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If properly prepared and managed, new infrastructure investments can play a key role in fostering this vision. Still today there is little guidance on how to translate the global imperative into specific actions that could be delivered at a project level due to several challenges:

Executive Summary

Challenges and Pressing Issues

• Decision-makers need to ensure that investments can offer benefits across the agendas of sustainable development, climate mitigation, and adaptation without risking the affordability and the bankability of the project.

• New infrastructure projects should be technically robust to absorb, withstand, and recover from unprecedented climate threats and other shocks—including sudden changes in demand.

• All infrastructure projects invariably should be structured and delivered within a climate-sensitive framework that provides quantitative evidence of the impact of the infrastructure on the climate objectives, systematically monitors climate performance, and incentivizes the integration of innovation and good practices at all stages of the development.

• For PPP projects in particular, there is the additional challenge of dealing with the lock-in effect of long- duration contracts, which increases the pressure of adequately assessing the cost and benefits of climate investments over the whole life-cycle of the project while simultaneously managing climate uncertainty.

Responding to these challenges, the present toolkit emphasizes the need for taking a holistic, systematic, and integrated approach to support the inception, selection, design, preparation, and management of sustainable long-lived investments. The toolkit describes a coherent flow that runs smoothly along the PPP process cycle, discusses interactions and trade-offs among technical, economic, financial, and contractual decisions of a PPP project, and provides guidance on pressing questions.

Spotlight Areas of Guidance

• How the decisions on climate mitigation aspects of a project made during the early stages of Phase 1 may impact the long-term sustainability of the investment (tested during the Project Appraisal – Phase 2)

• How to translate these climate mitigation decisions into project requirements and technical specifications to be integrated within the contractual structure and the tender documents of the project (Phases 3 and 4)

• How to design for climate uncertainty (i.e., proposing adjustments in the technical feasibility of Phase 2), and what are the recommended tools and methodologies to incorporate this uncertainty into the project appraisal (e.g., by evaluating the project performance under multiple scenarios representing a variety of climatic futures)

• Which are the recommended methodologies, standards, and frameworks for assessing climate risks and GHG emissions and designing adaptation and mitigation measures

• What are the means to finance climate adaptation and mitigation works (including green bonds, green and sustainability-linked loans), and how the PPP projects may benefit from blending innovative funding/financing sources into their traditional project finance (explored during Phase 3)

• How the climate-risk assessments (of Phase 2) can inform the risk-allocation decisions of Phase 3

Phases, Modules & Areas of Guidance