Reconciling climate and development

Agence Française de DÊveloppement Reconciling climate and development

Contents P. 3 Editorial P. 4 Scientific consensus and global awareness P. 5 Reconciling development and the fight against climate change P. 6 AFD’s response to the major challenges of climate change

AFD: A major and innovative international actor for climate finance Agence Française de Développement is a key public operator in France’s cooperation mechanism. It finances and supports development in countries in the South and

P. 9 Our priorities

in the French overseas territories. Its aim is to

P. 13 Our tools

promote sustainable economic, social and

P. 14 Provision of new financing: Cornerstone of a future global climate agreement

environmental development trajectories.

P. 15 Tools in line with trends in development assistance

It has a mandate that combines the fight against poverty, sustainable development and the fight against climate change.

With a commitment of over EUR 2.4bn of

P. 17 Our areas of operation

“climate” finance in 2013 alone, AFD is one of

P. 18 Focus on Kenya

the main international public financiers of the

P. 21 Our activities

fight against climate change.

P. 27 AFD and COP21

In this capacity, AFD is particularly active for

P. 28 Infography

the preparation of COP21, which will be held

P. 30 Our publications and films P. 31 Our experts P. 32 Contacts

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in Paris in December 2015.

Scientific consensus and global awareness Š AFD

The changes observed in the climate since 1950 are unprecedented: each of the last three decades has been warmer than all the previous ones1 since 1850, and atmospheric concentrations of CO2 have reached levels that have not been seen for 800,000 years. The scientific community has today reached consensus on the reality of climate change: greenhouse gas (GHG) emissions, which mainly stem from the massive use of fossil fuels and deforestation, cause both current and future disturbances to the climate system. While there are still uncertainties over the swiftness, extent and geographical distribution of climate change, there are already signs of the large-scale transformations. It is estimated that the consequences of climate change will have major impacts on our 4

societies by disrupting ecosystems, population distribution, the availability of natural resources, economic sectors, and our lifestyles.

IPCC experts, who submitted the summary of their 5th report at the end of October 2014, estimate that GHG emissions will need to be reduced by between 40 and 70% by 2050 compared to 2010 and reach a level close to 0 or below by 2100, taking into account CO2 storage, in order to maintain global warming at 2 °C compared to preindustrial levels.

1 5th report of the Intergovernmental Panel on Climate Change (IPCC).

Reconciling development and the fight against climate change

© AFD

It is possible to take action for both development and against climate change.

On the one hand, the acceleration of climate change jeopardizes progress in development all around the world, especially in the poorest countries. On the other hand, development threatens to exacerbate climate change because it goes hand in hand with an increase in the consumption of natural resources and fossil fuel. This situation places development institutions before an unprecedented challenge: it is now necessary to reconcile development needs with the climate constraint, and support countries in their ecological transitions.

The world faces common challenges, the solutions must be shared. The adoption of low-carbon development trajectories by both developed and developing economies will contribute to a more sustainable future and to the global fight against climate change. At the same time, it is crucial to support the poorest and most fragile countries, so that they can adjust their economies to the already present impacts of this climate change and seize the opportunities offered by the ecological and energy transition.

Mitigation or adaptation?

Actions to fight against climate change can be divided into three categories: mitigation, i.e. limiting greenhouse gas emissions; adaptation, which aims to adjust human, economic and natural systems to the changes caused by global warming; support for ecological transition policies, which aims to generally assist countries, regional and local authorities and territories, as well as the main economic actors, in establishing low-carbon development trajectories that are resilient to the impacts of climate change.

For AFD Group, a “mitigation project” is a development project that leads to greater reductions in greenhouse gas emissions than it generates during its lifespan.

The “adaptation project” is a development project that contributes to reducing the vulnerability of goods, persons and ecosystems to the impacts of climate change (drought, floods, etc.). The “climate policy” projects, for their part, aim to support the transformation of public policies.

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AFD’s response to the major challenges of climate change

© Emmanuel Baudran, AFD

Three questions to Pierre Forestier, Head of the Climate Change Division

How does AFD reconcile climate and development?

For a donor, the climate is not a purpose in itself. We finance development projects that have a “climate benefit”. This means economic and social development projects that also contribute to reducing greenhouse gas emissions (mitigation projects), to resilience to the impacts of climate change (adaptation projects), or that assist countries and local authorities in the implementation of their ecological transition policies. Consequently, climate issues are a major development subject, which concerns all actors and all types of economic investment, first and foremost the energy sector, but also infrastructure, industry, services, etc. We are also very committed to the valuation of services rendered by nature, such as the capacity of certain natural resources (soil, forests) to store tons of carbon.

What does this involve for a financier like AFD? Taking the climate into account is not an obstacle to development. But we need to devise new instruments and make different investment choices. AFD is a major financial actor and has 6

been working on the subject of “climate and development” for over ten years. We have acquired expertise and developed effective instruments that can meet increasing demand from countries and economic actors (budgetary loans, programs to support public policies, instruments to leverage the local banking system and private sector, research programs…). We have also adopted an ambitious operational strategy based on a financial commitment, a selectivity of the projects we finance, the systematic measurement of their carbon impacts, and there will soon be a systematic analysis of vulnerability.

Finally, we seek to reinforce our catalytic role vis-à-vis our partners. The various actors need to build coalitions and develop new cooperation practices. This is what we are doing with the international alliance for cities, the International Development Finance Club (IDFC), the alliance of financiers for cities, which will be launched at the climate summit in September, or with the energy alliance (Se4all). We also aim to achieve knock-on effects and redirect the flows of investors and the other financiers towards low-carbon growth models. Our aim is to promote effective solutions as much as possible, which reconcile

“AFD works to achieve innovative and effective solutions combining the fight against climate change and sustainable development.”

Pierre Forestier Head of the Climate Change Division

development, the reduction of GHGs, the adaptation of economies and the transformation of public policies.

Will the mainstreaming of climate issues bring about a change in development assistance?

We could say that international aid is already undergoing rapid change. It could, in particular, be argued that climate change “re-legitimizes” Official Development Assistance. What is at stake with the climate issue is to finance and support innovation, risk taking, the redirection of investments and financing flows, and energy transition policies. And financiers have real added value for this! It also involves ensuring long-term access to

infrastructure and basic services. These issues of adaptation and vulnerability to the impacts of climate change, particularly in Africa, give a new sense of urgency to international solidarity. So, it can be said that mainstreaming the “climate dimension” into development programs firstly strengthens our solidarity mandate in poor countries and, secondly, completely legitimizes our action in emerging countries and the Mediterranean, where our objective is indeed to reorient public policies and support economic actors to ensure there is a sustainable development that benefits all.

Strategy: The 3 pillars Over the past ten years, AFD has radically reformed its strategy and action to meet the challenges of climate change. It is among the leaders in mainstreaming “climate-development” dimensions and ensures that concrete progress is made on these issues.

Our climate-development strategy for 2012-2016 is one of the most ambitious among development banks.

It is based on three pillars: A long-term financial commitment for the climate, accounting for 50% of AFD’s allocations to developing countries and 30% of the allocations of its subsidiary PROPARCO (private sector)

A systematic measurement of the climate footprint of the funded projects, using a robust and transparent methodology

A selectivity policy for projects with regard to their impact on the climate, taking account of the level of development of the countries in question

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million tCO2eq/year AFD respects a systematic procedure to analyze the carbon footprint of the projects it finances. In 2013, AFD estimated that the cofinanced mitigation projects, with a significant carbon footprint and measurable ex ante, should avoid the emission of 3.2 MtCO2eq a year throughout their lifespan.

Our priorities

Š SONABEL for AFD

Assisting countries in their energy and ecological transition The energy transition is the main challenge for the fight against climate change. Our objective is to help countries to establish new low-carbon growth trajectories. AFD, alongside other bilateral and multilateral donors, has initiated an innovative approach to financial support for countries that aim to mainstream climate change into their development strategies. This financial support is combined with technical assistance and a high-level dialogue with our partners, which aims to encourage the development of public policies. AFD has contributed to financing the climate plans of Indonesia, Vietnam, Mauritius and Mexico, and is supporting the strengthening of the “development-climate� policies of several African countries.

Supporting renewable energy development and taking action on energy efficiency Power generation is the main source of GHG emissions and a major economic challenge for all countries. Renewable energy development can provide an opportunity for development and energy independence for poor countries, particularly in Africa.

The bulk of our climate finance (AFD and PROPARCO) focuses on the emergence of clean technologies (concentrated solar thermal, wind, hydro and geothermal energy) in countries that wish to develop them and in the short or medium term reach cost parity with the conventional power generation industries.

It also concerns the implementation of effective systems and technologies to control and reduce energy consumption.

Alongside the intergovernmental negotiations, AFD, with its partners, seeks to mobilize networks of financiers and support coalitions of actors in order to bring about joint commitments and actions for the climate and development.

As a founding member of the International Development Finance Club (IDFC), a network of twentytwo major development banks from the North and South, AFD is building synergies for action with these institutions. They are conducive to the emergence of innovative financial solutions, which are acceptable for countries and therefore credible. We are thus participating in the necessary scaling up of the mobilization of financiers.

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“We are convinced that social priorities and climate issues are compatible and can be considered together within an integrated approach to urban development. In order to help mayors take this approach on board, it is essential to demonstrate its effectiveness. For example, a project for clean public transport, which allows communities living in the outer suburbs to access the city center, is a project that is both virtuous in terms of the climate, because it reduces travel in private cars, and at the same time social, because we help these communities to be closer to employment areas.”

Anne Odic, Head of the Local Authorities and Urban Development Division

“Our climate activity is increasingly conducted in cooperation with our European colleagues. We have, along with the European Investment Bank (EIB) and a group of European financial institutions, the EDFI (European Development Finance Institutions), created a financing vehicle (ICCF) dedicated to renewable energies and energy efficiency all over the world.

We also see that a large number of private sector players are actively involved in this sector. We try to support these dynamics in a proactive manner.”

Jérôme Bertrand-Hardy, Deputy Chief Investment Officer, PROPARCO

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Financing sustainable development approaches for cities Cities are increasingly sensitive to the negative environmental impacts related to their rapid and often uncontrolled urbanization. They are areas that concentrate economic activities and are heavy consumers of energy and emitters of greenhouse gases. AFD, thanks to appropriate financial tools and a long-term dialogue with local authorities, supports the implementation of public policies for an urban development that is beneficial to the environment: efficient waste and sanitation management or urban densification and regeneration which, combined with effective public transport projects and a policy favorable to social housing, bring about both social inclusion and low-carbon urban development.

Reducing the vulnerability of countries to the impacts of climate change The impacts of climate change already pose a threat to the economies and most vulnerable populations in Africa, Asia, Latin America and the small island States. AFD is pursuing its mandate for solidarity towards the poorest and most vulnerable countries and ensures that the projects it finances have a resilient nature. In order to ensure the sustainable development of these countries and prepare them to face extreme climate events, we support the necessary changes in economic, social and land-use planning policies. Our adaptation actions focus on water, agriculture and climate risk management in urban and rural areas.

Supporting private climate investments It is essential to redirect private financing flows towards climate change in order to address the scale of the global challenge.

Donors must play a major catalytic role. AFD, at the center of a network of partners, supports the growth of these new actors. We promote public transition policies that are attractive to private investors. We develop instruments to mobilize private financing (risk sharing, grants, technical assistance, support for local banking systems…). We provide direct support to the local private sector in the least developed countries.

© Xavier Allard, AFD

Supporting the economic valuation of environmental services rendered by forests and agriculture Deforestation and agricultural practices account for almost 30% of greenhouse gas emissions. As the cost of the externality of GHGs is recognized by the international community, the benefit of soil sequestration and not destocking by deforestation can be valued economically (REDD+ principle). This valuation provides an economic opportunity for the countries in question and, especially, for communities who effectively manage their forestry capital (biodiversity) and sustainable agricultural and rural practices (family farming). AFD is actively involved in these issues and builds programs for forest development (Congo Basin), agroecology (Madagascar), local development, and the management of rural territories.

Helping poor countries and Africa to benefit from international climate efforts The issue of climate change must be seen as an opportunity for catching up and for economic differentiation. The countries that will take the “green” path first, or clearly hold potential in this field, have a competitive advantage that needs to be developed.

AFD is convinced that the renewable energy potential in Africa is an opportunity and that the countries which will most effectively manage their forestry capital and ecosystems where communities live will have economic and social benefits. We support large-scale renewable energy programs, more sustainable agriculture, and vocational training in green sectors in Africa.

“The promotion of national strategies aiming for an energy transition must be conducted in combination with economic development priorities. Through its dual mandate as a development bank and cooperation agency, AFD firstly seeks to support projects that provide a sustainable energy supply with an optimal use of it and, secondly, inform the design and preparation of public policies that are effective over the long term.

Consequently, the Studies, Research and Knowledge Department provides its technical expertise and forward-looking analytical tools, which are necessary for the assessment of the short-term costs and opportunities and long-term impacts of a wide range of measures on energy demand, the associated emissions, economic growth and the well-being of individuals.”

Fabio Grazi, Economist, Studies, Research and Knowledge Department

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Billion euros This is the amount of AFD’s climate commitments since 2005 in the sectors of renewable energies, energy efficiency, clean transport, forest protection, agroecology and adaptation to climate change.

Our tools AFD finances a whole host of activities and demonstrates that there are positive and realistic solutions to the fight against climate change.

It has a wide range of financial tools (investment loans, budget support, guarantees, investments in equity or grants, and technical assistance), and also mobilizes resources from European and international mandates.

It places strong emphasis on cofinancing with other national and international donors.

Fonds Français pour l’Environnement Mondial (FFEM), managed by AFD, finances innovations and proposes new technical solutions and organizational methods to meet the global environmental challenges: climate change, biodiversity reduction, ecosystem degradation, desertification, pollution.

PROPARCO, AFD’s private sector financing arm, is an essential link in development through the impact it has on job creation and the dynamism of economies.

Its activity promotes the emergence of a strong and innovative private sector. PROPARCO has developed expertise in financing renewable energy projects.

In addition to project financing, AFD Group, via its corporate university, CEFEB, contributes to improving the performance of development actors from the South. This is essential for sustainable development, the reduction of greenhouse gases and adaptation to climate change.

© Xavier Hoang, AFD

Innovative financial instruments and modes of action to combat climate change Involving the private sector in the fight against climate change: guarantees, risk sharing and bank credit lines, to help SMEs in the South initiate energy upgrading.

Financing climate plans: Support, from a budgetary and technical point of view, for countries that mainstream climate change into their development strategies.

Assisting cities in their transition policies.

Supporting the redirection of financing from banks and markets.

Assisting rural and agricultural communities in the management and preservation of water resources, forestry resources and soil.

Supporting the growth of new financing actors by working in partnership with development banks in emerging and developing countries.

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Š Manfred Meiners

Provision of new financing: Cornerstone of a future global climate agreement Climate bond

Green Fund

AFD’s climate bond is an innovative and incentive financial tool for development projects related to the fight against climate change. Its first bond was issued on 17 September 2014 and was a resounding success with international socially responsible investors, who subscribed 70%. In one day, AFD was thus able to raise EUR 1bn on financial markets.

The Green Fund is a new international tool to finance the fight against climate change. It was conceived during the Copenhagen Conference in 2009 in order to assist developing countries in their transition towards trajectories compatible with the objective of containing global warming at 2°C. It aims to mobilize USD 100bn for developing countries every year by 2020.

It is the first socially responsible bond issue conducted by a French public agency and has specific and robust standards that go further than the usual international standards for green bonds. It will finance projects to combat climate change that have a direct impact on reducing greenhouse gases.

Through this issue, AFD has positioned itself as a key actor in the development of financial instruments to allow an effective and sustainable transition towards a low-carbon economy.

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In November 2014, during the first capitalization meeting, 21 countries pledged to contribute some USD 9.3bn. France, which pledged USD 1bn, has contributed to a positive dynamic. Several countries have indicated their intention to contribute in the near future.

Building on its new resources, as early as in 2015, the fund will be able to help developing countries finance the reduction of their greenhouse gas emissions and, particularly for the most vulnerable, support their climate change adaptation policies.

Tools in line with trends in development assistance “We learn a lot from the exchanges with our partners during the preparation of climate plans. It is not simply a question of transferring capacities from the North to the South, but of collective learning on a global scale to enhance the quality and beneficial effects of these plans.

The climate issue is addressed through an approach based on exchanges and shows that the balances are in the process of changing.

Our aim is to pool experiences.

The credit lines we allocate to local public or private banks allow them to offer appropriate financial tools and encourage their clients to develop energy efficiency programs or renewable energy projects. This type of tool is very much in line with the trends in development assistance, as it leads us to work not directly with project initiators, but with local financiers. There are a lot of advantages to this type of arrangement. Local banks know the project initiators much better than us – they are sometimes long-standing clients –, as well as the political

context, the national strategy and the issues involved in the implementation of the project, and therefore manage the risks much more effectively. This approach also contributes to reinforcing the dissemination of climate themes.

By working on these issues with these major actors in local economies, we can have a much greater impact than when we finance two or three projects. If we manage to assist banks in developing proactive strategies and a more extensive business portfolio on issues related to the fight against climate change, it allows us to scale up, and our action takes on a broader scope, because in addition to the projects for which we will have facilitated the financing via these credit lines, these banks will also, without us, develop other projects on climate-related topics. It is this type of more systemic impact that we are working towards.”

© MASEN for AFD

Alexis Bonnel, DevelopmentEnvironment advisor, Operations Department

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percent of our financing must have a positive impact on the climate.

Our areas of operation

© Nguyen Thuy Anh, AFD

In each geographical area, AFD’s climate intervention strategy is applied using a differentiated approach.

In emerging countries in Asia and Latin America These are the countries that pose the most challenges in terms of greenhouse gas emissions in developing countries.

Our climate operations mainly focus on renewable energies and energy efficiency (urban transport, local authorities, forests and agriculture).

Our strategy to promote green and inclusive growth has supported the strong demand from these countries in terms of technology transfers and innovations. It has thus contributed to the policies implemented to limit the environmental footprint of rapid growth.

Our aim is to achieve a level of 70% of annual allocations with climate cobenefits (investment loans with little or no concessionality, budgetary loans, technical expertise).

In the Mediterranean Climate projects hold many opportunities to achieve sustainable development in the region. Our activities focus on

energy, urban transport and water.

In the medium term, we aim for approximately 50% of annual allocations with climate co-benefits (concessional and non-concessional investment loans, budgetary financing for sectoral, territorial and national policies).

In Sub-Saharan Africa and LDCs Our climate operations develop the continent’s natural resources and renewable energies potential and contribute to the adaptation of the economies and societies of these countries to the impacts of climate change (dams, geothermal energy, access to electricity, forestry, water, agriculture…). The prime focus is to reduce their vulnerability to the impacts of climate change and to economically value climate services rendered by their forests and their agriculture.

In the medium term, it will be possible to achieve a level of approximately 30% of annual allocations with climate

co-benefits (concessional and highly concessional investment loans, grants, support for innovative crosscutting programs combining climate change and poverty).

In the French overseas territories We support the policies that are implemented, particularly under the French Grenelle Environment Act. We operate by financing local authorities and the private sector, as well as via our social housing subsidiaries.

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© James Keogh

Developing geothermal energy and promoting low-carbon growth Kenya has difficulties meeting electricity demand. The country is entirely dependent upon imports for fossil fuels, yet it has renewable resources that are largely sufficient to meet its needs. In the geothermal sector in particular, the potential is estimated at 7,000 MW. AFD is supporting the Kenyan Government’s “Vision 2030” national development strategy, which has made energy a priority sector. In the extensive geothermal area of Olkaria, AFD is contributing to the installation of four 70 MW generation units, the drilling of steam wells, and other infrastructure required for the generation of 280 MW. This project will supply competitive, secure and low-carbon energy.

Financing tool: Sovereign loan. Amount: EUR 150m.

Supporting the definition of national adaptation strategies and protecting biodiversity A significant proportion of Kenya’s GDP is based on resources generated by tourism in national parks. Consequently, it is important to assess the potential impact of climate change on Kenya’s flora and fauna (change of habitat, competition over water resources, appearance of invasive species and new diseases, animal migration…) and identify possible adaptation solutions. As part of the program to support and build climate capacities in Sub-Saharan Africa, AFD and Fonds Français pour l’Environnement Mondial (FFEM) are providing technical assistance to KWS for the definition and implementation of a low-carbon development strategy that is resilient to climate change. The proposed approach is based on a multi-actor and multi-scale (national/decentralized) operation.

Financing tool: Grant. Amount: EUR 3m.

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development projects with climate co-benefits financed by AFD Group in 2013.

Adaptation Agriculture Biodiversity and water

Energy

Forestry

Vocational training and green jobs

Credit lines

Ecological transition

Urban

Health

Private sector

Our activities Our wide range of financial tools allows us to support innovative projects and provide a response to the diversity of situations encountered in the fight against climate change.

© AFD

“The climate challenges mean we have to completely review our development choices, but also project design.

We assist our partners in order to accelerate the development of projects that limit carbon emissions, while responding to economic and social issues, for example, renewable energies, public transport or projects to combat deforestation. We also try to help them more effectively combat the impacts of this climate change, the consequences of which are still difficult to predict. One subject that is becoming increasingly important is the fight against natural disasters, such as floods, with drainage infrastructure, which should increase resistance to extreme climate events.”

Laurence Breton-Moyet, Director of the Sustainable Development Department

Sustainably developing urban areas and improving living conditions for vulnerable communities The territory of Santo Domingo (one million inhabitants) is lagging behind in terms of equipment, infrastructure and housing. It is also particularly sensitive to climate change.

The “East Santo Domingo” development and mobility program comprises three interdependent components: extension of the metro; introduction of waterway transport (Acuabus) connected to the metro and serving poor neighborhoods; transformation of the part of the Barquita neighborhood that is vulnerable to flooding into a riverside park and rehousing of residents in a nearby area, which has been developed and equipped with basic services and community facilities.

Impacts Improvement in living conditions for 7,500 people.

24 million additional passengers right from the first year, thanks to the metro extension and Acuabus.

Opening up of precarious neighborhoods and greater attractiveness for Santo Domingo.

Adaptation: Displacement of communities outside a highrisk area.

Mitigation: Reduction of CO2 emissions by promoting a less polluting mode of transport.

Financing tool: Sovereign loan. Amount: EUR 150m.

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Curbing deforestation and securing a future for local communities

© Virgine Leroy, AFD

© Nicolas Hertkorn, AFD

In Madagascar, a global biodiversity hotspot, forests cover 18.5% of the territory and house a flora and fauna with a level of endemism that reaches 80% to 90%.

This exceptional wealth is threatened by massive deforestation due to significant population growth and an extremely high poverty rate.

AFD, FFEM and Air France are cofinancing the Holistic Conservation Program for Forests in Madagascar (PHCF), which is a crucial issue in terms of biodiversity, climate change mitigation and adaptation, and local development.

This project aims to preserve rainforests in the East, improve living conditions for local communities by implementing sustainable alternatives to the destructive exploitation of forest resources, and maintain the activities in the long term thanks to carbon finance.

This project is led by Etc Terra, WWF and AgriSud.

Sustainably developing forests and combating deforestation Central African forests house the continent’s most abundant biodiversity and are one of the world’s main carbon sinks.

Forests constitute a major issue for the economic development of the region. Their conservation and sustainable exploitation are essential assets for the diversification of the economy and social development. However, their integrity is seriously threatened: mining and agroindustrial plantations, development of road infrastructure, population growth combined with clearance for agriculture or urbanization. The PAGEF project provides technical assistance to forestry companies for the definition of development plans that reconcile forest conservation, economic development and sustainable management.

AFD and the French Facility for Global Environment (FFEM) are also financing a program to provide satellite data to monitor forest cover.

Impacts

Financing tool: Grant.

Improvement in living conditions for local communities.

Production of development plans in accordance with the highest quality standards.

Measurement of the effectiveness of policies implemented to combat deforestation.

35 million hectares of forestry holdings developed in Central Africa.

10 million hectares certified REDD+.

Amount: EUR 2 (AFD) / EUR 1.5m (FFEM)

Financing tool: Grant. Amount: EUR 5m + EUR 8.5m.

Impacts Implementation of sustainable, income-generating practices for rural communities.

Protection of an ecosystem that is vulnerable to climate change.

Additional resources thanks to the carbon credits sold on voluntary markets.

REDD+ is the mechanism for the Reduction of Emissions from Deforestation and forest Degradation, for conservation, sustainable forest management and the increase in forest carbon stocks. It is an international mechanism which offers to remunerate developing countries that make efforts to combat deforestation and forest degradation.

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“Local development requires a holistic approach. Consequently, we define territorial development strategies in rural areas, which at the same time include aspects of productivity, adaptation, mitigation and biodiversity conservation. We help to empower territorial authorities and communities, and we assist them in the definition of their priorities.”

Jean-Luc François, Head of the Agriculture, Rural Development and Biodiversity Division

More effectively managing drinking water and improving distribution in small and mediumsized cities

© AFD

Preserving island ecosystems and making them less vulnerable to climate change The South Pacific islands are particularly dependent on their terrestrial and marine ecosystems. Climate change, combined with human activities, leads to a sharp deterioration in natural environments, with significant social and economic consequences.

The RESCCUE project aims to assist Pacific Island countries and territories in the implementation of integrated management for coastal areas, with pilot sites in Fiji, New Caledonia, French Polynesia and Vanuatu. The aim is to improve the functionality of ecosystems, demonstrate their economic value, and establish innovative financing mechanisms to ensure the sustainability of conservation actions (for example, via payments for environmental services).

Impacts Economic activities boosted (sustainable fishing and agriculture, ecotourism…).

Valuation of ecosystem services in management policies for coastal areas.

New sources of financing to supplement the budgets of partner administrations, which are often very constrained.

Conservation of biodiversity, landscapes and water quality.

Reinforcement of the resilience of coastal ecosystems to the impacts of climate change.

Financing tool: Grant. Amount: EUR 2m.

© AFD

Morocco is today subject to acute water stress, which is expected to be exacerbated with climate change. Furthermore, water demand is constantly rising due to the increase in irrigation, population growth and urban, industrial and tourism development.

In order to ensure that there is a continuous and effective drinking water supply in about thirty small and medium-sized urban centers, the ONEE (National Office for Electricity and Drinking Water) project comprises investments to rehabilitate drinking water distribution and production networks, but also support measures to improve the operating of facilities and client management.

Impacts Reinforcement of ONEE’s financial situation by reducing its operating costs.

Sustainably improved drinking water supply for 1.6 million people.

Reduction of losses on supply networks: 15 million cubic meters of water saved every year.

Improved performance of distribution networks: 10,000 teq CO2 saved every year.

Financing tool: Sovereign loan. Amount: EUR 30m.

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Building photovoltaic power plants and scaling up access to electricity

© Quentin Lebègue, AFD © TSOLAR

Reinforcing the match between training and employment and increasing the number of skilled staff in “green jobs” sectors Forestry is a major source of employment in Central Africa.

With social and environmental issues being taken into account, the reinforcement of legislation and the use of new technologies, the technical know-how of professions has developed considerably. The PARAFE project is helping to increase the match between training and employment and is contributing to improving the professional qualifications of actors in the forestry and environment sector.

Impacts Increase in the economic and social performances of forestry actors (students, professionals).

Improvement in skills in continuous training engineering, which is driven by demand in the forestry and environment sector.

Development of environmental services: carbon capture, biodiversity conservation, water resources, watershed protection, etc.

Improvement in the sustainable management of the forest area.

Electricity demand in Peru, a high-growth country, is experiencing an average annual increase of 8%. The country is still highly dependent on fossil fuels and is seeking to diversify its energy mix. Thanks to a high level of sunlight and an appropriate regulatory framework, solar power offers significant, competitive and sustainable potential. PROPARCO has allocated a USD 7.15m loan to finance the construction and operation of two photovoltaic power plants with a combined capacity of 44 MW. T-Solar is the first large-scale photovoltaic solar power program in Latin America. It is an exemplary project from an environmental and social perspective (workers’ safety, waste management, protection of archaeological remains…).

Impacts Annual production of 80 GWh to meet the electricity needs of 80,000 people.

Creation of over 160 direct local jobs during the construction and installation phase.

Increase in revenues for local administrations.

Annual reduction in greenhouse gas emissions of 40,000 teq C02.

Financing tool: Loan. Amount: USD 7.15m.

Financing tool: Grant. Amount: EUR 1.5m.

“Our objective is to put social issues back at the center of reflection on energy transition.

What place will human capital have in adaptation and mitigation strategies? How can training and skills development support this transition? To be effective, our operations need to meet the demand of our counterparts and be based on partnerships. We involve professional organizations and companies in the definition and management of our vocational training modules. Involving companies upstream guarantees employment for trained young people.”

Céline Gratadour Project Manager, Education, Training, Employment Division 24

“Our actions to ensure the transition of an economy based on fossil fuels and generally ineffective to another economy based on renewable energies and high energy efficiency are implemented in four sectors, which absorb 90% of the energy consumed: power generation (especially for electricity), industry, construction and transport. In these four sectors, the aim is to simultaneously develop renewable energies, energy efficiency and energy saving.”

Alain Ries, Head of the Transport and Sustainable Energies Division

© Le Huong, AFD

Supporting climate plans and helping countries to implement low-carbon growth trajectories The geographical configuration of Vietnam makes it one of the most vulnerable countries to the consequences of climate change, and especially to rising water levels and the intensification of extreme climate events. Its economic growth, combined with significant energy intensity, leads to a rapid increase in its greenhouse gas emissions. The Support Program to Respond to Climate Change consists of budget support, combined with a high-level dialogue with the Vietnamese authorities and donors in order to define and implement climate-related public policies.

AFD is focusing its support and the dialogue on renewable energies, energy efficiency, and climate allocation and budget monitoring mechanisms.

Impacts Country’s development trajectory secured.

Institutional framework strengthened and country prepared for the impacts of climate change.

GHG emissions limited.

Decrease in energy intensity (energy consumption/GDP) by 1 to 1.5% a year.

8 to 10% reduction in the ratio of CO2/GDP emissions compared to 2010.

Financing tool: Sovereign loan. Amount: EUR 20m a year.

Facilitating business investments in the energy efficiency sector and promoting sustainable economic development

© AFD

In Turkey, growth in energy demand is one of the highest in the world. The country’s emissions are expected to more than double by 2020. Turkey is highly dependent on imports, as domestic energy resources only meet 28% of demand.

The allocation of a credit line to Türkiye Sınai Kalkınma Ban-kası (TSKB), Turkey’s largest private investment and development bank, aims to facilitate business investments in the energy efficiency sector. Technical assistance is also developing the banks in-house skills and raising the awareness of TSKB clients on the theme of energy efficiency.

Impacts 18 projects financed.

78 MW of installed renewable energy capacity.

Reduction of GHG emissions: 760 ktCO2 avoided every year.

1,000 MWh of electricity saved.

Financing tool: Credit line. Amount: EUR 50m.

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© ARS Forum

Supporting the regional epidemiological surveillance network and implementing the “One Health” concept In the Indian Ocean, the Chikungunya epidemic in 2006 highlighted the interdependence and vulnerability of the islands faced with the risk of epidemics. The Indian Ocean Commission countries (Comoros, Madagascar, Mauritius, Seychelles and France-Réunion) have set up a regional surveillance and response network for infectious diseases.

Thanks to an initial AFD grant in 2007, this network, called SEGA (epidemiological surveillance and alert management), now allows health information to be exchanged between the islands, as well as the pooling of training for epidemiologists, the quality control of their laboratories and their capacity to respond to epidemics. In 2013, AFD allocated a new EUR 6m grant in order to continue the development of the SEGA network.

Impacts Building of national capacities in the field of detection, diagnosis, rapid alert and preparation faced with disease outbreaks.

Implementation of the “One Health” concept, integrating the surveillance of communicable diseases for human health and animal health.

Sustainability of the SEGA regional health monitoring network secured.

Prevention of risks, which are increased by climate change, and adaptation.

“Changes and degradation in the environment come with increasing risks for health. According to WHO, between 2030 and 2050, climate change could lead to some 250,000 additional deaths a year, due to malnutrition, malaria, diarrhea and stress related to the heat. Regions that do not have good health facilities, mostly in developing countries, will be the least able to prepare for and address this situation.

A city without a hospital and without access to health services cannot be a sustainable city!”

Pierre Salignon, Project Manager, Health and Social Protection Division

Financing tool: Grant. Amount: EUR 5.6m + EUR 6m.

« Climate Challenge » International competition on agricultural and forestry innovation to address climate change.

This AFD/CIRAD competition aims to support and encourage innovators in Africa, the Mediterranean, Asia and Latin America to make ideas and techniques a reality in order to address the challenges that the agriculture and forestry sectors need to face due to climate change, and support sustainable development.

Find out more : challenge-climat.com

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AFD and COP21

Xavier Hoang, AFD

From 30 November to 11 December 2015, France will host the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21).

It is a crucial milestone, since it should lead to a new international climate agreement, applicable to all countries, with the aim of maintaining global warming below 2 °C by the end of the century.

The international climate change negotiations should lead to shared commitments in terms of reducing or modifying emission trajectories, and able to provide a fundamental structure for policies in developing countries, as well as the creation of a major fund

specifically dedicated to financing actions to combat climate change in developing countries.

France will be taking action at international level in order to facilitate the search for a consensus, as well as within the European Union, which plays a key role in the climate negotiations. The French President and Minister of Foreign Affairs and International Development have made the fight against climate change a priority in France’s foreign policy.

“The Paris Conference is a real opportunity to reach an international climate agreement.

AFD’s role, within the French team, is to bring some good news, to show, alongside our partners, that there are solutions. The operations we finance demonstrate this every day: in Africa, as in emerging countries, we support development trajectories that improve living conditions for populations and their resilience to climate change, while limiting greenhouse gas emissions. Our mandate is also to promote coalitions of actors. AFD is part of networks with a very wide range of partners, which it sometimes leads. This means that it can mobilize common initiatives by financiers from the North and South, as well as by cities and territories.”

Dimitri Kanounnikoff, Director of the Cross-Operations Issues and Operational Support Department. AFD’s special Climate representative.

Positive agenda By “positive agenda” or “agenda for solutions” we mean actions and projects led by economic and institutional actors which demonstrate that the fight against climate change is possible and acceptable by communities and countries, as well as a source of opportunities and positive externalities, particularly in economic and social terms.

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Since 2005, EUR 15bn for the climate AFD Group finances many development projects that have co-benefits for the fight against climate change

2005 16 projets

2006

2007

2008

2009

2010

In 2013, AFD Group committed over EUR 2.4bn to finance 77 climate projects (renewable energies, energy efficiency, clean transport, forest protection, agroecology, climate change adaptation).

â‚Ź â‚Ź

323

518

2011

2012

2013 77 projets

1,785

â‚Ź

m

m

m

Budget support Programs to support governments and local authorities that aim to mainstream climate change into their development strategies.

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Development projects that contribute to reducing the vulnerability of goods, individuals and ecosystems to the impacts of climate change.

Development projects that lead to a greater reduction in greenhouse gas emissions than they generate.

Our publications Reconciling climate and development “L’AFD et”, 2014 Sustainable cities and territories, “L’AFD et”, 2014 Marine protected areas, “L’AFD et”, 2013

Energy Efficiency Policies in China, India, Indonesia, Thailand and Vietnam Document de travail n°133, 2013 Sustainable development, “L’AFD et”, 2012

The Governance of Climate Change in Developing Countries. À Report on International and Domestic Climate Change Politics in China, Brazil, Ethiopia and Tuvalu, “À Savoir”, n°15, 2012

Our films La transition écologique: comment l’initier (enfin)? Conférence ID4D, 2014 Construire la Tunisie, 2014 Demain, une ville pour chacun?, 2014 Curitiba au Brésil, la ville durable La Turquie en mouvement, 2014 Changer la ville, Colombie, 2014 Le métro de Bangalore: un projet emblématique pour l’AFD en Inde, 2013 Conte du Congo: la forêt, les villageois et l’exploitant, 2013 Gestion durable des forêts, Gabon Gira la tierra, Mexique, 2013

Le programme de lignes de crédit vertes de l’AFD en Chine, 2013

Gestion durable des forêts dans le Bassin du Congo, 2009

Le développement durable, fil conducteur de l’intervention de l’AFD à Maurice, 2012

Afrique du Sud: Durban et l’énergie durable, 2008

Le riz de mangrove, Guinée, 2011 Réduction des gaz à effet de serre en Indonésie. Objectif Développement, 2011 Mumias Sugar Company : la cogénération durable d’énergie, Kenya, 2011 Protection des récifs coralliens, Nouvelle-Calédonie, 2010 Agroécologie, Madagascar, 2010 Lutte contre le réchauffement climatique, Chine, 2010

All our climate videos are available on our channel: youtube.com/user/GroupeAFD

Our agenda 01/12/2014 > 12/12/2014

21/02/2015 > 01/03/2015

31/03/2015

COP20 – Lima

International Agricultural show – Paris

IDFC “Climate Finance” Forum – Paris

“Climate Challenge Agriculture and Forestry” awards presented by Brice Lalonde, President of the jury.

The International Development Finance Club (IDFC) includes twentytwo major development banks from the North and South.

20th Conference of the Parties to the United Nations Framework Convention on Climate Change, in Peru.

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Our experts

Jérôme Bertrand-Hardy, Deputy Chief Investment Officer, Proparco.

Alexis Bonnel, DevelopmentEnvironment advisor, Operations Department.

Cassilde Brénière, Head of the Water and Sanitation Division.

Laurence Breton-Moyet, Director of the Sustainable Development Department.

Pierre Forestier, Head of the Climate Change Division.

Jean-Luc François, Head of the Agriculture, Rural Development and Biodiversity Division.

Céline Gratadour, Project Manager, Education, Training, Employment Division.

Fabio Grazi, Economist, Studies, Research and Knowledge Department.

Dimitri Kanounnikoff, Director of the Cross-Operations Issues and Operational Support Department.

Special Climate representative.

Anne Odic, Head of the Local Authorities and Urban Development Division.

@francoisjl

Alain Ries, Head of the Transport and Sustainable Energies Division.

Pierre Salignon, Project Manager, Health and Social Protection Division.

@forestierp1

Find out more: climat.afd.fr

@salignonp

© Alain Goulard, AFD

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