Draft Category I paper for the Belgrade Ministerial Conference

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Draft Category I paper for the Belgrade
Ministerial Conference Environment for
EuropeMobilising Finance for Environmental
Priorities Recommendations for the Future

• Craig Davies
• PPC Executive Secretary
• Tenth Meeting of the EECCA Environmental Finance
  Network
• Paris, 22-23 February 2007

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Background to the paper

• The sixth Environment for Europe Ministerial
  Conference is taking place in Belgrade on 10-12
  October 2007
• The conference will include a session on
  Environmental Financing, with representatives
  of the private sector and IFIs
• A draft Category I paper (for consideration by
  Ministers) on environmental financing in EECCA
  and SEE has been prepared jointly by the PPC, EAP
  Task Force, REC for Central Eastern Europe and
  the World Bank
• The paper is intended to provide recommendations
  on future actions to support environmental
  financing and provide a basis for discussions on
  financing issues at Belgrade

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Objective and scope

• Objective of the paper
• To identify actions that can be taken by actors
  in the EfE process to ensure that adequate levels
  of finance are available for environmental
  improvements in EECCA and SEE countries to meet
  commitments under the Environment for Europe
  process
• Scope of the paper
• A brief assessment of the trends in environmental
  expenditures and access to finance in the region
• A consideration of the roles of public, private
  and international sources of finance and the
  opportunities these present for supporting
  environmental improvements

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Main findings of the paper

• Access to finance, both public and private, to
  address environmental challenges has improved
  across the EECCA and SEE regions, especially in
  oil- and gas-rich countries
• But this has not always led to environmental
  improvements due to the needs for policy and
  institutional reforms and barriers to project
  development
• In low-income countries these problems are
  compounded by more limited access to affordable
  finance
• Action is required by EECCA and SEE governments,
  donor country governments, international bodies
  including IFIs and the private sector to find
  innovative ways of optimising flows of
  environmental finance

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Recommendations for Ministers (I)

• Environmental expenditure as a percentage of GDP
  in EECCA and SEE needs to increase to levels
  comparable to those in CEE countries net of EU
  funds
• Environment ministries can help to achieve this
  by supporting mid-term budget frameworks and
  preparing sound environmental investment
  programmes within these frameworks
• Donors and IFIs could align their assistance
  plans with such programmes, while using more
  performance-based aid instruments to create
  clearer incentives for results
• To take advantage of Kyoto Protocol financing
  mechanisms the eligible countries should
  implement adequate legal and institutional
  frameworks by 2008.

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Recommendations for Ministers (II)

• Environmental ministries could encourage more
  private sector finance by implementing
  market-friendly reforms of environmental policies
  and institutions
• Sustained donor grant co-financing is required to
  make IFI loans accessible for low-income
  countries
• Middle-income countries could attract more
  international finance by making it more
  accessible at sub-national levels donors could
  help by providing market friendly aid
• Assistance is needed to build the capacity of
  potential project proponents to prepare viable
  environmental investment projects.

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Next steps in the finalisation of the paper

• Draft paper was approved in principle by the
  Executive Committee of the Working Group of
  Senior Officials on 15 February
• Delegates asked for the final draft to be made
  more reader-friendly and for the language to be
  made less prescriptive
• Draft paper now to be presented at the Joint
  Meeting of the EAP Task Force and PPC on 15-16
  March for approval
• Final version to be completed, taking into
  account all comments received, and submitted to
  the Environment for Europe Secretariat by 1 May

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Key issues for consideration

• Does this paper capture the key financing issues
  to be brought to the attention of Environment
  Ministers at Belgrade?
• Have the drafters successfully kept the focus on
  issues that are within the mandates of
  Environment Ministers?
• What further refinements should be made to the
  report before it is finalised?
• How can EECCA governments support the papers
  messages during the preparations for the Belgrade
  Ministerial Conference?