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Project Pipeline Development

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Caspar-Theyss-Strasse 14a14193 Berlin / GermanyT +49 30-8900068-0F +49 30-8900068-10E clifit@adelphi.de I www.adelphi.deDeutsche Gesellschaft frInternationale Zusammenarbeit (GIZ) GmbHCF Ready ProgramGodesberger Allee 11953175 Bonn/GermanyT +49 228-24934-111F +49 228-24934-215E info@giz.de I www.giz.de Dennis TnzlerE clifit@adelphi.de T +49 30-8900068-20www.clifit.org

Dorit LehrE cf-ready@giz.de T +49 228 24934-133http://www.giz.de/expertise/html/3041.html

Any content written by named authors do not necessarily reflect the views of adelphi nor GIZ nor of the German Federal Ministry for Economic Cooperation and Development.Although the authors take all possible care to ensure the correctness of published information, no warranty can be accepted regarding the correctness, accuracy, reliability and completeness of the content of this information.

August 2014Nr.Terms of UseThis Training Material was developed by adelphi with financial support from GIZs CF Ready Program on behalf of the German Federal Ministry for Economic Cooperation and Development.If you would like to adapt this presentation to your needs, please respect the following terms of use:The imprint is mandatory. It may neither be altered nor removed from the presentation and should always be printed out as part of the presentation, if applicable.The German Cooperation, GIZ and adelphi logo must not be moved or removed. No other logos or further information may be placed in the footer area.If you wish to add your own content please indicate in the respective slides that the respective content has been added and that it was not part of the original version provided by the authors mentioned in the imprint.If you would like to make substantial changes to the content of this presentation or have other questions regarding the material, please contact cf-ready@giz.de or clifit@adelphi.org Nr.Contents & ObjectivesNr.4Role of project pipelinesNeed for prioritisationCountry examplesKey questions

ContentNr.What you can expect to learn from this session

Understand the importance of project pipelines for the implementation of climate strategies and learn about selected examples in other countriesLearn about the tools and criteria for prioritisation of projects through which to implement climate policies strategies (exercise)Nr.The role of project pipelines in climate policiesNr.7Definitions Project pipeline:Projects that are between the starting point and the completion point are 'in pipeline.

Examples of project pipelines:CDM project pipelineNAMA pipelineInternational funds have their project pipelinesMinistries can have their project pipelines

Nr.Strategic relevance International climate policies encourage the development & implementation of national climate strategiesNational strategies related to mitigation (Low Emission Development Strategies, NAMA frameworks) and adaptation (NAPAs, NAPs) require:national capacities to access and program climate financecapabilities to develop a pipeline of bankable projects and programmes (e.g. to access international funds)Financial relevancePublic budget for climate investments is limited: Project pipelines at national level can help to engage international partnersNeed to select the most cost-effective projects that are feasible to be implemented within a given time-frame

project prioritization needed

Project pipeline starting pointNr.9Project pipelines (mitigation/adaptation; sector-related) can serve as a tool for communication (national/international)for structuring the climate policy implementation processfor selection what project to finance at what level

Interesting for..International climate focal points within the governmentsLine ministriesPrivate sector (project developers, banks)International development partners

Project pipeline rationale and target groupsNr.10The need for project prioritisation during project pipeline developmentNr.11Project prioritization: from a wish list to a short list

Source: Cities Development Initiative for Asia (CDIA) 2010

Assessment and rankingFinal selectionNr.Cost Benefit Analysis (CBA)Assessment of costs and benefits expressed in monetary values, with one main objective, e.g. economic efficiency. Allows the comparison of options across sectorsCost Effectiveness Analysis (CEA)Costs are valued in monetary terms, and benefits quantified in physical unitsCosting of different options that achieve the same objective, producing a ranking in terms of costAllows for cases with multiple objectives or criteria, but only if quantifiable Multi-Criteria Analysis (MCA)Ranking of alternative options by a number of priority criteria, where important benefits cannot be quantified and valued, e.g preserving biodiversityAllows combining financial/economic criteria with technical, environmental and social ones. MCA can complement CBA or CEAData availability will appear to be a major determinant of the method to be used. In practice, political decisions will probably determine selection and prioritizationMethods for prioritization and selection of projectsSource: UNFCCC Least Developed Countries Expert Group. Annotated guidelines for the preparation of national adaptation programmes of actionNr.13Multi-Criteria Analysis: potential criteria for selecting projects (I)CountriesFundersSite-specific context (e.g. urgency, social acceptance)High-level political support and / or local prioritiesObjectives set for mitigation or adaptation planning (e.g. poverty reduction or emission reductions)Potential for transformational changeDevelopment benefitsCost-effectivenessEnvironmental impactsEase of implementationStakeholder supportAttractiveness to fundersRobust MRV or M&E systemsPotential for transformational change Embedded in national policyShare of national co-financingPrivate sector leverageInstitutional capacities of implementing entityReplicability Innovation Source: Adopted from: Ecofys 2013. MRV Summer School training materialsNr.Multi-Criteria Analysis: potential criteria for selecting projects (II) Source: Adopted from: Global Climate Change Alliance: Intra-ACP Programme. Module 5. Costing, assessing and selecting adaptation and mitigation options and measures OptionTotal cost / benefit ratioPolitical support Technical feasibilityDevelopment benefitsEnviron-mentalimpacts.Total scoreProject 1Project 2Project 3Project 4Scores: For qualitative criteria: range, e.g. from 1 (poorest performance) to 5 (highest performance)For quantitative criteria: monetary or physical unitsNr.Example I: Investment criteria of Green Climate Fund (I)Coverage area Criterion Impact potentialParadigm shift potentialSustainable development potentialMitigation impactAdaptation impactEnvironmental co-benefitsSocial co-benefitsEconomic co-benefitsGender-sensitive development impactPotential for scaling-up and replication and overall contribution to global low-carbon development pathways, consistent with a temperature increase of < 2 degreesPotential for knowledge and learningContribution to the creation of an enabling environmentContribution to the regulatory framework and policiesOverall contribution to climate-resilient development pathways consistent with a countrys climate change adaptation strategies and plansSource: GCF Decision B.07/06. Annex XIV: Initial investment framework

Nr.16Example I: Investment criteria of Green Climate Fund (II)Needs of the recipient Country ownershipEfficiency and effectivenessVulnerability of the countryVulnerable groups and gender aspectsEconomic and social development level of the country and the affected populationAbsence of alternative sources of financingNeed for strengthening institutions and implementation capacityExistence of a national climate strategyCoherence with existing policiesCapacity of implementing entities, intermediaries or executing entities to deliverEngagement with civil society organizations and other relevant stakeholdersCost-effectiveness and efficiency regarding financial and non-financial aspectsAmount of co-financingProgramme/project financial viability and other financial indicatorsIndustry best practicesCoverage area Criterion Source: GCF Decision B.07/06. Annex XIV: Initial investment framework

Nr.17Example II: Adaptation Fund project eligibility criteriaCountry EligibilityHas the government endorsed the project through its Designated Authority?Project EligibilityResource AvailabilityEligibility of Implementing EntityImplementation ArrangementsEligibility of Implementing EntityImplementation ArrangementsReview CriteriaDoes the project support concrete adaptation actions to address the adverse effects of climate change and build in climate change resilience? Does the project provide economic, social and environmental benefits, with particular reference to the most vulnerable communities, including gender considerations, while avoiding or mitigating negative impacts, in compliance with the Fund policies? Is the project cost-effective? Is the project consistent with national strategies for sustainable development, national development plans, poverty reduction strategies, national communications or adaptation programs of action, or other relevant instruments? Does the project meet the relevant national technical standards, where applicable, in compliance with the Environmental and Social Policy of the Fund? Is there duplication of project with other funding sources? Does the project have a learning and knowledge management component to capture and feedback lessons? Has the project provided justification for funding on the basis of full adaptation cost? Does the project align with the AF results framework? Has the sustainability of the project outcomes been taken into account when designing the project?Does the project provide an overview of environmental and social impacts / risks identified?

Source: Adaptation Fund Project/Programme Review CriteriaNr.18Example III: International Climate Initiative (ICI)Thematic relevance Partner country benefitsEfficiency and effectivenessGeneral alignment with one/more of thematic priorities of the ICIContribution to the creation of enabling political conditions Coherence with and integration into national and/or regional/transnational strategies, international cooperation and synergies with other projects/ sectorsContribution to economic and social development in the partner country Contribution to bilateral cooperation on climate and environment Solidity of the concept, quality of presentation and of the anticipated project management and monitoringAmount of self-financing and third-party financing Coverage area Criterion International RelevanceSustainability of outcomes and replicability of the concept and/or resultsContribution to international cooperation (e.g. UNFCCC, Montreal Protocol, CBD)Source: ICI 2015; Information on support for projects under the International ClimateInitiative (update 2015)Nr.19Examples from selected countriesNr.20Example: Prioritizing mitigation and adaptation options in KenyaSource: Prioritising mitigation and adaptation options as part of the development of a National Climate Change Action PlanAdaptation options Mitigation options The long-list of adaptation actions were screened based on the following criteria: Is the action timely? Does the action enable climate resilient decisions to be made? Does the action build adaptive capacity? The screening process resulted in a top-10 list of adaptation actions for each of the plan themes and incorporated into resilience pathwaysA long list of 60 possible abatement options was screened using three criteria: Substantial emission reduction potential; Significant sustainable development and climate resilience co-benefits; Alignment with Government of Kenya development priorities. Screening resulted in 25 options that would be assessed according to their abatement potential, costs, and evaluated against a set of sustainable development and climate resilience indicators. National Climate Change Action Plan (NCCAP) developmentNr.

Messages to take away from a readiness assessment:Limited human capacity to enable climate change mainstreaming. Capacity needed in research and in the public sector and use the great potential of private sector Country is effective in identifying many potential climate change activities through plans and strategies, howeverit is not clear how these should be prioritised or funded Hence: greater prioritisation and the costing of interventions needed to provide a stronger basis from which to facilitate implementation of climate change activities

Project pipeline Example of needs (I): Tanzania Source: GIZ/ODI 2013a

NAPA 2007: wish list of six projects with hardly any implementation due to a lack of financing, technological problems and poor governance-related constraintsNational Climate Change Strategy identifies over 200 strategic interventions

Nr.The GIZ/ ODI study on climate finance readiness outlined as the take away message for aptitude:http://www.giz.de/fachexpertise/downloads/giz2013-en-climate-finance-readiness-tanzania.pdf

There is limited human capacity to enable the mainstreaming of climate change, both in government and the non-governmental sector. The National Climate Change Strategy emphasises the need to build capacity in research and in the public service, highlighting in particular the need to develop research in alliance with local institutions to strengthen in- country capacity.The private sector has been nominally engaged in climate change activities in Tanzania through independent activities (such as investments in renewable energy and forestry activities), as well as through PPPs. Broad support for PPPs exists and these have the potential to stimulate greater engagement in adaptation, such as in the water sector where private sector engagement is currently low.While Tanzania has been effective in identifying many potential climate change activitiesthrough plans and strategies, it is not clear how these should be prioritised or funded. To this end, greater prioritisation and the costing of interventions could provide a stronger basis from which to facilitate implementation of climate change activities

22Zambian National Climate Change Response Strategy (NCCRS) draft outlines activities by sector, with estimated costs and outputs. Planned action: Bankable actions/projects development for specific funding opportunities. Expected output: at least 3 funding proposals developed to request min. USD 200 millionProject pipeline Example of needs (II) ZambiaMessages to take away from a readiness assessment:Need for improved capacity and processes to translate the key areas of the NCCRS to a programme of action. Zambias climate project track record mainly dominated by international support.

Source: GIZ/ODI 2013bLack of a project pipeline has apparently led to donor competition: agencies have funding available to support climate change actions, but struggle to find viable investmentsMomentum created by donor projects is reported to be hard to maintain due to lack of domestic resourcing to sustain or scale-up projectsNr.GIZ/ODO study on Climate Finance Readiness in Zambiahttp://www.giz.de/fachexpertise/downloads/giz2013-en-climate-finance-readiness-zambia.pdf

Study shows that there are useful entry points for a project pipeline and gaining more experience with climate activity implementation. But National Strategy still not ratified and NAPA only with one project under the process of implementation

Zambian NCCRS draft outlined a number of activities by sector, with estimated costs and outputs. Estimated cost reaches US $ 6.6 billion. Planned action: Bankable actions/projects development for specific funding opportunities. Expected output: at least three funding proposals development for a request of a minimum of Us $200 million by 2012Zambias pipeline of climate change projects and programmes, to date, has been largely supported by international agencies and development partners and capacity needs exist to develop ideas into tangible projects.

there is a clear need for improved capacity and processes to translate the key areas where the NCCRS identifies a need for progress with actionable programs. We therefore see this as a need that relates to strengthening aptitudes that will reinforce efforts to deepen planning.some stakeholders have suggested that the lack of a project pipeline has led to donor competition; where agencies have funding available to support climate change actions, but struggle to find viable investments. Donors have also recently begun to provide finance directly to subnational actors. Furthermore, the resources and momentum created by donor projects are reported to be hard to maintain due to lack of domestic resourcing to sustain or scale-up projects

23Training example of prioritization of adaptation options (a)Source: Mounira Boussetta. CLIFIT Training materials in Togo. PNUD-Maroc, manuel de formation en changement climatique, juillet 2014Adaptation optionCostsIntensity of reduction in vulnerability Scope of reduction in vulnerability'No regret' measuresControl of the implementation of the optionTotal Adoption of water-efficient and drought/temperature-resistant crops2452114Adoption of more resilient livestock breeds1352112Adoption of no-till seeding2552115Strengthening and protection of agricultural conveyance structures2332212Diversification of livelihoods2433112Compensation and insurance system to minimize CC-related losses1451213New water impoundment structures (small and medium dams)1552215Maintenance of hydraulic structures2452215Nr.Training example of prioritization of adaptation options (b)Source: Mounira Boussetta. CLIFIT Training materials in Togo. PNUD-Maroc, manuel de formation en changement climatique, juillet 2014Adaptation options Ranking 1New water impoundment structures (small and medium dams)Upkeep and maintenance of hydraulic structuresIrrigation water saving programs (localized irrigation). Transition to localized irrigationDrinking water saving programsAdoption of no-till seedingAdaptation options Ranking 2Action plan against flood damages Adoption of water-efficient and drought/temperature-resistant cropsTreatment of brackish watersRainwater harvesting Artificial groundwater rechargeWatershed treatment programs Combatting agricultural pollution Adaptation options Ranking 3Compensation and insurance system to minimize CC-related lossesRecycling of waste waterDepollution at household and industrial levelControlled garbage dumpingSupporting rural populations' access to drinking water (boreholes, wells...)Supporting urban populations' access to RE-supplied air conditioningAdaptation options Ranking 4Adoption of resilient livestock breedsStrengthening and protection of agricultural conveyance structuresDiversification of livelihoods (off-farm activities)Networks for air quality monitoring and early warningNr.Key questionsWhat is the status of the overall status of project pipelines on climate change adaptation or mitigation in your country?

What are processes of prioritising climate investments in your institution/country?

Nr.26List of references:Cities Development Initiative for Asia (CDIA) 2010: City Infrastructure Investment Programming & Prioritisation Toolkit. User Manual: From wish list to short list: prioritising urban infrastructure projects for local development

GIZ/ODI 2013a: Understanding Climate Finance Readiness Needs in Tanzania

GIZ/ODI 2013b: Understanding Climate Finance Readiness Needs in Zambia

Nr.27BACK UPNr.28What do we mean by paradigm shift or transformational change? Source:GCF Decision B.07/06. Annex XIV: Initial investment frameworkNAMA Facility (2014): Potential for Transformational Change, NAMA Facility factsheetLarge international facilities, e.g. GCF or NAMA Facility, have transformation potential or paradigm shift as their funding criterion

Green Climate Fund: degree to which the proposed activity can catalyze impact beyond a one-off project or programme investment

NAMA Facility: projects are considered as conducive to transformational change if theycontribute to enabling either a significant evolution in terms of scope (e.g. scaling-up or replication), or enabling a faster and/or a significant shift from one state to another;have a catalytic effect and include mechanisms to ensure the sustainability of the impacts, local ownership and political will, the involvement of the private sector and the use of innovative technologies and approaches, and;allow for systematic learning processes.

Nr.Further reading:Wuppertal Institute (2014): Capacity Building for Transformational Change in International Climate Finance

29Example II: Climate Actions Prioritization (CLIMACT Prio) tool Approach: climate awareness, decision support and capacity building tool for the prioritization and assessment of climate mitigation and/or adaptation actions at a local levelExcel tool available online Source: University of Rotterdam ; Institute for Urban Management http://www.ihs.nlhttp://toolbox.climate-protection.eu/search/?cmd=view&uid=e74e081d

Nr.Example: Prioritisation of projects NAPA approachStep 1. Four general criteria to select priority adaptation activities from a long list of potential activities:Level or degree of adverse effects of climate change;Poverty reduction to enhance adaptive capacity;Synergy with other multilateral environmental agreements;Cost-effectivenessStep 2. Criteria to prioritize and subsequently to rank the selected activities:Loss of life and livelihood;Human health;Food security and agriculture;Water availability, quality and accessibility;Essential infrastructure;Cultural heritage;Biological diversity;Land-use management and forestry;Other environmental amenities;Coastal zones, and associated loss of land.Nr.Example III: International Climate Initiative (ICI)General alignment with one/more of thematic priorities of the ICITransformative impact, level of ambition, innovation potential (technological, economic, methodological, institutional)Sustainability of project outcomes and replicability of the concept and/or resultsContribution to international climate cooperation (e.g. UNFCCC, Montreal Protocol, CBD)Contribution to the creation of enabling political conditions in the partner countryCoherence with and integration into national and/or regional/transnational strategies, international cooperation and synergies with other projects and sectorsContribution to economic and social development in the partner country Contribution to bilateral cooperation on climate and environment Solidity of the concept, quality of presentation and of the anticipated project management and monitoringAmount of self-financing and third-party financing Suitability of projectSource: ICI 2015; Information on support for projects under the International ClimateInitiative (update 2015)Nr.32