Exploring Integrated Governance to Accelerate Private Sector Investment in NDCs (Learning Theme 3)
As countries transition from strategic planning of their Nationally Determined Contributions (NDCs) towards implementation, the fundamental challenges around resourcing, coordination and capacity are exposed at the different tiers of government. Information asymmetries, gaps in mandates and accountability, and differences in objectives and priorities are some of the governance challenges that stunt investment and progress. Such problems can lead to public investment choices that are poorly coordinated and unmonitored, resulting in inefficiency, stunted outcomes, limited opportunities for public-private partnerships and erosion in public trust.
On the other hand, well-managed public investments to strengthen resilience in the face of climate change and low carbon infrastructure can be a growth-enhancing form of public expenditure. Learning Theme 3 focuses on how this is achievable through better integration of climate governance.
The assumption behind Integrated Governance learning theme activity is that “supporting stakeholders to identify and address multi-level governance coordination and capacity challenges will accelerate effective public and private investment towards achieving their NDC.”
This assumption was explored in Peru, Kenya and the Philippines, through a process of institutional mapping and technical consultation:
Multi-level climate governance mapping: This is an activity to identify the key climate response actors and their interactions to discern between those who have the ability to influence decisions, those who make decisions, as well as those who are affected. The purpose of the mapping is to determine the different actors’ ability to implement climate action and highlights some of the significant barriers and blockages in their ability to do so.
Stakeholder dialogues: This mapping exercise serves as a reference point (or context) for stakeholder consultation with national and local actors. Dialogue with multi-level governance actors enables a better understanding of practical challenges. In many cases, consultation illuminates profound differences in stakeholders’ objectives and priorities at different levels of government. Stakeholders may also define the main problems and the solutions to these in different ways.
In addition to providing an opportunity for learning, the technical discussions were a helpful process for participants, assisting to facilitate better understanding of organisational blockages and practical recommendations on addressing these, as well as the measuring, reporting and verification (MRV) of NDC implementation.
IKI MI integrated governance work is well presented in a concise synthesis report which provides insight into the following two, often overlooked, assertions which are:
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- Technology and finance are not the primary barriers to decarbonizing economic growth and human development.
- Paradoxically, money is not the best response to the absence of capital. Very often, the causes of underdevelopment are both the lack of complementary inputs and the poor quality of internal organisation.
The main obstacles are, therefore, social and political.
Learning Theme 3 activities facilitate multi-level collaboration on solutions to accelerate investments at the local level – aiming to achieve more effective implementation of the NDCs in the three pilot countries.
IKI MI Integrated Governance activities in Peru
The Integrated Governance learning theme activities aligned with the IKI MI in-country work in Peru. The in-country work had identified waste management as a target investment sector, in close consultation with the Department of Climate Change within the Ministry of Environment (MINAM).
There are 32 municipal landfills in Peru at concept or early development stages requiring different levels of investment. Commercial banks, and institutional investors have typically shown little interest in providing finance for the construction of the landfill sites or emissions reductions technologies. Since both the climate change and waste management departments sit within MINAM, this also enabled relatively simple coordination and engagement.
Details on the approach to the integrated governance assessment are presented in our blog post: Peru: The valorization of solid waste at the municipal level.
The starting point for the technical consultation in Arequipa was the Institutional Mapping report. The contextual report was reviewed during technical consultation. Over the course of two days, the solid waste managers from the nine cities, MINAM, financing entities, and participants from the private sector shared a wealth of insights and examples of the various integrated governance challenges they face.
The technical consultations with provinces, municipalities, private and financial agents, and the MINAM were well received, with parties recommending further dialogues and setting up local information sharing mechanisms. Interesting issues emerged relating to perception of risk and information asymmetries between central planning and local implementation. For example, a clear reason national public investment needs to kick-start local solid waste management services is the existing level of risk in operations, or what the private sector perceives as “the crippling bureaucracy and confusion around issues of environmental management at the local level”.
This is a manifestation of the coordination and capacity gaps between sectors and levels of government. The consultation sessions “drilled down” into this issue. If local governments are expected to successfully operate and provide maintenance to the new infrastructure, they need actual investment models that produce more than physical capital (e.g. new landfills and new trucks) but address real operating costs. On the topic of operating costs, information asymmetries presented as a major challenge. For example, operators are faced with servicing operational costs that had been conceptually forecasted without local contextual input – thus not factoring local route logistics nor variables associated with local leachate management.
The experts from the municipalities at the technical consultation in Arequipa demonstrated strong, enthusiastic commitment for continued progress and improvement in their operations. They recommended repeating such technical consultations on a regular basis with other provinces, municipalities, private and financial agents, and MINAM. In the interim, the cities have created an informal WhatsApp group to share progress, challenges, and references on their ongoing solid waste management operations.
IKI MI Integrated Governance Learning Activities in Kenya
Aligning County Integrated Development Plans with the National Climate Change Action Plan
In Kenya, climate change response planning is becoming increasingly significant to county-level governance. Unseasonal temperature variations and erratic climate events are leading to local economic crises and are significantly increasing the costs of infrastructure. County-level delivery of services, planning and budgeting is directly affected, making access to finance ever more critical.
Importantly, the County Integrated Development Plans (CIDPs) must inform all spending at county-level. Any funds appropriated outside the county’s planning framework are in contravention of the law, therefore CIDPs have a pivotal role to play in financing climate actions that deliver the Nationally Determined Contributions.
These climate governance challenges were outlined in the institutional mapping report, Aligning County Integrated Development Plans to the National Climate Change Action Plan which provides an overview of some of the challenges to mobilising climate investments encountered at the county level.
IMAGE 1: Mapping the linkages between actors on climate change and planning in Kenya
This report was used to catalyse debate at the Domestic Technical Consultation conducted in Nairobi, Kenya on 23 and 24 January 2020, with local officials from the district counties of Mandera, Lamu, Nyamira, Laikipia, and West Pokot. The two-day consultation provided a platform to explore this information and to interrogate meaningful, practical solutions which will have high relevance for national planning. Participants shared challenges and brainstormed solutions.
IMAGE 2: Participants at the Domestic Technical Consultation held in Nairobi, Kenya
IMAGE 3: Fobian Masheti explains the linkages of West Pokot County’s integrated development plan
IKI MI Integrated Governance Learning Activities in Philippines: Implementation of the Energy Efficiency and Conservation Act by Local Government Units.
The Philippines presented very unique circumstances. The country has set a 70% conditional greenhouse gas emission reduction target from the country’s 2020-2030 Business-as-Usual (BAU) scenario, which is anchored on the extent of external funding support. The Philippines has been setting sector-specific policies and pursuing initiatives which have strong greenhouse gas emission reduction co-benefits.
The Energy Efficiency and Conservation (EE&C) Act, signed into law on April 2019, and establishes the general governance and strategies to improve energy use is one such example. This Act acknowledges the importance of strategic investments into energy saving measures in the national and sub-national (local) levels while at the same time addressing mitigation goals in the NDC. This Act and the role of the local authorities were selected for interrogation.
The aggressive greenhouse gas emission reduction target (70% vs BAU scenario 2000-2030), constitutional guarantees of Local Government autonomy, and unfortunately, the early rumblings of the COVID-19 pandemic proved a unique and challenging environment.
After the publication of the Institutional Mapping diagnostic led by Ms. Jean Laurente, environmental and municipal environment officers from 14 Local Government Units (LGUs) in the Philippines were able to swiftly organize themselves to participate in the two-day Domestic Technical Consultation (DTC) held in Quezon City in mid-February, before the country began to implement aggressive, broad quarantines in an effort to control the worsening pandemic.
The 14 LGUs were joined by 13 more key actors and decision-makers, including; a representative from the League of Cities of the Philippines, a representative of the Philippine League of Local Environment and Natural Resources Officers (PLLENRO), a small delegation from the National Department of Energy, as well as academics and energy efficiency experts.
The consultation session generated specific recommendations to help LGUs attract budgetary support and investment.
Despite the Energy Efficiency and Conservation Act (EE&C) being signed into law in April 2019, the Technical Consultations were an overdue opportunity for the National Department of Energy (DOE) to consult the LGUs and receive key stakeholder input to help draft forthcoming guidelines on policies on EE&C implementation.
Among the fundamental concerns expressed by the LGUs was the real opportunity cost of the bureaucracy congesting administrative capacity to properly define and implement the plethora of plans. The new law mandates LGUs to come up with local EE&C plans— obligating them to establish an EE&C office, and appoint an EE&C officer. LGUs are simply not EE&C experts, and need support to understand opportunities and technologies. The question of upfront capital investments and complex financial instruments necessary to achieve EE&C — coupled with the lack of local administrative and managerial capacity, makes any sort of local plan or targets very difficult to establish.
What’s more, the national EE&C effort comes on top of current obligations to formulate a myriad of LGU plans and reporting requirements, including: Local Climate Change Action Plans (LCCAPs), Local Investment Development Programmes, Comprehensive Land Use Plans (CLUPs), Comprehensive Development Plans (CDPs), as well as others— totaling over 30 Plans.
One experience discussed was when the National Climate Change Act mandated LCCAP compliance, with plans delivered to the Department of Interior and Local Government (DILG) starting in 2009. But by 2016 only 9% of the 1,684 LGUs had LCCAPs. It was debated if the low compliance is due to the fact that there is no LCCAP monitoring mechanism in place at the DILG to bind LGUs to national climate targets. Going forward, the new EE&C Act may be one of the pioneering national policies to legally bind the LGUs to the national mitigation target, and input from this DTC will help the DOE set standards and targets, as well as define guidelines to enable monitoring of LGU compliance to the EE&C mitigation goals.
Interestingly, from an investment perspective— debt obligations can be financial, but they can also refer to “level-of-effort” and human resources. The obligation to deliver plans, hirer technical staff, etc can be quantified as a debt obligation. In that sense sufficient administrative and managerial capacity can also be considered a form of “liquidity.” Without liquidity (financial or human resources), there is no local decision-making ability. Resolving the lack of capacity to coordinate, define, implement and monitor local plans is a priority to create the conditions that attract financial investments.
Significant early coordination efforts from the DOE could help build subnational capacity to plan, manage and monitor energy efficiency policies for infrastructure, especially the use of complex financial tools.
For more detailed information please consult, Implementation of the Energy Efficiency & Conservation Act by Local Government Units in the Philippines:
- Part A: Institutional Mapping
- Part B: Domestic Technical Consultation with LGUs -Challenges and Opportunities.
As detailed in the Synthesis Report on Integrated Governance to Mobilize Investments for NDCs, improving capacities of subnational governments to plan for, administrate, and manage new infrastructure initiatives is a fundamental precondition to creating the favourable conditions necessary for attracting investment
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