Results-Based Financing for Climate

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Energy+ Partnership (Energy+)

Created Feb 14 2017, 12:00 AM by Julian Sosa Valles
  • Energy access-project examples

Energy+ Partnership (Energy+) was launched in October 2011 with the primary goal to “increase access to sustainable energy services and reduce greenhouse gas emissions” by scaling up access to RE and enhancement in EE.[1] Energy+ adopts a sectorial approach rather than project-based approach. The types of support provided by Energy+ include policy development, technical support and financing.

Program Design: the Energy+ Partnership has 3 phases: Readiness Phase on determining need for support, preparing strategies/plans, and assessing initial institutional framework, Implementation Phase on results-based support on policy development and capacity building, and Performance Payments Phase on paying for verified increased access to energy and emission avoidance.[2] The partner countries that have joined the program include Kenya, Bhutan, Liberia, Ethiopia, Maldives, Senegal, Morocco, Tanzania, Nepal, Mali, Grenada, and Mozambique.[3]

 

Scope
Country Developing countries
Sector Energy sector
Timeframe 2011-2015[4]
Volume Results-based support of up to Norwegian Krone (NOK) 500 million for Ethiopia, 250 million for Kenya,100 million for Liberia over five years and 100 million for Bhutan.[5]
Final beneficiary Households, poor people who didn't have access to energy
Donor partner(s) France, Germany , Italy, UK, Spain, USA and the Netherlands
International
Organization partners(s)
United Nations Environment Programme (UNEP), United Nations Development Programme (UNDP), World Bank Group, Asian Development Bank, African Development Bank
Inputs and activities 1)     Inputs: Finances and providing knowledge on program and project implementation; 2)     Activities: Activities are country driven where in Phase 1, Energy+ will support development of low-carbon and energy sector strategies. In Phase 2, Energy+ will support prioritized investment projects in institutional capacity building, implementation of policy and legal reforms, establish monitoring and reporting systems, enable transparency and efficiency of regulatory regimes, and enable functioning of incentive mechanisms. In Phase 3, Energy+ will support results-based payment systems aligned with strategies in developing partner countries based on emissions reductions or increased access relative to the reference level based on agree-upon country level indicators.
On which level are RBCFs used? At program/sectorial level, payment based on (Phase III only) access to sustainable energy services and emission reductions
Disbursement linked indicator(s) tCO2e and KWh / MWh

 

In the design phase, Energy+ encountered a number of challenges. Firstly, it was difficult to determine appropriate metrics for improvements in energy access and basic lighting, as well as usage of advanced cook stoves. The verification transaction costs also needed to be kept to a minimum. Pre-financing needs in this program might divert resources in the country from other priorities, and in the event that other more significant concerns in the countries arise (e.g. unforeseen epidemic), the continuity of RBCF payment may be endangered.[6]

 

Purpose / Goal
Outputs 1)    Certain number of households are granted access to modern energy services; 2)    Certain amount of emission reduction in tCO2e achieved from power production activities; 3)    Certain amount of renewable energy capacity installed.
Outcomes Improvement in the access to modern energy services and abatement of greenhouse gas emissions.
Impacts 1)    Poverty reduction; 2)    Combat climate change
On which of these levels are measurable indicators defined / formulated? Output

 

RBCF Design & DLIs: The RBCF components occur in the second phase and the third phase. In the second phase, support for creating an enabling environment, policy development, legal reform, MRV systems, registry, etc. is provided based on delivery of results, i.e. RBCF. That is to say, funding is disbursed on the basis of deliverables, such as implementation of new policies or incentive schemes. There is also a pre-financing component in the second phase, that is, an initial down payment to start the process of building an enabling framework. In the third phase, RBCF is delivered on the basis of verified improved access to energy and increased renewable energy outputs (approximately equal to avoided emissions). DLIs used include activity data e.g. number of bills, receipt and invoices from the consumption of electricity to calculate the GHG emission (Activity data*Emission factor= GHG emission) and contribution of renewable energy sources to overall power consumption of a country.

 

Support Instrument
Type of support granted: 1)    Upfront grant funding to government for implementation of Phase I activities; 2)    Payments grants against verified emission results, the revenue generated from these results could be used to finance the projects.
How is the payment related to the goal(s)? 1)    Payment against the achievement of a pre-defined national or sectorial GHG baseline (in tCO2e); 2)    Amount of electricity produced in KW or MW from Facilities using renewable sources and exporting them to the grids.

 

Lessons-learnt: Energy+ has a design component that aligns climate policy EE enhancement and GHG reduction), with energy policy (energy access) and development goals (poverty reduction from energy access). Capacity building conducted for recipient countries through Energy+ Partnership program contribute to recipient country readiness in the near future to have direct access to various climate funds and in preparation for implementing NDCs.

 


      
[1] Energy+. 2012. Results based financing Energy+ Partnership between Ethiopia and Norway. Retrieved from https://www-cif.climateinvestmentfunds.org/sites/default/files/meeting-documents/results_based_financing_0.pdf
     
[2] Energy+. 2012. Results based financing Energy+ Partnership between Ethiopia and Norway. Retrieved from https://www-cif.climateinvestmentfunds.org/sites/default/files/meeting-documents/results_based_financing_0.pdf
     
[3] Norwegian Government. (n.d.). International Energy and Climate Initiative – Energy+. Retrieved from http://www.umb.no/statisk/energiseminar/Presentasjoner/Lindeman-EnergyPlus.pdf
     
[4] The Norwegian Minister of Foreign Affairs decided to close down Energy+ as an initiative as of the end of 2015.
           
[6] Oliver Knight, Paying for results: Energy+, 2012, http://blogs.worldbank.org/energy/paying-for-results-energy