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:
Challenges and Pressing Issues
Find a collection of terms, references, instructions and notes to help in using the Climate Toolkit.
According to a recent publication by the Global Infrastructure Hub, PPP contract management is one of the most important aspects of PPP delivery. If done effectively, it will support the long-term success of the project in line with the agreed contract terms. But, if managed poorly, it can seriously undermine years of project preparation and procurement and can ultimately lead to major cost implications for taxpayers and service disruptions for end users1.
The objectives of Phase 3, which evolves during the contract structuring phase of the PPP cycle are: (1) to rigorously describe the climate risk profile of the project and prepare a clear risk allocation structure and management plan that specifies and nuances climate risk events (i.e., use of intensity levels/benchmarks and impact ceilings to restrict unreasonable claims), including hedging mechanisms and force majeure exceptions (2) to prescribe climate provisions on the financial structure that would enforce incorporation of climate mitigation and adaptation requirements in the project (
This essentially includes: (i) designing/drafting the RFP and RFQ. That is, specifying a set of climate-related qualification/evaluation criteria for the bidders that are consistent with the characteristics of the project. It also includes the structuring and designing of a clear and transparent RFP package that outlines proposal requirements and informs bidders on the climate aspects of the tender/selection process and timing.
In this context, Phase 2 of the climate toolkit is devoted to guiding users on how to conduct detailed assessments of GHG emissions and climate risks (including advanced climate hazard modeling) while accounting for both internal and external risk factors, followed by a thorough review of considerations on the design of climate mitigation and adaptation plans under deep uncertainty (including provisions for promoting the use of "green" construction solutions).
Alongside this process, the toolkit intends to guide the preliminary assessment of the climate hazard environment and the evaluation of the overall climate-risk level of the project, to identify and appraise adaptation, resilience, and low carbon/mitigation solutions, and to guide public entities on whether the additional risks or opportunities prompted by climate change render PPPs or other forms for private participation less or more attractive as procurement methods.
This introductory phase is meant to assist government officials and their advisors in acquainting themselves with what constitutes the enabling environment for climate-smart PPPs and understand how the alignment of current legislation with the Paris Agreement and other climate change and sector-specific policies underpins investments in low carbon and climate-resilient infrastructure.
The fiscal constraints of governments across the globe open the door to new opportunities and challenges to crowd in private sector solutions, innovation, and finance to create new solutions and pathways to meet Paris Agreement goals on climate change. Participation of the private sector in climate-smart investments and infrastructure is critical and public-private partnerships (PPPs) are among the key solutions.