This article was originally published on the CFR website on December 2, 2014
Ari Huhtala, Lead for Climate Finance of the Climate and Development Knowledge Network (CDKN) talks with Mairi Dupar about what climate finance readiness involves.
What does it mean for a country to be ‘climate finance ready’?
Developing countries are allocating considerable resources from their own public and private sources towards improving resilience to climate change and shifting to low emission technologies. International climate funds are vital for scaling up this process. The preferred modality for many countries is to make use of such funds through direct access. To comply with the requirements for accessing the funds, countries need to demonstrate sufficient fiduciary and governance standards to ensure transparent and effective administration and disbursement. Countries also need to develop a health pipeline of bankable projects in which climate funds can catalyse national and subnational action in combination with local public and private sector resources, other development funding and possible revenues from the carbon market.
What range of activities do you see developing countries taking to get climate finance ready and how does this look different depending on whether it’s a LIC or a MIC?
MICs are more likely to have the required institutions and standards available for early access through national implementing entities or agencies. It is likely that different institutions in one country will be most suited for channelling funds for mitigation ,adaptation, REDD+ and private sector windows.
What, in your experience, are proving to be some of the greatest hurdles to attracting climate finance from foreign sources?
Often one of the key hurdles for mobilising interest in the financial community is the lack of well defined and clearly articulated investment projects that present an economic case for financier, climate funds or others. Planning instruments such as Nationally Appropriate Mitigation Actions (NAMAs) and National Adaptation Plans (NAPs) are useful in describing investments in a strategic context and part of a broader plan rather than stand—alone initiatives.
Do you consider that the availability of climate finance is a driver for climate compatible development strategies and plans or the other way around?
The availability of climate finance is a very powerful driver for accelerating developing countries’ attempt to shift their infrastructure investments towards climate compatible options without sacrificing other important development priorities such and health and education.