Innovative GEF-6 Programming for Sustainable Energy for All David E - - PowerPoint PPT Presentation

Innovative GEF-6 Programming for Sustainable Energy for All

1

David E Rodgers June 2014

Record GEF-6 Replenishment

In April, the GEF concluded its year long replenishment process receiving a commitment of $4.43 billion from donors for the GEF-6 cycle Donors also endorsed innovative strategies that include: – Integrated approach pilots – Innovative programming – Non-grant instruments – Expanded private sector engagement GEF-6 projects need to deliver a combination of innovation, synergy, speed, and scale

2

GEF-6 will test delivery of integrated approaches that address discrete, time-bound global environment challenges, attack drivers of environmental degradation, provide unique added value, and build strong stakeholder relationships

• Taking Deforestation out of Commodity Supply

Chains

• Sustainable Cities – Harnessing Local Action for

Global Commons

• Fostering Sustainability and Resilience for Food

Security in Sub-Saharan Africa.

3

For sustainable energy, look for opportunities to partner in these efforts

Innovative Programming for Climate Change

Performance-based financing and incentives for projects

• r sectors

Multi-focal area projects with climate benefits Flexible programming for high-impact projects and under-served countries (SIDS and LDCs) Flexibility for regional projects and programs Catalyzing private sector engagement including – PPS – risk-mitigation and structured financing tools – global certification and standards program – SME Small Grant/Loan Program

4

GEF-6 Programming Directions, GEF/R.6/20/Rev.04, March 31, 2014, Annex I, pages 70-72

GEF-6 Pilot for Non-Grant Instruments

Under the GEF instrument, a non-grant is a form of concessional finance that has the potential to earn a return (or reflow). Reflows are available to expand the pool of GEF resources available for future investments.

• Examples:

– Contingent Grant – Credit Guarantee or Risk Guarantee Fund) – Equity Fund Investments – Concessional Loans – Performance Risk Guarantee – Revolving Fund – Risk Sharing Fund for Loan Provision GEF-6 Non-grant pilot will be available for private sector and National Government $110 million will be available for this pilot and can be global, regional,

• r country level projects.

5

Innovative Non-grant Approaches in GEF-5

Under the operational modalities developed in coordination with the MDBs (C.42.Inf.08) five PPPs were approved – $20 Million with AfDB for renewable energy loans

• Co-financing $240 million

– $15 Million with IDB for equity investments in clean energy and bio- diversity

• Co-financing $266 million

– $15 Million with EBRD for structured financing to invest in energy efficiency and renewable energy in North Africa

• Co-financing $141 million

– $15 Million with IDB for a new clean energy equity fund for the Caribbean

• Co-financing $200 million

– $5 Million with IDB for a investments in climate smart agriculture (approved in work program by Council May 2014)

6

Enhancing Private Sector Engagement

Build on lessons learned to mainstream private sector engagement across the portfolio in country projects and integrated approach pilot Fine-tune interventions to match country and private sector needs Focus agencies and partners on proven intervention models Prioritize areas where GEF can provide unique added value and catalyze market transformation

7

8

We note three different types of private sector actors with whom GEF can engage

Capital providers 1

▪ Pension funds, VCs

Financial intermedi- aries and facilitators 2

▪ Investment banks, commercial banks, financial

advisory services Industry players – large corporations 3a 3a

▪ Large retail, manufacturing companies, project

developers, etc. Industry players – SMEs 3b 3b

▪ Full time staff below 250 or less depending on

the country Industry players – individuals/ entrepreneurs 3c 3c

▪ Small start-ups with full time staff below 10

Type Description/Examples

9

In this eco-system, GEF regularly uses four different intervention models

Enabling policy environments 1

▪ Policy and regulatory development (e.g. feed-in tariffs for

renewable energy, regulatory incentives that guarantee markets for new sustainability innovations and encourage business to make long-term investments)

▪ Consistency and standardization

Incremental financing (Concessional / risk reduction 2

▪ Loans, equity, and performance based funding/guarantees (e.g.

co-investing in research for more environmental and cost- effective products and/or processes?)

▪ Risk-sharing facilities ▪ Policy risk insurance ▪ Structured financing

Corporate alliances and interventions 3

▪ Collaborative goal setting for transformational targets (e.g. 80%

cocoa certified sustainable by 2020)

▪ Certification and supply chain management (e.g. Forest

Stewardship Council, Marine Stewardship Council)

▪ MRV and risk- valuation methodologies (Risk reduction tools ?) ▪ …

Capacity building and incubation 4

▪ Advisory services (e.g. for SMEs) ▪ Technical assistance and innovation (e.g. R& D to co-develop

products/services)

▪ Aggregation ▪ Information and communications technology applications

Type Description

10

These three different types of private sector actors form a complex eco- system, interacting with consumers and the global environment

Public Policy Global environmental commons Consumers NGOs, CSOs, think tanks

▪ Multinational to Subnational

Capital providers Financial intermediaries and facilitators Industry players Large corporations SMEs Individuals/ entrepreneurs 1 2 3

11

With these four intervention models, GEF can fine-tune its approach and partnerships to achieve targeted results

Enabling public policy environments Global environmental commons Consumers 1 2 NGOs, CSOs, think tanks 3 Incremental financing Corporate alliances and interventions

▪ Multinational to Subnational

Capital providers Financial intermediaries and facilitators Industry players Large corporations SMEs Individuals/ entrepreneurs 4 Capacity building and incubation

12 Soft Commodities

Industry players

GEF's Proven Intervention Models for Private Sector Engagement

Types of private sector actors Intervention models Enabling policy environments 1 Concessional financing/ risk reduction 2 Corporate alliances and interventions 3 Capacity building and incubation 4 Capital providers Financial intermediaries and market facilitators Large corps SMEs Individuals/ entrepreneurs

ESCO Reform in Eastern Europe, China, Turkey. Renewable Feed-in-Tariffs in 60 countries Nagoya Protocol sharing agreements

Financial players

BIODIVERSITY CLIMATE CHANGE MITIGATION INTERNATIONAL WATERS

Global Ballast GEF Crew- wastewater Strategic program for West Africa Russia Energy Efficiency Fund Earth Fund GEF-5 PPPs Chile ESCO Risk Fund Risk-sharing Facilities in 12 countries SCAF en.Lighten Carbon Index China Utility Energy Efficiency (CHUEE) GEF-UNIDO Cleantech Programme Best practices for Energy Management

SUSTAINABLE FORESTRY

Summary

GEF is prioritizing innovative strategies that include: – Integrated approach pilots – Innovative programming – Non-grant instruments – Expanded private sector engagement GEF-6 projects need to deliver a combination of innovation, synergy, speed, and scale GEF is committed to using these approaches to support the Sustainable Energy for All initiative

13

Join Us!

David E. Rodgers Senior Climate Change Specialist drodgers@thegef.org 202-458-9869

14