  • How can Green Bonds be adapted to the needs of developing countries?
  • How can governments facilitate Green Bond investments in developing countries?

Mobilising capital for green infrastructure investments

C. Kaminker (OECD, Paris, France)

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Mobilising capital for green infrastructure investments

C. Kaminker (1)
(1) OECD, Environment Directorate, Paris, France

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A keynote presentation focusing on OECD analysis on what developed country governments can do to catalyse private sector investment in green infrastructure of developing countries.

The presentation would cover key lessons from the following OECD work streams: Mapping Channels to Mobilise Institutional Investment in Sustainable Energy: An OECD Report for G20 Finance Ministers and Central Bank Governors; which uses an empirical base of 70 deals to identify barriers and advise on how governments can overcome them to mobilise institutional investment in sustainable energy and how governments can support the development of potentially promising investment channels and consider policy interventions that can make institutional investment in sustainable energy infrastructure more likely.

Green Bonds: a new report will analyse the potential, barriers and policy solutions for scaling up green bonds across their various different forms (including municipal, corporate, asset-backed, covered, project).

The OECD-led Research Collaborative on Tracking Private Climate Finance, an OECD-led network of governments, research institutions and international finance institutions. Over the past two years it has explored data and a range of methods to estimating private finance mobilised by developed countries for climate action in developing countries. In 2015, work conducted under and in co-operation with the Research Collaborative will focus on the further development and ground-testing of estimation methods in the context of pilot measurements of mobilisation for climate-relevant sectors, different types of interventions/instruments, as well as at the level of individual/groups of countries and public finance institutions.

The OECD Policy Guidance for Investment in Clean Energy Infrastructure: Expanding Access to Clean Energy for Green Growth and Development is a good example of our efforts to improve the enabling conditions for private investment in clean energy infrastructure. Non-prescriptive tool to help governments identify ways to mobilise private sector investment in clean energy infrastructure, annexed to the Communiqué of G20 Finance Ministers in 2013.

OECD report on Overcoming Barriers to International Investment in Clean Energy discusses the rise of hidden indirect protectionism in clean energy since the 2008 financial crisis. The report provides empirical evidence on the negative impact that LCRs have on international investment in solar PV and wind energy, as they increase the cost of inputs for downstream segments of the value chain like renewable energy-based electricity generation. By assessing the impacts of measures such as LCRs across different segments of the value chains, this report provides policy makers with evidence-based analysis to guide their decisions in designing clean energy support policies.


Result Based Financing for Mitigation: choosing the right “triggers” to drive a “paradigm shift”

R. Spalding-Fecher (Carbon Limits AS, Pelham, United States of America)

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Result Based Financing for Mitigation: choosing the right “triggers” to drive a “paradigm shift”

R. Spalding-Fecher (1)
(1) Carbon Limits AS, Pelham, United States of America

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Results-based finance is an emerging tool to link public and private financing to a more sustainable and climate-friendly future.  The main goal of many of these new funding sources is to create a “paradigm shift” towards low carbon and climate resilient development. But what does this mean for how new mitigation financing could be allocated and what types of projects, programmes or larger policy changes could be targeted?  This contribution explores two specific question in the RBF decision making process. This first is how to ensure that RBF for climate finance promotes mitigation even after the payments for emissions reduction stop, and supports technologies and practices that are part of the “end game” for climate stabilisation.   Long term results typically require policy and institutional changes, which are not normally linked to project or programme-based financing.  In addition, focusing on long term results means avoiding technology “lock in” and driving innovation in mitigation technologies.  The second question is what type of non-climate criteria are needed for RBF, including environmental and social safeguards, and how might these be integrated in the payment system.  In other words, how might non-climate impacts not only be monitored, but how would their achievement (or avoidance) affect the results-based payments.


Smart Unconventional Monetary (SUMO) policies: giving impetus to green investment

R. Morel (CDC Climat, PARIS, France), B. Leguet (CDC Climat, Paris, France)

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Smart Unconventional Monetary (SUMO) policies: giving impetus to green investment

R. Morel (1) ; B. Leguet (1)
(1) CDC Climat, PARIS, France

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Today, given the amount of investment needed to reach a 2-degree emissions reduction target and the tight budgetary constraints of governments worldwide, public spending alone will not be sufficient alone. Therefore, there is a double need to not only shift private financial flows from “brown” sectors to “green” sectors, but also to leverage new sources of financing. Addressing the second challenge, this study reviews three families of proposed funding mechanisms based on unconventional monetary policies targeting “green” or “climate” investments. These “Smart Unconventional MOnetary” (or SUMO) policies include: (i) the use of Special Drawing Rights (SDRs) issued by the International Monetary Fund (IMF), (ii) green quantitative easing and (iii) the issuance of Carbon Certificates.

This contribution will first present the basic elements of these three approaches. It will then identify and discuss the implementation challenges to overcome. These include both concerns over inflationary worries as well as the difficulty to reach multilateral agreements in the short run, and the involvement of the private sector. Finally, the presentation will look at the key conditions for ensuring the environmental integrity of the unconventional monetary policies, both ex-ante – during the selection of eligible projects – and ex-post . This contribution will look at lessons drawn from Monitoring, Reporting and Verification (MRV) methods used in the Clean Development Mechanism as well as other existing schemes (white certificates, etc.).


Panel discussion

A. Torvanger (CICERO, Oslo, Norway), R. Spalding-Fecher (Carbon Limits AS, Pelham, United States of America), R. Morel (CDC Climat, PARIS, France)

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Panel discussion
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