Frequently Asked Questions

 

 

 

— Q&A for cities and local governments

I have a question about my City Climate Finance Gap Fund (Gap Fund) Expression of Interest form. Who can I contact for more information?

Please use the contact form on the website for all questions related to the Gap Fund and expressions of interest.

Who can apply for Gap Fund support?

Cities, municipal authorities and local governments1 of developing or emerging countries eligible to receive official development assistance as defined by the OECD’s Development Assistance Committee can apply for Gap Fund support. The proposal seeking support from the Gap Fund must only be for an initiative located in an urban area or functionally linked to one. 2

When a city is not the direct applicant, evidence of support from the local government to which the expression of interest relates will be requested during the selection process. For example, applications may be made by municipal enterprises (such as water companies, waste management agencies), private sector providers of urban services (such as companies providing services under contract to a city) and urban developers (such as companies delivering affordable housing). An Expression of Interest may also be submitted by entities representing groups of municipalities (e.g., municipal associations), national or regional municipal agencies, municipal development banks or national development banks responsible for municipal investment. As above, evidence of support from the relevant local government will be required in all cases.

To be considered for Gap Fund project support, applicants must use the Expression of Interest form on this website.

1  For the purpose of this FAQ, “local governments” is used interchangeably with the term city, municipality, parish, metropolitan area, urban local body and any other form of local government.

2  For the purpose of this FAQ, “proposal” covers both upstream initiatives (e.g., urban planning and climate strategies) as well as downstream projects and investments.

What types of proposals are eligible?

The Gap Fund provides technical assistance to support concept development for low-carbon and climate-resilient urban projects or proposals that fully align with the Paris Agreement objectives. Sectors typically covered by these proposals are listed under the eligibility criteria.

What does ‘technical assistance through the Gap Fund’ mean?

The Gap Fund provides grant funding and technical assistance support at the early stage of project preparation. Types of technical assistance can range from building capacity for cities and local governments to plan for low-carbon, climate-resilient development, to supporting early stage project preparation, defining the project concept, carrying out or supporting project feasibility work, analysing available alternatives (e.g., technological solutions), enhancing project bankability and identifying potential sources of finance. For more information on Gap Fund-supported activities, please see what we offer. Gap Fund support will be provided free of charge.

Please note that the Gap Fund does not directly provide financing for the underlying investment at the implementation phase of the project.

Can Gap Fund support COVID-19 recovery for my city?

COVD-19 continues to impact cities large and small worldwide. A note explaining how the Gap Fund can support recovery in the COVID-19 pandemic era can be found here here.

Does my city need to take a loan from the European Investment Bank (EIB) or the World Bank to receive Gap Fund support?

No. Gap Fund support is provided in the strategic development or early project preparation stages, often before a project’s financing source is clear. Should Gap Fund support be provided, the city has no obligation to take a loan from the EIB or the World Bank to finance the project. Similarly, neither the EIB nor the World Bank have any obligation to provide loans to a project that has received Gap Fund support.

In practice, how does the application and selection process work?

As a first step, the applicant should ensure the project proposal meets the eligibility criteria for Gap Fund support. Subsequently, an Expression of Interest form must be completed and submitted.

Where a project proposal meets the necessary eligibility criteria, the completed Expression of Interest will then be reviewed to determine the scope of Gap Fund support requested.

The applicant will subsequently be contacted by the Gap Fund to advise whether the submission meets the eligibility criteria and is shortlisted OR is not being considered further.

The shortlisted applicant will then be asked to complete a more detailed application that directly addresses key project specifics. The project will, in turn, be assessed based on the following: the extent and credibility of anticipated climate action benefits; replication potential and scalability; alignment with central and local government commitments; positive environmental, social and economic co-benefits; potential bankability or creditworthiness; political ownership; and priority at city government and the national level.

My proposal already receives technical and/or financial support from other entities, such as other development banks or International/regional Financial Institutions. Can I still apply for Gap Fund support

Yes, if there is complementarity between the activities proposed for Gap Fund support and those already supported by other partners and this is clearly presented. To ensure maximum efficiency, the Gap Fund aims to close gaps in urban planning and project preparation that are not or cannot be covered by other project preparation facilities. This complementarity implies that if a proposal has already received, or is receiving, support from other entities, they should be clearly indicated on the Expression of Interest form. If a proposal is eligible as part of the detailed assessment phase, an applicant will be required to provide details about the type and scope of support received to ensure Gap Fund resources are used to build on, not duplicate, achievements.

How can I know the result of the selection process?

After submitting an Expression of Interest, applicants will be informed by email about whether their submission meets the eligibility criteria. If so, the proposal will move to the next phase and the applicant will be contacted about additional proposal information and a more detailed assessment. In turn, an overall assessment will then be conducted and the applicant will be informed of the result. If the outcome is positive, an applicant will receive confirmation about the scope of technical assistance to be provided by the Gap Fund. Kindly note that the timelines for receiving notification will vary by applicant and depend not only on the completeness of the original application but the time required to seek any additional clarification. Therefore applicants are encouraged to be as thorough and specific as possible through all stages of the process.

If I cannot provide answers to some questions on the Expression of Interest form, will my submission be refused?

You should only submit your completed Expression of Interest form after collecting all relevant proposal information, including information from other relevant departments or agencies in the local administration. If you have difficulties understanding the information required in the form, kindly refer to the question “I have some difficulties filling in my Expression of Interest. Who can I ask for support?” If, in exceptional cases, some information required to complete the application form is unavailable, applicants can leave that part of the form blank and submit the application. All applicants should clearly understand, however, that failing to provide as much information as possible on the form may not only delay the process but reduce a project’s chances of being considered eligible and moving forward to the detailed assessment phase.

We are a group of smaller municipalities in a specific region. Can we submit one combined Gap Fund Expression of Interest for climate proposals across multiple local governments or sectors?

Proposals from smaller municipalities can be bundled into one multi-city Expression of Interest provided they can be considered activities of a coherent programme (i.e., they concern the same sector or area and have the same climate objectives). As an example, a municipal solid waste management project serving several small neighbouring municipalities can be considered a single project if it allows for achievement of economies of scale and a higher efficiency than individual projects of a similar nature developed separately by each municipality.

Are there size limits for the scale of renewable energy projects considered for Gap Fund support?

Energy generation, distribution and storage projects, including small-scale renewable energy projects (energy grid/micro grid, demand management and electricity storage), are eligible for Gap Fund support as long as they demonstrate a clear urban dimension in addition to the expected climate action impact. Thus, urban energy projects should be in or exclusively serve a defined urban area. As such, this would exclude renewable energy projects whose production would feed into a national grid. Aside from this consideration, there are no specific size limits.

Does the Gap Fund operate on a first-come, first-serve basis? Are there set allocations of Gap Fund support per target region?

Expressions of Interest can be submitted on a rolling basis through the Gap Fund website [insert link to the Expression of Interest form]. While there is no fixed allocation of support per target region, the Gap Fund may launch subsequent calls for expressions of interest targeting specific regions or sectors to achieve the broadest possible geographical and sectoral coverage.

Will a list of supported proposals be published? Are applications for similar proposals from within selected country then welcome?

Examples of proposals receiving support from the Gap Fund will be published on the website. These examples are intended to provide inspiration for potential applicants. However, since each proposal is unique and must undergo a specific, detailed assessment, that a proposal in one sector/country has received Gap Fund support does not guarantee another proposal from the same geography will be supported. All Gap Fund applicants or prospective applicants are reminded that the Gap Fund aims to achieve the broadest possible geographical and sectoral coverage.

Our city is not committed to the Global Covenant of Mayors (GCoM) and is not a member of a city network. Can we still apply?

Yes. Gap Fund support is not contingent on being committed to GCoM or a member of a city network. It is, however, noted that membership and/or engagement with regional or city networks and other partners active in supporting climate action can help demonstrate commitment; such organisations may also be able to provide advice on completing the Expression of Interest application.

Is Gap Fund support free?

Thanks to donor funding, Gap Fund support is provided free of charge. However, cities and their partners (e.g., service providers, municipal companies and other organisations) receiving Gap Fund support must cover their Gap Fund application costs (e.g., costs associated with interacting with experts and advisors provided by the Gap Fund or to submit relevant documentation/data about their city, strategy, project or proposal). Cities are also expected to be active partners in the process and identify relevant staff to actively engage with Gap Fund experts.

How do you determine if the location of a proposal is functionally linked to an urban area?

If a proposal and its related activities are not located within the limits of an urban area, the proposal must clearly show a link to its key functions. For example, a solid waste management project could be located along the urban periphery or in a low-density area; if it will serve a well-identified city, the project’s urban dimension will inherently be verified. Conversely, a renewable energy project similarly located in a low-density area will not necessarily serve a city exclusively but rather feed into the national grid. In this case, the proposal will not be considered as functionally linked to an urban area.

Can the Gap Fund support a project later in its life cycle?

Once the Gap Fund has delivered its advisory and technical assistance support, it will help facilitate matchmaking with project preparation support facilities (PPFs) and potential co-financiers for later project cycle stages.

In exceptional cases, projects at a more advanced stage but for which there are gaps in the previous project preparation phases may be considered — provided they are expected to generate significant climate, environmental, social and economic co-benefits and/or they present significant potential for scalability and replicability in other contexts.

My city has several proposals at varying stages that meet the Gap Fund eligibility criteria. Should I include them in one application or apply with several applications?

The Gap Fund provides technical assistance for early stage projects (i.e., projects for which feasibility studies have not yet been completed). If your city’s projects can be considered as activities of a coherent programme (i.e., they concern the same sector or same area/city neighbourhood and have the same climate objectives), they can be included in one Expression of Interest. If, however, your city has several projects meeting the Gap Fund eligibility criteria that can be considered standalone projects, applicants are welcome to submit more than one Expression of Interest.

Is there an alternate approach for proposals not selected for Gap Fund support?

If the proposal does not meet eligibility criteria, the application will be rejected outright. Other proposals may also be rejected if the additional information provided through the selection process is insufficient or does not demonstrate considerable impact in comparison with other applications received. In this case, the rationale for rejecting an application will be specified and the applicant will have the opportunity to submit a new application for the same proposal once the issues highlighted in the selection process have been addressed.

In terms of end investment, is there a minimum proposal size for a project that can benefit from Gap Fund support?

The Gap Fund aims to support proposals with a sizeable climate mitigation and/or adaptation impact or that can be considered as pilots or proofs of concept that, if successful, can be easily replicated in other geographic areas or ‘scaled up.’ As each proposal is different, there is no minimum size for an application to be considered. However, the potential to deliver significant climate benefits is an essential selection criterion during the detailed assessment phase.

Are there expected amounts of CO2 savings or benchmarks per dollar ($ )or Euro (€) of investment?

As the Gap Fund aims to support proposals that align with the Paris Agreement objectives , a proposal’s expected climate mitigation and/or adaptation impact is an essential selection criterion during the detailed assessment phase (see question “How will the selection process work in practice?”).

However, considering that proposals requesting Gap Fund support will be early stage, a proposal’s expected climate mitigation or adaptation potential may be unavailable at the time of application. Accordingly, this information will be collected during the implementation of the technical assistance, whenever possible, depending on the type of assignment.

In the Expression of Interest form, the applicant must commit to estimating the climate change mitigation and/or adaptation potential of the proposed project — either independently or with Gap Fund support as part of the technical support package. The applicant can use standard methodologies and publicly available tools for scenario planning to identify low-carbon urbanisation pathways under various business-as-usual (BAU) and target scenarios or request the support of the Gap Fund experts to conduct preliminary analyses of greenhouse gas emission reductions or savings.

Is political level approval or endorsement, for example by a mayor or cabinet, required for the application?

A formal expression of support signed by the relevant authority is not required for the Expression of Interest to be complete. If shortlisted, however, the applicant must commit to provide evidence of this going forward. Formal evidence of support would be required at the detailed application stage.

Political support or endorsement is an essential success factor, not only for implementing proposals but in ensuring their sustainability — especially if they involve significant initial investments that will deliver benefits over the long term, innovative components or land use changes (often the case for urban climate action proposals). Cities must provide evidence that the proposed activities align with the Paris Agreement, in addition to existing climate action plans, master plans and urban development plans at the local level.

As specified in the Expression of Interest form, to receive Gap Fund support the applicant commits to provide evidence of local political support for the proposed intervention.

We do not yet have a fully developed and ratified climate action plan. How should we proceed?

It is important that proposals receiving Gap Fund support fit within an overarching urban climate strategy or action plan. However, if an applicant’s city is in the process of developing such a strategy and the submitted proposal aligns with its objectives, even though they may not yet be formalised in a climate action plan or similar document, applicants are still invited to complete and submit an Expression of Interest form. It is important to highlight here that if a city has not begun developing such a plan or requires support to update an outdated existing plan or strategy, the Gap Fund can assist.

— FAQs for donors/potential donors

Why should donors support the Gap Fund?

By helping city governments improve the quality of their proposals, with a target size of at least €100 million, the Gap Fund will work with cities to unlock €4 billion of investments and implement their climate strategies. This shows that even a relatively small investment in the right place can enable significant investment in the long term. 

Donors will be able to participate in decision making, reviewing progress and use of resources and in discussing the key challenges of climate-smart urban development with partners (such as GCoM), city networks [such as ICLEI, C40 and the Cities Climate Finance Leadership Alliance (CCFLA)]. Donors can also participate in Gap Fund-organized knowledge events.

Given the co-benefits of climate-smart investment in an era of pandemic response and resilience, donors will also be contributing to a green recovery for cities impacted by COVID-19.

How does supporting the Gap Fund contribute to accelerating Paris Agreement commitments and contribute to goals on mobilising climate finance and the Sustainable Development Goals (SDGs)?

The Gap Fund only supports urban projects and initiatives with the strong potential to help cities reduce emissions that align with the goal of limiting warming to 1.5 degrees Celsius or adapting to climate change. Accordingly, the extent of a proposal’s climate ambition is a key selection factor. Strong engagement of the World Bank and EIB ensure that selected proposals also have a ‘reality check’ as far as financing potential and physical implementation. Gap Fund resources are expected to intervene at the critical early stage of planning/project preparation and are expected to be catalytic to enable climate investments. Gap Fund donors would thus also be supporting low-carbon, climate-resilient urban development needed to achieve several of the SDGs — especially on Climate Action (SDG 13) and Sustainable Cities and Communities (SDG 11), but also Clean Water and Sanitation, (SDG 6), Affordable and Clean Energy, (SDG 7) and Decent Work and Economic Growth, (SDG 8).

The Gap Fund is a central initiative of the Leadership for Urban Climate Investment (LUCI), which promotes financing for ambitious urban climate action until 2025. LUCI links action-oriented initiatives that commit to remove barriers in financing climate-smart urban projects and was developed under the leadership of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. It is hosted by the Cities Climate Finance Leadership Alliance (CCFLA), the leading platform for international cooperation and knowledge exchange in the field of subnational climate finance.

How do the World Bank and EIB collaborate under the Gap Fund umbrella?

The Gap Fund will consist of two pools of funds, one managed by the EIB in partnership with GIZ, and the other managed by the World Bank. Both organisations are committed to supporting the transition to low-carbon, climate-resilient development and bring a unique mix of longstanding expertise in sustainable development, climate finance and urban renewal. Both institutions will provide technical support directly to cities and local authorities under a common approach. Cities and local governments will be able to apply for Gap Fund support via one common Expression of Interest process. Selected proposals will receive technical assistance from one implementing partner, depending on the type of assignment required and availability of the required expertise.

What is the target size of the Gap Fund?

To date, €55 million has been pledged to the Gap Fund. The Gap Fund has a target size of at least €100 million and aims to unlock more than €4 billion in investment for bankable climate action projects in cities.

Who has contributed to the Gap Fund to date?

The Gap Fund can be reached through the contact page on the website.

Who should I contact if I am considering contributing to the Gap Fund?

The Gap Fund can be reached through the contact page on the website contact page.