Presentation by Martin Gauss

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International Climate Finance Sources
Green Action Programme – Stakeholder Meeting and Training Workshop
13-15 December 2016, Astana, Martin Gauss

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Contents
Introduction to Climate Finance
o What does CF mean
o important issues to consider
Selected Funds
1. Green Climate Fund
2. Global Environment Facility
3. Climate Investment Fund / Climate Technology
4. ADB Sustainable Transport Initiative (and dedicated ADB Funds)
5. Nama Facility

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Introduction to Climate Finance
• What does Climate Finance mean?
o Climate finance is funding used to support climate change mitigation and adaptation
o Involves traditional funds and new sources
o Can play a key role in shifting and scaling up funding for low carbon transport
o Particular impact where a combination of sources is needed, and where it can push
sustainable transport intervention beyond the tipping point to implementation
 Multilateral sources, bilateral sources, private sources of climate finance
Source: ADB, Rethinking transport and climate change (2009).

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Introduction to Climate Finance
• Important issues
o Pre-requisite: reduction of greenhouse gases (mitigation)
o Monitoring, reporting, verification (MRV) is crucial
o Financed activities:
 Concepts and plans
 Infrastructure (vehicles, roads, etc.)
 Operation and maintenance
 Capacity building
o Link to climate change policy: NAMAs - Nationally Appropriate Mitigation Action:
registration of a low-carbon transport programmes / projects at the UNFCCC NAMA
registry, matching with financing partner, contribute to NDCs - Nationally Determined
Contributions.

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Selected Funds: Green Climate Fund (GCF)
• under UNFCCC;
• Capitalization: 9.9 billion mobilized (Nov. 2016);
• 50:50% mitigation : adaptation (over time)
• Financial instruments: grants, loans, equity, guarantees
Source: GCF website
27 projects
98 m
expected
beneficiaries
129 m tons
CO2 avoided
Loans Grants Equity Guarantees
46% 41% 2% 11%
Funding amount per financial instrumentGCF status quo

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Green Climate Fund:
Transport is one of four investment priorities
Source: GCF website
Where the GCF can add value
• Recognition that so far, only modest
share of climate finance went to urban
transport
 Low-carbon transport to support low-
emission and climate resilient cities
 Reduce emissions from freight transport
… however, so far no transport-related
project yet in the GCF portfolio.
Energy
generation and
access
Transport
Forests and land
use
Buildings, cities,
industries and
appliances
Reduced
emissions

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GCF – Access modalities and country ownership
• Access through accredited entities: national / international
• GCF concept note for preliminary formulation and feed back for the fund; full project
proposal
• Investment criteria: impact potential, paradigm shift potential, sustainable
development potential, needs of the recipient, country ownership, efficiency and
effectiveness
• NDA – Nationally Designated Authority for coordination and communication between
the country and the GCF; no-objection procedure:
Ministry of Energy, Climate Change Department
Ms. Gulmira Sergazina
Source: GCF website

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Selected Funds: Global Environment Facility (GEF)
• Operating entity under UNFCCC
• During GEF-6, the GEF will provide US$210 million to a new program to address
low emission development needs at the city level.
• Transport has significant climate change mitigation potential. Increased cooperation and
investments are needed to develop sustainable transport solutions in developing
countries to protect human health, improve economic growth and address climate
change.
• Key characteristics:
o eligible stakeholders: national / regional / local government, private sector
o Types of support: concepts, infrastructure, operation, capacity building
o Level of intervention: national / regional / local
o MRV requirement: moderate
o Modes of support: includes urban public transport
o Size of projects typically funded: USD 10,000 to > 1 m
o Need for co-finance
Source: adapted from GIZ (2014).

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GEF – relevant projects and access criteria
Access criteria
 Country eligibility
• Consistence with national priorities and programmes
• Endorsement by GEF operational focal point
responsible for all GEF activities and its alignment
• Deliver tangible environmental benefits,
including GHG emission reductions
• Seek financing only for incremental costs
• Development and communication through one of the ten GEF agencies
(support proposal approval process, development, implementation and management of
projects)
Relevant projects in low carbon transport eligible for support under this GEF
program may include:
o Design and implementation of sustainable urban strategies, policies, and
regulations
o Innovative policies and mechanisms for freight and logistics services
o Urban sustainable transport infrastructure and systems that reduce demand
for car travel, including road and parking policies and pricing, zoning and
street/urban design codes, and congestion pricing.
Source: GEF website
Focal Point Kazakhstan:
Mr. Gani SADIBEKOV
Vice Minister, Ministry of Energy

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GEF – selected example:
Sustainable Transport in the City of Almaty
https://www.thegef.org/project/sustainable-transport-city-almaty
Objective: reduce transport related emissions and improve urban environmental conditions by
(i) improving management of public transport;
(ii) building capacity in Almaty to plan and implement integrated traffic efficiency and
quality of public transport;
(iii) implement a demonstration project that raises awareness and knowledge on
sustainable urban transport
 Status: completed (approved 2010, closed 1.2016)
 Implementing agency: UNDP
 Financials:
preparation grant: ~ 136,000 USD
project grant ~ 4.8 m USD
total co-financing ~ 76 m USD
total cost ~ 81.5 m USD

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Selected Funds: Clean Technology Fund (CTF)
• part of the Climate Investment Funds; operated by the World Bank in cooperation with
Multilateral Development Banks (MBDs)
• Aims to promote scaled up financing for demonstration, deployment and transfer of low-carbon
technologies. CTF provides support for transport activities; coordinates actively with other
institutions to mobilize co-financing and harmonize policy support
• Grants, loans, risk mitigation instruments for … preparation documents, investment plans and
projects.
• Key characteristics:
o eligible stakeholders: national / regional government
o Types of support: concepts, infrastructure, operation, capacity building
o Level of intervention: national / regional / local
o MRV requirement: moderate
o Modes of support: includes urban public transport
o Size of projects typically funded: > USD 1 m
o Need for co-finance
Source: adapted from GIZ (2014).

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CTF – Application procedure and access criteria
• Applicant to request a joint mission with
World Bank and regional MDB to discuss
proposed activities with country stakeholders
and prepare investment plan
• Investment plan describes how CTF funding
will be used, building on and complementing
existing country strategies / activities;
facilitates prioritisation of projects (see access
criteria); examples available online
• Project documentation must support
investment criteria and show additionality
(project and emissionr reduction would not
have taken place in absence of CF)
• Investment plan reviewed and endorsed by
CTF Trust Fund Committee and MDB Board
1. Mitigation potential (emission reductions)
2. Cost – effectiveness (investment per t
CO2 reduced)
3. Demonstration potential at scale
4. Additional costs and risk premium
(support for commercially unviable
projects)
5. Development impact (standard MDB
appraisal criteria)
6. Implementation potential (proposals
assessed in context of existing country and
sector strategies, institution and
implementation arrangements, long-term
operation and maintenance provisions).
CTF Fact Sheet (8.2016): https://www-cif.climateinvestmentfunds.org/sites/default/files/knowledge-
documents/50723_ctf_factsheet_web.pdf

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CTF – Example:
Kazakh CTF EBRD Investment Plan (Update 2013)
Source: Website Climate Investment Funds
• Background: Kazakh Railways operates one of the world’s largest railway
networks, playing a key role in the country’s transport sector (59% of freight
movements; 11% passenger traffic).
• Objective: upgrade Kazakh Railways with energy efficiency technologies (heat
pumps, solar water heaters, gas boilers; upgrade lighting systems) through a ~ 15
m USD project, modernizing infrastructure for more reliable service provision
• Approval: TFC (2011); EBRD (2013)
• CTF Funding: 1.0 m USD
Co-financing: ~ 28.4 m USD
Kazakh Railways: Sustainable Energy Programme

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Selected Initiatives: ADB - Sustainable Transport Initiative
• The Asian Development Bank approved in 2010 the Sustainable Transport Initiative -
that guides ADB investments in low-carbon, safe, accessible, and affordable transport
systems and inclusive, clean, and energy-efficient transport policies and projects.
• Sustainable Transport Initiative aligns ADB transport operations with Strategy 2020
which features three guiding agendas: inclusive economic growth, environmentally
sustainable growth, and regional integration.
• ADB has progressively shifted the focus of its transport sector portfolio to expand lending
for urban transport and railway projects.
• ADB’s Sustainable Transport Initiative operational plan identifies key areas for new and
enhanced lending to scale up support for sustainable infrastructure. These include
investments in
o urban transport, support for low-carbon and climate resilient transport,
o integration of safety in road investments, and cross-border transport and logistics.
• Complemented through ADBs Climate Change Fund & ADB Clean Energy Fund
o Application procedure: coordinate with ADB’s operating department; use ADB
templates to submit application form, concept paper and project proposal.
https://www.adb.org/sites/default/files/publication/29105/brochure-sustainable-transport-initiative.pdf

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Selected Initiatives: NAMA Facility
• Objectives
o Support developing countries and emerging economies in implementing ambitious actions
to mitigate greenhouse gas emissions (Nationally Appropriate Mitigation Actions,
NAMAs).
o NAMAs can function as an important vehicle to implement nationally determined
contributions (NDCs) under the Paris Agreement
• Key facts
o Multi-donor funds established by Germany and UK in 2013; Denmark and the European
Commission joined in 2015 as additional donors
o Total funding made available through the NAMA Facility since its inception: ~ EUR 262 m.
o In 3 Calls, 14 projects have been selected so far (last call ended 31 Oct. 2016)
o Managed by GIZ as the Grant Agent
o Projects must have an implementation period of 3-5 years and a budget of EUR 5-20m
o The Call is open to all regions and sectors

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Selected Initiatives: NAMA Facility
NAMAs…mitigation measures:
o should be country-driven and anchored in national development strategies and plans.
o should strive to be sector-wide programmes that are national in scope, even if
regional or municipal elements could form part of the overall design.
o should consist of a combination of policies and financial mechanisms.
o Policies should serve to create an enabling environment and channel financial
flows into low-carbon investments.
o Financial mechanisms should serve to address potential barriers for investment
and leverage potential public support for mitigation activities.
o should leverage additional public and/or private capital investment. A strategy for self-
sustained implementation at national level should be envisaged.

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NAMA Facility – Application and Selection
Phase 1 (Outline Phase)
short NSP Outlines that undergo a thorough desk and some of them an on-site assessment
by an independent external evaluator; Applicant: National Government (Ministry) or other
legal entity with sufficient capacity and endorsed by Government
Phase 2 (Detailed Preparation Phase/Proposal Phase)
Selection is based on the full-fledged proposal which is the outcome of the Detailed
Preparation Phase. Proposals successfully passing the assessment are recommended to
the Board for final decision.
The Selection Criteria (4th Call; further calls expected)
• Timely submission, Completeness of documents (including endorsement letters)
• Documents provided in English
• Envisaged implementation duration of 3-5 years
• Qualification of the NAMA Facility funding as ODA finance
• Funding volume for implementation: EUR 5-20 million
• funding not used for the generation of GHG emission allowances
Ambition criteria: (i) potential for transformational change, (ii) leverage of private funding,
(iii) mitigation potential

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NAMA Facility – Implementation and monitoring
• Implementation by „support organisations“
o Funding my not be provided directly to national government institutions,
o International institutions: development banks, UN agencies, development agencies,
international NGOs, etc.
o National institutions: development banks / funds, public utilities, agencies, foundations,
NGOs.
• Strong emphasis on monitoring and evaluation
o Core indicators include
Emission reductions
Number of direct beneficiaries
Potential for transformational change
Public finance mobilised, private finance mobilised
o Sector specific indicators might apply (transport)

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NAMA Facility – Example from transport sector
Peru: Sustainable Urban Transport NAMA (2015-2019, 9 Mio Euro)
• to halt the trend towards urban sprawl dominated by cars and afflicted by serious traffic jams,
poor road safety and low air quality.
• two building blocks: high quality public transport provision and vehicle fleet optimisation.
• Progress in these areas requires several changes:
o A policy matrix will drive this vision through integrating the partners’ common agenda in a
structured way
o six major approaches to emission reduction:
 Integrated mass public transit system in the metropolitan area of Lima
 Non-motorised transport
 Institutional set-up for urban transport management
 Control and mitigation of GHG emissions and local pollutants from motor vehicles
 Modernisation of the public transport motor vehicle fleet
 Support to local authorities on sustainable urban transport.
Greenhouse gas emissions are to be reduced by at least 2.2 million tonnes CO2 between 2012
and 2022

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Thank you !
m.gauss@kommunalkredit.at
www.kpc-consulting.at

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Back up Slides

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Introduction to Climate Finance
• Global Climate Finance Architecture
Source: Overseas Development Institute (2013).

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The 6 GCF Investment Criteria
Source: GCF website
1. Climate impact potential: describes the mitigation and adaptation impact through programme
specific indicators. For mitigation: Tons of C02 equivalents avoided
2. Paradigm shift potential: describes aspects such as potential for scaling up, potential for
knowledge and learning, contribution to enabling environment, regulatory framework and policies,
contribution to climate resilient development pathways.
3. Sustainable development potential: environmental, social, economic, gender-related co-
benefits.
4. Needs of recipient: includes aspects such as vulnerability of the country, vulnerable groups, need
for strengthening institutions, etc.
5. Country ownership: covers coherence with existing policies and stakeholder engagement.
6. Effectiveness and efficiency: ensures financial adequacy and appropriate concessionality of
GCF funds (i.e. least concessionality to make the proposal viable),