Project Identification Form (PIF)
Project Type:
the GEF Trust Fund
Submission Date: March 1, 2008
Re-submission Date:
Indicative CalendarMilestones / Expected Dates
Work Program (for FSP) / NA
CEO Endorsement/Approval / 05/08
GEF Agency Approval / 06/08
Implementation Start / 07/08
Mid-term Review (if planned)
Implementation Completion / 12/10
part i: project IDentification
GEFSEC Project ID[1]:
gef agency Project ID: P101404
Country(ies): Jordan
Project Title: Energy Efficiency Investment Support Framework
GEF Agency(ies):
Other Executing partner(s): FFEM, AFD, GOJ
GEF Focal Area (s):
GEF-4 Strategic program(S): CC-SP 1&2
Name of parent program/umbrella project:
A. Project framework (Expand table as necessary)
Project Objective: Promote investment in energy efficiency.Project Components
/Indicate whether Investment, TA, or STA**
/ Expected Outcomes /Expected Outputs
/Indicative GEF Financing*
/ Indicative Co-financing* / Total ($)($)
/%
/($)
/%
1. Establish a support facility for the identification, preparation and financing of EE Projects / TA / Increase in funded projects and kWh/TOE avoided / Operational Clean Energy credit linePipeline of bankable EE projects / 550,000 / 50.0 / 550,000 / 50.0 / 1,100,000
2. Awareness creation and market development for EE / TA / Increased EE business interest by ESCOs, lenders, eqpmt vendors / Outreach events, business briefings, technical guides, newsletters, website / 150,000 / 50.0 / 150,000 / 50.0 / 300,000
3. Capacity building and institutional frameworks creation / TA / Increased technical capacity and new enabling policies frameworks / Scaled-up EE industrial capacity, new frameworks created to overcome barriers / 300,000 / 27 / 1,000,000 / 73 / 1,300,000
4. Clean Energy Credit Line / Investment / Reduction of energy demand growth, decreased energy intensity of Jordanian economy / Scaled-up investment in EE and renewables across all consuming sectors, leveraging of commercial financing and private equity / 0 / 40,000,000 / 100 / 40,000,000
5. Project management / 0 / 0 / 2,400,000 / 100 / 2,400,000
Total project costs / 1,000,000 / 44,100,000 / 45,100,000
* List the $ by project components. The percentage is the share of GEF and Co-financing respectively to the total amount for the component.
** TA = Technical Assistance; STA = Scientific & technical analysis.
B. Indicative Financing Plan Summary For The Project ($)
GEF / 0.00 / 1,000,000 / 100,000 / 1,100,000
Co-financing / 200,000 / 44,100,000 / 44,300,000
Total / 200,000 / 45,100,000 / 100,000 / 45,400,000
* Please include the previously approved PDFs and planned request for new PPG, if any. Indicate the amount already approved as
footnote here and if the GEF funding is from GEF-3.
C. Indicative Co-financing for the project (including project preparation amount) by source and
by name (in parenthesis) if available, ($)
Project Government Contribution* / Grant / 2,100,000
GEF Agency(ies) / (select)GrantSoft LoanHard LoanGuaranteeIn-kindUnknown at this stage
Bilateral Aid Agency(ies) / (select)GrantSoft LoanHard LoanGuaranteeIn-kindUnknown at this stage (FFEM) / 2,200,000
Bilateral Aid Agency(ies) / Credit Line (AFD) / 30,000,000
Multilateral Agency(ies)
Private Sector / (select)GrantSoft LoanHard LoanGuaranteeIn-kindUnknown at this stage
NGO / (select)GrantSoft LoanHard LoanGuaranteeIn-kindUnknown at this stage
Others / Grants, loans, equity / 10,000,000
Total co-financing / 44,300,000
* The amount of $2,100,000 is for the first year (FY08) and has already been approved by the Government. Subsequent contributions are expected to be about $2.8 million in FY09 and $1.4 million in FY10.
D. GEF Resources Requested by Focal Area(s), agency (ies) share and country(ies)*
GEF Agency / Focal Area / Country Name/Global / (in $)
Project Preparation / Project / Agency
Fee / Total
(select)World BankUNDPUNEPAsDBAfDBEBRDIADBFAOUNIDOIFAD / (select)BiodiversityClimate ChangeInternational WatersLand DegradationOzone Depletion SubstancesPersistent Organic PollutantsNDI/CSPSGP/CB/LDC-SIDS Support
(select)World BankUNDPUNEPAsDBAfDBEBRDIADBFAOUNIDOIFAD / (select)BiodiversityClimate ChangeInternational WatersLand DegradationOzone Depletion SubstancesPersistent Organic PollutantsNDI/CSPSGP/CB/LDC-SIDS Support
(select)World BankUNDPUNEPAsDBAfDBEBRDIADBFAOUNIDOIFAD / (select)BiodiversityClimate ChangeInternational WatersLand DegradationOzone Depletion SubstancesPersistent Organic PollutantsNDI/CSPSGP/CB/LDC-SIDS Support
(select)World BankUNDPUNEPAsDBAfDBEBRDIADBFAOUNIDOIFAD / (select)BiodiversityClimate ChangeInternational WatersLand DegradationOzone Depletion SubstancesPersistent Organic PollutantsNDI/CSPSGP/CB/LDC-SIDS Support
(select)World BankUNDPUNEPAsDBAfDBEBRDIADBFAOUNIDOIFAD / (select)BiodiversityClimate ChangeInternational WatersLand DegradationOzone Depletion SubstancesPersistent Organic PollutantsNDI/CSPSGP/CB/LDC-SIDS Support
(select)World BankUNDPUNEPAsDBAfDBEBRDIADBFAOUNIDOIFAD / (select)BiodiversityClimate ChangeInternational WatersLand DegradationOzone Depletion SubstancesPersistent Organic PollutantsNDI/CSPSGP/CB/LDC-SIDS Support
Total GEF Resources
* No need to provide information for this table if it is a single focal area, single country and single GEF Agency project.
part ii: project JustiFication
A. State the issue, how the project seeks to address it, and the expected global environmental benefits to be delivered: Although Jordan has made some progress in improving energy efficiency (EE), overall energy intensity (over 0.5 tonne of oil equivalent per US$1,000 of GDP) is much higher than in OECD countries and most MNA countries. Scaling-up investment in EE will require overcoming an array of barriers, including a shortage of technical capacity (there is only one ESCO in the country), lack of awareness and risk-aversion of financial institutions, uncertainty in energy policy and pricing regimes, and absence of comprehensive institutional arrangements for overall policy coordination as well as project identification and development. Current EE efforts are modest and uncoordinated initiatives, such as the Jordan Upgrading and Modernization Program (JUMP) and Building Management Systems (BMS), which have not resulted in EE market development or increases in commercial lending.The MSP will support near-term development of financial remediation windows for EE within the proposed Jordan Renewable Energy and Energy Efficiency Fund (JREEF). Development of an Energy Efficiency Investment Support Framework would thus parallel the efforts of the stand-alone GEF-financed Promotion of a Wind Power Market project, creating technical and managerial capacity for EE projects and direct access to a credit line dedicated to energy efficiency projects. This approach is consistent with the Government's agreement with the World Bank to avoid the proliferation of funds in the country by establishing a combined renewable energy and EE fund (JREEF) that would have clear demarcations between renewable energy and EE responsibilities, but be managed as a single institution. The proposed MSP with cofinancing from FFEM ( the French GEF) and the GOJ will build institutional and technical capacity within the JREEEF framework and mobilize a clean energy line of credit from the French Development Agency (AFD). The total credit line amounts to about $58 million and includes EE, renewable energy and other environmental projects. It is expected that at least half of the credit line will be utilized for EE and renewables. The credit line will allow scaling up EE measures in residential, commercial and industrial sectors via both the interest rate subsidy window and the loan guarantee window envisioned in the JREEF design. In addition to supporting the design and establishment of the EE part of the JREEF, the proposed MSP will also support implementing several interventions and market development activities designed to remove the barriers to scaling-up EE. The global environmental benefit from early operation of the EE windows of the JREEF using the AFD clean energy credit line include reduced energy intensity in the Jordanian economy (measured in tonnes of oil equivalent per US$1000) and avoided carbon emissions from reduced use of fossil fuels (diesel, heavy fuel oil and natural gas).
B. Describe the consistency of the project with national priorities/plans: The Hashemite Kingdom of Jordan has few indigenous energy resources, with about 96% of energy supply imported. In the past four years energy costs have increased dramatically, reaching 20% of GNP, as oil prices have risen. Jordan is pursuing several initiatives to diversify its supply sources and mitigate the adverse balance of payments situation, including: substituting natural gas for more-expensive oil, developing renewable energy sources (wind and solar), and improving end-use efficiency. In 2006 the Government approved an EE Strategy calling for improved energy efficiency through appropriate legislation, tariff and financial policies, raising public awareness on EE, and establishing an institution to coordinate EE activities. The GoJ plans to promulgate legislation for renewable energy, incorporating energy conservation, by early 2008, which will also provide a legal framework for the JREEF. It is currently updating its overall energy strategy, which it also expects to complete in early 2008. A key focus of the strategy is conservation and development of alternative energy sources.
C. Describe the consistency of the project with gef strategies and strategic programs: Recent studies have estimated a possible reduction in energy use of over 20% through scaling up investments in energy efficiency, at an approximate cost of some US$150 million. A substantial part of this reduction can be achieved by EE investment in commercial and residential buildings and in industry, which fall under GEF’s Strategic Programs 1 and 2. The proposed MSP aims to provide the necessary technical assistance for removing barriers, developing EE capacity and markets, and providing a dedicated financing facility to rapidly scale up deployment of EE technologies and energy conservation practices. It will create the technical and instiutional conditions needed to access the AFD clean energy credit line and, through the JREEF framework, finance EE investments and develop EE markets. The clean energy credit line will flow through several financing windows (e.g. for credit facilitation for commercial projects, for grants for non-commercial projects, and for market development activities). The MSP, with cofinancing from GoJ (US$2,100,000 in FY08), French GEF (US$2,200,000), AFD ($30,000,000), and other donors (unidentified at this stage) and private sponsors (US$10,000,000) includes the following components:
1. Establish a Support Facility for identifying, preparing and financing investment projects, including support in operationalizing the JREEF, conducting energy audits and feasibility studies, and preparing project documents and financing packages(US$1,100,000; GEF: US$550,000).
2. Awareness creation and market development, including preparation of websites and other information dissemination media and material, conducting demonstration projects and workshops, working with commercial lenders, developers and other key decisionmakers, and capacity building activities for stakeholders (US$300,000; GEF: US$150,000).
3. Capacity building and institutional frameworks creation, through training and accreditation of EE practitioners, creation and licensing of new ESCO SMEs, public-private partnerships, policy advice on equipment certification, standards and labeling and building codes, and preparation of subsidiary legislation for the JREEF (US$1,300,000; GEF: US$300,000)
4. Clean Energy Credit Line, made available to interested banks at preferential interest rates and without the need for government guarantees, that banks would use for lending to eligible projects (US$40,000,000 (indicative); GEF: US$0).
5. Project management, including establishing the PMU, technical assistance to PMU staff, results monitoring and evaluation, and reporting (US$2,400,000; GEF: US$0)
D. Outline the Coordination with other related initiatives: The MSP is part of an overall EE program which will include a credit facility, financed by AFD and other donors, within the JREEF. AFD would contribute about US$30 million in the form of soft loans, with a 13 year tenor, to participating Jordanian banks (four of which have already been identified). This loan plus about US$10 million from other donors and self-financing by companies, would finance investments. The GEF (MSP) and French GEF grants would support establishment of the project preparatin capacity and institutional frameworks needed to enable investment. This overall EE program withint the JREEEF will be an integral part of Jordan’s national initiative for energy conservation. The government is in the process of establishing the JREEF, which will be the umbrella institution for the coordination of all current and future EE and renewable energy activities.
E. Discuss the volue-added of GEF involvement in the project demonstrated through incremental reasoning : The AFD and other financiers plan to support EE investments through credit lines and other soft financing. However, enabling this investment flow requires establishing a support facility to create a pipeline of bankable EE projects, improve the policy and regulatory framework, scale-up industrial capacity to undertake projects and project preparation, raise public awareness about the benefits of EE, and address outstanding barriers to EE investment, especially in the financial community. Building capacity and overcoming barriers to penetration and adoption of EE technologies and practices are necessary preconditions to EE market development, Without GEF support to these incremental costs the baseline case would be a continued low level of EE investment, delays in the creation of EE windows within the JREEF, and a continuation of high energy intensity levels in the Jordanian economy.
F. Indicate risks, including climate change risks, that might prevent the project objective(s) from being achieved, and if possible including risk measures that will be taken: The current high global demand for equipment, including that required for improving EE and for renewable energy, and corresponding high costs and delayed deliveries, could delay or prevent achievement of the MSP’s objectives. This is a risk for most EE and renewable energy projects which can not be mitigated locally. Another risk is that donors may not accept the role of the JREEF as a coordinator of EE activities and will proceed with individal initiatives without proper coordination with others. This risk is being mitigated by wide stakeholder review of the ongoing design work of the fund and ensuring that the design is not restrictive; but allows for various financing options. An associated risk is that of the Government not adopting the new legal framework or adopting a legal framework for EE that is not conducive to achieving the project’s objective. To minimize these risks, the WB would agree with the Government on ways to ensure wide stakeholder consultation is conducted prior to submitting the legislation for approval and on target dates for promulgation of the new legislation prior to approval of the MSP
G. describe, if possible, the expected cost-effectiveness of the project: To ensure the best use of the limited MSP resources, they will be used to finance incremental costs in three areas considered critical for the success of the larger complementary project. These are areas for which debt finanicing is inappropriate but without which debt financing is unlikely to materialize: (i) technical assistance for initial operation of the JREEF; (ii) EE market development; and (iii) capacity and institutional framework creation. The MSP resources will be matched almost four to one by French GEF and GOJ financing, which will supplement MSP resources in the three areas identified above plus provide for 100 percent of the project management costs of the EE investment support framework. Together these resources will enable efficient disbursement of the $30 million in AFD clean energy credit financing for Jordan. Neither the MSP nor French GEF will finance investments, bur will enable the flow of AFD and other donor contributions to the EE window of the JREEF.