All plans are the initiative of the central government. The objective is that the private sector and the decentralized autonomous governments also accede.
What is the roadmap to be followed by the private sector, municipalities and prefectures of Ecuador to finance environmental projects with climate funds?
Based on the Paris Agreement, in force since November 2016, several funds were created under the concept that already developed countries should allocate economic resources to support other nations to face and mitigate the effects of climate change. This is a phenomenon caused by the warming of the atmosphere due to the emission of greenhouse gases (GHG) since the beginning of industrialization in the 19th century.
The powers, such as the United States, the United Kingdom, the European Union bloc and China, are currently the main GHG emitters, but historically so are Japan and Russia. These contribute to Green Climate Fund (GCF), the largest and most well-known of these funding sources.
The GCF operates under the watchful eye of the United Nations based in South Korea. Among the requirements to access is that climate projects are certified by the designated national authority, in the case of the country, from the Ministry of the Environment, Water and Ecological Transition (Maate).
But it is not the only fund available. What’s more there is the Global Environment Facility (GEF) and others managed individually by the developed countries themselves or regionally through international cooperation.
“Germany, apart from contributing strongly to the GCF, also has its own programs and financing mechanisms to face climate change; it handles them through its cooperation agencies. The United States and China do the same ”, says José Morales, coordinator of the Sustainable Intermediate Cities Program of the German Cooperation Society (GIZ, according to its acronym in German).
The The mobilization of resources from developed countries is justified in that they make their additional contribution to combat climate change because they are the ones that caused it.. “All countries committed to internal actions, such as Ecuador with reforestation, the switch to electricity transportation and mitigating effects,” says Morales.
The first Nationally Determined Contribution (NDC) presented to the United Nations Framework Convention on Climate Change, in March 2019, constitutes the national commitment on climate change for the mitigation components and adaptation.
Karina Barrera, Undersecretary of Climate Change of Maate, affirms that “its general objective is to implement policies, actions and efforts that promote the reduction of GHG and the increase of resilience and decrease of vulnerability to the adverse effects of climate change in the sectors prioritized in the National Climate Change Strategy ”.
The NDC poses two scenarios. An unconditional one, which represents the actions that the country undertakes to execute with its own or already committed resources and based on its own capabilities. While the second conditional refers to those actions that could be executed if the technical, economic and human resources are available for their implementation, and it is expected that they come from external sources or international cooperation.
Another requirement to access climate funds is that they are contributing directly to the NDC. Only four national projects in execution are financed directly through the GCF and GEF funding sources, according to Maate.
The first is “Promotion of financial instruments and land use planning to reduce emissions and deforestation.” The second is that of “Integrated management of multiple-use landscapes and high conservation value for the sustainable development of the Ecuadorian Amazon region.”
The first obtained financing from the GCF for $ 41.1 million and the second from the GEF for $ 12.4 million. The third is the National Plan for Adaptation to Climate Change, which obtained three million dollars from the GCF.
The fourth and last is the Climate Smart Livestock project, in order to avoid land degradation and reduce the risks of desertification in vulnerable provinces, which received $ 3.1 million from the GEF. The four projects total $ 59.6 million, but the potential is greater.
Climate funds are an opportunity in times of economic crisis with the generation of an action that has positive ends.
One of the greatest challenges is to facilitate and ensure that the private sector, municipalities and prefectures of the country also have direct access by applying to the other existing funds that developed countries and regional blocs manage on their own..
With international technical and financial cooperation, “Maate’s capacities were strengthened to review and approve projects, and it helps Banco del Estado to attract green financial resources and use them to generate new lines of credit for decentralized autonomous governments (GAD) ”, indicates Morales.
One way of access is to propose projects in which, for example, the size of the storm sewer networks takes into account the predictions of the amount of rainfall that will fall in the specific territories. One of the impacts of climate change is that rainfall will increase in certain areas and decrease in others.
This requires research and the accumulation of specific data on emissions into the atmosphere of greenhouse gases, which cause global warming.
“Quito and Cuenca make these measurements periodically. The The most important requirement is to justify and prove the impact on climate change that the project will have, that is what you have to learn to do. All this requires calculations and capacities that most municipalities do not have.”, Assures Morales.
The calculation of the fossil fuel that would no longer be used with electricity transport or flood mitigation works and thus protect coastal cities also fall into these plans.
Private banks can serve as intermediaries with the capture of these international resources for green lines of credit directed to the private sector.
Municipalities can manage funds from international cooperation
What does it depend on that more state entities such as municipalities access these green climate funds?
Barrera says that there are several issues to consider, such as, “the need to strengthen capacities for the design and formulation of projects with climate actions aligned with the goals established in the NDC”.
They also constitute a barrier, he adds, the requirements of climate funds that include lthe need for information and analysis that can be expensive or complex, which requires investments that cannot be made in the initial phase of a project.
The nature of the funds is another stumbling block. “The need of municipalities is usually oriented to a greater extent to adaptation issues, which reduces the supply of funds available for this type of proposal, since the funds are aimed at mitigating climate change,” says the official.
The clear thing is that not all climate funds are managed from the Maate, so local governments also have the competence of international cooperation.
“The projects that reach this State portfolio are diverse, but it could be said that not all of them have a high quality or that they are aligned with the policies and priorities of climate change with the NDC. It is our duty to provide technical assistance in an objective manner to prepare proponents to deliver proposals aligned with the requirements of climate funds and that are aligned with the country’s priority lines ”, indicates Barrera.
The three most populous cantons already have access to funds that developed countries offer directly
The Municipality of Quito agreed to the Cities Finance Facility fund (CFF, which helps cities in developing and emerging economies to develop infrastructure projects) to finance the study in order to electrify the so-called Ecovía.
This is an operational mass transport system whose units run on diesel. “The studies are a first step, with this Quito could already look for a specific financing that is now working with the Banco del Estado. This last entity tries with the large climate resources that it tries to mobilize, then, to finance the change, to give an example ”, says Morales.
The study includes how much carbon will be stopped emitting with the use of electric units in the Ecovía. Then, with the financing, the purchase and reconversion will be carried out, as well as the installation of the infrastructures, such as the electric stations.
Cuenca also works with the German international cooperation (through the KFW-State Development Bank of the Federal Republic of Germany) to have an emission-free historic center. “This means establishing bicycle routes, pedestrianizing spaces, significantly reducing the number of cars that enter the historic center and pollute it,” says Morales.
The Municipality of Guayaquil, on the other hand, financed the Aerovía project, which runs on electricity, through the French Development Agency.
They are already established paths that the rest of the country’s municipalities can follow as an alternative way of financing infrastructure projects. (I)
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