APRC Mission to Bangladesh, 22-27 May 2011

Martin Krause, Faris Khader, Gernot Laganda

This BTOR contains our observations, analysis and recommendations and is structured around the following topics:

CO staffing and capacity

UNDAF Action Planning

Institutional strengthening and capacity development

Renewable Energy project pipeline management

Upscaling UNDP’s work on Coastal Afforestation

Implementation support to the ongoing Coastal Afforestation project

Observations on the Poverty, Environment and Climate Mainstreaming (PECM) project

Donor relationships

Mission TOR and Agenda are to be found in the annex.

CO staffing and capacity

Staff capacity in the CO has increased significantly (3 new professional staff) which is an encouraging development. Lack of staffing capacity was identified as a major bottleneck for expanding the E&E portfolio during the August 2009 mission. Both CO teams (adaptation and environment) are now fully staffed and have started engaging in new initiatives around UNDAF pillar 5, Outcome 1 and 2.

UNDAF Action Planning

Outcome 1 and 2 and related Outputs of UNDAF pillar 5 describe the climate, environment and energy work to be undertaken over the next 5 years. For issues related to Outcome 1 (climate change adaptation and disaster risk reduction) please see detailed discussion in the section on LDCF. Outcome 2 covers two areas, namely (1) low emission development, climate mitigation, energy, and (2) environment and ecosystems more broadly. Two comprehensive programmes which would serve as successors to the Sustainable Environmental Management Programme (SEMP) could be designedaround these two areas and are discussed below. Such an approach could facilitate resource mobilization and help position UNDP in this space.

For the low emission area of work, formulation of a comprehensive programme - focusing on energy and mitigation - is recommended. A good concept paper already exists which should be expanded and fleshed out resulting in a full programme proposal. The low emission programme will comprise all ongoing and planned initiatives in the area of climate mitigation, renewable energy and energy efficiency. Main elements of such a programme could include:

  • Institutional strengthening of the newly emerging CC Department and of SEDA;
  • Supporting the deployment of renewable energy technologies such as household bio-digesters, wind energy and solar LED lanterns;
  • Strengthening the CDM regulatory framework in Bangladesh; and possibly
  • Creating a Center of Excellence related to clean industry, which could support the implementation of the industrial policy (UNIDO to take the lead in the latter).

APRC advisors will suggest revisions to the current concept and at the same time the CO should initiate a PA/initiation plan allocating approx. 100,000 USD for the design phase of the programme. It is also recommended to allocate approx. USD 3 million from TRAC resources to such a low emission programme. DFID has expressed interest in a dialogue over the next few months and they might consider allocating resources to a UNDP led low emission programme. DFID has substantial resources available and pressure to allocate and disburse quickly, hence could be a good partner for this work. A DFID scoping mission will arrive in Dhaka in June to assess and recommend allocation of funds to the CC MDTF and/or other channels. It is strongly recommended that the CO engages with the mission; the APRC team is also ready to speak to them in a telecon.

Recommendations/Follow up:

(1) Reviseand expand concept on low emission programme;

(2) Determine allocation of TRAC resources;

(3) Formulate an initiation plan/PA; and

(4) Proactively engage with DFID on resource mobilization.

Similarly, for the environment and ecosystems area of work, formulation of a comprehensive programme is recommended. Such a programme could include the GEF Biodiversity (BD)/Land Degradation (LD) soft pipeline ideas and respective STAR allocation (USD 1,88 million BD + USD 1,12 million LD). It could be combined with approx. USD 2 million from TRAC, which provides a strong case to leverage additional funds from bilateral donors. Ecosystem adaptation and water (mentioned by the Dutch embassy) are particular topics of interest and could be woven into such a programme (if feasible).

Recommendations/ Follow up:

(1) Formulate a concept for a comprehensive ecosystems/ biodiversity programme;

(2) Determine allocation of TRAC resources;

(3) Proactively engage with Dutch embassy on resource mobilization.

For the UNDAF Pillar 5 Action Plan, it seems advisable to cross-check which ongoing initiatives have been counted by UNDP as ‘Regular Resources’ and/or ‘Other Resources’. Initiatives which have already disbursed some or most of their funds (such as the coastal wetlands and brick kiln project) should not be counted in full.

Recommendation/Follow up:

Check and if necessary correct USD figures listed in the action plan against ongoing UNDP projects.

Output 2.1 seems well covered, considering that most GEF- and LDCF-funded projects have been counted here. This involves ongoing and prospective new BD projects, POPs projects, and ongoing and prospective LDCF projects. The question how UNDP can mobilize projects related to pollution should be revisited, as UNIDO seems to have a comparative advantage in this field. UNIDO’s work on pollution (relating to cleaner production, phase-out of ODS and other industrial processes (e.g. reducing pollution from tanneries) should be mapped more comprehensively.

Recommendation/Follow up:

(1) Discuss with UNIDO specific pollution related initiatives covered under the UNDAF and suggest that they take the lead.

Institutional Strengthening and Capacity Development A new CC Department is being created within the MoEF and a renewable energy authority in emerging within the Department of Energy (SEDA). These 2 new institutional structures require support on all fronts. Institutional capacity strengthening is a strategic investment that can help the GoB to organize itself better around matters of CC financing and programming. This is especially relevant in view of the emerging international CC financing architecture (new vertical funds for climate change adaptation and mitigation; perspective of the Green Fund; perspective of direct access, etc.). It is also relevant in the context of the 2 climate trust funds that are already operational. Government partners have requested UNDP support to develop capacities and strengthen these structures. In particular, MoEF wants to improve processes and procedures for allocating resources from the 2 CC trust funds and requested UNDP support in this area. This is a politically sensitive yet strategically important area of work which could be included in a UNDP support programme. If the new CC Department will be tasked with managing the climate change trust funds, there may be some reputational risks involved, given the transparency and governance concerns currently associated with those funds.

Other agencies are doing or planning to undertake similar activities (DFID [200k], ADB [500k], USAID [??]), and it is important that we coordinate properly with all actors involved. This is a crowded space but it is also a strategic engagement in an area of traditional UNDP competency. It is recommended that the CO consults with DFID, ADB, USAID and MoEF to find out what exactly these agencies are planning to do and where the space is for UNDP. In principle it is recommended to design a component specifically dedicated to capacity development for CCD and SEDA respectively under the low emissions programme mentioned above. At the core of such a component is the recruitment of a senior staff to be seconded to CCD and SEDA respectively, following the PECM model. Under PECM, a senior expert is placed at a critical interface in the Planning Commission, delivering vital intelligence to the UNDP CO and mobilizing targeted support for critical capacity gaps in the Planning Commission.

Throughout most meetings conducted with government counterparts and development partners, it became clear that ADB’s TA on capacity development (which is envisaged as part of the SPCR) is not perceived to coverthe critical needs of the newly emergingCC Department in the MoEF. An initial investment of around 500,000.- US$ will be required to kick-start a process in which the organizational setup of this Department can be fine-tuned and a number of fast-start training initiatives (such as Logical Framework Analysis; Climate Change Financing; REDD; Carbon Finance; Low Emission Climate Resilient Development Strategies; South-South transfer with other CC Departments in the region, etc.) can be launched.

The establishment of SEDA has been long delayed but according to several of the partners we met with, it is expected to become operational at some point this year. There is an express demand and expectation on the part of government and development partners that UNDP will play a leading role in helping to set up SEDA, define and clarify its mandate and bolster its capacity so that it becomes the nodal agency on renewable energy and energy efficiency in Bangladesh. There has been some tension in the past between the Bangladesh Energy Regulatory Commission (BERC), which regulates the electricity, gas and petroleum sector, and the Ministry of Power, Energy and Mineral Resources over whether SEDA should have any regulatory authority. In our view, SEDA should have regulatory authority on clean energy issues if it is to effectively stimulate market development of sustainable energy technologies. It is essential that UNDP gets this capacity development support right, as a strong and credible SEDA will shape donors’ perceptions of UNDP’s effectiveness and will in turn help position UNDP as a reliable player in this space.

Recommendations/Follow up:

(1)Design a comprehensive institutional capacity strengthening component for the emerging CC Department and SEDA – in close consultation with government and donor partners – as part of the low emissions programme.

(2)Support placement of a Technical Advisor in the new CC Department and SEDA, and develop a suite of fast-track training measures to kickstart the capacity development activities in critical areas (International CC Finance; Low Emission Climate Resilient Development Planning; REDD; Project Cycle Management; etc.)

Renewable Energy project pipeline management

Bangladesh faces an energy crisis. 18 million households do not have access to electricity and those that do face sporadic power cuts. It is estimated that electricity supply will have to grow by a factor of four or five, from the current level of 5,000 MW to 20,000-25,000 MW, over the medium term in order to meet the rapidly growing demand for electricity. This would require an investment of $1 billion per year in the energy sector. The shortage of electricity generation capacity represents a major constraint to economic growth and consequently to the achievement of the MDGs and Bangladesh’s goal of becoming a middle income country by 2021. Currently, renewable energy only accounts for 1% of the total energy mix. Under the Renewable Energy Policy, the Government has set a target of a 5% RE share by 2015 and 10% RE share by 2020.

Clearly, renewables will not be the solution to the country’s energy crisis but they can help place Bangladesh on a low-carbon development path, and importantly they can bring vital local benefits such as increased energy access for the poor, reduced reliance on imported oil, and increased energy security. Through the proposed GEF-funded RE programme, UNDP can support the market development of promising RE technologies such as household bio-digesters and solar LED lanterns based on the successful model established under the solar home systems (SHS) initiative. Figure 1 below highlights some of the key success factors of the SHS project, which is largely considered to be the most successful SHS project in the developing world, with 1,000 systems being disseminated every month.

Figure 1: Success Factors of GEF/WB Solar Home Systems Project

Source: Meeting with GIZ on 25 May 2011.

Given the current dynamics within the GEF, it is very unlikely for two separate RE projects to be approved under GEF-5. Therefore, we would recommend folding the pro-poor solar lanterns initiative under the broader RE programme. The size of the GEF grant is likely to be on the order of $4.5 to $5 million. It is worth noting that under the ADB-supported Asia Solar Energy Initiative, GoB plans to install 500 MW of solar power, approximately 40% of which would come from solar irrigation pumps. UNDP can play a vital, catalytic role in lowering some of the major barriers preventing the widespread diffusion of solar and other renewable energy technologies in Bangladesh.

We received the GEF Project Review of the RE programme on 23 May 2011. Four main issues were raised: 1) a greater level of project resources should be directed towards demonstration investments as opposed to TA, 2) it should be clarified which of the proposed activities are planned to occur anyway without GEF funding, 3) the GEF project grant request should be lowered, and 4) the UNDP co-financing contribution should be increased. On this last point, we will include TRAC resources of $300,000 that were earmarked for the RELIEF PIF in this proposal. For the other points, Faris will schedule a telecon with the GEF Program Manager to reach a common understanding on all of the outstanding issues. Following the call, Faris and Sarwat can then work together to address the GEF comments, with a view to resubmitting the PIF by the middle of June.

Recommendations/ Follow Up:

(1)Combine the off-grid and on-grid RE projects under one programme.

(2)Undertake a telecon with GEFSEC to go over all outstanding issues

(3)Based on this discussion, Faris and Sarwat to revise the PIF and provide responses to GEF comments. PIF resubmission is targeted by 17 June.

Upscaling UNDP’s work on Coastal Afforestation

The mission has dedicated substantive time to the question how UNDP’s current adaptation and coastal afforestation portfolio can be upscaled to achieve critical mass and transformational impact. A number of opportunities, such as upscaling of the ongoing LDCF project through the Strategic Programme for Climate Resilience (SPCR), the Bangladesh Climate Change Resilience Fund (BCCRF) or the government’s own Climate Change Trust Fund had not yet been systematically evaluated by the UNDP CO.

In April 2011, the DoF has submitted a 25 million US$ proposal to the BCCRF to undertake a large-scale afforestation and reforestation programme in all coastal and several hill districts. Systematic alignment of this project with ongoing and planned LDCF-funded coastal afforestation projects is considered essential to avoid ‘business as usual’ tree planting and propagate community-based adaptation benefits (e.g. through replicating the Fruit-Fish-Forest model); replicate lessons learned about adaptive greenbelt management (e.g. how to choose a resilient mix of mangrove and non-mangrove varieties and optimize planting techniques/patterns to match the demands of a changing climate); and promote models for efficient and well-coordinated project implementation (such as co-located Project Management teams).

A Project Identification Form (PIF) and Project Preparation Grant (PPG) for Phase II of the project “Community-based Adaptation through Coastal Afforestation” (3 million US$ from the LDCF, 6.5 million US$ in parallel co-financing from various sources) was originally submitted to the GEF Secretariat in November 2010. After 3 revisions of the PIF following review sheets by the GEF Secretariat, the PIF and PPG were resubmitted on February 8, 2011. Since then, the GEF Secretariat has failed to provide official feedback to Bangladesh on the success of this submission. From earlier interaction, we believe that this lack of feedback is related to the impression of some individuals within GEFSec that the project is insufficiently connected to large baseline programmes (such as the SPCR and BCCRF) and therefore insufficiently transformative.

The recent submission of a 25 million US$ project by the DoF to the BCCRF presents a concrete new opportunity to connect the pending LDCF PIF more closely and systematically to a larger baseline programme. Meetings with the Secretary, Joint Secretary and Deputy Secretary, MoEF; the Chief Conservator of Forests, DoF; and the local World Bank office have led to agreement among key stakeholders that BCCRF funding could be used to cover baseline costs for tree planting activities, while LDCF resources could ensure integration of community-based adaptation and livelihood support options with these afforestation and reforestation actions. Along these lines, UNDP has agreed to revise the PIF and submit to MoEF, DoF, WB and UNDP CO for review. Together with a new LoE (upscaled from 3 million US$ to 5.65 million US$ of LDCF financing) and a cover letter explaining the rationale for the revision, the PIF can be resubmitted to the GEF Secretariat over the course of June 2011.

Recommendations/Follow up:

(1)UNDP APRC to provide a revised and streamlined PIF with a larger financial envelope that is closely aligned with the BCCRF

(2)UNDP CO to solicit comments from key stakeholders (MoEF, BFD, WB) and submit revisions/edits to APRC

(3)UNDP CO to obtain new LoE and cover letter for resubmission from Secretary in-charge

(4)UNDP APRC to resubmit PIF to GEF Secretariat (target date: 30 June 2011)