Institutional Analysis of MRV of Financial Support to Developing - - PowerPoint PPT Presentation

Institutional Analysis of MRV of Financial Support to Developing Countries

Potential Design Options and Challenges g p g

Joint Research conducted by Koji Fukuda ‐ Policy Researcher, Climate Change Group, IGES Makoto Kato ‐ Principal Researcher OECC Makoto Kato ‐ Principal Researcher, OECC

N.B: The findings, interpretations, views, and conclusions expressed in this presentation are ti l th f th th i th i l iti d d t il

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entirely those of the authors, in their personal capacities, and do not necessarily represent the views of any institution, IGES, OECC, or the Government of Japan.

Research Background, Purpose, and Methodology

Background:

• MRV system  Major agenda in climate change negotiation

MRV system  Major agenda in climate change negotiation

• n future regime. Discussions involves how to design and
• perationalize a system, and introducing possible guidelines
• 2 aspects of MRV (Bali Action Plan 1(b)(ii):

(1) MRV of mitigation action, and (2) MRV of Support

• Current MRV‐related negotiations center around mitigation

per se, but not much progress on the other side of MRV: MRV

• f Support
• Previous Researches (OECD, WRI, IFIs etc) have been

conducted and it mostly focus how they can utilize existing systems, and establishment of a robust transparency system based on them.

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Purpose:

• The research focuses on MRV of support provided to

developing country Parties, particularly the financial aspect of support and aims to fill in the gap with existing literatures and support , and aims to fill in the gap with existing literatures and negotiations by conducting systematic analysis of MRV, clarifying the definitive stages of support provided to clarifying the definitive stages of support provided to developing countries, and analyzing potential institutional designs with different sets of scope for transparency that MRV designs with different sets of scope for transparency that MRV aims to achieve along these support stages.

• The research also argues that phased approach has the most

The research also argues that phased approach has the most potential to move negotiations forward in view of the ultimate goal of capturing broad aspects of climate finance as a whole .

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Methodology:

• Design options by setting different scopes of transparency to

be achieved by MRV

• Evaluation by setting a set of criteria

(advantage/disadvantage by options, identification of reporters, existing systems that can be utilized or applied.

• Expert Interview/Questionnaire to gain feed back on

discussion points, operationability, and acceptability (Both developing and developed country negotiators, domestic administrators, donors etc)

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Potential Institutional Options for MRV of Support

D i O ti 1 D i O ti 2 Design Option 1

Scope of Transparency: Coherence between Financial Pledge and Amount Disbursed/Mobilized by Donors

Design Option 2

Scope of Transparency: Amount Disbursed/Mobilized by Donors and Contents of Supported Actions/Plans Disbursed/Mobilized by Donors Supported Actions/Plans

Supported Actions/Plans

Annex I

Component A

Non Annex I

C t B

Financial Pledge Disbursement /Mobilization Budget Allocation

/

Annex I (Donors) Non‐Annex I (Recipients)

Component B Component C

Impacts/ Effects

Design Option 3

Scope of Transparency: Coherence between Amount Disbursed /Mobilized g p Coherence between Amount Disbursed /Mobilized and Budget Allocated within Recipient Countries

Design Option 4

Scope of Transparency: p p y Amount Disbursed/Mobilized and Mitigation Effects Generated 5

Evaluation Criteria for Design Options for MRV of Support

• The criteria are selected by highlighting whether the design options can be operational in
• The criteria are selected by highlighting whether the design options can be operational in

a practical manner.

• It does not reflect political acceptability by negotiating parties.

Evaluation Criteria Definition Scope Scope of matters to be disclosed for transparency, attached to stages of finance Predictability Predictability of financial support that may be assessed by giving transparency C i t Consistency with timeframe of current and future reporting Consistency system Collectability The extent of how easily data can be available, accessed and collected Accuracy Level of accuracy of collected information on support Completeness of areas and kind of support (eg funding Completeness Completeness of areas and kind of support (eg funding sources) Comparability Comparability to coordinate and adjust different kind of data, for comparison and aggregation (and avoiding double Comparability for comparison and aggregation (and avoiding double counting)

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Common Elements, Matters for Discussion, and Comments on the Design Options g p

1. Common Elements: S l f MRV d d f T d

• Scale of MRV system depends on scope of Transparency and

accuracy of

• Importance of avoiding complicated procedure and high
• Importance of avoiding complicated procedure and high

transaction costs 2 Maters for Discussion: Option 3 and Fungibility in Recipients

• 2. Maters for Discussion: Option 3 and Fungibility in Recipients
• If international support replaces existing domestic budget, and

the domestic budget can be diverted for different purpose(how the domestic budget can be diverted for different purpose(how the finance is additional ? Impact of support for mitigation?)

• Efforts to address climate change is made in the context o SD 

g If diverted domestic budget is used for other development priorities, can it be still supporting SD?

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3. Expert Questionnaire and Interview D fi iti f Cli t Fi <Definition of Climate Finance>

• Various comments were found: all kinds of finance directed to

climate change related area/finance to contribute to 2 degree climate change related area/finance to contribute to 2 degree target/Financial commitment under Art.4 <Gradual Development of MRV system> <Gradual Development of MRV system>

• Relying on the existing systems may provide advantages of

smooth start and ensuring a certain level of accuracy, the issue smooth start and ensuring a certain level of accuracy, the issue

• f completeness (ie. wider finding sources) remains. Some

pointed out that the coverage of MRV system should be gradually enlarged, by improving information collection system.

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Recommendation on Evaluation of Design Options

G d l D l t f MRV S t Gradual Development of MRV System

• Narrow definition : System to ensure transparency of support

provided by AXI to NAI under Art 4 3(Option 1) provided by AXI to NAI under Art. 4.3(Option 1)

• Wider definition: Providing global image of support to

developing countries Wider scope of transparency developing countries Wider scope of transparency

• Some options remain technical and institutional challenges

Phased Approach for Larger Coverage of Transparency Phased Approach for Larger Coverage of Transparency  More complete/comprehensive information collection (Private sector south south cooperation etc) (Private sector, south‐south cooperation etc)  System development and strengthening (reporting system, formats and methodologies) and capacity‐building for formats, and methodologies) and capacity building for developing countries  Confidence building among parties g g p

* While it is not defined as matters to be covered by “support”, it is helpful to share how domestic finance are being used, in line with international finance.

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Remaining Issues and Way Forward

I tit ti l A t f Cli t Fi

• Institutional Arrangements of Climate Finance

 Support through GCF and MRV scope  R l d f i f SC ( 112)  Roles and function of SC (para 112)

• MRV of Support other than Finance

Support = Finance + α How MRV should be done in case of technology and capacity‐ b ildi ( ti t it bl f tit ti l ti ) building (sometimes not suitable for quantitative evaluation)

• Tools/Vehicle of MRV

W t D ib t i d d t f f t Ways to Describe transparency is dependent of format

• Scope of Transparency

 k h f f  Linkage with MRV of mitigation actions: How MRV of support can be placed?

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Thank you very much! Thank you very much! fukuda@iges or jp fukuda@iges.or.jp kato@oecc.or.jp

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Potential Institutional Options for MRV of Support

Info Required for MRV Reporting Constituency(ies) Existing System Scope of Transparency Tiers/ Types of NAMA to be supported 【Design Option 1】 Tier1: Collective  Total Pledged Amount Annex I Public Finance (Bilateral) 【Design Option 1】 Grasping Coherence between Financial Pledge and Amount Disbursed/Mobilized by Donors Tier1: Collective Progress towards Long‐ term Financing Pledge  Total Pledged Amount ($100billion)  Amount Disbursed / Mobilized (Aggregate) Annex I Public Finance (Bilateral) NC, BR, OECD/CSR Public Finance (Multilateral) Annual reports, phase reports(tranche), Private Finance： UNCTAD Report, etc Tier2: Progress towards Individual Financing  Pledged Amount  Amount Disbursed / Annex I (Comparison of Volume) Pledge Mobilized (Individual) 【Design Option 2】 Grasping the Amount Disbursed/Mobilized by Donors and the Contents of Supported Actions/Plans Supported Actions/Plans (projects, programs, sectoral supports, LEDS, etc)  Amount Disbursed / Mobilized  Contents of Supported Actions and/or plans Reporting by each financial channel 1)GCF 2)Annex I 3)Multilateral IFIs Public Finance (Bilateral) NC, BR, OECD/CRS, individual PD・sectoral support documents Public Finance (Multilateral) individual PD・sectoral support documents, annual reports Private Finance：UNCTAD Report etc Supported Actions/Plans (Disclosure of Contents of Support) etc) 3)Multilateral IFIs 4)Private Sector Private Finance：UNCTAD Report, etc 【Design Option 3】 Grasping Coherence between the Amount Supported Actions/Plans (projects, programs,  Amount Disbursed / Mobilized (Amount sent to the Treasury of 1)GCF 2)Annex I 3)Multilateral IFIs 【Information from Annex I】 Public Finance (Bilateral) Annex I NC, BR, OECD/CRS, individual PD ・ sectoral support Disbursed/Mobilized and the Budget Allocation within Recipient Countries (Comparison

• f

Financial Volume) sectoral supports, LEDS, etc) Recipient s)  Budget allocated domestically to the Target Actions / Plans by the Recipients 4)Private Sector 5)non‐Annex I documents Public Finance (Multilateral) individual PD・sectoral support documents, annual reports Private Finance：UNCTAD Report, etc 【Information from non‐Annex I(recipient)】 Budget request・budget allocation Budget request budget allocation 【Design Option 4】 Grasping the Amount Disbursed/Mobilized and the Mitigation Effects Generated (MRVi h I f Project‐based Support  Amount Disbursed / Mobilized  Calculated Mitigation Effects (quantitative) Annex I Non‐Annex I Public Finance (Bilateral) NC, BR, OECD/CRS, individual PD・sectoral support documents Public Finance (Multilateral) individual PD・sectoral support documents, annual reports Private Finance：UNCTAD Report, etc b d b d / bl ( l l) (MRVing the Impact of Support) Program‐based Support Sector‐bases Support  Amount Disbursed / Mobilized  Calculated Mitigation Effects (quantitative, qualitative) Annex I Non‐Annex I Public Finance (Bilateral) NC, BR, OECD/CRS, individual PD・sectoral support documents Public Finance (Multilateral) individual PD・sectoral support documents, annual reports Private Finance：UNCTAD Report, etc Supporting Low Carbon  Amount Disbursed / Annex I Public Finance (Bilateral) Suppo t g o Ca bo Development Plans and Strategies(LEDS)

• u t

sbu sed / Mobilized  Calculated Mitigation Effects (qualitative) e Non‐Annex I ub c a ce ( ate a ) NC, BR, OECD/CRS, individual PD・sectoral support documents Public Finance (Multilateral) individual PD・sectoral support documents, annual reports Private Finance：UNCTAD Report, etc

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Major comments from Questionnaire and Interviews

<Scope of Transparency> <Scope of Transparency>

• While it is desirable to set a wider scope of transparency, it is

realistic to limit the system which can ensure accuracy of realistic to limit the system which can ensure accuracy of information subject to MRV. <Predictability> y

• It is important issue, but it is not clear if the predictability of

finance can be assured by MRV system. <Consistency>

• In practice, t is essential to coordinate timeframes of information

collection and reporting. If wider scope of transparency are sought, additional coordination is necessary. <Collectability >

• When developing countries are involved as information

id ( ) h i f i ll i h ld b i l providers(reporters), the information collection should be simple and easy.

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<Accuracy>

• It is realist that MRV system should rely on currently available

It is realist that MRV system should rely on currently available systems to collect accurate information. For information not covered by the current systems, it is important to gradually improve the level of accuracy. <Completeness >

• Financial sources to be covered highly depends on the definition
• f “climate finance”. In order to capture a global image of finances

f iti ti ( d d t ti ) it i i t t t i l d for mitigation (and adaptation) , it is important to include as many kinds of finances as possible. However, it may raise controversy on acceptability as well as technical challenges acceptability as well as technical challenges. <Comparability>

• Shoud be prioritized For those data that are not readily available

Shoud be prioritized. For those data that are not readily available for comparison/aggregation, methodologies should be established.

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