Mid Term Evaluation: Sustainable Rural Biomass Energy Project

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Evaluation Plan:
2014-2018, Bhutan
Evaluation Type:
Mid Term Project
Planned End Date:
12/2014
Completion Date:
11/2014
Status:
Completed
Management Response:
Yes
Evaluation Budget(US $):
20,000

Management Response of MTR for SRBE Project

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Title Mid Term Evaluation: Sustainable Rural Biomass Energy Project
Atlas Project Number: 00060755
Evaluation Plan: 2014-2018, Bhutan
Evaluation Type: Mid Term Project
Status: Completed
Completion Date: 11/2014
Planned End Date: 12/2014
Management Response: Yes
Focus Area:
  • 1. Others
Corporate Outcome and Output (UNDP Strategic Plan 2014-2017)
  • 1. Output 1.5. Inclusive and sustainable solutions adopted to achieve increased energy efficiency and universal modern energy access (especially off-grid sources of renewable energy)
Evaluation Budget(US $): 20,000
Source of Funding: GEF
Joint Programme: No
Joint Evaluation: No
Evaluation Team members:
Name Title Email Nationality
Sandeep Tandon Mr sandeep_tandon@yahoo.com INDIA
Yeshey Penjor Mr ypendjor@gmail.com
GEF Evaluation: Yes
GEF Project Title: Sustainable Rural Biomass Energy (SRBE)
Evaluation Type: Mid-term Review
Focal Area: Climate Change
Project Type: FSP
GEF Phase: GEF-4
GEF Project ID: 3844
PIMS Number: 4181
Key Stakeholders: MOEA
Countries: BHUTAN
Comments: Completed
Lessons
1.

Since the project is designed to reach out to the population particularly the low income households in the rural areas, the project implementation faces the challenges of time involved in travelling in the hilly terrain of the country, weather and remote location of villages. The project activities in the field tend to slow down due to access issues and adds to the challenge of installing the improved cook stove on time;

- Adequate staffing of the partner agencies involved in the project implementation is important in a national level projects as the amount of coordination required is high. Frequent changes of staff in DAHE had an adverse effect on the project progress. Project Board must maintain an oversight on the staffing requirement since the project has tight time-line for completing all the activities within 3 years.

- The general experience in implementing pilot demonstration elsewhere has highlighted the importance of location of pilot demonstration site, which requires careful consideration with a preference to logistics and ease of access. This is based on the fact, and borne out of experience that a pilot faces many unforeseen challenges during its implementation and therefore easy access to its location makes the field monitoring easy and also helps in addressing the issues in a timely manner as they arise, a key to the success.

- An in-depth interaction with the banks and other stakeholders in Bhutan’s financial sector was not carried out during project preparation. Without full information of the financial barriers the project document and the PPM has few outcomes to provide fiscal incentive and create market for BET. However, in the current situation of the financial market, these are unlikely to be achieved by EOP. The banks in Bhutan have imposed restriction on offering loans to the private sector under the directive of the RGoB to maintain the foreign currency exchange to contain the current account deficit. With the situation likely to continue, the project may not possibly be in a position to extend the fiscal incentives and push for any market linked mechanisms.

- The project has made implementation arrangement with the help of another RGOB agency DAHE, which has helped thus far in the implementing some of the key project activities through awareness creation and demand for cook stoves as the NFEI have strong links with rural population. The implementation capabilities and the support required by DAHE to ensure smooth roll out of cook stoves in 15 districts, however, has not been carefully evaluated by the project. The findings from the field visits of the review team warrants a strengthening of DAHE with additional human resources and establishment of a mechanism in the project to review the installation process of cook stove and to help address technical and operational issues by DRE in a timely manner to mitigate operational issues that would cause people to abandon the improved cook stoves due to lack of solutions.


Findings
1.

3. KEY FINDINGS

3.1 Project Strategy

3.1.1 Project Design

To meet the objective of the project to reduce the pressure on local forest due to inefficient consumption of fuel-wood, reduce the rate of deforestation and improve the air indoor air quality and an overall reduction in the GHG emissions through a wide spread use of use biomass energy technologies, the project was designed to promote market based mechanisms to create demand for efficient technologies using fuel wood and support from the government in the form of incentives and policy measures. The barriers identified that contribute to unsustainable utilization of biomass resources are (i) inadequate policies and weak institutional setup; (ii) use of inefficient biomass energy technologies; and (iii) low level of knowledge and expertise or capabilities required produces and make use of modern and efficient biomass systems. The unsustainable use of biomass resources lead to very high consumption of fuel wood, leading to depletion of country’s forest trees and biodiversity, and high GHG emissions.

The project further identified policy gaps such as absence of a coherent renewable energy policy; lack of enterprises to supply biomass energy systems and services; low level of awareness and capacity on sustainable biomass energy technologies, and absence of working models of efficient technologies operating in the country. As such, the project design also sought to use GEF resources to provide support for demonstrating modern biomass energy technologies and establish market mechanisms to disseminate efficient cook stoves and mainstream biomass energy through knowledge management, institutional policies and regulation, and creating an environment for investment by private sector. The funds from GEF were designed to provide incremental cost needed to create policy regime and market mechanisms to support the widespread application of BET, and build on the earlier GEF Small Grants Programme in Bhutan that targeted educational and religious institutions.

Through its all round approach, the project design seeks to enhance the impact leading to reduction of GHG emissions from the improved production and efficient use of biomass throughout the country which will be achieved through awareness creation, training, building the capacity of governmental and non-governmental organizations and private sector participation. Furthermore, the project’s focus on introduction of improved biomass energy technologies and dissemination of improved cook stoves was rationalized by a number of factors including: (i) energy supply situation and heavy dependence on fuel wood in spite of impressive electrification; (ii) growth in the energy demand and biomass supply potential; (iii) dependence on conventional cook stoves by a high percentage of rural population with low level of household income; (iv) air quality issues in the household leading to high prevalence of respiratory disorder among women and children; and (v) reduced wastage of biomass residue in private industries especially sawmills, from alternate BET which convert the residue into feedstock for use in space heating and alternative to fuel wood.

As such, the framework of the project design is appropriate for barrier removal including:

- Implementation of strengthened support policies and regulatory frameworks and institutional capacity for adoption of sustainable practices for use of biomass resources;

- Implementation of BET applications from improved confidence in the feasibility, performance and environmental benefits through demonstration projects and increased private sector participation; and

- Improved knowledge, awareness and capacities of policy makers, financiers, suppliers and end-users on the benefits of biomass energy technologies.

The project also sought to achieve its objectives through the involvement of relevant government agencies and utilities at the national, and district levels, non-formal training channels and community based organizations. In addition, the project has numerous indicators and outputs including a roadmap for the promotions of sustainable production and utilization of biomass using community forest wood supplies as well as biomass residue feedstock from private industries, a wide range of knowledge products, learning platforms for sharing lessons learned and best practices that can lead to broader scale replication and demonstration of BET in industries and promotion of improved cook stoves among the low income rural households.

Following are the comments with regards to the relevance of two Project outputs:

Output 2.2 deals with financial incentives such as smart subsidies to enable market mechanism. Though this may have been relevant during the design phases of the project in 2008 to 2011, while the financial incentive may be required for spreading the BET, the output as designed with indicator is no longer workable in the 2014 business environment, and as such, this component is no longer required. This partly stems from the experience of the project team who experienced difficulties in getting the private sector response to the procurement to participate in the project implementation and gain experience. Around 2012 Bhutan faced foreign exchange crisis and as one of the precautionary measures, the RgoB restricted the private sector from obtaining finances from bank in the form of loans. With the existence of such restriction in the financial sector, the project will not be in a position to offer financial incentives beyond sharing the cost of pilot demonstration of BETs.;

- Output 3.3 deals with training of micro-entrepreneurs on different aspects of BET to stimulate the market with service/technology solution providers however experience elsewhere indicate that such arrangement works when the conditions are favourable with the availability of finance (or micro-finance), sufficient unmet demand in the market and ability of the end users to partly pay for the product. Since, there are other significant gaps and barriers that currently exists and are being addressed by the project, building the capacity of the micro-entrepreneurs to officer BET solution is well thought out and important for project’s sustainability, however, among the current set of barriers this ranks low and therefore for the limited time and resources available this output becomes redundant unless other barriers have been removed and most importantly the issue of access to finance by the private sector is resolved by the RGoB independent of the project. As such, the SRBE project has produced knowledge products, created awareness and training among the end use however the key tasks for sustainability of the project needs to be identified and worked upon.

In conclusion, the project design is ambitious considering a 3-year implementation timeframe and design considerations to stimulate markets and private sector to respond to demands. To achieve the outcomes and deliver the outputs under a NIM execution modality, the project is required to be implemented in a focused and efficient manner. The ProDoc does acknowledge the knowledge and experiences of other countries in Asian region including Cambodia, Thailand and India where the experience with biomass technologies and community forestry will be used on the project to accelerate the awareness creation, knowledge and framing of policies.

There was almost no experience and knowledge of efficient BET with the relevant stakeholders from the central government to district administration level, Community Based Organization and private sector players. The non-availability of finance has dampened the prospects for the private sector to benefit from projects that aim at opening new markets and providing business opportunity. This lack of support to private sector has placed further risks on the project achieving some of the intended outcomes within 3-year period. The somewhat ambitious nature of this project has placed significant pressure on the executing agency to efficiently deliver ambitious project plans and targets. This would have required the PMU and the project’s implementation partners to be sufficiently staffed with well-qualified and good managerial support.

One of the main stakeholders and beneficiary of this project are women and children. The project design has given sufficient emphasis for inclusion of women in certain outputs. As such, there were no significant gender concerns considered on the design of this project

3.1.2 Results Framework

The results framework for SRBE is included in Table 1. The Project Planning Matrix (PPM) was designed in 2010-11, with 3 components with 44 indicators. While this project is in line with the recently designed project with three-outcomes which responds to the broad barriers that SRBE is trying to overcome. However, PPM has overall 44 indicators to track and report progress, which is considered too high. Given the large number of indicators, a general overview of the PPM indicators is provided:

While there is rationale to the indicators provided in the PPM towards the achievement of an outcome, the number of indicators is excessive with most outputs burdened with more than one indicator. Moreover, there are few indicators that have become redundant due to reasons outside the control of the project, which can be removed from the PPM. A description of redundant indictors is provided below:

- "Fiscal incentives such as smart subsidies to enable market mechanisms introduced" from Output 2.2. Due to the financial restrictions imposed by the RGoB and absence of lending by the banks to the private sector, it is highly unlikely that the project will be able to influence markets in the remaining time and the financial resources available to it.;

- "Implemented and operational BET Full Scale model on biomass gasification for electricity services and thermal applications" from Output 2.5. As the Project Board has suggested dropping the demonstration of this technology as it is economically unviable, it is suggested that Output 2.5 be revised and the corresponding indicator on biomass gasification should be dropped;

- "Project developers and micro-entrepreneurs trained on different aspects of BETs" from Output 3.3. The project has faced severe challenge in getting the attention of private sector players and fabricators to respond to the tenders. Unless the market has a steady demand for improved cook stoves and other BET, it is unlikely the entrepreneurs will come forward and invest their resources. In the current circumstances, it is suggested that this particular output along with the indicator should also be dropped.

In conclusion, the PPM needs to be consolidated to be more user-friendly and help in monitoring the project’s progress. Suggestions on indicators are also included in the Table 1 against the outputs, where ever required. These suggestions could be used as a basis for further discussion and decision on having a revised PPM during the next PSC meeting.

3.2 Progress towards Results

By and large, the challenge of removing barriers to sustainable utilization of biomass and the use of biomass energy technologies is linked to the need for a functional institutional arrangement that allows DRE to frame policies and regulations based on studies and lessons learned during implementation of SRBE. Project resources have been utilized to setup these arrangements with the appropriate government agencies and CBO. Challenges have been encountered with the fact that the engagement of private sector players and CBO for providing goods and services took much longer than anticipated as most of the CBOs operating in Bhutan normally do not participate in the government’s procurement process, and the private players initially did not evince interest in the procurement. Further the hilly terrain of the country and location of villages further add to the implementation challenges. Lastly, the capacity of CBO to engage with the district administrations vary considerably when compared with government owned organization such as DAHE. The time lag between project design and implementation was high consequently the project team was not fully prepared for the changed conditions that affected the work.

- The project followed the design recommendation to engage Royal Society for Protection of Nature as the main CBO to work in the villages across all 20 districts. However, this was not accepted by Ministry of Finance which advised the project to follow the procurement process laid down by the government. The decision was conveyed to project after a gap of several months leading to inordinate delay in finding an alternate.

- The project utilized the locally available expertise for re-design of the cook stove with three configurations – three pots, two pots and fodder stove, which helped to reduce the cost of a cook stove by 75%. The new designs are available with the DRE which provide opportunities for future collaborative studies and design improvements to either improve the efficiency and reduce the costs of BET;

With the objective of the project being to operationalize BET in households and with private industries, the challenge for the PMU was to have these institutional arrangements strengthened in 20 districts with the weather constraints, limited accessibility to villagers during three months of monsoon season and limited time for engaging with villagers during the harvesting period, leaving 6 months for field work, a daunting task. Under the direction of MoEA, DRE and the Project Board, the PMU have undertaken steps to engage DAHE (under Ministry of Education) to reach out 16 districts out of 20 with the help of NFE instructors and district administration to select the beneficiary households.

Project resources are also being used to augment the capacity of NFE instructors to ensure compliance of design and quality to ensure high degree of satisfaction among the families using UNDP – Royal Government of Bhutan Sustainable Rural Biomass Energy improved cook stoves, and community forestry plantations which has been taken up in seven districts bringing 111.47 hectares under plantation in which 178,300 saplings have been planted and will be monitored by DoFPS. The project has conducted awareness building trainings and workshops on BET choices and engaged a large percentage of women thereby ensuring that the benefits of improved biomass energy technologies are understood and quickly adopted.

Project progress, however has been hampered by few unforeseen factors including:

- The scheduled starting date for the project was January 2013. However it coincided with parliamentary election till July 2013. Since the project included subsidy component and consultation of beneficiary societies, the project risked politicization by imminent political parties. The project implementation had to start with awareness and training components. The Election Commission of Bhutan (ECB) notified that no public gathering of any kind should be organized by any agency during the election campaigning and voting period. Therefore, the Project Management Unit had to defer some of the activities until end of July 2013;

- From July till September was peak monsoon coupled with farming season. Rains restricted the participation of beneficiary villagers as many villages are away from the main connecting road and being in the hills those are reachable on foot. Confusion and changes in selection of the project implementing agency from Royal Society for Protection of Nature (RSPN) to Bhutan Association of Women Entrepreneurs (BAoWE) from the Ministry of Finance also contributed to delay of the project implementation;

- Further, for Trashigang Dzongkhag pilot project which was supposed to install around 1247 stoves and end the activity by March 2013 ran into issue with the supplier for not fulfilling the contractual obligations and as a result only 169 stoves could be installed in the scheduled time period;

- Frequent change of project officials from different agencies also significantly disturbed the project progress. Four different officials have either resigned or moved to other agencies creating institutional memory loss and gap in transfer of knowledge and responsibilities;

- Private sector does not have access to bank finance due to restrictions imposed by RGoB to limit the outflow of foreign exchange. This greatly limits the private sector player’s ability to venture into new areas and explore business opportunities and markets. This severely restricts the project’s sustainability without government’s financial support to continue the work for couple of years, especially as the project greatly benefits the grass root population.

The project has managed to overcome some of the above challenges and after September 2013 it started to make steady progress. UNDP has come forward to support the program implementation by conducting the procurement on behalf of the project unit. The process is underway and is expected to complete within February 2015. By the time of MTR mission the key stakeholders expressed confidence about the project being able to achieve the goal by end of December 2015, the scheduled end of project.

3.2.1 Progress towards Outcomes Analysis

In general, project progress has been moderately satisfactory to date with some of the indicators on the PPM not likely to be achieved. This can be seen on Table 1 with the colour-codes. The main issues regarding progress are summarized below: UNDP – Royal Government of Bhutan Sustainable Rural Biomass Energy

- Much of the progress has been affected by two major factors. Firstly, start of the project coincided with the 2nd Parliamentary elections for which the Election Commission has issued guidelines which prohibited the project from initiating certain activities such as holding stakeholder consultations in villages, since the project had a subsidy component and it is part of the Ministry of Economic Affairs. Secondly, excessive time of the project and project team was spent on procurement of goods and services due to poor response of CBO and the private sector players.

- The assumptions during project design with regard to the local markets, participation of private sector were ambitious and lacked the required study on the financial sector’s preparedness to offer financing to private industries especially private sawmills during the programme design. Project’s few outputs are linked to extending the financial incentives but in the absence of background on country’s financial sector and the risks involved, these outputs are ambitious in the current situation. These outputs are not included among project risk matrix even though these are important for project’s sustainability ;

- The project Outputs 2.2, 2.3, 2.5 and 3.3 are meant to stimulate local market through a combination of market demand and financial incentives for local entrepreneurs to offer biomass energy technologies, however, this requires an analysis of the existing market conditions for the operation of private players and barriers faced. Since access to finance is a major issue faced by the private sector on account of the foreign exchange crisis faced by the RGoB, and restriction imposed by the banks are expected to be in place for some time, any progress on the above mentioned four output is highly unlikely. As such, the MTR reviewers are of the opinion that the project should focus on gaining confidence of the rural households from the use of improved cook stoves and work with select private sawmills to demonstrate the technical and economic viability of briquette production, which can be promoted as a fuel for use especially in the urban areas. The experience gained from these two major areas can be utilized for developing policies and addresses to a large extent the problems with regard to the use of biomass and directly responds to the Output 1.1;

- As a contribution to Output 1.2 (Established Biomass Energy Resource Information System (BERIS) for facilitating systematic collection, analysis and dissemination), the work has been awarded to a Thimphu based IT firm for development of website and database, and website www.bhutanbioenergy.gov.bt has been launched that provides information about the BET;

- For Output 1.3 and 1.4, the capacity building support has been provided to 28 CBO Focal persons (16 male and 12 female) and DAHE’s 180 NFE Instructors (74 male and 106 female) who in turn have provided awareness creation training on BETs; a large team of local persons (878 CFMG members; 557 male and 321 female) received training on community forestry and about 178,400 saplings have been planted in 111.47 hectare area in 6 Dzongkhags. The actions of the respective agencies involved in these activities have helped to achieve the EOP targets;

- Under Output 2.1, the menu of appropriate and efficient BET is yet to be developed that would cater to a variety of stakeholders ranging from rural households, income generating enterprises and private industries that utilize biomass;

- For Output 2.3, the project has to carefully review the relevance of this particularly output especially since the cook stoves for income generating enterprises have to be designed and prototypes tested for efficacy, prices determined before cost sharing mechanisms can be developed and applied;

- For Output 2.4, work on the procurement and supply is underway and it is expected that given the weather constraints, the installation of 13,522 cook stoves will be completed by December2015;

- For Output 3.2 and 3.5, the work is expected to be implemented in later half of 2015 as it would require BERIS to be fully operational and update with information from the field. The specialized training of trainers on community forestry has to be planned based on the financial resources available to the project;

- For Output 3.6, the site visits to successfully operational BET applications in Thailand and Vietnam have been completed while the international symposium on RE technologies will be held in 2015. The work on solution exchanges for the local entrepreneurs is likely to be taken up at a later stage;


Recommendations
1

Strengthen DAHE with at least one human resource to share the increased volume of work and help with coordination and management of cook stove deliveries across 10 districts for remainder of the project.

2

Communication with the District Officials about the SRBE project; its implementing and supporting agencies; end users and the overall benefits will help in securing feedback from Dzonkhag for scale up.

3

Expedite the implementation of briquetting project with private sector saw mills to gain experience, build capacity and arrive at a better understanding of the market for briquettes.

4

A qualitative and quantitative study in the 3rd quarter of 2015 to capture the benefits and the impact of improved cook stove.

5

UNDP to work with DRE and GNHC to make budgetary provision in the annual plans for 2016, 2017 and 2018 to support improved cook stoves installations in the hilly regions and to low income rural households by the end of current plan period.

6

Use standard methodologies of IPCC and UNFCCC to estimate GHG reduction from forestry.

1. Recommendation:

Strengthen DAHE with at least one human resource to share the increased volume of work and help with coordination and management of cook stove deliveries across 10 districts for remainder of the project.

Management Response: [Added: 2018/10/08] [Last Updated: 2018/10/08]

The management has taken up this issue – the need to strengthen the manpower of DAHE so that the massive construction target envisaged in 2015 will be achieved. The management has upraised this issue in the 4th board meeting and taken up in the 5th board meeting dated 23rd January 2015.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
1.1 During the 5th Board Meeting, the implementing partner in particular, DRE proposed to recruit VTI graduates on internship as field technicians to support DAHE in coordination. 1.2. The focal person from DAHE informed that recruiting VTI graduate will have huge cost implication to the project. 1.3. Instead, the project board endorsed that Mr. Tenzin Rabgyel, as full time SRBE focal person from DAHE until the end of the SRBE Project. 1.4. The 5th Board Meeting endorsed DAHE to recruit VTI graduates if it is necessary only within the proposed budget without any additional cost to the project.
[Added: 2018/10/08] [Last Updated: 2018/10/09]
CCM&E, UNDP, DRE, SFED 2015/01 Completed History
2. Recommendation:

Communication with the District Officials about the SRBE project; its implementing and supporting agencies; end users and the overall benefits will help in securing feedback from Dzonkhag for scale up.

Management Response: [Added: 2018/10/08]

There is a good communication network within the implementing partners. At the moment the focus is in the installation of the stoves, which is ongoing. The district education officers are entrusted to oversee the construction works in remote villages.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
2.1. Communication with the local governance enhanced 2.2. District Education Officers made a SRBE Focal officers to oversee stove’s construction works
[Added: 2018/10/08] [Last Updated: 2018/10/09]
CCM&E, UNDP, DRE, SFED 2015/12 Completed History
3. Recommendation:

Expedite the implementation of briquetting project with private sector saw mills to gain experience, build capacity and arrive at a better understanding of the market for briquettes.

Management Response: [Added: 2018/10/08]

Social Forestry Extension Division, of DoFPS identified to initiate briquetting project based on the decision of the 5th Board Meeting

Key Actions:

Key Action Responsible DueDate Status Comments Documents
3.1. Completed the survey of sawmills and produced feasibility report through consulting services and implementing partners 3.2. The report was presented on the 4th Board Meeting and the board recommended to institute a Taskforce chaired by the Director, DRE to validate the recommendations of the consultant regarding the viability gap funding. 3.3. The taskforce presented the finding on the 5th Board Meeting and outsourced the activity to SFED, MoEA due to relevance. 3.4. The SFED received the proposal from DRE and the SFED has taken up to their Management for final decisions whether to undertake this activity by them or by DRE. 3.5. DoFPS has agreed to implement briquetting project as proposed.
[Added: 2018/10/09]
CCM&E, UNDP, DRE, SFED 2015/01 Completed All activities completed
4. Recommendation:

A qualitative and quantitative study in the 3rd quarter of 2015 to capture the benefits and the impact of improved cook stove.

Management Response: [Added: 2018/10/09]

The study will be taken up during the course of implementation.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
4.1. To include the study while carrying out baseline and evaluation of project
[Added: 2018/10/09]
CCM&E, UNDP, DRE, SFED 2015/12 Completed Study completed
5. Recommendation:

UNDP to work with DRE and GNHC to make budgetary provision in the annual plans for 2016, 2017 and 2018 to support improved cook stoves installations in the hilly regions and to low income rural households by the end of current plan period.

Management Response: [Added: 2018/10/09]

DRE have been informed to incorporate the Budgetary provisions in the annual plans of the DRE and GNHC. However, UNDP can jointly work on resources mobilization and future up-scaling plan could be developed and approach different donors for funding support.

Key Actions:

Key Action Responsible DueDate Status Comments Documents
5.1. DRE has submitted project concept to the GNHC for their necessary actions
[Added: 2018/10/09]
DRE 2015/12 Completed Proposal completed but incorporation of budgetary provisions in annual plan on-going
6. Recommendation:

Use standard methodologies of IPCC and UNFCCC to estimate GHG reduction from forestry.

Management Response: [Added: 2018/10/09]

SFED has completed 111 hectares of plantation under the SRBE Project and GHG reduction estimates to be pursued

Key Actions:

Key Action Responsible DueDate Status Comments Documents
Need to assess GHG reduction
[Added: 2018/10/09] [Last Updated: 2018/11/12]
DRE, SFED, UNDP 2015/12 Completed On-going History

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