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ClimatePolicyRadar
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Vanuatu's National Carbon Registry System involve large legal and financial interests. Trust in the accuracy and integrity of the reported data is, therefore, a prerequisite for a well-functioning registry system. To ensure accuracy and integrity of data robust monitoring, reporting and verification (MRV) system are essential. Verification is essential to
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The Paris Climate Change Agreement (PA), specifically Article 6 of PA provides an opening for Parties to voluntarily cooperate in the implementation of their nationally determined contributions (NDCs) through the transfer of mitigation outcomes (MOS) i.e. Internationally Transferable Mitigation Outcomes (ITMOs). The ITMOs will be essentially generated from climate change mitigation actions/projects/ programmes implemented by Vanuatu and within or outside of the NDC; further, the NDCs shall make a corresponding adjustment to prevent double counting, questions remain about how to treat ITMOS generated outside an NDC, which do not contribute to double counting. To encourage countries to reduce emissions from outside their NDCs while both safeguarding and raising climate ambition, the Vanuatu's National Carbon Registry may play a key role. The design and implementation of a robust and future-proof National Carbon Registry will have multiple potential benefits and mitigate risks of double counting and environmental integrity.
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The establishment of a National Carbon Registry System in Vanuatu requires a comprehensive assessment of legal, regulatory, financial and institutional arrangements and shall complement the socio-economic and development goals of the host country. The inception stage requires to carry out system assessment and design of a national carbon registry system through the development of its functional and technical specifications in the context of supporting and facilitating a set of existing policies and instruments for greenhouse gas (GHG) mitigation and GHG reductions in the host country.
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Vanuatu's National Carbon Registry System on implementation is envisaged to manage the national GHG inventory and GHG emission reductions (Mitigation Outcomes) achieving from the various mitigation actions implemented and operational (bottom-up data from the robust national MRV system) and hence strengthen MRV and transparency. This will also facilitate consistency in available data for accurate reporting for greater transparency. Thereby Vanuatu's national carbon registry will provide bottom-up data from the national MRV and verification systems. Thus, the National Carbon Registry System shall record GHG emission data and implements a market-based rument by supporting issuance, ansfer, and cancellation of credits.
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The primary objective of the Vanuatu's National Carbon Registry System is to scale-up and shape the future of cost-effective domestic GHG mitigation actions; however, this will be an effective tool for tracking the climate action mitigation outcomes and ITMOs. This will also help in achieving the Vanutu's climate change mitigation objectives. Paris Agreement (PA) also opens up opportunities for the Vanuatu's National Carbon Registry System with domestic and international emission trading provisions and participating in the envisaged complex network of international and domestic market-based mechanisms post 2020. The National Carbon Registry System also channel to design and pilot new domestic market-based instruments.
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framework for the design, piloting, and scaling-up of
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enhance trust in a carbon registry system, climate actions mitigation outcomes and ITMOs.
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to record national GHG emission and emission reduction
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from mitigation action data (mitigation outcomes) and may be extended inter-linking among various (international) market-based mechanisms in future, while avoiding double counting and enhancing environmental integrity.
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Vanuatu is already in advanced stages of discussion with Annex 1 parties to sign bilateral agreements for ITMO transfer through implementation of green and low carbon technologies as part of its NDC targets. The NDC Support Programme is providing further support to Vanuatu to assist in setting up the enabling environment for future ITMO transfers through a readiness support.
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national repository for verified mitigation outcomes form national climate actions. The national carbon registry may potentially used as a host and may link. infrastructure of the market-based instruments (existing or upcoming for both domestic and international) by providing relevant details on registries and thus making inter-linking possible.
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will collect, control, process, and analyze bottomup data from national MRV (GHG inventory and mitigation actions) and regulatory sources. This would mean that the national carbon registry will control and consolidate the major chunk of GHG emissions data from all the sectors under national MRV. Therefore, this can be linked with a National Monitoring Reporting and Verification System (MRV) and enhance the transparency of the emissions data being reported under the domestic and international reporting requirements under the Paris Agreement
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2. Registry for Verified Mitigation Outcomes (Potentially used for Transactions, Transfer, and Cancellations): which implies that the national carbon registry will have
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VANUATU'S NATIONAL MRV FRAMEWORK AND INTEGRATED MRV TOOL
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Chapter 5 Climate Finance in Vanuatu and Support Received 5.1 Climate Change Funding in Vanuatu 5.2 Climate Finance and Development Effectiveness in Vanuatu Financial Support Received Climate Finance Issues and Challenges for Vanuatu 5.3 5.4 144 148 150 158
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Climate Finance in Vanuatu and Support Received
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t 5.1 Climate Change Funding in Vanuatu
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Although Vanuatu is increasing its access to international climate change finance, including project and readiness grants from the Green Climate Fund (GCF), there are still challenges in terms of meeting the reporting requirements of different funding sources and donors. Nevertheless, the Government is taking leadership and currently engages with a range of international development partners and regional organisations to progress its national priorities.
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For instance, the National Advisory Board has been operational for a number of years to coordinate climate change and disaster risk management actions in Vanuatu. In 2013, the Government established a dedicated Ministry of Climate Change Adaptation, Meteorology and Geohazards, Energy, Environment and Disaster Management. In that same period, the Government also requested UNDP to undertake a Climate Public Expenditure and Institutional Review (CPEIR). The report was finalised and adopted in 2014. After the twenty second Conference of the Parties (COP 22) to the United Nations Framework Convention on Climate Change, the Government set up a Climate Finance Working Group followed by the convening of a national climate finance forum. A Climate Finance Roadmap is already in place and has strong linkages to the Public Financial Management (PFM) Roadmap.
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and variety of requirements imposed by these climate
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and manage these funds can be a challenge. However,
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The provision of international climate change finance is expected to increase as we approach 2030 and beyond. This is in line with the pledges made at the fifteen session of the Conference of the Parties (COP15) in Copenhagen in 2009 with a reaffirmation at COP 16 in Cancun, in 2010, where developed countries committed to jointly mobilise up to USD100 billion per year by 2020 from a wide range of sources to assist vulnerable developing countries. This is further confirmed in Article 9 of the Paris Agreement, including seeking a new quantitative target by 2025 to build on USD100 billion as the floor. However, this increase in funding opportunity is being accompanied by an increase in the complexity to access these funds and coordinate with a range of implementing agencies.
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Climate change finance is a key priority to the Government of the Republic of Vanuatu. Gaining improved access to global climate change funds is critical to implement the resilient development agenda articulated in the National Sustainable Development Plan. Section 7.2 of the National Climate Change and Disaster Risk Reduction (CCDRR) Policy also recognise finance as a key priority to ensure that adequate resourcing is available for climate change and disaster risk reduction activities, build financial capacity to manage resources, and enable access to increased international funding". The CCDRR Policy also acknowledges the need for robust financial systems to gain access to and ensure accountable management of substantial climate change and
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ADB, through the Regional Technical Support Mechanism funded from the regional programme of the Pilot Programme for Climate Resilience (PPCRP) has also supported Vanuatu through the provision of technical assistance to develop a proposal to the Green Climate Fund.
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The Green Climate Fund (GCF) has become the newest channel through which international public climate change finance will flow over time. In 2016, a grant of USD23
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China supported Vanuatu through a concessional loan for road upgrading in Tanna and in North Malekula while New Zealand has provided funding for the Tourism Infrastructure Project, Pacific Risk Tool for Resilience (PARTner Project) and co-financing for the Vanuatu Rural Electrification Project (VREP). Other bilateral donors that have provided funding for renewable energy, climate change adaptation and natural resource management and community preparedness in Vanuatu include the European Union, United Arab Emirates, United States of America, Germany and France.
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The Government of Japan provided support for the installation of Himawari satellite receiving system to obtain more frequent and clear satellite weather information through the Vanuatu Meteorology and Geo-Hazard Department. Other projects supported include the development of the Port Vila Lapetasi International Multipurpose Wharf through the Ministry of Infrastructure and Public Utilities and Poverty Reduction Program through the Prime Minister's Office. These are climate proofed.
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The World Bank is the largest multilateral source for Vanuatu and has implemented a range of climate change related projects, such as the reconstruction and improvement of public assets damaged by Tropical Cyclone (TC) Pam, institutional strengthening and support of the energy sector and the Vanuatu REDD Plus Readiness Project. ADB is the second largest multilateral source and supports the Port Vila Urban Development project to improve drainage, roads and sanitation systems that would contribute to climate-resilient and sustainable urban development. A feasibility study on the development of hydro-power stations on Malekula and Santo was also supported by ADB, including the upgrade of port facilities in Port Vila with improved berthing facilities.
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an important role in distributing and channelling climate
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A large share of public climate change finance is bilaterally accessed, administered largely through traditional development agencies. Australia is Vanuatu's largest bilateral donor for climate change followed by Japan, China and New Zealand, according to the analysis of bilateral sources from 2014 to present.
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Having a better understanding of climate change finance flows is essential to addressing the constraints of developing countries, such as the Pacific region in the development of climate change financing opportunities. The commitment to increase the flow of climate change finance from developed to developing countries has added to the already existing complexities of the global climate change finance landscape. For the Pacific, a total of USD 748 million in finance was reported to have been committed between 2010 and 2014, targeting climate change activities.
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Australia has directly supported major activities in Vanuatu, relating to the Recovery and Development Program, Roads for Development Program, Water, Sanitation and Hygiene (WASH) in schools, and through regional projects, such as the Pacific Risk Resilience Program (PRRP), PacificAustralia Climate Change Science and Adaptation Planning (PACCSAP) programme, Governance for Growth Program and the Pacific ICLIM Project.
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Germany has supported Vanuatu in CC activities since 2009 through various programmes, including an adaptationfocused SPC-GIZ joint programme, a GIZ-European Union (EU) Adaptation to Climate Change and Sustainable Energy programme, a GIZ- International Union for Conservation of Nature (IUCN) Marine Adaptation programme, a GIZSPC REDD+ programme and, most recently, Germany has provided support through a GCF Readiness programme and a DFAT-GIZ Climate Finance Readiness for the Pacific Project. Most of the German climate finance is channelled through regional modalities (most programmes are regional).
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the Asian Development Bank and UN Agencies have played
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CLIMATE FINANCE IN VANUATU AND SUPPORT RECEIVED
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Figure 67 Key Bilateral and Multilateral Sources for Climate Change-Related Funding to Vanuatu (2014-2016)
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Bureau of Meteorology supported the set-up of a Climate Data for the Environment (CliDE) database. Other multilateral support is geared towards the construction of a 275 MW wind farm on Efate Island by the European Investment Bank and technical support by Global Green Growth Institute to the Department of Energy.
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Vanuatu currently receives climate change funding primarily as grants, concessional loans and technical support. These funds and assistance are either channelled through the Government financial system that can be tracked or provided directly to the beneficiaries through an implementing organization which is, without the proper reporting mechanism, outside the Goverment of Vanuatu's purview. Additionally, the risks associated with these modalities (also common to other PICs), include double counting of climate change funding by source donors, intermediaries and onground implementing agencies. Many community groups, NGOs and private sector organisations, including some donors will continue to prefer direct access to funding. recognising the bureaucratic processes of government financial systems. This is unavoidable but important to ensure that reporting of such support feeds to the national budget planning processes. Lack of a common definition and understanding of climate change finance constitutes major concern of what counts and what should be reported. As a result, the format and level of detail presented to the Government of Vanuatu is different, making it more challenging to find consistency.
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Accessed Climate Change Funding
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Around 78 climate change-related projects with clear national allocations to Vanuatu were considered for the period 2014 to present from a range of sources, including the 20142016 Annual Budget Estimates, Aid Coordination Unit and project information from development partners. Regional projects with unclear national allocations for Vanuatu were not counted. Until 2016, approximately 214 billion Vatu (-USD200 million) was approved for climate change-related activities in Vanuatu from a wide range of sources.
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Similarly, GEF has been supporting Vanuatu in a number of environmental sustainability initiatives, such as the integrated sustainable land and coastal management; coastal zone adaptation and community resilience to climate change and natural hazards; Vanuatu's National Communications to the UNFCCC, as well as the Intended Nationally Determined Contribution (INDC). Other UN Agencies, such as the World Meteorological Organization (WMO) and Food and Agriculture Organisation (FAO), as well as other countries, such as Germany and Australia are supporting Vanuatu with the TC Pam recovery programme. Agencies, such as the Australian
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It is important to underscore that there are a number of large multi-million resilient infrastructure projects, which may inflate the reported figures. Also, it is not clear how much of these approved funds have actually been disbursed to Vanuatu or expended. It was also noted that the funds accessed were largely in the form of grants and aid-in-kind (88%) and concessional loans (12%). Vanuatu's experience is unique from other PICs because there is a large focus on concessional loans.
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million was approved by GCF for a climate services project in Vanuatu. The implementing entity for this Project is the Secretariat of the Pacific Regional Environment Program (SPREP) and it is executed by the Government of Vanuatu through the Vanuatu Meteorology and Geo-hazards Department.
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t External Climate Change Funding in Vanuatu
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Figure 69 Breakdown of Climate Change Adaptation and Mitigation Funding Based on the 78 Projects (2014-2016)
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Sectoral Funding
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The objective of the CCDRR Policy 2016-2030 in relation
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Sectoral funding was aligned to the key sectors in the Peoples Plan 2030. A large share of climate change financing has been focused on infrastructure (56%). This is due to TC Pam recovery programmes and investment in major roads and wharves improvement works. Sectors, such as environment, which include agriculture, water resources management, biodiversity, conservation (27%) and energy (8%) received a fair share of financing, while the tourism, social, energy, health, education, forestry, governance and ICT sectors received between 1 per cent and 3 per cent of the total funding.
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This is in line with Vanuatu's priority where adaptation is the immediate issue. Adaptation expenditure is high because of the large capital infrastructure projects that focus on port development, road infrastructures, sustained livelihoods and increased food security
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Although a large share of funding has been for adaptation activities, Vanuatu has continued its efforts in the reduction of greenhouse emissions through renewable energy, energy efficiency and conservation. The Vanuatu National Energy Roadmap 2016-2030 implemented by the Department of Energy has provided a strategic direction on energy, including climate change mitigation through increased
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Domestic Climate Change Funding
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use of renewable and geothermal energy and promoting sustainable uses of land and forests. The NDC target of Vanuatu also focuses on renewable energy and the cost for implementing the conditional NDC targets is at least USD400 million.
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Adaptation and Mitigation
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Figure 70 Climate Change Sectoral Funding (2014-2016)
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Figure 68 Bilateral versus Multilateral Breakdown (2014-2016)
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Climate change is likely to impact all sectors in Vanuatu, including agriculture, water, coastal and marine resources, infrastructure and tourism. Of the climate change finance accessed during 2014-2016, 89 per cent has been for climate change adaptation activities while 9 per cent was for mitigation activities. The other 2 per cent was related to disaster risk reduction and supporting mechanisms for mitigation and adaptation, such as capacity development, and systems strengthening and governance.
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CLIMATE FINANCE IN VANUATU AND SUPPORT RECEIVED
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available for climate change and disaster risk reduction activities, build financial capacity to manage resources and enable access to increased international funding. It is also expected that robust financial systems are in place and operating effectively for Vanuatu to gain access and ensure
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accountability in managing climate change and disaster risk reduction funding. These objectives could only be effectively achieved with commitment from all levels of Government and stakeholders, and with the support of development partners and donors.
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5.2 Climate Finance and Development Effectiveness in Vanuatu
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nt Positioning and Linkages
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Agenda for Action, and Busan Partnership for Effective Development Cooperation, guide efforts to improve development effectiveness at the global level. At the regional level, external development support should be aligned to the Framework for Pacific Regionalism (FPR), SAMOA Pathway, Framework for Resilient Development in the Pacific (FRDP), Pacific Principles on Aid Effectiveness and Caims Compact on Strengthening Development Coordination in the Pacific (Forum Compact).
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Development support for climate change can only be sustained and absorbed if the assistance is aligned and harmonised to national priorities and systems. In Vanuatu, it means aligning climate change support to the pillars of the NSDP and the national CCDRR Policy.
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nt nt -S 2 d in 8 al 7₁ e Due to the range of different modalities of development support, coordination will be critical to ensure that all development support, whether it uses country systems or not, are tracked and reported. It is noted that 58 per cent of climate change funds accessed by Vanuatu between 2014 to 2016 is outside of the direct purview of the national budget (off-budget). Therefore, tracking and reporting on all development support is important to aid further maintenance or sustainability of project pilot activities. The climate change funds being accessed by Vanuatu are primarily project- based and some loans. This means that the Government of Vanuatu must remain flexible and not limit its options on the kind of instruments that it can access for climate change. Building the capacity of government officials to write project proposals will be vital. There is currently no formal donor- to-donor coordination mechanism in Vanuatu where donors can share information and status updates and lessons learnt on projects. However, Head of Missions meet regularly but
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In Vanuatu, donors such as the European Union had previously provided budget support for climate change. Vanuatu's National Indicative Programme for the EDF11 is on rural development. Australia and New Zealand deliver their bilateral support to Vanuatu on a programmatic grants basis. French support to Vanuatu is now mostly facilitated through the European Union. Japan and China still prefer projectbased approach. Unlike other PICS, Vanuatu is accessing a significant amount of funding relevant to climate change objectives as loans and concessional loans.
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risk-related matters. Its role also includes facilitation and F
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More recently, the Global Green Growth Institute (GGGI) and the Government of Vanuatu embarked on a joint initiative aimed at accelerating financial flows to increase electricity access in off-grid areas, renewable energy and energy efficiency investments in furtherance of the country's NDC under the Paris Agreement. In June 2016, the Vanuatu Council of Ministers formally approved the National Green Energy Fund's design and overall structure, including the establishment of a task force. The National Green Energy Fund (NGEF) Task Force comprises the Prime Minister's Office, the Ministry of Climate Change Adaptation, Ministry of Finance and Economic Management and the Ministry of Internal Affairs with GGGI acting as the Government advisor, providing support on fund design and technical aspects.
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Global frameworks, such as the Paris Declaration, Accra
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gains. One single climate-induced disaster can undo decades
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issues that have the potential to reverse years of development
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Winston in Fiji in 2016 was estimated close to FJD2 billion
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(20 per cent of GDP). Therefore, for Small Island Developing
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States, it is very difficult to differentiate climate change finance from financing for development.
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VANUATU FIRST BIENNAL UPDATE REPORT
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Accountability
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There is need to enhance the M&E capacity of DSPPAC and line ministries to be able to measure, process and report on the tangible impacts and outcomes of all CCDRM support on the communities, environment, culture and infrastructure. Currently, partners engaging with the Government of Vanuatu do not report through the same entry point. Although the Ministry of Foreign Affairs is the mandated political focal point for all external partners wishing to engage with Vanuatu, there is evidence that some projects and partners are by-passing that requirement and are contacting line ministries directly for mission requests and approvals. To support the Government to effectively coordinate country missions, donors, projects and regional organisations should channel all entry requests to the Ministry of Foreign Affairs instead of making direct requests to ministries or technical focal points. Similarly, national technical focal points for international frameworks and multilateral mechanisms should always channel official communication from the Government to partners through the Ministry of Foreign Affairs. The Government should enforce a "no mission period" during the critical months for budget planning and preparation.
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a Vanuatu and Fiji are currently the only two PICS that have
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In terms of civil society engagement, the Vanuatu Association of NGOs (VANGO) is the mandated member of the NAB. However, VANGO is inactive due to resourcing issues and thus cannot effectively undertake this role. This is a common challenge faced in other PICs where the umbrella NGO body is inactive to coordinate NGO efforts.
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In terms of private sector, there is a lot of interest from the private sector to engage in climate change financing investment, including access to the Green Climate Fund Private Sector Facility. However, there is still a lot of confusion and sense of frustration in understanding the procedures for access. The Ministry of Climate Change Adaptation, in particular the GCF National Designated Authority (using the TA support provided by Commonwealth Secretariat and the GCF readiness grant), will need to proactively engage with the private sector stakeholders/ entities to raise awareness on access procedures for the GCF Private Sector Facility
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NGOs have well established networks in the communities across Vanuatu. The Government should support NGOs to build community readiness and awareness for climate change financing. Another issue is that during TC Pam, a considerable amount of bort was channelled directly through international NGOs. Most of those funds are now exhausted and some NGOs are scaling down on their staffing and activities. Sustaining these activities might be a challenge since Government was not a partner in some of these undertakings. NGOs reporting to both the DSPPAC and NAB would help to address this.
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The Government ensures that there is accountability for all
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informally. Sectoral groups, such as education, meet on a regular basis. Having a formal donor-to-donor coordination meeting (including discussions on climate change issues) on a monthly or two-monthly basis will be beneficial. This will be an opportunity for sharing lessons leart/status updates to promote coherence and joint work programs, including with non-traditional partners and emerging players. At the regional level, a similar coordination mechanism for climate change that exists for donors and regional organisations based in Suva, Fiji is the Development Partners on Climate Change (DPCC).
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mponent 1: the EU-GIZ Adapting to Climate Change and Sustainable Energy Component (18.64 million Euros) which is administered by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Component 2 the Energy sic Component(10 million Euros) which isjointly managed by the EU with the Asian Development Bank (ADB) and New Zealand in selected PACPS and Component 3: the Technical and Vocational Education and Training (TVET) ponenton sustainable energy and climate change adaptation (6.1 million Euros) which is jointly managed by the EU with the Secretariat of the Pacific Community (SPO) in partnership with the University of the South Pacific
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components is under way. Estimate for Vanuatu will be provided at a later stage. (18.64 million Euros). "The Project total amount brall fivecountries will be between USD 10 million and USD 50 million. The estimate of costs for the main **Component 1: the EU-GIZ Adapting to Climate Change and Sustainable Energy Component Component 2: the Energy Catalytic Component (10 million Euros), Component 3: the Technical and Vocational Educati and Training (TVET) Component on sustainable energy and climate change adaptation (6.1 million
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