Government of Uganda, GGGI, NCE, and EPRC Macro Economic Analysis of the Potential of Green Growth in Uganda Report

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The Global Green Growth Institute (GGGI) partnered with the Government of Uganda to support with mainstreaming Green Growth into Uganda’s Vision 2040 and the 5-year National Development Plan II (NDPII) through the Green Growth Pathways Project. GGGI has been working with the Global Commission on the Economy and Climate, and The New Climate Economy (NCE), and the Ugandan Economic Policy Research Centre (EPRC) to conduct a macro economic analysis on the potential of Green Growth in Uganda. The report focuses on the economic potential and the affordability of Green Growth in Uganda, as well as recommendations for action.

Uganda has seen an average of 7% annual economic growth over the last two decades. This has resulted in a reduction in headcount poverty, from 56% in 1992-1993 to 20% in 2012-2013. Additionally, around half a million jobs have been created annually and access to basic services has improved. To build on this progress, Uganda will need to place an even greater emphasis on diversifying the economy and overcoming a number of constraints to development that could limit future prosperity for a growing, young, and increasingly urbanized population. This is critical as the country strives to reach upper middle-income status by 2040, realize the Sustainable Development Goals (SDG), and deliver on its international commitment to low-carbon economic growth as part of the Paris climate change agreement.

Uganda’s leaders understand that they will need to reconsider its growth model to deliver economic and social outcomes at the same time as protecting natural capital, managing the impacts of climate change, and using environmental policy to actually drive growth: a “green growth” model. This green growth model will require a continued focus on macroeconomic stability, improving the investment climate, and investing in health and education. It will also need to include an enhanced focus on improving the productivity of agriculture, developing high-value services and industry, providing access to modern energy, and harnessing the opportunities from urbanization. All are features of the development priorities outlined in the NDPII, and the President’s strategic priorities for 2016-2021.

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GGGI Vanuatu BAU Report

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GGGI recently published a report titled ‘Vanuatu Energy Demand Projections: Business As Usual Scenario’. This report was prepared to give an analysis of energy demand in the key sectors of Vanuatu and feed into development of energy efficiency targets. The business as usual (BAU) report estimates energy consumption for key sectors in Vanuatu between 2015 and 2030 under a BAU scenario in order to establish a baseline and enable identification of the impacts of activities recommended in the Vanuatu National Energy Roadmap (NERM).

The Council of Ministers of Vanuatu endorsed the NERM in June 2016 as the overarching policy framework for developing Vanuatu’s energy sector. Recognizing the importance of energy efficiency initiatives and their centrality to meeting the Government of Vanuatu’s vision for the energy sector, energy efficiency is a key element of the NERM. Additionally, there is an emphasis on the need to increase implementation of renewable energy technologies in the national energy mix. If the NERM goals for use of renewables are met, the higher usage of renewable energy in grid electricity generation and rural electrification through renewable energy projects will mean a reduction of imported fuel volume for electricity from 29% in 2010 to 6% in 2030.

The report collected up-to-date data on energy consumption by end-use, identified energy usage data gaps, analyzes baseline data, reviewed the status of on-going planned and/or financed energy projects, and analyzed the potential impacts of non-achievement of the NERM 2013–2020 targets on projected energy consumption. This report is based on relevant assumptions and develops models to estimate energy demand projections between 2015 and 2030 for the three main forms of energy (petroleum, biomass and electricity).

vanuatu-energy-consumption-projections

Overall, energy consumption in Vanuatu is expected to double in the coming 15 years. If Vanuatu does not achieve the targets for renewable electricity generation set in the NERM or the Intended Nationally Determined Contribution (NDC) submitted to the United Nations Framework Convention on Climate Change, petroleum consumption projections will increase compared to the BAU scenario. In summary, the annual petroleum consumption for electricity would increase by 24% between 2015 and 2030, instead of the 62% decrease currently projected under the BAU.

GGGI Presents Vanuatu with BAU Energy Projection ReportThe Director of the Vanuatu Department of Energy, Mr. Antony Garae, said about the report: “On behalf of the Government of Vanuatu, the Ministry of Climate Change, and the Department of Energy especially, I wish to extend our sincere thanks to GGGI for their kind and continuous assistance in setting the foundation for the NERM review. GGGI has helped to determine how far Vanuatu has gone in terms of its achievement after the NERM 2013 launch and the trend we are currently heading towards in a BAU scenario.”

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Bridging the Policy and Investment Gap for Payment for Ecosystem Services

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GGGI recently published a report titled, ‘Bridging the Policy and Investment Gap for Payment for Ecosystem Services: Learning from the Costa Rican Experience and Roads Ahead’. This report provides findings based on the Costa Rican experiences that are beneficial for countries around the world implementing Payment for Ecosystem Services (PES) schemes.

In this report, it is noted that from 2000 to 2010, over 5 million hectares of forest were lost per year globally, with the agricultural sector contributing to an estimated 80% of this loss. As forests are lost, the knock-on economic, environmental, and social benefits of ecosystem services provided by forests are lost as well (e.g. sequestrating carbon dioxide, regulating hydrological systems, hosting biodiversity, etc.). As a result, it is estimated that deforestation and forest degradation account for roughly 11% of total global greenhouse gas (GHG) emissions. This is a common occurrence especially in developing countries with high rates of population growth, where land is intertwined with livelihood, and governments are forced to make tough choices between competing land uses.

Payment for ecosystem services (PES) is a powerful tool for providing financial incentives for ecosystem services that are not usually monetized and paid for in the traditional market. PES schemes internalize externalities by creating new marketplaces for ecosystem services. These schemes provide a new source of income for land management, restoration, conservation, and sustainable agricultural activities. Costa Rica’s PES program is globally recognized as an innovative blend of economic and regulatory instruments.

Costa Rica PES Graph

This analytical report unpacks the lessons learned from the Costa Rican PES experience based on an in-depth analysis drawn out of Costa Rican national PES program. This report also addresses the conservation finance gap, describing changing landscape of finance and examining potential solutions, including strategies for attracting private sector investment. The valuable insight from this report will contribute to GGGI’s continued work in the land-use sector.

This report was launched on November 28, 2016 at an international workshop on Integrated Ecosystem Investment in San José, Costa Rica. The Environmental Bank Foundation (FUNBAM) and GGGI hosted the workshop with the support from the Ministry of Environment and Energy (MINAE) and the National Forestry Financing Fund (FONAFIFO).

Read more about the workshop here.

Read the full report here.

By Lauren Barrett

With Phnom Penh urbanising at a rapid rate, there is a growing need for investment in the city’s public spaces, waste management and energy efficiency network capabilities. As Global Green Growth Institute’s (GGGI) country representative in Cambodia Fiona Lord tells Post Property, the groundwork is already being laid for Phnom Penh’s shift towards becoming a more liveable city that is both cleaner and greener.

Phnom Penh’s development is advancing at a rapid rate. What are your current views and assessments of the city’s urbanisation?
Although Cambodia remains one of the least urban countries in Southeast Asia, it has one of the highest rates of urbanisation in the region, falling just behind Lao PDR, according to recent studies by the World Bank. This fast pace of urban growth is concentrated in Phnom Penh, and has put increasing pressure on the city’s infrastructure, communities and natural assets. It has been challenging for the city’s infrastructure planning and investments to keep up with the pace of urban population growth.

Read the entire article at The Phnom Penh Post

Dr. Frank Rijsberman Opening RemarksOn November 30, 2016, GGGI took part in an event at the Plaza Hotel in Seoul titled the Green Round Table – Enhancing the Implementation of the Paris Agreement and Sustainable Development Goals (SDGs). Mr. Lase Ringius, GGGI’s Deputy Director of Green Investment Services, delivered the opening remarks on behalf of Director-General Dr. Frank Rijsberman. The opening remarks were as follows:

“Tae-ho Lee, Deputy Minister for Economic Affairs of the Ministry of Foreign Affairs, Excellencies, Distinguished Guests, Ladies and Gentlemen,

It is a privilege and honor for me to deliver opening remarks at the Green Round Table on Enhancing the Implementation of the Paris Agreement and Sustainable Development Goals (SDGs). I would also like to express my appreciation to Deputy Minister Tae-ho Lee and the Ministry of Foreign Affairs (MOFA), Republic of Korea for organizing this very timely and important Round Table, and I sincerely regret that I cannot be with you in person today.

First, I am happy to share with you that I had a positive meeting with Minister Yun Byung-se on November 21 to discuss how the Global Green Growth Institute and the Ministry of Foreign Affairs could work together to promote green growth and address global climate change. Minister Yun expressed his continued support for GGGI and suggested ways to strengthen cooperation between the two sides going forward. Minister Yun also added that with the support of GGGI, Korea would like to work more closely with other GGGI member countries to achieve green growth and move towards low-carbon and climate-resilient economies.

Indeed, GGGI seeks to contribute to the implementation of the Paris Agreement through supporting all its member governments to accelerate the implementation of their Nationally Determined Contributions or NDCs – as is the topic of today’s meeting. For me, as new Director General of GGGI, the highlight of COP22 in Marrakech was the joint China-Japan-Korea side event, where the Ministers of the Environment of the three countries pledged to collaborate on NDC implementation, with support of GGGI. We are looking forward to active engagement with the three countries to develop and implement joint initiatives that may include Green Big Bang projects such as an Asia Super Grid, or a regional carbon market.

Dr. Frank Rijsberman Opening RemarksMore generally, GGGI is actively exploring the possibilities offered by Article 6 of the Paris Agreement that outline a number of mechanisms, formal and informal, for cooperation among countries. We are aware that the government of Korea has committed to reduce its own GHG emissions, but also to trade credits. Other GGGI members are likely to be interested in such trades with Korea and we look forward to establishing mechanisms to support this.

In addition, many GGGI member countries have expressed an interest for GGGI to support them to establish a measurement, reporting and verification, or MRV, system. Korea has ample experience in the establishment of such a system, which is expertise we are seeking to share with other countries. Korean research institutes and Korean private sector companies also have developed important expertise as well as a number of green technologies that other GGGI member countries would like to have access to. Enhancing and supporting the collaboration between and among member GGGI states to implement their commitments to the Paris Agreement, and to achieve their SDG targets, is indeed closely aligned with the mission of GGGI. We are committed to do all we can to support these goals.

I am confident that today’s Green Round Table will serve as a new beginning of collaboration between the Korean government agencies, stakeholders and international organizations, including GGGI – all engaging for a common goal: contributing to the implementation of the Paris Agreement and the SDGs and transforming economies to become inclusive, low carbon and climate resilient, that is, transforming towards green growth.

Thank you.”

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GGGI launched an Insight Brief titled ‘Mind the Gap: Bridging the Climate Financing Gap with Innovative Financial Mechanisms’. This report aims to advance the public sector’s understanding of innovative financial mechanisms by examining their function, characteristics, and use. Compared with the total investment required over the next fifteen years to meet the goals set by the Paris Agreement, this report estimates that the climate finance gap is USD 2.5 – 4.8 trillion. Phrased another way, bridging this gap would require an additional USD 166 – 322 billion per year based on current investment estimates.

In 2015, the international community committed at COP21 in Paris to limiting global temperature rise to two degrees Celsius. It also pledged to support least developed countries (LDCs) and emerging economies in their efforts to mitigate and adapt to the impacts of climate change while still pursuing economic development. This represents an opportunity to move towards a new model of strong, inclusive, and sustainable economic growth – what we refer to at the Global Green Growth Institute (GGGI) as “green growth”.

Increasingly in developing countries, private investors are attracted to green infrastructure investment deals that blend public and private sources of capital together using innovative finance mechanisms to structure a deal. For public sector actors interested in closing the climate finance gap, these innovative solutions address one of the most important underlying causes of private sector underinvestment: high investment risks. Particularly in LDCs and emerging markets, high investment risks – both real and perceived – are common. Standard investment practices have proven inadequate in mitigating such risks. Thus, accomplishing LDCs’ and emerging economies’ green growth objectives will entail identifying – and scaling – new approaches to project structuring and risk mitigation in order to attract significant funds from commercial and institutional investors.mind-the-gap-gggi

Taking a project finance perspective, the analysis demonstrates how public sector actors can use innovative financial mechanisms strategically to address specific investment risks as a way to leverage private investment and, ultimately, close the climate finance gap.

Specifically, this report attempts to answer two key questions:

  • What makes a financial mechanism “innovative”?
  • How can innovative financial mechanisms be used most effectively to unlock significant private investment?

As part of GGGI’s ongoing efforts to increase green investment flows and improve multi-directional knowledge sharing and learning, this report will be the first in a series of examinations of how to make climate projects bankable. Innovative financial mechanisms are designed to advance climate projects to bankability in LDCs and emerging economies through risk reduction, especially during their earlier stages.

GGGI’s Assistant Director-General Mahua Acharya recently spoke on a panel at the Asia Development Bank Green Business Forum for Asia and the Pacific in Manila, Philippines on November 22, 2016. Ms. Acharya spoke about the themes of this paper during the discussions that brought together experts, business practitioners, and key stakeholders to share knowledge and identify avenues for promoting green business solutions in the region. Additionally, GGGI plans to share this report at a variety of global conferences in the near future. By sharing this knowledge, GGGI hopes to contribute towards closing the climate financing gap in the 27 GGGI partner countries, and beyond.

Read the full report here.