Ethiopia has been leading least developed countries in its ambition and level of detail related to its climate change mitigation and adaptation plan. In order to finance its ambitious climate strategies, the country must harness international climate finance and revenue from innovative mechanisms.

The African Development Bank (AfDB) proposes the establishment of an Adaptation Benefit Mechanism (ABM), which would become a results-based mechanism under the provisions of Paris Agreement Article 6.8. In contrast to other mechanisms such as the Clean Development Mechanism (CDM), the ABM would reward adaptation outcomes instead of greenhouse gas reductions.

Ethiopia can play a key role in the further development of the ABM due to its leadership and influence in negotiations, as well as its tremendous adaptation needs. If the mechanism can be anchored in the international climate architecture, and if it is adopted by governments and the private sector, the ABM has the potential to mobilise significant resources for adaptation activities in Ethiopia. In order to achieve this, the government of Ethiopia should join forces with the AfDB to:

• mobilise support to define methodologies for assessment of adaptation benefits within the international community;
• develop “lighthouse ABM transactions” and the related institutional infrastructure;
• align the ABM process with the Multisector Investment Plan (MSIP) development process of the Pilot Program for Climate Resilience, as well as procedures of other climate finance institutions such as the Adaptation Fund (AF) and Green Climate Fund (GCF); and
• promote integration of the ABM under Art. 6.8 in the context of the international climate negotiations.

Report by the Africa Development Bank Group