NEWSLETTER May 2016, Volume 9

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1 NEWSLETTER May 2016, Volume 9 WHAT IS THE FRANKFURT SCHOOL UNEP COLLABORATING CENTRE FOR CLIMATE & SUSTAINABLE ENERGY FINANCE? The Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance (the Centre) is committed to facilitating essential structural changes in energy supply and use around the globe by helping to catalyse private sector capital flows towards investments in sustainable energy and climate change adaptation and mitigation. By treating all activities from research through to project implementation as a continuum, the Centre is building a knowledge base that is directly benefitting its partners and the wider community. The Centre s combination of advisory work with applied research and capacity building is a perfect platform for identifying and propagating good practices in sustainable energy and climate finance. Through partnerships with various financial institutions, the Centre develops and field-tests new financial instruments, products and services that serve the growing demand for energy efficiency and clean energy production. The Centre s primary objective is to implement UNEP s concept of a green economy by channelling capital towards sustainable energy and climate finance and bridging the public-private gap. Thanks to a strong focus on raising awareness, the Centre is becoming a leading think-and-do-tank on sustainable energy and climate change adaptation and mitigation. REGISTRATION FOR OUR SUMMER ACADEMY (24-29 July 2016) IS OPEN NOW! Register at the Frankfurt School Website Saskia Scholz Phone: The climate summit in Paris (December 2015) demonstrated: Climate Change is high on the agenda of international policy debates. COP21 made at least many policy makers and industry leaders think about what it would really mean to replace coal, oil and gas completely by clean energies by the second half of the century. This policy signal is important for the private sector to accelerate the low-carbon transformation of the global economy. It also raises the question: How much does the renewables scale-up contribute to reducing carbon dioxide emissions? Together with Bloomberg New Energy Finance (BNEF) on 24 April 2016 the Centre published UNEP s 10th Global Trends in Renewable Energy Investment Report 2016 (page 3). In 2015, global investment in renewables grew about 5 percent relative to the previous year and reached an all-time high of US$ 286 Not only in terms of volume but also in terms of flexibility renewables need to improve to become even more competitive. Prof. Dr. Ulf Moslener billion (bn). We estimate that renewables avoid emissions of about 1.5 gigatonnes of carbon dioxide per year. That is more than ten percent of the total emissions of the power sector. However, the huge weight of conventional generation capacity already built meant that new, clean technologies only accounted for just over ten percent of world electricity last year. To scale-up investments, efficient climate policy needs to trigger appropriate investment decisions. Therefore, policy design needs to understand private sector investment decisions. Discouraging the use of fossil fuel based power generation will likely be a separate challenge. Through its work the Centre acts as a moderator between the public and the private sector, developed and developing countries, high-level climate policy negotiators and onthe-ground project developers. At the COP 21, for instance, the Centre presented first results of the Demystifying private adaptation finance (page 4). The lessons learnt from this and other adaptation finance projects like the UNEP Microfinance for Ecosystembased Adaptation to Climate Change (MEbA) (page 8) lay the foundation for the development of the new E-Learning course Certified Expert in Adaptation Finance which complements the Certified Expert in Climate & Renewable Energy Finance (page 2). For the first time, the Centre s senior team is preparing the Senior Summer Academy which will take place concurrently to the next Summer Academy in July Other highlights comprise updates on our Green Climate Fund (GCF) Readiness Programme and sustainable energy finance projects in partnership with the African Trade Insurance Agency (ATI) (page 5) and the Eastern and Southern African Trade and Development Bank (PTA Bank) (page 6). Enjoy reading the 9th edition of our Newsletter! s.scholz@fs.de

2 The LinkEd E-learning courses are offered twice a year, from March to August and from September to February. CECRF regular fee: EUR Early bird fee for registrations from June 1 st to July 15 th : EUR Final exam fee: EUR 50 New course period begins: September 1 st 2016 Study period: 6 months For further information and to register for one of our courses please refer to E-LEARNING: CLIMATE AND RENEWABLE ENERGY FINANCE ONLINE COURSE The role of climate and energy finance in achieving a legally binding and universal agreement on climate was high on the agendas of governments, intergovernmental organisations, UN agencies, NGOs and civil society during the COP 21 in Paris. Because it aims to provide participants with a deep understanding of the key features of financing climate and RE projects, Frankfurt School s LinkEd E-learning course Certified Expert in Climate & Renewable Energy Finance (CECRF) helps to advance the Paris declaration. The training material, which was developed by the Centre s seasoned climate finance experts Ms. Silvia Kreibiehl and Prof. Dr. Ulf Moslener, draws on international best practice and relevant, up-to-date case studies and lessons learned the Centre s daily work. The e-learning course is unique in that it takes a hands-on training approach, with tools and guidance for real life implementation. In addition to analysing the prevailing market conditions, students receive an overview of the political and legal framework in the international context and an introduction to various forms of RE technologies in the energy generation mix with a curriculum including assignments and case studies from projects implemented at the Centre. LinkEd Team linked@fs.de AFFP fellows will take part in customised workshops, academies in Frankfurt and Bangkok, as well as online-based webinars. The researcher fellows will also secure a research grant, mentoring programme and publication possibilities. In conjunction with the AFFP, Frankfurt School will offer an e-learning course Certified Expert in Climate Adaptation Finance (CECAF). The CECAF will start in March 2017, with two course runs offered per year from March to August and September to February. More information and the application details about the AFFP and CECAF will be available in September This online, part time certification course allows participants to juggle their busy work schedules and professional development over a period of 6 months. After course completion, they have the opportunity to sit the final exam and earn a Frankfurt School certificate. The final exam can be taken at one of 60 exam venues around the world. The current course which started in March and will end in September 2016 counts 124 participants from 42 countries. FELLOWSHIPS TO PROMOTE ADAPTATION FINANCE IN RESEARCH, POLICY AND BUSINESS Achieving a binding and universal agreement on a targeted limitation of temperature increase to below two degrees in Paris marks the beginning of a new era. Climate finance will remain high on the agenda also in the post-paris era with massive funding needs to achieve carbon emission neutrality in the second half of this century. Paris also placed an increased focus on financing climate adaptation activities with an established adaptation goal including enhancing adaptive capacity, strengthening resilience and reducing climate vulnerability. As a result of the increasing international importance of adaptation, the International Development Research Centre (IDRC), Frankfurt School and the Thailand Development Research Institute (TDRI) are pleased to announce the Adaptation Finance Fellowship Programme (AFFP) - Linking Research, Policy and Business. The AFFP supports and promotes exceptional individuals from the scientific community, policy and private sector in climate adaptation related fields from developing and emerging countries. This cross-disciplinary and cross-sector exchange contributes to enhanced knowledge sharing and identifying good practices in adaptation finance from policy, private sector and research angle around the globe to emerge as knowledge leaders, exerting influence, and bringing solutions to the national level. The fellowships are open to highly motivated applicants from developing and emerging countries that are working in climate adaptation and finance and aim at future academic or professional careers in this field. Applicants can apply for one of three tracks: policy, business or research. Dr. Christine Grüning c.gruening@fs.de

3 The CTI PFAN is a multilateral public-private partnership (PPP), which mobilises private sector financing for climate change and clean energy projects. Their second Adaptation Scale- Up Programme call for project proposals was launched in November The Centre will continue to support this programme through close cooperation with CTI PFAN and project developers across Sub-Saharan Africa to help adaptation-related projects become bankable and draw on project development experience to strengthen our research findings. Laura Druce l.druce@fs.de The Global Trends in Renewable Energy Investment Report (GTR) provides an overview on trends in global investments in renewable power and fuels - broken down by type of economy, technology and level of investment - as well as analysis specified in asset classes, technologies and geographic regions. The data is presented in the context of political developments and the wider energy sector s GTR was published jointly by the Centre, Bloomberg New Energy Finance (BNEF) and UNEP in March. Prof. Dr. Ulf Moslener and Senior Project Manager Martin Cremer presented the most important findings of the report at a press conference at the Frankfurt School and at the 49 th Annual meeting of the Asian Development Bank (ADB). The whole report is available for download on the Centre s website Christine Grüning CENTRE DELIVERS RESEARCH COMPONENT FOR ADAPTATION STREAM SCALE-UP PROGRAMME Most experts agree that the USD 100 billion required annual investment for adaptation cannot only come from public sources, but must also come from private investors. There are increasingly examples of adaptation measures at the local level which are financed, at least in part, by the private sector. Dr. Moslener participates as a speaker at the side event Scaling-up private sector financing for adaptation projects. The Centre is recognised for our contributions to the (private) adaptation finance debate through our multi-disciplinary research and project implementation. We are leading a number of studies across a wide range of climate impacts, sectors and actors, developing our conceptual thinking on adaptation and applying its theoretical considerations to practical experiences and real case studies on the ground. We are in a unique position to have access to raw data from the CTI Private Financing Advisory Network (CTI PFAN) to assess what constitutes adaptation on the ground, how effective adaptation-related activities can be incentivised and financed among private sector actors and the suitability and effectiveness of risk mitigation strategies. This is an exciting new research project in the adaptation field, particularly as parties to UNFCCC continue to submit their (intended) nationally determined contributions and national adaptation plans and should consider whether adaptation projects as well as non-adaptation projects - are similarly affected by climate change. At the COP side event Scaling-up private sector financing for adaptation projects on 3 December 2015, Prof. Dr. Moslener presented our initial research findings. The panel, with experts from the Climate Technology Initiative, Business for Social Responsibility, the Renewable Energy and Energy Efficiency Partnership, CTI PFAN and Canada s International Development Research Centre, discussed initiatives on scaling up adaptation investments and outlined future directions for researchers, financiers, and project developers. GLOBAL TRENDS IN RENEWABLE ENERGY INVESTMENT 2016 In 2015, global investment in renewables grew about 5 percent relative to the previous year and reached an all-time high of USD 286 billion (billion). And there are more interesting trends: For the first time, investments in renewable energy in developing and emerging economy nations (USD156 billion, up 19% compared to 2014) surpassed those in developed countries (USD 130 billion, down 8% from 2014) AND Investment in renewables based electricity generation capacity in 2015 has been more than double the investment in the major fossil fuels (renewables: US$ 266 billion versus USD 130 billion for coal and gas stations). This also leads to added capacity in terms of Gigawatts in 2015 in renewables (134 GW) outstripping all other technologies combined (conventional coal, gas, and nuclear). When looking at world regions it is striking that investments in developing countries (here non-oecd plus Chile, Turkey and Mexico) surpass aggregate investment in developed countries for the first time. China (up 17 % to USD 103 billion) is by far the largest investor in renewables, growing and accounting for more than a third of the world s investment in this sector. Were it not for renewables excluding large hydro, annual global CO2 emissions would have been an estimated 1.5 gigatonnes higher in However, renewables, excluding large hydro, still represent a small minority of the world s total installed power capacity (about one sixth, or 16.2%) and actual electricity generated by those renewables was 10.3% of global generation in Coal-fired power stations and other conventional power plants continue to be constructed and have long lifetimes. Thus, to be able to reach the two target there is still a long way to go.. c.gruening@fs.d

4 The Demystifying Private Adaptation Finance approach and preliminary findings were presented at two COP 21 side events in Paris. The business case for adapting responsibly to climate change side event, hosted by Global Compact and UNEP Finance Initiative took place on 7 December, with Merlyn Van Voore (climate change and climate finance coordinator, UNEP) presenting the preliminary study findings followed by a panel discussion on corporate adaptation as risk management and business opportunity. Mobilising private finance for adaptation: private realities and public ambitions took place on 8 December and the Centre s Senior Project Manager Dr. Christine Gruening presented the study. The final study is due to be launched in Laura Druce l.druce@fs.de The SEI Metrics project is funded under the European Commission s Horizon 2020 Research and Innovation Programme. The project, which has a total volume of EUR 2.5 million, runs from March 2015 to March Besides the Frankfurt School, 9 other organisations from across Europe are involved in the implementation. The project aims to address the lack of investment in clean and sustainable energy assets on the part of financial institutions, as well as providing a clear definition of what a sustainable asset or sustainable investment portfolio really is. The project will tackle the above issues by developing an assessment framework to enable investors to measure and manage the climate performance of their investment exposures. Christine Grüning c.gruening@fs.de The RBCF project is a study commissioned by the World Bank, which will run from March 2016 to July Results-based finance modality generally refers to the approach of dispersing finance conditional to verified achievements on predetermined objectives. RBCF could possibly align climate finance with development finance and be a suitable instrument to facilitate Nationally Determined Contributions (NDCs). This makes RBCF a potential tool to address the challenges the climate policy community is facing today. By deep diving into this topic, Frankfurt School will contribute to the existing knowledge on RBCF and provide new analytical insights. DEMYSTIFYING PRIVATE ADAPTATION FINANCE Through our ongoing work with CTI PFAN to help adaptation-related projects become bankable, the questions arose as to where and why private sector finance is required in addition to concrete adaptation results on the ground, and what types of existing private finance actually constitute adaptation activities for achieving climate resilient development. The Demystifying Private Adaptation Finance Study seeks to examine the spectrum of private finance instruments used by a diverse set of market actors to determine which are relevant and well-suited to finance certain types of adaptation activity. Since adaptation-related activities are almost as heterogeneous as economic activities the study uses 'adaptation themes' to cluster adaptation-related activities. Each theme comprises a climate impact, a typical adaptation measure and typical commercial actor responses to these adaptation measures. We are now bringing our research to the forefront by introducing a distinctive approach to classic barriers to (private) adaptation finance. Our analysis includes the underlying market imperfection (economic perspective) and the consequence for risk and/or return of the corresponding investment (financing perspective). We show how these barriers lead to an unjustified reduction of the attractiveness of adaptation investments as well as indicate an impact on the actor s risk return profile. We hope that our analysis may be used in the future as a guide to translate specific barriers into different policy options to overcome or compensate these barriers. SEI METRICS: ASSESSING THE ALIGNMENT OF PORTFOLIOS WITH CLIMATE GOALS The working paper Assessing the Alignment of Portfolios with Climate Goals has been published on October 19th, 2015 as the first of a series of papers. The paper develops a performance framework that measures the exposure of financial portfolios to the two degree target and translates the energy technology roadmaps from the International Energy Agency (IEA) into a benchmark. The 2 C benchmark could be used for investors to assess the alignment of an equity portfolio with a decarbonisation pathway, especially those associated with the 2 target. A 2 C portfolio is defined as the normal diversified portfolio of an average investor in a 2 C world. The output of this assessment is an energy and technology gap quantifying the over and under-exposure to energy and technology under a 2 trajectory. The working paper Assessing the Alignment of Portfolios with Climate Goals is available online at the website of the 2 investing initiative (2 ii), a multi-stakeholder think tank working to align the financial sector with 2 C climate goals. The Centre jointly with 2ii works on the development of a methodology that measures the exposure of the asset class portfolio of banks to the two degree target. The benchmarks and measurement of alignment can be disclosed by investors to help policy makers better identify key private sector investment gaps, allowing them to better target public investments and tax incentives. RESULTS-BASED CLIMATE FINANCE: INITIATIVE MAPPING, OUTLINING AND ASSESSMENT The Frankfurt School team has successfully kicked off the project Results-based Climate Finance (RBCF): Initiative mapping, outlining and assessment with the World Bank at the beginning of March The project aims to understand RBCF approaches in a climate context and identify potential areas for building RBCF implementation capacities. In the coming months, Frankfurt School will conduct a series of challenging tasks, including defining RBCF in the climate context, mapping existing RBCF initiatives and developing a framework to compare different initiatives. The study will not only include technical rationale which consists of classical policy analyses, but will also go beyond that to explore various political economy-related aspects, such as private sector finance mobilization and aligning climate goals with development goals. Addressing the current debate, the study will include a discussion on whether RBCF is suitable in the context of NDCs, given that results-based financing may help to develop Monitoring, Reporting and Verification (MRV) capacity in developing countries. Christine Grüning c.gruening@fs.de

5 The ARC was set-up by the African Union to help member states become more resilient to extreme weather events and to protect food insecure populations in light of climate change. ARC launched the first ever African catastrophe insurance pool with the set-up of the ARC Insurance Company, a specialised hybrid mutual insurance company Membership included the following countries, which have also taken out insurance contracts for the coverage of agricultural seasons: Burkina Faso, The Gambia, Kenya, Malawi, Mali, Mauritania, Niger, Senegal and Zimbabwe. Germany and the United Kingdom contributed to the initial capitalization (with respective commitments of EUR 50 million and GBP 90 million) and are also founding members of the mutual insurance company. Stéphanie Besson s.besson@fs.de The Berne Union aims to facilitate cross-border trade and provide a forum for professional exchange among its members of private and state export credit insurers. It was founded in 1934 with its first meeting in Berne, Switzerland. Currently, it has 80 member companies globally and is the leading organization for export credit and investment insurance. Its members collectively insured USD 1.9 trillion of exports and foreign direct investment in 2014, which constitutes more than ten percent of international trade, and indemnified USD 4.6 billion to exporters and investors, protecting them from losses suffered due to buyer defaults in all regions of the world ( DESIGNING A NEW FINANCIAL MECHANISM TO SUPPORT AFRICAN COUNTRIES EFFORTS TO ADAPT TO CLIMATE CHANGE Recognizing the need to support African countries in their efforts to adapt to climate change and enhance country ownership, the African Risk Capacity (ARC), an institution of the African Union, is currently working on the design of an innovative financial mechanism in collaboration with the Climate Development Knowledge Network (CDKN). The new mechanism, the Extreme Climate Facility (XCF), will be funded by developed countries and will offer African countries direct access to finance their national climate change adaptation (CCA) and disaster risk reduction (DRR) investment plans. The team with representatives of the Permanent Secretariat to the National Council for Environment and Sustainable Development in Ouagadougou, Burkina Faso Kulima Integrated Development Solutions and the Centre were mandated by ARC and CDKN to conduct a feasibility study and propose recommendations on investment plan evaluation criteria for the XCF. The Centre is bringing its on-hands experience in the field of climate finance readiness in Africa to facilitate the design of innovative investment guidelines for the new facility. The feasibility assessment included the realisation of in-depth case studies in six different countries and in summer 2015 the Centre team went to Burkina Faso and Ethiopia to assess the national climate finance readiness and framework for CCA/DRR planning. Subsequent to the on-site missions, the team delivered a report on the financial absorptive capacity of the region together with investment guidelines and recommendations for the XCF. These were positively received by ARC/CDKN. Their key messages and next steps for XCF eligible countries were discussed with ARC/CDKN and representatives of the target countries during a workshop in April 2016 in Addis Abeba. CENTRE EXPERTS AT BERNE UNION ENERGY SECTOR SPECIALIST MEETING IN NAIROBI Silvia Kreibiehl and Tobias Panofen have been invited to participate as sector experts in the Berne Union Energy Sector Specialist Meeting in Nairobi in April 2016 and to present key developments in the renewable energy sector regulation in Sub-Sahara Africa. It was the first time that the Berne Union organized a meeting in the region and that it held such a sector-specific conference. The African Trade Insurance Agency (ATI) hosted the conference and organized a site-visit to the Olkaria geothermal power plant. This global conference attracted participants from the Berne Union itself, but was also open to selected experts from outside the association. The Centre is working together with ATI since 2014 helping the Agency to develop its business in sustainable energy. ATI offers trade and political risk insurances within its (currently) ten African member countries. As such, the ATI is in an excellent position to offer insurance for sustainable energy projects particularly the Agency is able to cover the offtake risk, i.e. the risk that utilities do not pay as agreed upon in the power purchasing agreement (PPA). This risk is considered as the most critical with regards to renewable energy projects. According to the Global Trade Review (GTR) and its Africa Leaders in Trade Award 2016, ATI is the best political risk and trade credit insurer in Africa. Tobias Panofen t.panofen@fs.de

6 PTA stands for Preferential Trade Area. The Eastern and Southern African Trade and Development Bank, known as PTA Bank, is a regional development financial institution established in PTA Bank is an institution of the Common Market for Eastern and Southern Africa (COMESA) and among the largest regional development banks in Africa in terms of its balance sheet. PTA Bank has its headquarters in Bujumbura, Burundi. Furthermore, it has regional hubs in Nairobi, Kenya; Harare, Zimbabwe and Ebene, Mauritius. Current member countries are: Burundi, Comoros, DRC, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe. Together, the member countries hold 81.3% of PTA Bank s shares. Non-regional shareholders (Belarus and China) hold 6.6% and institutional shareholders stand at 12.1%. Tobias Panofen t.panofen@fs.de The GCPF is a PPP aiming at the mitigation of climate change by promoting EE and RE investments for SMEs and private households and cooperating with qualified financial institutions. The Fund was established together with a TA Facility sponsored by the BMUB and OeEB that supports partner financial institutions to develop green energy lending portfolio, as well as to prepare investments of the Fund. STRENGTHENING PTA BANK S ENGAGEMENT IN THE SUSTAINABLE ENERGY SECTOR The Eastern and Southern African Trade and Development Bank (PTA Bank) has engaged the Centre in order to establish a sector expertise in financing RE and energy efficiency (EE) projects within their member countries. The Centre kicked off the project in mid-september 2015 and was met by a highly professional and dedicated PTA Bank team. The Centre staff is regularly at the bank s Nairobi premise in order to work face-toface with the colleagues. The bank focuses on project finance of infrastructure investments, mostly related to REs. The Centre is tasked to assist PTA Bank in streamlining and adapting its internal procedures and tools, in conducting thorough business analyses and in enhancing the capacity of PTA Bank to assess the feasibility of the respective projects. Thereby, PTA Bank intends to engage further in the sustainable energy sector and plans to position itself as an important player for project finance deals in the sector. The project is embedded in the German Financial Cooperation via KfW with PTA Bank. Both institutions pursue the goal of assisting the development of RE and EE in Africa by financing eligible investments. KfW made available a credit line to PTA Bank which is accompanied by technical assistance measures. POSITIONING THE SOUTHEAST BANK OF BANGLADESH IN THE AREA OF GREEN ENERGY FINANCING The Centre was mandated by the technical assistance (TA) programme of the Global Climate Partnership Fund (GCPF) to support the Southeast Bank Ltd. (SEBL) in implementing an EE lending programme in Bangladesh. SEBL is one of the leading private commercial banks in Bangladesh with a total asset base of BDT 236,608 million (over USD 3 billion) as on December The programme aims at positioning the bank in the area of green finance. Since the inception of the TA programme in September 2015, the Centre team has been providing on-the-job coaching while visiting potential industrial investors and continuous on-site support to the bank s green banking unit by developing an EE project pipeline eligible for the GCPF funding. To this end, the Centre team has been conducting extensive energy savings analyses. This encouraged the bank to develop further EE projects to attract funding and expand its green lending portfolio in the energy-starved industrial sector of Bangladesh. On November 19 th and 21 st 2015 the Centre provided two day-long trainings at SEBL to enhance bank s internal capacity on financial, technical and market aspects of EE in Bangladesh. More tailor-made EE trainings are planned to be provided for the bank staff First round training participants at SEBL in this year. To support the bank s vision of becoming green in its daily operation and boost up its green lending initiative the Centre is guiding the bank in adapting green banking practices at its pilot branches. An EE lending strategy and implementation plan is being developed to guide the bank to continue its EE lending in a sustainable manner. Besides continuing with pipeline and capacity building activities at SEBL, the Centre team is assisting the bank in adopting procedures, tools, policies and standardising industrial energy audits as per green lending best practices. Hirak Al-Hammad H.Al-Hammad@fs.de

7 Vietnam has experienced considerable growth in the last 20 years and developed from one of the poorest countries in the world to a lower middle-income country (MIC). Now that Vietnam is a lower MIC donor funds and grants gradually decrease. Hence, in an institution like the VGGSF different stakeholders need to be represented to coordinate on the mobilization and blending of private and public funds. This requires different governance and management structures compared to a sinking fund that relies purely on grant funding sources. DESIGNING THE OPERATIONAL MANUAL FOR THE VIETNAM GREEN GROWTH STRATEGY FACILITY Throughout 2015, the Centre team members Laura Susanne Shuford and Carola Menzel worked with the Belgium Technical Cooperation (BTC) and the Ministry of Planning & Investment (MPI) in Vietnam on the design of the Facility Operational Manual (FOM) for the Vietnam Green Growth Strategy Facility (VGGSF). Eventually, the VGGSF is expected to mobilise and manage climate finance in line with the National Climate Change Strategy and the National Green Growth Strategy. The Centre team drafted the FOM in close cooperation with BTC and a team of national experts by reviewing and benchmarking national and international fund management structures (e.g. collecting samples of good practice and lessons learned). When designing the FOM, the team also took into account requirements of donors and international funds, but also Vietnam s legislative framework and relevant green growth and climate change policies and targets. Carola Menzel c.menzel@fs.de The OSS is a Tunis-based international, intergovernmental organization operating in Africa s Sahara-Sahel region. The creation of OSS coincided with the Rio Earth Summit in 1992, which culminated in three landmark multilateral environmental agreements on desertification (UNCCD), biodiversity (CBD) and climate change (UNFCCC). OSS has a significant outreach with 22 member countries in West, East and North Africa. Most of OSS projects consist of advisory work/feasibility studies in the fields of water management and environment. Some of the institution s focuses are the management of transboundary water resources and the implementation of multilateral environmental agreements in Africa, addressing desertification, biodiversity and climate change. In the field of climate change OSS aims to develop standard tools/methodologies to determine the vulnerability of populations and ecosystems to climate change, monitor the impact of climate change on resources and estimate the potential for carbon sequestration. OSS was accredited as a RIE for the Adaptation Fund in If accredited, OSS would be the first African RIE with direct access (as of today). See more at: The draft FOM comprises operational procedures for the VGGSF addressing for instance the general facility management and governance principles, monitoring and evaluation functions, fund management principles; administrative processes, the financial and operational frameworks, and environmental and social safeguards and a corresponding complaint system. In 2016, the draft FOM will go through a consultation/verification process to ensure line ministries and other national agencies as well as donors are involved before finalising the FOM. SAHARAN AND SAHEL OBSERVATORY APPLYING FOR THE GCF With the recent operationalization of the Green Climate Fund (GCF) which received USD 10bn commitment so far, the Centre has been regularly solicited to support national and/or regional entities in their accreditation process as implementing entities of the GCF. Building on its extensive experience with accreditation support for direct access, Centre team members Carola Menzel, Laura Susanne Shuford and Stéphanie Besson are currently assisting the Tunisian Saharan and Sahel Observatory (OSS) in its accreditation process, with GiZ Participants to the GCF funding proposal training delivered in February 2016 in Tunis support. OSS is a pan-african institution based in Tunis and hopes to be granted direct access to the GCF as a regional implementing entity (RIE) for African countries. The Centre team went to Tunis last September and November to meet with the RIE task force and guide them through the application process. In addition, to better prepare OSS to the GCF accreditation, a 2-day training on how to develop GCF funding proposals was delivered in Tunis to OSS staff and some of their project partners from the Maghreb region in February It was followed by a 1-day training on Environmental and Social Safeguards (ESS) and Gender considerations as per GCF requirements to reinforce current capacities of OSS staff in these fields and introduce them to their new ESS and Gender policies. The RIE application was also sent out to the GCF last February and the Task Force is currently addressing the comments received from the GCF Secretariat with the Centre s support. Stéphanie Besson s.besson@fs.de

8 Ecosystem-based adaptation (EbA) is a concept that strengthens natural systems to moderate the negative impacts of climate change. A commonly used definition comes from the Convention on Biological Diversity: EbA is the use of biodiversity and ecosystem services as part of an overall adaptation strategy to help people adapt to the adverse effects of climate change. EbA means adaptation powered by nature. The aim is to increase the resilience of natural ecosystems and the services and species that support them, so that they are prepared for the impacts of climate change. The concept of EbA is relatively new, and it is still being developed and tested in the field. EbA can be implemented in diverse fragile ecosystem settings, such as mountains, coasts, wet- and dry-lands, and forests. On Saturday, December 12 th the MEbA Team launched a new website. For more information of the project visit us at: Alicia Rondón-Krummheuer a.rondon-krummheuer@fs.de Colombia has been actively engaged in international climate change negotiations and submitted its Intended Nationally Determined Contributions (INDC) to the UNFCCC in September In its INDC, Colombia commits to reduce its Greenhouse Gas (GHG) emissions by 20% below the business-as-usual (BAU) scenario by 2030 with a possibility to increase to 30% below BAU subject to the availability of international support. Mitigation activities will mainly be required in the agriculture sector since it accounts for the lion s share of the country s emissions. In 2010 the agricultural sector emitted 130MT CO2e or 58% of the country s emissions. During the COP 20 in Lima Colombia s President Santos announced a USD 6 million contribution to the Green Climate Fund. The country has also formulated its adaptation priorities in the National Adaptation Plan (NAP). Eleven regional plans have been formulated to achieve the goals set forth by the national plan. The Government aims at reaching a total of 20 plans by 2018, covering 32 million people. MEbA PROJECT ORGANISES WORKSHOP IN BOGOTÁ COLOMBIA In the framework of the Microfinance for Ecosystem-based Adaptation to Climate Change (MEbA) project the Centre and UNEP s regional office for Latin America and the Caribbean organised a two-day workshop in October 2015 at the Lancaster House Hotel in Bogotá, Colombia. The workshop dealt with Risk Management and Strategic Alliances for Microfinance and Ecosystembased Adaptation. Group picture of the MEbA workshop participants. More than 60 participants attended the workshop from the project s five partner microfinance institutions (MFIs) 1, ministries, banks, insurance companies and other institutions from Peru and Colombia. In three working group sessions the participants had the opportunity to exchange experiences work on case studies around the topics of climate insurance, climate change and credit risk and public private partnerships. The outcome of the workshop was on the one hand to continue searching financial opportunities for the partner MFIs in the topic of Ecosystem-based Adaptation (EbA) and on the other hand to propose a strategy to scale-up and to replicate the MEbA concept within the region. This could include the identification of a financial structure with suitable financial access, which is well regulated and could promote better policies and regulations focusing on natural resources conservation through EbA. GCF READINESS PROGRAMME ACTIVITIES IN COLOMBIA The Centre is currently supporting the financial sector component of the GCF Readiness Programme in Colombia, a project which is jointly carried out by UNDP, UNEP and WRI and supported by the German Government. The objective is to design innovative schemes combining financial instruments and policy measures to support sustainable climate investments. Building on the Centre s experience with the design of enabling environments for climate friendly investments, the team is implementing the project in close collaboration with the Government of Colombia through the National Planning Department and the Launch of the financial sector component in Bogotá, August 24, 2015 Colombian Banking Association through the Green Protocol, a voluntary commitment by Colombian banks to promote sustainable development in their institutions. The aim of the project is to develop innovative financial mechanisms that support climate friendly investments in six sectors: agriculture, energy, industry, transport, construction & housing and water. The Centre Team will be supported throughout the whole project by seven sectorial working groups. The team participated to the official launch of the financial innovation pilots in Bogotá on August 24th, coordinated by the National Planning Department to engage the finance community and the ministries concerned by climate. The Centre team is currently preparing a review of policies and a sectorial analysis of current climate investments. The results of the preliminary study will be used in a second step to elaborate recommendations on potential public mechanisms and financing schemes to promote sustainable investments in each sector. The Centre will accompany the project throughout the whole design phase which is expected to end in 2016 while the implementation of selected pilots is expected to be carried out by the government in the course of Michael Eschmann 1 Bancamia, Crezcamos and Contactar from Colombia; Solidaridad and Fondesurco from Peru. m.eschmann@fs.de

9 Mitigation-related activities have received more attention and funding from international donors than adaptation-related activities, but critics see adaptation as Ghana s main concern. Initiatives related to adaptation started 15 years ago with the Netherlands Climate Change Studies Assistance Programme (NCCSAP), followed by the two key projects Climate Change Adaptation and Development Programme Initiative (CC-DARE) resulting in the establishment of an Adaptation Strategy and the Africa Adaptation Programme (AAP) aiming at the mainstreaming of climate adaptation in Ghana with a focus on early-warning systems. There have been RE activities in Ghana since the 1990s. The Ghana Energy Development and Access Project (GEDAP) is one of the key projects aiming at an expanded electricity access and an increased renewable share of total electricity generation. STRENGTHENING MFIS TO FINANCE CLIMATE CHANGE ACTIVITIES IN GHANA To implement UNEP s Green Climate Fund Readiness Programme in Ghana the FS- UNEP Centre is collaborating with the financial sector, especially microfinance institutions (MFIs), to work out financing possibilities of climate smart products (e.g. clean energy solutions, irrigation technology). The first activity undertaken in the framework of this project was the establishment of a detailed market analysis which showed that Ghana has a well-developed financial sector with more than 400 MFIs, but only a few provide financing for climate smart products. After a kick-off meeting in June the team held a workshop for MFIs in October in Accra on Strengthening national public and private MFIs to finance activities addressing climate change and provided information on risks and opportunities of climate change adaptation, the potential for clean energy in rural areas as well as financial needs for adaptation and mitigation measures in Ghana. Suitable products (e.g. solar home systems, treadle pumps) and corresponding costs were presented and the MFI s experiences in these fields were discussed. An outcome of the mission was that the MFI Participants at the Climate Smart Financing Workshop Accra, Ghana, in April 2016 Ghanaian MFIs are well aware of climate change in their country, how this affects their clients and themselves and the need of adapting their financial products to climate change. However, a lack of knowledge about the market and its technology providers as well as on how to initialize climate smart financing, hinder them to take prompt action. To address these issues the team decided to further promote climate smart financing and to establish connections between MFIs and technology providers. Thus, on April 13 a second climate smart financing workshop for MFIs was organized by the FS-UNEP Centre Team with support from GHAMFIN and UNDP. Technology providers of solar home systems, small scale biogas technologies and sustainable irrigation pumps were invited to present their product portfolio. The aim of this activity was to familiarize the participating MFIs with the climate smart market, to bring together MFIs and technology providers and to give them the opportunity to discuss cooperation possibilities. With about 75 participants from MFIs and positive feedback from their side the workshop s outcome can be judged as successful. To further support small scale climate mitigation and adaptation measures the next step of the GCF Readiness Programme is to help MFIs in developing climate smart financing products through technical assistance. Andrea Bode The opinions, findings, interpretations and conclusions expressed in this newsletter are those of the Frankfurt School and do not necessarily reflect the views of UNEP, the German Ministry for the Environment, Nature Conservation and Nuclear Safety or other donors. Neither of the above mentioned institutions and bodies nor any person acting on their behalf may be held responsible for the use which may be made of the information contained in this newsletter. a.bode@fs.de