Introducing the sector-specific climate toolkits for infrastructure PPPs

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Billion Photos/Shutterstock.com
Billion Photos/Shutterstock.com

We stand at a global climate tipping point. We know the Paris Agreement 1.5° C limit is achievable but will take a quantum leap in climate action. It’s vital for governments to step up their actions particularly when it comes to translating their nationally determined contributions, national adaptation plans, and related policy commitments into pipelines of investments for both the public and private sectors.  Investment and financing will be key drivers to building decarbonization pathways and climate resilience to meet Paris Agreement goals.

Private sector participation in climate-smart solutions is critical to meeting these goals by catalyzing innovation, competition, and leveraging financing opportunities—ultimately moving these solutions from the fringe to the mainstream. This is the key to drive the over $3 trillion in annual investments needed to meet these goals by 2050. Developing a pipeline of climate-smart public-private partnerships (PPPs) that translate the Paris Agreement commitments into viable, bankable solutions are at the center of meeting net-zero ambitions and building long-term resilience.  

The delivery and implementation of practical tools aimed at developing low-carbon and resilient infrastructure will help pave the way in translating the goals of the Paris Agreement into tangible action, particularly in emerging market and developing economies (EMDEs) and to enable private sector participation.

The World Bank Group stepped in to meet this need and launched the Climate Toolkits for Infrastructure PPPs as one of the primary tools for accelerating climate action. Deployed so far in 14 countries, the initial Umbrella Toolkit is designed for multisector applications, providing a modular approach to identify climate risks and entry points to incorporate mitigation and adaptation measures throughout the project identification, appraisal, contract structuring, and tendering phases of infrastructure PPPs.

Building on the Umbrella Toolkit, the World Bank Group has now launched five additional sector-specific Climate Toolkits for Infrastructure PPPs tailored to the development of low-carbon and resilient infrastructure  in the following sectors: Water Production and Treatment, Transport (Roads), Digital/ICT, Energy (Hydropower), and Energy (Solar and Wind) PPPs.

The toolkits are designed and structured to follow the upstream-to-midstream phases of the PPP life cycle process building from the Umbrella Toolkit for each sector as follows:

  • Module 1: Assists users with mapping climate policies and assessing projects against climate objectives in order to (i) identify climate aligned investments, and (ii) identify opportunities for alignment through pinpointing areas where climate-informed scope revisions may be required.
  • Module 2: Provides a simplified methodology for the preliminary Life Cycle Assessment of the project’s greenhouse gas emissions at a preliminary stage based on the project’s typology and publicly available data. It also provides practical analytical steps to document—at a preliminary stage—which climate risks could affect a project, what their impact could be, and which adaptation measures might be applicable.
  • Module 3: Provides tools to qualitatively estimate the impacts of climate considerations on the costs, benefits, and value for money of infrastructure projects. It also identifies opportunities to tap into new and innovative financing options, including climate and sustainable finance, and blended finance.
  • Module 4: Proposes a set of output requirements in the form of key performance indicators, certification requirements, and reporting that can be embedded in the PPP contracts to ensure compliance with the climate objectives that are specific to each sector.

This body of work—the Umbrella and the five sector-specific toolkits—are an innovation to help address fundamental challenges that have long inhibited private financing of climate smart infrastructure.  As we look towards the future, it is essential for countries to seize this opportunity for climate action, and these toolkits create an important pathway to advance Paris Agreement goals.

By embracing the standardized approach and practical guidance provided by these toolkits, client countries can unlock the potential of private financing and pave the way for sustainable and resilient infrastructure development.  Together, let us take decisive action and ensure that the climate infrastructure needs of the world's poorest communities are met. If we do so, we can make significant strides towards a more sustainable and resilient future for all.

 

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Authors

Gisele Saralegui

Global Climate Head for IFC’s PPP Advisory

Khafi Weekes

Climate Infrastructure Specialist

Mariana Silva Zuniga

Senior Infrastructure Finance Specialist, Global Infrastructure Facility

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