Climate Governance Integrity Policy Proposal

Climate Governance Integrity Policy Proposal 

Climate Change Finance Integrity Policy Summary

Monitoring and tracking climate finance transparency, accountability, and integrity

This proposal urges the government to establish policies that can help prevent misuse of budgets for climate projects and programmes. Such monitoring activity will ensure disclosures, expenditures, and other relevant integrity aspects of climate actions. 

Mitigation Activities/programmes of the government

This proposal urges the government to establish policies that will implement the “action plans” (NAPs and INDC) to stop or reduce the emissions of Green House Gases (GHGs), which contribute to global warming issues. Also, it asks the government to establish policies that clarify the roles and ensure that each responsible ministries and sectors promote the reduction of GHG emissions.

Adaptation Projects and Programmes

This proposal urges the government to establish policies that will ensure that people and communities are safe from the effects of climate change. Further, it urges the government to establish policies ensuring that the budgets for projects and programmes are spent with greater transparency, accountability, and integrity.

Table of Contents

Summary...1

A. Introduction...2

Policy Objectives

B. Guiding Principles...3

Monitoring and Tracking Climate Finance

C. Mitigation...6

a. Establishing Relevant Policies

b. Clarifying the INDC for 2030 Target

c. Clarifying the Roles of Responsible Sectors

D. Adaptation...8

E. Managing Climate Governance Integrity and Accountability...9

a. Overarching Guidelines & Policies

b. Redress and Grievance Mechanism

c. Central Monitoring/Focal Point for Climate Governance Integrity

APPENDIX

ODA & Climate Finance Comparisons...10

Definitions...11

Glossary...12

A. Introduction 

South Korea has moved from a recipient country to a donor country. It has rebuilt the nation and has become a leading country in various fields, including technology and knowledge. Such development is extremely relevant at this period when climate change is causing losses around the world.

South Korea should continue to strengthen its commitments in supporting efforts that advance environmental protection and climate governance integrity through policies. South Korea has been involved internationally in committing to various initiatives such as by submitting National Action Plans (NAPs), Intended Nationally Determined Commitments (INDC), and being a member of the Open Government Partnership (OGP).

Nationally, internal policies related to environmental protection, energy sources and usage, and environmental safeguards have been established. However, there is a lack of participation regarding the policymaking process and consultations with various stakeholders, aside from the lack of greater transparency in reporting various results.

Internationally, South Korea has been a generous supporter of many developing countries through development aids (ODA). Also, it is hosting international environmental entities (Global Green Growth Institute and Green Climate Fund) and has been a donor to such global climate finance institutions. 

As one of the future leaders in various endeavors, South Korea can further its commitments by improving its present and established environmental laws and climate change policies. 

This document proposes policies that can further enhance South Korea’s relevant environmental and climate change policies, including climate finance governance integrity, transparency, and accountability.

Policy Objectives

The overarching goal of this policy proposal is to safeguard climate finance funding from the Korean government and its donor institutions (e.g., GCF) against abuse, mismanagement, and waste by demanding maximum transparency and accountability in the government’s practices and policies. 

As a secondary goal, as a civil society group, we want to ensure that the Korean government, civil society, and the private sector take climate governance seriously and introduce more robust policies about climate financing by and in Korea. 

Specifically, this policy proposal aims to encourage the government to fulfill its National Designated Commitments (NDCs) and regularly update and implement its National Action Plans (NAPs) commitments. 

B. Guiding Principles

1. Monitoring and Tracking Climate Finance – Technical, political, and capacity 

1.1. The Korean government should: 

Adopt clear and consistent definitions and criteria to define climate finance. The definition must distinguish climate finance from other forms of finance (e.g., official development assistance).

Adopt an approach to tracking adaptation and mitigation finance by setting criteria for adaptation and categories for mitigation (e.g., the Organization for Economic Co-operation and Development (OECD)’s Development Assistance Committee (DAC)). 

Provide definitive guidance to recipient countries on how to define climate finance, and offer formal systems to store information for tracking it, which are used by international organizations

Establish a broad definition of climate finance to enable countries to track a broader range of climate-related funding flows for both domestic and (climate fund) recipient countries for monitoring purpose

1.2. The Korean government should (e.g., by sector and activity):

Develop consistent markers, indicators, and codes to identify climate finance and track climate finance (e.g., MDB’s sector classification system, OECD DAC’s standard sector codes reporting system).

Provide climate finance and official development assistance (ODA) funds recipient countries climate finance and ODA tracking system that include sector classifications and indicators for activity type and source.

 

Demand from recipient countries to develop their national tracking systems various levels of the classification system (for example, a) a broad classification system that identifies activities as being an adaptation or mitigation project, b) a detailed classification system that considers mitigation activities by sector—e.g., energy, forestry, transport, etc.)

Regularly engage with the international community (including MDBs and the UNFCCC) to provide recipient countries updated guidelines to build their own classification levels decisions. 

1.3. Institutional Arrangements 

1.3.1. The Korean government should have sufficient institutional arrangements and clear roles and responsibilities of the following different ministries:

 

The Ministry of Environment should be mandated to coordinate climate change-related activities, the activities of other sectoral ministries that maybe be affected by climate change;   

The Ministries of Finance and Planning should define national development priorities and formulate a national budget to include an allocation for climate change activities;

The Ministry of Finance, Planning, and Foreign Affairs should also engage with development partners and provide guidance in keeping records of ODA supports to various sectors;

Responsible ministries and institutions should ensure effective coordination and information sharing and effective reporting with climate finance or development partners.

1.3.2. The Korean government should: 

Reform institutional arrangements and create coordinating committees for climate change should be enhanced.

Introduce multi-stakeholder and interagency committees for climate change with subcommittees and working groups (e.g., sectoral ministries, civil society, private sector) to ensure complete understanding of climate finance flows and facilitate holistic planning, implementation and monitoring.

Mandate relevant ministries to publish and share information with other government ministries, non-governmental actors, such as NGOs and private businesses, to have a wider picture of climate finance flows.

1.4. Sufficient technical processes and systems to identify and record climate finance expenditures. The Korean government should: 

Establish processes and systems and mechanism to integrate climate change into national systems for budgeting, monitoring, and reporting (such reporting formats and software platforms for storing and sharing information)

Establish a methodology for developing countries to examine their policy, institutional, and financial management framework for climate change (e.g., by adopting Climate Public Expenditure and Institutional Review  process developed by UNEP and UNDP (Note: developing countries can either modify their existing financial management system to capture climate-related expenditures or develop their ‘alone or together’ standardized climate finance data system).

1.5. Sufficient information on climate finance to be provided by non-governmental actors. The Korean government shall:

Enact a policy that requires non-governmental organizations (NGOs) to report the amount of finance and source using a reporting system.

Or, require international development partners to input data directly to national ODA or climate finance management systems.

1.6. Sufficient capacity to monitor different financial instruments. The Korean government shall:

Ask recipient countries to decide what financial instruments they want to capture in their climate finance monitoring system;

Ask the recipient countries to develop monitoring systems with the flexibility to add additional information to begin monitoring climate finance as loans and grants. 

1.7. Sufficient available private financial data. The Korean government shall:

Establish clear roles and responsibilities of each relevant institutions as well as various procedures and indicators for a private climate finance monitoring system to work well;

Ask countries to concentrate on monitoring public sector grants and loans pending further methodological work on private sector finance;

Ask developing countries to monitor both public and private climate finance for better national policymaking, aside from reporting to the UNFCCC in the short term.

1.8. Greater transparency and predictability on the part of development partners contributing to climate finance. The Korean government shall:

Strengthen its country-level representatives by providing a comprehensive list of all projects it has supported either by direct financing to government ministries and NGOs or through other mechanisms (such as financial intermediaries or contractors);

Consider how it chooses to support developing countries based on country needs and demand (e.g., relying on external companies, or embed personnel in developing country ministries);

Develop a common country assistance strategy and require developing countries to establish coordination committees and to identify focal points for coordination. 

1.9. Sufficient use by development partners of the developing country national systems and different administrative requirements by each development partner. The Korean government shall: 

Consider strengthening dialogue with recipient countries to build trust and promote collaboration. Recipient countries may need to train personnel from Korea (and international organizations) on how to input information into domestic financial management or ODA tracking systems.

C. Mitigation

2. The government’s relevant agencies should establish clear policies on its INDCs mitigation of the following items:

Clearer definitions and methods in achieving the 2030 emissions reduction should be laid out;

The roles and responsibilities for each relevant sector (such as energy, transport, economic sectors) should be clearly defined and published;

Kinds of gases and the amount to be reduced per gas should be described;

The report of the inventory methodology and tools being used (Korea’s Biennial Update Report, 1996 IPCC Guidelines, 2006 IPCC Guidelines) should be made publicly available;

Korea should clearly define its use of carbon credits from international market mechanisms to achieve its 2030 mitigation target;

In assessing mitigation performance for the land sector, greenhouse gas emissions, and sinks.

3. The planning process of South Korea’s INDC for the 2030 mitigation target should provide clarifications of the following items:

The dedicated task force – Ministry of Environment (MOE), Ministry of Trade, Industry and Energy (MOTIE), chaired by Prime Minister’s Office. 

➢The respective roles, objectives, and plans of the task force should be clearly defined based on their authorities and capacities;

Joint Working Group – Greenhouse Gas Inventory & Research Center of Korea (GIR), Korea Energy Economics Institute (KEEI).

➢The results of their technical analysis should be publicly accessible

➢Any result of the review by expert stakeholders (e.g., business, civil society organizations) should be publicly accessible;

The Committee on Green Growth will review the mitigation target by 2030

➢The results reviewed should be publicly accessible

➢The national authorization procedures should be publicly accessible.

4. The Korean government announced the National Greenhouse Gas Emissions Reduction Roadmap (2014) for sectoral action plans and their implementation (INDC). The Korean government shall clarify the roles and responsibilities of the following sectors:

Industrial Sector

➢The emissions reduction results through GHG and Energy Target Management System should be made publicly available

➢The Emissions Trading Scheme (ETS) results should be published including the business entities and their achieved results in the scheme

Renewable Sources

➢The obligations of the power generators should be clearly defined including their methods and tools used

➢Renewable energy development and their progress should be made publicly available

Building Sector

➢The implementation and performance evaluation of eco-friendly homes code results should be made publicly available

➢The code (Green Building Standards Code) should be regularly updated to adapt and monitor new development in infrastructures and technologies

D. Adaptation  

South Korea has developed its National Climate Change Adaptation Plan (2010) to address climate change and its adverse effects on the environment and people. The relevant and responsible agencies should monitor and publish materials on the following levels

Local government level

➢The roles of the local governments should be defined and made publicly accessible

➢Publish their own and local action plans for adaptation

Subnational governments level

➢The roles should be defined and made publicly accessible

➢Publish their own and local action plans tailored to their respective situations

National level

➢Should develop and provide overarching guidance and tools to support the assessment of vulnerability and risks 

➢Should publish results on research and development projects that analyze climate change impacts

E. Managing Climate Governance Integrity & Accountability

1. Overarching Guidelines & Policy for Each Governmental Levels

➢The relevant governmental agency shall establish an overarching policy and guidelines on climate change governance.  The overarching guidelines are for the following levels:

o  Local governments level

o  Subnational governments level

o  National government level

➢Each political level should also establish its own guidelines and policies and tailor them based on their specific needs.

2. Redress and Grievance Mechanisms

The relevant government agency should establish a grievance (redress) mechanism that shall address the following items:

➢Issues that arise due to a climate change programme or project;

➢Predictable issues that will arise due to a project

➢Accept complaints from individuals, groups of people, and communities on issues related to environmental health

➢Do a community consultation before and after the project implementation

3. Central Monitoring Agency/Focal Point for Climate Governance Integrity

The relevant governmental agency should establish a Central Monitoring Agency or Focal Point. The agency is responsible for monitoring the transparency and accountability matters on all climate change projects, programmes, and policies. Specifically, the agency or focal point shall have the following responsibilities:

➢Monitor and collect climate finance data for both national and international projects and programmes;

➢Monitor and collect data sets on climate change national projects and programmes;

➢Assess and evaluate the progress of climate change projects;

➢Make reports and publish report data online;

➢Work with Open Government Partnership programmes and activities

APPENDIX I

Comparison between a Climate Finance and Official Development Assistance (ODA)

Climate Finance

International Climate Finance is money pledged by developed, carbon-emitting countries to poorer and developing countries, and climate-vulnerable countries such as small island developing states, African countries, and vulnerable communities. However, most of the climate finance is spent domestically, and only a portion is paid overseas.

In other words, Climate Finance is money invested in supporting countries to mitigate global warming and adapt to its adverse effects. It is not aid or development aid, such as the Official Development Assistance (ODA). UN conventions define Climate Finance as “new and additional” to any aid money previously pledged, and must be pledged explicitly for climate change projects.

Sources of Climate Finance are from public or private sources. Although countries are considered responsible for the movement of climate change funds, climate finance can also come from the private sector.

An ODA

An Official Development Assistance is those finance that flow to recipient countries and territories and multilateral institutions. The ODAs are provided by official agencies, such as states and local governments, or by their executive agencies. The transactions are administered to promote economic development and welfare of developing countries.

Aids include grants, “soft” loans, and the provisions of technical assistance to recipients. There is a list of recipients periodically updated by OECD.

Other examples of ODA include some ‘peacekeeping’ aids (except military costs), nuclear energy (for civilian purposes), and cultural programmes (for building cultural capacities). 

(More here: https://data.oecd.org/oda/net-oda.htm)

In other words, Climate Finance is fundamentally provided for projects and programmes specific to climate change mitigation and adaptation initiatives, while an Official Development Assistance is basically for economic development and welfare of poorer countries. However, there are cases that the two overlaps, and that is why projects and their finances should be specific and accounted for accordingly.

Definitions

Mitigation

Mitigation refers to human interventions to reduce the emissions of greenhouse gases (GHG) by enhancing carbon sinks, such as forests, vegetation, or reabsorb carbon dioxide and other gases (UNFCCC). For mitigation, a range of policies and various economy-wide packages of policies are being implemented by the member parties of the Conference of Parties (COP). The member parties have agreed to submit to the COP national reports of their activity results and commitment implementations.

Adaptation

According to the UNFCCC, “adaptation refers to adjustments in ecological, social, or economic systems in response to actual or expected climatic stimuli and their effects or impacts” (UNFCCC). Adaptation is composed of five general activities: observation, assessment of climate impacts and vulnerability, planning, implementation, and monitoring and evaluation of adaptation actions (UNFCCC). The success of adaptation not only depends on governments but also on the active engagement and participation of all relevant stakeholders, such as civil society, the public and private sectors, local and international organizations, among others.

GLOSSARY

DAC – Development Assistance Committee – 개발원조위원회 

ETS – Emissions Trading Scheme – 배출권거래제 

GCF – Green Climate Fund – 녹색기후기금 

GGGI – Global Green Growth Institute – 글로벌녹색성장기구 

GIR – Greenhouse Gas Inventory & Research Center of Korea - 온실가스 종합정보센터 

KEEI – Korea Energy Economics Institute – 에너지경제연구원 

IPCC – Intergovernmental Panel on Climate Change - 기후 변화에 관한 정부간 협의체  

MDB – Millennium Development Banks – 다자개발은행 

MOE – Ministry of Environment – 환경부 

MOTIE – Ministry of Trade, Industry, and Energy – 산업통상자원부 

NGO – Non-governmental Organizations – 비정부기구 

NDC – Nationally Determined Contributions

NAP – National Action Plan – 국가기본계획 

OECD – Organizations for Economic Cooperation and Development - 경제 협력  개발 기구 

UNFCCC – UN Framework Convention on Climate Change - 유엔 기후 변화 협약 

UNEP – UN Environment Programme - 유엔 환경 계획  

UNDP – UN Development Programme - 유엔 개발 계획 

Prepared by:

Climate Finance/Governance Integrity Working Group:

Institute for Climate Change Action - www.climateaction.re.kr  

Korea Green Foundation - www.greenfund.org/en/  

Transparency International-Korea Chapter - www.ti.or.kr