Online courses and resources on climate change, climate finance and sustainable development

Here are some sites with online courses on climate change, climate finance, sustainable development and related topics: 

UNEPFI:  https://www.unepfi.org/training/training/climate-change-training/online-course/

EDX: https://www.edx.org/course/climate-change-financial-risks-and-opportunities

World Bank:  https://olc.worldbank.org/content/climate-change-online-learning

UNITAR: https://www.unitar.org/event/pmcp/ccp/event-pillars/planet?title=&content=climate&date%5Bmin%5D%5Bdate%5D=&date%5Bmax%5D%5Bdate%5D=&location=All&registration=All&delivery=24&language=All

Here is a general presentation I prepared on climate change, the Paris Agreement and climate finance (from 2016 - things have only gotten worse!).

https://drive.google.com/file/d/0B2keH2NAJ6iOSzlOaHdTMzdfUGM/view

Ecuador and climate change

Ecuador and climate change

By Luis Fierro Carrion (@Luis_Fierro_Eco)

(English translation of the article published in "El Universo" on February 6, 2020)

The average global temperature registered in 2019 its second highest level in history, barely tenths of a grade below the record set in 2016. The last five years and the last decade have also been the hottest since records are kept.

Global warming is due to the increase in greenhouse gases (GHG) in the atmosphere, in particular carbon dioxide (CO2) and methane gas. The level of CO2 in the atmosphere has increased from 350 parts per million in 1990 to 411 in 2019.

The increase in GHG emissions is mainly due to the use of fossil fuels (oil, gas, coal, etc.), and to a lesser extent to deforestation, agricultural and industrial activities.

We have already reached an increase of 1.1 degrees Celsius with respect to the pre-industrial average temperature, and in the Paris Agreement the countries of the world promised to restrict the temperature increase to 1.5 degrees, or at most to 2 degrees.

However, in accordance with the commitments assumed by the countries (through the “Nationally Determined Contributions” or NDC), an increase of at least 3 degrees C is projected until the year 2100.

With the temperature increase that has already occurred, we have begun to suffer catastrophic effects:

- Massive fires in Australia, Brazil, Bolivia, the United States and other countries.

- Rise of the sea levels (due to the melting of the ice at the poles and Greenland). This already threatens several countries and regions that are a few meters above sea level, such as Kiribati, Maldives, Marshall Islands, Tuvalu, Vanuatu, Bangladesh or the states of Florida and Louisiana in the United States.

- Fluctuations in the rain, which causes droughts in some regions and floods in others.

- Melting glaciers and snow-capped mountains.

- Intensification of hurricanes and tropical cyclones.

- Increase of epidemics of tropical diseases (dengue, Zika, malaria, etc.).

- Expansion of invasive species and extinction of endemic species.

Although Ecuador generates only 0.11% of global emissions (less than its participation in the global population or GDP), in the Paris Agreement all countries expressed their commitment to reduce their GHG emissions.

In Ecuador's climate plan proposal (NDC), there was no commitment for an absolute emission reduction, only sector programs and policies, such as the increase in renewable energy generation or reforestation plans (despite which Ecuador is currently the country in Latin America that deforests the most, as a percentage).

Before the last presidential elections, I published, as part of an initiative of Grupo FARO and Ecuador Decide, “Promote Sustainable and Low-Emission Development, with Greater Resilience to Climate Change” (Grupo FARO, Quito, 2017).

In this document I proposed public policies to address the problem, such as:

- Ratification of the Paris Agreement (the current government did it).

- Reduction or elimination of fossil fuel subsidies (partially achieved in the governments of Correa and Moreno).

- Promote solar, wind, geothermal, tidal and small hydroelectric energy (large hydroelectric plants emit methane gas from their dams, especially in tropical areas).

- Promote greater energy efficiency.

- Provide incentives for electric vehicles and mass public transport (metro, tramways and electric buses).

- Promote actions to adapt to climate change, including more resilient infrastructure.

- Improve the management of solid waste, including the capture of methane gas for electricity generation.

- Constitute an investment fund to face climate change, which channels national and international resources (a small fund has been set up to replace the National Environmental Fund that former President Correa eliminated).

There are concessional, and even non-refundable, funds available to deal with climate change. The Inter-American Development Bank (IDB), CAF, the World Bank, the Green Climate Fund, the French Development Agency (AFD), the German Development Bank (KfW) and the European Investment Bank, among others, finance mitigation and adaptation programs and projects, and there are initiatives to channel these resources towards decentralized autonomous governments and the private sector. Banco Pichincha issued the first Green Bond in Ecuador, in 2019, with the support of IDB Invest, the International Finance Corporation (IFC) and Proparco (the private sector branch of AFD).

Original article in Spanish:  https://www.eluniverso.com/opinion/2020/02/03/nota/7721430/ecuador-cambio-climatico

The graph shows the temperature anomalies in 2014-2018. Higher than normal temperatures are shown in red, and lower than normal temperatures are shown in blue.

Climate change, debt relief, debt swaps and climate finance

By Luis Alberto Fierro, Climate Finance Adviser (*)

In recent weeks we have witnessed the increasing impact of climate change, with Hurricanes Irma and Katia in the Atlantic, the heavy flooding in Southern Asia, Mali, Ecuador and other places, the extended wildfires in the United States and Canada, droughts, etc.

Climate-related natural disasters have increased four-fold since 1970:

https://www.economist.com/blogs/graphicdetail/2017/08/daily-chart-19

In particular, the warming tropical waters have increased the intensity of tropical cyclones (hurricanes, typhoons), and thus their destructive power.

At the same time, we have seen that the economic cost of these climate events has increased, given the increase in population, the increase in cities near coastal areas, and the increase in the number of severe climate events.  In some highly vulnerable islands in the Caribbean, the losses can exceed the GDP. Just Hurricane Irma is estimated to have cost $13 billion in losses and damage, with the cost exceeding the annual GDP of several islands.

We are witnessing the following concurrent trends:

a) increasing number of climate-related natural disasters

b) increasing cost of these natural disasters;

c) several developing countries having a public external debt that exceeds their GDP, or are otherwise on an unsustainable debt path.

d) increasing number of "climate refugees", that have to flee their native countries due to climate change related problems (drought, flooding, agricultural losses, desertification, excess heat).

e) developed countries committed in Decision 1/CP.21 that accompanied the Paris Agreement to jointly mobilize at least $100 billion per year annually for climate finance, including mitigation and adaptation activities.

These trends are interconnected.

The 10 top climate vulnerable countries in the world are:

Source: GermanWatch, https://germanwatch.org/de/download/16411.pdf

According to Erlassjahr (based on IMF data and their own analysis) the countries facing the most severe difficulties regarding their public external debt are the following:

"Most threatened by a renewed debt crisis are countries that already have shown high indicators before and could not improve their situations. In the five regional groups this relates to the following countries:

• CIS / CEE: Albania, Kyrgyz Republic, Armenia, Kazakhstan, Montenegro, Georgia, Croatia, Ukraine, Cyprus, Bosnia and Herzegovina, Serbia

• Sub-Saharan Africa: Cape Verde, Mozambique, Ghana, Mauritania, The Gambia, Sudan, Mauritius, Zimbabwe

• Latin America / Caribbean: Brazil, Colombia, Barbados, El Salvador, Antigua and Barbuda, Uruguay, Dominica, Saint Vincent and the Grenadines, Nicaragua, Venezuela

• Asia / Pacific: Bhutan, Samoa, Sri Lanka, Mongolia, Tonga, Pakistan, Lao

• North Africa / Middle East: Tunisia, Jordan, Yemen, Lebanon.

The most affected country groups are small island developing states, post-completion point HIPCs, transformation states and extractive economies"

Source:  https://goo.gl/isHS4Y

Among those countries most affected by unsustainable levels of debt are the small island developing states (SIDS) of the Caribbean, as well as several highly vulnerable Central American nations (Nicaragua, Guatemala and El Salvador).

HIPC refers to the Highly-Indebted Poor Countries debt relief initiative, which was complemented by the Multilateral Debt Relief Initiative (MDRI).  Between the two, they provided debt relief of approximately $75 billion (in end-2014 net present value terms) to 36 low-income highly-indebted countries. (https://goo.gl/C5tJ1i).

HIPC Post-Completion-Point Countries (36)
Afghanistan	Ethiopia	Mauritania
Benin	The Gambia	Mozambique
Bolivia	Ghana	Nicaragua
Burkina Faso	Guinea	Niger
Burundi	Guinea-Bissau	Rwanda
Cameroon	Guyana	São Tomé & Príncipe
Central African Republic	Haiti	Senegal
Chad	Honduras	Sierra Leone
Comoros	Liberia	Tanzania
Republic of Congo	Madagascar	Togo
Democratic Republic of Congo	Malawi	Uganda
Côte d’Ivoire	Mali	Zambia
Pre-Decision-Point Countries (3)
Eritrea	Somalia	Sudan

However, it should be noted that several non-Paris Club creditors (notably, China and the other BRICS) did NOT participate in this debt relief initiative, and, to the contrary, took advantage of the fiscal space opened by the HIPC to provide new loans to these countries, to the extent that several of them are now again facing debt service difficulties. Among these Nicaragua in Latin America, and Ghana, Mauritania, Mozambique, Sudan, and The Gambia in Africa.


Currently, there is a petition to provide a moratorium on debt payments for Antigua and Barbuda, given that the island of Barbuda was completely devastated, and losses mount to $220 million (about 15,7 % of GDP of the entire nation, but probably exceeds the GDP of Barbuda itself). 

Given the situation, I would like to propose the following:

1. Debt Relief, including multilateral and bilateral public debt, for highly-indebted, highly-vulnerable countries (irrespective of their GDP per capita level). Additional grant resources to finance primarily adaptation actions, to enhance climate resilience of infrastructure, and also to strengthen the existing regional and sub-regional catastrophe risk insurance facilities such as CCRIF:

http://www.ccrif.org/

This could be organized under existing international institutions (such as the World Bank or UNDP).

2.  Debt swaps, also open to multilateral and bilateral creditors, for those countries which still have market access and sustainable debt levels.  In this case, proceeds from debt swaps would be invested in results-based mitigation and adaptation actions, with stringent monitoring and evaluation systems, to ensure that the public investments (in lieu of external debt service payments) are effectively channeled.  This could be organized under existing climate finance facilities, such as the Global Environment Facility (GEF) or the Climate Investment Funds (CIF).

3.  Additional climate finance:  currently, multilateral development bank's climate finance for developing countries is estimated at $27 billion per year, and an additional 17 billion is provided through bilateral public finance from developed countries to developing countries.  The OECD and CPI estimated a total of $62 billion in climate finance in 2014, which included private funds mobilized by public institutions.  

In order to reach $100 billion goal by 2020, the OECD projects that public funding should increase to $67 billion (from an average of $41 billion in 2013-2014), with the difference coming from private funds mobilized by public entities.


https://goo.gl/tzts6L

An interesting recent proposal (given the uncertainty surrounding the Trump Administration's position vis-à-vis the Paris Agreement) has been launched by CAP  and WRI that would enable the creation of "America's Climate Fund" that would receive contributions from State and local governments, foundations, other private sources and even individuals (through crowd-funding).

https://goo.gl/93K4hM

Part of the funding provided by the Green Climate Fund, Adaptation Fund, LDCF, GEF, CIF and other climate funds could be directed at developing national climate finance strategies, identifying portfolios of projects, and assisting in the design of projects, to be partially funded through national investment derived from debt relief or debt swaps.

This would enable:

a) decreasing the debt burden of developing countries (especially low-income and highly-vulnerable countries).

b) channeling additional domestic and international resources towards mitigation and adaptation activities, with which hopefully the temperature increase would remain under 2 degrees C, and the impact of climate change wouldn't be as severe.

c) enabling additional climate finance resources to be channeled from developed countries to developing countries, and dedicated to establishing robust M&E systems to measure the results of the resources invested.

This initiative would require support from the larger sources of climate finance, and in particular a champion (such as France's Macron).

(*) Climate Finance and Development Finance Adviser.  These are my personal opinions, and they do not necessarily reflect the positions of any entity with which I am now or have been affiliated.

Bonos Verdes en América Latina

Por Luis Alberto Fierro, Asesor en Financiamiento Climático

• La emisión de bonos verdes ha aumentado mucho en últimos años, alcanzando cerca de $40 mil millones en el 2014.

• A la fecha los principales emisores han sido los bancos multilaterales y nacionales de desarrollo (tales como el Banco Mundial, el Banco Europeo de Inversiones, y el Banco Alemán de Desarrollo, KfW); empresas privadas, y gobiernos (nacionales y subnacionales).
  
• Los bonos verdes fueron creados para financiar proyectos que tuviesen beneficios ambientales y / o climáticos positivos (en mitigación o adaptación).
  
• En América Latina han emitido bonos verdes: NAFIN (México), Acciona (empresa de infraestructura española para proyectos eólicos en México); la Corporación Financiera Internacional (del Banco Mundial, para un proyecto de Seguros Rimac en Perú); y la empresa Energía Eólica de Perú.
  
• Recientemente el Fondo Verde para el Clima (GCF) aprobó una propuesta del BID para el desarrollo de bonos verdes para eficiencia energética en América Latina.
  
• Mas información disponible en: www.climatebonds.net

Innovative instruments for climate finance

By Soledad Aguilar (*), Luis Fierro (**) and Virginia Scardamaglia (***)

Funding to address climate change was one of the main topics of discussion at the recent COP20 in Lima, Peru. One focus of climate negotiations in recent months has been the capitalization of the Green Climate Fund (GCF), which during the COP reached an initial resource mobilization of US $10.2 billion; as well as the efforts to scale up climate finance in order to reach the goal of joint mobilization of $ 100 billion annually by 2020.

It is worth noting that, today, not only developed countries are mobilizing resources but some developing countries are doing so as well. Thus, three members of AILAC announced contributions to the Green Climate Fund: Colombia and Peru will contribute US $ 6 million each; and Panama will provide a million dollars. Other developing countries such as Mexico, Mongolia and South Korea also announced contributions to the GCF.

At the same time, these countries are also recipients of resources for climate change. All the members of the AILAC group, comprising Chile, Colombia, Costa Rica, Guatemala, Panama and Peru, receive funding for mitigation and adaptation. Funding comes mainly from traditional sources such as: multilateral and bilateral development banks, particularly the World Bank (WB), the Inter-American Development Bank (IDB), the Andean Development Corporation (CAF), and the European Investment Bank (EIB); bilateral development agencies; and specialized funds, such as the Global Environment Facility (GEF), the Climate Investment Funds (CIF), and the Adaptation Fund.

The AILAC countries also promote innovative and creative approaches to climate finance. In the current negotiations, members of AILAC are among a group of countries that has proposed that financial contributions should not be limited to the traditional group of donor countries, but others countries in a position to do so may also provide financial resources and other means implementation. Chile, for example, established various trust funds at the Inter-American Development Bank (IDB), and the UNASUR countries jointly provided financial assistance to Haiti after its devastating earthquake, along with material support.

Some of the newer instruments used to finance mitigation and adaptation by governments in the region include the carbon tax introduced by Chile, the first of its kind in the region. Several countries in the region, such as Colombia and Peru, have launched National Climate Funds. In the case of Colombia, the National Adaptation Fund (www.fondoadaptacion.gov.co) was created, which will complement the existing Calamity Fund, designed for emergency assistance in the event of a natural disaster; and in the case of Peru there is the Fund for the Promotion of Natural Protected Areas of Peru (www.profonanpe.org.pe).

Among the investments of funds from public sources, some interesting examples to highlight are the following:

• The European Union (EU) launched the Latin American Investment Facility (LAIF), which provides a grant as part of a financing package which includes hybrid loans, concessional loans, grants, guarantees, equity investments, risk mitigation, and technical assistance from European and Latin American public financial institutions.
• The implementation of a Program for Climate Change and Clean Energy, funded by the German Development Bank (KfW) and CAF for members of that institution in the region.
• The EU, Germany and Norway created the Global Fund for Energy Efficiency and Renewable Energy (GEEREF). Its aim is to anchor new private equity funds for renewable energy and energy efficiency.
• Debt for nature swaps, as was the case of a swap with the participation of Germany and Guatemala,
• CAF and KfW are launching a new Geothermal Development Fund for Latin America. The fund intends to mitigate risk for the development of geothermal energy in Chile, Colombia and Peru, among other countries.

Among the investments of private, or mixed, sources, we highlight the following:

• The Multilateral Investment Fund (MIF) created, along with other public and private institutions, the Eco-Business II biodiversity fund, which invests venture capital for the growth of sustainable ventures in unique business niches, such as organic agriculture, non-timber forest products, sustainable forestry and eco-tourism. The instruments used are quasi-equity, convertible notes and long-term debt, among others.  Several AILAC countries have participated in the operations of this Fund.
• Althelia Climate Fund backed carbon credits for Peru's Cordillera Azul National Park.
• In Peru, the International Finance Corporation (IFC) of the World Bank Group issued its first "Green Bond" denominated in Peruvian soles, with Rimac Seguros.
• Peruvian wind energy producer Energia Eolica SA (an indirect subsidiary of Contour Global) issued a $204 million green project bond with a coupon of 6% and 20 year tenor.
• Another interesting example, although without AILAC country participation, is the Caribbean Catastrophe Risk Insurance Facility, supported by the governments of Caribbean countries and administered by the World Bank, which has allowed the pooling of risks to address natural disasters in the region such as hurricanes. This is a mechanism that could be replicated in other regions that share similar climate risks.

As we have seen, there are many new and creative sources of funding for mitigation and adaptation to climate change in Latin America and the Caribbean, and the countries of AILAC in particular, although thus far with a majority participation of public funds.

In the case of private investment, the necessary measures to attract such resources require a more proactive role of the State (and sub-national entities), to adopt regulations that create the market conditions necessary to attract investment in sectors that are not commercially viable in the absence of specific legislation or regulations (concessions, approvals, incentives, etc.). For example, it is necessary to adopt specific regulations to promote the development of renewable energy; build large infrastructure to prevent flooding; or develop the market for indexed weather insurance.

National development banks play a key role in creating the type of financial instruments needed (such as political risk guarantees and concessional/hybrid lines of credit) to encourage investment by the private sector.

Once the business environment that enables private investment is established, a wide variety of instruments can be used to channel investments, including traditional bonds, equity investments and guarantees, as well as some newer instruments, such as green bonds, catastrophe or contingent bonds, securitization of resource flows for energy efficiency, the development of index insurance for climatic disasters, the development of carbon markets, and the aggregation of climate assets, all of which operate today in developed countries and have some incipient development in AILAC member countries.

(*) Soledad Aguilar, Lawyer (UBA), LLM (London School of Economics). Directs the Graduate Program on Law and Economics of Climate Change, FLACSO-Argentina. She currently leads a consultancy on Innovative Financial Mechanisms for AILAC.

(**) Luis Fierro, Climate Finance Adviser for AILAC. Economist (PUCE), M. A. (University of Oregon), M.Sc. and Ph.D. (c) (U. of Texas at Austin). Profile: www.linkedin.com/in/luisfierro. The opinions expressed do not necessarily reflect the position of the member countries of AILAC.

(***) Virginia Scardamaglia, Master in International Relations and Negotiations (FLACSO), research assistant at the Graduate Program on Law and Economics of Climate Change, FLACSO-Argentina. Works with Soledad Aguilar in a consultancy on Innovative Financial Mechanisms for AILAC.

Cerca de $9.400 millones en anuncios de contribuciones al Fondo Verde del Clima

             El 20 de noviembre en Berlín, 22 países se comprometieron a aportar $9.4 mil millones a la capitalización inicial del Fondo Verde del Clima (GCF por su sigla en inglés), casi alcanzando la meta de $10 mil millones que se habían trazado la Secretaria Ejecutiva de la CMNUCC, Christiana Figueres y la Directora Ejecutiva del Fondo, Héla Cheikhrouhou.

            Por monto absoluto, cabe destacar las contribuciones de Estados Unidos ($3 mil millones), Japón ($1.5 mil millones), Reino Unido ($1.130 millones, al tipo de cambio vigente a la fecha), Francia ($1 mil millones) y Alemania (750 millones de euros, alrededor de $938 millones al tipo de cambio actual).

            En términos de contribuciones per cápita, los más generosos fueron los países escandinavos, incluyendo Suecia ($61), Noruega ($26), Finlandia ($18) y Dinamarca ($13) (ver http://goo.gl/ZlAFH1).

            También se puede destacar que anunciaron contribuciones cuatro países en desarrollo: Corea del Sur ($100 millones), México ($10 millones), Panamá ($1 millón) y Mongolia ($50 mil).  De estos cuatro, los dos primeros son miembros de la OCDE, pero no forman parte del “Anexo II” de países que tradicionalmente han contribuido al financiamiento climático.  Panamá es miembro de la Asociación Independiente de Latinoamérica y el Caribe (AILAC), un grupo de negociación en cambio climático.  Otro miembro del grupo, Colombia, ha ratificado su intención de hacer una contribución.

            Anteriormente, Indonesia había hecho también el anuncio de una contribución de $250.000 para los gastos administrativos del Fondo.

Los países BRICS, pese a que anunciaron que capitalizarán su “Nuevo Banco de Desarrollo” en $50 mil millones, no han anunciado contribuciones al GCF.  Tampoco han anunciado contribuciones hasta fines de noviembre algunos países desarrollados que tradicionalmente habían aportado a los fondos climáticos globales, tales como Australia, Austria, Bélgica, e Irlanda.  Polonia anunció que hará una contribución, pero sin indicar el monto.

            Por su parte, la Junta Directiva del GCF ha avanzado en el cumplimiento de los requisitos previos a la operacionalización del Fondo, con una reunión importante en Barbados en octubre, en donde, entre otros temas, se definieron temas de gobernanza, política de contribuciones, y programación operativa (http://www.gcfund.org/meetings.html).