From Climate Resilient Green Economy Vision to Sectoral

*/ From Climate Resilient Green Economy Vision to Sectoral Investment Plans: The Sectoral Reduction Mechanism (SRM) and The CRGE Facility October 28 2013 Oslo

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Background § Ethiopia is the second most populous country in Africa § It is one of the fast growing countries in the world § Has officially declared (During COP-17) and pursed to building a Green and Climate Resilient Middle income Economy with a Zero net emission by 2025

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The Ethiopian CRGE Initiative Architecture

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The Ethiopian CRGE Initiative Cont. ) § The CRGE vision has identified several (>60) initiatives across seven sectors to achieve the net zero emission middle income economy § The prioritized green economy initiatives are divided in to three categories: Ø Own initiatives: that are planned and fully funded by the government Ø Supported initiatives: that are planned by the government but require support in implementation Ø Market-based initiatives: for which Ethiopia might be able to monetize carbon credits in exchange for GHG abatement

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The Sectoral Reduction Mechanism (SRM) § Is a mechanism for mobilizing action on climate change on the ground § Intends to contribute to the CRGE Vision through provision of upfront support and ex-post payment for the preparation and implementation of reduction interventions (both GHG and CC vulnerability reductions)

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM Conceptual Foundation § Understand the base year situation § Project the business as usual scenario § Undertake action

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM Objectives: i. Create a Transformative Impact § The mechanism will systematically integrate climate change and sustainability considerations into all of Ethiopia’s economic planning (on going and next Generation GTP) ii. Increase Investment § Helps to leverage finance by making catalytic investments § Through the Facility, allocates finance to approved actions, which contribute to the CRGE goals § Ensures provision of matching fund to private sector investments which have market potential

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM Objectives: iii. Improve Coordination § Clarifies roles and responsibilities to institutions and committees and assigns accountability across all phases § Develops and institutionalizes a process to coordinate among the involved institutions iv. Overcome barriers § The mechanism attempts remove policy, institutional, technological, behavioural and technical skill barriers in order to redirect existing and planned capital flows from traditional high-carbon to low-emission, climate-resilient investments

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM Objectives (cont. ) v. Create Synergies- with conventions such as the UNFCCC, and the Convention on Biological Diversity, the Convention to Combat Desertification, etc.

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM Steps 1. Planning § The Technical Unit, Mo. EF provides technical guidance for sectors on SRAs preparation § The CRGE-F in Mo. FED provides statement on the availability of funds that can be allocated to sectors § IEs (line ministries, regions) will draft SRAs § SRAs are a critical instrument in the SRM process for drilling down from high level strategies, into detailed sector led implementation and investment planning for action on the ground § The SRA should be sector-wide covering a number of programmatic interventions, combining inputs at both a federal and regional level § Development partners are expected to support SRA drafting § The CRGE-F Secretariat and the Technical Unit provide quality assurance against agreed criteria

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM Steps (cont. ) 2. Approval § SRAs are submitted by the IEs to the CRGE Facility Secretariat for financial and technical review (carried out by the Technical Unit) § The technical unit review based on the standard criteria (technical and financial viability, monitoring and evaluation) approves the SRAs or send it back to the sectors for revision § The Management Committee makes the final decision on the SRAs to be financed immediately or remain in the waiting list for the next round of funding

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM steps (Cont. ) 3. Implementation § IEs can directly implement the SRAs or seek the involvement of EEs § Should IEs decide to involve the EEs, in collaboration with the CRGE Facility Secretariat, they will facilitate the process for soliciting proposals and selecting delivery partners

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The SRM steps (Cont. ) 4. Monitoring and Evaluation § Overall M&E responsibility of the SRM lies with the CRGE Facility § Ministries report to the CRGE Facility Secretariat in line with agreed M&E framework and existing/improved budgeting processes § Mo. EF manages the technical monitoring and evaluation § Specific responsibilities under the M&E programme will be assigned to IEs and EEs

The SRM Work Process Step-2 Implementing entities (IEs) work to develop sector action plans Step-3 EEs invited to develop investment proposals, against priorities identified in the SRPs Step-4 EEs prepare investment proposals and submit to IEs Step-5 IEs review and bundle investment proposals into investment packages in line with strategic priorities of the SRPs Step-1 Set green growth strategic vision including detail indicators for progress Step-14 The CRGE Facility reports to contributors Imple menta tion Step-6 submission of investment packages and proposals to the CRGE Facility Step-12 EEs report to the IEs Step-11 The IEs release fund to the EEs Planni ng M&E Step-13 IEs report to the CRGE Facility Appro val Financ ing Step-7 Technical and financial review and appraisal of the investment packages Step-10 The Facility Secretariat releases money to the IEs Step-9 The management committee priorities and makes the funding decision and instructs the facility Secretariat to facilitate fund release Step-8 Approved investment plans sent to the management committee for financing decision

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Components of the SRAs: a. Establish Geographical Coverage § Federal or regional and the corresponding split of responsibilities for delivery b. Stocktaking § The SRAs review current interventions, plans and policies of the sector in order to select interventions, set baselines, targets c. Baselines § SRAs identify the current level of emissions and vulnerability d. Targets § SRAs set out Measurable, Verifiable and Reportable targets for reducing vulnerability and emissions

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Components of SRAs (Cont. ) e. Interventions § The SRA will spell out the proposed interventions for each sector and quantify the investment need f. Delivery § The SRA will outline details about the proposed delivery mechanism for the above interventions g. Risk management § The SRA will identify potential conflicts and trade-offs with CRGE objectives

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Components of SRAs (Cont. ) h. Monitoring and evaluation § The SRAs should define the framework for monitoring and evaluating the sector’s progress for meeting its CRGE targets § The SRA will clearly set out the M&E framework with expected outputs, outcomes and indicators § SRAs should establish safeguard measures and tools for assessing value for money and effectiveness § Ensure alignment with the overarching CRGE M&E framework and the requirements of MRV procedures, produced by the Technical Unit

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The CRGE Facility § Preliminary estimates indicate that building the green economy alone require total expenditure of around US$ 150 billion over 20 years § The government of Ethiopia has established The CRGE Facility in September 2012 Objectives: 1. To help mobilize, access, and combine finances required for implementing the CRGE from international, public and private sources 2. To help improve environmental management for a climate resilient green development through provision of grants, guarantees for loans, co-financing, payment for verified results and loans

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Main Duties and Responsibilities of the CRGE Facility § Resource mobilization § Receiving resources mobilized from different sources § Disburses funds to Implementing Entities (IEs) for implementation of programs and projects appraised and approved by the task force § Receives project proposals, registers and forward to advisory board and task force for technical and financial appraisal

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Duties and Responsibilities (cont. ) § Receives substantive and financial report from the IEs § Monitors and evaluates § Request independent verifiers including MOEPF on reports submitted by sectors § Ensures the agreed procedures, rules and regulations are adhered to § Quality assurance

The CRGE Facility Governance Arrangement FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The CRGE Task Force: § Two development partners will be represented in Task Force during appraisal and review of investment plans and project proposals The CRGE Management Committee: § Two contributors can be represented in management committee on rotational basis. They can have decisionmaking power on financial resources other than government allocations § The UN Resident Coordinator will be represented on allocations from the International Account

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The Facility Advisory Group: § Reviews draft investment plans and provide comments and suggestions to the CRGE Task Force and Management Committee § Is not part of the decision-making process, which will remain entirely with the Government of Ethiopia The Facility Secretariat: § Will receive investment plans and project proposals submitted by IEs and send them to Task Force for technical appraisal, review and prioritization

The CRGE Facility Appraisal Process FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

Processes for Disbursing Funds from the CRGE Facility FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Scope of The CRGE Facility Monitoring and Evaluation § Focuses on development and climate (emission and vulnerability reduction)results § M&E of development results is primarily the responsibility of the MOFED § M&E of climate results (i. e. MRV) is primarily the responsibility of MEPF § Sector institutions (implementers) are directly involved and should ensure project beneficiaries get involved in M&E

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