National Economic, Environment and Development Study (NEEDS) for Climate Change Project
The Subsidiary Body for Implementation, in its consideration of the fourth review of the financial mechanism of the Convention at its twenty-eighth session in June 2008, requested the secretariat to provide information to non-Annex I Parties on the assessment of financing needs to implement mitigation and adaptation measures. In response to this mandate, the secretariat established the National Economic, Environment and Development Study (NEEDS) for Climate Change. The following countries have requested assistance from the secretariat of UNFCCC and to conduct this study: Costa Rica, Egypt, Ghana, Indonesia, Jordan, Lebanon, Maldives, Mali, Nigeria, Pakistan and the Philippines.
The outcomes of the NEEDS are expected to provide useful inputs to the discussions by Parties to determine the financing requirements of non-Annex I Parties to implement mitigation and adaptation measures to address climate change. Participating countries are also providing information on financial and policy instruments available to support these measures. The present report provides a summary of the initial inputs received from the first seven case studies under NEEDS. A full report is expected to be released in the first half of 2010 once all participating countries submit their final inputs.
The purpose of this study is to facilitate the identification of priority mitigation and adaptation measures by the participating countries, in line with their national sustainable development strategies, and how these measures can be effectively supported financially by public and private sector funding, multilateral initiatives, carbon markets and other sources of funding or investment. Therefore, the main objectives of the NEEDS are to support the participating countries in:
1. Selecting key sectors for climate change mitigation and adaptation measures, on the basis of priorities identified in the national communications and in national development plans;
2. Assessing the financing required and received to implement mitigation and adaptation measures in the key sectors selected in 1. above and identifying appropriate financial and regulatory instruments to support these measures;
3. Raising awareness and facilitating informed consensus among government agencies on the policy actions required to mobilize finance and investment in mitigation and adaptation measures.
Estimates of the cost of implementing measures under abatement scenarios at the 2020 and 2050 time horizons and, in one instance, at a 2030 time horizon were provided, either economy wide or by priority sector. Key priority sectors addressed by participants included: energy; forestry; agriculture; water and health.
- Overall total costs for implementing priority adaptation and mitigation measures ranged from approximately USD 721.13 million by 2030 to USD 6.8 billion by 2012, as reported by some countries.
- In one case, the average annual abatement cost of all potential measures until 2030 amounted to EUR 12.84 billion.
- Differences in the level of funding allocated were dependant on the countries unique climate change context, identified vulnerabilities, scope of activities planned, as well as how developed existing climate change policies, instruments and mechanisms were at present (for example, national climate change strategies).
- Indonesia invests 0.9 to 1.9% of the country’s total budget; Costa Rica has contributed USD 400 million since mid 1990s to reduce deforestation; The Philippines provided USD 1.576 billion for climate change activities from 2004 – 2008.
- While the financial mechanism under the Convention was noted as a potential financing source to support climate change mitigation and adaptation, countries stated that the level of financing is believed to be variable or difficult to rely on for short and long term planning in the current situation, given that the financial mechanism relies on voluntary contributions from developed countries.
- Although countries participating in the NEEDS identified international financial support as the crucial component for implementing effective mitigation and adaptation measures, their national budgets continued to provide significant sources of financing at the local level in the absence of strong and predictable flows of international funds, stretching national economies to limits that threaten to compromise sustainable development.
- Countries varied with regards to the level of national/local funding mobilised. Limited national investments in climate change activities in the majority of the participating countries reflect the financial vulnerability created by climate change in the developing world. The major sources of external funding mentioned by countries as actual or potential sources of funding included United Nations Environment Programme (UNEP), United Nations Development Programme (UNDP), Global Environment Facility (GEF), Funds under the Convention, Clean Development Mechanism, Adaptation Fund, Special Climate Change Fund, multilateral agencies like the World Bank, the Asian Development Bank, the African Development Bank, the Arab and regional development funds, and the European Community; as well as bilateral agencies like the Swedish International Development Cooperation Agency and the United States Agency for International Development.
- Some countries reported good examples of innovative in-country initiatives, like the Indonesian Low-Carbon Development Fund. This fund aims to manage the public and private sources of funding that support low-carbon development, by leveraging private funding.
- Participating countries recommended that sector specific and legislative reform at the national level be encouraged in order to promote public and private sector partnerships and enhance private sector involvement. For example, Ghana suggests the introduction of climate sensitive building codes as an example of such legislative measures while design criteria for urban planning and spatial zoning of human settlements are suggested by Costa Rica. Other policy instruments identified by participants included taxes on fossil fuels and research and development subsidies for technological change.
- Several participants in the NEEDS have identified high-level cross-sectoral commitment as a key ingredient to facilitate the integration of climate change priorities into their development strategies. Consequently, the establishment of national committees on climate change is a priority in countries where such mechanisms do not already exist, as is the case reported by Egypt.
- Countries have recognized the urgent need to mainstream climate change activities into national development plans. For example, Indonesia has a National Action Plan on Climate Change that acts as a roadmap for mitigation actions and intends to incorporate more robust climate change policy into the forthcoming Medium Term development plan (2009 – 2014).
- In the case of Mali, although still in the process of developing a specific national climate change strategy, its Strategic Framework for Growth and Poverty Reduction supports implementation of National Environmental Protection Policy. This framework is regarded as the institutional tool for explicitly integrating climate change activities into the country’s national development priorities in the future.
- Capacity and information constraints must be addressed to enable progress in climate change mitigation and adaptation. Some countries have recommended the establishment of an independent national committee for scientific and technological advice. Such a facility could act as a think tank for governments to define and prioritize climate change needs and ascertain the availability of policy instruments to meet those needs.