Tonga Climate Change Trust Fund - Tonga

The Tonga Climate Change Trust Fund is the Pacific region's first and only existing national fund with a specific focus on climate change. Capital from the Fund may be invested in donor countries with only the distribution from investments reaching the recipients. Thus, donor economies benefit directly through jobs in the investment sector and indirectly from the ongoing increased business activity and jobs that result from the investments.

Fast facts:

The Tongan Government, in 2014, responded to the challenges of reducing the Tongan contribution to global greenhouse gas (GHG) emissions;
The government improved national energy security by approving a policy to supply 100% of electricity generation through renewable resources by 2020.

The problem

With 80% of Tonga's population living on the coastlines, Tonga is currently ranked the world's third “most at risk” country to the effects of climate change. Tonga is highly dependent on imported fuels to meet its overall energy requirements. All grid-supplied electricity, which accounts for over 98% of electricity used in Tonga, is generated using imported diesel fuel.

The solution

The Tonga Climate Change Trust Fund provides supplementary financial support to both pipeline and current adaptation and mitigation efforts through scaling up of community based solar electrification projects, and implementing coastal protection measures. The Fund is constituted of two elements: an endowment account comprising 80% of the initial capital sum (USD 4 million), which will be invested in a low risk financial instrument (or bank account) and an operational account which will be used to finance projects.

The drive behind the Fund is to empower both the government and communities to take ownership of climate related activities implemented at both levels. The Fund allows for government to shift from short-term project based initiatives to more long-term programmatic pathways that can be sustained via sustainable climate financing mechanisms.

Helping the planet

Tonga has embarked on a low-carbon development pathway with a target of 100% renewable energy dependency by 2020.

Helping people

The Fund encourages communities to take ownership and be responsible to manage future climate related impacts in their communities, and allows for broader knowledge sharing and understanding of climate change and its impacts. It also enhances community knowledge on eligibility and accessibility to the National Climate Change Fund.

NGOs benefit from the provision of technical and managerial expertise of the Climate Change Division, and also attain knowledge on eligibility and accessibility to the National Climate Change Fund. The consultation process has taken into account and highlighted the necessity and importance for involvement of men, women, youth and vulnerable groups in the decision-making process, awareness-raising, participation in meetings, and the implementation of current and future projects.

Scaling Up

The Fund is designed to be a self-sustainable long-term financing mechanism, with sound fiduciary management and a robust governance system for management of the funds which will in effect aid in building a stronger relationship between the government of Tonga and potential donors and development partners for further contributions to the Fund.