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Climate Finance Essentials

Module 01

Climate Finance Essentials
Lesson 3

Country Readiness to Use Climate Finance
Presentation Script

Climate Finance Essentials
Lesson 3 – Country Readiness to Use Climate Finance

Presentation Script

1. Home

Welcome to Lesson 3 of eCourse for climate finance. Click Next to begin.

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Climate Finance Essentials
Lesson 3 – Country Readiness to Use Climate Finance

Presentation Script

2. Introduction

In this lesson, you will learn about the types of national systems and
capacities needed to effectively use climate finance. You will understand
what support is needed to improve capacity to establish nationallyappropriate systems to manage climate finance. You will also become
more familiar with the various tools, mechanisms and modalities
available from different development partners in helping countries with
their climate finance readiness.

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enhance resource management and coordinate international flows. Tangible activities of readiness Climate finance readiness is a term used to describe processes at the regional.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 3. For example. Page 3 of 38 . a readiness initiative aims to strengthen climate finance allocation. national and local levels to prepare for climate finance.

Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 4. There are four components: capacities of countries to plan for. in ways that are catalytic and fully integrated with national development priorities. Page 4 of 38 . both internationally and domestically. deliver and monitor climate finance. Understanding climate finance readiness There may not be a silver bullet to achieving climate-finance readiness. but the United Nations Development Program (UNDP) has conceptualized the common elements of readiness and the key national capacities required to build and strengthen these elements. access.

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take a moment to reflect on your own understanding of climate finance readiness.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 5. Page 6 of 38 . Reflection Question Before we continue.

3) deliver. you will review the four main components to readiness the capacities of countries to 1) plan for. Page 7 of 38 . 2) access. Understanding climate finance readiness In this lesson. You will begin by examining why planning of climate finance is so critical and what national systems and capacities could help pull all of these pieces of information together to formulate a financial plan for effectively using climate finance. and 4) monitor climate finance.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 6.

In doing so. Page 8 of 38 . efficient and equitable use of climate finance. countries can plan how to integrate resources and sequence them over time. Planning also includes assessing climate finance flows and allowing policymakers to match their priorities with available resources.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 7. Planning for climate finance readiness Planning for the supply. management and use of climate finance resources is a fundamental step in ensuring the effective. The overall aim of the planning component of climate finance readiness is to strengthen financial planning capacities to ensure integration of climate finance within national development and budgetary processes.

A starting point is to examine existing resources are already being used for climate change activities. Planning to use climate finance effectively draws from strong national systems and capacities to identify the resources required for the chosen priority activities and draft the financial plan for managing such flows.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 7. Planning for climate finance readiness In order to conduct financial planning of climate finance. low-carbon and climate-resilient growth strategies. Page 9 of 38 . Many countries are already achieving this by preparing green. countries will first need to arrive at prioritized climate actions in line with overarching development priorities.1. Consider these key questions to help plan for climate finance.

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] A climate public expenditure and institutional review (or CPEIR) that assesses current on-budget climate finance expenditures across sectors.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 7. An investment and financial flows assessment (I&FF) creates a baseline of existing expenditures at the sectoral scale and maps this on to priority climate-related activities to identify gaps. Planning for climate finance readiness The following tools can support the process of identifying the resource flows required for priority activities and the plan associated with sequencing such flows. CPEIRs have provided insight into the importance of finance flowing through national budgets and helped raise Page 11 of 38 .2. Click on each image for more information. I&FFs are a way to forecast future investment flows needed to reach a given set of climate goals and priorities.

The World Bank has developed an e-learning course on Investment Planning towards Low Carbon.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script awareness of climate finance as not just an environmental issue.] Visit the website: www.] 7.climatefinanceoptions.org “. Climate Resilient Development. Planning for climate finance readiness Page 12 of 38 . but in fact one that straddles many sectors of a country's economy.3. which gathers experiences from the first years of the Climate Investment Funds (CIFs) to respond to the needs of governments and other actors regarding how to prepare and finance climate change strategies. policies and plans.

such capacities for climate finance readiness might include directing finance toward climate change activities. For those domestic projects being funded by public climate finance that is on budget. This requires knowledge of the international climate finance flows. but also shifting funding of existing activities that have detrimental climate impacts (such as fossil fuel subsidies) to more climate-friendly investments.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script Another central capacity in the climate finance planning process is matching supply to demand. Page 13 of 38 . This process includes the ability to estimate costs for priority actions and then match those costs to different sources.

There are currently two new access modalities which have emerged over the years. Page 14 of 38 . Accessing climate finance Also vital for climate finance readiness is the capacity for countries to be able to directly access resources from different sources.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 8. and then blend and combine those resources at the national level in order to access a wider range of financial instruments. We will now briefly introduce the traditional access modality and learn how this compares to these two emerging access modalities. these are “direct access” and “enhanced access” to climate finance.

An example of this traditional access mode is the Global Environment Facility or GEF. multilateral access is when eligible countries work through multilateral implementing entities (UN agencies or Multilateral Development Banks) which handle strategic and operational management and implementation of the resources. Accessing climate finance Traditional. Click on the GEF logo to learn more.1. Click on each entity to see expanded definitions of each body. Page 15 of 38 . Activity execution is then shared at the international and national level.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 8. The graphic shown here visually explains this traditional access mode. where eligible countries access resources through a GEF Agency.

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safeguard compliance and implementing and executing capacities in order to directly access finance.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script Direct In contrast to the traditional access mode you just learned about. Page 17 of 38 . Activity implementation and execution is then handled at the national level. As you can see. direct access allows accredited entities from recipient countries to access financial resources directly from the Fund without passing through an intermediary institution like an agency. using direct access modalities requires national or subregional entities to have strong fiduciary capacities. Click on the Adaptation Fund logo to learn more. The Adaptation Fund pioneered direct access to finance through the use of National Implementing Entities.

Click on the logo to learn more. including legal arrangements for holding funds in trust.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script Enhanced Enhanced access mode shifts strategic fund management to the national domain. The rest of the implementing and executing responsibilities are fully devolved to the national level implementing and executing entities. with some international fund oversight. Page 18 of 38 . You will see that enhanced access will likely require more substantial financial management capacities. Enhanced access mode is anticipated as an option for the Green Climate Fund. and governance systems to oversee allocation and report on the use of resources.

2. Transferring the ability to combine and blend climate finance to the national level increases recipient country ownership over how finance is used and in what form.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 8. they then need to be able to blend and combine those resources at the national level in order to access a wider range of financial instruments. Accessing climate finance As countries directly access resources from different sources. Both combining and blending require specific financial mechanisms and capacities at the national level. Page 19 of 38 .

An example is The China CDM Fund. which is a national fund provides grants funded by revenues from CDM projects. such as a national development bank. and national climate fund or a simple trust fund. earnings from CDM business operations. Click on the link to learn more Page 20 of 38 . where resources are allocated together side by side. and other sources.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script Combine Combining climate finance means bundling different types of finance within a single project. Resources can be combined through a national financial mechanism.

National systems can also be blended to benefit national capacity to access heightened climate finance. may be reformulated into different financial instruments (for example lowering interest rates or extending repayment period of a loan). Page 21 of 38 . Banking capacities are therefore critical.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script Blend Blending climate finance means using one resource to restructure the terms of another resource. A clear example is the Development Bank of Southern Africa's management of the South Africa Green Fund . and depending on the nature of the blending. more complex financial capacities. Resources must be held on an entity's balance sheet together. Blending requires different.click the box to learn more.

effective use of climate finance requires recipient countries to be able to formulate bankable project and program proposals. Page 22 of 38 .Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 8. or whether combining or blending resources. Specific national capacities for accessing finance Regardless of the mode of accessing finance.3. Review the range of national capacities listed here that will serve countries in accessing climate finance.

Delivering climate finance resources requires national systems that provide financial oversight and management. contracting or hiring. as well as execution services such as procurement. This is a key component of ensuring that climate finance contributes to effective and transformative actions at the national level. We will now take a look at each capacity and the entities and systems required for each. Delivering climate finance The third component to climate finance readiness involves the capacities to deliver finance and implement and execute activities at the regional. Click on each button to learn more.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 9. Implementation and execution services. Page 23 of 38 . There are two core capacities required for climate finance to be delivered effectively. national or local level. Coordination among entities is essential to ensure that project-level activities are in line with national development planning and strategies at the macro level.

overseeing and appraising programs/projects for the provider of finance. They may also be involved in blending and combining finance. Capacity is also needed within the public financial management system to deliver resources to implementing partners.click the box to learn more. whether line ministries and government agencies or external contractors.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script Implementation Implementing entities are responsible for identifying. A clear example of an Implementing Entity is the Bangladesh Climate Change Resilience Fund . Page 24 of 38 . and to ensure that resources are spent on effective and sustainable mitigation and adaptation measures.

Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script Execution Executing entities receive funding to undertake programs of work and may utilize sub-contracting agreements to complete these activities. particularly in the context of ensuring capacities of direct access entities. Page 25 of 38 . The require transparent procurement procedures. There is a major emphasis on preparing entities to undertake either implementation and/or execution roles. reporting and project management capacities.

Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 9. builders. One example is vocational training for professionals like architects. engineers. One tactic for capacity development is utilizing local centers of expertise in the functional areas where more training is required. and clean energy installers.1. Another example is individual guidance related to project design choices. contractors. Delivering climate finance Capacity development is often needed to develop a local talent pool ready to undertake the work of funded climate projects. such as technology selection or supply chain management. Page 26 of 38 .

coordination systems at the project-level are essential. Central to coordination is preventing groups from being marginalized from climate finance opportunities. One approach is to entrust coordination to a multi-stakeholder steering committee rather than a national level body. Strong coordination minimizes redundancies and ensures climate finance flows are in line with national strategies for low-carbon and climate-resilient growth.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 9. A good example is projects that Reduce Emissions from Deforestation and Land Degradation (REDD) which involve a large number of stakeholders at the project scale .2. often in multiple forms and some with national budget implications.click on the box to learn more Page 27 of 38 . Delivering climate finance With multiple sources of finance.

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as such.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 10. Monitoring climate finance The last important element to effectively using climate finance is monitoring and evaluating the impact of climate finance on mitigation and adaptation goals. More climate finance support also becomes readily available if positive development and climate results can be demonstrated . Page 29 of 38 . capacities and national systems for climate finance monitoring and evaluation are critical to have in place as part of readiness preparations to effectively use (and catalyze increased flows of) climate finance.

Central to capacities for monitoring and evaluation is a system to record and calculate results. As data on financial flows is collected.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 10. national development priorities. and using these inputs in evaluation analysis of climate finance to determine the impacts of the investment on climate. for what purposes and how effectively they abate GHG emissions and/or build resilience. decision-makers can shore up weaknesses. Monitoring and evaluation are critical steps for helping decision-makers come full circle in a dynamic planning process for utilizing climate finance. Page 30 of 38 .1 Monitoring climate finance Climate finance monitoring and evaluation is needed to understand what financial resources are flowing where. poverty.

2 Participant Question That's correct! All of the above are correct! Page 31 of 38 .Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 10.

Page 32 of 38 . developing indicators and assessment processes help countries determine whether climate finance is being used effectively to meet set-out environmental. Also.3. Monitoring climate finance As part of climate finance readiness preparations. stay tuned for future e-learning courses that will specifically explore this topic. economic and social objectives. Building database systems and information-collection processes to record results from climate finance is vitally important. With the growing demand to learn more about climate finance monitoring and evaluation. countries can get ready to monitor financial expenditures on climate change activities flowing within and outside the national budget.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 10.

in practice.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 11. Summary of national capacities required for climate finance readiness Recapped here are the four components of climate finance readiness. build on existing institutions and programs to manage resources at the national level. Applying this framework for climate finance readiness can. Page 33 of 38 .

How does your country handle ongoing climate finance readiness management? Page 34 of 38 . take a moment to reflect on any existing structures countries are using to pull together all of their climate finance readiness needs.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 12. Reflection Question Now.

accessing and implementing climate finance. Many national climate funds are themselves lacking the resources and support necessary to manage climate finance. Challenges and opportunities: national climate funds Many countries are creating National Climate Funds to help handle ongoing climate finance readiness management.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 13. The message is that climate finance readiness does not necessarily require countries to create new organs for effectively using climate finance. Page 35 of 38 . as well as occupying fiduciary roles. they are not necessarily the “silver bullet” solution to effective use of climate finance. This is an opportunity for countries to turn to existing institutions that already have the capacities to carry out the multiple roles a national climate fund would undertake. While national climate funds can serve the multiple roles for planning.

World Bank climate finance readiness initiatives The World Bank is playing a significant role in supporting countries with their climate finance readiness. mechanisms and approaches to planning. These ongoing programs shown here help build pipelines of bankable projects and programs.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 14. laying the ground for new climate financing instruments. Page 36 of 38 . accessing and managing finance. Click on each logo to learn more. which support country readiness to facilitate access to finance and increased impact of climate finance used effectively.

and monitoring of finance flows. The programs listed here are delivered in partnership with donors and other UN agencies and improve enabling environments for public and private climate finance. Click on each logo to learn more. managing. Page 37 of 38 .Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 15. accessing. UNDP and partners climate finance readiness initiatives UNDP has been a leader in the field of climate finance readiness by working cooperatively with developing countries to build national capacities for improved planning.

References and Resources This is the end of Lesson 2. Page 38 of 38 . Visit these links for additional information.Climate Finance Essentials Lesson 3 – Country Readiness to Use Climate Finance Presentation Script 16.