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Concept note: Climate Envelope 2015. Programme Committee, 19 February 2015
Introduction and strategic questions
The Danish Government has allocated DKK 500 million to the Climate Envelope in 2015 with
the threefold aim of 1) assisting developing countries to adapt to climate changes, 2) assisting
developing countries with the transition to low carbon economies and 3) preparing the
developing countries to enter into a new global climate agreement at COP21 in Paris in
December 2015. The budget is equally divided between the Poverty Frame and the Global
Frame, under which an outline of 10 different interventions have been approved by the
Government’s Coordination Committee on 17 September 2014, subject to final approval by the
appropriating authorities. Considering the different nature of the projects in the Climate
Envelope, this presentation focuses on the overall purpose and strategic guidance of the
different projects. Hence, this concept note does not follow the common structure, and the
detailed descriptions of programme activities, including results frameworks, the mandatory
screening notes and risk assessment matrices will be included in the subsequent programme
documentation. The contribution to the Green Climate Fund is covered by the interim
organisation strategy. The bilateral programmes under the Poverty Frame in Bangladesh and
Kenya are included in/coordinated with the respective Country Programmes. Hence, these
programmes will only be mentioned briefly in this concept note.
Approximately 194 million DKK (39%) is allocated for adaptation and approximately 281
million DKK is allocated for mitigation (56%)1. DKK 25 million is allocated for administration
(5%). 18% of the funds are allocated to bilateral activities.
Strategic questions:
- Does the draft Theory of Change adequately explain the overall strategic purpose,
intervention logic and expected results, impacts and goals? Are the suggested
assumptions relevant for the implementation of the different projects? Suggestions for
addressing these assumptions during the formulation and implementation phase of the
projects under the Poverty frame and the Global frame?
- It is expected to re-formulate the Climate Envelope as part of the Finance Bill process
for 2016 and in follow-up to the thematic evaluation of the Climate Envelope. It will be
explored to base the future Climate Envelope on multi-year commitments in order to
ensure more predictable funding and to make the administration more efficient.
Recommendations for the re-formulation process? How should the current mix of
interventions (a balance between adaptation and mitigation through bi- and multilateral
instruments) be balanced against the ambition of strengthened strategic focus?
1 See annex 1: Process Action Plan for the appropriation process and a tentative overview of funds allocated for mitigation
and adaptation
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Background, purpose and procedures
Climate change is widely seen as one of the most serious challenges in the 21st century, and it is
clearly linked to security, poverty reduction, access to natural resources, human rights and
sustainable development. The international efforts to mitigate and adapt to climate changes
therefore requires a multi-sectorial approach.
At the Copenhagen Climate Summit in 2009, COP15, a non-binding agreement was reached
which included provisions for further “accelerated” financing for both mitigation and
adaptation to climate change. The Copenhagen Accord states that “Scaled up, new and additional,
predictable and adequate funding as well as improved access shall be provided to developing countries, in
accordance with the relevant provisions of the Convention, to enable and support enhanced action on mitigation,
including substantial finance to reduce emissions from deforestation and forest degradation (REDD+),
adaptation, technology development and transfer and capacity-building”. In the short-term (2010-12),
developed countries were committed to provide a total of USD 30 billion as “Fast Start
Finance” (FSF), and the Climate Envelope 2010-2012 represents the Danish Government’s
contribution to this commitment.
In Cancun in 2010 at COP16 this commitment was further operationalized. In the broad
context of long-term financial support, industrialized countries committed to provide funds
rising to USD 100 billion per year by 2020 to support concrete mitigation and adaptation
actions by developing countries that are implemented in a transparent way. These funds would
be raised from a mix of public and private sources. At COP2016 it was agreed to establish a
Green Climate Fund intended to be the main fund for global climate change finance in the
context of mobilizing USD 100 billion by 2020.
At the subsequent climate conference meetings (COPs), these commitments were reconfirmed.
At COP19 in Warsaw in 2013 and at COP20 in Lima in 2014 there was a strong pressure from
developing countries for a COP decision of a midterm target of new commitments from the
developed countries to demonstrate their dedication to scale up climate finance to the USD 100
billion. However, the industrialized countries have not been willing to make any new
commitments in this regard, and they generally refer to the agreement at COP19 to make
efforts to scale-up climate finance publicly known on a biennial basis from 2014 to 2020.
Technical workshops on best ways of scaling up finance and efforts to improve the monitoring,
reporting and verification of climate finance would also be held. At COP20 in Lima the
progress and the successful resource mobilization process of the Green Climate Fund, which
led to a mobilization of USD 10,2 billion was welcomed. During the negotiations developing
countries recognized the need to scale-up the involvement of the private sector to mobilize the
needed climate finance for mitigation and adaptation. Despite these positive steps, the major
issues on climate finance were left unresolved, which makes climate finance a challenge for the
negotiations of a global climate agreement at COP21 in Paris in December 2015.
In this context, the Climate Envelope is an important landmark of dedicated Danish climate
finance, which is further supplemented by other bilateral and multilateral ODA contributions
that can be defined as relevant to adaptation and mitigation efforts. According to OECD-DAC,
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the total Danish climate related aid amounted to 405 million USD in 2013, which is an increase
from 283 million USD in 20112. There is no formal definition of a “climate relevant activity”,
but it is in general accepted to use the OECD Rio markers3 as a basis. As a preparation for
COP21 in Paris in December 2015, the MFA is preparing an internal strategy note to identify
and prioritize actions within climate finance and climate diplomacy. The aim of this note is to
identify activities where Denmark can contribute to constructive negotiations up to COP21.
When negotiating the Government Finance Act for 2015, it was decided to continue the
Climate Envelope on DKK 500 million. As in previous years, the Climate Envelope is being
administered as an integral part of the Danish ODA in the Ministry of Foreign Affairs.
The Climate Envelope is equally divided between a Poverty Frame (PF) and a Global Frame
(GF). Activities financed from PF are primarily aimed at initiatives in low income countries and
follow the income limits stipulated by the Danida guidelines. These activities are prepared by
the Ministry of Foreign Affairs. Activities financed from the GF are targeted at mitigating
activities, mainly in fast-growing, emerging economies as the marginal return in terms of CO2
reductions is higher in middle income countries than in low income countries. These activities
can be implemented in all countries on the OECD-DAC list, and they are proposed by the
Ministry of Climate, Energy and Building. The Ministry of Finance and the Prime Minister’s
Office need to approve the list of activities proposed through an endorsement by the
Government’s Coordination Committee.
Preparation, appraisal and appropriation of each activity follow Danida guidelines.
Projects financed by the Climate Envelope are based on the Strategic Framework for Natural
Resources, Environment and Climate Change (2013) as well as the Strategy for Denmark’s
Development Cooperation, The Right to a Better Life (2012).
Strategic guidance for the selection of activities
At the Grant Committee meeting in May 2014 it was concluded that: “Recognizing that the
international climate architecture is still unfolding and the need to test different mechanisms
and approaches, the Committee recommended that the concerned Ministries take steps to
prepare a strategy/strategic framework which could guide the use of the Climate Envelope,
including guidance on e.g. focus, modalities, etc.”. As a follow-up, steps have been taken to
strengthen the guiding principles for the use of the Climate Envelope:
 A paper to the External Grant Committee was prepared on the Climate Envelope in
September 2014: “Climate Envelope: Strategic focus and long term planning”. It was
suggested to continue using the guiding principles of selection of activities, including the
aim to have a balance between adaptation and mitigation, while there should also be a
2
On basis of the DAC Rio markers. See figures from 2011 – 2013 at : http://www.oecd.org/dac/stats/
These climate markers indicate donors’ policy objectives in relation to each aid activity. A principal objective (mitigation
or adaptation) score is given when promoting the objectives of the UNFCCC is stated in the activity documentation to be
one of the principal reasons for undertaking the activity. In other words, the activity would not have been funded but for
that objective. Activities marked “significant” have other prime objectives, but have been formulated or adjusted to help
meet climate concerns (source: OECD, September 2011, http://www.oecd.org/dac/stats/48785310.pdf).
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balance between bilateral and multilateral activities as well as a geographical balance. It
was also suggested to adapt a longer-term planning horizon with multi-annual planning
in the Danish Finance Act and an adjustment to the administrative preparation
procedures to make it more effective.
 The Ministry of Climate, Energy and Building has elaborated guidelines for screening
and selection of projects under the Global Frame. The main criterion is the potential
impact on emission reductions in the energy sector. The projects are screened to assess
the relevance in relation to promoting an enabling environment and the mobilization of
climate finance within renewable energy and energy efficiency – areas where Denmark
has relevant experience and added value.
 The identification of activities for the Climate Envelope 2015 was completed in
September 2014. This is five months earlier than for the identification of activities to be
funded by the Climate Envelope 2014. This will allow for a more thorough preparation
process of the identified activities, and it is de facto in line with the suggestions of the t
paper sent to the External Grant Committee in September 2014.
 To the extent possible activities for the Climate Envelope 2015 has been identified with
a view to continue on-going or previously Danish funded activities and/or with an
existing implementing agency. Seven of the ten suggested activities follow this guiding
principle. This is expected to contribute to making administration of the Climate
Envelope more lean and effective. Particular attention was paid to local demands and
local climate change strategies/plans in the bilateral programmes.
 As part of the on-going evaluation of the Climate Envelope, which is scheduled to
deliver a final report in May/June 2015, efforts have been made to elaborate a “Theory
of Change” (ToC), which will provide guidance during the formulation and
implementation phases of the 2015 activities with regard to the intervention logic and
expected results.
Theory of Change
The structure of the ToC aims to bring together an integrated approach within Danish climate
assistance (see Annex 2). Rather than developing separate theories of change for the global and
poverty frames, a generic draft ToC structure has been developed that can capture both, but
which can also be used to present each frame individually.
This has been done by recognising that, while the overall impacts for each frame are different
(mitigation vs. adaptation/resilience), the pathways to delivering these impacts at programme
outcome and output level are broadly similar. Project level activities (and associated outputs)
remain specific to the individual frame. However, most assumptions related to the
interventions from inputs to activities, outputs and outcomes are relevant for both frames.
It is hoped that the proposed an overarching long term goal of “low carbon, climate resilient
and socially inclusive green growth” in developing countries can act as a unifying element for
the two impacts. It draws upon emerging concepts of green growth (both in Danish policy and
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the wider literature) which seek to integrate mitigation, resilience, social inclusion and economic
development.
The global and the poverty frame support four different set of climate relevant activities: a)
support to national governments (e.g. capacity development, policy development, financial
management and tracking systems and development of National Appropriate Mitigation
Actions (NAMAs) and National Adaptation Plans of Action (NAPAs); b) scaling up clean,
resilient technology (e.g. support national R&D strategies, promote private sector markets
within renewable energy and energy efficiency, facilitate access to finance; c) promoting
community resilience and social equity (e.g. promote inclusive green growth, community forest
programmes and support to local resilience plans) and d) building international policy
architecture (e.g. promote private sector partnerships, facilitate international access to finance
and support the harmonization of the international climate finance architecture).
Through different outputs, these activities are expected to contribute to specific outcomes:
 Strengthened national and subnational climate change policies and enabling frameworks
for private investments
 Development, deployment and scale-up of climate-relevant technologies and
infrastructure
 Adoption of more socially inclusive approaches to climate change
 More robust international political and financial architecture.
The expected impacts are:
 Greenhouse gas emissions are reduced to ensure global warming is kept below 2°C
threshold (global frame)
 Increased climate resilience for communities at risk, particularly vulnerable and
marginalized groups.
During the 1st quarter of 2015 the Department for Green Growth will develop a monitoring
framework for the on-going activities under the climate envelope and efforts will be made to
align the different results framework of the new activities in 2015 with the proposed ToC.
Activities to be financed from the Climate Envelope 2015
The activities to be financed from the Climate Envelope 2015 were endorsed by the
Government in written procedure on 17 September 2014.
The list includes 10 activities, of which one is financed from both the PF and the GF, four
activities from the PF, and the remaining five activities from the GF.
Jointly financed from Poverty Frame and Global Frame
1. The Green Climate Fund (GCF) (DKK 200 million):
The purpose of the GCF is to make a significant and ambitious contribution to the global
efforts combat climate change (mitigation and adaptation) in accordance with the UNFCCC
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Conventions and COP-decisions. A GCF Board has been established comprising 12 members
from developing countries and 12 members from developed countries. Representatives from
the private sector and civil society participate in board meetings as observers. Hence, the GCF
has a high degree of legitimacy.
Denmark is an active member of the GCF Board in collaboration with the Netherlands. A
number of issues have been identified and pursued in the GCF Board. Denmark and the
Netherlands have put particular emphasis on the following priorities:
 Maximization of the GCF’s mitigation and adaptation impact;
 Enhancement of enabling environments, including regulatory frameworks and policies;
 Establishment of the Private Sector Facility (PSF), including use of innovative financial
instruments;
 Gender mainstreaming;
 Transparent and cost-efficient administrative policies.
The Green Climate Fund is expected to start disbursing funds to adaptation and mitigation
projects prior to COP21 in December 2015.
Reference is made to the interim organization strategy for the Green Climate Fund, which was
endorsed by the Council for Development Policy and subsequently approved by the minister
for Trade and Development on 10 December 2014. As one of the first countries, Denmark
announced a significant contribution of DKK 400 million to the Green Climate Fund at the
UN Secretary General’s Climate Summit in September 2014. The commitment of DKK 200
million from the Climate Envelope in 2015 adds to the contribution of DKK 50 million
(“other environmental contributions”) in 2015 and the previous contributions in 2014 of DKK
150 million (DKK 100 million from the Climate Envelope and DKK 50 million from (“other
environmental contributions”).
Financed from Poverty Frame
2. Bilateral support to climate change activities in Kenya (DKK 70 million)
The Danida Climate Change Programme (DCCP) in Kenya provides targeted assistance to
private sector across Kenya and to communities in the drylands of Northern Kenya. The
programme has two components: 1) support to energy audits and related energy and resource efficiency
measures for the private sector in Kenya to be achieved through support to the Kenya Association of
Manufactures and 2) support to rangeland management in Northern Kenya to enhance climate resilience and
reduce natural resource related conflicts to be achieved through support to the Northern
Rangeland Trust.
The DCCP is a continuation and further development of the Fast Start Climate Change
Programme (FSCCP) 2011-2014. The programme will have a budget of DKK 70 million for a
five year period of which approximately 47% is allocated for mitigation and 52% for adaptation
and 1% on programme management. The DCCP is formulated in parallel with the Kenya
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Country Programme, and it will be implemented over the same time-period and in synergy with
the forthcoming thematic Programme on Green Growth and Employment.
The first component is expected to expand the level of energy services provided by The Centre
for Energy Efficiency and Conservation and deliver results at national level. This includes
mainly mitigation of longer climate change impacts, i.e. promotion of a low carbon growth path
through energy conservation and efficiency. This component will be relevant for the current
process for developing nationally appropriate mitigation actions (NAMAs). NAMAs are being
identified and will be implemented in the context of the country’s wider sustainable
development strategy, and with the aim of moving the economy onto a low-carbon path.
The second component is expected to enhance resilience among pastoralist in Northern Kenya
to cope with more severe and prolonged drought events through rangeland management. In
addition, there are several indirect benefits from this intervention such as that of peaceful,
cohesive communities as conflicts caused by over grazing of land and over utilisation of water
is minimized through land use that is planned, developed and managed by the communities.
This component is relevant for the development of the national green growth strategy, which
includes resilience building and disaster risk reduction.
3. Bilateral support to climate change activities in Bangladesh (DKK 20 million)
The objective of the Climate Change Adaptation and Mitigation Programme (CCAMP) is to
support the Bangladesh Climate Change Strategy and Action Plan through the introduction of
climate proofing and green growth initiatives that empower vulnerable communities, capacitate
the private sector and make better use of natural resources. By extending the support it will be
possible to integrate the activities as an engagement in the Country Programme for 2016-2021
(DKK 50 million from the Climate Envelope 2014 was approved in 2014 for the period 20142016). The engagement is a continuation of an existing partnership with the Local Government
Engineering Department. The additional funds will be directed towards adaptation activities,
which include construction of climate resilient rural infrastructure in Southern Bangladesh.
The expected outcome is to reduce the vulnerability to climate change induced hazards and to
empower and increase the income of the targeted poor coastal communities.
4. Mangrove rehabilitation through the International Union for Conservation of Nature (DKK 35
million)
The Mangroves for the Future (MFF) programme emerged from the major efforts to rebuild
and restore livelihoods after the devastating Indian Ocean tsunami in December 2004. In 2006
the International Union for the Conservation of Nature (IUCN) and the United Nations
Development Programme (UNDP) organized consultations on regional needs in relation to
improved coastal zone management, during which the importance of mangrove forests both as
protective “buffers” in the face of storms and extreme events as well as a significant sources of
livelihoods for millions of people living in fishing and coastal communities were recognized.
The MFF coordination operates from the Asian regional office of the IUCN in Bangkok and
Norwegian (Norad) grants have also funded the activities since 2008.
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Starting in the countries most affected by the tsunami - India, Indonesia, the Maldives, the
Seychelles, Sri Lanka and Thailand - the MFF has gradually expanded to include others, notably
Bangladesh, Pakistan and Vietnam (which joined during the second phase of the SIDA
funding). Cambodia, Myanmar and Timor Leste participate as “outreach” countries. There are
three main objectives of the MFF: i) to improve, share and apply knowledge about mangroves
and coastal zone management; ii) to strengthen coastal management institutions and empower
civil society; and, iii) to enhance coastal governance at all levels (inter alia through encouraging
sustainable business practices in coastal zones). A series of “programmes of work” are
undertaken in the MFF countries, guided by “national coordinating bodies” and the regional
steering committee which brings together all the different partners, including the IUCN, the
UNDP, UNEP, the FAO, Care International and Wetlands International.
In 2012 a 25 million DKK grant from the Climate Envelope for the MFF was approved. The
overall objective of this new “mangroves and climate change” (MCC) component of the MFF
is to ensure that adaptation and mitigation benefits and other potential environmental services
from mangroves and coastal vegetation are realized in the MFF countries. Specifically, the grant
was used for small and medium sized demonstration projects in Bangladesh, Indonesia and
Vietnam.
During the last phase until 2020 the experiences from the climate-related activities supported
previously by Denmark will be mainstreamed in the entire programme. The new Danish grant
of DKK 35 million will cover the period 2015-2019. An appraisal will be made in April to
follow-up on the review from 2013.
5. Green Mini-Grids Development Facility (DKK 12,5 million)
Globally, over 1.2 billion people are still without access to electricity - with half of them in SubSaharan Africa – affecting economic development and quality of life. The Sustainable Energy
for All initiative (SE4ALL) was launched in 2011 to help achieve universal energy access in
addition to doubling the share of renewable energy and gains in energy efficiency by 2030. A
considerable proportion of this access, up to 40%, is projected to be achieved through minigrids (IEA, World Energy Outlook 2012), with grid extension and off-grid systems being the
other options.
Mini-grids (also referred to as micro-grids in case of smaller sized systems) are village or district
level energy distribution networks that can serve remote and dispersed communities, which are
away from the grid. Mini-grids can also lend themselves well to supply energy to small
communities such as in Small Island Development States (SIDS). Even in areas where the grid
is expected to reach in the medium term, mini-grids could be effective pre- grid electrification
options. Green Mini-grids (GMGs) are those built with fully renewable and/or hybrid power
sources, which in addition to helping expand energy access, provide global and local
environmental benefits.
However, in spite of their obvious advantages, the scaling up of installation of GMGs is
impeded by a number of critical barriers: Policy uncertainty and inadequate regulation;
fragmented early stage markets with little cross-fertilization of knowledge among different
stakeholders; capacity issues including in project preparation; lack of proven business models;
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and, lack of access to affordable and long term finance. The overall global experience is diverse
in scale and scope, and there is a need to consolidate the learnings and determine how they can
be put to use in specific country contexts.
The purpose of the Green Mini-Grids Development Facility under the the World Bank’s
Energy Sector Management Assistance Program (ESMAP) is to support the acceleration and
scale-up of GMGs by addressing policy barriers, and by identifying and assisting new GMG
projects. The overall budget estimated for 5 years is USD 20 million.
The main focus areas and activities are categorized into two broad components: 1) Action
Learning and Evidence Generation (USD 10 million) and 2) Technical Assistance at Country
Level (USD 10million).
The Facility will have its secretariat in ESMAP, and will work closely with World Bank’s
regional teams as well as International Finance Corporation (IFC), and will build upon the
ongoing activities. Where feasible, partnerships will be developed with other
international/regional agencies for mutual leverage.
Financed from Global Frame
6. Financing of NAMAs through the German/UK NAMA Facility (DKK 78 million):
National Appropriate Mitigation Actions (NAMAs) are strongly embedded in the UNFCCC
and negotiations for a new climate agreement. The concept of NAMAs was developed in the
UNFCCC negotiation processes, and NAMAs now constitute developing countries national
contributions to the global efforts needed to attain the internationally agreed goal to keep
global warming below two degrees Celsius compared with pre-industrial levels. NAMAs are
mitigation actions, which are nationally determined and voluntary taken by a developing
country to deviate from its “business as usual emissions” and shift to low carbon development
path. Hence, NAMAs vary in scope, nature and in supportive or underlying interventions.
Furthermore, they can range from national economy-wide, sector or sub-sector goals and
policies to a selection of specific activities, which may again range from regulatory interventions
over financing mechanisms to intervention programmes or single interventions.
In order to make a significant contribution to global mitigation efforts, NAMAs will be
dependent on the availability of financing, technology and capacity development. This is
particular true for NAMAs having high ambitions with regard to transformation potential
towards a low carbon trajectory path. This means that implementation of NAMAs is currently
only supported from a few financial sources and mainly through the NAMA Facility. Thus, the
NAMA Facility is at present the predominant mechanism for supporting NAMA
implementation, in particular as the Green Climate Fund is not yet operational.
The NAMA Facility selects through a competitive bidding process “NAMA Support Projects”
by providing financial support and technical cooperation instruments to support governments
in implementing parts of their NAMAs. Financial instruments include grant-based support
instruments as well as concessional loans. The Facility also provides technical assistance and
capacity building to increase institutional and regulatory capacity with a view to maximize the
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transformational impact of the NAMA and/or to support partner countries in developing
mature, in-depth planned and co-ordinate projects.
Following its first call full-fledged projects in Chile, Costa Rica, Colombia, Indonesia and
Mexico have been developed. From its second call NAMA outlines in Burkina Faso, Peru,
Tajikistan and Thailand were selected and have started the process of appraisal.
The NAMA Facility became operative in 2013. The UK and Germany have up until now
allocated Euro 119 million and both countries pledged additional funding for 2015/2016 in
December 2014 at COP20 in Lima. The Facility is open for other multi- and bilateral donors.
Through Climate Envelope 2014 Denmark joined the NAMA Facility as an additional donor
providing financing amounting to DKK 73.8 million for a third call announced by the Facility
at COP20. The EU Commission also contributed Euro 15 million to the Facility. The funding
amount sought for under the Climate Envelope 2014 was primarily a matter of priority between
individual engagements put forward under the Global Frame. Moreover, at that time there was
less certainty about other donors funding for a fourth call. As a contribution to the
continuation and further development of the important work of the NAMA Facility, the
Danish support through the Climate Envelope 2015 is expected to provide funding towards a
fourth call to be announced in 2015/2016.
Through the NAMA Facility, Denmark seeks to attribute to demonstration short-term of
successful leverage of finance for implementation of ambitious and transformational NAMAs.
Moreover, the NAMA Facility is expected to generate learning towards the Green Climate
Fund. The outcomes targeted mid-term is development of a robust financial architecture
capable of enabling mitigation efforts needed to attain the 2 degree goal.
7. Center for Clean Air Policy - Mitigation Action Implementation Network II (DKK 10 million):
Assistance to identification and preparation of NAMAs are in high demand by developing
countries. Also, there is a continuous need for supporting the development of strong pipelines
of ambitious NAMAs for climate finance including for the NAMA Facility and the Green
Climate Fund both of which Denmark supports.
CCAP (Center for Clean Air Policy) is an American based think tank. Through its Mitigation
Action Implementation Network (MAIN) network it is well placed for supporting developing
countries with NAMA readiness and have previously prepared NAMAs that were selected for
financing through the NAMA Facility.
CCAP MAIN II is a continuation of a program run by CCAP. The first MAIN was supported
by Germany and the Danish Climate Envelope 2012. The funding expired in 2014. MAIN
seeks to spur ambitious mitigation actions through peer-to-peer learning among developing
countries in Latin America and Asia. MAIN participant countries includes China, Indonesia,
Malaysia, Pakistan, the Philippines, Thailand, Vietnam, Argentina, Chile, Colombia, Costa Rica,
the Dominican Republic, Panama, Peru and Uruguay.
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Within the initiative and with support from Denmark a series of regional and global policy
dialogues as well as on the ground work with specific NAMAs were undertaken and the most
promising NAMAs were put forward to the NAMA Facility seeking funding for
implementation. One application was successful and hence the NAMA is currently being
supported by the NAMA Facility while others may be re-submitted to the Facility or put
forward elsewhere.
With Danish support from Climate Envelope 2015, CCAP now seeks to take the MAIN
initiative to the next level from NAMA readiness to implementation in order to help building a
robust pipeline of transformational NAMAs. Specifically, the Danish support through the
Climate Envelope 2015 will contribute to finalizing the 3-4 concrete and finance ready NAMA
proposals. This support will complement enabling international climate financing including
from the NAMA Facility and/or the Green Climate Fund. Selection criteria for NAMAs to be
supported are expected to align with those of the NAMA Facility. The expected outcome is to
attribute to building strong pipelines of ambitious and transformative NAMAs.
8. International financing for energy efficiency and renewable energy within the framework of Global
Innovation Lab for Climate Finance (DKK 40 million):
Mobilizing public and private finance for energy efficiency (EE) is a Danish priority due to the
untapped substantial mitigation potential that significantly can contribute meeting the 2 °C
target through to 2020, at no net economic cost and with readily available technology solutions.
The Danish Government has partnered up with the Global Innovation Lab for Climate
Finance (The Lab) and the Inter-American Development Bank (IADB) to develop and pilottest the Energy Savings Insurance (ESI) instrument that aims to overcome key financing
barriers encountered by companies when investing in EE measures. Notably barriers that the
private sector is unlikely to overcome by itself. Spurring private sector climate finance and
unlocking potentials of energy efficiency will benefit developing countries in reducing CO2emissions, save energy, promote economic growth and create local jobs.
ESI is part of an innovative business model consisting of a structured set of interventions. A
central element hereof is an insurance component that underwrites minimum savings estimated
for specifically defined energy efficiency measures. Specifically ESI addresses the following key
barriers:
1. Investors’ creditworthiness: the private sector is faced with non-recognition of energy
efficiency savings as collateral for investment. This in turn is anchored in local finance
institutions lack of familiarity and trust in estimated savings.
2. Transaction costs: loans to individual EE projects are often small compared to the
(associated) transaction cost incurred by the banks; setting up an assessment and
verification framework requires up-front expenditures.
3. Insufficient marketing: financial decision-makers in companies are often unaware of EE
savings potential and thus hesitant to make the investment. Targeted marketing and
outreach, building on strong and evidence-based data, is needed to convince businesses
of the virtues of EE investments.
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Addressing these barriers gives reassurance to both the end-user/investor and the bank that
energy savings will be sufficient to pay the financing, while also building capacity and credibility
of energy service providers. Program experience will allow suppliers to evaluate project
opportunities and integrate the reduced costs into their investment project portfolio.
Experiences will over time lead to reduced insurance rates and eventually reduce or eliminate
the need for subsidies for insurance. The Lab highlights these features in its assessment of
ESI’s scaling and impact potentials; both with regard to emission reductions and private
investment
The main part of the Danish funding for climate financing instruments developed and tested
within the framework of the Global Innovation Lab for Climate Finance will support the
further and wider implementation of ESI instrument via a new regional facility managed by
IADB. This facility will incorporate key learnings from an ongoing ESI pilot program in the
Mexican agro-industry supported by the Climate Envelope (2013 budget). IADB’s regional
facility will through national development banks introduce the ESI in relation to a growing
portfolio of high-impact energy efficiency investment projects across additional sectors in
Mexico (e.g. agro-business, commercial buildings and small & medium sized enterprises) and in
several new countries in Latin-America. Currently IADB is screening the following countries
for up-scaled implementation: Brazil, Columbia, Dominican Republic, Nicaragua and Peru.
Funding will be set-aside for a global outreach initiative aiming to engage and introduce the ESI
and similar innovative financing instruments developed by the Innovation Lab in financial
institutions and multilateral development banks in other regions of the world. Particular
attention will be given to introduce the ESI and equally relevant Lab-developed instruments in
the ongoing Danish bilateral energy and climate cooperation. Collaboration and co-financing
opportunities will be sought via interested partners of The Lab and international financing
institutions associated with the SE4All initiative. Part of the outreach and marketing will be
targeting technology suppliers, institutional investors and international re-insurance companies.
Specification of ToR and deliverables in relation to global outreach of the ESI and new
Innovation Lab financing instruments, including prioritization of institutions and fora to
engage in, will be undertaken during 2nd and 3rd quarter.
9. The Low Carbon Transition Unit (LCTU) and cooperation with China (DKK 4.5 million):
The Low Carbon Transition Unit (LCTU was established by the Ministry of Climate, Energy
and Building (located at the Danish Energy Agency) in 2012 financed by the Danish Climate
Envelope 2012. The development objective of the support to LCTU is to assist developing
countries to adapt to climate change and with transition to low carbon economies and
preparing to enter into a new global climate agreement. Thus, the LCTU is an important
element in meeting the overall objectives of the Climate Envelope.
The outcome of the support to LCTU is defined as: Emerging economies are further enabled
to reaching ambitious climate and energy goals through knowledge sharing and support within
planning, regulation and implementation of energy efficiency and renewable energy policy in an
Agency-to-Agency cooperation. The point of departure is four decades of Danish experience
12
within renewable energy solutions and regulation. Technical support is delivered by LCTU on
the basis of expressed demand. The demand driven principle provides higher incentives for and
ownership by institutions to implement advice and technical assistance recommendations.
Currently energy sector programs are running in South Africa, Vietnam and Mexico. These
programs contribute to enable the countries to make credible Green House Gas projections as
a basis for Low Emission Development Strategies (LEDS), mobilize climate financing and
quantifying emission reduction pledges.
LCTU was prolonged in context of Climate Envelope 2014 for a two-year period (2014-2016)
covering the bilateral cooperation with China, South Africa, Vietnam and Mexico as well as the
cross-cutting and plurilateral efforts focused on emission reductions across emerging
economies. Following a request from the Ministry of Finance, the grant was divided into two.
The purpose of the funding by the Climate Envelope 2015 is to ensure the same operating
costs for the LCTU as the initial two-year funding period for the LCTU.
The extension of the LCTU and the Danish-Chinese Energy Cooperation descends from a
continued extensive demand for Danish experience in low carbon transition. In addition, a
review of LCTU finalized in March 2014 stressed the relevance of LCTU and the energy sector
programs.
10. Targeted support for activities during the climate negotiation in 2015 (DKK 5 million):
The objective is to support relevant activities during the climate negotiations in 2015 that can
contribute to achievement of a new global climate agreement in 2015 to be adopted at COP21
in December 2015. Possible activities include:
-
-
Activities related to the Cartagena Dialogue, the Green Climate Fund, IPCC as well as
the work of the Major Economies Forum (MEF) and the Clean Energy Ministerial
(CEM) related to emerging economies.
Activities enabling concrete results from UN Secretary General's Climate Summit in
New York in September 2014 towards COP21 for the purpose of raising the level of
ambition within central focus areas.
28 January 2015
Ministry of Foreign Affairs /Department for Green Growth and
Ministry of Energy, Climate and Building
13
Annex 1: Process Action Plan for the individual activities financed under the Climate envelope 2015
Appropriation limits:
Amou
nt
(mio.
DKK)
Koncept
note/
Projectdocumen
t
**)
Danida
internal
Program
me
Committ
ee
Below 5 mio. kr. – Head of Department
Above 5 mio. kr. – Internal Grant Committee
Above 35 mio. kr. – External Grant Committee and Parliamentary Finance Committee
Projectdocumen
tation
complete
Request for
appraisal,
incl. toR
Appraisal proces
Appraisal:
Incl. mission
report with
recomendati
nos
Joint Climate Envelope 2015
CGF (15)
200+
27/01
50
19/02
Programme
documents
revised
Deadline
for
documen
ts to the
grant
committe
e
Last
quality
assuranc
e check .
Programme approval process. Danida
grant committees
Date for meeting
Head
of
dep <
5
mio.
DKK
To be
defined
External or
internal
grant
committee
(IGC/EGC)
or Council
for
Developme
nt Policy
(UPR)
n/a
Deadl
ine
for
Aktstykke til
UM
Amount
for adaptation (a),
mitigation
(m) and
others (o)
Responsa
bility
A: 50%
UM/
KEBMIN
Parlia
ment
ary
Finan
ce
Com
mitte
e
FiU*
Marc
h
M: 50%
Poverty Frame 2015
Kenya
70
27/01
19/02
Marts/April
19/5
9/6 (EBK)
+
A: 52%
Amb.
Nairob
M: 48%
Bangladesh
20
Mangrove
35
rehabilitering
(IUCN)
Green Mini12,5
Grids
Global Frame 2015
CCAP MAIN
10
27/01
19/02
January
19/5
9/6 (EBK)
+
A: 100%
27/01
19/02
April
19/5
9/6 (EBK)
Juni
A: 100%
Amb.
Dhaka
GRV
27/01
19/02
13/5
3/6 (IBK)
M: 100%
GRV
27/01
19/02
M: 100%
KEBMIN
February/
31/3
22/4l
-
II
UNFCCC
negotiations
etc.
Low Carbon
Transition
Unit (LCTU)e
NAMA
International
finance
initiatives to
renewables
and energy
efficiency
(IADB)
March
5
27/01
19/02
4,5
27/01
19/02
78
27/01
19/02
40
27/01
19/02
(IBK)
Okt
Okt
15
?
April/
May
1/10-14
(UM)
1/10-14
(UM)
19/5
9/6 (EBK)
April
19/5
June
10/9
9/6
(EBK)
29/9
(EBK)
Aug
Sept
Okt
Okt
A: 50%
KEBMIN
M: 50%
M:
100%
KEBMIN
M:
100%
M:
100%
KEBMIN
KEBMIN
*) Dates for the Parliamentary Finance Committee are not yet available for second semester 2015
**) The presentation to Danidas internal programme committee will cover the entire climate envelope. The bilateral activities will be included with a brief description.
However, substantive descriptions will be included in the country programmes.
***) Review appraisal
15
Annex 2: Summary of the key elements of the proposed Theory of Change4
4
From the inception report “Evaluation of Denmark’s Climate Change Funding to Developing Countries”, 14 November 2014
16
Box 1. ToC assumptions
From inputs to activities
Danish climate assistance:
Provides a clear and coherent strategic framework that allows for smart partner selection
and activity programming
• Promotes activities that have a clear demand among partners and end beneficiaries,
based on consultation, co-development
• Targets its funds at activities that support the international agenda on climate change,
whilst ensuring that they are new and additional
• Has effective procurement and programming processes that result in efficient transition
from design to implementation
• Uses its institutional and budget structures to disburse funds and technical assistance in a
timely manner
From activities to outputs
•
Danish climate assistance:
Ensures that its portfolio is structured, managed and resourced in an efficient way
Uses logframes, indicators, targets and results frameworks to monitor and manage
project outputs
• Builds relationships with relevant stakeholders to facilitate project implementation and
uptake
• Effectively exploits synergies with other Danish structures and programmes (e.g.
global/poverty frame, country programmes)
From outputs to outcomes
•
•
Danish climate assistance:
•
•
Successfully mobilises external finance, technology and expertise to support delivery
(both Danish and non-Danish)?
Supports wider Danish development assistance aims, and seeks to find synergies with
17
relevant programmes and structures
• Selects the most effective interventions to achieve outcomes, using theory of change
processes and feedback loops
• Delivers outcomes that can be attributed to Danish inputs at a level higher than its prorata share of finance
From outcomes to impacts
Danish climate assistance:
•
•
•
•
•
Is able to achieve transformative change that delivers longer term outcomes once project
funding is disbursed
Uses diplomacy to influence the wider policy and financing debate among donors, IFIs
and national governments
Builds the evidence base for demonstrating the potential for effective action
Impacts the lives of beneficiaries beyond those directly engaged by the programme
portfolio
Uses ex-post monitoring and on-going situational analysis to assess wider macro impacts
18