Interview: Financing actions on mitigation - NAMAs

Air conditioning systems on walls in asia

Air conditioning systems on walls in asia; Photo: flickr/draculina_ak (CC BY-NC-ND 2.0)

The NAMA Facility is a multi-donor programme that supports the implementation of the most ambitious Nationally Appropriate Mitigation Actions (NAMAs) that induce transformational change towards a low-carbon development pathway. It was jointly established by the Department for Business, Energy and Industrial Strategy (BEIS) of the United Kingdom (UK) and the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB). For identifying the most ambitious NAMAs, the NAMA Facility conducts open competitive calls for NAMA Support Projects. The current 4th Call for projects is open until the 31 October 2016. More information on the website of the NAMA Facility.

Søren E. Lütken is an expert on NAMAs and talked with IKI about the concept of NAMAs and possible challenges in financing them and in international climate change collaborations.
He is a senior adviser at UNEP DTU Partnership located at the Danish Technical University. Formerly he worked as Senior Climate Finance Adviser to the Technical Support Unit of the NAMA Facility.

What exactly constitutes a NAMA or what kind of initiative qualifies as a NAMA?

NAMAs have no official definition and therefore what a country decides to label 'a NAMA' is per definition a NAMA. However, to the extent that donor funding is sought, the targeted donor will have its own criteria for what is considered 'a fundable NAMA', i.e. a NAMA that responds to criteria set by the donor. These are commonly requirements on transformational change characterized by the permanence of the change, the scale of the change and of course the expected emissions reduction effect. Most will also expect a firm and long-term plan for the financing of financial instruments, such long-term financing not to be donor grant based, but rather being rooting in the national budget.

What types of NAMAs can you differentiate and which ones are supported by the NAMA Facility (NF)?

Referring to the above, NAMAs may come in all shapes and sizes as they have no official definition. There are also unilateral activities (i.e. funded solely with national resources) that are not labelled as NAMAs, but which conform to the criteria listed above. The NAMA Facility aims at funding activities that complies with the above criteria, although it is not always easy to translate definitions into real-life contexts.

How is the concept of NAMA linked to MRV?

It would be the other way around - how is MRV linked to NAMAs. There is a general preoccupation with measuring things long before they (maybe) happen (let alone reporting and verification). MRV is inherited from CDM (Clean Development Mechanism) and refer to a rather rigorous process that is difficult to integrate in NAMAs with sector wide approaches and often dispersed activities. The NAMA Facility, for example, uses Monitoring and Evaluation which is better suited to the nature of NAMAs.

Do you have any positive examples for effective financial mechanisms?

Ideally NAMAs are funded by rearranging national incentive structures and regulation in order to promote the low-emission alternatives. Sometimes transition into such a changed regulatory regime needs bridge financing - loans, guarantees or sometimes grants, but on a temporary basis as indicated above. The public sector provides these regulatory changes that incentivizes (or imposes) the private sectors investments in low-emission assets. Possibly the best examples of such models from the NAMA Facility are the Thai RAC NAMA and the new Colombian NAMA for replacement of fridges. 

What are the main difficulties in NAMA development and what could be done from the donor/international community to address these problems?

The main challenge for applicants seems to be the design of a sustainable financing mechanism in which a donor such as the NAMA Facility can participate on a temporary basis. The phasing-in of other sources of financing, including national sources, is commonly unclear or not thought of as a financing plan. Also the blending of different sources is a challenge, but the donor community's programming cycles are not helpful in this process either. There is limited if any collaboration between different donor institutions on the provision of long-term financing models.

What is the role of NAMAs in light of the NDCs and the Paris Agreement, especially since NAMAs are not clearly mentioned in the Paris Agreement? Do you see any danger in the fact that it is not mentioned? And how do NAMAs support NDCs?

Whether labelled NAMAs or not, the 'mitigation action' is what materializes the NDCs. Without action, nothing will be achieved. We believe that the NAMA by now has fostered so much conceptual development that if it was discarded, it would have to be redone - and that would be a waste of valuable time. Already now, you see initiatives on 'how to finance NDC implementation'. There is no difference to 'how to finance NAMAs', which we have been training and developing the past seven years. Redoing it as 'financing NDC implementation' is a detour for which we do not have time.

How are NAMAs currently being discussed in the international climate change and development community?

We are making an effort to keep the NAMA solidly on the agenda and it seems that it will stay in the vocabulary - but as indicated above there is a risk that it may be used in parallel to NDCs without thoughtful differentiation, which would have the NAMA being the obvious implementation concept for the NDCs.

What is the role of (co-)benefits here and can this concept be used to enhance/strengthen NAMA development?

Generally, the benefits (or, quite misleading, the 'co-benefits') of NAMAs are essentially what makes them happen. Although they are 'mitigation actions', the real benefit lies in the substance of the initiative - transport, housing, energy… - while the real 'co-benefit' is the emissions reduction. NAMAs should ideally finance the incremental cost of the low-emission alternative, but often climate finance is sought for the entire activity. This approach would quickly exhaust grant funding such as the NAMA Facility. 

Further information

Website of the NAMA-Fazilität (external)