Colombia shares key lessons with the region on its national climate finance strategy

Colombia

Colombia’s commitment to reduce gas emissions by 20 percent by 2030 was a central theme at its Annual Climate Finance Event, held in Bogota in November 2016. The event showcased Colombia’s work on climate finance, including its new monitoring system, while offering a forum to exchange ideas and lessons with regional neighbors, financial institutions and international partners on climate finance. Representatives from Colombian Government Ministries including the Ministry of Finance (including its Financial Institution for Development), Ministry of Environment, Ministry of Industry and Tourism and Ministry of Foreign Affairs presented Colombia’s progress in the past year towards climate change-related commitments, as well as future plans. Opening the event, Simon Gaviria, Director of the Colombian National Department of Planning, stated the country required an investment of approximately $3.1 billion pesos (USD 1.03 million) annually to achieve the 20 percent emissions reduction goal, requiring contributions from both public and private resources. However, in order to measure the investment required and progress towards this and other climate change targets, he said the right tools must be in place.

An effective and accurate climate finance monitoring system is one such tool, and Deputy Director of Territories and Public Investment of the Department of Planning Manuel Fernando Castro outlined Columbia’s Monitoring, Reporting and Verification (MRV) System, established in partnership with the UNEP/UNDP/WRI GCF Readiness Programme to monitor progress towards Colombia’s Paris Agreement commitments. Manuel Fernando Castro explained that the system was designed with the input of prospective users from the national and regional public sectors as well as the financial sector, and is expected to be completed by February 2017.

Learning from best practices in the region, experts from Costa Rica, El Salvador, Chile and Peru shared their own experiences of improving and expanding climate finance. Costa Rica had the most ambitious goal: to reduce greenhouse gas emissions by 44 percent by 2030. In El Salvador, which is also a GCF Readiness Programme member country, the government has welcomed the Paris Agreement as incentive to scale up its climate change financing efforts. Chile, which has been significantly affected by climate change in recent years, has increased public investment in climate change interventions and is creating monitoring systems that allow the country to estimate its current investment levels. Peru is aiming to reduce greenhouse emissions by 30 percent, with two thirds to be financed with public funds and one third with private funds and international cooperation.

Green bonds, climate change financing which focuses on funding projects that have positive environmental benefits, were also discussed at the forum. International Financial Corporation (IFC) Regional Leader, Helena de la Torre, said IFC had been a pioneer in the green bonds market, with US$5.6 million in bonds issued to date (end 2016). Through these bonds, IFC aims to increase transparency in ‘green financing’ and to mobilize resources from the private sector for environmentally sustainable projects. Colombia has not issued green bonds yet, but plans to do so in the future as an additional source of funding to reach its climate change goals.

Finally, Ari Huhtala, Deputy Director of the Climate and Development Knowledge Network, analyzed the relationship between developed and developing nations in mobilising climate finance and achieving global commitments such as the Sustainable Development Goals and the COP 21 commitment to limit the increase of global temperature to two degrees Celsius. He acknowledged that both developed and developing nations had specific roles to play, and quality communication flow between the two was crucial if these global goals were to be achieved. Success after COP21 would depend on three key steps: 1) linking climate investment to National Determined Contributions (NDCs), 2) significantly increasing the quality of information available on such investment, and 3) presenting national plans for implementation of NDCs to domestic and external markets and donors to attract more investment in climate finance.