Sources and Sinks: Assistance
Developing country capacities to identify, access and blend varied sources of financing
UNDP is already a major source of technical assistance developing the capacity of countries to access and blend different sources of international climate finance to meet national goals. This case study provides a specific example of UNDP’s approach to accessing and blending different sources of funds. This expertise can be leveraged to develop the capacity of countries to identify and match the different sources of climate finance with the required incremental funding spelt out in the NAMAs/NAPs.
Blending different financing sources for refrigerator life-cycle management
The life-cycle of refrigerators can have a large impact on the environment. Household electricity use can contribute up to 40% of national demand in developing countries. Ozone depleting substances (ODS), used as refrigerants, have a very high global warming potential and are often released directly into the atmosphere at a refrigerator’s end-of-life. No single source of financing is currently available to incentivize consumers to purchase energy-efficient ODS-free refrigerators, to cover the incremental costs of re-engineering the production lines of domestic manufacturers to meet this new demand, and to collect and dispose of the ODS in old appliances. In the absence of this financing, the result is significant elevated energy consumption and high GHG emissions.
As set out in the figure below, UNDP is assisting developing countries to access and blend three sources of financing to better manage this environmental impact in the refrigerator life-cycle.
First, at the manufacturing stage, funding from the Multilateral Fund of the Montreal Protocol can assist manufacturers to switch from HCFCs to lower global warming potential refrigerants. Second, at the usage stage, funding from the GEF can help bring about energy efficient market transformation. Third, at the end of a refrigerator’s lifetime, funding from carbon finance can cover the costs of financing the recovery and destruction of high global warming refrigerants.
Taken together, these various funding requests require a high level of familiarity with the – different – requirements of each funding source. UNDP can assist developing countries in formulating the necessary documentation and in meeting each source’s various requirements in order that the finance can be successfully accessed.
The Ministry of Climate Change and Natural Disasters and UNDP MDG Carbon have issued the Nationally Appropriate Mitigation Action (NAMA) on Rural Electrification in Vanuatu.
The overall target of the NAMA is to support Vanuatu in achieving the goal defined in the National Energy Road Map (NERM), namely to provide access to electricity to all households in Vanuatu. The NAMA will reduce GHG emissions through the replacement of fossil fuels with renewable energies. The NAMA will also contribute to Sustainable Development (SD) benefits, such as improvement of the situation of groups with specific vulnerabilities, women and the poor.