Strengthening enabling frameworks, institutional capacities and financing and investment instruments for the achievement of national climate objectives in the region.
One of the main objectives of the EUROCLIMA+ programme is to create and strengthen the conditions to favour access to climate finance for Latin American and Caribbean countries for the implementation of plans, actions and policies to tackle climate change, comply with the Paris Agreements and achieve each country's own goals, a commitment that was ratified, consolidated and shared in the events developed by the Programme in the framework of COP26, which took place from 31 October to 12 November in Glasgow, Scotland.
Climate finance represents one of the priorities for the Latin American region. To move towards low-carbon and climate-resilient development, a shift in investment flows is needed. The complex architecture of climate finance makes it difficult for Latin American countries to access the necessary resources, international and national, local, public and private, to facilitate Nationally Determined Contributions in action and to foster a sustainable, resilient and inclusive recovery.
The involvement of financial system actors is important for strengthening climate action and realising a sustainable, resilient and inclusive recovery strategy in the public, private and civil society sectors. Regulatory frameworks, institutional and management capacities as well as coordination with the financial sector need to be strengthened and consolidated to adequately harness or mobilise all available or potential resources.
EUROCLIMA+ therefore supports its partner countries in strengthening enabling frameworks, institutional capacities and financing and investment instruments for the achievement of national climate objectives in the region.
Closing the financing gap for local climate action
"There is no lack of investment resources when you have well-structured projects".
Renato Casagrande, Governor of the State of Espírito Santo in Brazil
In the framework of COP26 in Glasgow, the Side Event "Closing the financing gap for local climate action: solutions for the development of bankable projects and appropriate financial vehicles” organised by the EUROCLIMA+ programme, the French Development Agency (AFD), the German Society for International Cooperation (GIZ) and the Economic Commission for Latin America and the Caribbean (ECLAC).
Through the experiences of different actors of the financial ecosystem in the region, tools, services, methodologies and financial instruments were presented, and a space for debate was opened to identify innovative areas for closing the climate finance gap at the subnational level in Latin America.
The dialogue brought together policy makers and representatives of financial institutions from national and sub-national levels in Latin American countries.
Through the discussion, valuable experiences from the region were shared, such as the Reforestar Programme of the State of Espírito Santo in Brazil and the budget initiative of Manizales in Colombia. In addition, representatives of financial institutions highlighted the role of the public sector in articulating and promoting climate investments and the need to better structure investment needs to facilitate their implementation. See more information on the agenda of the event
The financing we need for the future we want: a discussion with financial actors leading the transformation towards a sustainable and climate-neutral economy in the LAC region –UNEP
Climate events are the greatest threat to development in Latin American and Caribbean countries. Due to the impacts of climate change (CC) on countries' economies and financial stability, financial flows must be coherent to achieve low-carbon and climate-resilient development to keep the increase in global average temperature below 2°C above pre-industrial levels and, if possible, below 1.5°C.
"The EU taxonomy will be based on four principles: 1) everything we do in sustainable finance must contribute to the transition; 2) inclusiveness, everyone must participate (citizens, SMEs); 3) resilience, the financial sector and institutions must be resilient and take into account climate risks, large-scale environmental degradation, biodiversity losses, etc. and 4) global ambition, climate change is a global problem that requires global solutions, as does sustainable finance."
Elisabetta SIRACUSA DG-FISMA, European Commission
Financial actors therefore have a key role to play in closing the investment gap to achieve climate-resilient, low-emission economies, and have begun to recognise CC as a systemic risk that puts their operations at risk. In response, they are increasingly taking action to integrate CC and broader sustainability concerns into their investment decisions and portfolio allocations. However, there is still a lack of understanding of what green investment is and how to assess and disclose climate-related financial risks.
Carbon pricing instruments, applications in LAC
The objective of the event was to discuss among national authorities the use of carbon pricing instruments in LAC and their importance for the fulfilment of emission reduction commitments set forth in NDCs. This event also sought to provide a space for the exchange of ideas on existing initiatives in the region on carbon pricing instruments. More details of the agenda and speakers HERE.
This side event brought together national authorities and technicians from Argentina, Chile, Colombia, Costa Rica and Mexico, linked to the Ministries of Finance, Planning and Energy, to discuss experiences with the use of carbon pricing instruments: carbon taxes, emissions trading systems, the social price of carbon, among other topics, and their contribution to meeting the decarbonisation goals in the countries.
Environmental taxes and expenditures have the potential to promote a variety of macroeconomic benefits, such as increased employment, economic diversification and improved competitiveness of national industries while incentivising emissions reductions by providing economic actors with a market signal," said Joseluis Samaniego, director of ECLAC's Sustainable Development and Human Settlements Division.
Latin America seeks funding for the climate-resilient transformation of its agricultural sector
“It is necessary to facilitate spaces for dialogue with actors in the financial sector, to listen to the experiences of entities such as IICA, CAF and BCIE, in order to learn about their requirements and opportunities to support the structuring of projects and to be able to really close the existing gaps".
Silvia Brugger, GIZ Climate Governance Coordinator in the EUROCLIMA+ Programme
The event focused on Latin American countries' need for financing for their processes of transforming the agricultural sector towards food systems with low GHG emissions, climate resilient, guaranteeing the livelihoods and needs of indigenous peoples, with gender equity.
Designing proposals for international climate funds requires professional training and inter-institutional articulation to develop substantial actions that enable the implementation of sectoral policies that support the transition to low-carbon economies and resilient societies. A high-level panel discusses proposals for action from 4 countries, prepared for funding from the Green Climate Fund, Adaptation Fund or International Climate Initiative. They cover innovative approaches including Nature-based Solutions, Ecosystem-based Adaptation, Synergies between Adaptation and Mitigation or Inclusive Climate Finance.
The event, moderated by Andrea Schloenvoigt, senior expert of Expertise France, brought together a high-level panel of experts, including the Ministers of Agriculture and Livestock of Costa Rica, Mr. Renato Alvarado, accompanied by Ms. Karla Mena, and from Panama, the executive director of the Plurinational Authority of Mother Earth of Bolivia, Ms. Angélica Ponce, accompanied by Mr. Rodrigo Michel of SWISSCONTACT Bolivia, and the representative of the Chilean Ministry of Agriculture and Livestock, Mr. Juan Arias.
Representatives of Designated National Authorities for four projects present key elements of their concept notes (Bolivia, Chile, Costa Rica, Panama), focusing on how to effectively improve practices, organisational structures and institutional environments for managing climate finance. The panellists share their views on opportunities and challenges in securing sustainable finance. The moderators focus the discussion on lessons learned during the design and formulation process, addressing, among other items, how to align multi-stakeholder, -level, -sector interests, build public-private partnerships and increase the ambition of projects to achieve country and target fund objectives.
The proposals covered innovative approaches, including nature-based solutions, ecosystem-based adaptation, synergies between adaptation and mitigation, and inclusive climate finance. In this regard, the Bolivian representatives highlighted the revalorisation of Andean family farming. For his part, the representative of Chile indicated the country's interest in climate action and food security to make the agricultural, livestock and silvopastoral sector resilient. In Costa Rica, the aim is to reinforce agricultural innovation to strengthen resilience and competitiveness. In Panama, the focus is on the implementation of integrated systems to comply with the NDCs for sustainable, low-carbon agriculture and livestock production.
The role of green finance in meeting the goals of the Paris Agreement and the Sustainable Development Goals
“Without funding, change will not stop. Money is not lacking, the challenge is how to direct the money to the right projects, in the right places and with the right technologies". Juan Carlos Jobet, Chilean Minister of Energy and Mining.
At the heart of today's globalised economy are the financial markets through which banks and investors allocate capital to different sectors.
Capital allocated today will shape tomorrow's ecosystems and patterns of production and consumption. Green finance is playing a crucial role in increasing the level of financial flows (from banking, microcredit, insurance and investment) from the public, private and non-profit sectors to sustainable development priorities and the energy transition. Globally, the green bond market could be worth $2.36 trillion by 2023 and the European Central Bank alone holds around 20% of all euro-denominated green debt, even though it only started buying corporate bonds in 2016. The relationship between finance and the real economy is changing, especially during the recovery from the pandemic.
The transition to a green, sustainable and resilient future for all is now at the heart of public and private finance in the energy sector. Given that more than two-thirds of the world's greenhouse gas emissions are attributable to the energy sector, SDG 7 is a key factor in achieving SDG 13 as well.
Energy transition from fossil fuels to renewable energy, energy efficiency measures and universal access through sustainable energy resources will contribute significantly to climate mitigation action. Financing SDG 7 therefore has a direct implication for the achievement of SDG 13 targets.
The side event covered three main themes: 1. Financing the Energy Transition; 2. Infrastructure and green growth; 3. Financing resilience and adaptation, and bringing together public authorities, private foundations and academics, international organisations and representatives of multilateral banks for dynamic and authentic discussions that will contribute to highlighting the fundamental role of green finance from a variety of crucial perspectives.
It was moderated by Anthony Robert Hobley, co-executive director of Mission Possible Partnership and executive member of the World Economic Forum, and featured a very valuable exchange between the speakers with the valuable presence of the Chilean Minister of Energy and Mining, Juan Carlos Jobet and the presence of Faith Ward, Chair of the Institutional Investors Group on Climate Change and Elina Kamenitzer, Head of Division, Climate Action and Environment Coordination of the European Investment Bank.
How can we make green recovery work? Experiences from Latin America and the Caribbean and the role of international cooperation?
"Less than 2.4% is spent on green recovery in Latin America and the Caribbean. There is still a long way to go to green recovery efforts in the region". Niklas Hagelberg, Coordinator of UN Environment's Climate Change sub-programme
Green Recovery has become a keyword for addressing the health, environmental and socio-economic crises in an integrated way. But how realistic is it and can the Green Recovery approach really turn the crisis into an opportunity for structural transformation? What have been some of the lessons learned from practical experiences in the LAC region?
The event, hosted at COP26 by the EUROCLIMA+ programme, the German Society for International Cooperation (GIZ) GmbH and the NDC Partnership, sought to answer these questions and discuss what has been achieved so far and the role that international partnerships can play in helping to make Green Recovery a reality.
Throughout the conversation, the various elements necessary to move towards a green recovery were discussed, including the need for good planning, the incorporation of various sectors, and the integration of Ministries of Finance in the process.
In addition to this, the importance of cooperation and coordination to advance the Green Recovery in the region, and the important role this can play in the economic recovery was discussed in the session.
About EUROCLIMA+
EUROCLIMA+ is a programme funded by the European Union and co-financed by the German federal government through the Federal Ministry for Economic Cooperation and Development (BMZ), as well as by the governments of France and Spain through the Ministry of Foreign Affairs, European Union and Cooperation.
The Programme's mission is to reduce the impact of climate change and its effects in 18 countries of Latin America and the Caribbean, promoting mitigation, adaptation, resilience and climate investment. It is implemented according to the "Spirit of Team Europe" under the synergistic work of seven agencies: the Spanish Agency for International Development Cooperation (AECID), the French Development Agency (AFD), the Economic Commission for Latin America and the Caribbean (ECLAC), Expertise France (EF), the International and Ibero-America Foundation for Administration and Public Policy (FIIAPP), the German Society for International Cooperation (GIZ) GmbH, and the UN Environment Programme (UNEP).