P O L I C Y R E P O R T:
NEXT STEPS FOR CONVERTING
I N T E N D E D N AT I O N A L LY
DE TERMINED CONTRIBUTIONS
INTO AC TION
WRIT TEN BY:
Hannah Pitt, Paolo Cozzi and Laurence Blandford
CONTRIBUTIONS FROM:
Leila Surratt
M A R C H 2016
Dialogue. I nsight. S o l u t i o n s.
Acknowledgements
This paper was written by Hannah Pitt, International Policy Associate, Paolo Cozzi, International Policy
Analyst and Laurence Blandford, Director of International Policy Analysis, with contributions from Leila
Surrat, Chief Operating Officer. The authors are particularly grateful to Ned Helme, former President of
CCAP, whose engagement on INDC conversion and the models that this paper includes was seminal. A
special thank you to Carmen Martinez, Communications and Events Assistant, who put this report
together.
This project is part of the International Climate Initiative (IKI). The German Federal Ministry for the
Environment, Nature Conservation, Building and Nuclear Safety (BMUB) supports this initiative on the
basis of a decision adopted by the German Bundestag.
The views expressed in this paper represent those of CCAP and not necessarily those of any other
institution or individuals mentioned above. For further information, please contact Hannah Pitt at
hpitt@ccap.org.
1
Acronyms
APA
Ad Hoc Working Group on the Paris Agreement
CCAP
Center for Clean Air Policy
COP
Conference of Parties
CMA
Conference of the Parties serving as the Meeting of the Parties to the Paris
Agreement
GCF
Green Climate Fund
GEF
Global Environment Facility
INDC
Intended Nationally Determined Contribution
NDC
Nationally Determined Contribution
UNFCCC
United Nations Framework Convention on Climate Change
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Contents
Acknowledgements ................................................................................................................................. 1
Acronyms ................................................................................................................................................ 2
Introduction ............................................................................................................................................ 4
Why convert INDCs?................................................................................................................................ 4
Increased UNFCCC ambition through the five year cycles ........................................................................ 5
What is a converted INDC? ...................................................................................................................... 6
How is an INDC converted? ..................................................................................................................... 7
INDC investment strategy to mobilize support......................................................................................... 8
Conclusions and recommendations to promote INDC conversion ............................................................ 9
INDC conversion should be a strategic focus of climate finance ......................................................... 10
Support for INDC Conversion should be varied to match with country needs ..................................... 10
INDC investment strategies should consider all sources of finance..................................................... 11
UNFCCC rules should support conversion .......................................................................................... 12
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Introduction
After the landmark deal in Paris, governments are now in the process of converting their Intended
Nationally Determined Contributions (INDCs) into tangible and ambitious mitigation policies and
programs. With unprecedented climate commitments by developing country Parties on the table, strong
political momentum coming out of Paris and the availability of significant climate finance with the
launch of the Green Climate Fund (GCF) and other public and private pledges, it is timely to consider
how countries can turn INDC goals into concrete action.
CCAP’s discussion paper released prior to Paris, “Converting Intended Nationally Determined
Contributions into Action,” highlights the importance of turning INDC targets into policies, measures and
finance-ready investment strategies quickly, and the need for financing for developing countries to carry
this out. The paper takes stock of the state of play in converting INDCs by examining INDCs from key
developing country Parties and explores ways to build on Paris’s momentum to advance the conversion
process after Paris.
Taking into account the results of Paris, ongoing discussions in the GCF, and continued engagement with
CCAP partner countries, including at CCAP’s February 2016 regional dialogue with Latin American
policymakers, this policy brief aims to take forward CCAP’s work on INDC conversion and crystallize key
recommendations for policy makers in developing and developed countries, as well as for funding
agencies and other stakeholders.
This policy brief aims to build a shared understanding of INDC conversion by taking a deeper look at
what elements a “converted” INDC might include and the steps involved in the conversion process,
including considerations for the mobilization of finance, with a view to accelerate this work at the
country level. We then consider how countries might wish to identify and present strategic and catalytic
uses of international financing, and how the work of converting INDCs can be facilitated through the
provision of support, including from the GCF, and through the elaboration of the Paris agreement and
related decisions.
Why convert INDCs?
The wide adoption of economy‐wide mitigation goals in Paris is a critical step in increasing global
ambition. In general, however, greater specificity in domestic policy making will be needed to turn
pledges into specific, implementable policies and programs and finance-ready investment plans.
For developing countries, the process of INDC conversion can:
•
Promote ambition by helping countries to identify or clarify effective pathways to reach their INDC
goal, as well as opportunities for action with impacts beyond the INDC target date;
•
Optimize use of resources by encouraging the effective use of domestic and international resources,
and lower transaction costs through comprehensive approaches to mitigation;
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•
Achieve synergies between mitigation and development goals by aligning national strategies and
plans, including the INDC, national development plans, and Nationally Appropriate Mitigation
Actions;
•
Make proposals more attractive to funders by enabling countries to justify the need for support in
context of the larger country strategy; and
•
Attract private sector investment by establishing long-term policy signals and developing a pipeline
of viable projects that investors need to justify engagement.
•
Support long-term, low carbon development strategies: The Paris decision text invites countries to
put forward “mid-century, long-term low greenhouse gas emission development strategies” by
2020. INDC conversion can inform these efforts by helping countries identify medium and long-term
trends, as well as barriers that may require longer-term efforts to overcome.
For climate finance institutions, the successful conversion of INDCs can help deliver a pipeline of high
impact programs. Strong, programmatic proposals anchored in a broader country strategy can mobilize
private financing, and make the case for additional replenishments.
Increased UNFCCC ambition through the five year cycles
In Paris, the international community committed to keeping the rise in global average temperature to
“well below” 2 degrees Celsius. Developed country Parties have pledged to mobilize $100 billion
annually by 2020, and to consider an enhanced quantified goal in 2025. INDC development and
conversion is an ongoing domestic policy planning process that is critical to achieving these global goals.
The Paris Agreement provides a framework for this bottom-up and iterative process, wherein Parties
report on progress toward their commitments, and strengthen the ambition of their targets every five
years (see Figure 1). The “facilitative dialogue” to assess collective progress in 2018, followed by the
global stocktake in 2023 and every five years thereafter, can encourage ambitious action, and inform
Parties’ discussion on the ambition of new NDCs and the scale of financial mobilization required.
The initial cycle gives Parties a window before confirmation of their INDCs as NDCs ahead of 2020. This
allows Parties some time for INDC conversion, which will be particularly important to the success of the
first commitment period. For many developing countries, the implementation of comprehensive
national climate change plans represents significant new efforts that will require putting in place policy
frameworks and enabling environments that can lay the groundwork to ratchet up ambition over time.
There is a significant opportunity to build national capacity for effective climate action over this initial
conversion cycle that should be seized in a timely fashion given the relatively short time until INDCs
need to be confirmed.
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With the strong framework of the Paris Agreement in place, more remains to be done to ensure support
can be effectively provided for the conversion of INDCs, and that the rule-making process following the
adoption of the Agreement takes these needs into account.
Figure 1: INDC conversion and increased UNFCCC ambition through the five year cycles
What is a converted INDC?
A converted INDC reflects a comprehensive national plan to achieve the INDC target. It will likely include
information on:
•
National and sectoral goals, including quantified information for all relevant goals adding up to
INDC target. This will include the formally-committed mitigation target, as well as other sectoral or
regional goals, and sustainable development priorities.
•
How these goals will be achieved, including fully-specified policies, measures, mandates, as well as
enabling frameworks to support INDC implementation and longer-term goals.
•
How costs will be met, including through government spending, international public and private
financing, or through policy mandates that require households and businesses to bear costs (e.g.,
Renewable Portfolio Standards, vehicle efficiency standards).
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Ultimately, a converted INDC would therefore formally confirm the target, identify sectoral and crosscutting policies and measures, specify host-country public finance interventions, and present an overall
investment strategy for international finance to implement the INDC.
Countries seeking support for implementation will likely want to publish a strategy that further specifies
support needs and a project pipeline that can mobilize investment.
How is an INDC converted?
Countries will pursue a number of steps in carrying out the process of converting their INDCs, as
illustrated in Figure 2. To begin, countries will likely clarify priorities and goals for INDC implementation.
While some of this work may have been done during the INDC development process, countries may
wish to further break down the broad mitigation goals communicated in the INDC into sectoral
objectives, identify sustainable development goals, and define the key barriers to action in light of
country circumstances. This will initiate a process to select options to achieve these goals, which is likely
to involve a number of iterations as countries assess technical and political considerations for various
measures, sectoral strategies and cross-cutting approaches.
Some of these considerations might include relative costs, expected contribution to greenhouse gas
reductions, sustainable development benefits, the actions of peers, established international best
practices, as well as the feasibility of policy actions and the level of domestic public resources required
to carry out identified measures. This process is likely to underline the case to move ahead with lowhanging fruit, such as the deployment of commercially available low-carbon energy technologies, even
as more complex options are further assessed and deliberated.
Countries will require different types of support depending on how far along they are in the conversion
process. Some INDCs are supported by existing climate change frameworks and embedded in national
budget and planning processes, and may only require support to mobilize finance for specific programs.
For others, the INDC represents the country’s first effort to develop a comprehensive climate change
plan, and broader support may be needed.
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Figure 2: A model of the INDC conversion process
INDC investment strategy to mobilize support
In CCAP’s review of key developing country INDCs, 35 out of the 39 INDC examined indicated they can
achieve a greater level of ambition conditional on international support.1 For these countries, a key
outcome of the conversion process will be to develop finance-ready strategies that can help leverage
their own resources and attract public and private international financing for implementation.
Information on INDC implementation costs and financing varies. Roughly half of the INDCs that CCAP
reviewed estimate total investment costs to achieve the proposed greenhouse gas reductions. A fifth
provide full costs by sector and for specific measures, and 14% present an overall financial request for
international support.
In general, however, INDCs lack detailed information on costs, domestic financing conditions and
feasibility that can inform funding decisions. An INDC investment strategy, or a broader national
strategy for climate finance that could extend beyond the INDC target date, can provide this information
to help countries make a compelling case for international climate finance.
Countries seeking support may therefore wish to not only have a strategy to attract financing, but to
publish their “investment strategy” or “national climate finance strategy” to highlight key issues and
answer key questions for potential financiers and funders related to the strategic and catalytic use of
climate financing within the broader context of climate-related public and private expenditure in the
country (see Figure 3).
1
CCAP 2015. “Converting Intended Nationally Determined Contributions into Action”.
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Figure 3: Potential elements of an INDC investment strategy
The GCF readiness program currently provides support for the development of country programs that
define priorities for the GCF and potential proposals the country intends to bring to the Fund. However,
beyond identifying programming opportunities for a specific funding source, a broader investment or
climate finance strategy could help fully identify policy and market barriers that need attention, point to
where domestic resources are being deployed, and therefore attract new financing from a wider set of
public sources and private financiers within an overall strategic context in which international public
financing can be used to best effect.
Conclusions and recommendations to promote INDC conversion
Before 2020, countries should feel comfortable that they will be able to meet their INDC goals, or go
beyond them to achieve even greater levels of ambition. Beginning the process of INDC conversion
immediately can help ensure implementation and promote ambition.
Early action will be particularly important during the first five year commitment cycle, as countries
establish the processes and frameworks that will underpin long-term transformation. This will in turn
improve countries’ capacities to develop long-term strategies and subsequent NDCs. The coming years
are also a pivotal time for establishing policy frameworks at the global level that address INDC
conversion and implementation, both as the rules under the Paris Agreement are determined, as the
Global Environment Facility (GEF) prepares for its 7th replenishment, and as the GCF ramps up
operations to trigger the first formal replenishment in 2017.
The GCF has taken some steps to enhance the provision of readiness and project preparation support
that could facilitate INDC conversion. However, more can be done to broaden and expedite support to
effectively facilitate the conversion of INDCs into financeable investment strategies.
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The outcomes of Paris make clear that the GEF should play a meaningful role in INDC conversion. The
guidance from the Conference of Parties (COP) to the GEF requests the GEF to consider how to support
developing country Parties in “formulating policies, strategies, programs and projects” that contribute to
the implementation of their INDC, starting in 2016. How the GEF can effectively provide this support
needs to be determined.
There are several key considerations to effectively take forward the work of INDC conversion:
1)
2)
3)
4)
INDC conversion should be a strategic focus of climate finance
Support for INDC Conversion should be varied to match with country needs
INDC investment strategies should consider all sources of finance
UNFCCC rules should support conversion
INDC conversion should be a strategic focus of climate finance
The GCF, other public institutions and funders, and private investors are actively looking for a strong
pipeline of climate-friendly investments. While much emphasis has been given to mobilizing support for
implementation, more efforts are needed to scale up support for the development of country plans and
finance-ready programs to ensure that significant volumes of transformational financing can flow at
scale without sacrificing project quality.
For the GCF, readiness and preparatory support should be made a strategic priority and core focus of
Fund programming, to help build a pipeline that supports the Fund’s objective to contribute to countrydriven transformation. To this end, the GCF should consider significantly scaling up the resources
allocated to readiness and preparatory activities in support of achieving INDC and sustainable
development goals. At the same time, the approval process for readiness and project preparation
funding should be streamlined to permit timely disbursement in support of rapid country action.
The GEF should consider how they can fulfill the guidance from the COP in a way that builds on its
historical strengths and is coherent with the GCF and other institutions providing support. Given its
historical focus, this may include provision of support for national capacity building, integration of
climate change projects and programs into national policy frameworks, cross-cutting programs with
broader environmental benefits (e.g. biodiversity), project preparation, and reporting.
Support for INDC Conversion should be varied to match with country needs
Countries will require different types of support to successfully carry out the conversion process. While
some countries are essentially ready to start the process of mobilizing finance for programs in support
of their INDC, others may need broader support to develop or advance national climate plans and put in
place enabling environments and institutions that can promote low-carbon investment.
Support for INDC conversion can come from a variety of sources, including UNFCCC institutions and
other organizations. While some entities may be best positioned to support a more narrowly-defined set
of activities, cooperation to advance comprehensive and long-term planning and processes may be
better able to advance INDC conversion and implementation.
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Given its emphasis on transformational country action, the GCF is well placed to take a comprehensive
approach to INDC conversion that is responsive to a wide range of country needs. The newly-established
project preparation facility should afford countries the flexibility to seek preparatory support for
projects and programs of varying sizes (larger the current limitation to small-scale projects under $50M),
and allow countries to partner with the domestic or international accredited entity or support provider
that best suits their needs.
The existing GCF readiness program can complement the project preparation initiative by financing
more “upstream” activities, including the development of concept notes and preparation of country
programs, and support to assist countries to develop policy frameworks, long-term infrastructure plans,
and programmatic approaches that build project pipelines.
INDC investment strategies should consider all sources of finance
INDC investment strategies or national climate finance strategies that consider all sources of finance,
rather than addressing programming only by individual funding source, can identify strategic and
catalytic uses of international support and help attract financing from a wider set of public sources and
private financiers. Considering a wider set of finance opportunities can also build broader political buy-in
to achieve INDC goals.
These strategies should then be given weight by donors and funding institutions as they look to identify
the best ways to support the transition to a low-carbon global economy. If drafted correctly and given
appropriate domestic political backing, it is likely that private financiers will also give them weight in
targeting their investments.
Support from the GCF and the GEF should give all countries the opportunity to prepare comprehensive
INDC investment strategies or national climate finance strategies, considering a wide range of funding
sources beyond the Financial Mechanism of the UNFCCC.
To promote ambitious, country-driven programming, the Board should be advised by the Secretariat on
how projects and programs being considered for funding align with country strategies and contribute to
transformational outcomes consistent with countries’ INDCs – this advice would be usefully informed by
INDC investment strategies or national climate finance strategies.
While investment/climate finance strategies will reflect national priorities and circumstances, guidance
on key features of a compelling strategy and a coherent system of support for their development could
help accelerate the process and these strategies more useful for potential funders. As the GEF and the
GCF consider how to support countries to mobilize finance in support of their INDC goals, they should
look for opportunities to align or harmonize their approach.
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UNFCCC rules should support conversion
With a strong agreement and decisions adopted, rule-making following the adoption of the Paris
Agreement needs to take account the process of INDC conversion and implementation. There are a
number of opportunities to enable the conversion process and provision of support, including:
•
Transparency of action and support: The Ad Hoc Working Group on the Paris Agreement (APA) has
been tasked with developing new reporting guidelines for consideration at COP 24 and adoption at
the Meeting of the Parties to the Agreement at its first session (CMA1). The modalities and
guidelines for reporting on progress toward achieving INDC commitments should (i) take into
account that different countries have different capacities to convert INDCs into policies, measures
and investment strategies and to project their impacts and (ii) encourage timely and comprehensive
conversion by providing an opportunity for Parties to have their efforts, and progression in capacity,
recognized.
•
Communications on finance: Parties that provide support are directed to report on this assistance,
and Developed country Parties are also directed to biennially communicate anticipated support to
be provided to developing country Parties. In both cases, Parties should address support for INDC
conversion, including technical cooperation, capacity building and financial assistance.
•
INDC information and guidance: The APA is charged with providing further guidance to Parties on
information to be included in communicating their INDCs by CMA1. Such guidance can encourage
comprehensive and transparent commitments; for example, promoting specificity on planned
policies and measures, accurate emission forecasting, as well as domestic contributions and
financing needs.
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