International Climate Initiative

Contents
1 Summary
2 Graphs and statistics
3 Basic Description
4 Fund Governance
5 Relationship with Official Development Assistance
Summary

The International Climate Initiative (ICI) is an innovative, international mechanism for financing climate protection projects. It receives funding from the sale of tradable emission certificates. The overall objective of the fund is to provide financial support to international projects supporting climate change mitigation, adaptation and biodiversity projects with climate relevance.

Graphs and statistics

Basic Description

Name of Fund	The International Climate Initiative (ICI) of the German Government. Known as the International Climate Protection Initiative until December 2008.
Date created	Date fund proposed: December 2007 Date fund made operational: The fourth quarter of 2008
Administrating organisation	The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) of the German Government.
Objectives	The German ICI will provide financial support to international projects supporting climate change mitigation, adaptation and biodiversity projects with climate relevance. It aims to ensure that such investments will trigger private investments of a greater magnitude. It also aims to ensure that financed projects will strategically support the post-2012 climate change negotiations. For this purpose, it will support multilateral activities and funds focusing on adaptation and forest management.
Donor contributions	Pledged: The ICI will mobilise resources from private companies (compliance buyers) under the framework of the European Union Emission Trading Scheme (EU ETS). In 2008, the German government auctioned 8.8% of its allowable emission permits to businesses. Approximately 30% of the revenue earned from this sale is intended to finance climate change-related projects. This is expected to amount to EUR400 million (USD618.30* million)/year for domestic and international use. EUR120 million (USD185* million)/year is earmarked for developing countries and countries in transition. Of this, half is intended for sustainable energy projects and the other half for adaptation to climate change impacts and biodiversity projects. *The exchange rate used for the pledges reflect the annual average exchange rate from Oanda Website.
Activities supported	The ICI supports mitigation (mainly sustainable energy systems), adaptation and preservation and sustainable use of natural carbon sinks/ REDD. The criteria on which projects are selected include those projects that: can demonstrate a mitigation effect; are anchored in partner countries’ national strategies; are innovative and impact beyond the individual project itself and are transferable; built on the strengths of German climate policy and have synergies with the conservation of other global environmental goods.
Conditions and eligibility requirements	The ICI has initially focused on a number of countries that have a high potential for emissions reduction in view of their significant and sharply rising greenhouse gas emissions. Innovative projects are also being supported in other selected countries and regions. Furthermore, projects targeting valuable carbon sinks with high levels of biodiversity (such as in the Amazon region, the Congo Basin and South-East Asia) will receive support. Existing structures of development cooperation are used for the implementation of projects, with Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ – German Technical Cooperation) recently renamed as Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and Kreditanstalt für Wiederaufbau (KfW development bank) playing a key role in project identification and implementation. Projects will complement existing development cooperation with respect to climate change and energy policies, without being limited to certain sectoral or regional focuses or priorities. Projects are selected in a two stage procedure. In the first stage, project outlines submitted by applicants are appraised. In the second stage, applicants who have submitted promising project outlines are requested to submit a formal application for funding. The funding decision is taken on the basis of the final assessment of that application by the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. Project proposals can be submitted by implementing organisations of German development cooperation, and by non-governmental and governmental organisations, universities and research institutes, private-sector companies, multilateral development banks, and organisations and programmes of the United Nations.
Funds disbursed to date	The total amount approved, as of January 2012, is EUR 409.83 million (USD 575.57 million). The exact amount disbursed is unknown as the ICI doesn't distinguish the two categories. The breakdown of projects approved, as of January 2012, is the following: A) In the field of sustainable energy supply - mitigation general - 121 projects with a support volume of EUR 260.28 million (USD 363.96 million) have been approved. The goal is to support partner countries in establishing an energy supply structure that prevents climate-damaging greenhouse gas emissions where possible. Support is also given towards increasing energy efficiency, expanding renewable energy, reducing environmentally harmful hydrofluorocarbons and for investment-related measures and know-how in partner countries. B) In the field of adaptation to climate change, EUR 64.12 million (USD 90.86 million) has been assigned for 38 adaptation projects. The main emphasis here lies on helping partner countries to develop and implement national adaptation strategies, and increasingly also on ecosystem adaptation. C) In the field of REDD activities for conserving carbon sinks, especially of forests and other ecosystems such as wetlands, 28 projects are financed for a total amount of EUR 63.30 million (USD 92.26 million). Activities in this field aim to improve synergies between climate protection and biodiversity conservation. D) Other 9 multiple foci projects have been approved for a total amount of approximately EUR 22.11 million (USD 38.49 million). These amounts reflect only the BMU contribution. The exchange rate used for the amount disbursed has been calculated from external sources. It has been calculated reflecting the specific date when each disbursement was made. The funds from the International Climate Initiative primarily flow into bilateral projects. Additionally, involvement in international climate funds in the context of the Framework Convention on Climate Change and the Kyoto Protocol is also planned.
Uptake and projects supported	A full list of projects is available here: http://www.climatefundsupdate.org/projects Projects are divided per region: - Africa - Asia - Europe, Caucas, Central Asia - Middle East and North Africa (MENA) - Central and South America - Global And per topic: the development and implementation of national and local emissions reduction strategies, renewable energies and energy efficiency, emissions reduction in the transport sector, substitution of refrigerants that also contribute to global warming, testing innovative project mechanisms (CDM/JI), conservation, sustainable use and restoration of globally significant carbon sinks, habitats and climate-relevant biodiversity, synergies between climate change mitigation and biodiversity conservation, implementation of selected parts of national and regional programmes for adaptation to climate change, establishment of monitoring and accounting systems to review and evaluate mitigation activities.
Proposed life of fund	2008-2011. However the ICI will be extended beyond 2011 and it will be funded with the same amount of the past years (EUR 120 million per year) and also with additional funding coming from the “Energy and climate funds”.
Further information	1. ICI Website 2. International Climate Protection Initiative – background information 3. BMU Presentation of Innovative Finance Mechanisms and Climate Change-The German International Climate Initiative. Presented at the Annex I Expert Group Meeting, 5-7 May 2008, Paris, by Ursula Fuentes, German Ministry for the Environment, Nature Conservation and Nuclear safety. 4. Project of the international climate protection initiative lowers energy consumption in Jordan. BMU Press Release 212/08. 5. Information for applicants (April 2010)

Fund Governance

Decision-making structure for fund disbursement	All funding decisions on projects are made by the BMU. The ICI works closely with the two organisations contracted by the German government to perform development cooperation tasks: GIZ and KfW. The administration of the International Climate Initiative is carried out by a programme office located at GIZ, supported by additional personnel capacity provided by KfW. An international advisory group, of up to 30 members, offers strategic support to the practical work undertaken in the ICI. The international advisory panel is made up of experts from governments, academia, non-governmental organisations, companies, financial markets and international financial institutions. The international membership of this group reflects the complex range of interests that exists at international level and is designed to allow multiple, cross-sector perspectives to emerge regarding the innovative financing of future climate protection measures. Meeting once a year, the Group advises the ICI on the identification of project types, activity areas and ways to harness potential for cooperation and synergy. In addition, the panel debates the further evolution of the Initiative and discusses best practice, feeding this back to further important players and multipliers in the climate policy arena.
Consultations with non-government stakeholders	No consultations with civil society took place prior to the establishment of this initiative. The international advisory board, as stated above, has members from academia, non-governmental organisations, companies, financial markets and international financial institutions. On 11 June 2011, the ICI organized a workshop named “Developing Knowledge on the Building Blocks of a Global Mitigation Architecture” bringing together about 50 practitioners and experts. It looked and compared a selection of ICI-projects, presenting their perspectives and experience to a wider audience and specifically to the Bonn negotiation process. It involved networking, exchanging views and sharing lessons learned as well as experience and advice for the development and implementation of LCDS, NAMAs and MRV systems in developing countries. Among the success factors for LCDS, NAMAs and MRV systems, there was the establishment of inter-ministerial committees and working groups to improve collaboration and coordination. Several of the projects presented promised eventually to initiate such inter-ministerial collaboration. Inter-ministerial collaboration and coordination are necessary and support the whole process in prioritizing action, aligning low carbon with wider sustainable development goals, and identifying potential public and private financing sources. Another workshop was organised in the Philippines in September 2011 to address the topic of ‘Maximising the Co-benefits of REDD+ Actions’. The forum included experts involved in ICI projects in nine South-East Asian countries and the Pacific Islands; delegates represented governments, the private sector and civil society.
How fund disbursement is reported	At the conclusion of each project a systematic evaluation takes place by a team of research institutes. The mitigation impact is measured through greenhouse gas monitoring. The programmes are continuously adapted and further developed on the basis of this evaluation.
Issues raised by the public	National civil society has been in favour. The broad level of support that exists is reflected in the decision of two (out of the three) opposition parties in parliament to vote for this international initiative.

Relationship with Official Development Assistance

Is donor funding considered part of official development assistance?	Funding is classified as ODA, with some exceptions for project funding in non-ODA eligible countries, such as Russia.
Financial instrument/ delivery mechanism used (e.g. grant, loan)	A variety of approaches are pursued within the ICI, including financing investments and programmes in financial sectors by means of grants, as well as support via (interest-subsidised) loans and also, where appropriate, via project-based contributions to international funds.
Nature of recipient country involvement	Two preconditions for action on the part of the ICI is the presence of a robust executing organisation in the partner country and support for the project from the country’s government.
Overall consistency with the aid effectiveness agenda (i.e. the Paris Declaration)	Project selection is made with regard to the criteria of the Paris Declaration on Aid Effectiveness. As from 2009, country ownership will become an explicit criterion for project selection.