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UK and Germany boost NAMA financing

07 Dec 2012 17:36:07 | edcm

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The UK and Germany have joined forces to launch a new initiative to help countries implement Nationally Appropriate Mitigation Actions (NAMAs), the UK Department of Energy and Climate Change (DECC) said late on Thursday.

NAMAs are loose political concepts, created under the Bali Action Plan of 2007.

While poorly understood, the projects offer the potential to create new carbon credits within regional emission trading systems, as developing countries start to set up market mechanisms to combat climate change under a post-Kyoto global protocol arrangement.

In total, the UN has provided for 25 different types of NAMAs. One type of NAMA would generate credits that could be sold on the international carbon market and pay for the mitigation actions. This could link the credits from different regional schemes and create a global market − which is at the top of investors' wish lists - but this will take time, analysts have warned (see EDCM 20 September 2011).

The DECC and the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) have allocated €65m to create the "NAMA facility". The majority of this money, or €40m, will come from Germany's Special Energy and Climate Fund, which has earmarked up to €2.5bn annually for renewable and efficiency as well as climate projects "with the start of more comprehensive auctioning of emission allowances in 2013"; while the remaining €25m will be paid by the UK's International Climate Fund (ICF), which will spend £2.9bn (€3.6bn) in international climate aid by March 2015.

A NAMA could be any project, policy or programme that introduces technological changes or transforms sectors towards a low-carbon future. Developing countries stand to benefit from NAMAs, as they are already including some NAMA-type strategies into their national planning.

"However, it is difficult to access finance through existing commercial and public channels to finance implementation, particularly for the most innovative NAMAs," the DECC stated. Countries will be able to apply to the facility for funding, but will have to undergo a rigorous selection process.

"It is intended that the facility will support investments across a range of countries and sectors with grant funding as well as loan finance," the DECC added.

Project selection

The facility has already selected its first project, which will be based in Mexico. The money will go towards the Mexican government's implementation of a sustainable housing project, which will form the basis of a broader move towards energy-efficient buildings.

While submissions for NAMA projects to the UN have been slow to take off, a record number of NAMA projects were submitted in November (see EDCM 6 December 2012).

Data from UN research body UNEP Risoe show that there are now 112 projects in the United Nations Framework Convention on Climate Change's NAMA pipeline. MLDB

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