Module 5

01
Area of Expertise

Budgeting for climate change, and the role of parliaments and parliamentarians in this process, comes with many challenges.  In addition to issues concerning coordination, reporting and so on, two principal problems stand out.

Firstly, most countries – and in particular developing countries - are struggling to secure sufficient funding to undertake necessary mitigation and adaptation efforts.  The World Bank puts the cost of combating climate change in developing countries alone at USD 100 billion a year.  While a wide range of financing mechanisms is being made available (see below), the current flow of funds is still too weak to meet the growing needs.  In short: there’s a money problem.

Fair Share: Climate Finance to Vulnerable Countries

Major funding gaps exist where climate action is concerned.  This is especially so for many of the countries most vulnerable to climate change.  Ethiopia’s climate change strategy calls for annual spending of $7.5 billion, but available national budgetary resources are in the range of $440 million per year.  (Eshetu et al., 2014). Uganda’s draft climate change policy is estimated to cost $258 million per year, but here too current public spending sits at around $25 million per year (Tumushabe et al., 2013).

These are two of many examples.  Without significant increases in available climate finance, action on climate change – both adaptation and mitigation – will fall far short of what is needed.

(Source: http://www.agora-parl.org/resources/library/fair-share-climate-finance-vulnerable-countries.)

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02
Discussion Questions

- Ask your participants to describe the budgetary process in their country.  What is the level of involvement of parliament?  What action have your participants taken in the past with regard to the budget? 

- How is climate action being funded?  How are budgetary decisions on climate action made, and what committees or departments are involved? 

- Is there a National Climate Fund (or similar entity)?  If yes, how does it function and what results have been achieved to date?  If no, is there room for such an entity?  How could parliament help launch an effective, credible and transparent fund?

- Are your participants aware of any externally funded projects and programmes in their area? What can they do, as MPs, to further attract international and private sources of climate finance?

 

03
Parliamentary Action Points
  • Improve risk assessment standards for adaptation action
  • Reflection
  • Make sure relevant legislation is employed to the fullest

04
Further Resources

UNDP/World Bank Climate Finance Options (CFO) Platform  

The UNDP/World Bank Climate Finance Options (CFO) Platform provides information on climate finance for developing countries, including climate funding source profiles and tools and guides for decision-makers.   It is also building an interactive community of practice to share South-South experience and best practices in climate action for better development impact.
 

Climate Finance for the Middle East and North Africa: Confronting the challenges of climate change

Responding to climate change presents challenges for the oil producing and water stressed countries of the Middle East and North Africa (MENA), but also opportunities to forge new paths to more inclusive and effective development. This brief considers the scope and objectives of dedicated international public finance directed to the region, drawing on Climate Funds Update data.
 

Mobilising investment in energy efficiency: Economic instruments for low‐energy buildings

This IEA analysis addresses the fact that, to date, relatively little effort has been directed toward evaluating how well economic instruments work. Using the buildings sector to illustrate how such measures can support energy efficiency, this paper can help policy makers better select and design economic instruments appropriate to their policy objectives and national contexts.

 

Blending Climate Finance Through National Climate Funds: A Guidebook

This publication focuses on the design and establishment of National Climate Funds to support countries to collect, coordinate, blend and account for climate finance.