1. Designing and implementing green
public investment programmes –
approach, main elements and outcomes
2021-22
Friday, 12th May 2023

2. Greening public expenditure
The work area on greening public expenditure (Activity 3.3.1) focuses on assisting
the partner governments in utilising public resources effectively and efficiently
-> Both budgetary and personnel resources
The aim is to help countries achieve:
1. National environmental and climate-related objectives
2. Socio-economic development
3. Well-being of citizens

3. Green public investment programmes
 The mechanism to allocate resources to priority areas in need of public funding,
without which the improvements will not be achieved
 Series of measures designed to achieve certain public objectives with clearly
allocated budget and deadlines for their implementation
Economically sound and credible multi-year investment programmes are better
positioned to successfully compete for:
i. support from national and international public sources
ii. leverage private (non-state) investments into clean and socially important projects

4. Components of the project
I. Programmatic approach
II. Sectoral focus
III. Phased implementation

5. I. Programmatic approach

6. Why programmes are needed
 Many environmental projects are not profitable or their profitability is too low to
attract attention/interest of the private sector
 Thus, the governments have in principle two choices:
1. Sticks –> To force implementation by regulation, though this might not be always
possible (e.g. free market principles)
2. Carrots –> To financially support investments of the private sector
 In some cases, even relatively small technical assistance offered can tip the scales
of decision-making towards more environment-friendly options (esp. in case of
smaller companies)

7. What programmes involve
The goal of this work is to develop pipeline(s) – i.e. groups of projects – of priority
environmental investments that will be supported by the public sector funds:
This approach provides private investors not only with a direct financial support but
also a guidance what types of investments can bring the desired environmental and
socially beneficial outcomes
From:
National government
Development funds
IFIs
Through:
− on-lending to local governments
− exchange rate risk subsidies
− preferential loans
− grants

8. What OECD can help with – tools
Since 2016, the OECD has developed a number of policy tools that aim to support
countries in greening their public expenditure:
1) Costing methodology focused on environmental/climate-related investment programmes
2) Costing model (Excel-based) that calculates the overall implementation costs of a particular
investment programme
− both in terms of “hard” investments as well as administration/management expenditure
− that are assessed over its foreseen/aspired environmental impacts
As such, the model is an analytical tool that can help the decision-making process
become better informed and more transparent
The OPTIC model was developed specifically for public transport sector (KAZ, KGZ, MDA),
however, the tool can be modified for use in any environmental “sector” (in a broader sense)

9. What OECD can help with – assistance
 Provide TA and CD that help the national public authorities to better design and
cost priority green public investment programmes:
− in a cost-effective way (though not CB analysis)
− within national medium-term expenditure frameworks
− and in line with good international practices
 Conduct training courses on public environmental expenditure
management
− on medium-term environmental and climate-related investment planning
for government authorities responsible for environmental management
− both in in-person and virtual formats (incl. webinars)

10. Pillars of the project
Pillar one: Preparing economic analysis that investigates the supply and demand
side of potential technologies and equipment within the agreed target sector
Pillar two: Developing costing methodology and the associated costing model that
calculates the amount of finances – both on the supporters’ and beneficiaries’ side
Pillar three: Proposing institutional set-up that also includes operating regulations
needed to be put in place, and policy and regulatory barriers that, conversely, need
to be eliminated (if any)
Pillar four: Providing capacity development measures that will enable the future
implementer of the programme to launch the programme (or prepare similar one)

11. Step 1 – Programme design
The first activity area included analytical work on programme preparation and
involved following four stages:
1) initial scoping and data collection phase
2) adjustment of the programming and costing methodology
3) development of an investment programme in line with international good practices
4) preparation of an analytical report
The activity area includes these types of activities:
− desk research
− primary data collection (bilateral and stakeholders’ meetings)

12. Step 2 – Programme implementation
TA component:
1) reviewing financing sources to support CPT Programme implementation
2) supporting establishment of programme implementation structure
CD component:
1) providing capacity development on seeking financing sources
2) providing capacity development on project cycle management
The trainings are targeted to:
− government officials (specialists)
− not limited to civil servants, though preferably long-term staff

13. Key principles of programme design
 Funds allocated to expenditure programme strictly justified
(1) Public funds should not replace private financing
(2) Encouraging the private sector to take the lead
 Expenditure programme needed only if public subsidy is shown to be
indispensable to achieve environmental objective
(1) Concentration on the most pressing issues
(2) Introducing new techniques and technologies
 The support should be timely limited
 Supporting education (awareness) public participation (ownership)

14. Role of the partner ministry – project
The projects were implemented by the OECD in a participatory approach along with
its main counterpart in the partner countries
 Ministry of Ecology and Natural Resources of Azerbaijan (MENR)
 Ministry of Environmental Protection and Agriculture of Georgia (MEPA)
 Ministry of Environment of Moldova (MoE)
As a major player in environmental and climate change policy in the country, the
respective ministry had a substantive role in:
i. setting the direction (focus) of the programme
ii. coordinating the project on the national level
iii. implemeting the programme (programming authority)
.
Owner of the programme

15. Role of the partner ministry – programme
For the GPIP implementation, governments’ support is needed in three main areas:
1) policy and regulatory commitment and reform (GPIP integration)
2) financial commitment (budget allocation)
3) institutional set-up (and personnel allocation)
a. the ministry can implement the programme
b. the ministry can delegate the implementation to environmental funds, environmental
agency (national/regional)
c. the ministry can outsource the implementation to NGO or even private company (banks,
investment funds, etc.)

16. Beneficiaries
(more levels)
Partner governments
 Technical assistance
 Capacity development
Private sector
 Financial support
 Policy guidance
.
Citizens
 Healthier environment
 Access to public services
Environment
 Protection of biodiversity
 Conservation of natural
resources
.

17. First-level objectives (achieved by the project)
 transfer practical skills and know-how to specialists in the partner ministry to design and cost
green public investment programme in a given sector
 enhance capacities to implement the designed programme and, more importantly, also
similar low-carbon public investments in future
Second-level objectives (achieved by programme implementation)
 leverage “private” investments into clean and socially important projects through more
targeted public spending and utilising other domestic (such as public-private partnerships) or
international finance support mechanisms
 contribute to accelerating the socio-economic development of the country (e.g. through
creation of green jobs, adoption of innovative technologies)
Objectives of assistance

18. 1. Enhanced investment planning and management capacities
(budget allocations and financing proposals)
2. Increased effectiveness and efficiency of local public spending
3. Increased transparency of decision-making
4. Improved sustainability of investments through longer-term planning
timeframe (e.g. MTEF)
5. Strengthened communication channels (esp. in case of cross-sectoral focus)
Key benefits of programming

19. Agreement on what is the major environmental problem we want to solve – i.e.
focus of the programme
o The focus of the programme should contribute to reaching national environmental or
climated-related objectives (CO2 emission, air/water or other environmental pollution, etc.)
o Market research will further confirm the feasibility of the programme interest of stakeholders
in its realisation
Clearly defined and allocated resources that are realistically assessed for the whole
preparation (and later implementation) process
o Minor part for the programme preparation (technical assistance)
o Major part for the programme co-financing (financial) and managing the programme (human
resources)
Prerequisites for the programme preparation

20. Key steps in the process
Designing and costing green public investment programmes
o Define pipelines that leverage other (non-state) investments
o Calculate the amount of support, overall financial envelope and expected results
Budgeting and financing green public investment programmes
o Integration into (national) strategies and (multi-year) budgetary processes
o Economically sound programmes have higher chances of financing
Implementing green public investment programmes
o Can be split between government bodies
o Long-term objectives –> multi-year budget –> country-wide public investment programme
Meeting “complementary” requirements (MTEF, ownership, good practices)

21. II. Sectoral focus

22. Examples of priority sectors
 Climate-related investments (energy efficiency, renewable energy projects)
 Pollution abatement and control (construction of wastewater treatment plants,
introduction of clean public transport)
 Mobilisation of natural resources (water supply)
 Protection of biodiversity and landscapes; prevention of natural and technological
risk; environmental and climate-related research and development; training and
teaching activities

23.  strategy (needs and problems)
 policy (priority elements)
 plan (essential activities)
 framework (legal and institutional)
=> environmental protection
=> air, water, nature, solid waste
=> wastewater treatment, waste collection and treatment
=> law, regulations, enforcement
 programming (non-expenditure and
expenditure programmes)
=> priorities for programming
=> setting programme targets
=> costing a programme
=> priorities within a programme
 programme implementation
(projects)
=> project selection, appraisal and control
=> post-implementation appraisal
Programme vs. policy context

24. Selection criteria
 Sector where the most acute problems are
 Sector that the country has done some work in
 Sector where the “low-hanging fruits” seem to be
 …

25. Project pipelines
 Within the focus sector, the programme defines:
1. concrete project pipelines (i.e. lists of project types) to be supported
2. requirements that the potential beneficiaries (i.e. the recipients of the support) would
need to meet to become eligible for the support
 The project types usually do not include large projects, but rather small-scale
(replicable) measures that could benefit most from a state financial support
 At the same time, the targeted support should be limited – both in terms of
amount of financial support per project, and time (i.e., the programme’s overall
implementation timeframe)

26. Selected priority sectors
Pipeline Objective
Azerbaijan Water supply Increase the drinking water supply coverage
Irrigation Increase the irrigated areas
Reduce water losses and salination of irrigated lands
Wastewater Reduce environmental pollution (soil, water)
Georgia Waste to energy Reduce the greenhouse gas emissions
Preserve environment and contribute to energy mix diversification
Aerobic composting and anaerobic digestion Support sustainable agricultural and gardening practices
Reduce biowaste share in municipal waste
Moldova Buses Reduce emissions of CO2 and air pollutants in major urban centres
Improve reliability and expansion of public transport services
Minibuses
Trolleybuses
Accompanying investments

27. Selection criteria – Georgia example
Waste streams
(1) Agricultural residues
(2) Green waste
(3) Bio-waste
Groups of beneficiaries
(1) Farmers
(2) Households
(3) Food / beverage producers
Types of utilisation
(1) Biomass
(2) Composting
(3) Digestion
Waste system and area
(1) Non-municipal waste
(2) Generated in rural areas

28. Azerbaijan – WSS
1. Water supply: Investment in the increase of the drinking water supply coverage
by constructing water intakes and wells, pumping stations, and water
distribution network with all supporting elements
2. Irrigation: Investment in irrigation and drainage networks by rehabilitation of
existing, but deteriorated, infrastructure
3. Wastewater: Investment in small-scale wastewater collection network and
wastewater treatment plants

29. Azerbaijan – costs and outcomes
Unit Phase 1 & Phase 2
Total population connected to drinking water supply PE 547 876
Total population connected to the wastewater facilities PE 10 000
Total irrigated agriculture area with rehabilitated irrigation systems ha 93 350
Total costs of installations MAZN 697.99
Of which co-financed by the programme MAZN 483.00
Of which co-financed by private/municipal entities MAZN 196.99
Source: OECD, OPTIC model.

30. Azerbaijan – public co-financing
Programme
pipeline
Investment Estimated public
co-financing
Water supply Increase of the drinking water supply coverage by construction water intakes and
wells, pumping stations, a water distribution network with all supporting elements
75%
Irrigation Irrigation and drainage networks by rehabilitation of the existing but deteriorated
infrastructure
50%
Wastewater Small-scale wastewater collection network and wastewater treatment plants 75%
Side investments Provided by municipalities
Source: OECD, OPTIC model.

31. Georgia – biodegradable waste
 Waste to energy
− supply chain for vine pruning or similar residues for biomass boilers, mainly in public
buildings
− briquettes or pellet production facilities that use residues (hazelnut shells, fruit orchard
pruning sunflowers, wheat straw, bay leaf, etc.)
− biomass boilers and equipment for local incineration of biomass (wheat, corn straw,
sunflower).
 Aerobic composting and anaerobic digestion
− farmers/household composting bins (aerobic composting of garden and kitchen waste)
− food industry composting containers (aerobic composting)
− food industry composting bioreactors (anaerobic digestion).

32. Georgia – costs and outcomes
Unit Phase 1 Phase 1 & Phase 2
Total number of new supply chains for vine pruning or
similar residues for biomass boilers
No. 5 1 005
Total number of non-wood briquettes or pellets installations No. 1 5
Local incineration in biomass boilers No. 20 1 020
Composting bins No. 2 000 102 000
Composting containers No. 1 1
Bioreactors No. 1 1
Total costs of installations MEUR 2.95 130.55
Of which co-financed by the programme MEUR 1.74 99.92
Of which co-financed by private/public beneficiaries MEUR 1.21 30.63
Total CO2 reduction t CO2 /year 13 873 222 393
Source: OECD, OPTIC model.

33. Georgia – public co-financing
Source: OECD, OPTIC model.
Programme pipeline Investment Estimated public
co-financing
Waste to energy Vine pruning or similar residues for biomass boilers 80%
Non-wood briquettes or pellets 50%
Local incineration in biomass boilers 75%
Aerobic composting and
anaerobic digestion
Composting bins 50%
Composting containers 50%
Bioreactors 50%
Side investments Provided by municipalities

34. III. Phased implementation

35. Scaling-up approach
The first (pilot) phase shall be launched on a smaller scale:
− geographic area
− number of beneficiaries
− required finances
Clean public transport (MDA)
(1) Pilot cities – urban
centres
(2) Pilot cities – suburbs
(3) Intercity connections
Biodegradable waste (GEO)
(1) Less installations (supply
chains) & waste streams
(2) More… but still in rural
areas
Water supply and sanitation
(AZE)
(1) Most underdeveloped
districts in focus regions
(2) Other districts in focus
regions

36. Implementation overview 2021-22
Launch meeting Final meeting
and training
Webinars Country visit Online meetings
Number of participants Number of meetings
Azerbaijan 27 43 12 8
Georgia 37 27 12 19
Moldova 31 26 0 18
Webinar 1 70
Webinar 2 44
Webinar 3 50
Webinar 4 72

37. Further capacity development needs
 Need to cover more sectors
 Need to focus on low-income countries
− fewer resources
− less experience
 Need for training diversification
− smaller groups
− focused content
(Policy development –> Programme preparation –> Project appraisal)

38. Questions to participants
1) Does/did your country actively or pasively support environmental technologies?
2) How is a public support of the private sector regulated in your country?
3) Is there any structure (e.g. agency) in place for implementing or supporting
environmental projects?
4) Are there long-term positions in the public sector (not contractually)
5) How can be the awareness of individuals and companies of benefits and their
willingness to participate increased?

39. Thank you for you attention