Published by
Center for Clean Air Policy (CCAP)
Year
2012

Overview of NAMA Financial Mechanisms

Nationally Appropriate Mitigation Actions (NAMAs) have the potential to receive international financial support. Designing a successful NAMA therefore requires careful integration of climate policy actions, sustainable development goals, and financial mechanisms. This policy brief provides an overview of a number of financial mechanisms and design elements to consider in developing NAMAs that can effectively mobilize investments in mitigation projects.

Major differences between NAMA financial mechanisms and carbon credits

At the outset it should be noted that there are major differences between NAMA financial mechanisms and carbon credits. While carbon credits are project specific, NAMA financial mechanisms are program based and made available to an entire sector or industry. In this regard, NAMA financial mechanisms are somewhat similar to Global Environments Facility (GEF) projects but with a greater focus on integration of policy actions and financial incentives.

Lack of definition and precedence in the subject of NAMAs

Due to the lack of definition and precedence in the subject (the world is yet to formally recognize the first NAMA), there exists a tremendous scope for flexibility, customization and innovation. In this interim period, while NAMAs are yet to be defined and financing programs such as the Green Climate Fund are yet to be formally launched, exists the opportunity for developing countries to work in close collaboration with contributing countries to take advantage of their specific climate finance programs.

NAMA finance coming from development banks, climate finance programs and multilateral institutions

The various donor-driven sources of NAMA finance that exist right now are a combination of development banks, specific climate finance programs (mostly related to fast start finance), and multilateral institutions among others. Some of these financing programs are in the process of being designed such as the Green Climate Fund (GCF) and hence are also in the "learning-by-doing" mode.