2018–2019 Annual Report 2018–2019 Annual Report 1 Table of Contents FOREWORD 2 CF-ASSIST: IN ACTION 3 2.1 CLIMATE KNOWLEDGE FORUMS 3 INNOVATE4CLIMATE 4 LATIN AMERICA CARIBBEAN CLIMATE WEEK 6 THE ASIA PACIFIC & AFRICA CLIMATE WEEKS 7 2.2 KNOWLEDGE AND LEARNING 8 2.3 CLIMATE ANALYTICS AND ADVISORY SERVICES 11 COLOMBIA AND LAO PDR 12 BHUTAN 13 ETHIOPIA 14 VIETNAM 16 ZIMBABWE 17 2.4 NETWORKED CARBON MARKETS 19 2.5 CLIMATE WAREHOUSE 20 2.6 CARBON PRICING LEADERSHIP COALITION 22 CF-ASSIST: LOOKING AHEAD 24 2 CF-Assist Foreword The last year has been quite eventful Latin America and the Caribbean event in Uruguay, and the for climate action—a landmark Africa event in Ghana. The feedback from various Intergovernmental Panel on Climate stakeholders indicates the evolution of these events as the Change (IPCC) report was released, most significant forums to highlight the climate challenges which underscored the magnitude of and opportunities in specific regions. the challenge; countries have reached an agreement at COP24 on As part of its knowledge management function, CF-Assist a near-complete rulebook for the has piloted a webinar series on carbon pricing and market Paris Agreement; and, while no consensus emerged on mechanisms, which attracted record-breaking participation operationalization of Article 6, activities on carbon pricing from stakeholders. The Carbon Pricing Leadership and markets continued to grow around the world. With the Coalition (CPLC)—one of the platforms managed through expected conclusion of the negotiation process on the CF-Assist—organized the first global research conference rulebook at COP25 in Chile, countries are poised to raise on carbon pricing in New Delhi, India in February 2019. climate ambition and initiate climate action post-2020 First of its kind, the conference brought together academic through NDC implementation and international researchers, policymakers, and practitioners for a cooperation. Over the last year, the Carbon Finance meaningful dialogue across conceptual and practical Assist—as one of the key World Bank initiatives on climate aspects of carbon pricing. action—has continued to support these developments CF-Assist has also facilitated innovative work on through various ongoing, and some new, activities. operationalization of Article 6 of the Paris Agreement, CF-Assist’s country support program has provided technical which has led to the development of the Climate assistance to Ethiopia, Colombia, Lao PDR, and Zimbabwe Warehouse. This aims to catalyze early participation in in integrating climate change considerations in their climate markets by piloting the creation of demand and development policies. The Mexico program on building supply of Mitigation Outcomes, and the creation of a national institutional capacity to plan for evaluation, selection, common market infrastructure. access, management, deployment, and monitoring of All these activities have been made possible by the proposals for GCF financing has successfully concluded. generous support from CF-Assist’s contributing After two successful events in Barcelona (2017) and Frankfurt partners—the Government of Spain, the Netherlands, (2018), the third edition of the Innovate4Climate (I4C)—the Germany, and Switzerland. As the WB’s client countries flagship World Bank climate event—has moved to Asia and others move towards enhanced climate action, the (Singapore, June 4-7, 2019) with the objective of capturing support programs of CF-Assist could only gain in the growing interest and demand in the region and relevance, and the team looks forward to successfully maintaining its status as a premier global event focused on delivering the continuing work program. climate finance, investment, and markets. The 2019 edition of the global States and Trends of Carbon Pricing report will also be launched at I4C. CF-Assist has also supported the World Bank’s partnership role in organizing regional Climate Weeks and Carbon Forums, which have become part of the annual climate Venkata Ramana Putti, PhD calendar. During 2018-19, this partnership comprising WB, Program Manager various UN agencies and regional development banks Carbon Markets and Innovation successfully conducted the Asia Pacific event in Singapore, The World Bank Group 2018–2019 Annual Report 3 CF-Assist: In Action 2.1 Climate Knowledge Forums CF-Assist offers a discrete platform for private and public efforts to meet climate goals that complement the sector partners to connect and collaborate on climate Sustainable Development Goals at the national level. These finance, as well as policies and measures that incentivize forums provide an opportunity for capacity building in financial support from international and domestic sources. designing carbon-pricing policies and the investment Its annual conferences contribute to post-Paris Agreement planning that supports countries’ NDCs. INNOVATE4CLIMATE 2018 | FRANKFURT, GERMANY AFRICA CLIMATE WEEK 2019 | ACCRA, GHANA LATIN AMERICA & CARIBBEAN CLIMATE WEEK 2018 | SINGAPORE ASIA PACIFIC CLIMATE WEEK 2018 | MONTEVIDEO, URUGUAY 4 CF-Assist CLIMATE KNOWLEDGE FORUMS Innovate4Climate (I4C) Innovate4Climate (I4C) was launched in 2017 as a global support from GoS, the WBG launched I4C as a three-year platform to showcase and foster climate-smart investment, pilot to establish an event that could be an integral part of finance, and markets. It facilitates deal-making on the global dialogue on climate change. In an already- transformative climate action by convening a dialogue crowded calendar of climate-related events, the goal is to between developed and developing countries, public and make I4C the go-to climate event on finance, investment, private actors, and development organizations in an apolitical and markets. Its goal is to bring leaders together to think and business-supportive environment. It serves as both a innovatively about how to leverage and direct the flagship event on WBG climate change action, as well as investment needed to combat climate change. It provides a platform to showcase action and opportunities examines how to channel it to achieve the biggest impact. from countries, institutions, and the private sector. The second edition of I4C was hosted by the WBG and the I4C builds on CARBON EXPO, the preeminent global Government of Germany, supported by the GoS, in forum on carbon markets from 2003 to 2016. The World Frankfurt, May 22–24, 2018. Bank Group played a leading role in convening CARBON EXPO. In 2016—together with the Government of Spain In 2019, I4C will take place outside of Europe for the first (GoS), a long-time donor and supporter—it rebranded the time. The objectives of this move are threefold: 1) leverage EXPO to better reflect the role of finance, policy, and I4C’s convening power to mobilize and bring the climate targeted investment in climate action. With financial community together in different regions where new Milestones of Frankfurt: §§ The World Bank’s annual report on emerging trends in global carbon pricing, “State and Trends of Carbon §§ 1,233 attendees from 74 countries participated Pricing 2018,” was launched. §§ In 56 workshop sessions, about 282 speakers discussed ways to address the pressing challenge of climate change §§ I4C also included a dynamic “Marketplace,” where 44 exhibitors—from leading governments and industry groups, to clean energy firms and carbon In Spain, we are betting on technological traders—showcased their strategies and innovation and the design of new business technologies for driving the fight against climate change. formulas and project financing. We want to §§ #Innovate4Climate got 296,000 social media hits explore and learn from an early position the challenges that the future presents us. §§ The World Bank’s initiative, "New Generation of Market Instruments," focused on operationalization of –María García Rodríguez , former Spanish Secretary of the Paris Agreement’s Article 6, was launched, with State for the Environment financial support from the Government of Spain. 2018–2019 Annual Report 5 opportunities and challenges can be highlighted; 2) The third edition of I4C will be hosted in Singapore and acknowledge and learn from the growing interest in, and will build on previous events in Barcelona (2017) and implementation of, carbon pricing instruments globally; Frankfurt (2018). and 3) establish I4C as a truly global event on climate finance, investment, and markets. With these goals in mind, Singapore has been selected as the first venue for the I4C rotation outside of Europe. Features of I4C 2019 will include: §§ High-level summit featuring transformative investment opportunities in clean cooling, battery storage, and climate-smart cities. §§ High-level plenaries on Asia’s green bond market; Chinese, Korean, and Japanese carbon markets; and the future of carbon assets and operationalization of Article 6. §§ Workshop program with 50+ sessions across four tracks: finance, technology, markets, and resilience; §§ Inaugural Pitch Hub competition attracting 200+ submissions from start-ups and entrepreneurs with climate-smart solutions for low-carbon and climate-resilient cities; Innovate4Climate creates a much-needed §§ Marketplace and exhibition hall for leading space for public and private actors to come practitioners and proponents of sustainability; together to collaborate around solutions to §§ Site visits showcasing Singapore’s leadership in urban sustainability. the greatest challenge of our times. This has become the go-to place—especially for sharing In addition to the WBG, I4C 2019 is supported by Singapore’s National Climate Change Secretariat, inventive, innovative, and non-traditional Spain’s Ministry for the Ecological Transition, and approaches to financing climate solutions. Germany’s Ministry for the Environment, Nature Conservation, and Nuclear Safety. –John Roome, Senior Director for Climate Change at the World Bank. 6 CF-Assist CLIMATE KNOWLEDGE FORUMS Latin America and Caribbean Climate Week The Latin America and Caribbean Climate Week was held Highlights: in Montevideo, Uruguay in August 2018. This 12th edition was one of the most successful events in the region during The event showcased opportunities in line with the Paris the last few years, both in attendance and in content. The Agreement such as: four-day event recorded over 900 registered participants from various government agencies, the private sector, §§ Implementing NDCs non-profit organizations, and academia, in addition to eight §§ Leveraging public and private finance for climate action ministers and deputy ministers of environment from various §§ Carbon pricing mechanisms and carbon markets Latin American and Caribbean countries, including representation from a Caribbean parliamentarian. §§ Sustainable development and transformational change §§ Public-private partnerships The theme of this year’s edition was “Climate Action for Sustainable Development: Driving Change in Latin America §§ Innovative business models to fight climate change. and Caribbean.” It focused on climate finance, NDCs, Talanoa Dialogue, carbon markets, and carbon pricing. I have no doubt that the future of our economies will be shaped and defined here, which is one of the many reasons why this Climate Week is so important. It represents a transformational shift that is already underway, and which embraces the participation of all constituencies, including states, regions, businesses, investors, and civil society at large. – Patricia Espinosa, UNFCCC Executive Secretary © Marcelo Campi, Flickr 2018–2019 Annual Report 7 CLIMATE KNOWLEDGE FORUMS The Asia Pacific Climate Week The Asia Pacific Climate Week was held in Singapore in Highlights: July 2018. The three-day conference was attended by nearly 750 registered participants from various government §§ During the three-day conference, participants discussed agencies, the private sector, non-profit organizations, and the challenges countries in the region are facing to find academia, in addition to five ministers and deputy ministers suitable financing sources for their climate projects and of environment from various East Asia Pacific countries. carbon markets, particularly on implementation. The event focused on market-based approaches, economic instruments, and climate-aligned finance to drive §§ Furthermore, the event showcased groundbreaking action investment in climate action. Other events included: underway in the region to dramatically reduce emissions high-level sessions with the champions of the Marrakech and build resiliency. Delegates attending the event called Partnership; a high-level ministerial meeting; a low- for a new kind of multilateralism to ensure that Asia Pacific emissions development strategy (LEDS) workshop; a implements the Paris Agreement. regional technology meeting on industrial energy efficiency; §§ Looking ahead, it became clear that carbon markets are and the Asia Pacific Talanoa Dialogue. a priority for the region, and indeed formed a major part of discussions, with delegates openly calling for strong leadership on the issue. This represents an opportunity for the Bank to enhance and continue working with the region even more. Africa Climate Week The 13th edition of Africa Climate Week took place in Accra, action in key sectors; Ghana in March 2019. Over the five days of the event, there were more than 2,500 participants from various §§ Financial instruments and regulatory frameworks; government agencies, the private sector, non-profit §§ Advancing the implementation of climate action. organizations, international donors, and academia; there were seven ministers and deputy ministers of environment from various African countries. The inaugural session included the President of Ghana, Nana Akufo-Addo, and the President of COP24, Michał Kurtyka. Africa Climate Africa has come together to join the rest of Week provided a critical opportunity to build momentum for the world in tackling the issues of climate raising the level of ambition on the part of African countries to achieve the goals of the Paris Agreement, and to limit change as we have just one world and we climate change. have to protect it now. – Asmau Jibril of the Federal Ministry of Highlights: Environment of Nigeria §§ Practical examples of policies, initiatives, and actions in Africa; §§ Barriers and enabling measures for engaging climate 8 CF-Assist 2.2 Knowledge and Learning Endorsing global capacity building and innovative publications, and webinars, learners can access innovative knowledge solutions, CF-Assist provides support in and impactful information on carbon markets and pricing, translating technical knowledge into coherent online learning Article 6 of the Paris Agreement, NDCs, and climate finance. packages. Through a suite of different e-courses, E-COURSES Knowledge and learning under CF-Assist is undergoing a popular. In the next financial year, we will update these revamp. The focus is on developing a strategic plan on courses to develop a well-designed learning map for development and delivery of e-courses. The CF-Assist CF-Assist clients and climate change practitioners. Below is courses on emissions trading systems and designing, a breakdown of participants across the globe who monitoring, and verification of climate finance continue to be undertook CF-Assist courses this year: SOUTH ASIA REGION 146 NORTH AMERICA 115 MIDDLE EAST & NORTH AFRICA 18 LATIN AMERICA & THE CARIBBEAN 75 EUROPE AND CENTRAL ASIA 127 EAST ASIA PACIFIC 79 AFRICA 134 WEBINAR With CF-Assist’s support, a series with four webinars was Results: designed and delivered to expand clients’ and partners’ understanding of the challenges and opportunities of adopting §§ The series received interest from 1,233 climate change stakeholders different carbon pricing mechanisms. These topics are: §§ All sectors were well represented—Africa, Middle East and North i. Guide to communicating carbon pricing Africa, Latin America and the Caribbean, East Asia Pacific, ii. Designing accreditation and verification of carbon pricing South Asia Region, Europe and Central Asia, and North America instruments §§ Understanding on carbon pricing was enhanced; peer-to-peer iii. Blockchain and climate markets learning increased. iv. Climate auctions for national climate action. §§ Strengthened collaboration §§ Paved the way to develop further in-depth knowledge and learning products. 2018–2019 Annual Report 9 PUBLICATIONS n STATE AND TRENDS OF CARBON PRICING emissions in the world. The report showcases CF-Assist supports the development of the annual State how companies along the construction value chain are and Trends of Carbon Pricing publication. This report adopting various practices and approaches to embed provides an up-to-date overview of existing and emerging sustainability in their operations, as well as exploring carbon pricing instruments around the world, including ​ how they are using carbon pricing to manage their international, national, and subnational initiatives. It also carbon risk and reduce their carbon footprint. investigates trends surrounding the development and implementation of carbon pricing instruments. This year’s edition discusses the relation between policies that put an explicit price on carbon and policies and those that put ONLINE DASHBOARD an implicit price on carbon. While the State and Trends is published annually, the n GUIDE TO COMMUNICATING CARBON PRICING carbon pricing dashboard provides up-to-date information In collaboration with the Partnership for Market on existing and emerging carbon pricing initiatives around Readiness, the Carbon Pricing Leadership Coalition the world. CF-Assist supports this project; the dashboard is (CPLC), supported by CF-Assist, released the Guide to an online interactive platform to find data on national, Communicating Carbon Pricing at COP24. Stakeholder regional, and subnational carbon pricing instruments. Users and public support are critical for an enduring and make a selection and navigate through different tabs to robust carbon pricing policy. The guide explains how view the value and the emissions covered. Complementing jurisdictions communicating their carbon pricing policy the State and Trends publication, the dashboard allows plays a key role in creating and maintaining support. users to visualize data, and download and compare carbon pricing in different parts of the world. n CARBON PRICING LEADERSHIP REPORT https://carbonpricingdashboard.worldbank.org Together with providing an update on CPLC’s activities over the last year, this report showcases articles from thought leaders to inspire and guide government and business leaders to increase their carbon pricing ambition. n CARBON PRICING AND THE TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURE This brief discusses the value of carbon pricing as a metric to meet the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) by assessing the materiality of climate risk at the portfolio level. While banks and other financial institutions tend to apply carbon pricing primarily at the operational level, they are most vulnerable through their financed emissions, and should expand pricing accordingly. n CONSTRUCTION INDUSTRY VALUE CHAIN REPORT The global construction industry is the world’s largest consumer of raw materials, and constructed entities account for between 25 and 40 percent of total carbon 10 CF-Assist 2018–2019 Annual Report 11 2.3 Climate Analytics and Advisory Services CF-Assist strengthens the capacity of client countries to policy packages and the enhancement of national capacity understand, integrate, and develop low-carbon initiatives to plan for, access, deliver, and monitor climate finance. The consistent with their NDCs, sustainable development program currently works in Colombia, Bhutan, Ethiopia, priorities, and country climate action strategies. Country Lao PDR, Vietnam, and Zimbabwe. programs focus on the identification of transformational BHUTAN LAO PDR VIETNAM ETHIOPIA COLOMBIA ZIMBABWE 12 CF-Assist CLIMATE ANALYTICS AND ADVISORY SERVICES Colombia & Lao PDR AIR POLLUTANT AND GHG EMISSION MITIGATION IN CITIES THROUGH POLLUTION CHARGES AND CARBON PRICING—COLOMBIA AND LAO PDR In Colombia, CF-Assist is working with the local authorities in Lao PDR. In March 2019, key newspapers and media of the Metropolitan Area of the Aburra Valley (AMVA)— included articles on the government’s commitment to adopt which includes Colombia’s second largest city, Medellin—to environmental taxes that provide clear incentives to reduce support the development of market-based instruments. pollution as part of the National Green Growth Strategy. The program, Air Pollutant and GHG Emission Mitigation in Cities through Pollution Charges and Carbon Pricing, provides incentives to reduce emissions of local air pollutants and GHG. Objectives: §§ Develop a strategic framework and a methodology for The program has helped estimate the economic costs of regulatory impact analysis of pricing policies for air the health issues caused by exposure to fine particulate pollution and GHG in cities; matter (PM2.5) in the Aburra Valley in current conditions and in the future under a baseline scenario. In addition, the §§ Apply the framework in cities, including the preparation of initiative has developed a model to show the positive analytical work and organizing stakeholder consultations. effects of adopting different market-based instruments on air pollution and GHG emissions, and demonstrate the subsequent health improvements. The analytical work conducted in the Aburra Valley and its recommendations has been presented and discussed with representatives from Colombia’s Ministry of Environment and Sustainable Development, and the National Planning Department. Based on this dialogue, CF-Assist worked with national government agencies in developing a charge on PM2.5 emissions from fixed and mobile sources that aims to reduce the emissions of air pollutants and short- lived climate pollutants. In Lao PDR, the program supports the development of pollution charges and fees to reduce emissions of local pollutants and GHG. During FY19, CF-Assist completed analytical work to underpin the adoption and strengthening of market-based instruments that can help Lao PDR tackle its environmental and climate change priorities. The options assessed by CF-Assist include increasing the excise tax on transport fuels and the establishment of water effluent fees © Ben Bowes, Flickr 2018–2019 Annual Report 13 CLIMATE ANALYTICS AND ADVISORY SERVICES Bhutan BHUTAN CLIMATE FUND The Bhutan Climate Fund (BCF) is intended to aggregate and monetize emission reductions (or Mitigation Outcomes (MOs) in the context of Article 6 of the Paris Agreement) from renewable energy projects in Bhutan, starting with the ecologically sound development of run-of-river hydropower. Objectives: §§ Aggregating MOs to reduce transaction costs, establish a common framework, and channel carbon revenues systematically; §§ Facilitate the monetization of Bhutan’s net negative GHG emissions and carbon offsets from renewables; §§ Increase the viability of hydropower projects in Bhutan by providing an additional revenue stream; and §§ Support the country in meeting its NDC commitments, while meeting its overall development goals. In FY19, the conceptual development of the BCF was completed and approved by the National Environment Commission Secretariat. A task force consisting of representatives of relevant ministries of the Royal Government of Bhutan and key stakeholders has been constituted to lead detailed design development. The BCF is also exploring opportunities for trading MOs to build the necessary institutional mechanisms, capacity, and experience to participate in post-2020 climate markets. © Curt Carnemark, Flickr 14 CF-Assist CLIMATE ANALYTICS AND ADVISORY SERVICES Ethiopia EXPLORING CARBON PRICING IN DEVELOPING COUNTRIES: A MACROECONOMIC ANALYSIS IN ETHIOPIA In response to a challenge from the Carbon Pricing Panel Appropriate pricing instruments such as feebates or tax to expand carbon pricing to cover 25 percent of global revisions can potentially bring a transformational change emissions by 2020, Ethiopia commissioned a study to by complementing and contributing towards NDC obtain recommendations on the role and possible forms of implementation. This study is a starting point to identify policies in Ethiopia. This study opened new avenues for areas for deeper analysis across countries. policy dialogue on climate and environment issues at the highest levels. This work is a follow up to the country’s participation in President Kim’s and Managing Director Lagarde’s Carbon Pricing Panel, which has helped solidify Objectives: the international perception of Ethiopia as a climate leader §§ The study summarized in this report is a collaborative effort and the Bank as a key partner in this effort. by the GoE, the EDRI, and the World Bank to better understand the potential benefits and costs for Ethiopia The key milestones and goals reached are: with use of carbon pricing to reduce GHG emissions. The i. methodology for evaluating the economic and social study also investigates distributional impacts of carbon impact of climate carbon pricing was developed, pricing and measures to address unwanted distributional peer-reviewed, and agreed with the Ethiopian impacts. The specific aims include supporting the GoE in Development Research Institute (EDRI) and Government identifying policy actions, including carbon pricing, to of Ethiopia (GoE); achieve its GHG emission reduction targets; facilitating a dialogue among Ethiopian stakeholders on related policy ii. carbon pricing study completed, peer-reviewed, and instruments; and building analytical and technical capacity presented to the client; and for GoE’s future policy planning. iii. complementary analytical pieces that evaluate how carbon tax revenues enhance environmental co-benefits have been produced. This study has enhanced the understanding of carbon pricing implementation and associated policy instruments. It has produced ongoing discussions with the Ministry of Finance for excise tax reforms and for mainstreaming of Climate Resilient Green Economic (CRGE) considerations in the development planning process. Findings from this study act as a guiding approach to design similar studies for other low-income countries, such as Ghana and Rwanda. 2018–2019 Annual Report 15 Key findings from this analysis include: §§ A significant impact for Ethiopia of applying a carbon price to fossil fuels is that substantial revenues can be generated—up to $800 million per year by 2030. This revenue can be used in part for income transfers to soften impacts on the poor and to make revenue-neutral reductions in other taxes to spur investment and productivity gains. §§ Application of carbon pricing to fossil fuel use in Ethiopia will have a somewhat limited effect on total GHG emissions (up to two percent of total national GHG emissions), especially as the tax rate rises over time. This, in turn, reflects both the low base level of fossil fuel use, and the relatively low-price responsiveness of transport fuel demand. However, carbon pricing on fuels can contribute to mitigating a “lock-in” of high levels of individual vehicle use and high demand for road expansion by limiting vehicle use and creating support for expanding high quality public transit in more densely populated areas. §§ The direct effect of the carbon pricing is likely to be felt more by higher-income households since they are more intensive consumers of fossil fuels. Indirect economic effects to higher fuel prices can lead to modestly slower growth for the urban poor, but the size of that impact will depend on how carbon revenues are recycled. Because the rural poor are not intensive users of fossil fuels, and the economic adjustments to carbon pricing may favor the agriculture sector, the rural poor are likely to face little impact from it. 16 CF-Assist CLIMATE ANALYTICS AND ADVISORY SERVICES Vietnam VIETNAM GETTING ON A LOW-CARBON ENERGY PATH TO ACHIEVE NDC TARGETS The Government of Vietnam submitted its NDC under the Objectives: Paris Agreement in 2015, which commits to reducing GHG emissions by eight percent compared to the business-as- §§ This study aims to support the development of the usual case by 2030 with domestic resources and 25 Roadmap for GHG Mitigation in the energy sector up to percent with international financial support. 2030. More specifically, the primary objectives of this analytical advisory are to support Vietnam in: In this context, the Ministry of Natural Resources and Environment requested each key line ministry submit their §§ developing and reaching consensus on cost-effective sectoral goals to achieve the NDC targets, and propose low-carbon mitigation options and pathways both on new and more ambitious targets for the next round of the demand and supply sides to achieve NDC targets; NDC submission. §§ estimating the total costs and financing needs to The energy sector, comprising power generation, achieve NDC targets; and industry, buildings in the residential and commercial sectors, and transport is the single largest source of §§ recommending updated NDC targets for the energy GHG emissions in Vietnam, accounting for more than 60 sector and determining the roadmap to achieve percent of GHG emissions now, and projected at more these goals. than 85 percent by 2030. §§ It is anticipated that the final NDC Pathways Analysis The Ministry of Industry and Trade (MOIT) requested World Report will be delivered to MOIT in June or July 2019. Bank support in developing its energy sector emission reduction targets and pathways contributing to the national NDC targets. © Tran Thi Hoa, Flickr 2018–2019 Annual Report 17 CLIMATE ANALYTICS AND ADVISORY SERVICES Zimbabwe CLIMATE FINANCE AND LOW CARBON DEVELOPMENT ACTIVITIES; ZIMBABWE CLIMATE CHANGE TECHNICAL ASSISTANCE (ZIM-CLIM) CF-Assist supports the Zimbabwe Climate Change Milestones: Technical Assistance Program (ZIM-CLIM), which aims to increase the capacity of the Government of Zimbabwe to §§ Development of the NDC implementation framework for integrate climate change considerations in the planning, mitigation. This work included a robust analysis leading to design, and implementation of development programs in the identification of: priority sectors. It seeks to turn knowledge into investment plans that can be supported by emerging climate finance i. expected BAU emissions trajectories through 2030; mechanisms. Specifically, CF-Assist support targets the ii. feasible mitigation options in the energy sector and GHG cross-cutting work stream of ZIM-CLIM, fostering cross- emission reduction pathways; and sectoral policies and processes. These aim to make Zimbabwe’s development more climate-resilient and less iii. potential mitigation options from the agriculture and carbon-intensive through: forestry sectors, which could help achieve the target. §§ NDC implementation framework for mitigation. The NDC §§ The analysis also developed a MRV method for one of the implementation framework will be instrumental in prioritized mitigation actions (solar irrigation), analyzed documenting the country’s progress in achieving its implementation arrangements, and developed policy commitments, and will help attract financial support from recommendations for the achievement of the NDC. different public and private sources. §§ The report on NDC implementation framework for §§ Building capacity to mobilize climate finance to attract mitigation received feedback from various stakeholders and execute scaled-up financing from the Green Climate through a validation workshop held in Harare in September Fund (GCF) and other sources. Support is focused on: 2018; was peer-reviewed; and shared with the government. An additional workshop to launch the report i. Building capacity to develop bankable projects in line took place in April 2019. The analysis conducted provides with the country's climate change strategies, plans, the Government of Zimbabwe updated and robust and policies; and information of an important input for the 2020 NDC review ii. support of the Infrastructure Development Bank of and update. Zimbabwe (IDBZ) to achieve accreditation to the GCF. §§ In addition, two standalone reports for the MRV framework were produced: §§ Institutional Arrangements and Governance Structures for MRV Framework §§ MRV Method for Energy-Agriculture-Water Nexus. 18 CF-Assist §§ Building capacity to mobilize climate finance. The grant In addition, support is being provided to IDBZ and other helped the Infrastructure Development Bank of Zimbabwe stakeholders in Zimbabwe to strengthen their capacity to (IDBZ) finalize its accreditation to the GCF. Trainings on mobilize climate finance resources from international, project preparation, environmental and social policies, national, and private sources. There is specific attention on and the Environmental and Social Safeguards opportunities to mainstream climate issues within the Management Systems (ESMS) were conducted during Zimbabwean financial system. As part of this support, 2018. These were targeted to IDBZ staff and included advisory services on innovative climate financial instruments other relevant stakeholders. Inputs for the trainings allow will be provided to IDBZ. A workshop will be conducted in for the continuous improvement of the ESMS. It is April 2019 to present initial findings on the analysis of the expected that IDBZ will submit their application by the current financial landscape in Zimbabwe, and to discuss end of March 2019. lessons learned and best practices from other countries that could be relevant for the country. 2018–2019 Annual Report 19 2.4 Networked Carbon Markets The current global landscape for carbon pricing is trending §§ Contribute to Climate Transparency’s Brown to Green towards a network of decentralized market mechanisms, report in November 2018. This provides a comprehensive linking at regional, national, and subnational levels. While overview of G20 countries’ transition to a low-carbon international climate markets have the potential to economy. Climate Transparency, an independent global significantly lower costs and mobilize resources for low consortium, is supported by NCM and other partners to carbon development, the heterogeneous landscape of enhance assessments of G20 countries’ climate policies climate actions make it complex for policymakers and and targets. investors to move forward an internationally coordinated approach on climate markets. Article 6 recognizes the heterogeneity of approaches by allowing Parties to engage in bottom-up cooperative approaches through Objectives: “internationally transferred Mitigation Outcomes”. However, §§ The NCM initiative develops innovative tools and there are still several unresolved issues related to Article 6 frameworks to support bilateral or regional that negotiators must address before COP25 in December cooperation and linkage of climate markets. The goal 2019. Therefore, focused effort on Article 6 is now more is to enhance the transparency, comparability, and important than ever to ensure the most cost-effective potential fungibility of heterogeneous climate actions achievement of the highest possible ambition. to enable more countries to participate in international climate markets, while ensuring the environmental Against this backdrop, the Networked Carbon Markets integrity of the trade. (NCM) initiative is working closely with the World Bank program, Climate Warehouse to develop and pilot tools §§ In light of the bottom-up framework embedded in the and frameworks to support post-2020 climate markets. Paris Agreement, the growing diversity of climate Key activities in FY19 include: market mechanisms, and the rapidly evolving landscape of digital technology, a new architecture is §§ Develop and pilot a module, Module International needed to facilitate more liquid trading across Transfer Readiness (ITR), to assess a country’s readiness heterogeneous systems. NCM’s products and activities to engage in Article 6 of the Paris Agreement. The are geared towards achieving this goal. module seeks to support broader capacity building activities by identifying key institutional requirements and gaps for transferring Mitigation Outcomes internationally under Article 6. §§ Partner with the Designated Operational Entities and BROWN TO GREEN G20 Independent Entities Association (DIA) to develop a THE G20 TRANSITION TO A LOW-CARBON ECONOMY | 2018 manual and code of conduct to ensure quality control of independent assessments using the Mitigation Action Assessment Protocol (MAAP). §§ Partner with the World Bank Technology and Innovation very low low medium high very high Lab to experiment and explore the feasibility of Blockchain-enabled climate markets through a multi- phased proof of concept (PoC). This PoC builds on NCM’s report, Blockchain and Emerging Digital 2018 Technologies for Enhancing Post-2020 Climate Markets. 20 CF-Assist 2.5 Climate Warehouse CATALYZING THE NEXT GENERATION OF CLIMATE MARKETS BY OPERATIONALIZING ARTICLE 6 The Climate Warehouse program proposes to catalyze and 11 private sector participants, has been established early participation in climate markets by piloting the and has held three meetings. In addition, a Multilateral creation of demand and supply of Mitigation Outcomes Development Bank (MDB) Working Group on Article 6 was (MOs), and the creation of common market infrastructure established and held two meetings to share knowledge on through four work streams: MO generation. The Working Group released a joint statement on Article 6. i. Asset development: Create initial supply of MOs starting with the WB lending portfolio by developing design documents to quantify MOs and establish monitoring, reporting, and verification (MRV) systems—to be Ojectives: completed for four projects by June 2019. This is §§ The expected long-term goal of the advisory services and accompanied by stakeholder engagement and support analytics is to catalyze climate markets, which would for development of institutional and governance enable the public and private sector to work together to frameworks for Article 6, as appropriate. finance the global public good of limiting the temperature ii. Transaction platform: Facilitate demand for MOs increase to two degrees. The program proposes to (a) through the development of financial and risk mitigation inform the design of clear and transparent regulations and products. Design of two risk mitigation products for rules for the future climate market; (b) address market Article 6 transactions (MIGA guarantee and options barriers for first movers; and (c) create markets for MOs contract) is on track for completion by June 2019. through four work streams. iii. Warehouse for MOs: Create market infrastructure to allow for the exchange of MOs through the design and establishment of the Warehouse facility. Functions of the Warehouse have been defined and agreed with the The ultimate goal of the Working Group Advisory Group, and the request for information process completed. Piloting is targeted in FY2020. is to position Article 6 as a high strategic iv. Enabling environment: The pilot activities are expected priority in climate negotiations and to create practical experience and enable “learning by encourage Parties to leverage market or doing” for countries to participate in climate markets under Article 6 of the Paris Agreement. An options paper for priced-based mechanisms as an important Article 6 was published and updated. A tool for assessing tool to deliver NDC commitments cost- countries’ international transfer readiness for Article 6 was developed with nine countries initiating the pilot phase. effectively, drive increased ambition, and support sustainable development. The program has been developed through a consultative process engaging several categories of stakeholders. – Joint statement of the MDB Working Group on Article 6 An Advisory Group, consisting of three donor governments of the Paris Agreement 2018–2019 Annual Report 21 22 CF-Assist 2.6 Carbon Pricing Leadership Coalition Four years since its launch in Paris, the Carbon Pricing Last year, the CPLC restructured its work program around Leadership Coalition (CPLC), supported through CF-Assist, the following distinct, but interrelated, pillars: regional continues to convene leaders from government, business, advocacy; private sector leadership; fostering partnerships; and civil society to support the introduction of carbon knowledge creation; and outreach and communications. pricing, share experiences, and enhance understanding of The Coalition’s secretariat facilitates the engagement of its the emerging practices in the implementation of carbon partners through an array of activities ranging from pricing instruments. regional-focused virtual working groups, and thematic task teams, to activities at the regional and international level. Key Activities in 2018: n INNOVATE4CLIMATE pricing revenues with high-level participation from At Innovate4Climate, CPLC and the PMR co- Canada, Singapore, Costa Rica, British Colombia, hosted a technical workshop on effectively and corporate leadership from Suncor. CPLC communicating carbon pricing. partners, Belgian, French, Swedish, and German governments convened a workshop on carbon n REGIONAL CLIMATE WEEKS taxation in the EU’s non-ETS sectors. In addition, CPLC hosted carbon pricing workshops and together with the partnership for market readiness, high-level dialogues at three regional Climate the CPLC launched the Guide to Communicating Weeks, attracting 390 participants in total. Carbon Pricing. n GLOBAL CLIMATE ACTION SUMMIT n HIGH-LEVEL COMMISSION ON CARBON Together with the State of California, the European PRICING AND COMPETITIVENESS Commission, the International Emissions Trading Tasked with exploring the evidence base, the Association, and other partners, CPLC organized, concerns of business, and lessons learned in the Carbon Pricing Driving Climate Ambition, a carbon design and successful implementation of carbon pricing day in the margins of GCAS. pricing policies, Commissioners of the high-level Commission on Carbon Pricing and n INTERNAL CARBON PRICING IN HIGHER Competitiveness have started their work by hosting EDUCATION TOOLKIT a series of regional consultations. Their findings will Presenting this toolkit, CPLC co-hosted, together be presented in the fall of 2019. with Yale University, Second Nature, and other partners in the Carbon Pricing in Higher Education n KNOWLEDGE PRODUCTS Working Group, a side event with former U.S. Development and delivery of information and Secretary of State John Kerry. learning through knowledge products have been key to CPLC’s activities last year. The Coalition n CONFERENCE OF PARTIES (COP) 24 presented three reports last year: Guide to CPLC convened a leadership dialogue on carbon Communicating Carbon Pricing, Construction 2018–2019 Annual Report 23 Industry Value Chain Report, and Carbon Pricing, was to take stock of the existing carbon pricing and the Task Force on Climate-Related Financial research base—both theoretical and practical—to Disclosure. Details on this can be found under the better inform future decisions made by business Knowledge and Learning section (page 9). leaders and policymakers using carbon pricing. n CPLC RESEARCH CONFERENCE n HIGH-LEVEL ASSEMBLY (HLA) The CPLC successfully held the world’s first Attended by leaders from 14 governments, 21 International Research Conference on Carbon companies, and 45 strategic organizations, Pricing. In collaboration with the Energy and including civil society bodies and academia, the Resources Institute (TERI), the two-day event in fourth HLA focused on integrating carbon pricing New Delhi brought together more than 30 into investment decision making and ensuring that researchers and 150 participants from a range of carbon pricing policies are designed with sectors, with young, emerging scholars and consideration of social and development concerns. researchers from developing countries leading in The third Carbon Pricing Leadership Report was participation. The cornerstone of the conference released at this event. Forward Looking to advocate for carbon pricing policies that are designed and communicated in a way to increase acceptability Going forward, the Coalition, as called for during the and sustainability. HLA, will continue to broaden engagement from developing countries and subnational jurisdictions at the public and Additionally, the CPLC will explore how to make carbon private sector level, while deepening engagement so that pricing a demand instrument. It will build the evidence base support for carbon pricing policies is strengthened at an on application of shadow prices to understand fairness and institutional level. Utilizing the recently launched Guide to define approaches that would be relevant for portfolios in Communicating Carbon Pricing, CPLC will also continue developing countries. We all need to join forces to ensure an effective carbon pricing design. Solid evidence of effective carbon pricing will help give policymakers the courage to introduce such measures. - Susanne Åkerfeldt, member of the CPLC Research Conference Scientific Committee and Senior Adviser to the Swedish Ministry of Finance 24 CF-Assist CF-Assist: Looking Ahead With new programs launched, the road ahead for the CF supply of Mitigation Outcomes, and the creation of common Assist reaffirms its task in strengthening its work by market infrastructure. In knowledge and learning, CF Assist providing capacity-building and technical assistance for supported flagship knowledge periodicals such as State client countries to help them raise their climate ambition and and Trends of Carbon Pricing and the online carbon pricing advance their sustainable development goals. CF Assist’s dashboard will continue providing clients with the latest on primary efforts in the years ahead will be in strategically carbon pricing and markets around the world. Also, in the supporting the World Bank Group’s post-Paris climate pipeline and expected to launch next fiscal year is an policy and markets strategy through its work in developing e-Course on Carbon Tax aimed to equip clients and climate Innovate4Climate as a global platform for climate finance change stakeholders with cutting edge knowledge around and markets; facilitating innovation on operationalization of this carbon pricing instrument. With the ongoing and Article 6 (of the Paris Agreement), with instruments such as proposed activities, CF Assist is well poised to support the Climate Warehouse aiming to catalyze early participation in post 2020 operationalizing Paris Agreement in right earnest. climate markets by piloting the creation of demand and