Workshops organized by FERDI:
December 7, 2015 - 01:00 – 02:15 pm, Le Bourget
Organised with Fondazione Eni Enrico Mattei (FEEM) and France Stratégie.
Moderator : Carlo Carraro, Scientifique Director, Fondazione Eni Enrico Mattei (FEEM)
Carlo Carraro, scientific director at the Fondazione Eni Enrico Mattei, moderated the first session. In introduction he reminded the objective of this session which was to confront point of view between academics that conceive alternative solutions for mitigation financing in developing countries (insurance, risk reduction…) and the point of view of practitioners that manage the financing in developing countries. Finally this session explored the available strategies to finance mitigation and the policies and practices that can be set up.
Adama Coulibaly, director of Madame Niale Kaba cabinet, Minister to the Prime Minister in charge of Economy and finances of Côte d’Ivoire, presented the strategy for tackling climate change put in place by Côte d’Ivoire. The country’s target is to reduce greenhouse gases by 28% in 2030. The three principle lines of improvements are renewable energies, increase agricultural productivity and sustainable waste management. Adama Coulibaly then reminded that many adaptation funds have been created in the past, but there is a necessity for countries to access directly these resources if possible without intermediaries (i.e. multilateral agencies), making access procedures more flexible and a preference for financing in the form of donation or concessional loans. He also raised the necessity to use resources coming from carbon taxation to finance developing countries needs regarding technology transfers. Finally he concluded on the need to involve more the private sector through public-private partnership to enhance financing capacities dedicated to climate change.
Barbara Buchner, principal director of Climate Policy Initiative, firstly presented a panorama of the current state of financing mitigation. It reached a record of $ 391 billion in 2014, private financing representing $ 243 billion. It is this financing coming from the private sector that drove this increase with a large investment effort made in wind and solar energies. The share of climate finance dedicated to the mitigation represents 93%, with $ 243 billion only dedicated to renewables. Barbara Buchner concluded that even though efforts made are significant, there are far from sufficient to keep in reach the 2°C scenario. She defined four main opportunities to enable an increase in financing: (i) enhance tracking efforts; (ii) get domestic investment policy and support frameworks right; (iii) Innovate to develop or refine financial instruments that meet investors’ needs; (iv) Further integrate climate change considerations into the financial system.
Etienne Espagne, economist at CEPII, began is presentation reminding the gap existing between amounts declared necessary to finance the fight against climate change, the pledges and commitments made by countries and finally the amounts actually disbursed. There is also divergence between developing and developed countries regarding expectations of mitigation and adaptation financing. One solution to find a common ground is to set up Carbon Certificates that, once delivered to a low-carbon project, would allow the recipient to benefit from concessional loans next to commercial banks. Moreover, to attract more financing, the setup of green bonds by development banks could also be a part of the solution.
Matthew Arndt, Head of Environment, Climate and Social Policy at the European Investment Bank (EIB), stated that EIB dedicate 25% of its portfolio to climate actions. Moreover, since 2007, the EIB is an emitter of Climate Awareness Bonds in order to leverage more funds for climate activities. In the same effort, the EIB applied to be accredited by the Global Environment Fund with the aim to bring its expertise, notably financial engineering in the domain of climate. Matthew Arndt also noted that the turn made by EU climate policies will greatly influence the next activities of the EIB. Finally he explained that the EIB is searching for a catalytic action with private financing on climate projects, with the objective to optimize the supply of funds in this sector. He then concluded presenting the efforts made by the EIB to integrate fairness and representation in these green investment projects, especially by involving as much as they can the impacted actors.
Attached presentations :
December 7, 2015 - 02:15 – 03:30 pm - Le Bourget
Organised with Agence française de développement
Moderator : Pr. Patrick Guillaumont, President of Ferdi
The first part of this session was a presentation made by Patrick Guillaumont, president of Ferdi, proposing the use of a vulnerability to climate change index for the allocation of adaptation concessional funds. This proposition was introduced in the book edited by Scott Barrett, Carlo Carraro and Jaime de Melo “Towards a workable and effective Climate regime”. The rationale for such an allocation is based on the fact that poor countries, that are not responsible for climate change, have a right for compensation according to their exposure to the climate shocks. For this reason Patrick Guillaumont proposed an index which is exogenous, independent of policies set by countries, based on physical measures, not on economic forecast of the damages, and is finally an index of climate change and not of climate itself. The Physical Vulnerability to Climate Change Index (PVCCI), developed by the Ferdi answers to these criteria. Used in an allocation model, like that used by the multilateral development banks for the allocation of their development assistance, it allows to determine an adaptation credit by country. Then countries can claim this credit to the accredited organisms in order to finance operations for which the adaptation purpose has been recognized.
Michele de Nevers, from the Center for Global Development, then presented her proposition previously made with Nancy Birdsall, which is the basis of the one proposed by Ferdi. This proposition recognizes a causal responsibility of developed countries and an entitlement of poor countries with regard to the CO2 emitter countries. However this proposition does not exclude to evaluate economic damages. According to Michele de Nevers, adaptation credit could also be used directly by local accredited organisms, other than State.
Gaël Giraud, chief economist at Agence française de Développement (AFD), then supported the Ferdi proposition, highlighting the importance of a physical vulnerability index to climate change for a fair allocation. The advantage of such an indicator, being only a physical one, is to avoid the uncertainty linked to the pricing system implied by an estimate of the damages in monetary terms. Gaël Giraud also mentioned that AFD used the Ferdi index to assess the vulnerability of Small Island developing States and territories. He also highlighted the need to account for the regional environment in the assessment of country’s vulnerability.
Boukary Adji, former prime minister of Niger and former vice-governor of the BCEAO, followed as the Co-Champion for the planning of the Lack Chad basin. He underlined the scale of the desertification in the Lack Chad basin and the Sahelian area and how they link with the development of conflict, and in particular Boko Haram. He also highlighted the need to allocate adaptation funds in accordance with climate change vulnerability.
Finally Sonam Lhaden Khandu, from the national commission for the Environment of Bhutan, highlighted the great vulnerability to climate change of her country, especially by its landlocked characteristics and the fragility of its mountainous landscape but also by its economic dependence to agriculture. Moreover Bhutan is composed of many glaciers and lakes, warming temperatures exposes the country to the increase in magnitude and frequency of flooding events, which have great consequences on the soil quality and the propagation of diseases. Sonam Lhaden Khandu then recalled the efforts made by her country to elaborate the National adaptation programmes of action (NAPA), especially the first large scale program in 2013 with adaptation projects in all impacted sectors, underlining the importance of a global approach to face climate change consequences. The prospect of rising temperatures to 1,5 to 2 degrees are worrying for the most fragile ecosystems. So it is essential to consider objective criteria for aid allocation in favor of these ecosystems, in particular with the help of indices like the one Ferdi developed, that account for vulnerability, for the dependence of subsistence means, and insufficient capacities to cope with them.
December 7, 2015 -03:30 – 04:45 pm - Le Bourget
Organised with The World Bank Group / GFDRR
Moderator : Pr. Alain de Janvry, University of California-Berkeley et Senior fellow Ferdi
Speakers : Stéphane Hallegatte, Senior Economist, Climate Change Group, The World Bank Alejandro del Valle, Professor, Georgia State University Embassador Seydou Bouda, Alternate Executive Director Africa 2, The World Bank
With climate change, it is expected that countries will be increasingly exposed to climatic disasters such as tornadoes, droughts, floods, and extreme temperatures. With the poor most exposed and most vulnerable to these shocks, countries need to put into place strategies to anticipate the occurrence of these shocks in order to secure rapid relief, reconstruction, and recovery. This includes both the use of financial instruments to rapidly provide the necessary resources to cope with shocks, as well as investments in resilience to reduce the expected losses in assets, incomes, and livelihoods associated with future shocks.
Negotiations at COP21 have two main objectives: secure country voluntary contributions to the reduction of CO2 emissions sufficient to avoid a rise in temperature above 2 degrees centigrade by 2100, and obtain financial commitments to a Green Fund of US$100 billion annually to help poor countries finance the mitigation in emissions and the adaptation to climate change. Assuming that these financial resources become available, question is how would countries best use them to set up national strategies for ex-post shock responses and ex-ante investments in resilience. The purpose of this FERDI workshop was to derive lessons from existing country experiences in order to provide guidelines for possible national strategies to other countries.
In responding to this challenge, Stéphane Hallegatte, senior economist at the World Bank’s Climate Change Group, argues that countries should plan for disaster response by anticipating how they will finance and implement relief, reconstruction, and recovery following a climatic disaster. The financial plan should anticipate how to combine various instruments according to the magnitude of the disaster and the country’s capacity. Instruments include reserve funds, budget reallocations, contingent credits, emergency loans, traditional and parametric insurance, and the emission of catastrophe bonds. The financial plan is not just a technical exercise, but importantly a political commitment that makes the provision of post-disaster assistance credible. Credible risk financing clarifies the allocation of risk ownership that can in turn crowd in investments in risk reduction.
Alejandro del Valle, professor at Georgia State University, presents a rigorous impact evaluation of Fonden, Mexico’s Natural Disaster Fund. The post-disaster transfer of funds to municipalities is indexed on specific disasters exceeding publicly known and verifiable thresholds. The growth outcome is proxied by monthly observations of changes in nightlights. Results show that the Fonden strategy has a benefit-cost ratio of 1.29, making it cost effective. The largest income gain from the program is obtained 15 months after disaster, tapering off after two years.
Alain de Janvry, professor at the University of California at Berkeley, analyzes four instruments that have been used to respond to climate shocks: index-based weather insurance, pre-approved lines of credit indexed on climatic shocks, risk-reducing agricultural technology such as flood tolerant rice, and insured social safety nets with transfers targeted at the poor and index on climatic events. He shows that these instruments can be effective in helping countries adapt to shocks, but that they all need additional work to improve designs. They must be used as part of comprehensive ex-ante risk response strategies and be tested out through field experiments.
Embassador Seydou Bouda, Alternate Executive Director for Africa 2 at the World Bank, emphasized the high risks that the poor in Africa bear in the context of climate change. He argued that countries must plan ahead for the occurrence of these events. In some countries like Mauritius, the private sector had a key role to play in providing social protection. In most other countries, foreign aid will have a major role to play in achieving adaptation due to lack of financial capacity and technical expertise.
In wrapping up, participants agreed that there are many potential instruments available for countries to help populations adapt to climate change and that making use of these instruments in poor countries will require extensive foreign aid as pledged at COP21. The panel made the following recommendations:
December, 8, 2015 11:30 - 13:00 - Paris-Le Bourget
Moderator: Ana Toni, Executive Director, Instituto Clima e Sociedade, Brazil
Carlo Carraro opened the session by introducing the volume Towards a Workable and Effective climate regime. He then turned to on an evaluation of the INDCs. He noted that they constitute a turning point in climate policy as, if they are implemented, this should put a stop to the growth of CO2 emissions (the INDCs represent a reduction of emissions of 20% relative to projected BAU). Many world regions are on the right pathway, particularly OECD countries. Important steps forward are also made in many emerging economies. Carraro noted that INDCs contain some degree of fairness: emission reductions increase with per capita income. However, a high discrepancy of marginal abatement costs between countries is implied by the INDCs suggesting the potential for high efficiency gains through carbon pricing accompanied by Cap and Trade Regimes (CATs), a topic covered by Robert Stavins.
Surabi Menon presented the Carbon Transparency Initiative (CTI) highlighting the progress towards building a low-carbon economy through an analysis of the driver metrics underpinning decarbonization. She presented the contribution of the decline in carbon intensities in the power sector that has come from increased penetration of Renewable Energies (hydro, geothermal, biomass, wind and solar) and a partial switch from coal to gas generation. A continuation of these trends would make the 2°C scenario possible. For example, between 2013 and 2014 coal use declined by 2.9%. Extrapolating these changes, CTI predicts that coal use in industry and buildings will peak and start to decline after 2016. Turning to the transport sector, Menon predicts that between 2010 and 2030 transport emissions would grow by 2.8% per year in China, EU, India, and US, a growth driven by the high growth in China and India. Key is the decarbonization of the power sector which is happening faster than predicted. Menon concluded her presentation with CTI’s predictions of growth in renewables sources of energy.
Roger Guesnerie followed up with a discussion of the lessons to be drawn from the EU experience with carbon trading, the European Trading System (ETS). He noted that the ETS was chosen over a carbon tax on political grounds since a carbon tax would have required unanimity while a majority was sufficient for setting up a trading scheme. Among the lessons of the ETS is that it is difficult to have a control over the price because of the political pressure to give away too many permits which has depressed the price of permits on the market for trading emission permits. Another lesson is that EU ETS market should not be opened to other markets, for instance the Clean Development Mechanism (CDM) since that that dilutes the market by increasing supply. Guesnerie also noted that the market was affected by the current global slowdown. He concluded his presentation by suggesting that ‘virtuous coalitions’ could be built around countries that would include countries with a carbon price. Coalition members would impose a tax on imports from countries that would refuse to join the coalition, a punishment mechanism that would work for moderate carbon tariffs and moderate tariffs as the members of the carbon club would gain by an improvement in their terms of trade while outsiders would lose from reduced market access.
Jaime de Melo opened his remarks that the climate and trade regimes are on a collision course as the different carbon prices would imply carbon leakage as countries move towards an effective climate regime. Currently the ‘negative integration’ of the WTO gives quasi complete leeway on countries to choose freely their environmental policies as long as they don’t discriminate. He notes that the current negotiations towards an Environmental Goods Agreement (EGA) are likely to result in small gains as most members have already zero tariff on environmental goods and Environmental Services were excluded from the negotiations. However the Plurilateral Agreement (PA) approach, if multilateralized could lead the way to further agreements among high-emitting sectors. De Melo noted that PAs are a complement to WTO multilateral approach. PA satisfies 3 criteria that eluded the Kyoto Protocol (i) full participation; (ii) members comply; (iii) members change their behavior substantially. He concluded his presentation by suggesting that the WTO should move to a ‘positive integration’ contract. Such greening of the WTO would include allow again for green’ subsidies (re-instate art. 31 SCM). There should also be compulsory monitoring of subsidies for fossil fuels. Environmental labelling should be legalized by using an ISO standard that guarantees immunization from challenges on ‘likeness’ grounds at the WTO.
In his opening remarks, Scott Barrett reminded the audience that emission reductions pose an immense collective action problem because of the strong incentives to free-ride as countries do not have enough incentives to reduce emissions to reach an optimal level. Based on laboratory experiments in which individuals had financial incentives, he showed that even with assessment and review, countries acting in their own interests, would systematically set targets, makes pledges and propose contributions that would be well below what is needed, even with the full knowledge of what is needed. Barrett then discussed the merits and drawbacks of Carbon geoengineering and Solar geoengineering, both alternatives to emissions reductions.
Robert Stavins closed the session with a discussion of the benefits and difficulties of a successful linkage of regional, national, and sub-national policies which would allow a connection of markets with different carbon prices. Such regimes, known as Cap-and-Trade (CAT) can allow efficiency gains when markets with different carbon prices are allowed to trade carbon certificates leading to an equalization of carbon prices. Stavins reviewed the experience of CATs which have emerged as the instrument of choice in many countries both at the national and sub-national (or regional) levels. Stavins then described the considerable potential benefits of linkage: Cost savings, reduction of market power, and reduction of price volatility. He concluded his presentation by noting that an agreement that would facilitate actions in other jurisdictions would help countries meet their INDC targets.
Patrick Guillaumont and Jaime de Melo participated at four side- events:
Tuesday, 3 December 03.00-04.00 pm, Le Bourget, Espace Génération, Salle 9
Cette conférence organisée par IPEMED avait pour principale thématique la régionalisation des réponses aux enjeux du changement climatique, plus particulièrement dans le cadre des relations entre l’Afrique, la Méditerranée et l’Europe.
Jaime De Melo, Directeur scientifique de la Ferdi a introduit cette conférence en dressant un panorama des effets anticipés du changement climatique en Afrique et des défis à relever.
Etaient également présents :
- Saïd Mouline, Président d’ADEREE Maroc, est intervenu pour présenter les engagements du Maroc en matière de changement climatique, ainsi que les politiques mises en œuvre dans le cadre de la Stratégie Nationale Energétique. Une ouverture sur les apports de la coopération bilatérale et régionale (notamment au sein du réseau MEDENER) pourra être faîte au Maroc.
- Un représentant du 4C Maroc (Centre de compétence Changement Climatique) a apporté son témoignage sur le fonctionnement et les missions de ce centre, qui se définit comme un « hub pour les informations en matière de changement climatique (CC) ouvert sur son environnement régional et africain ». Le représentant du 4C Maroc est intervenu en binôme avec le représentant d’un pays africain ayant participé au processus d’élaboration de l’INDC.
- Alfred Mignot, rédacteur en chef de La Tribune, a joué le rôle du médiateur lors de cette conférence. Après des échanges avec le public,
- Jean-Louis Guigou, Président d’IPEMED, a proposé des éléments de conclusion autour de la nécessité de penser les défis climatiques au sein d’une grande région Afrique-Méditerranée-Europe.
Sunday, 6 December, Paris
Patrick Guillaumont participated as an expert at this meeting organised by the Republic of Zambia, in partnership with the UN-OHRLLS and UNFCCC.
The meeting aimed, first and foremost, at information sharing with different stakeholders, the UN system, LLDC Member States, Civil Society, and Donor community on the impact of climate change on LLDCs. The Meeting was expected to come up with concrete ideas and recommendations on how to achieve strengthening resilience, supporting adaptation and mitigation needs of LLDCs, in particular, with regard to the fully implementation of the Vienna Programme of Action for LLDCs for the decade 2014-2024, adopted last December 2014 by the UN General Assembly.
2.30 – 3.00: Ouverture
3.00 - 3.45: Impacts of climate change on economic development of landlocked developing countries
3.45-4.15: Interactive debate
4.15-4.30: Concluding remarks
Sunday, 6 December, Paris
Patrick Guillaumont participated to this meeting organised by UN-OHRLLS and moderated by Gyan Chandra Acharya, Under-Secretary-General and High Representative for LDCs, LLDCs and SIDS.
Monday, 7 December, Le Bourget
This worshop was organised by the Organisation internationale de la francophonie (OIF) and the government of Senegal.
Patrick Guillaumont participated to this event and presented his chapter on measuring vulnerability to cliamte change to allocate funds to adaptation written for the book Towards a Workable and Effective Climate Regime