Promoting private sector actions in the fight against climate change in Belgium and abroad

142 Pages·2016·2.07 MB·English

Promoting private sector
actions in the fight against
climate change
in Belgium and abroad

PART A – International Climate Finance

Final Report
Contract details
Federal Public Service (FPS) Health, Food Chain Safety and Environment
Bestek nr. DG5/CC/LUD/14014 - Promoting private sector actions in the fight against climate change in
Belgium and abroad

Presented by
Trinomics B.V.
Westersingel 32a
3014 GS, Rotterdam
The Netherlands

Contact main author(s)
Jeroen van der Laan ([email protected])
Elske Veenstra ([email protected])
Hans Bolscher ([email protected])
Koen Rademaekers ([email protected])

Date
Rotterdam, 23 December 2015

Disclaimer
The information and views set out in this report are those of the author(s) and do not necessarily
reflect the official opinion of the Federal Public Service (FPS) Health, Food Chain Safety and
Environment. The FSP does not guarantee the accuracy of the data included in this study. Neither the
FSP nor any person acting on the FSP’s behalf may be held responsible for the use which may be made
of the information contained therein
Promoting private sector actions in the fight against climate change in Belgium and abroad

Rotterdam, 23 December 2015

Client: Federal Public Service (FPS) Health, Food Chain Safety and
Environment

Reference: Bestek nr. DG5/CC/LUD/14014 - Promoting private sector
actions in the fight against climate change in Belgium and abroad

Jeroen van der Laan
Elske Veenstra
Hans Bolscher
Koen Rademaekers
Promoting private sector actions in the fight against climate change in Belgium and abroad
Promoting private sector actions in the fight against climate change in Belgium and abroad
Abstract
This report presents the results of a study on Belgium’s international climate finance, carried out in the
context of the pledge of industrialised countries to jointly mobilise USD 100 billion per year by 2020, to
support mitigation and adaptation actions in developing countries. It consists of the following
components: 1) the methodological framework that was developed in collaboration with the Steering
Committee on tracking and measuring private climate finance mobilised by Belgium; 2) an overview of
actors in Belgium that are relevant to the mobilisation of private climate finance to developing
countries; and 3) a quantitative assessment of Belgium’s public climate finance and mobilised private
climate finance for the years 2013-2014. The report gives recommendations and lessons learned in
relation to the methodology, data collection process, and the results.

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Promoting private sector actions in the fight against climate change in Belgium and abroad
Executive Summary
In accordance with decisions under the United Nations Framework Convention on Climate Change
(UNFCCC) Conference of Parties (COP) in Copenhagen and Cancún, industrialised countries have
committed to jointly mobilise USD 100 billion per year by 2020 to support mitigation and adaptation
actions in developing countries1. This pledge comprises scaled-up, new and additional, predictable and
adequate funding from a wide variety of sources: public and private, bilateral and multilateral,
including innovative sources. Recently, in the context of the Paris package agreed at COP21, developed
country Parties emphasized their commitment to respect their Copenhagen pledge and committed to
continue providing support to developing countries in their climate mitigation and adaptation efforts by
continuing to mobilise USD 100 billion per year from 2020 to 2025. By 2025, countries will then set a
new collective quantified goal for climate finance for at least USD 100 billion per year.

In 2015, the OECD, in collaboration with the Climate Policy Initiative (CPI), published ‘Climate Finance
in 2013-14 and the USD 100 billion goal’, which provides an estimate of the public and private climate
finance mobilised by developed countries towards their UNFCCC 2010 Cancún commitment, for climate
action in developing countries in 2013 and 2014. The report estimates that USD 62 billion of public and
private finance were mobilised in 2014, up from USD 52 billion in 2013, making an average of USD 57
billion per year over the 2013-2014 period.

This study was commissioned to shed light on the Belgian contribution to the international pledge,
by providing evidence-based results, outputs, analysis and insights on the private sources of climate
(mitigation and adaptation) investments made in developing countries mobilised by Belgium2. The
study also aims to better understand the (rather complex) methodological issues that are involved
in these calculations and discuss the implications of each of the options for the methodological
choices. The report also identifies and describes the landscape of the (main) international climate
finance providers in Belgium and assesses the private climate finance flows that were mobilised by
Belgian public interventions in 2013 and 2014. The study builds on the methodological work developed
by the OECD-led Research Collaborative on Tracking Private Climate Finance.

Methodology to calculate the levels of private climate finance mobilised
The methodological choices underlying any estimates of mobilised private climate finance flows are
important as they can have a substantial impact on the total outcome. The most important choices that
have to be made concern:
• Which projects and what part of these projects are considered as ‘climate finance’;
• How are the different financial instruments (grants, loans, guarantees, etc.) valued;
• How are the amounts attributed to the different actors, as actors (public and private) from many
origins (Annex 1 and non-Annex 1) are involved in financing projects.

1 This means that all substantial investments in mitigation (renewable energy production, energy efficiency measures, etc.) and
adaptation (coastal protection, changing weather impact on agriculture, etc.), as well as the related ‘softer’ interventions such as
technical assistance, are collectively called ‘climate finance’.
2 The mobilisation of private climate finance means that a Belgian public intervention (e.g. policy framework, concessional loans,
grants, etc.) has ‘triggered’ investments from the private sector in climate-relevant activities and/or projects in developing
countries.
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Promoting private sector actions in the fight against climate change in Belgium and abroad
There is currently no internationally agreed methodology for measuring and reporting mobilised private
climate finance. The OECD Research Collaborative on Tracking Private Climate Finance has developed a
four-stage decision framework for developing a methodology3 and very recently most OECD countries
have, based on this decision framework, adopted a common understanding of a methodological
framework as a basis for going forward4. Figure 1 presents an overview of the four-stage framework and
all methodological decisions, as decided by the Steering Committee of public Belgian climate finance
providers, that was established and used in the context of this pilot study. This methodology closely
follows the OECD common understanding. Stage 1 of the framework defines the core concepts. This
entails definitions of climate finance, and what can be considered as mobilised private climate finance.
In Stage 2 of the framework, decisions need to be made on what kind of public interventions are taken
into account when calculating private climate finance mobilisation. Stages 3 and 4 of the framework,
which are the more technical stages, set the framework for the quantification exercise. Stage 3 defines
how public interventions can be measured, while Stage 4 describes the attribution of private climate
finance to different donors in multilateral funds, and how to quantify the causality between public
interventions and private finance.

Figure 1 - Four-stage framework and overview of decision points for this pilot study5

3 OECD (2015), "Estimating mobilised private climate finance: methodological approaches, options and trade-offs’, available at:
http://dx.doi.org/10.1787/5js4x001rqf8-en
4 U.S. Department of State (2015), ‘Joint Statement on Tracking Progress Towards the $100 billion Goal Paris, France, 6 September
2015’, available at: http://www.state.gov/documents/organization/246878.pdf
5 Based on: Jachnik, R., R. Caruso and A. Srivastava (2015), "Estimating mobilised private climate finance: methodological
approaches, options and trade-offs", OECD Environment Working Papers, No. 83, OECD Publishing, Paris. 
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Promoting private sector actions in the fight against climate change in Belgium and abroad
Not all climate finance goes directly into projects or ‘investments’. Some very relevant climate
projects concern policy support and project preparation support, preparing the ground for later
investments. We have made a distinction between two different kinds of public support to climate
goals:
1. Policy support and project preparation support: public support to policy and policy
instruments (e.g. developing legal frameworks, setting up ‘feed in tariffs’, institutional
strengthening, etc.) and for the preparation of projects. Giving indirect support to the
mobilisation of private climate finance.
2. Project finance: public financial support at project level, where money is invested for project
execution. Often directly related to the mobilisation of private climate finance.

Both forms of support are relevant and can be counted as public climate finance. They both have an
impact on the mobilisation of private climate finance, but it is only possible to quantify this impact for
the second form of support, i.e. direct project finance. It is not yet possible to calculate, nor even
estimate, the indirect mobilisation impact of public finance on private finance, even though this
indirect impact is extremely relevant. We have therefore not been able to include this form of
mobilisation in the quantification as part of this study. We have nevertheless included several case
studies to show the importance of this indirect mobilisation.

In order to understand the impact of various options in the calculation methodology on the final
numbers, we have carried out three sensitivity analyses:
• We have estimated the impact of measuring the financial flow at the moment of contract as well
as calculating at the moment of disbursement (in general this is substantially less).
• We have also estimated the difference between calculating all financial flows at ‘face-value’
(which is current international practice in climate finance) versus calculating the different flows
based on ‘grant-equivalent’ (the OECD DAC methodology; current practice in development
finance).
• We have also made an analysis of the impact, and implications, of considering export credit
insurance (provided, in Belgium, by Delcrede-Ducroire) as an instrument mobilising private
climate finance.

Relevant actors in the Belgian climate finance landscape
Belgium has a fragmented landscape of climate finance providers to developing countries. A Steering
Committee was established for this study to identify all of these actors and to discuss the technical
details of our methodology. Figure 2 presents the actors that were identified. This list is not
exhaustive. There could be more relevant actors which have not been examined in this study. Despite
our best efforts, not all of them could be included in the quantification of this study due to lack of data
or time constraints6.

It should be noted that data collection was relatively complicated for this study, due to the diverse
landscape of climate development finance providers in Belgium.

6 We have used data from: DGD, Flemish Foreign Affairs, Walloon Agency for Air and Climate, FPS Environment, BIO, and Finexpo.
Delcredere-Ducroire data was used in the sensitivity analysis.
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Promoting private sector actions in the fight against climate change in Belgium and abroad
Figure 2 - Landscape of relevant climate finance providers in Belgium

Results of the data assessment
We have conducted interviews, studied reports and sent a questionnaire to the Steering Committee
members and the participating organisations listed in Figure 2, to gain insight into their general climate
finance and their mobilisation of private climate finance in particular. The data available on the public
support delivered to climate projects was generally of good quality. However, the data available for
mobilised private finance was not documented in the existing data information systems. Therefore, we
had to go back to the original project documentation of the participating organisations several times in
order to get the required data and even then, not all data required for a correct calculation could
always be found.

In 2013 and 2014, Belgium provided EUR 106.61 million of climate finance through bilateral
channels and EUR 91.51 million through multilateral channels7. We were able to identify EUR 36.99
million of public finance that directly mobilised private climate finance. This finance was provided by
concessional and non-concessional loans from Finexpo and BIO. After applying the methodology to the
available data we concluded that the (main) Belgian climate finance providers mobilised a total of EUR
18.21 million of private climate finance in 2013 and 2014. There was no data available on climate
finance mobilised by Belgium through multilateral channels. However, we were able to make a first

7 These figures are based on the MMR report 2013-2014 for bilateral finance and climate-specific finance through multilateral
channels, and additional data provided by BIO and Finexpo.
(Government of Belgium, ‘MMR Report 2013-2014, Report on financial and technology support provided to developing countries under
the Monitoring Mechanism Regulation (MMR)’, Communication with European Commission.)
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