FELICITY: Promoting sustainable investments in climate-friendly urban infrastructure

Project description

Title: Financing Energy for Low-Carbon Investment – Cities Advisory Facility (FELICITY)
Commissioned by: German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU)
Countries: Mexico, Ecuador, Indonesia, Brazil
Overall term: 2017 to 2021

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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, over two billion more people will live in cities, primarily in developing countries and emerging economies. Emission reductions to mitigate climate change are therefore essential, particularly in urban areas. Moving away from fossil fuels and reducing climate-damaging emissions in urban infrastructure therefore play a key role, especially in the energy, mobility, waste and wastewater sectors.

International financial institutions such as the European Investment Bank (EIB) have been providing funding for years in order to realise emission reduction potential through sustainable green infrastructure. Up to now, however, there has been insufficient demand for these funds and delays in their disbursement. Cities and municipalities often lack the prerequisites and know-how to develop projects that meet the standards of international financiers. The financial institutions, on the other hand, often lack the appropriate instruments to adequately advise on the preparation and implementation of investment projects and to develop partner capacities. The result is that the available financial resources are not optimally distributed and used.

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Objective

Cities and municipalities in the partner regions have the capacities to prepare and implement investment projects that are eligible for funding in the area of climate-friendly urban infrastructure.

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 a project preparation facility to advise cities on the preparation, funding and implementation of green investment projects.

FELICITY, the first cooperation project between GIZ and the European Investment Bank as implementation partner. It focuses on measures in the energy, wastewater, transport and waste sectors. The project supports mitigation measures in cities and municipalities as follows:

  • The project prepares specific mitigation projects in cities that are eligible for funding from the EIB. To this end, it supports the preselection of suitable potential investment projects, as well as the development of their technical, financial and economic feasibility, the tendering processes and the management of environmental and social risks.
  • It promotes capacities and resources for project preparation. In addition, it facilitates access to funding in local administrations and from any financial intermediaries involved, such as development banks and government actors.
  • It advises on national framework conditions regarding international climate financing.
  • It conducts knowledge management for project preparation and financing mechanisms, strengthens sector networks and continues the development of instruments and methods for preparing projects worldwide.

The pilot projects in Brazil, Indonesia, Ecuador and Mexico provide examples of further measures in urban areas. The experience from the projects and analyses of framework conditions for urban climate financing can help to sustainably improve national structures. The emission reductions achieved contribute directly to the achievement of national climate targets. The projects therefore have an emission reduction potential of up to 1.98 million tonnes of CO2 equivalents over 15 years. This is approximately equal to the annual CO2 emissions from 430,000 small cars.

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Results

  • FELICITY supports projects in Mexico, Indonesia, Ecuador and Brazil with an estimated investment volume of 317 million euros.

  • The Brazilian ministry of energy has published new standards for preparing for investment in energy efficiency and solar power in public buildings. These standards are available in the form of a manual and are based on the experience gained from the FELICITY project in Porto Alegre.

  • In Mexico, FELICITY has teamed up with the BMU-funded PEEB programme to support the ministry of environment in revising and publishing guidelines on energy efficiency in the planning, construction and operation of hotels, and on energy transition methods in buildings.

  • The project has implemented capacity development measures for 3,300 municipal, regional and national experts. This entailed project preparation for and implementation of low-carbon investments.

Last updated: June 2021