Integrating Environmental and Climate Action into Development Co-operation

France

How are development programmes systematically integrating climate and environment objectives post-COVID-19?

Political commitments, strategies and tools

France’s political commitments

France attaches great importance to climate and environmental issues through its development aid policy. Climate is one of the five sectoral priorities enshrined in the Programming Law on Solidarity Development and the Fight Against Global Inequalities, which was adopted by the French Parliament in July 2021.

France places environmental and climate diplomacy at the heart of its policy of inclusive development and the fight against global inequalities. It is resolutely committed to the irreversible implementation of the Paris Climate Agreement, in particular its central objective of limiting the increase in temperature to 2°C or 1.5°C, if possible. This priority has been concretely translated in an increase of resources dedicated to the fight against climate change, in particular adaptation. France is particularly active in mobilising multilateral institutions in order to increase the amount of climate co-benefits in their interventions and exclude investments that are not aligned with the goals of the Paris Agreement. This was underscored by President Macron in his speech at the United Nations General Assembly (UNGA) 74.

Finally, climate and environment are at the heart of all high-level interventions and official statements regarding development co-operation, including during the UN General Assembly high-level week, Global Summits for Ambition and Adaptation, and One Planet Summits.

Targets

France has committed to mobilising EUR 5 billion for climate action in developing countries in 2020, including EUR 1.5 billion for adaptation. In December 2020, President Macron announced an increased commitment: EUR 6 billion per year from 2021 to 2025, out of which one-third will be dedicated to adaptation. These commitments are taken in the context of the collective quantified goal from developed countries to provide USD 100 billion per year between 2020 and 2025 to developing countries, in the context of meaningful mitigation actions and transparency on implementation.

To support the achievement of these targets, in 2012, the French Agency for Development (Agence française de développement, AFD) committed to dedicating 50% of its yearly financing approvals in developing countries to climate action.

Progress towards the achievement of these commitments is tracked at the national level every year for the previous year in the following reports:

• Climate Activity Report

• Biodiversity Activity Report

• Energy Transition Activity Report.

According to these reports, in 2018, France mobilised EUR 5.08 billion of climate finance in developing countries, and in 2019, the mobilisation reached EUR 5.96 billion.

Strategies and policies for systematic integration

France’s strategies and policies to align development co-operation with international environment and climate goals are outlined in several documents:

• France’s Law on Development, which is a programming bill on inclusive development and combatting global inequalities.

• Interministerial Committee for International Cooperation and Development, convened by the Prime Minister on 8 February 2018.

• France’s International Strategic Guidelines for Combating Land Degradation and Desertification (2020-2030).

• France’s International Strategy for Water and Sanitation (2020-2030).

• AFD Climate Strategy: Following the 2015 UN Climate Change Conference (COP21), AFD adopted a new climate strategy for the period 2017-22, with four main commitments: 1) ensure the compatibility of the Group's activities with the Paris Agreement; 2) increase the volume of climate finance; 3) contribute to the redirection of financial flows towards climate; and 4) co-build solutions and bring influence to bear on standards. This strategy is crosscutting and is included in all sectoral and country/regional strategies.

• The Mid-term Review of the Climate Strategy conducted in 2020 stating that the AFD Group is on track to reach, or has already reached, many of its climate objectives.

Box 1. Creditor reporting system’s environmental and climate markers

Figure 1. France’s integration of climate objectives

Note: “Other environmental markers” include biodiversity, environment and desertification that do not overlap with mitigation and adaptation. Biodiversity-related ODA is integrated in the columns, as well as presented separately for better visibility.

Source: OECD (2021), Creditor Reporting System (database), https://stats.oecd.org/Index.aspx?DataSetCode=crs1

Operational tools for systematic integration

The operational tools used at the AFD level are presented in detail in the Mid-term Review of the Climate Strategy of the AFD group. These operational tools are spread across different levels of the strategic and project cycle:

• Country climate assessment: A country assessment of climate policies and Nationally Determined Contributions (NDCs) is prepared and serves as an input for every project assessment. Such an assessment of the adequacy of the project with the country’s NDC/climate policies is required in the appraisal phase.

• Carbon footprint: As early as possible in the appraisal process, the AFD Group assesses the carbon footprint of projects considered for financing, especially infrastructure projects relative to a baseline scenario, which is the situation without the project.

• Sustainable development analysis: The alignment with the Paris Agreement is integrated in the appraisal process of projects through the climate-related dimension of the Sustainable Development Analysis, for example in order to avoid creating emissions lock-in, stranded assets, maladaptation or misalignment with national climate policies.

• Climate screening: Ahead of appraisal committees and board approval, every project appraisal case is screened on the basis of these assessments as well as the sectoral exclusion lists (for example, on fossil fuels). A climate screening tool is also used to assess the climate risks and vulnerability dimension of every project, and to identify opportunities for improvement. The result of these checks is reported to the Board in a dedicated paragraph on the appraisal case.

• Environmental and Social (E&S) Support Division: The E&S Support Division at AFD is responsible for monitoring and providing expertise on implementation of E&S risk management policy. Compliance with such policy is subject to examination by the Credit Committee, which validates the end of instruction of projects. The E&S Support Division at AFD has 20 E&S experts (plus 2 managers).

• Exclusion list: The AFD Group applies an exclusion list of projects that excludes all activities that violate human rights (forced labour, child labour, racial or gender discrimination, prostitution, etc.). In addition, all Proparco projects have to be compliant with the International Finance Corporation (IFC) performance standards, which include the respect of human rights. On climate, the AFD Group excludes the financing of highly emissive projects, i.e. over 1 million tonnes of equivalent CO₂ emissions annually, in middle-income countries, if it is not possible to ensure that the project in question is part of a national and sectoral policy to mitigate greenhouse gas emissions.

Monitoring, evaluation and learning frameworks

As part of its performance objectives assigned by the Government, AFD is accountable for its climate activity, meaning the share of all financing approved by its governing bodies with climate benefits in developing countries and the French overseas territories. This includes financing through delegations of funds, for example, from the European Union or the Green Climate Fund (GCF).

France reports relevant parts of this financing to the United Nations Framework Convention on Climate Change (UNFCCC) every two years on financing approved for developing countries on behalf of France under the Convention.

Climate and environment objectives are integrated both in a sectoral manner in the evaluation policy (for example, an evaluation was conducted in 2019 on the French contribution to the GCF) as well as in a crosscutting manner, as the evaluation policy aims to improve development results, including on climate and environment.

How are development programmes supporting country-owned transitions to environmentally sustainable, low-emissions and climate-resilient development pathways?

Supporting national transition plans that are commensurate with international objectives

Through its commitment to be 100% aligned with the Paris Agreement, the AFD ensures that 100% of its projects are in line with the priorities identified in partner countries’ own national climate strategies. Wherever such strategies are not yet disclosed or require technical assistance for preparation and implementation, tools are available to support such an effort.

This is why the AFD launched the 2050 and Adapt’Action Facilities, in order to provide technical assistance and capacity-building support to strengthen climate governance. It helps countries ensure that climate-change mitigation and adaptation is incorporated into their public policies and projects, and contribute to structures that make climate a continuing priority. This includes, among others, support to the implementation of National Adaptation Plans (NAPs), NDCs and Long-Term Strategies (LTS).

France is also ensuring that operational synergies are found between its bilateral support to countries’ own national transitions and support from other sources. This is made possible through support and close co-ordination with the NDC Partnership, among others.

Examples of projects to support national transition plans

• The 2050 Facility was launched at the One Planet Summit in December 2017. Endowed with EUR 30 million and currently committed in 16 countries, this facility aims to finance the preparation of long-term, climate-resilient and low-carbon development strategies, which the Paris Agreement invites every Party to communicate. Such strategies provide incentives for stakeholders to plan and prioritise investments with a long-term perspective.

• In 2017, the AFD also launched the Adapt’Action Facility, endowed with EUR 30 million over four years. It is designed to support 15 countries and regional organisations that are especially vulnerable to the effects of climate change as they implement and revise their climate commitments, within the framework of the Paris Agreement. Adapt’Action works with vulnerable island states such as Comoros, Cuba, the Dominican Republic, Madagascar, Mauritius, the Indian Ocean Commission (IOC), the Organisation of Eastern Caribbean States (OECS), and with several African countries, such as Cameroon, Republic of the Congo, Côte d’Ivoire, Equatorial Guinea, Ghana, Niger, Senegal, and Tunisia. This work is showing, with encouraging results, that about 100 capacity-building supports will be delivered by the end of 2021, which are expecting to leverage over EUR 1 billion through projects financed by AFD and other partners, such as the GCF. This demonstrates that supporting governance and public policies dedicated to adaptation, in particular through NAPs, can help prioritise adaptation in the dialogue with financial partners, and benefit adaptation projects.

To consult examples of climate projects financed by the AFD Group, additional examples are also available on AFD’s website.

Implementing the transition to environmentally sustainable, low-emissions and climate-resilient development pathways

The AFD has committed to aligning 100% of its activities with the Paris Agreement, as well as to dedicating 50% of its financing resources to climate projects. France is also among the largest contributors to the budget of main multilateral funds dedicated to climate and environment action in developing countries (EUR 1.5 billion for the GCF between 2020 and 2023 – GCF1; USD 300 million towards the Global Environment Facility between 2018 and 2022). It also advocates for an increase in climate action financing by multilateral development banks (MDBs), as well as an alignment of their activities and portfolio with the objectives of the Paris Agreement.

Since 2018, AFD’s Paris alignment strategy has been taken into account in sector-specific strategies – in particular, in the Energy Transition Strategy – regional strategies and some country strategies. It was identified in the Mid-term Review of the Climate Strategy that sector-specific strategies could further specify areas of exclusion (such as coal, exploration, production and transport of hydrocarbons) and the financing conditions for sectors that are deemed sensitive, requiring greater selectivity of projects (gas, aerospace, etc.). A few examples include:

• Energy/fossil fuels: In May 2019, AFD adopted a new Energy Transition Strategy, which excludes from its financing: any project for coal-fired power plants (as validated by its March 2013 Board of Directors); power plant projects operated from fuel oil or diesel only (excluding hybridisation); exploration or production projects, or dedicated exclusively to the transport of coal, gas and oil (conventional and unconventional); infrastructures associated with fossil-fuel exploration, production or storage units (mines, processing units, refineries, storage, etc.) or fossil-fuel-based electricity production.

• Transport infrastructure: In its new Mobility and Transport Intervention Framework adopted by the AFD Board in May 2019, three dimensions linked to climate are analysed for each transport project: minimising environmental impacts, decarbonisation and coherence with a low-carbon development trajectory, and taking into account adaptation and resilience in the face of climate extremes.

Support for sustainable, quality infrastructure

The implementation of the G20Principles for Quality Infrastructure Investment remains France’s priority. France and its partners have adopted commitments to further implement the G20 Principles at the Summit on the Financing of African Economies, held in Paris on 18 May 2021. These commitments are: strengthening the macro-financial environment and trustworthy policy, legal and institutional frameworks; further working on the mobilisation of multilateral and bilateral financial instruments and products in support for public-private partnership (PPP) projects and the mobilisation of commercial finance; increasing the quantity of infrastructure investment, including through national infrastructure funds, while improving quality and sustainable infrastructure investment, including by a voluntary engagement of African States to assess the quality and sustainability of their infrastructure projects; supporting capacity development for planning and preparation of key infrastructure projects and foster the emergence of bankable projects. The concrete actions are listed in the Communiqué.

France’s priority in terms of infrastructure is to support Sustainable Development Goal (SDG) trajectories by systematically seeking environmental and social impacts. For example, France systematically seeks to integrate the best energy efficiency standards in these projects, including building construction, such as homes or schools. This strengthens the adaptation of these buildings to hot weather, saves energy, and creates skilled jobs. In terms of urban development, France finances public transport in order to decrease congestion in large cities and invests in secondary cities and informal districts to fill the infrastructure deficit. This contributes to the fight against social divides and promotes equity between territories.

France, through the AFD Group, invests EUR 5 or 6 billion annually in infrastructure. The Group can finance infrastructure projects directly, whether public or private, or provide resources to local banks to help them finance these projects, as well as support structural reforms in these sectors through public loans. In addition, STOA, an infrastructure impact fund held by the AFD Group and the Caisse des Dépôts Group, has committed EUR 279 million, including EUR 206 million in climate co-benefits (74%), to eight projects since 2017.

Examples of projects in support of environmentally sustainable, low-emissions and climate-resilient transitions

• France is one of the leading financial supporters of the Africa Renewable Energy Initiative (AREI). AREI was launched by African heads of state at COP21 as the continent's flagship initiative to fight climate change while improving Africans' access to energy. It emanates from the African Union (AU), in particular, the African Heads of State Committee on Climate Change (AHSCC). In 2017, France announced an increase from EUR 2 billion to EUR 3 billion in funding for renewable energy in Africa (implemented by AFD for 2016-20). France has also allocated a EUR 6 million grant to support the Independent Delivery Unit of AREI and its activities.

• An Energy-Climate Public Policy Loan allocated to Uzbekistan aims to support the implementation of reforms in the energy sector. It contributes to lowering the carbon intensity of the energy mix, to reducing electricity losses and to improving energy efficiency.

• The French Global Environment Facility (FFEM), created in 1994, specifically supports climate, environment and biodiversity projects in developing countries, with a EUR 120 million budget for the 2019-22 period.

• Finally, the International Solar Alliance (ISA) is a joint initiative of France and India, launched at COP21, to rapidly and massively deploy solar energy. The objective of the ISA is to support countries in best-practice exchange and harmonisation of norms and standards for solar energy, in order to accelerate its deployment, especially in countries where the risks are still perceived as high. France contributes to the functioning of the ISA Secretariat by financing two seconded expert positions. France also announced in 2019 that it would enhance its commitment for the development of solar energy projects, implemented by AFD, to reach EUR 1.5 billion in 2022 in ISA member countries.

How are development programmes supporting SIDS to achieve sustainable development?

Responding to the particular needs of SIDS

The AFD’s operations in most Small Island Developing States (SIDS) and the French overseas territories are conducted by the same department which, for example, developed and now manages the Kiwa Initiative under a unified operational strategy, the Three Oceans Strategy. The Adapt’Action facility also places a specific emphasis on SIDS’s specific needs.

Examples of projects in support of SIDS’ sustainable development

France contributed EUR 22 million between 2016 and 2020 to the financing of the trustee fund of the Climate Risk and Early Warning Systems (CREWS) initiative. CREWS is an initiative aimed at significantly increasing the capabilities of multi-risk alert systems in order to widen the scope of prevention and information on dangerous hydro-meteorological and climatic events. CREWS aims to leverage USD 100 million to respond to the financing shortcomings in already existing bilateral and multilateral co-operation programmes.

CREWS is implementing a regional project in the Pacific region (amounting to USD 2.5 million), one of the first projects to be approved and has been operational since January 2017. The project covers the improvement of early warning services in the Cook Islands, Fiji, Kiribati, the Marshall Islands, Nauru, Niue, Palau, Samoa, Tokelau, Tonga and Tuvalu, with more specific support to the regional hydro-meteorological centre of Nadi in Fiji. Given the needs, a second phase of the project covering the integration of services, a hydro-meteorological system was approved and launched in August 2020 for an amount of USD 4.8 million.

France is also active on the subject of access to sustainable energy for SIDS, both internally (development of domestic renewable energy resources in the overseas departments and territories: geothermal, solar, wind, marine energies, etc.), and through the support it provides to the International Renewable Energy Agency (IRENA)'s SIDS Lighthouse initiative. France provided a voluntary contribution of EUR 200 000 to IRENA in the name of this initiative at the end of 2016. This contribution aimed in particular to promote marine energies, specifically by identifying and mapping the potential of different territories for this type of energy.

As part of the co-presidency of the International Solar Alliance, France supports the ISA’s Solar Technology Application Resource Centre (STAR-C) programme, which aims to implement capacity-building activities to accelerate solar energy deployment in ISA member countries. In 2021, France announced a contribution (grant) of EUR 1 million to the programme, with a priority focus earmarked on African States and SIDS. As part of the pilot phase of the programme, the French Institute for Solar Energy (INES) has already conducted capacity-building activities in partnership with the Pacific Centre for Renewable Energy and Energy Efficiency (PCREEE).

Supporting SIDS’ access to finance

In December 2017, at the first One Planet Summit, the French President, Emmanuel Macron, announced the Kiwa Initiative. This initiative aims to strengthen the resilience of Pacific countries and territories’ ecosystems, economies and communities by setting up a dedicated one-stop-shop funding facility to promote nature-based solutions (NbSs). Kiwa has been operational since March 2020, and has received EUR 35 million in grants. It unites five international donors – Australia, Canada, France, New Zealand and the European Union. The initiative is based on a collaboration between AFD, the Pacific Community (SPC), the Pacific Regional Environment Programme (SPREP) and the International Union for Conservation of Nature (IUCN). The initiative is committed to working at the local level with calls for projects being managed by IUCN in 18 Pacific Island States and Territories, as well as at the regional level via a helpdesk for regional projects, which will be monitored by its Secretariat, located in Noumea (New Caledonia) within AFD's Pacific Ocean Regional Office.

Furthermore, France has played an active role regarding a specific approach within the Paris Club to provide SIDS access to finance for sustainable and resilient development. Over the past decades, the Paris Club has regularly worked on the subject of debt sustainability in the event of external shocks, including natural disasters. Faced with the proliferation of debt treatments due to extreme weather events, the Paris Club adopted an innovative approach through the introduction of a “hurricane clause” in the Grenada Debt Restructuring Agreement in 2015. This “hurricane clause” allows the borrowing country to consider, under certain conditions, additional debt relief during the repayment period, if damage has been caused by a hurricane.