This presentation was delivered as part of the "Developing Building Blocks of a Global Mitigation Architecture" workshop series.

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Financing supported NAMAs
Laura Würtenberger
Energy research Centre of the Netherlands (ECN)
Presentation at the ICI Workshop on “Building Blocks of a Global Mitigation Architecture”
Bonn, 19 May 2012
Background
• Working paper on “Financing NAMAs” as part of the ICI funded
“Mitigation Momentum” project
• Provides background for work with host countries on moving
NAMAs towards financing and a basis for developing lessons-learnt
on financing supported NAMAs
• Content:
• NAMAs in the context of climate finance
• Should support for NAMAs finance incremental costs?
• Choosing an appropriate public finance mechanism
• Best practices for the use of public climate finance
• Practical steps in a NAMA proposal

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Should support for NAMAs finance incremental costs?
• Language on incremental costs has become less clear in latest
UNFCCC documents
• Challenges in calculating and attributing incremental costs:
o Difficult for complex projects which involve various stakeholder groups
o Difficult for interventions with strong sustainable development (co-)benefits
o Difficult for actions facing other barriers than “high costs”
• Incremental costs work in some cases, but in most cases are unlikely
to determine the level of international support
• Supported NAMAs can range from actions with negative abatement
costs to actions with very high abatement costs
• MRV important for accountability to developed country tax-payers
Choosing an appropriate public financing mechanism
adapted from Neuhoff et al. (2010)
Barriers Type of financing Public Finance Mechanisms Examples of support
Low (or no) return
on investment
Contribution to
investment or
operational costs
Up-front grant (e.g. subsidies,
concessional loans)
Funding during operation (e.g.
feed-in tariffs, carbon markets)
GEF projects, bilateral support
CDM, ideas like GET FIT, Low
Carbon Advance Market
Commitments
High up-front costs /
lacking access to
capital
Facilitating
access
to finance
Provision of debt (e.g. loans,
credit lines)
Provision of equity
Incentivizing existing financing
system
WB CTF, EBRD Energy
Efficiency Finance Facilities,
micro-finance credits
IFC Cleantech Venture Capital
ESCO market development
High risk
Provision of risk
coverage
Risk guarantees / insurance
schemes
WB MIGA
Non-financial barriers
(regulatory, lacking
capacity etc.)
Technical
assistance
Mostly as grants GEF projects, bilateral support

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Best practices for the use of public climate finance
• Interventions generally need to address various barriers and should
be targeted to the local circumstances.
• Private sector requires public interventions to be “loud, long and
legal”.
• Public sector funds should be spent efficiently and effectively.
• Potential donors and investor should be engaged early on.
• NAMAs should be an integral part of the national system with
mutual accountability between donor and host country.
Practical steps in a NAMA proposal
• Define the rational behind the action
• Clarify the role of co-benefits and alignment with NDP, incremental
costs and international vs. national support
• Clarify the role of the private sector
• Engage with potential donors and investors
• Identify gaps and barriers and chose the appropriate public finance
mechanism
• Develop a concrete financial proposal

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Thank you!
Laura Würtenberger
wuertenberger@ecn.nl
Energy research Centre of the Netherlands (ECN)
Radarweg 60
1040 AW Amsterdam
The Netherlands
Phone: +31 224 564948