The Ethiopian Climate Resilient Green Economy (CRGE) Strategy and the CRGE Facility
These days, whenever we speak about development and economic growth the concept of green economy and sustainability have become a great concern. In the Growth and Transformation Plan (GTP) the issue of sustainable development has been given much emphasis. Out of the four main GTP objectives the two of them focused on sustainability. These are:-
- Establishing suitable conditions for sustainable nation building through the creation of a stable democratic and developmental state
- Ensuring the sustainability of growth by realizing a stable macroeconomic framework.
Moreover, the seven strategic pillars of the GTP deal about sustaining rapid and broad based economic growth giving detailed attention to equitable growth, agricultural and industrial transformation, quality of social and infrastructure development, building capacity and good governance.
Based on this background, the Government of the Federal Democratic Republic of Ethiopia launched the Ethiopia’s Climate Resilient Green Economy (CRGE) Facility in August 2012 to insure sustainable and environmentally friendly economic growth. Ethiopia which aspires to reach a middle income country by 2025 and sets a goal of double digit economic growth needs a green economy strategy that helps in multidimensional aspects to the country which is highly vulnerable to climate change.
The CRGE initiative has triple goals of economic growth, net-zero emission and building resilience. The CRGE facility governance structure which has ministerial steering, technical and management committee predominantly embraced Ministry of Finance and Economic Development (MoFED) and Ministry of Environment Protection and Forestry as active participants and implementers.
- Greening Ethiopia’s Economy
Ethiopia is one of the fastest-growing economies in Africa and in the world. It aspires to achieve middle-income status by 2025, without increasing its net greenhouse gas emissions and while protecting itself against the negative impacts of climate change. Ethiopia recognizes the link between environmental concerns and economic development. The country has historically been prone to extreme whether events. High rainfall variability causes droughts and floods on an almost annual basis, with severe consequences for the country's economy and people. The social and economic costs arising from climate variation and climate extremes are significant, and expected to become even more severe under climate change. If no adaptation measures are taken, climate change may reduce Ethiopia's GDP by as much as 2.5% per year by 2050. The government of Ethiopia therefore recognizes the importance of designing development policies with a view to climate and climate change. For Ethiopia, green growth is a necessity as well as an opportunity to be seized. It is an opportunity to realize our country’s huge potential in renewable energy and a necessity so as to arrest agro-ecological degradation that threatens to trap millions of our citizens in poverty.
3.The Ethiopian CRGE Initiative
Recognising the close links between environmental and development concerns, Ethiopia is working to integrate climate considerations into its broader development planning processes. The Ethiopian Climate Resilient Green Economy (CRGE) initiative, which was launched in late 2011, laid the foundation for integrated planning for climate-resilient development. Ethiopia’s CRGE initiative aims to "climate-proof" its National Development Plan goals so as to stabilise its net greenhouse gas emission while building resilience to against current climate risks and future climate change. Over time, Ethiopia aims to go beyond climate-proofing, to fully align its green growth and climate resilience objectives with its future national development plans. The CRGE initiative led to establishment of new institutions, new efforts in capacity building and financial resource mobilization, and triggered comprehensive climate risk and vulnerability analyses.
Ethiopia's decision to develop a strategic, national-level response to climate change has been triggered by a strong awareness about climate risks and strong political leadership. The historically high exposure to climate variability has created strong awareness about current and future climate impacts in Ethiopia. In its national development plan, the Ethiopian government explicitly identified climate variability and climate change as a threat to its development goals, and hence called for plan of action, strategies, laws, standards and guidelines, etc. to lessen the effect of forecasted climate change.
The CRGE process builds on Ethiopia's five-year national development plan, with a view to ensuring that Ethiopia's development targets are achieved in a low-carbon and climate resilient manner. The CRGE's three key objectives are to:
i)foster growth and economic development;
ii)manage greenhouse gas emissions; and
iii)improve resilience to climate change.
This marks a significant shift in Ethiopia's climate change policy, lifting both climate change mitigation and adaptation from the environmental to a cross-governmental sphere. To fully mainstream climate resilience and green growth into development planning, Ethiopia aims to feed the CRGE into its next national development plan, which will cover the period 2015‑2020.
The CRGE consists of four elements which, once finalized, are intended to build a comprehensive national framework for Ethiopia’s climate change mitigation and adaptation policy. These elements include:
a.the development of a national vision, laying out the key objectives and long-term development goals;
b.the development of a national strategy, outlining concrete steps for both climate change adaptation and mitigation;
c.the establishment of an institutional climate change system to facilitate cross-governmental co-operation and planning linkages; and
d.the establishment of financial and capacity-building mechanisms to support the implementation of the national CRGE strategy.
- The CRGE Vision
The CRGE Vision was the first step in Ethiopia's efforts to achieve climate-resilience green development. It formalized Ethiopia's aspiration to become a climate-resilient green economy by 2025, and set the framework for the development of concrete policy action. The vision summarizes key challenges and opportunities arising from climate change in Ethiopia, defines common goals and objectives, and outlines key steps required to achieve for achieving a climate-resilient development. Prepared under the leadership of the Prime Minister's office, the CRGE vision has been an important step for creating awareness about the benefits of climate resilience for economic and social development across the government, and helped building a momentum for change. The CRGE Vision also received noteworthy international attention when it was presented at the 2011 climate negotiations in Durban.
- The CRGE Strategy
Building on this vision, Ethiopia began to develop a national CRGE Strategy to identify and prioritise concrete steps for building a climate-resilient green economy. The CRGE strategy comprises two distinct components: the mitigation-focused Green Economy (GE) Strategy and the adaptation-focused Climate Resilience (CR) Strategy. The GE Strategy has been published in September 2011, and the development of the CR strategy is going on (it is completed for the Agriculture and Water, Irrigation and Energy Sectors).
- Getting the Institutions Right
Linking climate change and development planning requires close co-ordination and co-operation across ministries and levels of government. In recognition of this, Ethiopia has worked to establish a new institutional set-up for effective development and implementation of the CRGE. The concrete design of this structure has evolved significantly since the CRGE launch in 2011, in response to administrative, coordinative or technical needs as they became apparent. The changing nature of the CRGE's institutional framework reflects the novelty of climate-resilient development planning and points to the need to adopting a flexible, 'learn-by-doing' approach.
To spur the development of the CRGE strategy in early 2011, Ethiopia has put in place a new institutional system. The Environmental Council, chaired by the Prime Minister Office and comprising members from federal ministries, presidents of regional states, and private sector and civil society representatives provides overall oversight and responsibility the realization of the CRGE Vision. A new body, the CRGE Inter-Ministerial Committee, was established to directly oversee and guide the process to ensure overall policy coherence and alignment to existing government structures. The CRGE Inter-Ministerial Committee is composed of high-level representatives from line ministries and chaired by the Prime Minister's Office, which provides a direct link to Ethiopia's key national planning institution. Line Ministries have also established CRGE units, with overall responsibility of coordinating and facilitating the planning and implementation of sectorial CRGE strategies. The government furthermore has upgraded the Ethiopian Environmental Protection Agency to obtain ministerial status with enhanced role of coordinating the realization of the CRGE Vision.
- Securing sufficient financing- The CRGE Facility
Finance is one of the three constraints (in addition to technology and capacity), which can pose a major challenge to effectively implement the CRGE. Preliminary estimates indicate that building the green economy will alone require total expenditure of around US$ 150 billion over the next 20 years, with around US$ 80 billion of required funding estimated to be capital investment and the remaining US$ 70 billion assessed as being necessary to cover operating and program expenses. The government of Ethiopia should therefore mobilize significant amount of new and additional finance from international, domestic, public and private sources.
4.The CRGE Facility
To secure finance for the implementation, Ethiopia established the CRGE Facility within the Ministry of Finance and Economic Development (MOFED) in 2012. The CRGE Facility aims to mobilize additional resources from domestic, international, public and private sources and to ensure that implementing entities at federal and regional levels have access to sufficient funds. The Facility has a number of financing instruments such as loan, co-financing, result based payment, grantee, grant, etc. The Facility was established with a view to channel all climate and domestic finance into one multi-donor trust fund, operated and hosted by the Ministry Finance and Economic Development (MoFED). The Facility foresees to allocate resources to sectors according to9 prioritized investments as detailed the sectorial implementation plans. Its resources will complement existing investment and funding streams, meaning that ministries could therefore draw on the Facility to access additional funding for CRGE projects. Resources disbursed to sectors from the Facility are channeled through existing delivery mechanisms.
4.1 The CRGE Facility Structure and Governance
The structure of the CRGE Facility is tailored to the unique circumstances and needs of Ethiopia, and its scope of work. With regard to the governance arrangement, an inter-ministerial steering committee, which is comprised of the CRGE implementing sectors and chaired by the Prime Minster Office (PMO), among others sets overall policy direction and provides guidance. Under this umbrella, there is CRGE Facility Management which oversights the operations and functioning of the Facility. The Management Committee is Co-chaired by State Ministers of MOFED and MEF, which is a manifestation of genuine collaboration between the two ministries in coordinating and pushing the agenda of Green Growth and Climate Change Resilience building forward. A secretariat, which is comprised of technical staff in MOFED and MEF, ensures that the Facility provides its functions and coordinates its portfolio. An advisory board comprised of non-state actors and developments provides technical advice and support to the Facility Secretariat.
4.2 Capitalizing the CRGE Facility and Financing the CRGE Initiatives
The government of Ethiopia has been allocating significant amount of domestic public finance annually for implementation of projects and programs that have contribution to both GHG emissions reduction and climate change resilience building. The government is investing in clean energy sources from as hydro, geothermal, wind and solar. It is also allocating finance and mobilizing the wider public on landscape management and restoration.
Furthermore, the government is mobilizing development partners to provide support to the green growth agenda of the country and channel their support through the CRGE Facility. Since late 2013, development partners have started to capitalize the CRGE Facility. Austria provided an initial tranche of development support; DFIF provided further, substantial tranches of support. Other developing partners have also committed to provide support through the Facility. The Facility currently has signed MOU with six federal line ministries to finance over 40 projects and is in the process of disbursing the first tranches of support to the line ministries
The government of Ethiopia which has been working towards the overall economic development and social wellbeing of the society is in a promising socio-economic path that the international organizations and development partners witnessed. According to the recent measurements, it became public knowledge that Ethiopia has been one of the fastest growing countries in the world. Moreover, the Ministry of Finance and Economic Development (MoFED) that has the powers and duties of initiating policies which ensure sustainable and equitable economic development as well as macro-economic stability in the country has been working focusing on the green economy. Therefore, the CRGE Facility is a very crucial mechanism in order to implement the green economy strategy which aims to achieve sustainable development with net-zero emission and building resilience.
 As cited in the ‘Green Economy Strategy, September 2011’ developed under Ethiopia’s CRGE. It should be noted that not all of this expenditure is necessarily additional to current investment plans – rather, a large part of this expenditure (for example, for power generation infrastructure or transport infrastructure) would also occur in a conventional growth scenario.