Fourth Dialogue for the Implementation of the NDC
The Mexican-German Climate Change Alliance of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH helped the Ministry of the Environment and Natural Resources (SEMARNAT) with the development of four dialogues aimed at defining the content and narrative of Mexico’s Nationally Determined Contribution (NDC) Implementation Plan. In this fourth dialogue, multilateral and bilateral international organizations, financial organizations, private banks, among others, were invited.
The fourth and final dialogue for the development of the NDC Implementation Plan was held on November 8, 2018 at the SEMARNAT offices. In this dialogue, multilateral and bilateral international organizations, financial institutions, private and capital market banks, among others, were invited. During the meeting, the structure, content and narrative of the Implementation Plan were presented, as well as the steps Mexico has taken to determine its mitigation and adaptation goals and seek technical advice and public and private financing so that it can achieve its conditional targets.
During the dialogue, participants highlighted the importance of increasing access to national and international funding mechanisms for different sectors and government institutions. Also emphasized was the importance of inter-ministry coordination to help ensure the allocation of public resources. There was discussion about the Ministry of Finance and Public Credit’s (SHCP) budgetary role in financing the NDC, and all agreed that it should be involved in the design and implementation of mitigation and adaptation actions.
Subnational governments should also strengthen their financing mechanisms and participate in executive and bankable projects, and these in turn should be part of a portfolio of projects that can be presented to international and national banks—public or private. One of the barriers facing subnational governments is their inability to interact with international financial organizations, since this right is reserved to the SHCP and the Ministry of Foreign Affairs (SRE).
Consensus was reached on the need to innovate in climate financing not only to decarbonize the economy, but also to improve adaptation to climate change. Financial mechanisms and insurance for disposable assets that can generate a loss or a risk for investors also need to be developed. Also discussed was the possibility to make interest rates more flexible in green projects and share the risk between more stakeholders benefiting from the projects; or to adapt the logic of financial organizations to direct beneficiaries of the project who may not meet all the financing requirements, such as indigenous communities who lack property titles and guarantees. One proposal even suggested creating a guarantee fund to overcome this limitation.
To increase funding sources, it is important to systematize existing and future projects and show the benefits and co-benefits of financing green projects. Moreover, private banks need to perceive these types of actions as profitable. One way to achieve this would be by selling carbon credits at the start of projects.
Mexico should also include an effective accountability mechanism in its Implementation Plan that helps trace the resources committed and their impact on meeting the conditions of the NDC. This will increase confidence in the country and attract more investments and financing.
Technical and financial cooperation are key for the Implementation Plan to support cross-cutting issues such as the gender perspective, human rights and the relationship of the NDC with the Sustainable Development Goals (SDGs).
