 Talking about large institutions, we just talked about how multilateral funding is, or rather than that bilateral funding is increasing more than multilateral funding. There are some innovations among institutions to meet the challenges of environment and climate change. And we will look into that now. We will first meet someone actually from the UN that we discussed. Maybe he can also answer our questions. And then we will take a look at something called RED. It's something to help, it's something against deforestation in the world. First, please let me introduce Mr. Janik Lemarek. He is the former Executive Director of Global Environment Facility, now at the UN, Multidonor Trust Fund. And later on we will meet Mr. Arith Angelsson, who's followed the institution called RED that we will hear more about. So how do you actually reduce aid fragmentation and create a green market? Please welcome Arth. Good morning everybody. As part of our discussion today on what does work, what does not work, what could work in the field of aid and climate change, I'm here to present the concept of green market transformation that the global environment facility and its implementing agencies has been championing for the past two decades. The total, the available public finance to address climate change and to preserve our global environment is only a fraction of the total investment required. The total amount of money required is at least bigger by an order of magnitude. Now most of what we have to do to address climate change is actually profitable. We are speaking about additional investment, not additional costs. When you invest in energy efficiency, you do not only save energy, you also save money. Also renewable energy technologies, for example, have become the most affordable technology to provide energy access in a number of locations. So if we are speaking about additional investment requirement for profitable activities, we should see the private sector interested in such an area. And indeed, if we look at what has been happening for the past 10 years, we have seen a dramatic increase in private sector investment, that means private sector individual citizens like you and I and business corporations. We have seen a dramatic increase in, for example, green energy from about $50 billion a year in 2004 to actually in 2011, 1011, over $250 billion. So we seem to be seeing a major trend and a very positive trend to address climate change. However, if you look very carefully at this graph, you will see that there is something very concerning. Most of this investment is actually taking place in OECD countries and emerging economies such as China or India. And all the other countries, more than 150 countries, are actually exactly at the level where they were 10 years ago. So what we are seeing is that only a subset of the countries are currently accessing private finance for green energy and any kind of green infrastructure. And this is a major issue because there is no way we are to remain under two degrees Celsius if only 50 countries can take action. Plus, if there is no way we are ever to reach a global political deal to address climate change in 2015, if 150 countries have basically the impression that there is nothing in that deal for them. And so this basically spells disaster, such a graph. And so why is it happening? One of the main reasons is because there's 150 countries that do not have access to climate finance have very weak domestic capital markets. And they have to rely on international capital markets to access the long-term finance that they need for their investment. And international capital markets tend to be very, very cautious. They are not to invest in a developing country if there are a number of barriers that basically would translate into above average investment risk. And for example, a developing country can have wonderful wind resources. I know one country with wind resources of above eight meters per second, the Saudi Arabia of wind. And in that country there hasn't been a single investment in wind energy so far. The reason is that having wonderful wind resources, wonderful renewable energy resources is not enough. For example, in the case of wind, doesn't matter if your wind resources are good, if independent power producers cannot access the grid. Or if it takes them five years to get the sitting licenses for their wind farm because they have to get authorizations from 30 agencies. Or for example, even if the wind produced is very competitive, fossil fuel energies are subsidized at 80%. Or they have to fly somebody from the other side of the world every time they have a problem with their wind turbine because there is a limited local supply of expertise. Or they are basically tens of potential technological, financial, institutional, political barriers that can make investment in wind energy in a windy country, not an attractive proposition. And here comes the concept of market transformation. Where, in a sense, the idea is to promote a long-term integrated strategy for a country that conducts a vision of hope for 2050, 2100, to look at what are the green investments that make sense both from a national development viewpoint and a global environment viewpoint. To make sure that, for example, green energy is at the service of the poor, not a distraction from poverty reduction. So once you have a strategy that identifies win-win options from a social, economic, and environmental viewpoint, after to look at for this win-win options, what are the exact barriers? Why is nothing happening? And so the second step is to identify all the different possible barriers. Keep in mind what I was saying for wind. Once this has been done, it's to try to look at what kind of public policy instruments could be used to remove these barriers. And for example, is it possible to streamline licensing processes? Is it possible to give guarantee access to the grid and guarantee a power purchase price for the next 20 years through a feeding tariff? Is it possible to develop the local supply of expertise, et cetera, et cetera? So that's basically the third step. What kind of public measures could be used to remove the barriers? And the fourth step is how do you finance all of these activities? So the concept of market transformation has proven extraordinary powerful. And for example, on my cover page for this presentation, cover slide, you will see a publication called Transforming Renewable Energy Markets, where UNDP described several market transformation efforts, and what has worked, what has not worked. Now, what has not worked is finance. You have a grand plan to basically remove all your barriers with an optimum portfolio of public policy measures. Now you have to finance it. And this chart is an outrageous simplification of climate finance. And I can guarantee to you that a similar chart for biodiversity finance will not be simpler. Now in climate finance, you have more than 50 international public funds. You have more than 60 carbon market pricing mechanisms. You have hundreds of innovative sources of finance. You have 1,000 equity funds. And developing countries get totally lost. It's not uncommon to see an institution in a developing country spending three, four, five years to try to access finance from one fund and to be told, sorry mate, but you are not eligible. You should have read paragraph 27A of our instruments. And there you will have understood that you were wasting your time. Oh, by the way, this document is not available. And so is it to get better? No, it will get worse. It will get far worse before it gets better. And because as discussed by Chris earlier, we are seeing a major bilateralization of head. We are seeing an increasing number of what we call non-traditional partners, foundations, emerging donors, et cetera. We are seeing a flurry of new innovative financing mechanisms. And so this chart is getting more complex by the day. Literally. Is it a problem besides the fact that people cannot access money and that it creates a lot of frustration? It is because this means that head is becoming increasingly fragmented. And so it's increasingly difficult to finance the type of sector-wide approaches, the type of geographic-wide approaches you would like to do to affect true transformative changes. If you want to increase the share of wind power in a country from 2% to 20%, you are not to do it through 1,000 small projects. It will be extraordinary on areas and it will be time-consuming. You want to go for one transformative approach. So what could work? It's another of my user-friendly slides. I think it's extremely important to make sure that the global funds, which are multi-donor, multi-partner funds, the global funds such as the global environment facility and the green climate fund are properly capitalized. Because they can act as a kind of international anchor. Most people know them so when they want to access funds from the GEF or in the future of the GCF, they often have a very clear theory of change and it's often a very useful first step in the process. So in addition to its end, there are some real question marks as mentioned by Chris and as available in the background paper about whether we are creating a grand fund or a grand empty fund. And so for all of us, for our own sake, it's very important to ensure that these international anchors are properly capitalized. The second thing is the idea of pool funding mechanism, pool programming and funding mechanism at the national level. Trying to come with a number of country funds for biodiversity or country fund for climate change. And there the idea is simple and it's a bit linked to the political economy of bilateral aid. It's true that increasingly, donors are uncomfortable with losing control through some multilateral mechanism and for example, their parliaments have signed for an allocation to climate change and to wind power, not an allocation to something else. And so through a pool funding mechanism, several donors can basically come together and ensure a critical financial mass to support a very clear initiative, let's say increasing wind power by 10%. There is a steering committee that enables them to be part of the decision-making process with the program countries. So there is a dialogue there. Plus you have a technical secretariat that ensure the quality, the robustness of the project. And this pool mechanism can enable you to have a number of different implementing partners. National institutions, multilateral development banks, bilateral institutions, et cetera. So basically, such a mechanism, such a pool funding mechanisms, enable you to reduce aid fragmentation. The enable you to create coalitions of global funds and national funds in pursuit of a transformative initiative at the country level without losing control, without getting out of the alignment with the government. So you can preserve your alignment with national domestics and at the same time have a very strong result-based mechanism. So I will contend that if we could shift part of the bilateral aid toward pool mechanisms who will have already resolved part of the problem without violating the main dates that bilateral agencies have received from their parliaments. Now what could be the future of aid and environment with that grand vision, see if we were to see it? There, what we could see is a smaller number of larger activities, rather than the one million, I was not so sure I had gotten the number right, one million developmental initiative. I think there's, I think, any kind of common sense when you keep your common sense, there is something wrong there. There's something very, very wrong, one million. So rather than this one million initiative, what we could have is a limited number of transformative initiatives. And this transformative initiative, the public money, the objective of the public money would be to leverage as much private flows as possible. And so, for example, you will try to use a billion dollars of public aid to leverage for market transformation, maybe 10, 20 billion dollars of private investment, individual cities and corporations. And something I will have the opportunity to discuss a little bit more this afternoon. In order to do that, public money should be used for market transformation, policy and financial deal risking. And mechanisms such as performance-based payment, carbon markets, or price premium, could be used to continue to strike this balance between alignment with national policies, national goals, and performance-based systems. And for the financing, you could have this coalitions of global and national pool funding mechanisms. Thank you very much. This sounds really nice on the paper, but does it really work in real life now? The last graph, I mean, with having this fragmented into more concentrated. What we have seen is that we have seen an increase in pool funding mechanism in the UN, an increase doubling from four to 8% over the past few years. The, what works in real life is the market transformation concept that I've described. How to move to the last slide would be basically bringing what works in terms of market transformation with what works in terms of pool funding mechanism. It would be the next step, but the last slide is definitely prospective. It's the vision. That's the vision. Thank you.