Annual Review Template_April 2020 - Amazon Web Services



Title: Transformative Carbon Asset Facility (TCAF)Programme Value ? (full life): ?60m CDEL + ?5m RDELReview date: June 2020 (review period: 1 Apr 19 – 31 Mar 20)Programme Code: GB-GOV-13-ICF-0027-TCAF?Programme start date: March 2017 Programme end date: Jan 2034Summary of Programme Performance YearDec 17Jul 18July 19July 20Overall Output Scoren/aAA+BRisk Rating ModerateModerateModerateMajorLink to Business Case: Business case Link to results framework: LogframeLink to previous Annual Review (if appropriate)2019 Annual Review A. SUMMARY AND OVERVIEWDescription of programme TCAF is a multilateral trust fund, established through a partnership between the World Bank Group (‘the Trustee’) and seven Contributors, which will help ODA-eligible countries to host carbon pricing projects and prepare them to trade carbon credits under the Paris Agreement. It does this primarily by: developing proposals for emissions reductions at a sector or economy-wide level; building host capacity to monitor and report on reductions; developing new crediting methodologies (i.e. ways to demonstrate that an activity has generated a carbon credit); following and piloting emerging guidance on accounting for carbon trades from the UN Framework Convention on Climate Change (UNFCCC); and,sharing its lessons with the international community.The UK’s contribution of ?60m means we have a place on the decision-making Facility Board, alongside Norway ($80m), Sweden ($25m) and Switzerland ($25m).Summary of progress and supporting narrative for the overall score in this review Overall, little progress was made towards Logframe targets over this review period, including a target for the first TCAF project to be operational by April 2020. The main reason for the delay is that since September 2019, Contributors and the Trustee have been taking stock of and responding to an instruction to pause project work from the government hosting the most developed TCAF proposal. This instruction, and emerging evidence from other crediting pilots, required Contributors and the Trustee to re-consider how carbon accounting should take place under TCAF, including how and when host governments will agree to undertake corresponding adjustments to make sure carbon credits are only counted towards one emission reduction target. This ongoing consideration dominated the TCAF work programme during this review period, and meant that pipeline development activities were limited. This delay, as well as the missed logframe targets, is reflected in the overall programme score of ’B – Outputs moderately did not meet expectation’. For this reporting year five of eleven output targets, and the one outcome target falling due, were missed. The main reason for delays is the above-mentioned revision of TCAF deal structures. Without this, potential hosts cannot be meaningfully engaged. A second significant driver was changes in host country administration and priorities, with some activities paused for over a year. This means that a key assumption made in the UK business case (that ‘sufficient political willingness … long term stability and adequate and predictable resourcing’ would be available) has not always held. Third, when TCAF proposals form part of a bigger envelope of development funding, they have sometimes been delayed when these broader operations have been rescoped, or key personnel have moved on. In light of these three issues, once a deal structure is agreed, the programme should be rebaselined by updating the logframe to take account of these issues. The Trustee made significant efforts to resolve the first of these issues, drafting and revising several versions of a document to inform Contributors’ discussions, and arranging an extraordinary meeting and conference calls. Although most of their efforts were focussed on this issue, the Trustee’s knowledge management work made a significant contribution to the understanding of participants and non-participants (outputs 2 and 3) including other funds, and its resources are being effectively managed (output 4). However, the lack of agreement on a deal structure at the time of writing, means the overall risk rating increases to ‘major’. Additional outputs included the presentation of pre-PINs for proposals in Cote D’Ivoire and South Africa, which met contributor expectations, a draft PIN for a project in the Philippines, two excellent sectoral blueprints for potential projects in agriculture and demand side energy efficiency, and work between the Trustee, IPSOS Mori and Contributors on the first independent evaluation of TCAF. This concluded just after this review period and was largely positive (see Section F). Finally, other carbon market funds have drawn on the Trustee’s technical reports, demonstrating that the programme is building knowledge among both participants and non-participants. Progress against recommendations from the last reviewThe Trustee’s response to the recommendations made in the previous Annual Review is assessed below and has generally been good. Some recommendations remain relevant and have been carried over or reflected in those made by this review. RecommendationProgressAs part of its capacity building activity, the Trustee should ensure, among other issues, that hosts understand the relationship between TCAF activity and their NDC achievement, and align that approach with those taken by other Trust Funds, including Ci-Dev, or other non-World Bank initiativesNot Achieved – this was not possible in the absence of agreement on a deal structure. However, the need for such activity is captured by logframe output target 2.1, and so will be taken forward there, rather than under a recommendation. The Trustee should continue to develop TCAF proposals to ensure there is a strong pipeline of suitable projects that fully commit the facility’s resources, and should seek to develop a portfolio that as a whole meets the overall objectives for TCAF.Partially achieved and rolled over - Pipeline development beyond pre-PIN has effectively been paused while the deal structure issue is discussed, although an additional pre-PIN was put to the TCAF Board and approved for further development at the January semi-annual meeting. BEIS and the Trustee should review and update the Logframe outcome indicators and output 1.1 once there is more detail on the developing pipeline, but in time for use in the next annual reviewRolled over – with additional clarity on the pipeline likely, a Logframe review would be appropriate, though in accordance with UK guidance, would need to conclude before October. BEIS should work with Facility Board members to ensure there is sufficient alignment and understanding between members’ objectives and expectations for TCAF funding, to enable timely progress on TCAF activities towards logframe indicatorsRolled over – during the review period, BEIS and COP26 Unit officials worked with Contributors and the Trustee to communicate the UK’s expectations, and understand theirs, although deal structure agreement has not yet been reached. The Trustee should continue efforts to ensure TCAF’s mitigation outcomes and programmes are compliant with Article 6 of the Paris Agreement, and emerging criteria under CORSIA (the Carbon Offsetting and Reduction Scheme for International Aviation)Achieved – the Trustee’s work during the review period reflected the emerging Article 6 guidance. The ‘Core parameters for TCAF operations’ document suggests that TCAF’s approach meets the standards expected under CORSIA. Assuming the first independent evaluation concludes by its end March deadline, the Trustee should issue a response to its conclusions and recommendationsRolled over – the evaluation concluded in April, and a Management Response from the Trustee should follow. Major lessons and recommendations for the year ahead This year we make five recommendations: The Trustee is to continue to develop TCAF proposals, sharing at least two new proposals with contributors by the end of 2020, to ensure there is a robust and diverse pipeline of suitable projects that fully commit the facility’s resources, and contribute towards meeting TCAF’s overall objectives. BEIS and the Trustee are to review and update the Logframe outcome and all output groups in time for use in the next annual review, before October. This is conditional on the emergence of a clear picture on pipeline development by October 2020.The Trustee is to issue a Management Response to conclusions and recommendations from the first independent evaluation of TCAF, by Ipsos-MORI, before 2021.The Trustee is to use any certainty provided by an agreed approach to deal structures to develop an internal engagement strategy that helps bring forward new proposals from broader Bank activities, including Development Policy Operations, and that raises the profile of TCAF within the World Bank, within two months of any such agreement. BEIS is to work with Facility Board members to ensure there is sufficient alignment and understanding between members’ objectives and expectations for TCAF funding, to enable initial proposals put forward over the next review period to be approved for further development., escalating to UK seniors where helpful.B: THEORY OF CHANGE AND PROGRESS TOWARDS OUTCOMES Summarise the programme’s theory of change, including any changes to outcome and impact indicators from the original business case. The?underlying premise?for TCAF is that carbon pricing and market mechanisms can play an important role reducing GHG emissions, by creating incentives for countries to develop in a low-carbon sustainable way that offers development benefits. Lessons from these projects will showcase opportunities, through expert groups and outreach to UNFCCC workstreams, to the global community of how carbon pricing mechanisms can help deliver or exceed the targets set out in countries emissions reduction targets.?The two outcomes for TCAF are:Participating jurisdictions are able to implement robust and sustainable carbon pricing mechanisms that lead to verified emissions reductions?and;?Non–participating jurisdictions are better able to consider and implement robust carbon pricing as a result of lessons from TCAF support.?There has been no significant change to outcome and impact indicators since the light touch logframe review set out in the previous annual review. This April, the TCAF SRO approved an extension in TCAF’s lifecycle, from end 2028 (as set out in the business case) to end 2034. This is so TCAF can remain operational after 2030, when host countries are most likely to trade any surplus credits. The steps to achieving outcome and impact appear, overall, to remain valid. However, an assumption that implementation is complemented by ‘sufficient political will’ has not always held, with some hosts unwilling to follow emerging UNFCCC guidance, or placing lower priority on piloting Article 6 projects. New administrations have paused TCAF programmes, or key Ministry teams have moved on. This is also supported by emerging evidence from other UK-supported World Bank funds, and by the experience of some governments seeking bilateral deals. To the extent possible, TCAF should respond by carefully considering political conditions and alignment with host climate strategy during project development, and by promoting the benefits of TCAF’s approach to potential hosts. At TCAF’s early stage it is too early for a thorough assessment of value for money. The Trustee has used resources efficiently, e.g. combining knowledge management activity with other funds, or events, allowing for cost sharing while still gaining benefits. More broadly, the UK is not seeking emissions reductions at least cost and so has not set a desired price per tonne for CO2 reduced through TCAF operations. Rather our objective is to identify transformative interventions. The transformative potential of TCAF proposals is therefore the UK’s main principle to determining credit prices. Around 86% of UK funding is results-based, which incentivises TCAF project entities and host governments to deliver results, and should help deliver vfm in the longer term. Should TCAF projects not reach commercial signoff though, there will be a broader opportunity cost as ICF funding could have been better used elsewhere. Describe where the programme is on/off track to contribute to the expected outcomes and impact. What action is planned in the year ahead? The programme is generally not on track to meet the two overall outcomes above, or output group 1 in the logframe. TCAF operates in a more challenging environment than perhaps was expected at business case sign off. These challenges are principally misalignment of Contributor objectives, capacity building requirements, still undecided UNFCCC guidance, alignment with broader lending operations and administrative and policy change in host countries. Not all of these are beyond the Trustee’s control and this is reflected in the recommendations made by this review. The programme is making a significant, high-quality contribution to the understanding of participants and non-participants (outputs 2 and 3) including other funds, and its resources are being effectively managed (output 4). The logframe will be updated following this review to reflect this context. It is currently unchanged from the previous annual review. Justify whether the programme should continue, based on its own merits and in the context of the wider portfolio There are strong arguments for continuing the programme, despite delays and complexity. The role of effective carbon pricing and an effective carbon market in meeting the Paris Agreement’s temperature goals have been?recognised by?the IPCC’s?1.5°C Special Report, the New?Climate Economy, and research that indicates a well-functioning carbon market could reduce the price of global achievement of countries’ climate targets (called Nationally Determined Contributions, or NDCs) by up to $250bn by 2030. TCAF continues to offer lessons to several ICF carbon markets, pricing and forests and land use programmes, particularly Ci-Dev, whose future crediting strategy is based to a large extent on TCAF work. However, without finalising commercial deals and putting TCAF projects into action, such lessons will be limited. It is therefore critical that agreement is reached on a TCAF delivery model. C. DETAILED OUTPUT SCORING Output Title Results-based finance provides necessary incentive to allow implementation of new and innovative GHG emission reduction crediting mechanisms.Output number: 1Output Score: BImpact weighting (%): 40Weighting revised since last AR? NoRisk ratingMajorRisk revised since last AR?YesIndicator(s)Milestone(s) for this reviewProgress 1.1 Number of programmes at: a) Pre-PIN stage - i.e. pre-PIN has been presented by the Trustee - and b) PIN stage - i.e. PIN has been presented by the Trustee. Both cumulative.11 3 Surpassed: 13Delayed: 1 1.2 Percent of programmes that move from: a) Pre-PIN to PIN stage b) PIN to ERPAa) 40%b) 50%Not achieved: 38% (5 pre-PINs)Not achieved: 0%1.3 Number of ERPA terms that are approved by the Facility Board1Not achieved: 01.4 Volume of results-based financing disbursed to TCAF programmes in support of crediting interventions ($m).No target until 2021Not scored Briefly describe the output and provide supporting narrative for the score. The target for presenting pre-PINs (1.1a) was surpassed, despite the broader discussion on deal structures occupying much of the Contributors’ and Trustees resources. This is welcome news. However, once approved so that full proposal development can start, these are not usually developed into PINs that are presented to the Board (although two draft PINs have been presented for informal review and are not included in the 1.1b score). PIN and ERPA development are being impeded by issues including:higher than expected capacity building requirements (e.g. [REDACTED], where the Board agreed an additional grant); delays as new administrations re-evaluate the climate programmes they host (e.g. [REDACTED]); changing delivery partners (e.g. [REDACTED]); rescoping of broader development operations of which TCAF is just a small part ([REDACTED]); and host government unwillingness to agree some pre-conditions of TCAF support (e.g. [REDACTED]). Our expectation that the first set of ERPA terms would be approved by the Facility Board (1.3) has been missed. Assess the VfM of this output compared to the proposition in the Business Case, based on performance over the past year Cost per pre-PIN/PIN/ERPA is probably the best measure of vfm for this output. The cost of developing a TCAF PIN is around $400k, although this is based on a single project. The historic per-project development costs in other World Bank carbon funds average around $350k per ERPA. The slightly higher cost under TCAF is acceptable as it likely reflects the much broader capacity building required by TCAF-scale crediting approaches. The Trustee has policies to ensure that during proposal development, procurement activities help to ensure vfm in terms of factors including price, fitness for use, environmental efficiency, and operating costs. When presenting proposals, the Trustee has demonstrated consideration of equity issues, e.g. distributional effects of a carbon pricing intervention on one sector’s informal workers. TCAF donors have agreed not to pursue the cheapest available abatement in host countries. The UK business case anticipated up to 5 ERPAs worth $30m-$50m each coming from a total $250m fund. Current capitalisation is c.$215m. Describe any changes this output, and any planned changes as a result of this review. There have been no changes to the output. If sufficient detail of future TCAF proposals is available in Q3 of 2020, these indicators should be reviewed and updated. Progress on recommendations from the previous AR (if completed), lessons learned this year and recommendations for the year ahead Previous AR (rolled over): The Trustee should continue to develop TCAF proposals to ensure there is a strong pipeline of suitable projects that fully commit the facility’s resources, and should seek to develop a diverse portfolio that as a whole meets the overall objectives for TCAF.Pipeline development beyond pre-PIN has effectively been paused while the deal structure issue is discussed, although an additional pre-PIN was put to the TCAF Board and approved for further development at the January semi-annual meeting.Previous AR (rolled over): BEIS and the Trustee should review and update the Logframe outcome and all output groups in time for use in the next annual review, before October. With additional clarity on the pipeline likely, a Logframe review would be appropriate, though in accordance with UK guidance, would need to conclude before OctoberOutput Title Relevant knowledge transferred to participants resulting in increased capacity and readiness for the effective and sustainable management of carbon pricing mechanisms (including baseline methodologies and MRV). Output number: 2Output Score: BImpact weighting (%): 25Weighting revised since last AR? NoRisk ratingModerateRisk revised since last AR?NoIndicator(s)Milestone(s) for this reviewProgress 2.1 Effective strategy for capacity building is a) developed and b) delivered for each projecta) 2b) 0a) Not achieved: 0 b) 0Briefly describe the output and provide supporting narrative for the score.In preparing proposals, the Trustee has effectively identified headline capacity building elements in potential TCAF host countries, in particular Morocco, where a well targeted approach was discussed and agreed with Contributors. However, in the absence of agreement on TCAF deal structures, these elements cannot be fully developed into effective strategies. As the international negotiations have evolved since 2016, it has become clear that a great deal of analytical work will need to be undertaken by the host country to properly determine pricing, credit volume and the subsequent impact(s) on NDCs. Consequently, the Trustee plans to incorporate significant capacity building activities and support into the standard country engagement model, including virtual delivery during the Covid-19 pandemic. Areas to be covered will include domestic crediting strategies, the relationship between scaled up crediting and NDC achievement, legal title (i.e. who owns the credits), and how hosts will be supported to meet their carbon accounting obligations under the Paris Agreement.Assess the VfM of this output compared to the proposition in the Business Case, based on performance over the past yearComplete capacity building strategies that go beyond explaining the general features of TCAF projects cannot be further developed without agreement on the TCAF delivery model. While it is too early to make a thorough vfm assessment of the provision of capacity building to host governments, there does appear to be a vfm risk that capacity building activity needs to be repeated in instances where governments and/or ministry personnel change, that TCAF will need to continue to assess in developing proposals.Describe any changes this output, and any planned changes as a result of this review. There have been no changes to the output. If sufficient detail of future TCAF proposals is available in Q3 of 2020, these indicators should be reviewed and updated. Progress on recommendations from the previous AR (if completed), lessons learned this year and recommendations for the year aheadPrevious AR: As part of its capacity building activity, the Trustee should ensure, among other issues, that hosts understand the relationship between TCAF activity and their NDC achievement, and align that approach with those taken by other Trust Funds, including Ci-Dev, or other non-World Bank initiatives.This was not possible in the absence of agreement on a deal structure. However, the need for such activity is captured by logframe output target 2.1, and so will be taken forward there, rather than under a recommendation.This year: The Trustee should use any certainty provided by an agreed approach to deal structures to develop an internal engagement strategy that helps align TCAF considerations with broader World Bank activities, including Development Policy Operations, within two months of any such agreement. Output Title Relevant knowledge transferred to targeted non-participants, including UNFCCC negotiations, by effectively sharing TCAF blueprints and lessons learntOutput number: 3Output Score: AImpact weighting (%): 25Weighting revised since last AR? NoRisk ratingMinorRisk revised since last AR?YesIndicator(s)Milestone for this reviewProgress 3.1 TCAF annual Knowledge Management Work Programme developed, implemented and reviewed as appropriateYes Achieved 3.2 Number of enquiries from non-participating TCAF jurisdictions/sectors/areas that express interest in TCAF-style methodologies (cumulative).4Surpassed: 5 (South Africa, Egypt, Kenya, Peru, Thailand)3.3 Number of events and reports conducted/delivered by the Trustee to inform and consult on TCAF, build capacity of UNFCCC negotiators, engage the private sector and non-participating jurisdictions and disseminate programme experience. Not cumulative.8Achieved: 8 Briefly describe the output and provide supporting narrative for the score.A Knowledge Management Work Programme for this financial year was developed and signed off in June (3.1). It was well targeted at the most important TCAF audiences (potential hosts, policymakers and UNFCCC participants). Potential hosts continue to express interest in TCAF (3.2). Towards indicator 3.3, the Trustee has issued three reports: two on crediting potential in two sectors, and one on how TCAF might operationalise UNFCCC carbon accounting guidance. This helped shape the transition strategy of another Bank carbon market programme. All were completed to a very high standard and in good time. Five events counted towards 3.3: a joint event with the Zurich Carbon Markets Platform, where the TCAF experience was discussed with a range of global expert academics and practitioners; a session with the Swiss Environment Department; and a workshop at the UNFCCC, to developing country carbon market representatives. At these three events, which the TCAF programme manager attended, the Trustee’s presentations and facilitative approach helped to promote and test TCAF’s experience in an excellent exchange of views. Other events were conference interactions in South Korea and Singapore, to well-targeted audiences.Assess the VfM of this output compared to the proposition in the Business Case, based on performance over the past yearThe Trustee helped achieve good value for money by sequencing outreach activities to minimise cost, while ensuring high quality and an appropriate audience. The use of knowledge products by other funds suggests they generate value beyond TCAF.Describe any changes this output, and any planned changes as a result of this review.There have been no changes to the output. If sufficient detail of future TCAF proposals is available in Q3 of 2020, these indicators should be reviewed to focus more on quality, rather than quantity of results, and consider covid implications on delivery.Recommendations for the year aheadPrevious AR (rolled over): BEIS should work with Facility Board members to ensure there is sufficient alignment and understanding between members’ objectives and expectations for TCAF funding, to enable timely, consensus-based progress on TCAF activities, escalating to UK seniors where necessary.Output Title Effective fund management of TCAF ensures efficient use of Tranche resourcesOutput number: 4Output Score: AImpact weighting (%): 10Weighting revised since last AR? NoRisk ratingMinorRisk revised since last AR?NoIndicator(s)Milestone(s) for this reviewProgress 4.1 Specified project management processes and products are implementedYes Achieved 4.2 Evaluation activity is undertaken in accordance with an agreed Evaluation PlanFirst Evaluation completedAchievedBriefly describe the output and provide supporting narrative for the score.Good progress was made under 4.1. Communications and preparation for meetings have been carried out to a high standard with adequate commenting periods and the opportunity to shape agendas. The Trustee has consulted with Contributors to pursue agreement on an operating model for TCAF. Where Contributors were unable to agree on particular issues, the Trustee went as far as its role allowed in quickly developing and presenting possible solutions and BEIS very much welcomes these efforts. A final draft of the first evaluation, carried out by IPSOS Mori under a contract with the Trustee, was presented to Contributors in late March, and comments including the UK’s were taken on board before it was finalised. The UK and other Contributors were given good opportunity to comment on and shape the evaluation, which aligned with the Evaluation Plan and was completed to a high standard (see Section F for more). The TCAF programme manager was interviewed for evidence. Progress on recommendations from the previous AR (if completed), lessons learned this year and recommendations for the year aheadThis year: The Trustee should issue a Management Response to conclusions and recommendations from the first independent evaluation of TCAF, by Ipsos-MORI, before October.D: PROJECT PERFORMANCE NOT CAPTURED BY OUTPUTSThe requirement to agree a delivery model under which a host agrees to undertake a corresponding adjustment (CA) dominated the work program during the review period. To avoid a situation in which projects are developed but later dropped because of non-CA agreement from the host government, CA needs to be addressed early in the development process. Until an operational model is agreed upon, pipeline development activities have been limited. In order to support the Contributors in deciding how to operationalise CA for TCAF, the Trustee wrote several versions of a CA discussion note, along with several iterations of proposed ways to operationalise CA within the TCAF context. An extraordinary meeting was organised in October 2019 to discuss the topic. The Trustee has maintained engagement with several countries (Mexico, Colombia, and South Africa) to keep discussions progressing to the extent possible, while the CA issue is agreed.E: RISKOverall risk rating: Increases to Major Risk Type and DescriptionMitigation Residual RAG Delivery: TCAF Contributors do not agree a delivery model, delaying deals and resultsUK will work at pace with other donors to agree a delivery model that meets respective expectations and offers a workable deal to host countries. Donors should retain flexibility to amend the approach in the longer term if it does not lead to agreements. MajPolitical: TCAF host governments are unwilling or unable to comply with TCAF provisions from the Paris AgreementEach project will have a dedicated capacity building strand to help host partner ministries to understand the requirements the Paris Agreement places on crediting programmes, including on accounting and corresponding adjustments. BEIS and the Trustee will stay alert to the response from TCAF host countries to any TCAF deal structure, and react quickly in the event that this does not prove attractive. While TCAF capacity building will help, it may be impossible to fully mitigate the risk that a host government choses to not to commit to selling credits internationally until they are clearer on their NDC strategy.. MajDelivery: The Covid response in host countries means TCAF work is deprioritisedTCAF is in the pre-implementation phase, so some progress can be made through desk work and virtual meetings. The Trustee will monitor and report on changes to the priority assigned to TCAF by host governments.ModPolitical: Change in host country government jeopardises TCAF activityWorld Bank country offices remain alert to broader political changes and the priorities of host governments and continues to assess these in TCAF proposals. UK uses embassies and high commissions to understand likely local views and promote benefits of participation to them. However, it may be impossible to fully mitigate the risk of policy change under a new administrationModFinancial/Reputational: UK pays for non-additional activity (i.e. that would happen in the absence of TCAF)Setting of conservative crediting baselines helps ensure non additional effort is not credited. Where host NDC data is non-specific, extra modelling or capacity building will help to develop a suitable approach. The option to purchase credits outside of the scope of host countries’ NDCs, or at the upper end of a marginal abatement cost curve would reduce this risk and should be further explored by contributors and the Trustee.ModDelivery/reputational: hosts decide that TCAF emission reductions contractually committed to donor countries are required for their NDC achievement.A UK decision for its share of TCAF abatement to remain with the host country has reduced this risk to zero on the UK side. Should another TCAF donor insist on a transfer in a case where a host country requires TCAF funded abatement for their own NDC achievement, the risk of association with this is likely to be low for the UK. MinFinancial: Fraud or corruption in the host country World Bank due diligence and risk management processes are in place to manage delivery and potential fraud. MinOverview of risk management The overall risk rating increases from the higher end of ‘moderate’, to ‘major’. Although discussions on a TCAF delivery model have narrowed to two key issues and there is appetite to find a solution quickly, it is not yet clear that Contributors and the Trustee will agree a model that proves reasonable to potential host countries. The UK’s decision to allow the abatement we fund through TCAF to remain with the host country for use towards their NDC (rather than being simply cancelled) will likely make TCAF deals more attractive, and therefore lowers the risk to achieving ICF results to some extent. These results focus on increased capacity to implement carbon pricing approaches, to set crediting baselines and deliver co-benefits. Payment for emission outcomes is results-based, and this helps ensure that around 86% of UK TCAF funding will only be disbursed when outputs are generated. TCAF is a piloting facility, so a higher risk tolerance is factored into this overall score. Finally, all grants financed by Trust Funds are subject to the World Bank's operational policies and procedures that apply to their financing, including the Bank's framework on governance and anti-corruption. F: PROGRAMME MANAGEMENT: DELIVERY, COMMERCIAL & FINANCIAL PERFORMANCE Summarise the performance of partners and BEIS, notably on commercial and financial issues, and including consideration of VfM measures of economy and efficiency. ?In terms of fund management, the Trustee have been a pro-active partner and there has been a continuing good working relationship, including regular and detailed updates to participants with advance notice given for document review. All queries have been responded to thoroughly and in a very professional manner as would be expected and the UK enjoys a close, collegiate partnership with other Contributors. The quality of narrative reporting has been high. This includes an annual report prepared by the Trustee including the pipeline development status, facility management issues, current and future knowledge management activity and a financial update. The most recent budget (June 2020) showed a total use of funds of c.$1.25m against a budget of c.$3.54m, driven primarily by lower than expected business development and project expenses that were influenced by the delay in agreeing an operating model. A forecast call of funds for $1.6m therefore did not take place. As noted above, it is critical to reach this agreement on this issue in the coming months. TCAF?is subject to the same financial systems and policies as the World Bank’s core resources, such as their rules on reinvestment of funds, their audit framework, and their internal control procedures. The Bank’s external auditor carries out an annual “single audit” of the trust fund system. ?Date of last narrative financial report?9 June?2020?Date of last audited annual statement?Part of World Bank Single Audit of Trust Funds, conducted annually at the conclusion of each fiscal year: latest Single Audit of Trust?Funds issued September 2019 (period ending June 30, 2019)?In terms of vfm, there have been no changes to the cost of major inputs and cost drivers. The cost of PIN development (c.$400k) is broadly in line with historical average rates for similar agreements (c.$350k). The Trustee works, through its internal policies to ensure that TCAF receives the best value for money in terms of price, fitness for use, environmental efficiency, maintenance provisions, operating costs, guarantees, delivery and installation, and payment terms. The Trustee continues to use resources efficiently. For example by scheduling international outreach activities sequentially to share costs and reduce the need for TCAF to solely fund these activities, while still benefiting from them.?It is too early to reach a firm conclusion on overall effectiveness. However, some TCAF technical notes have been used by other initiatives, and the Trustee’s work to support agreement on deal structures demonstrates effectiveness at managing the Facility, while still progressing project development to the extent possible.? ?As TCAF engages with potential host countries, from an equity perspective it is important that the Trustee helps hosts understand the costs and options for achieving their NDCs and how TCAF activity relates to that effort. To the end, TCAF is developing a “Paris Agreement Capacity Building” workshop series to inform potential host countries on the various critical topics that must be considered as they work to implement their NDCs. Finally, IPSOS Mori completed a Formative Evaluation of TCAF in April 2020. This sought to understand the relevance of the facility and to provide early indications of effectiveness and efficiency of the activities conducted to date. Its draft conclusions are positive overall and include that TCAF remains relevant, that technical notes have been used outside TCAF and identified that capacity building requirements and complexity of the Paris Agreement were perhaps underestimated. Recommendations and conclusions should be addressed in a response plan, as per the recommendation made in this review. TCAF does not own any assets, and BEIS does not hold a contract with the TCAF Trustee. ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download