Terminal evaluation of Growing Green Business project

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Evaluation Plan:
2017-2022, Montenegro
Evaluation Type:
Final Project
Planned End Date:
11/2021
Completion Date:
11/2021
Status:
Completed
Management Response:
Yes
Evaluation Budget(US $):
20,000

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Title Terminal evaluation of Growing Green Business project
Atlas Project Number: 00087518
Evaluation Plan: 2017-2022, Montenegro
Evaluation Type: Final Project
Status: Completed
Completion Date: 11/2021
Planned End Date: 11/2021
Management Response: Yes
Focus Area:
  • 1. Poverty
  • 2. Others
Corporate Outcome and Output (UNDP Strategic Plan 2018-2021)
  • 1. Output 1.1.2 Marginalised groups, particularly the poor, women, people with disabilities and displaced are empowered to gain universal access to basic services and financial and non-financial assets to build productive capacities and benefit from sustainable livelihoods and jobs
  • 2. Output 2.1.1 Low emission and climate resilient objectives addressed in national, sub-national and sectoral development plans and policies to promote economic diversification and green growth
SDG Goal
  • Goal 1. End poverty in all its forms everywhere
  • Goal 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
SDG Target
  • 1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance
  • 4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship
Evaluation Budget(US $): 20,000
Source of Funding: GEF
Evaluation Expenditure(US $): 30,000
Joint Programme: No
Joint Evaluation: No
Evaluation Team members:
Name Title Nationality
Mr. Roland Wong International Evaluator
Ana Simonovic National Evaluator
GEF Evaluation: Yes
GEF Project Title: Growing Green Business in Montenegro
Evaluation Type: Terminal Evaluation
Focal Area: Climate Change
Project Type: MSP
GEF Phase: GEF-6
GEF Project ID: 9950
PIMS Number: 5488
Key Stakeholders: Ministries, local self governments, financial institutions, NGOs, business community representatives
Countries: MONTENEGRO
Lessons
1.

Lesson #1: If there is willingness of government stakeholders to have frequent interaction with project staff, the project will be more able to deliver outcomes regarding institutional and regulatory reform. This Project has fostered such a relationship and has generated benefits of efficient delivery of the studies (in implementing steps under the EU green recovery programme). Quick adoption of these studies, and accompanying rules and regulations were developed to help the Government, specifically the Eco-Fund and IDF design or reform economic instruments related to environmentally harmful projects and to provide incentives for both reducing pollution and introducing greener products. By comparison, there are countries where relevant government officials were not available to often meet (or meet at all) with project staff causing delays, and in some cases, non-delivery of outcomes involving institutional and regulatory reform work.


2.

Lesson #2: A project that focuses on a single sector will more likely succeed in its objectives of market transformation. In the case of GGB, GEF resources were mainly focused on the development of one renewable energy source, solar photovoltaic installations. Once momentum was achieved on the solar photovoltaic installations, the focus has been on electric vehicles and charging infrastructure. Once momentum has been achieved on electric vehicles and charging infrastructure, focus can be applied elsewhere to address other renewable energies such as biomass, wind or geothermal, and energy efficiency initiatives.


3.

Lesson #3: More time should be allocated to a project with intentions of legislative and financial reform. The 3-year implementation period of GGB was too short. If the GGB Project had 4 years to complete all of its intended works, it would have reached targeted GHG emission reductions.


Findings
1.

The GGB Project has managed to promote private sector investments in low carbon and green businesses in Montenegro. It has done so by:
• produced studies referred in Para 64 that have contributed to changes in the legislation of Montenegro, particularly regarding the installation and use of the solar panels within the Energy Efficiency Law, resulting in €30 million of financial support offered by the Electric Power Industry of Montenegro;
• successful awareness raising of low carbon and green business opportunities amongst potential and actual green business stakeholders;
• training and assisting existing and potential 247+ entrepreneurs through the Green Business Incubator (green business services delivered);
• working with donors such as the EIB, ADF and the Slovak Government to create credit lines for private investment into photo-voltaic installations, other forms of renewable energy, and electric vehicles;
• working with the GoM to provide subsidies from the Eco-Fund and favourable credit lines with a “grant” component to be provided by the IDF. This included Public Calls for solar PV installations, e-vehicles and e-vehicle charging infrastructure with affordable loans and grants considered a precondition and a highly motivating factor for the private sector to invest in the green transition and technologies (maximum envisaged amount of subsidies or grants would be up to €25,000 per project, covering up to 40% of eligible costs);
• the IDF and the Eco Fund cooperating to ensure synergies in actions taken by both institutions towards implementing the Programme to Support Green Business in Montenegro, specifically photovoltaic panels for industry and agriculture;
• facilitating Public Calls for low carbon proposals.


2.

This work was being done despite the change in government and the COVID-19 pandemic (with its social restrictions), causing the Project to fall behind. Regardless, the momentum carried by the Project was sufficient to get these credit lines into place with decent responses to the Calls. The EU’s Green Deal helped to determine a new low-carbon development framework and the way Montenegro’s financing institutions were able to access funding. As a result, the IDF and Eco-Fund had initiated discussions to obtain funding for low-carbon development with the IDF negotiating with the EIB and AFD and the Eco-Fund negotiating with the Slovenian Government’s Climate Fund, and these funds being operational in early 2021.


Recommendations
1

Recommendation 1 (to the Government of Montenegro and UNDP): Include as a part of awareness raising activities, additional presentations on the studies “Policy and incentive options for green businesses in Montenegro in agricultural, tourism and energy sectors” and ”Improvement of legislative and regulatory framework for the concept of ‘prosumers’ in Montenegro”.

2

Recommendation 2 (to the Government of Montenegro and UNDP): Monitor post-project GHG emission reductions from projects supported by the Solar 3000+ project, IDF funds, Eco-Fund and other financing initiatives.

3

Recommendation 3 (to UNDP and the Government of Montenegro): Green initiatives and climate actions must be continued with a special focus on improving their competitiveness within the business sector.

4

Recommendation 4 (to UNDP and the Government of Montenegro): In E-vehicle program operated by the Eco-Fund, there should be more focus on vehicle owners who frequently use their vehicles.

5

Recommendation 5 (to the Government of Montenegro and UNDP): Continually update the framework for energy efficiency and renewable energy sources.

Management Response Documents
1. Recommendation:

Recommendation 1 (to the Government of Montenegro and UNDP): Include as a part of awareness raising activities, additional presentations on the studies “Policy and incentive options for green businesses in Montenegro in agricultural, tourism and energy sectors” and ”Improvement of legislative and regulatory framework for the concept of ‘prosumers’ in Montenegro”.

Management Response: [Added: 2021/12/15]

Fully accepted.

These Studies were very important to the removal of policy and legislative barriers to green business in Montenegro, containing information relevant of the process of preparing future low carbon strategies. Thus, presentations should be aimed at awareness raising to a wider audience of decision makers.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
The study “Policy and incentive options for green businesses in Montenegro in agricultural, tourism and energy sectors” will be an input for the preparation of the National Adaptation plan for identification of companies and sectors to be targeted by capacity assessment in the context of the adaptation and as guiding framework for development of the financial and resource mobilization strategy for National Adaptation Plan.
[Added: 2021/12/15] [Last Updated: 2022/05/30]
UNDP CO, NAP Project Team 2022/04 Completed The document used as an input for the cap assessment of the business community for the design of the climate adaptation policies development and implementation of measures The document currently in use for setting up of climate adaptation goals in tourism and agriculture sector. History
The study ”Improvement of legislative and regulatory framework for the concept of ‘prosumers’ in Montenegro” will be an input for creating recommendations for revision of the Law on building and spatial planning that has been initiated by the Government. In addition, the study recommendations will be the basis for the next phase of work in the context of prosumer concept development, e.g. assessing legal framework for enabling energy cooperatives, relaying on detailed analysis provided in the study
[Added: 2021/12/15] [Last Updated: 2022/10/18]
UNDP CO – NAP Project Team, Ministry of Ecology, Urbanism and Spatial Planning 2022/10 Completed The study “Policy and incentive options for green businesses in Montenegro in agricultural, tourism and energy sectors” recommendations and overall conclusions are used in presentations organised by National adaptation team during the implementation relevant for the 3rd component of the project and focused on the engagement with business sector. In addition the Study was shared and used in preparation of two project (projects value exceeding 20M USD), namely EU4 Green project and Adaptation to Climate Change and resilience in the Montenegrin mountain areas. History
2. Recommendation:

Recommendation 2 (to the Government of Montenegro and UNDP): Monitor post-project GHG emission reductions from projects supported by the Solar 3000+ project, IDF funds, Eco-Fund and other financing initiatives.

Management Response: [Added: 2021/12/15]

Fully accepted.

IDF and the Eco-Fund have their own internal GHG emission reduction monitoring systems resulting from their Public Calls for solar PV installations and electric cars. The GHG emission reduction monitoring systems for the Solar 3000+ project and other financing schemes has not yet been defined. The UNDP CO and the Government of Montenegro should work closely with the IDF, Eco-Fund, the Solar 3000+ and other financing schemes to ensure the GHG emission reduction monitoring systems to adhere to best practices and comply with standards for accuracy.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
The Standard Letter of Agreement (SLoA) signed between Eco Fund and UNDP prescribes the obligation to report on GHG emissions reductions of all programme beneficiaries. The contract signed between the Eco Fund and beneficiaries stipulates the obligation of the Eco Fund to provide guidelines and templates for monitoring and reporting on GHG emissions reductions in the course of five years.
[Added: 2021/12/15]
UNDP CO – GGB Project Team Eco Fund 2021/12 Completed
The Project is providing technical assistance and targeted training to IDF and Eco Fund’s personnel focusing on technical aspects of green projects, energy and financial savings and CO2 emission avoidance calculation, monitoring and reporting
[Added: 2021/12/15]
UNDP CO – GGB Project Team 2021/11 Completed
The consultant is being hired to develop technical specification for the Eco Fund’s IT system that will allow for digitalization / automatization of GHG emissions reduction monitoring and reporting mechanisms. Once the tools are developed, they will be used for monitoring of the CO2 emission avoidance in the scope of the Solar 300+ and 500+ project, as Eco Fund is one of leading partners.
[Added: 2021/12/15] [Last Updated: 2022/05/31]
UNDP CO – GGB Project Team Eco Fund 2022/03 Completed Document uploaded , shared with all relevant stakeholders History
3. Recommendation:

Recommendation 3 (to UNDP and the Government of Montenegro): Green initiatives and climate actions must be continued with a special focus on improving their competitiveness within the business sector.

Management Response: [Added: 2021/12/15]

Fully accepted.

This would include:
• as most green investments are expensive, future support by donors and financing institutions is one of the key preconditions in the process of transition to green economy. This would include a focus on sustainable support for grants for the mentoring programme, concessional finance from donors and financial institutions, and grants for the Subsidy Programme of the Eco-Fund of green investments;
• future green projects should encompass credit lines and subsidies aimed at citizens, especially in the area of energy efficiency, which requires changes in the current framework;
• future subsidy programs for co-financing green projects should support more than 40% of the investment. While the Eco Fund suggests that the support to green investments be at least 50%, preferably 60%, the Government should consider this spike in subsidy levels to be only promotional. In other words, the Government should use this spike in subsidy levels to catalyse interest in a particular intervention such as solar PV installations or conversion of private vehicles to hybrid or electric vehicles (see Para 124), then reduce the subsidy rate when there is sufficient interest;
• future green projects should encompass introducing the emissions trading system for reduction of CO2 as well as technical assistance for operator’s capacity building;
• incorporate lessons learned from the Call for Proposals for the improvement of similar future programs to the current Eco-Fund and IDF programmes. For example, there needs to be simplified procedures in the legal and institutional framework that have created business barriers in the implementation of these green investments.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
The project is currently hiring a local expert, a representative of the industry directly involved in all the phases of the development of a ‘Prosumer’ with the aim to prepare a ‘Lessons learned’ paper (before the end of the project) to identify all the bottlenecks in all the phases of the process: administrative, institutional, infrastructural, etc. The document will produce recommendations and initiatives for changing the legal and institutional framework to remove identified barriers.
[Added: 2021/12/15] [Last Updated: 2022/01/13]
UNDP CO – GGB Project Team 2021/12 Completed The Report is finalized by the Consultant History
A consultant is being hired to develop technical specification for the Eco Fund’s IT system that will allow for exchange of data with relevant national and local public authorities, that would simplify the administrative procedure
[Added: 2021/12/15] [Last Updated: 2022/05/31]
UNDP CO – GGB Project Team, Eco Fund 2022/03 Completed Document uploaded , shared with all relevant stakeholders History
4. Recommendation:

Recommendation 4 (to UNDP and the Government of Montenegro): In E-vehicle program operated by the Eco-Fund, there should be more focus on vehicle owners who frequently use their vehicles.

Management Response: [Added: 2021/12/15]

Fully accepted.

The E-vehicle program operated by the Eco-Fund aims to convert existing individual and company petrol and diesel vehicles to electric or hybrid vehicles as mentioned in Para 114. The problem with this program is a focus on privately-owned vehicle owners who generally will be difficult to convert mainly due to problems of affordability. Focus should be on:
• corporate vehicle owners who frequently use their vehicles such as delivery companies and service vehicles. This would increase the success rate of vehicles conversions in the short-term while privately-owned vehicle owners decide to convert in larger numbers;
• vehicle owners who frequently use their vehicles (annual millage over 13,000 km) and would therefore be more willing to convert. Due to still low affordability by this class, increased subsidies (greater than 40%) should be considered for a year or 2 to catalyse and improve incentives to convert;
• potential owners of EV charging stations who should be offered subsidies.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
The EV related specific recommendation have been shared with the Eco Fund, and will be shared with the Project Steering Committee, and other relevant institutions in Montenegro.
[Added: 2021/12/15] [Last Updated: 2022/01/13]
UNDP CO – GGB Project Team 2021/12 Completed Recommendations shared with Eco Fund, SC and other intuitions. History
Eco Fund is summarizing the lessons learned from the outcomes of the first E-vehicles support program with the aim to enable adequate redesign and better targeting of future clients. The findings will also be shared with relevant institutions.
[Added: 2021/12/15] [Last Updated: 2022/05/31]
Eco Fund UNDP CO GGB Project Team 2022/05 Completed Based on lessons learned, the Eco Fund revised the second Call for the support of development of prosumers https://www.eko-fond.me/me/javni-konkursi/javni-pozivi/ History
The EV related recommendations will be presented to the CO team working on the development of the concept note for the Low Carbon Transport Project to be funded by the Green Climate Fund (GCF) with the aim to be integrated in the concept and future project proposal
[Added: 2021/12/15]
UNDP CO GGB Project Team UNDP CO – GCF team 2021/12 Completed
5. Recommendation:

Recommendation 5 (to the Government of Montenegro and UNDP): Continually update the framework for energy efficiency and renewable energy sources.

Management Response: [Added: 2021/12/15]

Fully accepted.

This would be to eliminate outdated technologies, reduce infrastructural barriers for installations, and have stronger involvement of line ministries.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
The project is hiring a local expert, a representative of the industry directly involved in all the phases of the development of a Prosumer who will prepare a ‘Lessons learned’ paper before the end of the project with the aim to identify all the bottlenecks in all the phases of the process: administrative, institutional, infrastructural, etc. The document will provide recommendations for changing the legal and institutional framework and will be shared with the Ministry of Capital Investments responsible for the legal framework regulating the use of RES and energy efficiency
[Added: 2021/12/15] [Last Updated: 2022/01/13]
UNDP CO – GGB Project Team 2021/12 Completed The Report is finalized by the Consultant History
The project has already supported drafting of two Rulebooks deriving from the Law on Efficient use of Energy, regulating the labelling, import and use of refrigerating equipment in line with the highest EU standards, and has engaged a consultant to draft two additional rulebooks (that will replace current five rulebooks) that are regulating energy labelling of light sources and separate control gears, with the aim to eliminate inefficient technology from the market of Montenegro.
[Added: 2021/12/15] [Last Updated: 2022/01/13]
UNDP CO GGB Project Team 2021/12 Completed The Rulebooks drafted and ready for public consultations History

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