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Show Me the Money Financing in Support of Multilateral Environmental Agreements

Show Me the Money Financing in Support of Multilateral Environmental Agreements. Alan Miller International Finance Corporation November 11, 2009. Outline of Presentation. Climate Financing: Great Expectations 1990-’95: where it all started Kyoto Protocol: putting our faith in markets

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Show Me the Money Financing in Support of Multilateral Environmental Agreements

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  1. Show Me the MoneyFinancing in Support of Multilateral Environmental Agreements Alan Miller International Finance Corporation November 11, 2009

  2. Outline of Presentation • Climate Financing: Great Expectations • 1990-’95: where it all started • Kyoto Protocol: putting our faith in markets • Going to Copenhagen

  3. I. Climate Financing: Great Expectations

  4. Financing in the Bali Action Plan • One of four “pillars” – but closely related to two of the remaining three: • Developing country commitments • Technology

  5. II. The first MEA financial agreements: 1990 - 1995 • Multilateral Ozone Fund created by London Amendments to Montreal Protocol (1990) • Board under COP guidance, evenly divided governance • “incremental cost” funding (why?) • GEF pilot program (1991 – 1994) hosted by World Bank • GEF Instrument 1995

  6. Key considerations • Elimination of ozone depleting substances mainly about replacing industrial chemicals – a well defined problem with clear ICs • In creating GEF, donors wanted to avoid multiplicity of funds, avoid new institutions, and promote synergies • Funding by pledging, 3 to 4 year cycles • High technical content – TEAP and STAP

  7. III. Kyoto Protocol (1997) • Recognition donor funds not likely to be sufficient for climate change • Perceived value in market based approaches • COP assumes major administrative role in the the CDM Executive Board (defining “additionality”) • First significant recognition of independent need for funding of adaptation with voluntary funds (LDCF, SCCF) and Adaptation Fund • Significant features in the AF: dedicated funding from CDM; majority governance by recipients • What’s “incremental” – shouldn’t we do what saves money? A development baseline?

  8. IV. Going to Copenhagen • More about governance and power, less about substance • “Direct Access” and the role of the MDBs • Declining belief in markets and demand for public finance • Adaptation rising • Link to reform of IFIs and the role of the G20 • What is funding for -- compensation?

  9. Likely Outcomes? • Climate funding will dominate all environmental aid • A Board will be created under COP authority with multiple funds receiving “guidance”, with funding from different sources • Distinctions will need to be made between countries with financial management capacity and those without • Funding will be increasingly “programmatic”

  10. Continuing Questions • Fiscal oversight • Funding for new technology and tech transfer, e.g. CCS • Role of the private sector • If adaptive capacity is fundamentally equivalent to development, will climate change and development assistance merge?

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