Business Case

Summary Sheet

Title: MDB Green Recovery TA Programme

Project Purpose: To support the implementation of green recovery efforts through technical assistance through MDB networks in government policy planning.

Programme Value: £10m Country/ Region: Global

Senior Responsible Owner: Ashufta Alam

Project Code: Start Date: Q4 2020 End Date: Q2 2022

Quest Number:

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CONTENTS

ACRONYMS............................................................................................................................................................................2

STRATEGIC CASE ...............................................................................................................................................................3

A GLOBAL GREEN RECOVERY......................................................................................................................................4

WHY MDBs?.........................................................................................................................................................................4

KEY BARRIERS...................................................................................................................................................................4

PROPOSED ACTIVITIES....................................................................................................................................................5

ALIGNMENT WITH BEIS ICF PRIORITIES.....................................................................................................................5

OTHER RELEVANT ICF INITIATIVES..............................................................................................................................6

THEORY OF CHANGE ...................................................................................................................................................6

APPRAISAL CASE ...............................................................................................................................................................9

OPTIONS APPRAISAL.....................................................................................................................................................10

PREFERRED OPTION......................................................................................................................................................13

VALUE FOR MONEY APPRAISAL .........................................................................................................................14

EFFICIENCY....................................................................................................................................................................... 14

EFFECTIVENESS..............................................................................................................................................................15

EQUITY................................................................................................................................................................................16

VALUE FOR MONEY SUMMARY...................................................................................................................................16

COMMERCIAL CASE ........................................................................................................................................................17

FINANCIAL CASE ..............................................................................................................................................................19

OVERVIEW OF COSTS ...............................................................................................................................................19

BEIS BUDGET .................................................................................................................................................................19

LEGAL COMPLIANCE......................................................................................................................................................21

STATE AID..........................................................................................................................................................................22

MANAGEMENT CASE ......................................................................................................................................................23

RISK MANAGEMENT........................................................................................................................................................26

RISK APPETITE ASSESSMENT ..............................................................................................................................28

ANNEX A - INDICATIVE RESULTS FRAMEWORK.........................................................................................................29

ANNEX B: PROPOSAL REVIEW SUMMARY...................................................................................................................31

ANNEX C: PROPOSAL SUBMISSION TEMPLATE.........................................................................................................32

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ACRONYMS AsDB Asian Development BankAfDB African Development BankCIF Climate Investment Funds CIF-TAF Climate Investment Funds Technical Assistance Facility CTF Clean Technology FundDBF Development Policy FinancingDPL Development Policy LoansEBRD European Bank for Reconstruction and Development EIB European Investment BankGCF Green Climate FundIADB Inter-American Development BankMDB Multilateral Development BankSCF Strategic Climate FundTA Technical assistance VFM Value for moneyWB World Bank

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STRATEGIC CASEA GLOBAL GREEN RECOVERY

The COVID-19 pandemic has created a window of opportunity to better align global economic development with the Paris Agreement – and simultaneously heightened the risk that budgetary pressures will cause countries to backslide to more polluting policy responses despite the financial viability of more sustainable pathways. Early technical assistance (TA) support, aimed at ensuring that green elements are not lost in the course of accelerated country action on economic recovery, can be impactful in ensuring the sustainability of longer-term plans. A green recovery is also important given its priority for COP26.

WHY MDBS?Developing countries are turning to MDBs as the institutions with the financial capacity and expertise to help them recover sustainably. The large financial packages that will be deployed by the MDBs to support COVID-19 recovery will be instrumental for driving these recoveries. However, there is a significant risk that planned MDB pipelines for supporting climate reforms across key sectors such as energy, transport, buildings, heavy industry and agriculture will be deprioritised. TA support can help mitigate such risks e.g. by backing reformers with timely, practical expertise and strengthen the case for climate-based reforms and ambition.

MDBs are hugely significant influencers on country development, climate and fiscal policy, with a global reach. They are dependable, experienced and efficient delivery partner, capable of acting at scale and speed. They have played key role in the BEIS ICF results story to date and are likely to remain an important element of BEIS’s new ICF strategy (in a way that complements an increase in bilateral programming). While we would expect, and continue to influence, MDBs to green their lending by default, providing TA to green MDB’s post-COVID-19 lending is a precautionary and ‘low regrets’ option for HMG, given the urgency, scale of lending, relatively small sums involved in TA, and limited bandwidth across MDBs and partner governments. Key to ensuring value for money will be the co-ordination of this support with complementary vehicles focusing on similar goals.

This business case therefore considers the role targeted BEIS ICF investment could play in capitalising on this opportunity for MDBs to help drive a global green recovery, by strengthening the quality of COVID-19 related DPLs. For instance, the IFC is deploying $8bn in fast track financing to sustain businesses and preserve jobs and MIGA has launched $6.5bn facility to support private sector investors and lenders in tackling the pandemic. These flows can help emerging economies most dependent on environmentally intensive sectors and without strong regulatory oversight have the biggest task to turn their stimulus green, and have so far failed to step up1. To date, the G20 stimulus measures of $12.1tn have mostly not been aligned to a green recovery, which could be indicative of the scheduled measures in other countries as they move to develop economic responses without additional support.

KEY BARRIERS  The COVID-19 pandemic has caused severe socio-economic disruptions and put significant strains on public finances. Specific challenges include:    Prioritization: Multiple agendas are competing for limited resources, with strategic ambitions (like low

carbon and resilient growth) at risk of taking a backseat to urgent recovery. Dedicated funding can be

1 Vivid Economics (2020), “Greenness of Stimulus Index” - https://www.vivideconomics.com/casestudy/greenness-for-stimulus-index/

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critical in ensuring that there is an opportunity to influence long term policy making with lasting impact. 

Capacity constraints: institutions are re-allocating human resources in light of limited capacity. Resources for reinforcing capacity at the local level are crucial to ensure progress made on the sustainability agenda isn’t lost. 

Alignment and coordination: coordinated, global action is essential to ensuring an effective response. Public and development finance institutions have rightly rushed to provide immediate relief to the countries most impacted by the pandemic, but we must ensure that action on the ground is aligned and coordinated to ensure efficient deployment of limited resources.  

In the absence of dedicated support to overcome these challenges, we risk deprioritisation, delay, and duplication. By seizing the opportunity presented by the pandemic response, we can make long lasting impact on the enabling environment and better prepare it for future climate action. 

PROPOSED ACTIVITIES

Green recovery TA programmes in the MDBs will look to carry out the following activities:

- Design activity for planned MDB lending operations - aimed at strengthening analytical support that enhances design of critical green recovery reforms.

- Implementation capacity for planned MDB lending operations - aimed at strengthening local institutional and technical capacity to implement of green recovery reforms. 

- Knowledge sharing - including country/ regional-level exchanges to share lessons learnt from designing / implementing green recovery reforms.

- Operational support to MDBs - such as staffing at country offices for a defined period and with a focused work program to deliver on green recovery reforms

‘Packages’ could be created for countries that include some or all of these activities.  We would expect all TA activities to be linked to a planned green recovery linked pipeline and project(s).

The appraisal case (page 9) explores the specific options in further detail and sets out a preferred option.

ALIGNMENT WITH BEIS ICF PRIORITIES

BEIS ICF seeks transformational change by working with developing countries to tackle emissions, demonstrating that low carbon development is a viable growth model and shifting markets in favour of clean and green. In so doing, we seek to raise ambition in line with limiting global temperature rise to well below 2 degrees and reduce poverty by mitigating the effects of climate change (which disproportionally affect the most vulnerable). Supporting MDBs to help drive a global green recovery, by strengthening the quality of COVID-19 related DPLs, aligns well with these overarching objectives, and the accelerated implementation of the Paris Agreement. The approach being pursued aligns with the new BEIS departmental priorities2.

From a geographic perspective, the programme could potentially cover all of the BEIS ICF priority countries3. Recipient countries are likely to be identified based on their current and future relative contribution to global GHG emissions, demand expressed by them and the size of planned spending by

2 On the 14th July, the Secretary of State launched the updated BEIS Missions and Priorities as: fighting coronavirus, backing business, unleashing innovation, and tackling climate change.

3 Recipient countries under the preferred option may benefit provided they, 1) meet Official Development Assistance (ODA) eligibility criteria according to OECD/DAC guidelines; and 2) have an active MDB country program (for this purpose, an “active” programme means that an MDB has a lending program and/or on-going policy dialogue with the country).The initial phase will focus on countries and interventions with the most significant mitigation potential. With additional funding from other interested contributors, a wider group of beneficiary countries and interventions may be included.

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MDBs in the country over the next few years. This is likely to result in a focus on high emitting middle income countries. The tentative pipeline put forward by the CIFs (under the preferred scenario) include major-emitter priority countries such as India, Indonesia, Philippines as well as a range of low income countries and small island developing states which are politically important in the climate negotiations. Middle income countries account for around 60% of the world’s poor (who are most affected by the impacts of climate change).

Given that the UK is hosting COP26 in 2021, it is imperative that coordinated action is taken to ensure we raise ambition using all levers at our disposal. Utilising the MDBs to ensure that covid-19 economic recovery responses are aligned with the Paris Agreement will help pave the way for longer term ambition.

OTHER RELEVANT ICF INITIATIVES

Across the BEIS ICF portfolio, a number of other programmes are also responding with planned green recovery activities.

UK PACT Green Recovery Challenge Fund: The first funding round will consist of two thematic windows from August 2020 onwards:   Greening financial systems across priority countries in Latin America and Asia (with an option to

expand to Africa, based on Embassy feedback); and   Electrifying urban mobility in Asian priority countries, with a focus on increasing the uptake of electric

vehicles for public transport and shared mobility.   This programme will have activities focusing on financing specific policy area and operating on a bilateral basis through 11 eligible countries.

NDC Partnership (NDCP): Supporting green recovery efforts from some of the £17m funding announced for the NDCP Initiative in 2019 - providing technical support to developing countries for a cleaner recovery through embedded economic advisors in finance/planning ministries.  

This business case has also been developed in consultation with DFID / FCDO to ensure complementary with their own initiatives.

An intervention that provides for TA through the MDBs can support and complement these other ICF programmes. MDBs have good links to our priority countries, and programme governance can ensure that we identify potential synergies and mitigate potential conflicts effectively.

THEORY OF CHANGEThe theory of change for the Green Recovery TA programme is set out below and illustrated on page 8.

The long-term impact of the programme is to help green COVID19 recovery response in host countries (measured through their NDCs and domestic targets, while helping to support the greening of recovery responses. On a more attributable level, the programme outcomes will consist of; increased climate related ambition as part of COVID19 recovery plans and increased investment mobilisation towards green recovery.

The overall outputs that the programme is envisaged to deliver includes strengthened institutional and technical capacity as well as greater knowledge and mainstreaming of COVID19 recovery related considerations in the policy process.

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The theory of change envisages the following activities: non lending/standalone analytical work and capacity building interventions, lending related readiness support, knowledge sharing, and MDB operations support through time limited strategic staffing on green recovery reforms.

What underpins the transformational nature of the intervention is ensuring that activities are occurring in a timely manner - as the window of opportunity narrows with crisis response decision making processes. The intervention logic is to focus on policy and regulatory frameworks as well as other targeted measures that are key in reprioritising green recovery within policy making expertise available to emerging economies. By providing an additional, and timely technical assistance and capacity building support in line with demand from partner country governments, the vision is that the economic response allows a green transition that will help to progress existing green DPLs and MDB supported programmes globally as well as lay the foundations for larger range of interventions such as co-financing the greening of DPLs and other future programming such as the Accelerating Coal Transition Programme.

Assumptions:

The theory of change relies on key assumptions, which are addressed as part of the risk management:

International commitments to climate change mitigation, as well as national targets for clean energy, continue to drive country level action;

Clean energy technologies continue to be increasingly competitive against fossil fuel alternatives based on production costs trends and political decision-making with renewable energy being “the cheapest source of new power generation for more than two-thirds of the world4”;

Innovations in technology and practices lead to more efficiencies in production and resources That the MDBs have the necessary access and policy leverage to influence partner countries at the

key policymaking levels through effective project selection criteria; That focus on climate and clean energy among MDBs will remain strong to act on their commitments.

The intervention logic and theory of change can be ensured if the following measures are taken:

A thorough analysis of the country context is carried out that is possible within the time frames needed, including existing support and expressed demand;

The full value chain of investment enabling measures is considered and critical initiatives identified that may unlock investments;

Targeted opportunities for strengthened technical support on green recovery by MDBs are identified in a dialogue with key government entities on enabling policy, regulation and other measures that affect investment in and financing of clean energy;

Technical support is efficiently deployed, improving the conditions for cost-effective investments and mobilization of finance by addressing risks and transaction costs, bringing down the cost of capital.

4 Jennifer Layke and Norma Hutchinson (2020) ”3 Reasons to Invest in Renewable Energy Now”, World Resources Institute - https://www.wri.org/blog/2020/05/coronavirus-renewable-energy-stimulus-packages

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Green Recovery TA Programme Theory of Change Diagram

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APPRAISAL CASE

Given the urgency of the window of opportunity, timings do not allow for setting up a new programme or vehicle. Existing vehicles, which can rapidly meet initial need and make use of existing contacts and infrastructure to the scales needed for global transformational change, have therefore been prioritised. We conducted a review of existing programmes and facilities that worked through MDBs and were focused on green recovery. Only two proposals were considered to be at a sufficiently developed enough stage to warrant consideration:

1. The World Bank COVID-19 Support Window will be providing TA support for rapid green recovery action through the World Bank country offices by i) supporting NDCP activities to embed expert capacity into recipient government departments and ii) discrete green recovery analytical and policy support to WB country offices to better align planned DPLs. This has 2 components:

A. Supporting World Bank country offices with Just in time (JIT) support for (Development Policy Finance) DPFs - providing Bank-executed grants of up to US$ 70,000 for the procurement of climate change specialist consultants or staff services to support the preparation of climate change-related institutional and policy reforms in World Bank DPFs for COVID-19 response and recovery, and/or for the preparation of studies to inform reforms in subsequent operations in programmatic DPFs. Teams may request an additional grant allocation up to US$150,000 against specific deliverables on successful implementation of the initial grant.  

 B. Green recovery technical assistance/capacity support in recipient countries which will

award Bank-executed grants of up to US$300,000 to provide technical support through two primary mechanisms that will seek to embed short term consultants in key advisory roles in Ministries as well as miscellaneous targeted technical support to discrete analytical tasks.  

 2. Green Recovery window within the CIF Technical Assistance Facility to provide

implementation, design, and operational support to all five eligible MDBs with green lending operations. The main objective is to leverage MDB COVID-19 response measures to deliver a rapid response on the ground with maximum impact to ensure a resilient, low carbon focused green recovery across the 72 countries the CIFs are active in and have an active MDB country programme.  The CIF COVID-19 Green Recovery Window will determine a list of priority activities/ countries in consultation with the partner MDBs where the resources would have the highest impact in terms of delivering a green recovery. The activities within the proposals include:

Analytical support for technical and institutional capacities to support countries in developing their low-carbon and climate-resilient pathways and demonstrating how green and resilient COVID-19 recovery fits within such pathways. 

Policy lending support - supporting current and future operations by identifying, enhancing, and implementing policy actions, alongside other activities with the goal of enhancing critical green and resilient recovery reforms and investments. 

Investment lending support - supporting stand-alone operations through funding for activities such as project preparation, project specific assessments like green jobs assessment, just transition assessment, climate risk and vulnerability assessment among others, with the goal of enhancing critical green and resilient recovery and investments.

Knowledge sharing to include activities such as country/ regional-level exchanges to share lessons learnt from designing/ implementing green and resilient recovery reforms.

Operational support to MDBs such as those for strategic staffing in country offices for a defined period and with a focused work program to deliver on green and resilient recovery reforms.

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OPTIONS APPRAISALThe appraisal case assesses the merits of funding either or both of the two proposals and considers the extent to which each option could achieve the outcomes and impacts set out in the theory of change.

The level of support that we have proposed is £10m – this has been deemed sufficient to provide support for the type of TA activities through the MDBs that are being proposed (based on initial discussions and estimations of past TA activities through other programmes), while also being within our budgetary envelope. The CIFs are confident, based on previous experience and an initial gauging of interest from across their networks, that funding of this scale could support activities across approximately 20 countries. We would be unable to provide more support than this, given recent portfolio prioritisation exercises. We would also not have confidence in providing less support given that the operational management costs as well as knowledge and learning components to run and evaluate the programme would mean that a smaller proportion would be spent on actual activities.

It is worth noting that ICF analysis does not usually quantify the benefits of technical assistance, given the difficulties in consistently establishing attribution and additionality (in addition to the lags sometimes involved before impact can be observed). Additionally, the activities supported by the programme will be demand led and therefore we would not know the projects supported at this stage. Therefore, a Cost/Benefit Analysis (CBA) is not appropriate.

The following options were assessed for the business case5:

1. Do Nothing. 2. Deploy BEIS ICF finance through the WB.  3. Deploy BEIS ICF finance through the CIFs. 4. Deploy BEIS ICF finance across both WB and CIF, proportions to be confirmed.  

Multicriteria Analysis

A number of criteria have been assessed to inform the selection of a preferred option, in line with HMT’s Green Book. Table 1 below provides an explanation of the criteria that have been used, which reflect considerations of value for money. Table 2 then provides an assessment of each of the options against these criteria, scored 1-5.   Weighting has also been applied to priority and secondary considerations.   Criteria    Scoring Weight  Description   1.Speed of delivery  

1:Slowest to 5: Fastest

2  Is the intervention able to rapidly deploy the required support?  

2. Scope of partnerships, MDBs and recipient countries

1: Least countries/MDBs to 5: Most countries/MDBs

A-1B-1C- 2

A. Geographic reach. B. Number of MDBs influenced/supported.  C. Deeper targeting of specific countries by delivery partner  

3.Track record  1: Weak track record to 5:Strong track record

1  Using proven vehicles and programmes with a good track record and which BEIS are

5 Note that this analysis is consistent with that taken forward by FCDO for funding green recovery TA. The two business cases have been developed in tandem and represent a coherent and administratively efficient HMG approach to supporting clean, inclusive and resilient recoveries in development countries.  The multicriteria analyses in the two business cases are consistent, but contain slightly different emphases reflecting differences in Departmental criteria, with BEIS placing a higher emphasis on the potential to drive mitigation in higher-emitting middle-income countries, and FCDO placing a slightly higher emphasis on addressing a broader range of climate adaptation, mitigation outcomes. 

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already supporting, increases both our ability to respond quickly and utilise the first-hand experience of these vehicle to assess the robustness of the proposals. This is even more important when seeking rapid delivery 

4.Scale of outcomes and impact 

1: Minimal outcomes and impact to 5: Significant outcomes and impact

A-2 B-2   

A. Ability to target countries which are important to meeting global GHG targets. B. Size of opportunity by project/pipeline 

5.Additionality   1: Weak case of additionality to 5: Strong case of additionality

2  Additionality to current activities to align climate with governments’ economic recovery efforts

6. Contribution to longer Term influencing / wider BEIS ICF policy objectives 

1: Little contribution to 5: Significant contribution

1  A. Raising ambition /influencing MDBs  B. Meeting wider MDB policy objectives 

7.BEIS resource requirement (staff and £) and coordination and Learning  

1: Significant additional resources required to 5: Minimal additional resources required

A-0.5B-0.5C-0.5 

A. The additional level resources / governance arrangements required in BEIS required to manage the contribution.  B. Ability to coordinate C. Ability to share learnings 

Table 1 – Description of criteria used for appraisal

 

Criteria   Weight Do Nothing

Option 2 (WB)

Option 3 (CIFs)

(Option 4 - Both)

1.Speed of delivery 2 0 5 5 52.Reach A:1 0 3 5 4

B:1 0 2 5 4C:2 0 4 3 3

3.Track record 1 0 3 5 44.Scale of outcomes and impact

A:2 0 3 4 4B:2 0 3 5 4

5.Additionality 2 0 3 4 36.Contribution to longer term influencing/ wider BEIS ICF policy objectives

1 0 4 5 4

7.BEIS resource requirement (staff and £) and coordination and learning

A:0.5 5 2 4 1B:0.5 0 2 4 3C:0.5 0 3 4 4

2.5 51.5 68 58Table 2 - Appraisal Table of Options 

Multi Criteria Analysis Summary of Results Ref which sub score.

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1.Speed of delivery Option 1:0, Option 2:5, Option 3:4, Option 4:4

All delivery partners will be able to deploy TA assistance rapidly through their established networks and have developed dedicated windows within their response to COVID-19. However, as the World Bank is likely to be able to provide assistance on the ground slightly faster, option 2 scores slightly higher.

2.Reach2A - Option 1:0, Option 2:3, Option 3:5 Option 4:4 2B - Option 1:0, Option 2:2, Option 3:5, Option 4:42C - Option 1:0, Option 2:4, Option 3:3, Option 4:3

For criteria 2A, both delivery partners have extensive geographic reach, but Option 3 would have deeper geographic reach given they operate with multiple MDBs that have differing levels of engagements. For criteria 2B, Option 3 also scores higher than option 2, given that option 2 is only providing support to one MDB, and higher than Option 4 as a smaller contribution to CIF-TAF could lead to less support through other MDBs. For criteria 2C, Option 2 will allow for deeper targeting of specific countries whilst the CIF option would include interventions across a wider range.

3.Track recordOption 1:0, Option 2:3, Option 3:5, Option 4:4

Whilst we don’t have experience with this particular World Bank programme, option 2 can be viewed as having a good track record given the World Bank’s experience providing TA across its operations and the World Bank’s status as a trusted delivery partner. However, Option 3 scored higher given the extensive range of policy areas and countries the CIFs offer in terms of technical assistance and supporting pipeline development. Furthermore, CIF-TAF would be delivered through an existing programme that we currently fund, as a new window. It is worth noting that both delivery partners have scored well in past ICF annual reviews. Option 4 would score highly as well, despite a split of payments, due to standalone considerations on track record.

4.Scale of outcomes and impact4A - Option 1:0, Option 2:3, Option 3:4, Option 4:4 4B - Option 1:0, Option 2:3, Option 3:5, Option 4:4

Option 2 scored well for criteria 4.A, given the scale of planned spending the World Bank has scheduled this decade, which can be supported by short term TA over the next 18 months. Option 3 scores slightly more than Option 2 - the MDBs combined would have an even larger scale than the World Bank alone.

For criteria 4.B, Option 3 scored the highest given that it would be funding a programme that can operate across all the MDBs’ activities. Options 2 and 4 scored slightly less given the potential reduction in supporting a wider range of projects through the CIFs. Option 2 may be limited if funding is limited to supporting the expansion WB country offices and partner governments ministries as it will not directly cover the Development Policy Financing (DPFs) that countries receive from other institution that could be at risk to delays or backsliding.

5.Additionality Option 1:0, Option 2:3, Option 3:4, Option 4:3

Option 3 scored the highest given that the programme will coordinate MDB actions in aligning government recovery efforts and that we have a higher chance of additionality due to us being first funders in a vehicle with a wider scope of activities and geographies as we can influence the CIFs TA fund to focus on the projects we think are additional by shaping the selection criteria. Option 2 provides somewhat similar support to what we’re doing through our existing NDCP contribution. Nonetheless,

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both options will have similar scope to shape the criteria and prioritisation of the TA which can help in mitigating risks with additionality.

5. Alignment with longer term influencing/ wider BEIS ICF policy objectivesOption 1:0, Option 2:4, Option 3:5, Option 4:4

Option 3 scored the highest as this intervention aligns with our current development and thinking of the future CIF programming that will fund further interventions globally across coal transition, industrial decarbonisation, clean energy, and land use. It also supports the role multilaterals play in our ICF strategy refresh, as well seek to couple our MDB engagements with increasing bilateral partnerships.

The options with the World Bank also align with our longer term influencing and ICF objectives but scored lower as the CIFs give BEIS a chance to spread across 5 MDBs.

7.BEIS resource requirement (staff and £) and coordination and learning7A - Option 1:5, Option 2:2, Option 3:4, Option 4:1 7B - Option 1:0, Option 2:2, Option 3:4, Option 4:37C - Option 1:0, Option 2:3, Option 3:4, Option 4:4

For criteria 7A, Option 3 is currently integrated with current FTE of BEIS ICF staffing work. Whilst Option 2 and Option 4 will need new FTE allocation on staff resources. For criteria 7B, working with Option 3 allows coordination amongst the major MDBs to communicate. We could potentially have better coordination if we were looped into both response options if funding was sufficient to run the programmes effectively.

For criteria 7C, Option 2,3 and 4 have some merit in learning based on the geographical spread which can disseminate lessons. The Options 3 and 4 will have more learning with MDB coordination.

PREFERRED OPTION Based on the multicriteria analysis, Option 3 (deploying BEIS ICF financing through the CIFs) is the preferred option. From a BEIS perspective, the CIF TA Facility, and the supported TA interventions, would have the most impactful contribution to the desired outcomes of increased investments and climate ambition within recipient countries’ recovery responses. The CIF TA Facility’s focus on coordinating MDBs and complementing existing work, means that each funded TA initiative will contribute to the objective without presuming that the resulting outcome can be attributed to the CIF TA Facility alone.

The activities that the CIF TA Facility would carry out are consistent with the ‘Proposed Activities’ set out in the Strategic Case. BEIS’s contribution of £10m would support the initial set up and pipeline of activities. Programmatically, the preferred option provides support for DPLs and includes elements of learning that will help inform future interventions. Whilst the programme is embedded within the CIF TA Facility that has its own monitoring, evaluation and learning processes, we will continue to work with the team through implementation to ensure learning and adapting can happen.

Both proposals have their merits in their respective models - which are either ‘wider’ or ‘deeper’ in approach - and have prospects for delivering strong outcomes. Whilst Option 2 would also enable us to influence the World Bank’s green recovery efforts more directly, Option 3 will allow us to utilise the widest network to intervene in more countries that align with ICF priorities. It is important to note that coordination amongst the major multilaterals organisations is key to ensure recovery packages are supporting green policies effectively to ensure their respective responses are operating in tandem and avoiding gaps for climate backsliding. With Option 4, there is the risk that we could spread ourselves thinly – we are however collaborating closely with FCDO, who are exploring their own business case on green recovery work, in this regard. We also note that the Netherlands and Switzerland have shown

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interest in supporting the CIF TA Facility option, and the German government has reallocated $6m of their World Bank investment to support the World Bank’s COVID Response Window. VALUE FOR MONEY APPRAISAL

The ‘4Es’ have been used to assess the value for money (VFM) of a UK contribution of £10m. Economy, Efficiency and Equity have been assessed at the CIF TA Facility level, as this will be a programme within the CIF TA and will be using much of the existing infrastructure and policies. Economy Administration and management fees are the two main economy indicators considered. The CIFs admin fees are comparably low compared to other similar interventions and the programme will see to streamline existing management practices within the CIF TA Facility. These are broken down in the table below.  

 Management Fees

Programme CIF TA Green Recovery Window

CSF Green recovery Window

Average Project Implementation Services Costs as % of Cumulative Funding Decisions  

N/A 17%

 Admin Fees 

Programme CIF TA Green Recovery Window

CSF Green recovery Window

Admin Costs as % of Cumulative Funding Decisions  

2.5% 5

The CIF Administrative Unit will look to leverage the existing infrastructure and capacity to keep costs at minimum. It will monitor and report on the deployment of funds, working in close consultation with the Trustee and the MDB and providing annual progress report on its delivery. (See ‘Monitoring, reporting, and accounting for expenditure’ section for detail on the BEIS role in the advisory group and relevant Trust Fund Committees). Overall, we remain confident in the procurement process and administrative fee arrangements.

EFFICIENCY The CIF TA Facility’s projects will look to deliver the following outputs relating to the design, operations and implementation of planned MDB lending operations in the form of analytical and policy support to enhance design and uptake of critical green recovery reforms as well as, where needed, strengthen local and country office institutional and technical capacity. All activities will be executed or supervised by the partner MDBs and will comply with MDBs’ operational policies and procedures, including procurement and financial management guidelines. Funds available through a dedicated C19 response window will be deployed on an accelerated basis with a view to start operationalizing projects from mid-October 2020, whilst adhering to the MDB procurement best practices and following the principles of a rapid response strategy.

BEIS has considerable experience of funding through development banks and has confidence in their procurement systems and controls. MDBs a good track record for VFM – they help us deliver interventions in complex areas at a scale we could not with smaller partners. They also enable us to talk policy with like-minded countries, and influence MDBs to be more innovative with their own balance sheets. In DFID’s Multilateral Development Review (2016), multilaterals were assessed to have good organisational strengths. Furthermore the CIF TA Facility in which this programme will sit, has a track record of delivering similar TA programmes, this increases both confidence in turning inputs into outputs

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and provides a quality benchmark which we will expect proposals to meet to ensure efficient conversion of inputs into outputs. This programme will also leverage the CIF TA Facility’s Partner Network to expediate efficient knowledge sharing. In addition to the above, BEIS will sit at both the CIF TA advisory group which scrutinises proposals thoroughly as well as the CTF committee which is the final decision-making body on project approvals. This provides BEIS the opportunity to scrutinise efficiency concerns for each individual project.

EFFECTIVENESS The effectiveness assessment is focused only on the possible impact of the green recovery programme rather than the wider CIF TA and will uses a qualitative assessment of the possible benefits. This is in line with the approach used for other similar TA based programmes in the ICF- ICF analysis does not usually quantify the benefits of technical assistance given the difficulties in consistently establishing attribution and additionality (in addition to the lags sometimes involved before impact can be observed). Additionally, activities supported by this programme will be demand led and are not known at this stage. As a result, it would not be appropriate to conduct a CBA.

The outcome expected is that the quality of COVID-19 related DPLs are strengthened in relation to climate policy reforms and the prospects for implementing the reforms are improved, leading to strong climate ambition at the national level and in relation to NDCs.  Evidence from the existing ICF portfolio, as noted within the ICAI reviews6, shows that TA is an effective way to use smaller amounts of finance to catalyse a wider transformation, and that there is high demand for assistance from developing countries.

The CIF TA will deliver through 5 of the largest MDBs7. This wide reach and unprecedented access across MDBs enhance the ability of the programme to influence DLPs and deliver the outcomes. MDBs are both well placed to understand how to strengthen the DPLs and the risks to implementation, but also hold strong and influential relationships with national governments which will be key to ensure implementation. By focusing on DPLs there is a large and developed set of measures for the TA to effect and leverage to influence national ambition. This potential influence is further magnified by the fact that DPLs will be related to active MDB investment pipelines. There is also an opportunity to find possible synergies between green recovery TA projects and influence upcoming CIF capital programming in energy, smart urbanisation, land use and industrial decarbonisation

Effectiveness will be further improved via the knowledge sharing elements looking to increase information flow and lessons on designing / implementing green recovery reforms across regions, enabling other initiatives to benefit from the CIF Green Recovery TA Programme.

A timely response is another important consideration to maximise effectiveness, so the activities supported can influence green recovery strategies whilst they are in the development stage. The CIFs have an existing platform and planned call for proposals that can be utilised to allocate support in a rapid fashion. The existing facility also allows the CIF AU to use their network with MDB partners to ensure proposals are received in a timely fashion and cuts out the need to advertise the call process. Furthermore MDBs have already been heavily involved with recipient countries at the COVID emergency response phase and are utilising fast track approaches to ensure support reaches the ground in a timely fashion, this provides us added assurances that UK contributions will be converted into effective outputs in a timely fashion. Given that there is a risk with the additionality of the projects developed at pace, the programme will seek to ensure value for money throughout the programme lifetime through the governance process and project selection criteria (listed on page 17). This will ensure that, based on needs and mitigation potential, the programme will target the right projects in the right countries to

6 ICAI (2019)” Report: International Climate Finance: UK aid for low-carbon development A performance review – 19 Feb 2019 https://icai.independent.gov.uk/html-report/uk-climate-finance/

7 World Bank, Asian Development Bank (AsDB), African Development Bank (AfDB), Inter-American Development Bank (IADB), and the European Bank of Reconstruction and Development (EBRD)

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ensure interventions are both additional and effective. As the programme matures, we can expect better tailoring to ensure value for money as lessons learned after the UK intervention could mean we have a better idea what interventions are more likely to succeed/have higher mitigation potential/more transformational impact thereby increasing effectiveness.

EQUITY The impacts of climate change are expected to be felt disproportionately by the world’s poorest. The recent IPCC 1.5C report estimated that limiting global warming to 1.5C rather than 2C ‘could reduce the number of people both exposed to climate-related risks and susceptible to poverty by up to several hundred millions by 2050’. This programme is targeted at cross sectoral sustainable economic recovery decarbonisation in developing countries, which leads to greater investment flows into sustainable projects. Apart from the mitigation benefits, it is expected that recipient countries and their populations will therefore also benefit (indirectly) from a series of economic and non-economic co-benefits. The CIFs in general also supports the equitable provision of climate finance in other ways, including through ensuring equal representation for recipient countries on the board, which strengthens their voice in the direction of the programme and its spending. The CIFs has implemented approaches to ensure indigenous populations are active stakeholders where relevant, which have been recognised as best practice by civil society. In 2018, a new Gender Policy was adopted by the CIF to strengthens the integration of gender equality considerations in the CIF procedures, programme design and implementation, and staffing and budgeting. The policy also introduced gender representatives within the CIF observer structure. This programme will be governed by these overarching CIF policies.

Although not all of the programme’s outputs and outcomes will directly accrue to the poorest people or communities in recipient countries, policies can be designed to help the most marginalised e.g. by reflecting socio-economic considerations (such as through compensation or exemptions), and/or redistributing revenues raised. This can also help address any distributional impacts that might occur as an unintended consequence of a policy’s design. We will work through the programme to ensure that such considerations are made in recipient country activities.

VALUE FOR MONEY SUMMARY The programme is economically good value for money. The CIF Administrative Unit will look to leverage the existing infrastructure and capacity to keep costs at minimum, monitor and report on the deployment of the funds, and provide annual progress report on its delivery.

In terms of efficiency, our experience with MDBs shows they have a proven track record of good organisational strengths to deliver TA. The programme will also utilise existing networks and infrastructure to accelerate results. BEIS will scrutinise efficiency through its allocated role in the CIFs.

Effectiveness can be achieved by utilising MDBs networks and influencing DPLs, which can have leverage on national ambition. Effectiveness can also be supplemented by the programme’s other activities, such as knowledge sharing. We will also ensure value for money throughout the programme lifetime by ensuring additionality of the supported activities through the governance structure and selection criteria.

In terms of equity, by contributing to global efforts to tackle climate change, the programme would help to reduce the impacts of climate change, and as a result help contain the exacerbation of poverty that climate change would bring. Funding will support those who are ODA-eligible and have capacity to develop and implement economic response measures to COVID-19 that can align with climate ambition, and where possible increase ambition. In turn, as LDCs transition through the immediate health responses to the pandemic, they could benefit from lessons and approaches utilised by LMDCs and UPDCs to implement a green recovery.

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COMMERCIAL CASEThe Commercial Case assesses the capacity of the delivery partner to both deliver the programme and value for money. The CIF TA Facility is currently embedded within the Strategic Climate Fund (SCF) within the CIFs and will therefore be subject to the same commercial processes.

Contract management, Commercial Risk and EU Exit BEIS will provide its contribution to the SCF, which allocates funds to individual projects that are managed by the MDBs, who have established processes and frameworks in place to manage contract. Therefore, BEIS will not manage contracts between the SCF and the MDBs, nor the MDBs and suppliers for individual suppliers. BEIS’s role and levers in the SCF and the governance processes are set out in the Management Case. Similarly, there are no EU Exit or Intellectual Property implications, as the UK would not be involved in any procurement or contracts at the project levels.   

How will   the   CIF TA Facility   ensure that projects will deliver Value for Money?    All requirements and decisions on project proposals are guided by a project investment criterion. Each project received under the CIFs undergoes a two-stage assessment process; first through the TA Advisory Group and then through both the SCF and CTF Trust Fund Committee (TFC) boards in parallel. The UK has a seat at both the CIF TA Facility Advisory Group and the TFC board committees (with BEIS sitting in the CTF TFC and FCDO sitting in the SCF TFC).  

An important part of the review process is early engagement with the MDB in the development of the proposals. This ensures submitted proposals are well aligned to the requirements of the CIF TA Facility. After a preliminary review by the Advisory Group, there is an opportunity to request further information, ask clarification questions and probe the initial submission. Based on MDB responses and funding criteria, the Advisory Group carries out a final review, scores the proposal and recommends a decision on the selected proposals to the SCF TFC and CTF TFC for approval.

Here the SCF and CTF TFCs then scrutinize the proposals and has a further opportunity to request further information, ask clarification questions and probe the project proposal The SCF TFC and CTF TFC considers the Advisory Group’s recommendation and makes a final decision adhering to the timelines in accordance with CIF standard procedure. The approved project will then follow the relevant MDB approval and implementation processes.

BEIS assesses each proposal individually at the TA Advisory Group level, involving HMG sector specialists, economists, private sector and commercial advisors, and monitoring and evaluation advisers, as well as input from the relevant FCO post and/or DFID country office. Projects are assessed against their ability to meet at least one of the investment criteria which include: 

Influences development policy loans, fast-track initiatives, or equivalents, used by MDBs as a C19 response measure, with the key objectives of significant impact, rapid response and speedy deployment including on the delivery side.

Aims to maximize impact and contribute to transformational change either through a single or a combination of activities in the host country.

Contributes to strengthen resilience of vulnerable communities to multiple socio-economic and environmental shocks.

Contributes to increased private capital mobilization. Follows an integrated approach involving key stakeholders (bi- and multilateral actors and initiatives,

as well as both intra1- and inter-MDB). Integrates gender equality design considerations particularly as the pandemic is exacerbating

important specific risks for women and threatening progress made on gender equality.

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There is a structured approval process which requires UK Board Members to approve the assessment based on specialist advice before the UK formally approves a project. This process ensures that the UK has the capacity and capability to ensure investments can deliver against objectives and provide value for money.  Capacity of the   CIFs   to deliver  

We have chosen not to contract a new delivery partner ourselves, given the need to act in a timely manner to deal with the urgency of the problem (i.e. even if we had the capacity, it would be counterproductive to spend 6 months conducting a procurement/grant for services). While we do not have the internal ICF resource to design and contract a new approach ourselves, we have the internal resource to manage and monitor an investment through the CIFs. Commissioning the CIFs with the payment schedule and mechanism will allow us to deliver in a timely manner (see the Financial Case section for further information).

MDBs are the sole implementing partners for the CIFs. The UK is a shareholder in all these institutions, with permanent representation on their Boards.  MDBs have existing in-country representation; undertake regular dialogue with country governments to support policy and regulatory reform; and have substantial technical expertise on low carbon technologies and investments as well as adaptation and resilience. Using MDBs as delivery partners is a proven approach which has delivered successful results for ICF over the past 10 years. 

 MDBs have the capacity to run competitive procurements and manage contracts between the MDBs and relevant parties. MDBs have robust risk management frameworks, auditing and reporting measures in place, as well as strong presence and capacity at local country offices. In addition, every project proposal goes to the MDB boards for clearance. All contracts also go through a due diligence process before being approved by the MDB boards, on which the UK also has a seat.  MDBs also have in place robust processes and frameworks that allow them to successfully work in high risk environments such as developing country markets; these include but are not limited to: Environmental & Social Safeguard Framework; Procurement; Financial Management; Safeguarding against Risks and Corruption; and Grievance Redress. 

 A recent (2019) independent evaluation of the CIFs provided evidence that they have made significant contributions to transformational change in recipient countries, shifting them towards low carbon climate resilient development trajectories. This was attributed in part to the capability of MDBs and their approach to the development of the private investment and developing country markets. Furthermore, in December 2016, DFID conducted a Multilateral Development Review, where DFID scored the various MDBs against their match with UK development objectives and organisational structure where the different MDBs were rated ‘Good’ or ‘Very Good’.

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FINANCIAL CASEOVERVIEW OF COSTS BEIS, through ICF, will provide a single Promissory Note (PN) for £10m to the CIF Admin Unit.

Funds available through a dedicated C19 response window will be deployed on an accelerated basis, adhering to the MDB procurement best practices and following the principles of a rapid response strategy. It means that, while the approvals will depend on the quality of the proposal, the preference will be to lay and encash all the funds to MDBs by end of November to early December.

Indicative breakdown based on £10m funding envelope

Details UK£/US$8 %

Technical assistance £ 9.25m / $12m 92.5%

Knowledge, learning and partnerships £ 0.50m / $0.65m 5.0%

CIF AU Program management costs £ 0.25m / $0.325m 2.5%

Total £ 10.00m / $13m 100%

All funds can be made available either through the upcoming TAF 2nd call-for-proposals scheduled for Autumn 2020, or through a separate call-for-proposals. Through either approach, advance consultations with the MDBs and other key stakeholders will ensure the quality of proposals developed for final approval by the Trust Fund Committee.

The CIF Administrative Unit will, given the temporary nature of this programme, look to leverage the existing infrastructure and capacity to keep costs at minimum. It will monitor and report on the deployment of the funds, working in close consultation with the Trustee and the MDB and provide annual progress report on its delivery.BEIS BUDGET

The project will be funded entirely from RDEL. The full programme funding will be ODA eligible spend and come from the ICF programme budget and meets the requirements of the International Development Act. All staff working directly on the programme will be funded from programme budgets. 

The total amount of £10m RDEL is affordable from within ICF’s FYQ3 2020 budget ODA savings/prioritisation exercise that specifically carved out £10m for this, subject to the development of a business case, despite pressures. This is affordable on the assumption that BEIS can allocate funding in the upcoming financial quarter.

Promissory NotesThe CIF TA Facility will receive BEIS’s contribution by a PN that will transfer the relevant funds to MDBs following a call for proposals. The PN, signed on behalf of BEIS, is a written undertaking by HM Government to provide to the named beneficiary any amount up to the specified limit that the beneficiary may demand, at any time. BEIS uses PNs mainly, but not exclusively, as part of the arrangements whereby we pay certain sums to International Development Banks and Funds. We will be looking to use a PN to meet our spend for this calendar year and ensure activities can be lined up with guaranteed funding. BEIS ICF’s default position is to make payments in arrears upon receipt of invoices and not pay in advance of need. However, organisations such as the WB have rules that do not allow them to commit funds unless the activity concerned has been fully funded in advance by donors, even if the organisation won’t incur any cash spend on those commitments in the short term. A PN allows BEIS to give the beneficiary an ‘absolute assurance’ that the amount promised will be paid without having to pay the cash until it is required. Having deposited a PN for the full sum which is due, the UK will appear in the

8 The Dollar to Pound Sterling exchange rate one year average as of 8th Oct 2020 is £1 to $1.3 rounded to one decimal place

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organisation's records as a donor country which has met its obligation in full even though, in accordance with the payment schedule agreed by BEIS and the beneficiary, the actual draw down comes later.

Memorandum of UnderstandingIn addition to the PN, there will be an accompanying non legally binding Memorandum of Understanding (MoU) detailing how the funding will be used. An MoU agreement based on WB terms and conditions will be agreed between BEIS and the Delivery Partner. An MoU, rather than a contract, is the preferred route – we have an existing, constructive relationship with the delivery partner, and high degree of influence as both a WB Board Member, and a core donor of the CIFs. Seeking to enter into a binding agreement under international law to take this programme forward would be disproportionate and unnecessary.

Payment method and schedule Payments will be made to the CIF Admin Unit in accordance with an indicative schedule of payments, to be agreed with the delivery partner. The CIF Admin Unit will transfer the contributions to the CIF TA Facility’s associated trust fund and hold them in trust, as legal owner and administrator of the funds, assets, and receipts that constitute the trust fund, pursuant to the terms of administrative arrangements with donor countries, that will be agreed and completed after contributors confirm their commitments. The UK will provide £10m over an indicative schedule of payments to transfer funds from the CIF TA Facility to MDBs by end of November to early December, which the programme can draw upon after evidence of need is demonstrated to BEIS and approved. In line with HM Treasury’s guide on Managing Public Money, BEIS will not disburse payments to the CIFs in advance of need. BEIS will monitor, and if necessary, revise, the disbursement schedule to ensure this.

Currency (and currency risk) For all payments, BEIS funding commitments will be in Pound Sterling only (and the Promissory Note will be laid in Pound Sterling), to avoid risks of exchange losses. The risk of exchange rate fluctuation will be owned by delivery partners and grant awardees. The CIF TA Facility will provide grants in US$. The currency risk will be carried by the CIF TA Facility trust fund, as per Trust Fund rules. In the event of adverse currency movement, there will be reduced potential for project fulfilment.

Monitoring, reporting, and accounting   for expenditure  As explained above, the Green Recovery Window sits in the CIF TA Facility of the Strategic Climate Fund (SCF) and adopts its governance and financial frameworks. The SCF is a multi-donor trust fund, managed by the CIF Administration Unit with the World Bank acting as Trustee. The SCF will be the legal recipient of BEIS’s funds and therefore its Trustee will be accountable to BEIS for their use. Funds will be disbursed to the MDBs in line with need, once projects are approved for funding by the SCF committee and funding is required for implementation. 

The SCF expenditure is monitored through the UK’s engagement at the biannual SCF Trust Fund Committee meetings, through UK official representation on the committees and in advance of the meetings. In relation to expenditure, Committee members:  Approve programming and pipeline priorities, operational criteria and financing modalities;  Approve allocation of SCF resources for programmes and projects;  Approve allocation of SCF resources for administrative budgets;  Ensure monitoring and periodic independent evaluation of performance and financial accountability of

the MDBs;  Approve annual reports of the SCF;  Review reports from the Trustee on the financial status of the SCF. 

 The Trustee maintains separate records and accounts in respect of the contributions deposited in the SCF and disbursements made. The Trustee reports to the Trust Fund Committee annually unless otherwise agreed. This report sets out funding allocations, commitments, transfers, use of funds, and

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receipt of funds in the Trust Fund. Upon request by a donor, the Trustee will also provide such information quarterly.  

 The annual financial statement, prepared by the Trustee, is audited annually by the World Bank’s external auditors. Copies of the audited financial statement and auditor’s report are provided to contributors.  

 In terms of Government Accounting for our contribution to the SCF, this is recognised as a charge to our RDEL Budget at the point the Promissory Note is deposited. The balances due on notes at 31 March each year are included as liabilities in department’s accounts. Teams make a return to HMT annually which identifies promissory notes issued and drawn down in respect of Consolidated Fund assets and liabilities. This information also informs the annual resource accounts balance sheet and operating statement.  

Risk   of   financial   fraud  SCF operations follow the investment policies, procedures, and risk management practices of the relevant MDB, including its fiduciary standards, procurement, safeguarding and anti-corruption policies. The risk of fraud in this programme falls within the ‘low’ threshold set by the SCF and BEIS ICF. Further information on risks can be found in page 26.

LEGAL COMPLIANCE 

International Development Act 2002     The main spending power under the International Development Act is section 4(2)(b) of the International Development Act 2002 that provides a power for a Minister to “contribute to any fund that is intended to be used (wholly or partly) for one or more relevant purposes” if the Minister is satisfied that to do so is likely to contribute to a reduction in poverty. A “relevant purpose” includes furthering sustainable development abroad and improving the welfare of the population of other countries. This programme meets these requirements as it will contribute to sustainable development and poverty alleviation in beneficiary developing countries by accelerating sustainable pandemic response measures that align with the Paris Agreement ambition to decarbonise development pathways. This is expected to have several benefits beyond mitigation of GHGs, as detailed in the Value for Money analysis, which will aid in poverty reduction. It will provide benefits of increasing renewable energy generation: reliable energy, energy access, energy security, reduced air pollution and by supporting the clean energy transition help to reduce the impacts of climate change which will affect the poorest most, and threaten to reverse progress in reducing poverty.

Section 1(1A) also provides that “before providing development assistance under subsection (1), the Minister shall have regard to the desirability of providing development assistance that is likely to contribute to reducing poverty in a way which is likely to contribute to reducing inequality between persons of different gender”. Gender equality is considered in the below paragraph. 

Legal Compliance: Equality Act 2010   BEIS is required by the Equality Act 2010 to give due regard to the need to eliminate unlawful discrimination, advance equality of opportunity and foster good relations between those who share a characteristic and those who do not (including in relation to age, gender, disability, race, religion, pregnancy and sexual orientation). The duty applies to all of BEIS’s functions. We ensure that appropriate social safeguards are in place and expect suppliers that we fund to factor equality-related considerations into the use of BEIS funds. Additionally, the impacts of climate change are likely to have a disproportionate impact on women so mitigating the impacts are likely to be positive for gender equality. BEIS’s funding will be focused on addressing climate change and, at a minimum, aligned with the SCF’s policy on gender and indigenous people. Impact on gender is also monitored via the CTFs

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Monitoring & Evaluation reports. The MDBs, who are the sole delivery partners of the SCFs have established appropriate social safeguards. Therefore, this programme meets this requirement.

MANAGEMENT CASE

Approvals Process 

See the Commercial Case section (page 17) ‘How will   the   CIF TA Facility   ensure that projects will deliver Value for Money?’ for a description of how the Approvals Process operates in practice.

Stakeholder Approval Stage (8-10 weeks) BEIS’s role

CIF Call for proposals

MDB Proposal submission

TAF Advisory Group

Preliminary review Sits on TAF Advisory Group

Clarification requests (5 days)

Final review

Propose decision

CTF TFC & SCF TFC

Final Trust Fund Committee decision BEIS sits on the CTF Trust Fund Committee, DFID/FCDO sits on the SCF Trust Fund Committee

BEIS Management structure   for the CIFs  

The programme will be managed by the following:

  BEIS 

Team Responsible  ICEF: ICF Policy and Investments Team 

SRO  ICEF Director (SCS2) 

Board representation  G6 Board Member (0.1 FTE) and Project Team (0.1 FTE)  

Programme team9 G7 Programme manager (0.1 FTE) SEO Policy Advisor (0.3 FTE) Supported by analyst, M&E, commercial, legal and finance (0.05 – 0.1 FTE each)

 Strategic and policy decisions, as well as scrutiny of performance, is centred around the SCF’s biannual board meetings. In addition to these, the programme team carry out annual reviews and results collections and monitoring risks. 

9 The programme manager will not be managing a contract, but if required will undertake the Foundation level of the Contract management professional standards. Any specialist work will be supported across the ICF team.

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Diagram above showing the management structure in relation to other CIF programmes

How the   Green Recovery Window Works  

Financing is channelled through MDBs, who work with recipient country governments and other stakeholders to design and implement projects. The Green Recovery TA Programme will be a separate window of the CIF TA programme, which in turn sits in the SCF, thereby allowing the funds to be dedicated without creating new legal structures (see diagram above).

The proposed implementation model for the response window is as follows:

• Donors’ contributions will be made to the SCF and a ‘special administrative budget’ will be used to fund the activities of the CIF TA Facility within the annual Business Plan and Budget.

• The CIF TA Facility Advisory Group will review funding proposals and provide strategic guidance on the Facility.

• A Senior Specialist will lead the implementation of the CIF TA Facility and be responsible for submitting proposed funding decisions to the joint CTF and SCF committees as agreed with the Advisory Group. The Senior Specialist will also consolidate reporting received from MDBs and presented to the joint meeting of the TFCs.

• Annual work plans and reports will be presented to the Joint meeting of the Trust Fund Committees, elaborated by the Senior Specialist/CIF AU with input from the CIF TA Facility Advisory Group.

• The Senior Specialist will engage with MDBs and institutional partners to facilitate exchange and learning and to strengthen collaboration and coherence across TA initiatives, helping to increase the impact of the support provided.

• The management of the knowledge, learning and partnership work will be done by the CIF AU, with implementation carried out by a combination of MDBs, CIF AU and external experts.

Roles and responsibilities

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An important constituent of the CIF TA Facility is the Advisory Group that consists of representatives from key stakeholder groups - MDBs, recipient countries and donor countries. It has the following roles and responsibilities:

Provide advice to ensure that activities are strategic and consistent with the goals of the facility. Work jointly with the TAF Senior Specialist in reviewing proposals in accordance with the

established funding criteria and make funding recommendations to the CTF and SCF Trust Fund Committees for their approval.

Engage in an ongoing dialogue with the CIF TA Facility Senior Specialist, CIF management, and the MDB Committee on good practices that can help achieve the objectives.

Identify thematic high impact areas suitable for thematic calls. Promote collaboration, learning, and knowledge exchange among the MDBs and with other

parties and initiatives that focus on clean energy investment mobilization. Work closely with the TAF Senior Specialist and provide strategic guidance to support the

development of an annual work plan.

Upon the conclusion of the 2019 nomination process, the following were elected to the Advisory Group:

Contributor countries: Denmark, United Kingdom Recipient countries: Brazil, Kenya MDB: Inter-American Development Bank (IDB), The World Bank (IBRD)

BEIS will have the ability to evaluate proposals within the CIF TA Facility Advisory Group, which can help deal with any potential issues earlier in the approval process, allowing Trust Fund Committee approvals to be agreed without conflict as has been the case in the CIF TA Facility.  

The UK holds a permanent board seat at CTF TFC and chairs the SCF Committee and the overarching Joint SCF/CTF Trust Fund Committee. In addition to this, the UK has strong and positive relationships with Board members, the CIF AU and all the MDBs. 

MONITORING, REPORTING AND EVALUATION   

The overall monitoring and evaluation will be based on the existing CIF framework, which has annual reporting on core indicators through its programmes. All MDBs have in place mandatory systems for monitoring and reporting on project implementation as well as systems for independent evaluation. All of the programme’s monitoring and reporting will be based on the monitoring and reporting systems currently implemented in each MDB.

Each proposed TA intervention will be required to present a results framework with core indicators as well as supplementary indicators as relevant. At the CIF TA Facility level, the monitoring of core indicators on impact and outcomes will aggregate the monitoring of each TA Initiative. Annual reporting to the joint meeting of the TFCs will include an aggregated presentation of the results from the individual TA interventions.

The results framework provided in Annex A is indicative of what the Green Recovery Window within the CIF TA Facility will seek to report against. BEIS will have sufficient resources to cover the monitoring, evaluation and learning (MEL) work as it will require minimal additional FTE requirements during the initial phase of the programme and is already integrated within the relevant policy leads work.

The $650k allocated for knowledge, learning and partnerships could include 2 to 3 green recovery related studies as well as knowledge sharing events to disseminate wider learning based on approved projects. Given the short-term nature of this particular programme (MDBs have to deliver within 2 years),

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it is mostly likely that an end of term evaluation would cover relevant findings and lessons once projects have been implemented.

What?  (the message) 

When?  (the timing) 

How?  (the mechanism) 

Audience(s)  

Responsible 

Findings and lessons learned; sharing of best practices on how to improve the investment-enabling framework in middle-income countries 

As part of CIF yearly reports and through special, targeted initiatives and events at international level   

Will be based on CIF typical way of reporting on results and activities  Through international partnerships including Clean Energy Ministerial, Partnering for Green Growth and Global Goals (P4G),  

MDBs, country governments, national investors communities including institutional investors 

CIF in cooperation with Advisory Group and seconded senior specialist advisor to the TA facility 

Table 3: Programme’s MEL framework 

RISK MANAGEMENT  

SCF   Risk Management Framework    

Project level Risk Dashboard provides an overview of all of the SCF’s projects and is updated regularly. The CIF Administrative Unit are responsible for its maintenance, with project level information provided by the MDBs. As part of each project proposal, the MDBs are required to set out risks and mitigating measures identified. Additionally, all MDBs follow a comprehensive due diligence and an effective risk management process in their respective institutions. MDBs’ own governance process requires them to monitor and report risks at a project level. In addition to the dashboard, the SCF reports on risks biannually through a semi-annual report and an annual report.

UK’s   process for managing and monitoring risk   The BEIS programme team monitors and updates risk via a shared risk register, drawing on the SCF risk dashboard. This is then transferred to BEIS ICF’s centrally managed risk register, which is reviewed by the programme SRO on a monthly basis, with any severe risks escalated immediately. Risks are also evaluated via the annual review process. 

The UK has several avenues to act on these risks, including direct engagement with the CIF Administrative Unit, MDBs and other SCF stakeholders’ at the committee meetings; as well as through the project approval process (where project risks must be set out). Specific levers include instructing the CIF Administrative Unit to seek a written explanation and mitigation plan from MDBs for risks, cancellation of projects (as set out by the cancellation policy); and rejecting projects at the project approval stage.   As the programme is situated within the SCF, it must work within the SCF Risk Appetite Statement thresholds, which is in line with BEIS ICF tolerance levels. The table below summarises the appetite levels.  

 The table below presents the top expected risks for the programme. The overall programme risk is judged to be within the acceptable tolerance levels of both the SCF and the ICF. The major risks identified are likely to include that:  

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  TA activity timelines are too rigid to respond opportunistically to ad hoc decision-making

processes in recipient countries. This can be mitigated through careful selection of recipient countries, including quality of partnerships with MDBs and effective capacity within MDB in-country teams;

TA ambition is poorly calibrated to the incentives that DPLs offer to country recipients. For some countries, expectations on climate ambition might feel too ambitious to proceed with DPLs as they might be designed. Managing this risk is similar to the above and given the risk of MDB managers seeking DPLs quickly, BEIS, UKDel and colleagues at post will need to engage in these conversations.   

 Based on the assessments of the CIFs, and the past track record of past annual reviews; and the risk mitigations developed as part of the development of this business case, we do not currently envisage any serious risks with the CIF-TA Facility. 

We judge the overall programme to be of a minor to moderate risk.  However, we have identified the top risk that could materialise, set out below alongside their mitigation plans.

Delivery Risk: Moderate

Risk Mitigation

Delivering the intervention in a timely way due to the uncertainty of COVID-19 on the ground

We will be using the delivery partners with track record of meeting or exceeding our expectations, and have confidence in their ability to deliver.

The delivery partner also has streamlined procurement processes in place to ensure the call for projects as well the infrastructure and relationship of MDBs on the ground.

Duplication with other initiatives/ Additionality of intervention 

We can mitigate the risk with extensive consultation with MDBs and countries during the design stage to increase alignment with policy landscape.  

It is also worth noting that the UK position on the advisory board can help evaluate activities in relation with other programmes. Using MDBs as delivery partners can also help to mitigate the risk as they already have expediated process set up to ensure quickly

  Table 4: programme main risk table 

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RISK APPETITE ASSESSMENTThe table below sets out the ICF-wide risk appetite across different risk types, alongside our assessment of the risk level for the programme. In all cases, we judge the risk level for the MDB Green Recovery TA programme not to exceed the risk appetite at the ICF project level. The programme will follow the ICF governance, dashboard reporting and escalation routes.10 The project team will engage with the ICF governance through its regular CIF engagement via monthly PDP meetings, risk reporting and annual reviews and escalate any issues as appropriate.

Risk appetite Project Level MDB Green Recovery TA

Justification

Risk type "BEIS ICF Portfolio (Agreed in Governing Principles)"

Business Case

N/A

External context(E.g. in-country political risk)

Moderate Moderate We realise that the COVID 19 is a novel external risk but given that we would be working with MDBs gives us confidence to accept the risk.

Reputational(Reputational damage such as loss of confidence in the UK’s/Department’s ODA strategy/delivery, manifested e.g. through widespread media criticism) 

Moderate Minor We see little risk of reputational damage given the urgency of the situation and the communication handling developed with the delivery partner.

Fiduciary(Funds used for unintended purposes or not being properly accounted for)

Minor Minor We have confidence in CIF AU procedures to manage fiduciary risks.

Delivery(Risk that projects fail/fall significantly short of delivering expected outcomes)

Major Moderate Delivery partner has track record through the CIFs. We do not expect all TA to directly contribute to greening government measures but will have additional co-benefits.

Compliance(Environmental Social & Governance (ESG) standards, ODA and accounting rules)

Minor Minor We have confidence in World Bank’s procedures to manage compliance risks.

Operational(Internal and external management of programmes)

Minor Minor We have confidence in CIFs as delivery partner, and BEIS ability to manage programme, based on past experience through the CIFs

10 The ICF procedures are detailed within this internal document: https://beisgov.sharepoint.com/:p:/r/sites/ICF/_layouts/15/Doc.aspx?sourcedoc=%7B7999D73C-7959-4114-AA1F-EE97A830076B%7D&file=ICF%20Governance%20Structure%20May%2020.pptx&action=edit&mobileredirect=true&cid=756f0101-9711-4dc6-acd4-17a8aa8ee18b

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Balance sheet Moderate Minor No risks identified for the programme

Table 5: Risk Appetite Table

ANNEX A - INDICATIVE RESULTS FRAMEWORKBased on the Theory of Change, below is an indicative list of indicators that may be used to measure impact from the funding offered through the proposed programme. The results framework will be finalized in consultation with the MDBs and ultimately adapted based on the nature of the proposed intervention.

Results11

Indicators Baseline Targets Data source and means of verification

TRANSFORMATIONAL IMPACT

Greening the COVID19 recovery response in recipient countries

% of overall COVID19 recovery responses integrating climate consideration in recipient countries

Number of NDCs revised with enhanced commitments to climate change considerations

Number of changes to domestic climate-smart legislations

To be determined

To be established and updated as appropriate

To be established and updated as appropriate

OUTCOMES12

OUTCOME 1:

Increased climate-related ambition and action as part of COVID19 recovery plans

Number of COVID19 recovery responses integrating climate consideration in recipient countries

Baseline set to zero

To be established and updated as appropriate

MDB reports

OUTCOME 2:

Increased investment mobilization towards green and resilient recovery

% of public and private sector investment mobilized taking into account green and resilient recovery considerations

Baseline set to zero

To be established and updated as appropriate

MDB reports

OUTPUTS

O-1:

Enhanced climate-related lending operations

Number of new climate-related lending operations approved

Baseline set to zero

To be established and updated as appropriate

MDB reports

O -2:

Institutional and technical capacity strengthened

Number of people that found the training useful with new knowledge acquired

Baseline set to zero

To be established and updated as appropriate

MDB reports

11 High-level impacts can be difficult to attribute to specific technical assistance interventions given the challenges in establishing additionality as well as potential lags involved before observations can be made at an impact level.

12 Data for applicable outcome indicators will be collected at project/program level and aggregated at the facility level and complemented by additional indicators from the MDB project log frames.

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O -3:

Enhanced knowledge of mitigation and resilience considerations as part of COVID19 recovery

Number of people with enhanced awareness and capacity of mitigation and resilience considerations as part of COVID19 recovery

Baseline set to zero

To be established and updated as appropriate

MDB reports

O-4

Climate resilience and mitigation objectives in policies and investments mainstreamed

Number of policies and investments integrating mitigation and resilience considerations

Baseline set to zero

To be established and updated as appropriate

MDB reports

O-5

Climate and disaster risk management systems developed

Number of Climate and disaster risk management systems developed and adopted

Number of projects/ programs integrating climate and disaster risk management approaches

Baseline set to zero

To be established and updated as appropriate

MDB reports

Activity/Input (A/I)

A/I -1

Analytical and modelling work that can lead to enabling environment reform (policy lending) and Investments (investment lending)

Number of analytical and modelling work developed for policy lending operations

Number of analytical and modelling work developed for investment lending operations

Baseline set to zero

To be established and updated as appropriate

MDB reports

A/I -2

Capacity building interventions

Number of people trained

Number of institutions trained

Baseline set to zero

To be established and updated as appropriate

MDB reports

A/I 3

New Policy actions identified

Number of New policy actions identified

Baseline set to zero

To be established and updated as appropriate

MDB reports

A/I -4

Policy action plans developed and implemented

Number of policy action plans developed and implemented

Baseline set to zero

To be established and updated as appropriate

MDB reports

A/I -5

Project preparation include Green jobs and just transition assessments

Number of projects preparation documents including Green jobs and just transition assessments completed

Baseline set to zero

To be established and updated as appropriate

MDB reports

A/I -6

Country/ regional-level Knowledge exchanges to share lessons learnt from designing/ implementing green recovery reforms

Number of knowledge products on implementing green recovery reforms organized

Number of knowledge events on implementing green recovery reforms organized

Baseline set to zero

To be established and updated as appropriate

MDB reports

A/I -7

Strategic staffing in country offices for a defined period and with a focused work program to deliver on green recovery reforms.

Number of dedicated green recovery-focused staff recruited in country offices

Baseline set to zero

To be established and updated as appropriate

MDB reports

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ANNEX B: PROPOSAL REVIEW SUMMARY

Criteria Score13

Part 1: Overall quality of the proposal [1-5]

Comments

Part 2: Alignment with funding criteria [1-5]

Comments

Part 3: Implementation potential [1-5]

Comments

Total score [Out of 15]

Proposed decision Yes/ No

YES, proceed with minor modifications

Comments

YES, proceed with significant modifications

Comments

NO, does not meet requirements

Comments

Approved funding amount

Should the originally requested funding be approved or would you propose a modified amount?

Original

Proposed

13 Score categories [0] Fails to Fit: requirements not addressed, or responses do not represent value [1-2] Poor Fit: limited and unclear information and relevance [3] Fair Fit: marginally sufficient amount of information and/or applicability [4] Good Fit: most parameters addressed, sufficient information and/ or applicability [5] Excellent Fit: all parameters addressed and highly relevant applicability

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ANNEX C: PROPOSAL SUBMISSION TEMPLATEThe proposals must follow the template below while submitting funding requests.Country/ region

Project Title

Implementing MDB(s)

MDB client

MDB focal point

Detailed description of proposed activity

Justification and theory of change

Consistency with selection criteria

Complementarity and additionality

Transformational change and knowledge sharing.

Budget

Host country

Short title of the proposal

Lead MDB submitting the proposal

Name, private/ public, brief introduction

Name and contact

More information on the demand for the activity, including clear linkages to COVID19 recovery strategy.

How it contributes to strengthen resilience of vulnerable communities to multiple socio-economic and environmental shocks

How the proposal reflects national context and challenges.How the proposal helps mobilize private sector investment and finance.How the proposal is complements existing work.

In relation to other projects/activities

Brief explanation of how the project supports transformational change and knowledge sharing.

Itemized budget, incl. co-financing if anyDetailed breakdown, incl. justification of each component

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Implementation plan and timeline

Stakeholder engagement and partnerships

Results framework

Assumptions and risks/ risk management

Co-financing, if any

Gender considerations and expected results

Detailed plan and key milestones

Specific objective, outcome(s), and outputs Indicators

Detailed implementation risk and relevant considerations as they may impact the delivery of the program

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