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Climate-proofing investments in the road sector can reduce future costs

N o r d i c D e v e l o p m e n t F u n d

NDF’s major co-financingpartners, the World Bank,the Asian DevelopmentBank, and the Inter-AmericanDevelopment Bank, iden-tify climate-proofing of infrastructure as a key element of their climatechange policies. Road net-works (roads, bridges, anddrainage) in developingcountries are highly vul-nerable to the impacts ofclimate change, the conse-quences of which go far beyond the mere physicaldamage to the road net-work, and can affect acountry’s economy.

Adaptation measuresare fundamental to avoid-ing threats, damage andaccidents caused by thechanging climate. Adapta-

tion is about reducing vul-nerabilities, and requiresdealing with both the long-term effects of climatechange and the more short-term or acute extremeevents. In order to developrealistic adaptation strate-gies, an understanding ofthe potential impacts of cli-mate change on road net-works is needed. Vulnera- bility mapping is an im-portant adaptation activitythat identifies sections orareas along the road net-work that may be particu-larly affected by climatechange. Thereafter, appro-priate climate-proofingmeasures can be identified.Furthermore, reviewingand revising policies andstandards for road infra-

structure and training ofrelevant staff in climate-proofing help to ensure thatclimate change considera-tions are mainstreamed inall road development plans.

Incorporating climatechange considerations intoroad design can be expen-sive, but may create consider-able cost savings both in theimmediate and longer term.More costly initial climate-proofing investments mayreduce future road mainte-nance cost as the impacts of climate change events onroads will be reduced due tothe fact that the roads have,from the beginning, beendesigned to withstand suchevents.

NDF currently financesthree climate change adap-

tation projects in the roadsector. The Adaptation Ap-proaches for the TransportSector Project in Cambodiaand the Integrating ClimateChange Adaptation to Trans-port in Vietnam Project areco-financed with the AsianDevelopment Bank and theIntegrating Climate ChangeAdaptation to Transport inSenegal Project is co-financedwith the World Bank. Thesetypes of projects are attrac-tive to NDF, since there isconsiderable scope for up-stream involvement with the potential for influencingboth sector policy and the design of large investmentprojects. For more informa-tion about NDF’s projects,please visit the NDF website:www.ndf.fi

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Solar and wind power provide off-grid rural areas

with climate-friendly energy services

The majority of Kenya’s electricity generation capac-ity is based on hydropower.Prolonged droughts have reduced water levels andconsequently, affected thepower supplies. Kenya is experiencing acute powershortage, and the countryhas to rely on expensiveemergency generation usingfossil fuels. The power de-mands of both populationand industry are increasingsteadily, and there is an ur-gent need to increase the capacity and diversifysources of power supply.

The World Bank is cur-rently implementing anElectricity Expansion Proj-ect in Kenya. The overall objective is to increase thecountry’s capacity, efficiencyand quality of electricity

supply. The project will sub-stantially increase the shareof geothermal energy in theenergy mix and reinforceand expand transmissionand distribution networks.Furthermore, it aims to in-crease the electricity accessrate from the present 20%,and reduce the imbalancebetween urban, peri-urbanand rural areas.

NDF will, with a grant of EUR 4 million, financetwo sub-components underthe Electricity ExpansionProject. “NDF will bring aclimate change perspectiveinto the World Bank pro-ject’s distribution compo-nent,” says Hannu Eerola,Country Program Managerat NDF.

The first sub-componentwill assist Kenya Power in

selecting, designing andinstalling hybrid energysystems in off-grid ruralareas. There are several localities, especially in thenorthern part of Kenya,which rely on isolateddiesel power plants. Theproject will install solarand wind generation plantsnext to existing diesel gen-erators and the generationfrom these renewable sourceswill reduce or displace theuse of fossil fuels, thus re-ducing CO2 emissions. Inaddition, the reliability ofthe energy supply in ruralcentres will increase.

The second sub-compo-nent will provide basic en-ergy services to ruralschools and nearby house-holds through solar charg-ing facilities. Apart from

providing lighting and basicelectricity supply to theschools, the solar chargingsystems can be used bypupils to charge portableLED-lanterns during theday to provide lighting fortheir homes in the evening.This will reduce the use ofkerosene lamps, and subse-quently reduce CO2 emis-sions and improve indoorair quality.

The activities financedby NDF are in line withKenya’s National ClimateChange Response Strategy.The strategy identifies theneed for strategic program-mes to be implemented inthe context of climatechange, and investmentsin renewable energy pro-jects are a main priority forthe mitigation programme.

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study on climate change insurance instruments

NDF has approved a EUR500,000 grant to support atwo-year World Bank studyon the development of cli-mate insurance instrumentsfor specific types of climaterisks in East Africa. Thestudy will be carried out bya team of international andlocal experts. The aim is tobuild on and take forwardongoing work on identify-ing climate risks in the region as well as to scopepossible insurance invest-ments. Currently, there is limited availability of

climate insurance instru-ments in Sub-Saharan Africa.The introduction of differ-ent insurance tools willhelp reduce the vulnerabil-ity of individual farmers,small and medium sized en-terprises and governmententities to extreme climateevents.

Floods, droughts, andstorms are a significantconcern for Africa’s devel-opment. The costs of invest-ing in climate insurance toreduce or transfer risks canpay off many times over in

losses and damage avoided.Without insurance mecha-nisms, resources earmarkedfor other development ac-tivities may have to be di-verted to disaster responseactivities. “These hiddencosts can undermine deve-lopment and economicprogress in the region, andtherefore, investments inrisk transfer solutionssuch as climate insurancemake good sense,” saysAage Jørgensen, CountryProgram Manager at NDF.

NDF supports the Energyand Environment Partner-ship (EEP) Program in theMekong region countries -Cambodia, Lao PDR, Thai-land and Vietnam. The Program is initiated by the Ministry for ForeignAffairs of Finland and thetotal financing is EUR 7.9million for a period of threeyears (2010-2012). NDF’sshare of the funding isEUR 3 million.

Three Calls for Propos-als have been organised todate and almost all avail-able funds have now beenallocated. The demand forthis type of preparatoryand seed funding is obvi-ous. For the first call forproposals launched in late2009, a total of 162 pro-ject ideas were presented.The first call resulted inpre-selection of 13 projectsfor further development.

The second call for pro-posals was organised inmid-2010. This time, 105project ideas were pre-sented, of which 14 projectideas were pre-selected.

The third call was openfrom January 16 untilMarch 11, 2011. Again,105 project applicationswere received and 21 projectideas were approved forfurther development.

The pre-selected projectideas present a wide rangeof energy efficiency andclean energy applicationsand technology. Vietnamcontributed the most pro-posals of any single country.With growing awareness ofthe program, involvementof Nordic organisationshas increased and the majority of approved pro-jects include a Nordic partner.

To date 12 contractshave been signed and fiveprojects are under imple-mentation. A mid-term review of the EEP MekongProgram is currently underway.

Strong demand for funds under the EEP Mekong

GRANT FINANCING FOR CLIMATE CHANGEPROJECTS IN LOW-INCOME COUNTRIES

The Nordic Development Fund (NDF) provides grant financing for climatechange interventions in low-income developing countries. NDF is the joint development finance institution of the Nordic countries—Denmark, Finland, Iceland, Norway and Sweden—and finances projects in cooperation with otherdevelopment institutions.

NORDIC DEVELOPMENT FUND, P.O. Box 185, FIN-00171 Helsinki, Finland (Visiting address: Fabianinkatu 34), Tel: +358 10 618 002, Fax: +358 9 622 1491, E-mail: info.ndf@ndf.fi, www.ndf.fi

Nordic Development Fund

NDF Newsletter presents NDF's operations. The newsletter is published as needed. Layout Kubik, print Libris Oy.

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Nordic Climate Facility - third call to be launched

At the end of October 2011,a third call for proposals willbe launched under the NordicClimate Facility (NCF). NCFhelps to promote and increasethe visibility of innovativeNordic solutions to climate-related problems in low-income countries.

NCF has received greatresponse within the Nordiccountries. The number ofproposals increased fromthe first call (138) to the sec-ond call (176). So did alsothe number of proposals bycountry, where Finland andNorway stood for the largestincrease. The first and sec-ond calls had two themeseach: one for adaptation and one for mitigation.Under the first call, the twothemes were water resourcesand energy efficiency.Under the second call, thethemes were urban adapta-tion to climate change andrenewable energy. The third

call has only one theme:Innovative low-cost climatesolutions with focus onlocal business development.

The new theme encour-ages business developmentand business opportunitieswhich provide goods andservices that will help re-duce carbon emissions andfacilitate climate changeadaptation. It is expectedthat the projects will have astrong positive developmentimpact in addition to expected

climate change benefits. The theme for the third

call has been broadened interms of sector scope. Thisimplies that the call has ex-tended the invitation to ap-plicants with project ideasfrom sectors that could nothave a call of their own, forexample those addressingdisrupted ecosystems, cul-tural losses and threats tohealth and food security.“This provides an opportu-nity for NDF to get increased

insight into climate solu-tions offered beyond thosesectors already targetedduring the preceding calls,”says Martina Jägerhorn,Country Program Managerat NDF. The third call forproposals has been grantedEUR 6 million, bringing thetotal financing of NCF up toEUR 18 million.

The implementation ofthe 14 winning proposals ofthe first call started towardsthe end of 2010. Several ofthe projects have reachedimportant milestones suchas conducting workshops,awareness-raising cam-paigns and installing orshipping goods. Under thesecond call, contracts with12 applicants with the high-est scores are presentlyunder negotiation.

For more informationabout NCF, please visit www.ndf.fi andwww.nefco.org.

Number of proposals by country