Climate finance for Cambodian sustainable development

On 25th November 2014, over 50 development workers joined together in Phnom Penh, and talked about climate finance-related issues such as access to climate finance, the role of climate finance in charting a sustainable development path for Cambodia, and more importantly, how government, the donor community, project implementers and NGOs can all work together to optimize global climate change support for Cambodia.

Our sincerest thanks goes out to the members of the panel whose expertise and experience on the subject provided some real valuable insights. GERES – and we are certain – the rest of the panel would not hesitate to share further insights, in the spirit of working together for a common goal in development.

You will find below the discussion’s summary and highlights.

The overall picture in Cambodia

The Royal Government of Cambodia (RGC) had been working on creating a climate change financing framework, and this was approved last week by the National Climate Change Committee. Cambodia has attracted a good amount of international public funds. In 2013, the RGC received US$180 million for climate-related and other development projects, US$85 to US$90 million of which is for climate change action. Of these, US$25 to US$30 million came from multilateral funds such as the ADB Climate Investment Fund, the Adaptation Fund and the Global Environment Facility (GEF), and support from donors such as the USA, Japan, Sweden and EU. The recently established Green Climate Fund (GCF) has received pledges worth US$9.3 billion from developed countries, and these can be utilized by Cambodia for climate-smart projects.

Access

Discussion about access to climate funds directed attention to the subject of access to carbon finance. GERES shared its experience, having been able to access funds for the 2003-2013 crediting period, from the Voluntary Carbon Market (VCS), for its improved cookstove project. While monies from the clean development mechanism (CDM) flowed mainly into the BRIC (Brazil, Russia, India, China) nations, VCS was accessed by GERES who was able to sell carbon credits to buyers who were mostly international companies and corporations that wanted to offset their emissions. The funds generated were used to recover the administrative, monitoring and verification costs, and to establish new projects and social enterprises. Carbon finance gave a project implementer like GERES the room to design longer-term grassroots interventions as compared to institutional donor funding which typically ran from 4 to 5 years. But the carbon market has collapsed owing to a fall in prices of carbon credits and a failure to formulate a new post-Kyoto agreement. Given the not-so rosy picture of the carbon market, it has become more risky for project implementers to consider revenues from carbon credit sales in their business plans.

The RGC hoped to leverage carbon finance through forest projects via the UN-REDD+ (Reduce Emissions from Deforestation and Forest Degradation Plus Conservation), but there is still a long way to go before it gets monetized.

Government has a role to play in regulating the carbon market. Carbon finance is all about putting a framework, regulations, policies, incentives, standards, etc., together, and should be viewed in a particular country’s context.

Climate finance for Cambodia’s sustainable development

By its very definition and utilization, climate change finance should be able to support long-term sustainable development options for Cambodia. It is estimated that by 2050, Cambodia’s gross domestic product would be reduced by 3.5% each year if impacts of climate change were not averted. Private sector investment into long-term climate change measures should be boosted by introducing incentives into the sector.

Several issues need to be addressed to ensure that climate financing is supporting sustainable development in Cambodia: at the policy level, government strategy (as articulated in the National Strategic Development Plan, National Green Growth Roadmap, Cambodia Climate Change Strategic Plan, National Adaptation Program of Action) should address issues relating to, for example, food security; issues on monitoring climate projects and ensuring accountability and transparency should also be addressed.

How to work together

There is a constraint of capacity building at the moment, and a need to scale up from pilots and prototypes. It is a priority to establish standards in sector like construction, energy, etc., as well as a monitoring and evaluation framework in the next 4 to 5 years so that entities – both national and regional – could get accredited, and hence, could use funds from the Green Climate Fund. Cambodia should make itself ready for the Green Climate Fund.

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