Gflacindcsfinancing

INDCs and Climate Financing in Latin America and the Caribbean

Produced by Sandra Guzmรกn, General Coordinator, GFLAC Mariana Castillo, Research Coordinator, GFLAC

Introduction The Intended National Determined Contributions (INDCs for its acronym in English) mark a path of action to achieve compliance of the Paris Agreement. However, there is still the need to strengthen its content to increase ambition. In this regard and in order to assist and encourage countries to the growth of that ambition, the Group for Climate Financing Latin America and the Caribbean (GFLAC) carried out various actions. First, it analyzed the content of the INDCs in 31 countries of Latin America and the Caribbean (LAC) that were submitted to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015. This study was focused on one main element for its implementation and should be strengthened in the coming years: Financing.

Furthermore, in the framework that the GFLAC has been promoting since 2014 with its focal points, a series of case studies were performed that allowed deepen in the INDCs financing component from various countries in the region. In these studies, more information on how specific commitments are integrated and assigned to meet unconditional goals on the resource assigned budget is intended to be provided, as well as defining the role of international financing as a condition for achieving the goals stated. The main results of these analyzes were shared in a webinar that was organized by the GFLAC prior to the COP 21, with the objective of preparing the discussions and build a joint position for the negotiations in Paris.

One of the main conclusions of these analytical efforts is that while funding as a means of implementation has been recognized as a key element in the Paris Agreement and the INDCs, this is not necessarily reflected in these contributions. In this sense, although the countries mention and recognize its importance, most of them do not integrate mechanisms, strategies, commitments or specific financing needs that result in the implementation of comprehensive plans.

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Part 1. Climate financing in the INDCs: an analysis from Latin America

Methodology This analysis parts from the fact that the INDCs submitted by countries studied show a great diversity in content and goals; therefore, doing a comparative study would not be entirely accurate.

Thus, this exercise focuses and seeks to understand the way these countries integrated the core element of funding, to identify the challenges and opportunities that countries will face to the implementation of the INDCs. In order to reach this goal, six relevant criteria for the issue of funding were identified. As shown below, each of these criteria was evaluated from the response to a number of relevant questions.

Financing mechanisms:

Are measures and specific funding mechanisms inclu-

ded?

Financing Commitments: Are commitments to specific amounts of funding for unconditional goals included?

Financing requirements (costs):

Are financing needs included with specific

amounts for the conditioned goals?

Losses and damages: Are estimates of losses and damages from climate change included?

Private financing and innovative mechanisms:

Is there mentioned the

idea of involving other stakeholders such as the private sector and/or other innovative measures to climate financing?

Transparency in financing: Are transparency mechanisms, measurement, reporting and verification for financing included?

In this analysis, 31 countries were studied, including Venezuela who placed its INDCs on December 12th, 2015. It should be mentioned that there are countries from the region that have not submitted their INDCs, such as Nicaragua, while others presented their INDCs not including measures such as El Salvador, so its content is not mentioned for not summing up anything to the discussion.

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Countries analyzed: Antigua and Barbuda; Argentina; Bahamas; Barbados; Belize; Bolivia; Brazil; Chile; Colombia; Costa Rica; Cuba; Dominica; Ecuador; El Salvador; Granada; Guatemala; Guyana; Haiti; Honduras; Jamaica; Mexico; Paraguay; Peru; Republic of Suriname; Dominican Republic; St. Vincent and the Grenadines; St. Kitts and Nevis, Saint Lucia; Trinidad and Tobago; Uruguay, Venezuela.

Results Parting from these criteria, the review of 31 countries INDCs was carried out, highlighting on the specific mentions of goals, measures and funding mechanisms. This is because although most of the countries speak about the importance of this issue, it is done in a generically way. Hence, the importance of really knowing which measures will be implemented. The main outcomes for each of the six elements are presented below:

Funding Mechanisms

In the first component, it was analyzed whether the countries included the importance and the establishment of measures and funding mechanisms for climate change attention. In this regard, it was identified that a good part of the countries point out the importance of climate financing to increase the ambition of INDCs, but few countries propose specific measures. For example, Venezuela notes that the degree to which its GHG reduction target is achieved will depend on the fulfillment of the commitments of developed countries in terms of provision of financing, and refers to Article 4.7 of the Convention.

Countries like Antigua and Barbuda, Chile, and Trinidad and Tobago talk about the importance to get access to mechanisms such as the Green Climate Fund and the Global Environment Fund. For its part, Honduras and Guatemala refer to the construction of national mechanisms and processes on climate finance; being Guatemala the one that mentions the existence of a National Climate Change Fund.

St. Kitts and Nevis refer that is relevant to prepare sectoral financial plans with specific funding sources and disbursement planning to implement the necessary policies and measures.

On the other hand, it is interesting to see that countries like Costa Rica, Dominica, Granada, Guyana, St. Lucia, Antigua and Barbuda, St. Vincent and the Grenadines, St. Kitts and Nevis and Mexico speak about the importance of market mechanisms to finance their actions.

In general, the role of financing is recognized but it is not deepen into specific measures to implement the INDCs.

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Funding Commitments

In the second component on commitments to specific amounts for unconditional compliance of goals, it is identified that some countries such as Chile and Colombia speak about creating climate-financing strategies at national level to accomplish these actions, but they are referred to processes in construction. For its part, the Bahamas and St. Lucia point out the commitment to implement incentive programs and tax measures to support the infrastructure on the energy sector. While Costa Rica points out the need to create credits and micro credits for INDCs compliance nationwide.

In the case of Guatemala, the national budget role is mentioned, as well as the creation of forest incentives. Meanwhile, Honduras, for its part, talks about the review of public spending to create an investment plan. In Paraguay, it is indicated that the country has allocated 40,000.00 USD for the National Plan for Afforestation and Reforestation through a “presidential decree the Department of Mines and Energy is authorized to establish a certification and funding regimes to the National Development Bank for forest plantations”.1 Meanwhile, Haiti notes that for unconditional compliance goals and allocation of 7,999.00 USD will be accomplished, assuming that these are budget items. The same applies to Cuba, which plans to give resources to adaptation without indicating specific amounts.

Venezuela does not include amounts, but refers to a series of nationally financed actions with an impact on loss and damage repair, adaptation and mitigation. These actions are organized within the framework of the nation´s development plan, in which the deepening of Eco socialist’s policies arises with high social, economic and environmental impact on Climate Change.

Of the eight countries analyzed, only eight mention ways in which they will make use of the public spending. However, no specific amounts for compliance purposes of the INDCs are included; in some cases previous assignations done are mentioned, as in Paraguay which includes a specific amount already set, but does not indicate how much will be assigned to fulfill the goals that have been already set.

It is noteworthy the case of Brazil that despite having included only unconditional measures that may meet by themselves, it does not include amounts and commitments to carry out these actions.

The lack of specific commitments for fulfilling the established actions is of interest and concern, as it is unknown whether countries estimated the cost of the actions and if it has been determined what would be the commitment for the budget set. This may be partly because most of the countries will live governmental changes before the entry into force of the INDCs in 2020. However, determining current commitments and future estimates could guide future governments to act.

1 All information related with the INDCs can be found in http://unfccc.int/focus/indc_portal/items/8766.php

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Financing requirements (costs)

The third component of financing needs is one of the most important. However, of the 31 countries analyzed, only ten have calculated the costs of implementing the actions and, therefore, the international funding needs they have for their accomplishment: Antigua and Barbuda, Bahamas, Belize, Cuba, Haiti, Trinidad and Tobago, Suriname, St. Lucia, Guyana and St. Vincent and the Grenadines are the ones that integrated costs. It is interesting to notice that most of these countries are islands that manifest living already the climate impact change, hence their need and urgency to integrate these requirements to be ready and face the problem.

In the following chart, estimated costs for these countries in the INDCs are shown. As it can be seen, not all countries disaggregate the information for mitigation and adaptation, or report information for both sectors.

Table 1. Costs associated with INDCs Country Antigua and Barbuda

Concentrated (Millions USD) $ 240.00 (annual)

Bahamas

$ 900.00 (to 2030)

Belize Cuba Dominica

$ 231.40 $ 4,000.00 $99.00 25.00 (for the next five years) $ 161,430,500.00 (towards 2025) $ 1,600.00 (to 2025) $ 25,387.00 $ 2,000.00 $ 3,492,000.00 $ 241.00 (2030) $ 20.92

Granada Guyana Haiti Trinidad and Tobago Suriname Santa Lucia Saint Vincent and the Grenadines Dominican Republic

Destination Approximate for mitigation and adaptation.

Resources for mitigation and adaptation, a cost analysis will be done.

Total Execution of programs on renewable energies.

Mitigation Adaptation Total cost

Adaptation Adaptation and mitigation Mitigation Total cost Mitigation and government programs It is the cost of the Program for Disaster from 2011 to 2018. It is noted that the costs of INDC are significant. $ 20,153.00 Water, tourism, mitigation, National Strategy to Strengthen Human Resources and Skills Development to Move forward towards a Green Development with Low Emission and Climate Resilience

Source: Based on information from the site http://unfccc.int/focus/indc_portal/items/8766.php

Countries that have expressed their financing needs reflect different time frames for the provision of these resources. It is noteworthy that the countries that present these figures are highly vulner-

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able and are in an emergency need to receive funds, but they are not main receivers of climate funding. While countries like Mexico, Brazil, Peru and Colombia are the main receivers of climate financing, they do not present need estimates according to a recent report by the Overseas Development Institute (ODI).2 It is assumed that the need reflection indicated seeks to be covered by international financing, although few countries describe it clearly. Such is the case of Haiti, which states that for the proposed goals a $ 773.519.00 assignment is expected.

It is necessary to notice that several countries talk about estimates, and that these amounts may vary. However, these first estimates allow the visualization of a financing strategic process for action funding, and to know better how much is the budget and how much is needed.

It is important to point out that countries like Ecuador, Paraguay, Guatemala, Mexico, Peru, Dominican Republic, do speak about financing need but do not add figures as such.

Loss and damage

In the international discussion framework, it has been talked about the importance of funding mechanisms and other alternatives to face the losses and damages which have derived as a consequence from negative impacts of climate change. 11 of the countries analyzed stated these estimates to highlight their vulnerability: Bahamas, Cuba, Jamaica, Guatemala, Colombia, Costa Rica, Peru, Dominican Republic, Mexico and St. Vincent and the Grenadines, as shown in the following table: Table 2. Loss estimates associated with climate change Country Bahamas Cuba Dominica Haiti Jamaica Colombia Costa Rica Peru Dominican Republic Mexico Saint Vincent and the Grenadines

Cost (million of USD) $ 60.00 $ 20,564.00 $ 392.30 $77.00 $ 128,540 .00 $6,000 $1,130.39 $3,500.00 $ 9,470.00 $1.5 $ 600.00

Causes Hurricane Joaquin 16 hurricanes Tropical Storm Erika, 2015 Hurricanes and droughts from 2010 to 2011

Impacts due to El Ni単o

Climatic events from 2010-to 2014

2 ODI, HBF, regional review on the financing for climate: Latin America, available in http://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/10089.pdf

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Information on loss and damages is presented in a different way since it refers to different time frames, but estimating the shown it explicitly talks about a cost of approximately $ 170,335.19 billion USD in the 11 countries that presented their figures. For its part, Guatemala talks about the impact that events associated with climate change has produced in their gross domestic product (GDP), “having an effect of 1.3 % to 3.7 % of their GDP, and it is estimated that between 40 and 70% of the impact is in the agricultural sector�.3 The rest of the countries do not refer to the impacts derived from the climate change, though some make mention of their vulnerability to the problem.

Private financing and innovative mechanisms

Internationally, the role of private funding has increased considerably, which is why it has been proposed to evaluate what is the interest or need to involve these actors in the funding and mechanism processes. On this matter, it was identified that, besides the mentions on the importance or interest in market mechanisms, countries like Colombia and Barbados talk about the role of the private sector.

On the other hand, some countries talk about innovative mechanisms such as the Bahamas that points out the importance of generating collection of money schemes on property insurance as a measure for climate funding, reducing insurance costs for properties in high places and relocate those found in low places, while proposing the generation of public-private partnerships to finance mitigation actions.

Despite the increasing role of the private sector, there is no major mention of its role in the issue of funding.

Financing transparency

The issue of transparency is of vital importance both to build trust among stakeholders as to improve understanding of the resources they have and those needed to meet the actions set out in the INDCs. However, out of the 31 countries surveyed, only three included transparency elements. Chile and Colombia stated the need and commitment to build measuring, reporting and verification systems (MRV) of climate financing, while Peru pointed out that it plans to create a measuring and reporting system for the financial support received.

Guatemala INDC, available in http://www4.unfccc.int/submissions/INDC/Published%20Documents/Guatemala/1/Gobierno%20 de%20Guatemala%20INDC-UNFCCC%20Sept%202015.pdf 3

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Balance This analysis allowed to know initially the role that the financing topic, as a means of implementation, has within the INDCs, where despite recognizing the importance of having resources, or access to financing mechanisms, few countries have included commitments, mechanisms and specific needs on this matter. Generally speaking, it is summed that of the 31 LAC INDCs analyzed:

30 speak about

conditional and unconditional goals.

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include the Chile, Granada, use of funding mechanisms such as Trinidad and the Green Climate Tobago and Antigua and Barbuda Fund

1

talks about national funds for climate change

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retake market mechanisms

1

specifies budget amounts to be assigned

Haiti

2

speak about the review of budget systems for investment

Guatemala, Honduras

12

include cost/ funding requirements

Guatemala

Costa Rica, Dominica, Granada, Guyana, St. Lucia, Antigua and Barbuda, St. Vincent and the Grenadines, St. Kitts and Nevis and Mexico

Antigua and Barbuda, Bahamas, Belize, Cuba, Dominica, Haiti, Trinidad and Tobago, Suriname, St. Lucia, Guyana and St. Vincent and the Grenadines

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include economic losses from climate change impacts

3

include or foresee transparency schemes and MRV financing mechanisms

2

mention the creation of National Strategies for Climate Finance

3

include the incorporation of the private sector

1

includes innovative financing measures

Bahamas, Cuba, Dominica, Jamaica, Guatemala, Colombia, Costa Rica, Peru, Dominican Republic, Mexico and St. Vincent and the Grenadines

Chile, Colombia and Peru

Colombia and Chile

Colombia, Barbados and Bahamas

Bahamas

This initial balance sets the need to strengthen and monitoring the actions and financing measures to ensure an effective INDCs action plan. Specifically, the pre 2020 planning should aim towards increasing ambition, but also towards strategy building to implementing such actions.

Given this context, the following recommendations are identified regarding financing and the INDCs in Latin America and the Caribbean:

· Integrate implementation routes on the INDCs, establishing both mechanisms and costs and financing needs related to conditional and unconditional measures. · Establish a monitoring, reporting and verification system for climate funding to identify gaps and financing needs. · Construct national finance climate strategies that follow the INDCs, in its pre 2020 and post 2020 process. · Expand the involvement and participation of civil society in the planning, implementation and evaluation of public policies and funding for climate change; including accountability of their impact for the fulfillment of the INDCs mitigation and adaptation goals. · Create mechanisms that allow the identification of resource set for climate change, such as labels and cross-annexes, among other possibilities. · Ensure accountability and strengthening of mechanisms for access to information and public participation in the INDCs process of implementation and revision.

This initial study is part of a monitoring process that the GFLAC seeks to do in order to strengthen the INDCs and supports its pre and post 2020 preparation.

For more information on this balance and Country Profiles see: sguzman@gflac.org

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http://gflac.org @GrupoGFLAC.org GFLAC Contact: sguzmรกn@gflac.org

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