Integration of climate change into country level work

Explanation

Country level strategies

Country strategies form the centrepiece of the EBRD’s approach to delivering its activities and are available for almost all countries of operation.[1] Their development is underpinned by country diagnostics, which assess the progress and needs of a country towards becoming a sustainable market economy, though they are only available for some of the EBRD’s countries of operation.[2] This is measured by assessing challenges and opportunities facing the country’s private sector and progress with regard to six “transition qualities”: competitive, green, well-governed, integrated, inclusive and resilient.

Country strategies, defined over five-year periods, address the needs and opportunities of countries for progress towards the six transition qualities, and the EBRD’s capacity to take advantage of these opportunities based on its business model, expertise, and complementarity with other institutions. Country strategies are complemented by sectoral strategies. While country strategies enable the alignment of strategic objectives across the Bank, sectoral strategies define the instruments and products available to the Bank to pursue them.

According to the Green Economy Transition (GET) 2.1 approach, country strategies are guided by the MDBs’ Joint Paris Agreement alignment framework, which integrates climate considerations into Bank activities. This operational framework helps ensure that climate-related risks and opportunities are consistently reflected in strategic planning. GET 2.1 further commits the Bank to ensuring that Nationally Determined Contributions (NDCs), Long-Term Strategies (LTSs) and other policy plans are increasingly taken into account in the overall formulation of priorities and objectives. The “green” transition quality implies that all country strategies integrate climate considerations. Green or resilient themes include priorities such as, supporting decarbonisation, green cities, water efficiency and green energy (in the Uzbekistan country strategy), or increasing renewable deployment, improved sustainability of infrastructure, and increased resource efficiency and climate resilience (in the Egypt country strategy).

Country level initiatives

NDC Support Programme

The EBRD has established an NDC Support Programme to assist its countries of operation in “developing, enhancing, and implementing” their NDCs. This programme provides assistance for NDC implementation, encompassing policy and legal analysis, updating action plans to align with NDC sectoral targets, and creating regulations consistent with the NDC.

Just Transition Initiative

The EBRD’s Just Transition Initiative (JTI) supports countries of operation in achieving a just transition. This support prioritises EBRD intervention in specific sectors: the green economy transition, support for workers and regional economic development. Policy-wise, the EBRD has been supporting governments in integrating just transition considerations in climate documentation and regional development strategies, as well as in the development of critical skills and labour market reforms. To guide its actions, the EBRD has started developing just transition diagnostics and action plans, such as for Ukraine, to identify effects of decarbonisation scenarios and opportunities for economic diversification. With regard to investment, the programme has enabled the delivery of just transition-related projects in affected regions, such as in renewable energy deployment and upskilling projects in coal-dependent regions in North Macedonia and Greece.

Country platforms

The EBRD has been a pioneering actor in the development of country climate platforms, country-led collaborative partnerships which aim to streamline and maximise the impact of financial support towards national sustainable development and climate goals. The EBRD is leading the deployment of the North Macedonian Just Energy Transition Investment Platform launched at COP28 in 2023, which aims to boost investment in the decarbonisation of the country’s power sector through the complete phase-out of coal and the deployment of 1.7 GW of renewable energy by 2030. It also includes investments in grids and storage solutions. 

The EBRD is also the lead institution for the energy pillar of Egypt’s country platform. EBRD involvement in these platforms is not limited to investments. It includes technical assistance, such as the development of a just transition approach and decommissioning master plan for the permanent closure of 12 thermal power plants, and the development of green value chains and institutional support for grid strengthening in Egypt.

Recommendations: 

• To ensure the GET 2.1 approach commitment that NDCs, LTSs and other policy plans are increasingly reflected in the overall formulation of priorities and objectives is met, the EBRD could consider building a portfolio of climate-specific country diagnostics to inform its country strategies. This could build on products already developed, such as the WBG’s Country Climate and Development Reports, by focusing on the Bank’s specialist experience and insights on the nexuses between private sector development & climate.
• Building on the expertise built through initiatives like North Macedonia’s Just Energy Transition Investment Platform and Egypt’s energy platform, the EBRD should continue to support, advance and spread country platforms as a model of action to drive coordinated climate action at the national level. This should also include greater engagement in global dialogues on country platform best practice, ensuring other PBDs and governments outside its operating region learn from the EBRD’s experience to date.

[1] Exceptions to these, which include Lebanon and Palestine, can be explained by the likely marginal role they play in EBRD operations, as well as their geopolitical context.

[2] At the time of research, 12 individual country diagnostics plus a Western Balkans regional one were available.