Ethiopian CRGE Initiative: Vision for Green Economy

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Ethiopia aims to build a green, climate-resilient, middle-income economy with zero net emissions by 2025. The Sectoral Reduction Mechanism (SRM) plays a crucial role in mobilizing climate action on the ground to achieve this vision, providing support for reduction interventions. The country has identified over 60 initiatives across seven sectors, categorized as Own initiatives fully funded by the government, Supported initiatives needing implementation support, and Market-based initiatives potentially monetizing carbon credits for GHG abatement.

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

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Background 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 The Ethiopian CRGE Initiative Architecture FINANCE PARTNERS POOLED FINANCE LEVERAGED FINANCE SECTORAL REDUCTION MECHANISM CAPACITY DEVELOPMENT PROGRAMME CRGE FACILITY STRATEGY CRGE SECRETARIAT CLIMATE RESILIENT GOVERNMENT OF ETHIOPIA CRGE MANAGEMENT COMMITTEE VISION GREEN ECONOMY CRGE TASK FORCE IMPLEMENTING PARTNERS

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The Ethiopian CRGE Initiative Cont.) 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: Own Own initiatives: initiatives: that are planned and fully funded by the government Supported Supported initiatives: initiatives: that are planned by the government but require support in implementation Market Market- -based based initiatives: 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) 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 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: The SRM Objectives: i. Create a Transformative Impact 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 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: The SRM Objectives: iii. Improve Coordination 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 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.) The SRM Objectives (cont.) v. Create Synergies 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 The SRM Steps 1. Planning 1. Planning The Technical Unit, MoEF provides technical guidance for sectors on SRAs preparation The CRGE-F in MoFED 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 T The SRM Steps (cont.) he SRM Steps (cont.) 2. Approval 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 T The SRM steps (Cont.) he SRM steps (Cont.) 3. Implementation 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 T The SRM steps (Cont.) he SRM steps (Cont.) 4. Monitoring and Evaluation 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 MoEF manages the technical monitoring and evaluation Specific responsibilities under the M&E programme will be assigned to IEs and EEs

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

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

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

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Components of SRAs (Cont.) Components of SRAs (Cont.) h. Monitoring and evaluation 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 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 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 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 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 (cont.)

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The CRGE Facility Governance Arrangement The CRGE Facility Governance Arrangement Inter-Ministerial Steering Committee NOTE: bodies in darker blue boxes have decision-making responsibilities MOFED MEPF NOTE: bodies in light green boxes host and enable CRGE entities Management Committee CRGE Task Force Advisory Board CRGE Secretariat

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The CRGE Task Force: 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: The CRGE Management Committee: Two contributors can be represented in management committee on rotational basis. They can have decision- making 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 T The he Facility Advisory Group: 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: 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

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA The CRGE Facility Appraisal The CRGE Facility Appraisal Process Process Secretariat prepares proposal packages for appraisal Secretariat submits proposal packages to Task Force for technical evaluation Secretariat submits proposal packages to Advisory Board for review and comment Use Standard Proposal Form Use Appraisal Checklist/ Criteria Task Force commences technical evaluation and seeks clarifications Advisory Board commences review and highlights issues of concern Use Proposal Evaluation Scoresheet Task Force completes technical evaluation and selects/ prioritises proposals Advisory Board reviews completed evaluations and relays opinions to Management Committee Apply Policy on Environmental & Social Safeguards Technical Committee submits final evaluations and reports to Secretariat Management Committee reviews selections against availability of funds Secretariat relays evaluations and reports to Management Committee Management Committee confirms decisions on award of funds Use Funds Allocation Matrix

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Processes for Disbursing Funds from the CRGE Processes for Disbursing Funds from the CRGE Facility Facility MOFED Strategic Targeted Allocations/Ledger Allocations/Ledger NIE Targeted Strategic Allocations/Ledger Allocations/Ledger Sector Approved Accounting Intermediary Bureau/Other State Actor at Regional Level State Actor at Woreda Level Non State Actor Executing Entity Other Implementing Partners

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA Scope of The CRGE Facility Monitoring and Evaluation Scope of The CRGE Facility Monitoring and Evaluation Focuses on development development and climate 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 climate (emission and