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: German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) as part of the International Climate Initiative (IKI)
Countries: Worldwide; Brazil, China, Mexico
Overall term: 2017 to 2020

Context

Cities and municipalities are responsible for three quarters of global CO2 emissions. This share is set to rise as a result of increased urbanisation. By 2050, the number of people living in cities will have increased by more than two billion, with developing countries and emerging economies at the forefront of this trend. The lion’s share of emission reductions to protect the climate will therefore be in urban areas. Decarbonisation of urban energy systems (the move away from carbon-based energy sources) will play a key role in this process. It includes promoting energy efficiency in buildings and urban transport systems as well as improving power management systems.

For many years international financing institutions such as the European Investment Bank (EIB) have been offering funding to help cities achieve their emission reduction potential. However, there has been insufficient demand for the funds and pay-outs have been subject to long delays. Cities and municipalities often lack the requisite institutional frameworks and know-how to develop projects which are eligible for funding and meet the standards imposed by international financiers. Financing institutions, meanwhile, often do not have appropriate instruments in place to be able to provide relevant stakeholders with enough advice and skills development support during project preparation and implementation. This means that the financial resources available are not being distributed and used in the best way possible.

Objective

Cities and municipalities in the regions covered by the project are able to develop and implement green energy projects eligible for financing.

Approach

The German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) has commissioned the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH with setting up a facility to advise cities on how to draw up and implement projects which will qualify for funding.

FELICITY, GIZ’s first collaborative project with the European Investment Bank as implementing partner, focuses on measures to boost energy efficiency and integrate renewable energies into the energy, water, transport, waste and building sectors. The project supports the implementation of mitigation measures in cities and municipalities by:

  • Providing needs-based advice for cities on how to apply for and use funding
  • Developing skills and resources in local administration
  • Offering policy advice on national frameworks for international climate financing
  • Providing knowledge management regarding financing mechanisms; further developing instruments and methods, for example intended nationally determined contributions (INDCs)

Chiefly, FELICITY is strengthening the capacity of cities and municipalities to prepare and implement projects, in direct association with the EIB funding which they hope to receive. The pilot projects in Brazil, China and Mexico are intended to serve as models in the project countries and to provide a basis for developing further measures in urban areas.

GIZ can harness the experience gathered from the pilot projects and analyses of the framework conditions for urban climate financing to sustainably improve national structures. Cities and municipalities will then be in a position, in the long-term, to develop and implement mitigation projects. The emission reductions achieved directly help fulfil national climate targets.