The UK / German NAMA Facility recently announced the results of its second call for proposals. As the most visible fund specifically targeting NAMAs, developing countries that are working on preparing NAMA proposals can learn a great deal about donor preferences. James Falzon from the Energy Research Centre of the Netherlands shares his experiences in preparing submissions to the NAMA Facility.

The UK / German NAMA Facility recently announced the results of its second call for proposals. As the most visible fund specifically targeting NAMAs, developing countries that are working on preparing NAMA proposals can learn a great deal about what donors see as most important. Nationally Appropriate Mitigation Actions (NAMA) were first coined in the context of the United Nations Framework Convention on Climate Change (UNFCCC) meeting in Bali in 2007. A voluntary measure, it refers to policies and actions that countries undertake to mitigate greenhouse gas emissions. Developing country governments can frame their NAMAs as ‘Supported NAMAs’, which seek to attract international financial and technical support from donors and climate funds. In 2012 the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) and the Department of Energy and Climate Change (DECC) of the United Kingdom (UK) jointly established the NAMA Facility. The NAMA Facility was the first fund specifically targeting support for NAMAs, and as such has an important signalling function for developing countries working on preparing their supported NAMAs. Although the formal selection criteria for the NAMA Facility is publically available, looking at the projects that have actually been selected by the NAMA Facility gives insight as to underlying quality criteria from the donor’s perspective. What do the pre-selected NAMA Support Projects of the 2nd round suggest as to ‘appropriateness’ from the donor perspective?

1. There is a clear preference for projects that employ existing disbursement frameworks and centrally involve established organisations that donors are comfortable working with. Of the four pre-selected 2nd round NAMA Facility projects, GIZ / KfW are the delivery organisations for three. They also run the technical secretariat of the NAMA Facility that selects projects, albeit through different departments. The other project is SNV Netherlands Development Organisation, with whom GIZ has worked extensively. Undoubtedly the involvement of these organisations, given their impressive track records and experience, contributed to superior proposals. However, they bring another important advantage, namely they minimise delivery and financial risk for the donors, and avoid contractual difficulties (often from the stringent conditions associated with Official Development Assistance).
2.  Giving donors the opportunity to play a strong role in project design can increase chances of obtaining financing. In a side-event at the COP 20, one of the recipients of the NAMA Facility indicated that KfW played an important role in the design of the programme, and some concessions needed to be made (by the government) in order that the programme be financed. ‘Negotiations’ of this kind are a normal part of the process in development co-operation and should be anticipated by prospective recipients.
3. Donor preferences are strong, and some selection criteria are not necessarily transparent. That the four projects in the 2nd round are from four different continents, and in different sectors, is unlikely a coincidence. This suggests that the NAMA Facility may have an uncommunicated criterion to seek a geographic and sectorial spread. This may be due to a desire to generate lessons and build momentum globally rather than in a single region which may already be more advanced on NAMAs (such as Latin America which received 75% of the first round of funding from the NAMA Facility).

What are the implications of the above for developing country governments working on NAMAs? It is clear that governments should build partnerships with a particular donor’s implementing bodies (or their preferred suppliers) as early as possible, and be prepared to be flexible on the design of the programme. Governments also need to be aware of the constraints and ‘unwritten preferences’ of the donor to which they apply. In practical terms, governments that seek support for their NAMAs will need to be as mindful as possible of existing development cooperation frameworks (many of which have existed for many years) and probe the preferences of the particular donor in question. Importantly, governments should be prepared to ‘move on’ if there is a clear mismatch in preferences and / or other significant constraints. As new funding streams such as the Green Climate Fund and other existing funds / donors increase their engagement with NAMAs, governments should see a growing spectrum of options for designing and financing their “Supported NAMAs”. However, given that donors will remain risk avers and that many of the preferences outlined above stem from a risk mitigation perspective, the above considerations are likely to remain relevant in future.

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