What it takes to craft a detailed project proposal

For climate change mitigation projects in its portfolio to drive transformational change and achieve the best possible outcomes, the NAMA Facility promotes extensive preparation prior to launching project implementation. Following the initial NSP Outline phase, NAMA Support Projects (NSPs) must successfully complete the Detailed Preparation Phase (DPP) which lasts ten or fifteen months in total. This period of time enables NSPs to prepare a comprehensive, sound and data-driven project proposal, thereby making projects more successful in reaching carbon-neutral solutions.

The overall goal of the NAMA Facility is to identify the most ambitious and promising projects that will reduce emissions while promoting sustainable development. This involves a competitive two-phase selection process, namely the NSP Outline Phase and the Detailed Preparation Phase (DPP). Ambitious NSPs are defined by their transformation and mitigation potential, as well as their potential for leveraging further public and private finance. NSPs undergo a thorough desk-based assessment, and some of them an on-site assessment, by an independent external evaluator and the Technical Support Unit (TSU), which manages the NAMA Facility’s portfolio. NSPs which successfully pass the assessment are recommended to the NAMA Facility Board for funding for the DPP, where they experience a more detailed assessment. When NSPs successfully pass the DPP, they are subsequently recommended for implementation. While assessing projects, the NAMA Facility always takes the context of the country and sector into account and appreciates the unique nature of differing approaches.

The ultimate purpose of the DPP is to prepare a comprehensive proposal for an NSP’s implementation. To successfully pass the DPP, NSPs must prepare for the project implementation with utmost diligence and provide a thorough plan on how to specifically implement their activities and address potential barriers which could arise. The DPP was given the name “Appraisal Phase” for Calls 1 – 3 but was later renamed and redesigned as the “Detailed Preparation Phase (DPP)” from Call 4 onwards, with the intention of providing more support to NSPs through additional resources and a closer exchange between NSPs and the TSU. For the DPP, the TSU and NSP agree on interim deadlines for milestones and the final deadline for submission. To provide more guidance the DPP was divided into two phases after redesigning the Appraisal Phase: NSPs must provide an interim report at the end of the first phase of DPP to provide insight into the progress achieved, which is reviewed by the TSU and Donors. Entering the second phase of DPP is permitted if progress has been achieved. Applicants should underline their project proposal with sufficient data. For this purpose, NSPs conduct feasibility studies to establish the financial mechanism, verify the mitigation potential and undertake any further activities necessary for the detailed project preparation. As an example, the NSP for Brazil’s Transformative Investments for Industrial Energy Efficiency (PotencializEE) used relevant sector studies carried out by Brazil’s Energy Research Office (EPE), which were used in the DPP’s impact models, including projected greenhouse gas (GHG) emission reduction. In collaboration with the National Service for Industrial Training (SENAI), the demand of small and medium-sized enterprises (SMEs) was specified to better understand which type of capacity gaps are currently hindering larger energy efficiency investment into Brazilian industries.

Compared to the assessment in the NSP Outline phase, a higher level of refinement (e. g. the mitigation potential and a well-designed financing mechanism based on solid background data) is expected for the NSP Proposal in the DPP. Substantiated assumptions and calculations of the GHG mitigation potential must be presented. However, in contrast to the NSP Outline assessment, a stronger focus lies on the feasibility criteria. The readiness of the financial mechanism and its underlying assumptions and calculations are of particular importance for the assessment of the feasibility, as the implementation of the financial mechanism starts within the first eighteen months of the NSP implementation.

The DPP provides the possibility for applicants to fine-tune their approaches. To craft a detailed project proposal, NSPs must demonstrate a clear approach and intervention strategy. The implementation approach needs to be complete and exhaustive, addressing potential barriers in the Implementation Phase. Therefore, the DPP requires risk mitigation planning so that an NSP considers alternative options in case one of the project activities face challenges during implementation.

Building on the expertise of NSPs that have undergone the DPP, it is essential to engage all parties that will be involved in the implementation of the project to secure a high level of commitment from partners from the outset. All actors involved must have a common understanding of the project’s goals. Close cooperation with all relevant actors, such as national implementing partners and political partners, is crucial to confirm the necessary ownership that is key to unfolding the NSP’s transformation potential. That might necessitate elaborate discussions and agreement with stakeholders on activities to be included in the project along with roles and responsibilities for each stakeholder. Actors could include the NAMA Support Organisation (NSO), local ministries, banks, private companies, civil society, technical staff, local producers, national and international experts and consultants.

Moreover, the project proposal should demonstrate that all relevant aspects are thoroughly incorporated. Certain groups and their needs should be addressed and met, which means that the gender aspects of the project’s approach should also be considered and incorporated.

Overall, successful NSPs build on local contexts and available expertise. The Tajikistan Forestry NSP, for example, explicitly based its project proposal on previously active projects in the country and sector. The prior experience and expertise of staff involved in the DPP in implementing projects can facilitate the creation of a detailed project proposal.

The NAMA Facility defines clear DPP milestones and expectations, to which NSPs should adhere. Strict timelines can pose a challenge for NSPs but provide clarity, transparency and rigour. Clear communication between the applicant and all relevant partners helps prevent challenges regarding expectations from national stakeholders.

Entering the DPP does not mean that the TSU will automatically choose the NSP for implementation. Carefully and transparently communicating the high expectations of the NAMA Facility can pose a challenge for applicants during the DPP. This also includes communicating the requirement to strictly maintain a separation between NSOs and governments. Due to a relatively long preparation phase, NSPs might face the challenge of reduced motivation among stakeholders over time. A high degree of flexibility and strong sense of ownership and identification by all actors can help them to endure the project development process and changing context factors. A high level of flexibility is also key to overcoming unexpected challenges during the DPP.

The long timeline and high requirements of the DPP lead to several positive outcomes and spill-over effects. The extensive preparation during the DPP through analyses and case studies may attract financial partners as it demonstrates the advantages of carbon-neutral solutions. In the case of Brazil – Transformative Investments for Industrial Energy Efficiency NSP (PotencializEE), the energy performance of best-available industrial technologies and the underlying cash flows of energy savings motivated several financial institutions to sign up to join the NSP. Furthermore, pay-back periods of such investments gave an incentive to participate in the NSP’s implementation.

Even if NSPs are not selected for implementation, the meticulous preparation of the projects can create a sound basis for future project implementation. In the case of the NSP Uganda – Revolving Loan Fund for the Uptake of Improved Institutional Cook Stoves (IICS) in Schools was circulated to other potential Donors, who expressed interest to pick up parts of the projects for implementation, which was only possible due to the detailed proposal developed before.

Unexpected challenges and barriers can always occur during the implementation of ambitious projects as the NSPs. A successful DPP however may result in a comprehensive project design with a detailed plan for technical and financial components as well as strong buy-in from all relevant stakeholders and project partners, which enables gradual progress towards carbon-neutral solutions.