The ALP Forum sessions on August 26 focused on national government initiatives and fund mobilization to support subnational climate actions.
The first session was moderated by Ms. Maryke van Staden, Director of ICLEI’s Bonn Center for Local Climate Action and Reporting (carbonn Climate Center), ICLEI World Secretariat. She said that the potential of subnational governments to enhance national climate goals can be gauged from their commitments, targets, action plans, actions and finance availability. She added that horizontal and vertical coordination of each level of government, with each having a clear mandate or role to play, could help us to get a clearer global picture of climate action. Ms van Staden spoke of the CDP-ICLEI Unified Reporting System, which helps to collect information about plans, actions, performance and climate and energy commitments. The reporting system offers to review data, point out mistakes and make recommendations on climate action.
She spoke of the need for multi-level governance, with clear mandates for each level, a policy framework to enable action, understanding of finance needs and vertical integration to track progress and to attract finance by proving that policies are in places and targets being met.
Ms. Seonhee Kim, Assistant Manager, GHG Reduction Division, Korea Environment Corporation (KECO), made a presentation on the Korean government’s carbon net zero support for local governments. She said that the Government of the Republic of Korea has established the National Greenhouse Gas Emission Reduction Goal and, in December 2020, formulated ‘National 2050 Carbon Net Zero Strategies’ and submitted them to the UN. Korea aims to reduce its carbon emissions by 24.4% by 2030, over the 2017 levels. KECO is supporting the government to achieve its carbon net zero 2050 goals by providing consulting for GHG reduction, GHG inventory calculation and training and supporting a carbon net zero society of local governments. The consulting for GHG reduction involves targets, content and standards that helps in establishing a General Plan for Carbon Emission Reduction and Climate Change Adaptation.
Dr. Arun Prakash Bhatta, Under Secretary (Technical), Nepal Climate Change Support Program (NCCSP), and Secretary, Ministry of Forests and
Environment (MoFE), Nepal, gave an overview of his country’s vulnerability to climate change impacts due to its unique topography, nature-based livelihoods, and poverty levels, among other factors. Nepal has been working on climate change response since 1994 as a signatory to the UNFCCC. A National Adaptation Plan of Action has been developed to mainstream climate into national development programs and to address developmental challenges. A climate change budget code has been developed and adopted by seven ministries that are preparing policies, legislation and plans of action related to climate change. Dr Bhatt said that new guidelines for climate-resilient planning and budgeting have been developed, besides climate change and disaster management committees. However, there is a lack of finance and capacity to roll out adaptation activities and meet NDC targets, and climate budget training is at program-level tagging by the federal ministries only, and not at the provincial and local levels.
Dr. Nguyen Thi Dieu Trinh, Deputy Director-General, Department of Science, Education Natural Resources, Ministry of Planning and Investment, Vietnam, described the formulation and implementation of the Green Growth Strategy and Action Plan as the key drivers to achieve her country’s national targets. Vietnam recently updated its green growth strategies and included components such as green financing instruments and laws on environment protection, including legal frameworks for focusing on climate resilience city plans and renewable resources.
However, there are limitations in access to finance as well as capacity challenges to take climate-resilient actions in terms of budgets and prioritizing of financial flows. Local authorities face challenges in using resources effectively, and it is also difficult for the private sector to measure investment.
Abdul Latif Helaly, Project Director, Urban Resilience Project: Rajdhani Unnayan Kartripakkha (RAJUK or the Capital Development Authority of Bangladesh) spoke about a comprehensive approach being developed for urban earthquake resilience in the Dhaka Metropolitan Development Plan (DMDP) area. Risk-sensitive land-use planning for sustainable development in the DMDP area has been prepared to reduce the impacts of seismic activities. The new strategy includes mitigation measures, risk management, a focus on saving lives and resources and a proactive, comprehensive approach. An infrastructure resilience center-Bangladesh has been set up to support the resilience and mitigation work in the country.
Fund mobilization for sub-national climate actions
The second session of the day on ‘Fund mobilisation for sub-national climate actions’ was moderated by Dr. Eszter Mogyorosy, Head, Innovative Finance, ICLEI World Secretariat. She said that there was a huge gap in the availability and accessibility of funds for climate actions by local and regional governments. Around US$93 trillion investment is needed for low-carbon infrastructure projects to reach global goals; US$5 trillion is required every year for urban climate finance, with an annual investment gap of more than US$ 1 trillion.
Dr Mogyorosy said that the lack of bankable projects was the key reason for inadequate financing access for local and regional governments (LRG). Additionally, investors are largely interested in financing international/large-scale projects and not in enabling the environment/climate action planning/project scoping space. Other bottlenecks that LRGs face in accessing funds include lack of fiscal and technical capacity, limited autonomy, electoral changes, and difficulties in engaging the private sector and in meeting investor requirements such as creditworthiness and co-financing.
However, she said that there were opportunities in terms of growing finance flows, increased recognition to LRGs as leaders of climate actions, global initiatives that support cities such as GCoM and CCFLA, knowledge and tool products, and new project preparation facilities such as the Transformative Actions Program (TAP) and the Gap fund.
In her presentation, Ms. Laura Jungman, Senior Consultant, Cities Climate Finance Leadership Alliance (CCFLA), introduced her organisation as a multi- level and multi-stakeholder alliance that aims to close the investment gap for urban and sub-national climate projects. Its members include more than 60 public and private financial institutions, including government and international organizations, research groups, city networks and city representatives. It is a platform for the members to exchange expertise in urban climate and also acts as a creator of knowledge in key areas in urban climate finance.
She spoke about The State of Cities Climate report 2021, developed by CCFLA, which presents comprehensive estimates of global urban climate finance, while analysing present frameworks and solutions to mobilise it for low-carbon development. The report establishes that between 2017 and 2018, US$ 384 billion was invested as urban climate finance, far lower than the US$ 5 trillion needed annually to meet global goals. The study shows a split of 60:40 in private and public funding, with domestic and national government finances being the major sources. The largest amount of urban climate finance was invested in East Asia and Pacific region (US$162 billion), while in South Asia, it was only US$4 billion.
Mr Gan Gan Dirgantara, Senior Advisor Climate Change, GIZ Indonesia, made a presentation on FELICITY (Financing Energy for Low Carbon Investment – Cities Advisory Facility), a project funded by Germany’s BMU and implemented in Mexico, Brazil, Ecuador and Indonesia, with support from GIZ and European Investment Bank). The project aims to prepare low-carbon infrastructure projects for cities that are bankable for international financing institutions, with a focus on project feasibility, structuring and preparation.
FELICITY will support the Government of Indonesia and subnational governments to prepare a possible financing scheme for infrastructure development in line with the national government’s plans to implement a low-carbon approach to infra-development as part of the NDC and SDG goals. Six innovative financing models have been introduced: PPP, Private, Municipal bonds, assignment to state-owned enterprise (SoEs), Foreign Loans with government guarantee and municipal lending.
Mr Joojin Kim, Managing Director, Solutions for Our Climate, spoke on the actions taken by Chungnam province in Korea to prevent new coal plants and to close down old ones. Korea has 60 coal power plants, which have had several environmental impacts. Chungnam had minimal authority on the power sector, which is controlled by the national government. In 2019, however, the province made the national government cancel life-time extension of 4,500MW coal plants and expedite the closure of 1,000MW coal plants. This was replicated in other provinces – eight of them are now members of the Powering Pas Coal Alliance (PPCA), which is a group comprising 122 countries, cities, regions and organisations aiming to accelerate the phasing-out of coal-fired power stations. Chungnam’s effort also facilitated changes in the financial sector; ‘no coal’ commitment is now an important requirement for financial institutions for collaboration (depository services) with sub-national governments. More than 100 financial institutions have made this ‘no-coal’ commitment.
Mr Rohit Sen, Head, Climate & Energy Actions, ICLEI World Secretariat, said 1.1 billion people lack access to energy globally, with cities responsible for 65% of the energy demands. He said a possible solution for reducing emissions was to get cities to drive energy transitions. They can lead renewable energy transition by setting 100% RE targets (globally, 350+ targets have been set by 300+ cities). He said cities could drive such changes by acting on public policies such as EVs, building codes, EE measures, and district heating and cooling. The drivers for sub-national governments to promote RE include energy security, reduction of carbon emissions and fossil fuel consumption, revenue from sales and export of RE, jobs creation and stimulation of the local economy. Mr Sen said that CLEI had introduced the 100% Renewable Cities and Regions initiative, under which two actions – 100% Renewables Cities and Region Network and 100% Renewables Cities and Region Roadmap project- have been launched.
Ms. Aurelie Chardon, Regional Lead – Cities, Asia Pacific, International Finance Corporation (IFC), said that 35% of the World Bank’s investment needs to have a climate impact, adding that cities have a crucial role to play in service delivery. The IFC provides finance to cities without any sovereign guarantee (based on their credit worthiness) so that they can be more independent without relying much on sovereign governments. Between 2003 and 2021, the IFC provided US$ 2.3 billion through 54 projects.
IFC’s solutions include providing funds and helping subnational governments access other commercial sources of finance, and creating investment opportunities for them by developing sustainable pipelines of bankable transactions. It also helps build capacity and develop projects; supports subnational governments with structuring PPPs and attracting private investments and expertise. For instance, it has given the city of Izmir in Turkey more than US$ 100 million over a decade, making a huge impact on carbon emissions and series delivery (water), besides addition support during the pandemic.
During the Q&A session, responding to a query as to how banks could be encouraged to take up green financing, Ms Jungman said that the first thing that needed to change was the narrative that green is not profitable. She said that investing in green infrastructure, especially in sectors such as energy and transport, can be just as profitable. Many projects are financially viable, but need to be made bankable and be able to access capital. She said that for projects in sectors where there was a lot of uncertainty, concessional capital could reduce the risk and uncertainty, especially when considering innovative financial models.