Climate Budget Tagging (CBT)

 

What is CBT and How Useful It is?

  • Climate Budget Tagging (CBT) is a tool for monitoring and tracking of climate-related expenditures in the national budget system.
  • It provides comprehensive data on climate change relevant spending, enabling government to make informed decisions and prioritize climate investments. 
  • CBT also encourages planning officers and policy managers to incorporate climate considerations in project design. 
  • By generating data on climate change investments which usual budget classification would not do, CBT enables public scrutiny on government’s and donors’ spending on tackling climate change issues strengthening accountability and transparency.

 

Country Experience

  • Philippines: The Philippines mandated CBT in national budget submissions for all government entities in FY2015 .
  • Indonesia: Since 2014, Indonesia has introduced mitigation budget tagging (Low Emission Budget Tagging and Scoring System – LESS) in key ministries to track resources spent to achieve the national emission reduction target of 26% by 2020 (RAN-GRK). 
  • Nepal: Nepal is one of the first countries to adopt a climate budget tagging. In 2012, Nepal incorporated the climate tag to the budget system.
  • Bangladesh: The Government of Bangladesh (GoB) adopted a Climate Fiscal Framework (CFF) in 2014 which proposes a climate expenditure tracking framework (CETF) which would be applied to all line ministries’ budget submissions and also tag on-budget ODA. 
 

Not a Stand Alone Initiative

  • CBT is not a stand-alone initiative but has to be considered and implemented in the context of a Climate Change Financing Framework (CCFF).

  • CBT supports the implementation of other PFM reforms such as performance-based budgeting and medium term expenditure framework (MTEF).  

  • CBT is part of the wider efforts contributing to country readiness for new climate finance such as the Green Climate Fund (GCF).   

 

Enabling Conditions and Readiness

  • Joint leadership between finance, planning and environment: buy-in and leadership from finance and planning ministries with technical support from environment ministry.
  • National climate change policy priorities: CBT should be designed based on definitions, typology and criteria driven by national climate policy priorities in order for CBT to track climate spending towards these policy priorities. 
  • Capacity Building: Clear tools and guidance to line ministries and relevant agencies are essential for CBT implementation. Also, training on climate tagging should be considered in the context of broader capacity building efforts from raising awareness on climate change to integrating climate change into the budget process.
 

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