Climate policy is no longer a stand-alone issue, but rather a need to be considered as an element of economic development policy, as both adaptation and mitigation needs will continue to drive economic development potential. The key objective of the regional forum on climate finance organised by the EU4Climate project on September 21-22, 2021 was to learn and share knowledge on climate finance instruments. The event also provided a networking opportunity between the governments of the region and participants from development banks and multilateral funds. The main focus of the forum was on how to finance NDCs, NAPs and mid-century LEDS.

The forum brought together development banks, government officials, multilateral funds. More than 130 participants joined the event, among them over 40 representatives of the EaP governments. Key participants also included the GCF, GEF, EBRD, EIB, ADB, World Bank, KfW, the NAMA Facility, the NDC Partnership, and partner UN agencies including UNEP-DTU and UNFCCC, who work at the boundary of policy and finance.

In his welcoming speech, Joakim Frendin (EU DG NEAR) emphasised the importance of the forum as an opportunity to define concrete ways forward to finance the green transition of the Eastern Partnership region noting that the successful and timely implementation of the NDCs is currently a priority. Justyna Glodowska (EU DG CLIMA) provided some updates about the legislative development and the preparation of the COP26 to set the overall framework for the forum by outlining the policy framework such as the EU Fit for 55 and the objectives of the EU in the Eastern Partnership (EaP) region. Ms Glodowska emphasized the European Green Deal priorities under the four thematic groups: climate, energy, transport and taxation and trade.

Talking about the forum Armen Grigoryan (UNDP) mentioned the substantial contribution of the EU4Climate with developing the updated NDCs in Armenia, Azerbaijan, Belarus and Moldova; while also providing support to communicate the goals of the new NDC targets for Georgia and Ukraine. Mr Grigoryan welcomed the updated NDCs submitted by the countries in the region and confirmed UNDP readiness to support all countries in the region to submit their pledges ahead of the 26th Conference of Parties to the UNFCCC in November 2021.

Welcoming remarks of the EU and UNDP representatives were followed by the EaP Government representatives’ overall assessments of the importance of financial opportunities and their alignment with the policies.

Key financing sources for NDCs/NAPs in the EaP region, including development finance institutions (DFIs) and multilateral climate funds, and national budgets, with a strong focus on technology, were presented to the EaP countries to gain a deeper understanding of the role of multilateral support, including the resources available for implementation of the NDCs.

The role of NDC/NAP Financing Strategies” by Deo Gabinete (Regional Manager Asia Pacific and Eastern Europe) from the NDC Partnership noted that climate policy should not be seen in isolation, but rather needed to be integrated into the overall development framework of a country. In this regard, a consideration of what constitutes “Transformational change” was important. According to Deo Cabinete, the NDCs need to become more data-driven, and an enhancement to the national MRV systems is needed.

Overview of the EBRD FinTech project presented a concrete example of how a development finance institution (DFI) integrates donor finance, DFI finance and policy into an integrated operation using the EBRD Fintech programme as an example. Another presentation showcased how the Energy Community is aiming to support EaP countries by supporting them in delivering the documents required under the EU legislation and regulations. As a continuation, three case studies were provided on how DFIs link high-level policy to operations bringing examples of different development banks and opportunities. ADB, BSTDB and EBRD representatives shared how they upgrade capacities and move towards a comprehensive, climate-driven investment framework in the future.

Technology Transfer and the NDCs/NAPs” presented by Sara Trærup lhoff (Head of the Technology – Transition and Systems Innovation Section, UNEP DTU Partnership) stressed the clear need for technology as a part of the climate solution, and that a systematic assessment through TNA is needed. This in turn needs to be integrated with NDCs and NAPs. According to Sara Trærup lhoff, data availability and reliability is a challenge, and data needs to be managed and understood to get the idea of what can be used for adaptation, where a lack of country-specific information is of crucial importance.

The presentation was followed by an overview on how the GCF engages with countries to deliver readiness and technical support for climate finance, noting that adaptation is a complex subject, with country-level data being critically important. The role of NDCs and NAPs in GCF programming was discussed as a need to look at the development of NDCs as a permanent, fully integrated policy element, based on robust data.

The presentation on NDCs/NAPs as a continuous process by Bernd Hackmann (Programme Officer with the Transparency Division, United Nations Framework Convention on Climate Change (UNFCCC) Secretariat) and Matti Goldberg (Programme Officer, Adaptation Division, United Nations Framework Convention on Climate Change (UNFCCC) Secretariat) on the NAPs highlighted how they can be approached, but also noted the need of further work towards technology needs assessments.

Case Study: Adaptation in Road Networks – the Polish example” by Elisabet Vila Jorda (Climate Change Specialist, European Investment Bank (EIB)) provided a technical overview of how adaptation is integrated into a transport project and highlighted the importance of the vulnerability assessment as without this there could be no understanding of the exposure to climate risk and the consideration of additional cost driven by ongoing climate change.

The presentations provided a solid background for discussions raising the role of agriculture with multiple beneficial impacts, in addressing climate change. The participants highlighted that many opportunities are being missed due to a lack of systemic ambition, in which all sectors need to be involved, and that is based on inclusion, robust M&E and continuous learning.

In her closing remarks, Michaela Hauf (EU DG NEAR) noted with satisfaction that after all presentations there is a good overview of the needs in the EaP countries and opportunities which are there in terms of the available finances. She noted that there were very concrete examples from other regions on what can be done in terms of NDC implementations. Michaela Hauf mentioned that the traditional financing from any side is good, but it is not going to be enough so linking to the private sector becomes an important approach.

The forum provided opportunities for the EaP countries to discuss their climate finance pipelines, review climate investment planning and budgeting tools, to meet and interact with IFIs, donors and potential investors. NDCs are the underlying element in decision-making, and for that reason also need to become more central to policy-making. The EU4Climate will help with developing NDC implementation and finance plans for EaP countries while the development banks and funds have the resources to support NDC implementation activities.

All presentations of the Climate Finance Forum can be downloaded here.