Financing a Green Recovery in Mauritius: Challenges and Opportunities

 
Financing a Green
Recovery in Mauritius-
Critical Juncture or Missed
Opportunity?
 
Karishma Ansaram (
)
k.ansaram@ieseg.fr
Doctoral Student at IESEG School of Management
Carbon Pricing, Carbon Markets and Climate Change
 by Unknown Author is licensed under 
CC BY-SAThis Photo
 
Fiscal Chain Effect of COVID-19
Green recovery
Supply Side
Pressure
Balance sheet
Pressure
Lending Pressure
Fiscal Pressure
 
COVID-19 has created
financial pressure on govt
spending and tax revenues
 
Public sector debt is
increasing
 
Financial Institutions’ (FIs) balance
sheets are aggravating with non
performing loans (NPL)
 
Increased govt debt and FIs NPL, this
leaves less room for supply of finance
 
The need for it?
 
The need for Financing a Green
Recovery
 
COVID-19 is testing our resilience in responding to potential climate-related disasters.
 
Countries’ commitments to 2030 climate goals collectively fall short of what is needed to shift
towards a pathway consistent with carbon neutrality. In addition, the identification of detailed
strategies to achieve these goals and the implementation of policies have been lacking.
 
The pandemic has interrupted global supply chains, including those for renewable energy
projects, which could delay or obstruct their completion (PV Magazine, 2020).
 
Green Finance- Types and Flow
 
Financing a Green Recovery
 
The COVID-19 pandemic has led governments to implement unprecedented fiscal policy action as
an immediate, emergency response to cushion the blow in the initial confinement phase of the
outbreak.
As countries consider recovery packages, there are opportunities to prioritise green policy choices
that help promote environmental objectives and speed up structural change towards the low-carbon
transition, increasing society’s resilience to future shocks and reducing future risks.
 
 
 
Rs 100 Billion in this Budget for our Plan de Relance de
L’Investissement et de l’Economie.
 
go back to basics with investment in smart agriculture
 
diversify and deepen the blue economy value-chain
 
National Agri-Food Development Programme. This
programme will promote the Farm to Fork concept,
ensure food security and reduce our dependence on
imports.
 
Green and Blue Bond frameworks by the Bank of
Mauritius.
 
proposing to transfer Rs 2 billion to the National
Environment Fund through an Estimates of
Supplementary Expenditure in this fiscal year.
 
Rs 215 Million will be used for the protection of our
beaches, lagoons and coral reefs.
 
And Rs 207 Million will be provided for the Cleaning and
Embellishment Programme of drains, roads, rivers and
public sites including places of worship.
 
Rs 1.2 billion will be provided from the National
Environment Fund to construct drainage infrastructure in
high risk flood-prone areas across Mauritius and
Rodrigues.
 
This is why we need to increase the share of local
renewable energy in our energy mix to 40% by 2030.
 
Budget 2020-2021 for Mauritius (Extract)
 
Source: Authors’
 
Public vs Private Green Finance in Mauritius
 
Green Finance Instruments and Level of Awareness
 
Green Budgeting as recovery measure
 
Green Budgeting Exercise: 
public expenditure can be
identified which contributes to either mitigation of or adaptation
to climate change, as well as to the fight against artificialization of
land and to the protection of biodiversity.
 
Tools for reporting how stimulus packages help meet green
objectives
 
A general green budget statement
: This summarises in broad narrative terms how measures
introduced in the budget are intended to support green priorities and goals.
 
A green progress statement: 
This provides a more detailed explanation of how the budget
measures advance the government’s green agenda, by reference to established objectives and
indicators.
 
Distributional impact analysis
: This is an assessment of how specific green measures (both
revenue and expenditure) affect individuals, households or firms
 
INDCs Financing for Mauritius
 
In 2015, the Paris Agreement set binding targets for the reduction of greenhouse gas emissions to limit global
warming to below 2 degrees.
Heavy reliance on donor funding
However, the costs of such adaptation measures are so exorbitant that Mauritius can only achieve its targets if
financial support in terms of grant and technical support from partners is made available to enable it to
implement the plans to protect life and property and mitigate any propensity of migration of its population
(INDC for Mauritius, 2015).
The implementation of the INDC of the Republic of Mauritius will require over USD 1.5 billion for mitigation
measures and about USD 4 billion for adaptation measures across all the sectors up to 2030 in the form of
finance, investment, technology development and transfer, and capacity-building to fully realize its intended
contribution.
However, the proposed adaptation and mitigation activities can only be implemented in the medium and
long term with necessary support from international funding 5 agencies, grants from climate funds, transfer of
appropriate and affordable adaptation and mitigation technologies, technical assistance and capacity
development.
 
Private Climate Finance for
Mauritius
 
Natural Disasters
Insurance
 
 
Climate Risks
Stress Testing on
projects to be
financed
 
Research- Investigating the Private Climate Finance Mechanisms in SIDs.
(NDC Finance Fellowship Programme- Frankfurt School of Finance and Management)
 
Research questions:
 
Research Methodology:
1.
Exploratory research : i.e the case of 9 SIDs have been selected.
Interviews with key stakeholders in Financial Institutions shall be
mainly performed through personal meetings in the over the
phone or video conference.
 
 2. Document Analysis: three types of information collected such as
articles, reports and websites.
 
Thank You
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COVID-19 has caused financial strain on government spending and tax revenues in Mauritius, leading to increased public sector debt and non-performing loans in financial institutions. This has limited the availability of finance for green recovery initiatives amidst the pressing need to address climate-related disasters and meet climate goals. The budget for 2020-2021 includes investments in green and blue economy projects, emphasizing the importance of transitioning to renewable energy sources. Public and private green finance mechanisms are crucial for driving sustainable development in Mauritius.


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  1. Financing a Green Recovery in Mauritius- Critical Juncture or Missed Opportunity? This Photo by Unknown Author is licensed under CC BY-SA

  2. Fiscal Chain Effect of COVID-19 COVID-19 has created financial pressure on govt spending and tax revenues Fiscal Pressure Public sector debt is increasing Lending Pressure Financial Institutions (FIs) balance sheets are aggravating with non performing loans (NPL) Balance sheet Pressure Supply Side Pressure Increased govt debt and FIs NPL, this leaves less room for supply of finance Green recovery The need for it?

  3. The need for Financing a Green Recovery COVID-19 is testing our resilience in responding to potential climate-related disasters. Countries commitments to 2030 climate goals collectively fall short of what is needed to shift towards a pathway consistent with carbon neutrality. In addition, the identification of detailed strategies to achieve these goals and the implementation of policies have been lacking. The pandemic has interrupted global supply chains, including those for renewable energy projects, which could delay or obstruct their completion (PV Magazine, 2020).

  4. Green Finance- Types and Flow

  5. Financing a Green Recovery Carbon Pricing Tools Green Budgeting Green Fiscal Policies

  6. Public vs Private Green Finance in Mauritius Budget 2020-2021 for Mauritius (Extract) Green Finance Instruments and Level of Awareness Rs 100 Billion in this Budget for our Plan de Relance de L Investissement et de l Economie. Source: Authors go back to basics with investment in smart agriculture diversify and deepen the blue economy value-chain National Agri-Food Development Programme. This programme will promote the Farm to Fork concept, ensure food security and reduce our dependence on imports. Green and Blue Bond frameworks by the Bank of Mauritius. proposing to transfer Rs 2 billion to the National Environment Fund through an Estimates of Supplementary Expenditure in this fiscal year. Rs 215 Million will be used for the protection of our beaches, lagoons and coral reefs. And Rs 207 Million will be provided for the Cleaning and Embellishment Programme of drains, roads, rivers and public sites including places of worship. Rs 1.2 billion will be provided from the National Environment Fund to construct drainage infrastructure in high risk flood-prone areas across Mauritius and Rodrigues. This is why we need to increase the share of local renewable energy in our energy mix to 40% by 2030.

  7. Green Budgeting as recovery measure Green Budgeting Exercise: public expenditure can be identified which contributes to either mitigation of or adaptation to climate change, as well as to the fight against artificialization of land and to the protection of biodiversity. Green Budgeting Framework Green budget tagging Classifying budget measures according to their environmental and/or climate impact Environmental impact assessments Requiring environmental impact assessments to accompany new budget measures. Ecosystem services, including carbon, pricing Putting a price on environmental externalities, such as greenhouse gas emissions, often through taxes and emissions trading systems, to facilitate each achievement of national environmental and climate goals. Green perspective to spending review Incorporating consideration of the impact of measures on national environmental and climate goals alongside considerations of efficiency. Green perspective in performance setting Integrating performance objectives related to national environmental and climate goals.

  8. Tools for reporting how stimulus packages help meet green objectives A general green budget statement: This summarises in broad narrative terms how measures introduced in the budget are intended to support green priorities and goals. A green progress statement: This provides a more detailed explanation of how the budget measures advance the government s green agenda, by reference to established objectives and indicators. Distributional impact analysis: This is an assessment of how specific green measures (both revenue and expenditure) affect individuals, households or firms

  9. INDCs Financing for Mauritius

  10. Private Climate Finance for Mauritius International Transfer of Mitigation Outcomes Implementation of Carbon Tax Mobilising Private Climate Finance Policies Private Adaptation Finance Private Climate Finance Article 6 of PA Natural Disasters Insurance Sustainable Banking Standards Climate Risks Stress Testing on projects to be financed Green and Blue Bonds Bilateral Climate Protection Agreement

  11. Research- Investigating the Private Climate Finance Mechanisms in SIDs. (NDC Finance Fellowship Programme- Frankfurt School of Finance and Management) Research questions: Research Methodology: 1. Exploratory research : i.e the case of 9 SIDs have been selected. Interviews with key stakeholders in Financial Institutions shall be mainly performed through personal meetings in the over the phone or video conference. What are the mechanisms being adopted for flow of private climate finance? 2. Document Analysis: three types of information collected such as articles, reports and websites. What are the drivers and challenges of providers and users of climate finance? Coun try Seyc helle s Mauri tius Com oros Singa pore Mal dive s Cab o ver de Sao Tom e and Princ ipe 0 Guin ea- Bissa u Bahr ain Sources of Information Sources of Information Articl es Web site Repo rts 3 2 0 6 3 0 0 0 How is reporting and accountability of private climate finance being adopted? 71 10 14 9 6 4 4 8 5 2 43 15 9 8 4 5 8 6 4 1 0 Articles ReportsWebsites

  12. Thank You

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