Supporting Green Investment Banks in Emerging Economies

Transcription

1 Supporting Green Banks in Emerging Economies Call for Proposals Phase I Supporting Green Investment Banks in Emerging Economies Call for Proposals Phase I 18 August

2 Supporting Green Banks in Emerging Economies Call for Proposals Phase I 2 Supporting Green Investment Banks in Emerging Economies Call for Proposals - Phase I ClimateWorks Foundation ( ClimateWorks ) is pleased to welcome proposals to support efforts to scale Green Investment Banks in emerging market economies. Request This call for proposals ( Call ) seeks proposals to support the development, implementation, and operation of Green Investment Banks in emerging market economies. About ClimateWorks Foundation ClimateWorks mobilizes philanthropy to solve the climate crisis and ensure a prosperous future. ClimateWorks was created to help tackle the problem of climate change on a global scale, offering our funders, grantees, and partners the necessary combination of expertise, insight, and ability to strengthen their efforts to develop research and generate insights, engage industry and the general public, influence key decision makers, and mobilize investments to address global climate change. ClimateWorks envisions a future where the world s use of energy and natural resources sustains a safe climate that supports healthy communities and global prosperity. We align our work with the internationally-agreed objective to prevent global average temperature increase from exceeding 2 degrees compared to preindustrial levels a level that would enable us to prevent catastrophic climate change and stabilize the world s climate. Background context and rationale A number of public institutional models have emerged to pursue an effective and sustainable approach to expanding financing for the clean energy transition. These Green Investment Banks ( GIBs ), established in both developed and emerging markets, leverage public capital to mobilize private sector finance towards low carbon investments. 1 These institutions share a few key characteristics: public capitalization, a focus on serving local markets, a clear public mandate for low carbon development, and the use of financial structures that specifically address and prove out new markets for commercial products. GIBs typically seek to leverage their public funding by mobilizing private sector finance through a variety of strategies including de-risking, co-lending and co-investment, and demonstration of successful investment strategies. The majority of GIBs have been implemented in developed countries. However, substantial opportunities exist for GIBs to shift emissions trajectories and realize development objectives in emerging markets. ClimateWorks seeks to support efforts that demonstrate the power and flexibility of these institutions to a wide audience of stakeholders in a variety of geographic and economic contexts. The potential benefits are significant. GIBs can be responsive to emerging market country demands for sustainable finance while maintaining local control and focus. In addition, these institutions can improve 1 There is no formal definition of a green bank. However, efforts have been made to classify common characteristics of identified existing GIBs. For more on GIB definitions see, for example, the OECD s GIBs review ( or note the attributes of the constituent members of the Green Bank Network (

3 Supporting Green Banks in Emerging Economies Call for Proposals Phase I 3 enabling environments for the clean energy transition by organically expanding the financial and public sector ecosystem for clean energy investments. GIBs may operate as a locus for new financial product innovations, facilitate disbursement and demonstration of successful approaches, and provide a training ground for investors, finance professionals, and entrepreneurs. If successful, GIBs can expand existing development finance strategies into explicit energy transition investments to mobilize significant private capital and, importantly, ensure that green finance innovations are widely distributed. Call for proposals process overview ClimateWorks will request and evaluate proposals in two Phases. This open call is Phase I, and requests a concise concept note under the guidelines set forth below. At the close of Phase I ClimateWorks will evaluate submitted concept notes against the published evaluation criteria. Based on this Phase I assessment ClimateWorks may request a longer proposal (Phase II) from identified applicants. Funding decisions will be made following a review of full Phase II proposals. Specific Phase I concept note guidance, indicative budgeting details, and a process timeline are described below. Phase II guidance will be shared directly with applicants from whom a full proposal is invited. Concept note overview and requirements In the concept note, applicants should detail a set of activities to support an identified institution (existing or proposed), drawing explicit reference to the institution s jurisdictional scope. Proposals may address the development and implementation of a new GIB, the greening of an existing institution, the development of a GIB arm or subsidiary hosted within an existing institution, or a related activity. This Call is structured to support activities that fall within a single national or subnational jurisdiction, although innovative transnational or regional concepts may also be considered. While ClimateWorks anticipates that applicants may be headquartered in locations outside of the proposed GIB s host jurisdiction, ClimateWorks recognizes the importance of local organizations to designing context-specific interventions and realizing durable outcomes. As there is no universally agreed definition of emerging economies this Call does not apply a strict country list. The Call aims to identify opportunities in markets that can be argued to possess some of the characteristics of developing economies but are not seen to have achieved the standards of developed countries. For the purposes of this Call EU member states will not be considered; OECD membership, however, is not necessarily disqualifying. 2 This Call requests activities that can be completed during a period of one year or less. ClimateWorks acknowledges that the support necessary to establish GIBs can be time and resource intensive, and anticipates that proposals will therefore only address the initial activities of a multi-year program of activities. While multiple year funding will not be offered as a part of this Call, concepts should provide some realistic indication (including a budget projection) of the anticipated full scope of the project (i.e., how the first year s activities would be pursued beyond an initial one-year funding period). 2 For more on emerging economies, see:

4 Supporting Green Banks in Emerging Economies Call for Proposals Phase I 4 Concept narrative guidance The concept note narrative should cover the following elements: 1. Context: Brief overview of the jurisdictional scope of the GIB with reference to specific sectors and financing gaps to be targeted by the identified institution (e.g., technological profile, emissions trajectory, depth of financial markets). 2. Opportunity: Description of the existing opportunity to support the development of a new GIB or operational reforms that result in the greening of an existing institution. Narrative should make explicit reference to the proposed GIB s anticipated: a. Use of proceeds (e.g., sectors, markets, technologies, financial structures or products); b. Institutional design (e.g., mandate, ownership, relationship to other institutions, risk appetite); and c. Sources of capital (e.g., public domestic sources, international development finance, bond issues). 3. Approach and timeline: Description of the proposed approach, including planned activities and outputs, stakeholder targets, and a high-level timeline for the approach during the proposed one-year grant period. Although the Call does not intend to prejudice a specific teaming structure, for administrative purposes teams should designate a lead applicant organization. Additional organizations or consultants joining lead applicants in a team should be explicitly identified in the concept note. Where feasible, the concept narratives submitted for Phase I should address the following questions, whether incorporated into the description of proposed activities or separately: How do the proposed activities improve the feasibility of the GIB, given existing conditions, and what gaps in support do the activities fill? To what degree does the proposed GIB have the mandate and ability to develop and execute on a transformative investment agenda? What is the pathway to performance? Specifically, how do the proposed activities: a. Consider the political landscape and current stakeholder interests; b. Identify and unlock sufficient capitalization and operating budget to make significant transformative investments; and c. Enable professional GIB operation (e.g., adherence to financial best practice, staffed with sufficient sectoral expertise, political independence) capable of effectively executing on its green mandate. How do the proposed activities support the enabling environment for a GIB? Are the necessary local legal, regulatory, and economic conditions in place to allow the envisioned GIB to execute and enforce financial transactions with a reasonable likelihood of success? Please limit Phase I concept narratives, including responses to the initial questions, to 2,000 words.

5 Supporting Green Banks in Emerging Economies Call for Proposals Phase I 5 Concept appendix guidance An appendix with further details on project team, budget, and references, as detailed below, should be submitted with the concept narrative. There is no limit to the length of the appendix; its text will not count against the concept narrative word count. a. Team: Information about the team implementing the concept, including background, subject matter expertise (e.g., finance, law, economic modeling, policy analysis and advocacy), experience in identified jurisdiction, and proposed roles. b. Budget: A notional budget. Although there is no dollar limit to concept budgets, ClimateWorks indicatively anticipates making grant awards in the range of USD $50,000 to $250,000. No formal budget template is required for the Phase I concept note, however, proponents are requested to provide, at a minimum, aggregated anticipated project figures for the following spending categories: organizational salaries, travel, regrants/contracts, and overhead. Regrants or contracts with consultants or other organizations should be clearly itemized indicating the amount of funding each consortium member would receive. c. References: Three references familiar with the proponent s ability to successfully complete the envisioned activities in the region. At least one reference must be domiciled in the target jurisdiction. Assessment ClimateWorks will evaluate Phase I concepts based on the following principles. 1. Impact: Potential for identified GIB opportunity to realize primary outcomes related to market transformation and sectoral decarbonization. Secondary outcomes (e.g., professionalization of sectoral financing, influence on green finance policy in further jurisdictions, and advancement of new financing models) may also be considered. 2. Ambition: Opportunities will be weighed with consideration of the size of identified target market(s)/segment(s), scope of potential lending, and alignment of the envisioned institutional design of new/greened institution with GIB best practice. 3. Strength of team: Capacity of team to deliver on proposed activities with a particular focus on proponent s experience managing analogous projects to successful outcomes, technical expertise across identified team roles, and strength and relevance of local capacity. 4. Jurisdictionally appropriate: Identifies and accommodates political, market, and cultural realities and demonstrates how activities will be grounded in local knowledge and effective partnerships. 5. Value for money: Proposal makes effective use of limited high-opportunity cost philanthropic grant capital. Eligibility Teams with the appropriate subject matter competencies and relevant local expertise to accomplish the identified activities. No restrictions are put on the domicile or charitable status of the lead applicant organization (i.e., for-profits and organizations based outside the US are encouraged to submit

6 Supporting Green Banks in Emerging Economies Call for Proposals Phase I 6 concepts). There is no limit to how many concepts a single organization can submit, either as lead applicant or as part of a consortium. Timeline I. Deadline for receipt of Phase I concept notes: 14 September 2017 Phase I Evaluation: ClimateWorks will evaluate concept notes received in response to this Call for Proposals and may request supplementary information from selected applicants. Following this evaluation period, ClimateWorks may request the submission of a full proposal based on initial concepts. II. Anticipated deadline for receipt of Phase II full proposals from selected proponents: Early October III. Applicants notified of Phase II grant decisions: End of October IV. Grant start date: Projects should indicatively commence no sooner than 1 January 2018 and no later than 1 June How to Apply Phase I concepts should be sent to tim.stumhofer@climateworks.org by Thursday 14 September Inquires may be directed to the same address. Unfortunately, ClimateWorks is unable to respond to all individual inquiries with respect to this Call for Proposals, but may provide additional written guidance if determined necessary based on submitted inquiries.