tracking public and private climate finance

TRACKING PUBLIC AND PRIVATE CLIMATE FINANCE OECD side event at the UNFCCC COP20

Lima, 4 December 2014

Stephanie Ockenden, Policy Analyst Development Co-operation Directorate

Raphaël JACHNIK, Policy Analyst Environment Directorate

0 20 40 60 80 100

Mobilised Private Finance

Private Finance

Multilateral Concessionaland Non-Concessional

Flows

Bilateral Other OfficialFlows

Bilateral OfficialDevelopment Assistance

KnownUnknown

We have only a partial picture of climate-related

finance to developing countries…

Illustrative magnitudes & data gaps

?

?

?

Annual Av., USD, Bn

Initiatives to improve

data quality & coverage:

OECD DAC Task Team

& DAC post-2015

development finance

mandate

International

Development Finance

Club (IDFC)

MDB Joint Approach

OECD-led Research

Collaborative on

Tracking Private

Climate Finance

Climate-related development finance:

Improving the statistical picture…

3

4

Presenting an integrated picture of bilateral & multilateral climate-related development finance flows in 2013…

Commitments of USD 37bn in 2013, reported by DAC members,

MDBs, GEF & UAE

Robustness -> Project-level data

collected and monitored against

standardised classifications,

improves consistency and avoids

double counting

Transparency -> data

publically available

Collecting & compiling project-level data...

Owing to data gaps, USD 37bn represents a low-end range based

on data reported....

• Rio markers identify projects climate change objectives – principal or significant

• Bilateral Official Development Assistance (ODA), 28/29 members + UAE,

• Over 6,000 activities

• Bilateral Other Official Flows (OOF), partial data only for 4 members

Bilateral

• MDB Joint approach - AfDB, AsDB, EBRD, EIB, IDB, IFC, and WB

• Climate-related multi funds – GEF

• Over 1,000 activities

• Gaps remain on data from other funds..

Multilateral

Total 37 billion

13 bn

10 bn

Bilateral principal

Multilateral outflows

3.4 bn

14 bn

Bilateral significant

Non-DAC core contributions

MDB’s capital resources

DAC core contributions

Recipient perspective Provider perspective

Two perspectives can be taken from the statistical system....

Imputed multilateral contributions

Total 37 billion

13 bn

10 bn

Bilateral principal

Multilateral outflows

3.4 bn

14 bn

Bilateral significant

Non-DAC core contributions

MDB’s capital resources

DAC core contributions

Recipient perspective Provider perspective

13 bn

10 bn

Climate-related development finance ≠ UNFCCC Climate

Finance

Rio markers are descriptive, allowing for an approximate

quantification of financial flows

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Future improvements underway for 2015:

4 December 2014 Tracking private and public climate finance

Quality and Coverage

Use of data for reporting

Broader measures

• On bilateral ODA and OOF

• Increasing data collection from multilateral providers.

• Advancing collaboration between the OECD, MDBs & others

• Improving data and understanding from a recipient perspective

• Developing the evidence based to support more quantified reporting

• Improving imputed multilateral contributions

• Improving coverage of data beyond ODA, including on amounts mobilised from the private sector through public actions (e.g guarentees)

Towards improved data and methods for estimating mobilised

private climate finance

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+/- USD 35 billion per

year

Energy efficiency

Transport

Agriculture

Water Waste

Industry

Data and methodological challenge

10 4 December 2014 Tracking private and public climate finance

Source: Caruso R. and R. Jachnik (2014), Exploring potential data sources for estimating private finance, OECD Environment Working Paper http://dx.doi.org/10.1787/5jz15qwz4hs1-en

Renewable energy

Tracking private climate finance Estimating mobilisation

Bilateral public guarantee

Multilateral public loan

Private loan

Private equity

Domestic public

support policy

Bilateral grant and capacity building

http://dx.doi.org/10.1787/5jz15qwz4hs1-en





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Measuring private finance mobilised by public finance in OECD DAC statistics


Scope

Methods for public finance instruments aimed at mobilising private capital To date: syndicated loans, shares in collective investment funds, guarantees

Causality

Complex to measure statistically

Need for assumptions that: Reflect reality Are conservative Are commonly agreed Vary by financial instrument

Source: On-going OECD DAC work on the mobilisation effect of public development finance

Example of DAC method for guarantees

Amount mobilised defined as face value of debt/equity instrument guaranteed

· Causality: assumption that private financier would not have participated without a public guarantee

· Attribution: pro-rata-based in case of co-guarantors

Attribution

Rules and methods need to vary by financial instrument

http://www.oecd.org/development/stats/mobilisationeffectofpublicdevelopmentfinance.htm






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Estimating the mobilisation effect of public finance and policy interventions


Source: Haščič I., M. Cárdenas Rodríguez, R. Jachnik, J. Silva and N. Johnstone (2014), Public interventions and private finance flows: empirical evidence from renewable energy financing, OECD Environment Working Paper (forthcoming)

Econometric simulation of the effect of public interventions renewable energy private finance flows (2000-2011) from developed to developing countries

41.5%

15.7%

14.8%

3.3%

2.4%

0% 10% 20% 30% 40% 50%

All public interventions

North-South bilateralpublic finance

Multilateral public finance

Feed in tariff indestination country

Renewable energy quotain destination country

Testing methods: exploratory results

Likely underestimate

Remaining % could be explained by country and market conditions.

Currently only possible for renewable energy (mostly wind and solar) and at aggregate level

Missing suitable data on key variables e.g. domestic investment conditions

In the short-term

· Test and implement practical methods

· Provide transparency on underlying definitions, assumptions and limitations

In the longer term · Converge on definitions

· Build data systems e.g. private co-financing data

· Improve and standardise methods

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Ways forward


OECD DAC Statistics on

Climate-related Development Finance [email protected]

http://oe.cd/Riomarkers

[email protected]

www.oecd.org/env/researchcollaborative

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Thank you





mailto:[email protected]

http://www.oecd.org/env/researchcollaborative