12/23/2020

IKI 2020 – challenges and solutions

We are pleased with these successes despite and in the face of COVID-19. While it has been a difficult and effortful year, we are optimistic about the future and wish everyone a happy New Year.

Since 2008, International Climate Initiative (IKI), under the auspices of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), has been supporting climate action and biodiversity conservation in developing and emerging countries. In those 12 years, it has funded over 750 climate action and biodiversity conservation projects worldwide with a total of over EUR 4.5 billion.

The budget appropriation, which has increased steadily annually, was set at EUR 567 million for the year 2020. However, the actual expenditure for 385 new and ongoing projects amounted to approximately EUR 601 million (2019: EUR 467 million, 2018: EUR 410 million); the difference between budget appropriation and actual expenditure was met by excess funds retained from previous years. These funds are also likely to be fully spent, despite the challenges posed by the COVID-19 pandemic.

By the end of December 2020, 109 projects in ODA countries had either started or received more financial assistance. To achieve this, commitments were made in 2020 for approximately EUR 619 million, to cover actual expenditure in 2020 and planned expenditure in following years.

This includes in payments to international climate and biodiversity funds as well as commitments for IKI Small Grants in the custodianship of GIZ GmbH, IKI Medium Grants in the custodianship of ZUG gGmbH and the NAMA Facility.

Many projects were also extended using a cost neutral approach given the adverse effects of the coronavirus pandemic.

This was and continues to be possible thanks to the close worldwide cooperation of all IKI partners through prompt communication on challenges and direct implementation of solutions. As always, we wish to thank everyone around the world for their commitment to realize and implement IKI’s projects, as well as the office and administrative staff who have kept things running smoothly. This has been essential for maintaining the high quality of IKI projects, and ensuring that many countries and communities benefit from these concerted efforts.

Impacts of COVID-19 on IKI projects

Great communication, fast solutions

The lockdowns which began early in the year threatened IKI projects as well. However, the good communication between implementing organisations soon made it easier to adjust project duration and goal-setting, so that delays in reaching stated goals would not jeopardise the high level of project ambitions.

Cancelled business travel, meetings, seminars and workshops kept many projects from consistent successes, since digital formats were quickly established but proved unsuitable for some tasks.

Corona Response Package

Simultaneously, IKI assessed its project portfolio to determine where adjustment, increase in project funds, and extension of project duration could make the most rapid contribution to a climate-friendly restart in project countries. The result was the extensive 68 million euro ‘Corona Response Package’, which with its fast-track process offered partner countries immediate support in tackling the COVID-19 crisis.

The emergency aid delivered to 28 projects and two new programmes in 26 countries provides special relief for preservation areas and biodiversity hotspots, a climate-friendly economic re-start and the prevention of future pandemics.

This includes economic advisers who will advise the environment and finance ministries of 7 countries in order to contribute to an economic recovery in line with the stipulations of the Paris Agreement.nzministerien beraten, um zu einem wirtschaftlichen Wiederaufbau gemäß der Vereinbarungen des Übereinkommens von Paris beizutragen.

"Green Recovery" as an integral part of IKI funding

Thematic selection procedure, IKI Small and Medium Grants

COVID-19 also plays an important role in IKI’s thematic call this year. The motto of the annual IKI ideas competition, which is open from November 2020 to March 2021, is ‘Creating green societies in challenging times’. This focus on a green recovery sends the message that tackling the social and economic impact of the pandemic should be done within a framework of environment- and climate-friendly reconstruction. A total of 240 million euro is available for ambitious and transformative project ideas.

IKI Medium Grants and IKI Small Grants projects can also contribute to a future-oriented recovery effort.

NAMA Facility’s ‘Ambition Initiative’

But IKI’s greatest contribution to the global green recovery is the NAMA Facility’s ‘Ambition Initiative’, begun on the fifth anniversary of the Paris Agreement. This special initiative is meant to support especially ambitious countries in implementing their national climate action goals using innovative projects. Furthermore, the projects will support the countries’ economic recovery from the effects of the coronavirus pandemic. At 174 million euro, the ‘Ambition Initiative’ is the NAMA Facility’s largest call yet. It is primarily financed by Germany (100 million euro through the BMU under IKI) and the United Kingdom (68 million euro). The Children’s Investment Fund Foundation (CIFF) is contributing 5 million euro.

The international Adaptation Fund

Through IKI, the BMU is also the largest contributor to the international Adaptation Fund, which helps developing countries that are particularly exposed to the negative effects of climate change develop specific projects and programmes to adapt to climate change. The Adaptation Fund helps local populations in many countries increase their resilience to climate change and protect ecosystems. In 2020, the BMU paid an additional 50 million euro into the Adaptation Fund via IKI. This makes a total of 390 million euro paid into the Adaptation Fund via IKI since the fund was created.

Unbroken commitment in new projects

Mobilising private equity

In 2015, the Paris Agreement (PA) renewed the aim of the 2009 Copenhagen Accord to mobilise a joint total of 100 million US dollars annually starting in 2020 to support developing and emerging countries in climate action and adaptation. Signatories also resolved to bring global financial and investment streams in line with low-carbon and climate-resilient development strategies (article 2.1.c of the Paris Agreement).

To date, however, the mobilisation of private investment has lagged far behind expectations. Over the past years, IKI has engaged increasingly with questions of climate finance and mobilising private equity.

In 2020, this culminated in the creation of a large number of (funding) projects which contribute to the stated goals in various ways. The projects include:

City Climate Finance Gap Funds II (total of 15 million euro in 2020)
Catalyzing private financing for climate impact in Africa - Climate Facility Afrika for Compact with Africa (20 million euro)
Scale Up Finance Sector - 30 by 30 Zero (20 million euro)
Regeneration Initiative (10 million euro from the Corona Response Package)
Topped up: Biodiversity Finance Initiative (BIOFIN II) (20 million euros from the IKI Corona Response Package)

Net zero – support for mitigation of greenhouse gas emissions

The central yardstick for most IKI projects is the implementation of the Paris Agreement. Relevant projects support IKI partner countries in further developing their own climate policy as well as implementing specific, innovative instruments for the mitigation of greenhouse gas emissions.

The following projects, for example, began in 2020:

Forest landscapes, biodiversity and ecosystem adaptation

The United Nations General Assembly has declared 2021–2030 the UN decade on ecosystem restoration. Its stated goal is to prevent the global degradation of ecosystems and resultant loss of biodiversity and reverse the trend.

IKI is supporting the decade, which officially begins in summer of 2021, with many projects and initiatives. In particular, that includes supporting crucial processes in relevant UN organisations and the Seed Capital Assistance Facility (founded December 2019) to underwrite forest landscape restoration projects with private funding.

Current support for the Bonn Challenge, the Global Landscapes Forum (GLF) and the New York Declaration on Forests (NYDF) will also continue. These initiatives are central pillars of the international efforts to restore forest landscapes.

Selected projects begun in 2020 to support the UN decade goals, further expand IKI’s focus on ecosystem-based adaptation to the impacts of climate change or which emphasise indigenous communities and biodiversity conservation include: