Meeting of the Board GCF/B.20/10/Add.14/Rev.01 1 – 4 July 2018 al a Songdo, Incheon, Republic of Korea Provision agend item 4 July 2018 p ls X Consideration of funding y roposa – Addendum IV Independent Technical Advisor Panel’s assessment Summary is m s s s e Th addendu contain the independent Technical Advisory Panel’ assessment of funding proposals (FP082-FP090) submitted for th Board’s consideration at its twentieth meeting. GCF/B.20/10/Add.14/Rev.01 Page b Table of Contents a e e FP 082 Green Cities Facility 1 FP 083 Tong Renewabl Energy Project under th Pacific Islands Renewable Energy a Investment Program 16 s FP 084 South Taraw Water Supply Project 32 e e e e FP 085 Enhancing climate resilience of India’ coastal communities 43 FP 086 Building livelihood resilienc to climat chang in th upper basins of Guatemala’s s s highlands 54 FP 087 Upscaling climate resilience measure in the dry corridor agroecosystem of s 8 El Salvador (RECLIMA) 66 s FP 088 Biomas Energy Programme in the South Pacific 0 FP 089 Transforming e Financiale System for Climate 89 FP 090 DBSA Climat Financ Facility 94 GCF/B.20/10/Add.14/Rev.01 Page 1 Independent Technical Advisory Panel’s review of FP082 Proposal name: Green Cities Facility Accredited entity: European Bank for Reconstruction and Development (EBRD) Project/programme size: Large I. Assessment of the independent Technical Advisory Panel 1.1 Impact potential Scale: High 1. Cities and municipalities are critical to delivering climate change mitigation and adaptation action. The most recent Intergovernmental Panel on Climate Change assessment found that urban areas account for approximately 70 per cent of global energy consumption and about three quarters of greenhouse gas (GHG) emissions.1 Cities are a very important part of the world’s urban areas. Apart from GHG emissions, much urban infrastructure (including transportation facilities, buildings, energy production facilities, portable water supply facilities, etc.), which are critical attributes of cities, are vulnerable to climate change as they are static. Therefore, the essential nature of these structures can become a weakness if the local ecosystem within which they exist is unable to adapt to climate-induced changes. The GHG emissions from these facilities must therefore be reduced and the resulting green facilities must be rendered resilient to climate impacts. 2. Managers of cities all over the world are faced with the important responsibilities of: providing affordable housing; ensuring that there are adequate transportation (different modes) facilities to cope with growing demand; and ensuring that within cities there is affordable energy that is efficiently available and reliable; among others. Not only must managers source funds to provide for these needs in a cost-effective manner, the climate change realities also require that the facilities provided are “green” and resilient to the negative impacts of climate change. The normal investment needs of cities are significant with municipalities facing budgetary constraints and limited capacity to structure and deliver “bankable” projects. This situation is further exacerbated by the climate investment needs which, in the face of financial constraints that are inherent in many of these countries, make normal financial flows into “climate proofing” almost impossible for city infrastructure projects in the baseline. 3. To address this problem, in this submission the European Bank for Reconstruction and Development (EBRD) proposes to establish a Green City Facility that is designed to address cities’ climate change challenges while building the market case for private sector investment in sustainable urban infrastructure. The facility, which will be country driven and evidence based, will prioritize and finance transformational municipal climate-related infrastructure investments. The EBRD Green Cities Facility (hereafter “Facility”) is expected to address the climate change challenges described above through the following interventions: (a) Development of policy and strategic support to cities, which is expected to assist them in prioritizing their climate actions; 1 Seto KC. 2014. Human Settlements, Infrastructure and Spatial Planning. In: Climate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. IPCC, Geneva, Switzerland, Chap 12, pp 923–1000. GCF/B.20/10/Add.14/Rev.01 Page 2 (b) Support for the financing of green city infrastructure investments; (c) Capacity-building for relevant stakeholders; and (d) Facilitation and provision of a pathway for cities to access green finance and capital markets. 4. The Facility is expected to focus on urban infrastructure in the following six sectors: (a) Building energy efficiency; (b) Water management; (c) Solid waste; (d) Public transport; (e) Municipal energy systems; and (f) Lighting. 5. EBRD has included an annex in the funding proposal containing confidential information on some of the component projects that have been identified in selected cities in the nine countries covered by this intervention. Information in the confidential annex, which provided the basis for the estimated total project costs as well as the estimated GHG emission reduction, was discussed by the accredited entity (AE) with the independent Technical Advisory Panel (TAP). The AE has also agreed to share the confidential information with GCF Board members. 6. EBRD expects that this intervention will assist the targeted cities to adopt a mixture of policy, regulatory and investment measures and actions that will lead to the reduction of GHG emissions in the six sectors listed in paragraph 4, while enhancing the resilience of urban communities in the targeted city areas to natural disasters and negative impacts of climate change and associated risks. 7. The following is a summary of the elements of the financial structure of the proposed Facility: • GCF (grant): EUR 48 million (6.4 - 7.1 per cent); • GCF (senior loan): EUR 180 million (24.1 – 26.7 per cent); • EBRD (senior loan): EUR 350 million (47 – 52 per cent); • Donor finance: EUR 8 million (1 – 1.2 per cent); • Donor grant: EUR 28 million (3.7 – 4.1 per cent); • Local contribution: 8.9 – 17.4 per cent); • Total: EUR 674–744EUR million. 60−130 million ( 8. As stated in an earlier part of this assessment, a tentative list of projects has been identified covering some of the cities in the region targeted. It is expected that the list will be updated as the programme proceeds, especially as city action plans are developed and confirmed. 9. The methodology utilized and presented in the funding proposal to estimate GHG emissions reduction impacts of this intervention can be summarized as follows: (a) The calculations utilized for emission reductions drew very much from EBRD experiences with municipal infrastructure projects by sector between 2013 and 2017; GCF/B.20/10/Add.14/Rev.01 Page 3 (b) Information from the EBRD business plan and relevant projects in the pipeline for the facilities, especially those in the confidential annex made available by EBRD; and (c) The emission reductions from each of the Facility’s projects within the indicative pipeline were estimated using a model to estimate carbon dioxide equivalent (CO2eq) emission reductions for the Facility’s portfolio, drawing from country and sector- specific information as well as historic EBRD performance in municipal and environmental infrastructure investments. 10. Mitigation impacts: (a) It has been estimated that the interventions by EBRD will yield direct GHG emission reductions of about 576,000 tonnes of carbon dioxide equivalent (tCO2eq) annually; (b) This will amount to a GHG emission reduction of about 11,023,000 tCO2eq during the Facility’s lifetime; and (c) It is important to point out at this stage that the GHG emissions performance stated in (b) has been estimated using a project list that may not be exhaustive and emission factors by sector that are based on similar project experiences of EBRD. As the Facility implementation proceeds, more exhaustive project lists will be established and local parameters, such as emission factors, will be collated from country and city sources making the estimation of GHG emission reduction impact more reliable. Given the important nature of these performance metrics in the establishment of GCF performance metrics, comprehensive monitoring of the individual projects must be built into the project, and reporting and verification must be included in the operationalization and implementation of the Facility. 11. Adaptation impacts: (a) Cities that are part of this programme will benefit in terms of having in place: a green city action plan; regulatory and policy reforms that enhance and facilitate climate resilience; targeted technical assistance that will enhance the ability to manage climate adaptive capacity planning; green city infrastructure investment; and gender mainstreaming. All these will promote urban climate resilience; (b) The entire population of the cities involved will directly and indirectly benefit from this programme. This population has been estimated to be about 22.75 million people, of which about 11.54 million (50.7 per cent) will be women; and (c) It has also been estimated that the direct beneficiary urban population constitutes about 52.1 per cent of the population in the Facility’s urban areas. 12. Accordingly, the impact potential of the proposed framework is assessed as “high”.