Financing Energy for Low-carbon Investment – Cities Advisory Facility (FELICITY)

Project description

Title: Financing Energy for Low-carbon Investment – Cities Advisory Facility (FELICITY)
Commissioned by: Bundesministerium für Umwelt, Naturschutz und nukleare Sicherheit (BMU)
Overall term: 2017 to 2021

Context

Cities and municipalities are responsible for three quarters of global CO2-emissions, a share which will continue to rise due to increased urbanisation. By 2050, more than two billion people will live in cities, primarily in developing and emerging economies. Reduction of emissions of urban infrastructure therefore plays a key role in mitigation of climate change, especially in the energy, mobility, waste and wastewater sectors.

International financial institutions (IFIs) as the European Investment Bank (EIB) have been providing financing in order to realise emission reduction potential in urban infrastructure. However, IFIs see insufficient use of these funds or severely delayed disbursements. Cities and municipalities often lack the institutional framework as well as the know-how to develop projects that meet their high standards. The IFIs, on the other hand, may lack the appropriate instruments to adequately address project preparation and implementation with advisory services and capacity development for the relevant stakeholders at sub-national level. The result is that the available financial resources are not optimally distributed and used.

Objective

Cities and municipalities in the project regions have the capacities to develop and implement bankable, low-carbon infrastructure projects.

Approach

The German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) has commissioned the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH to establish an advisory facility regarding the development and implementation of bankable urban infrastructure projects.

FELICITY, the first cooperation project between GIZ and the European Investment Bank (EIB), focuses on measures in the energy, water, transport and waste sectors. The project supports the implementation of mitigation measures in cities and municipalities through:

  • Demand-oriented advisory to cities on applying for and using financing, as well as support in the preparation of concrete low carbon projects, subsequently to be financed by the EIB.
  • Development of capacities and resources in the local administration.
  • Policy advisory on national framework conditions regarding international climate financing.
  • Knowledge management on project preparation and financing mechanisms; further development of instruments and methods, e.g. nationally determined contributions (NDCs)

FELICITY assists cities and municipalities to build their capacities to prepare and implement low-carbon infrastructure projects, where possible linked to subsequent financing by the EIB. Pilot projects in China, Brazil, Indonesia and Mexico will serve as examples in their respective countries, on the basis of which further urban infrastructure projects can be developed.

GIZ uses the experience from pilot projects and analysis of framework conditions to advise towards sustainably improving national structures. This enables cities and municipalities to develop and implement mitigation projects in the long term. Emission reductions realised by investing in low-carbon infrastructure contribute directly to achieving national climate targets.

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