SPAR6C Program – Updating of Colombian Mitigation Abatement Cost Curves and Development of Business Plan for Article 6

Date documents can be requested until : 30 January 2025 13:59
Title : SPAR6C Program – Updating of Colombian Mitigation Abatement Cost Curves and Development of Business Plan for Article 6
Procurement No. : 100011743
Process : RFP

Date documents can be requested until : 20 January 2025 16:00
Title : SPAR6C Program – Updating of Colombian Mitigation Abatement Cost Curves and Development of Business Plan for Article 6
Procurement No. : 100011743
Process : RFP

Date documents can be requested until : 06 January 2025 16:00
Title : SPAR6C Program – Updating of Colombian Mitigation Abatement Cost Curves and Development of Business Plan for Article 6
Procurement No. : 100011743
Process : RFP
Description : GGGI in Colombia invites eligible firms/companies to submit their proposals for the provision of consulting services to Update the Colombian Mitigation Abatement Cost Curves and Development of Business Plan for Article 6.
Service providers (in case of consortium, at least the lead entity) must be a legal entity incorporated and registered in Colombia and/or able to receive payment in Colombia.
Bidders are informed that the project holds a certificate of public utility and is therefore exempt from VAT. Consequently, the financial proposal submitted should not include VAT

It is expected that the selected firm will procure the licenses for the LEAP and VANSIM models. These tools are essential for the successful implementation and analysis required in this project. The firm must ensure that the necessary licenses are obtained promptly to avoid any delays in project timelines.

GLOBAL GREEN GROWTH INSTITUTE:
Based in Seoul, the Global Green Growth Institute (GGGI) is an intergovernmental organization founded to support and promote a model of economic growth known as "green growth", which targets key aspects of economic performance such as poverty reduction, job creation, social inclusion, and environmental sustainability. GGGI works with 48 countries around the world, building their capacity and working collaboratively on green growth policies that can impact the lives of millions, as well as promoting green growth investments. The organization partners with countries, multilateral institutions, government bodies, and private sector to help build economies that grow strongly and are more inclusive, efficient and sustainable in the use of natural resources, less carbon intensive, and resilient to climate change.

GGGI serves the role of an enabler and facilitator of Members’ transition into a low-carbon green economy, providing policy advice and technical support in the development of green growth plans, policies and regulations, mobilization of green investments, implementation of green growth projects, and development of local capacities and knowledge sharing.

GGGI’s value chain cuts a wide swathe from green impact assessment to strategy and planning, financing, implementation, and knowledge sharing. By linking policy and implementation along the value chain, GGGI supports its members to develop and implement green growth plans and strategies adopted by governments, translated into green investment plans and financing vehicles aligned with national priorities and supported by knowledge sharing and best practices, and finally, the design, financing, and implementation of green growth projects.

PROJECT BACKGROUND AND OBJECTIVES:
The Paris Agreement provides a comprehensive framework for signatory Parties to reach an ambitious commitment to limit the increase in global average temperature to well below 2°C, and to pursue efforts to limit the increase to 1.5°C in a cooperative manner. This framework covers several instruments including cooperative approaches under Article 6 which allows for the potential development of international carbon transactions.

The Carbon Pricing Unit (CPU) of GGGI is implementing several programs related to scaling up international carbon trading, now covered by the Paris Agreement Rulebook finalized in Glasgow at COP26. By opening up these markets and the resultant flow of transactions it is envisaged a robust and reliable global price for carbon can be established, something many governments and private sector actors have long called to motivate the transformational change needed to achieve the ambitious goals of Paris. GGGI’s Article 6 programs provide technical assistance and capacity building to government counterparts to improve their readiness for Article 6 engagement. These programs support the design of projects and policies for pilot transactions and the strengthening of institutional frameworks required for their implementation.

The Supporting Preparedness for Article 6 Cooperation (SPAR6C) Program, funded by the International Climate Initiative (IKI) of the German Government, is a five-year, 20M EUR Program, whose implementation began in Q2 2022. Its objective is to use Article 6 (A6) cooperative approaches to engage the private sector in NDC implementation and to raise ambition. This will enable cost-efficient, flexible, high-integrity carbon markets with positive sustainability impacts. Transformative design of A6 pilots for real transactions of Internationally transferred mitigation outcomes (ITMOs) will be enabled by research-based capacity building in four partner countries: Colombia, Pakistan, Thailand and Zambia. The program consists of six (6) work packages, of which two are centrally managed and four are country driven. In the first two (2), best practice tools and approaches to implement cooperative mechanisms will be developed, underpinned by an international forum – a high ambition community of practice - that brings together countries and practitioners, who share the common objective of raising ambition through markets. In-country implementation will focus on three areas of work in each of the four countries: 1) Long-term planning, 2) institutional readiness to transact and 3) pilot design and transactions. More than eight A6 pilot programs will be implemented in Colombia, Pakistan, Thailand and Zambia based on a toolbox of innovative guidance and approaches for transformative A6 design.

The Supporting Preparedness for Article 6 Cooperation (SPAR6C) Program is supporting Colombia in developing it is institutional, regulatory, and technical framework and capacities to embark on Article 6 transactions of ITMOs during the NDC implementation period 2020-2030. The program's first stage has been the development of a Readiness and Needs Assessment (RNA) for implementing Article 6, which examines the country's capacities and systems to consolidate a strategy, and guiding principles, institutional and procedural framework, and monitoring tools related to Article 6.

The RNA developed by the program identifies the need to include additional costs related to the implementation of the mitigation measures that may not have been included in the marginal abatement cost curves (MACC) analysis but are relevant to identify the financial gap to implement all the mitigation measures, as well as identifying the sources of finance and potential role the carbon market could play.

The Supporting Preparedness for Article 6 Cooperation (SPAR6C) Program will support the Ministry of Environment and Sustainable Development of Colombia (Minambiente) and the Directorate of Climate Change improving the cost information of the measures included in the NDC and the ones that could contribute closing the mitigation gap.

Project Description and Objective:
Since 2012 Colombia started building robust information to identify the mitigation actions that could be cost-effective to reduce the national emissions. The Ministry of Environment and Sustainable Development has led robust analyses to inform the decision-making process with the national entities and encourage the commitment of the sectors to change the business-as-usual economic development. The last work, conducted by a consortium of the consulting firm VITO and the Universidad de Los Andes (Uniandes), included the development of Marginal Abatement Cost Curves – MACC for 108 measures, where 48 were part of the NDC (some measures in the NDC aggregated some sub activities), 6 proposed measures by the sectors, and 54 new measures. The MAC curves analysis allows evaluating the potential on emission reduction of the identified actions, as well the identification of the measures with the highest cost per ton of CO2 and which have the lowest cost per ton of CO2. This information allows the creation of scenarios with different levels of implementation and determining the aggregate impacts of all the measures.

The definition of the NDC goal presented to the UNFCCC considered the mitigation potential of the measures and the marginal cost of reducing GHGs. Although many of the measures included in the NDC have negative abatement costs (the cost of not implementing the measures is higher than the cost of implementing them), the level of progress of the implementation shows that there may be information that has not been considered. Although the MAC curve analysis includes an estimation of the investment, operation, and maintenance costs, the delay in the implementation of the measures included in the NDC may evidence that some costs are not yet visible and could be delaying the implementation of the measures.

This consultancy is expected to develop 4 main activities:
1. Review and update the cost information included in the LEAP model for all 108 measures.
2. Out of a selection of (at least 20 and up to 30) measures selected by GGGI and the Ministry of Environment for consideration for Article 6 that would be selected, develop a detailed cost analysis of implementing each measure.
3. Develop a financing plan for at least 20 and up to 30 measures that should include the different sources of funding required to reach the expected targets and the amount of funding that has been mobilized to date. The analysis on additional funding requirements should consider the potential role of leveraging funding from Article 6 to close the financial gap and/or to reach the multiplier effect of carbon finance.
4. As a result of the previous activities, a business plan for Colombia must be developed that provides insights into how Article 6 can support in reaching compliance with NDC targets, considering different scenarios for ITMO prices.

It is important to consider that all the mitigation outcomes that could be part of the Article 6 carbon market will be transferred to the buyer country and will not count for the Colombia NDC goal. That’s why, the consultancy must consider the trade-off for the country and the accomplishment of the NDC targets. In addition, the service provider should develop a roadmap and recommendations for each scenario. The information developed during the consultancy will provide an analysis of mitigation scenarios (prioritized measures) to ensure Colombia’s NDC accomplishment and participation in the Article 6 carbon markets. The mitigation information will be given by the Ministry of Environmental and Sustainable Development.

Two (2) dimensions are defined to assess the results and the service provider performance: Key Performance Indicators (KPI) and Service Level Agreement (SLA). It is proposed to have three (3) criteria to evaluate the products and to assess the outcome of the consultancy:

1. Quality: related to the quality of the design and compliance with the requirements described by GGGI. To evaluate this criteria 3 scores will be given: 1. does not meet; 2. meets requirements; 3. exceeds requirement.
2. Efficiency and productivity: related to the time required for development and compliance with deadlines. To evaluate this criteria 2 scores will be given: 1. does not meet; 2. meets requirements.
3. Impact and results: related to the satisfaction of GGGI with the product developed and the capacity transferred. To evaluate this criteria 3 scores will be given: 1. Not at all satisfied 2. Satisfied 3. Very satisfied - exceeds requirements.

This proposal will be delivered by the Supporting Preparedness for Article 6 Cooperation (SPAR6C) Program as an important input for consultation with the Ministry of Environment and Sustainable Development.

All information contained and developed in the consultancy may not be shared or published without the respective authorization of GGGI and the Ministry of Environment and Sustainable Development.

PROPOSED ACTIVITIES:
The service provider shall be responsible for providing support in developing following activities:

1. Elaborate and develop a detailed work plan schedule that includes a methodological framework and timeline for the activities outlined in these terms of reference and agreed with GGGI, as well as the scope of each activity and the risks identified.

2. Update of Mitigation Abatement Cost Curves:
a) Analyze the information included in the Mitigation Abatement Cost Curves (MACC) work, developed by VITO-Uniandes,
b) Propose and develop all the improvements to the MACC for all mitigation actions required to accomplish the NDC (108 measures) (Annex 2. List of measures).
c) Develop the MACC for five (5) additional measures that will be selected by the Ministry of Environment and Sustainable Development, and GGGI.
d) Develop a tool, database, platform or similar that allows easy consultation and traceability of information, including references and sources of information, and a dashboard with indicators. The consultancy team should work in collaboration with Minambiente and GGGI team and check the requirements and needs.

3. Develop a financial analysis:
a) Develop an implementation cost analysis for the prioritized measures for consideration of Article 6 (at least 20 and up to 30) selected by GGGI and the Ministry of Environment.
b) Identify all the relevant costs and financial incomes for the implementation of the measures, including the resources already mobilized, the financial gaps and requirements of additional resources for the full implementation.
c) Develop a financial feasibility analysis for the measures prioritized.

4. Develop a business plan:
a) Identify all potential financial sources that can finance at least 20 and up to 30 prioritized measures.
b) Develop a sensitivity analysis for the emission reductions and different ITMO prices to evaluate the financial closure gap and/or the multiplier effect to generate additional mitigation, analyzing the use of revenues to optimize the net benefit for implementing the NDC.
c) Propose a financial plan for each measure, including where suitable the option to use Article 6 as a mechanism to have a financial closure and/or a multiplier effect.
d) Evaluate in aggregate the potential of Article 6 in Colombia role in the article carbon market as a seller and as a buyer to accomplish the NDC goal.
e) Consider GGGI's demand analysis inputs (including ITMO prices and any other relevant variable for the transfers) for the construction of the business plan.

5. Consultation and validation with stakeholders. Throughout the duration of the consultancy, the firm is expected to develop workshops and/or focus groups with the key stakeholders for the implementation of the measures, including sectoral ministries, to validate, receive feedback and collect information for the analysis.

6. Provide inputs to evaluate the macroeconomic impacts of Article 6 and a priority list of mitigation interventions, total investment requirements, and potential financial volume of ITMOs per sector.

7. Consolidate information and support capacity transfer to the SPAR6C Program, discuss the results and receive feedback from GGGI team, Minambiente and other relevant stakeholders for the process. In addition, the Colombia LEAP model update with A6 scenarios and capacity building sessions with GGGI and Minambiente will be carried out including changes and improvements in the model.

8. Attend technical and team meetings, as required.

9. Prepare monthly reports with the progress in the different consulting activities.

SCOPE OF WORK:
The MACC developed on the LEAP model shows that some mitigation actions have a negative abatement cost which indicates that with the implementation of the measure the net cost is lower than the baseline scenario. However, the level of implementation of the measures is not necessarily what was projected. This may happen because an underestimated cost for the measures or an optimistic implementation pathway that it’s not compatible with the actual resource mobilization in Colombia. The improvement of MAC curves is expected to be developed in LEAP, using the official model owned by Minambiente. In this regard, knowledge transfer sessions are expected to be held with the Minambiente team and DNP so that the results can be used in future work and analysis.

To have a better understanding and recognition of the costs of the measures, it is required to develop an additional analysis, that could be developed outside LEAP and be connected after, that allows evidencing all the necessary costs to implement the measures in the expected scope to fulfil the mitigation targets, identifying the current mobilization level and the financing requirements. At this point it is expected to identify the opportunities of Article 6 as one financial mechanism to complement or close some financial gaps for the measures, as well as identify the multiplier effect of financing a measure through the carbon market and how transaction proceeds could lead to the implementation of additional actions or enhanced mitigation of the same action.

The analysis will include scenario construction and sensitivity analysis the financial/economy variables (e.g., ITMO value and other to relevant variables such as Gross Domestic Product (GDP), Representative Market Rate) and mitigation reduction impact.This information will be input for the construction of a business plan proposal for Colombia for participation in Article 6 of the Paris Agreement, in relation to prices sought and measures more suitable to participate in international transfers.
The proposal must have scenarios with alternatives for the sale and purchase of reductions will be proposed, always bearing in mind the need to meet national targets and maximize the emission reductions that can be achieved.
For all the analysis developed, and the relevant information, assumptions, variables and parameters used for the analysis, including the sources and references from where the information is taken must be consolidated in a database that will be part of the deliveries. The information must be reported in COP, USD, and in relation to the GDP.
The consultancy and the analysis will be designed by the Service Provider under orientation of GGGI and Minambiente.

For more details, please refer to the Terms of Reference (TOR) document attached.

IMPORTANT TIMELINES:
The tender submission deadline is JANUARY 6, 2025 16:00 HRS KOREAN STANDARD TIME (KST).
If any bidder has any request for clarification on the TOR or any part of the tender documents, GGGI will be happy to clarify if they are received on or before 7 days before the deadline (namely: if the tender submission deadline is 16:00 6 Jan 2025 KST, then the due date for submission of request for clarification is 16:00 30 Dec 2024 KST).

Interested parties will be required to register their details on the GGGI e-Green Procurement Portal (https://in-tendhost.co.uk/gggi).

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