Financing for Climate Change in Latin America and the Caribbean in 2014
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climate change studies in latin america Financing for climate change in Latin America and the Caribbean in 2014 Joseluis Samaniego Heloísa Schneider Project Document Financing for climate change in Latin America and the Caribbean in 2014 Joseluis Samaniego Heloísa Schneider Economic Commission for Latin America and the Caribbean (ECLAC) Alicia Bárcena Executive Secretary Antonio Prado Deputy Executive Secretary Joseluis Samaniego Chief, Sustainable Development and Human Settlements Division Ricardo Pérez Chief, Publications and Web Services Division This document was prepared by Joseluis Samaniego, Chief of the Sustainable Development and Human Settlements Division, and Heloísa Schneider, staff member of the Climate Change Unit of the Economic Commission for Latin America and the Caribbean (ECLAC), with financing from the European Union through the EuroCLIMATE programme (CEC/14/001). Luis Miguel Galindo, Chief of the Climate Change Unit of the Sustainable Development and Human Settlements Division, and Miroslava Barragán also participated in its preparation. Neither the European Union, nor anyone acting on its behalf, may be held responsible for the use made of the information contained in this publication. The views expressed in this study are those of the authors and do not necessarily reflect the views of the European Union or the Economic Commission for Latin America and the Caribbean. This document is the translation of an original which did not undergo formal editing. LC/W.676 Copyright © United Nations, December 2015. All rights reserved Printed at United Nations, Santiago S.15-01262 ECLAC Financing for climate change in Latin America and the Caribbean in 2014 Contents Introduction ...................................................................................................................................... 7 I. Methodological aspects ......................................................................................................... 15 II. Conceptual framework for climate finance ............................................................................. 19 III. Current situation ..................................................................................................................... 23 A. Financing needs for the transition to a low-carbon economy ........................................ 24 B. How does climate finance flow? ..................................................................................... 31 1. Climate funds .......................................................................................................... 34 2. National climate funds ............................................................................................ 42 3. Multilateral development banks .............................................................................. 53 4. Regional development banks ................................................................................. 59 5. Public development banks...................................................................................... 65 6. Private banks .......................................................................................................... 70 IV. Additional sources of climate finance .................................................................................... 73 1. Resource commitment ............................................................................................ 73 2. Pension funds and insurers .................................................................................... 77 3. Green bonds ........................................................................................................... 85 Bibliography ................................................................................................................................... 89 Annex ............................................................................................................................................. 95 Tables Table 1 Climate finance in Latin America and the Caribbean in 2014 and 2013 ............... 8 Table 2 Climate finance flows to Latin America and the Caribbean in 2014, by funding source ................................................................................................... 9 Table 3 Funds provided by Latin American regional and national development banks in 2014, by type of climate finance ............................................................ 11 Table 4 Financial instruments providing climate finance to Latin America and the Caribbean in 2014 .................................................................................. 11 Table 5 Estimated financing needs to “green” the planet by selected institutions ............ 27 Table 6 Costs of climate change to gross domestic product at current prices by 2100 under scenarios A2 and B2, applying a 0.5% discount rate .................. 29 3 ECLAC Financing for climate change in Latin America and the Caribbean in 2014 Table 7 Total annual costs of adaptation for all sectors, by region and climate change scenario, 2010-2050 ............................................................ 31 ECLAC Table 8 Climate funds and their basic features ................................................................ 34 Table 9 Specific climate funds available as of July 2015 ................................................. 36 Table 10 Climate funds approved in Latin America and the Caribbean in 2014 ................ 39 Table 11 Characteristics of projects being implemented with NAMA Facility funding in Latin America and the Caribbean in 2014 ........................................... 40 Table 12 Characteristics of projects being implemented with own resources in Latin America and the Caribbean in 2014........................................................ 41 Table 13 Recorded disaster events and physical losses caused by La Niña episodes between 1970 and 2011 .................................................... 43 Table 14 Funding approved for Colombia’s national adaptation fund (2012-2015) ........... 44 Table 15 Implementation of Colombia’s 2014 expenditure budget .................................... 45 Table 16 Budget of Brazil’s Climate Fund defined in the Annual Resource Allocation Plans (PAAR) of 2012, 2013 and 2014 ............................................... 49 Table 17 Amazon Fund: projects approved between 2009 and 2014 ................................ 51 Table 18 Funding for the Programme for Reducing Greenhouse Gas Emissions in Agriculture (ABC Programme) managed by Banco do Brasil and the National Economic and Social Development Bank (BNDES)........................ 53 in 2014 Caribbean the and America Latin in change climate for Financing Table 19 Combined resources earmarked by the seven multilateral development banks for mitigation and adaptation worldwide, by sector (2012- 2014) ............. 54 Table 20 Commitments and disbursements for Latin America and the Caribbean in the fiscal years 2011-2015 ................................................ 55 Table 21 Projects for tackling climate change financed by the World Bank in Latin America and the Caribbean in 2014....................................................... 56 Table 22 Climate Investment Funds: cumulative disbursements by fund .......................... 57 Table 23 Climate Investment Funds projects approved in Latin America and the Caribbean in 2013 and 2014 .................................................................. 58 Table 24 Climate-related lending by the European Investment Bank in Latin America and the Caribbean in 2014........................................................ 59 Table 25 Funds approved for Latin American and Caribbean countries in 2013 and 2014 by the Inter-American Development Bank (IDB) .................... 62 Table 26 Projects with a climate component financed by the Development Bank of Latin America (CAF) .............................................................................. 63 Table 27 Financing under the Green MSMEs Initiative in 2013 and 2014 ......................... 64 Table 28 Instruments offered by selected Latin American and Caribbean public development banks to finance climate change mitigation programmes ........................................................................................ 66 Table 29 Resources mobilized by the Brazilian National Economic and Social Development Bank (BNDES) in 2013 and 2014, by use, type of financial instrument and sector ................................................... 68 Table 30 BANCOLDEX total green finance for all sectors, regions and instruments ....................................................................................... 70 Table 31 Climate funds available as of July 2015 .............................................................. 74 Table 32 Potential sources of climate finance by type and amounts announced ............... 76 Table 33 Assets by type of institutional investor, 2012-2013 ............................................. 78 Table 34 Green investments by selected pension funds: percentage of total .................... 79 Table 35 Market capitalization in Latin America and the Caribbean .................................. 81 Table 36 Total investment of pension funds in Latin America and the Caribbean and globally ........................................................................... 83 Table 37 Issuers of labelled and unlabelled climate (green) bonds by country, as of June 2015 .....................................................................