IDFC Facility – NUCA Programme
The NDBs Urban Climate Action Programme (NUCA Programme)
The NUCA programme, a grant financed by The International Climate Initiative (IKI) with counterparty from the Agence Française de Développement (AFD) on behalf the Interna-tional Development Finance Club (IDFC), will help to enhance the strategic role of National Development Banks (NDBs) as drivers of low-carbon climate-resilient urban infrastructure investments in developing and emerging economies.
Context and concept
Cities generate around 70% of the global greenhouse gas emissions and are highly vulnerable to climate change. National development banks (NDBs) are well positioned to support cities’ climate-smart infrastructure projects – they often have long-standing relationships with local public and private sectors, can provide local currency funding at attractive financial rates and can also offer support in the form of guarantees or grants for technical assistance. However, NDB’s urban climate finance remains limited due to barriers such as the lack of climate-related expertise on both the cities’ and the financial institutions’ sides.
The NUCA Programme will address these shortcomings by developing strategic urban climate financing pipelines for cities supported by appropriate financial products, building capacity within NDBs and cities as well as mobilizing private sector.
The NUCA Programme
NUCA will strengthen the technical, institutional and financial capacity of (NDBs) as providers and facilitators of funding for urban climate action. It will foster their capacities for systematically mainstreaming climate change into urban financing, providing advisory services for the development of bankable urban climate projects to city clients, and bringing such projects to financial closure.
The project will contribute to the development and implementation of urban low-carbon and climate resilient infrastructure projects in four emerging economies (Brazil, Colombia, Indonesia, South Africa) and one developing economy (Mozambique), leading to a significant reduction in greenhouse gas (GHG) emissions and to an increase in resilience to climate-related physical risks in cities.
The Programme activities:
The programme is organized under the framework of a consortium conformed by seven partners:
- AFD as the Lead Implementing Organisation and the International Climate Initiative (IKI) counterpart, being IKI is implemented by the German Federal Ministry for Economic Affairs and Climate Action (BMWK),
- five National Development Banks (NDBs) as lead organizations on country-level (BNDES, CAF, DBSA, PTSMI, TDB), and
- C40 as knowledge and implementation-support partner both at the global and the local level.
In order to achieve its objectives, NUCA Programme activities will be focused on the following pillars :
- Strengthening NDB’s technical and institutional capabilities: The NUCA programme will provide up to 10 NDBs (including but not limited to the five NDBs that form part of the project consortium) with technical advisory services and capacity building support to mainstream climate risk assessment and climate-smart project development across their urban financing activities. This will include identifying cities’ climate finance needs and appropriate financing instruments for climate-smart investments, as well as strengthening advisory capabilities for cities willing to develop urban climate projects.
- Funding investments and institutionalizing results: the NUCA programme will provide technical and financial support to help cities and NDBs to jointly organize feasibility studies for selected projects. Other forms of readiness support for climate projects will also be provided to grow the pipeline of projects for NDBs to finance and learn from. As a result of these efforts, NDBs will have approved projects for (co-) financing that are anchored in the NDBs’ new urban climate finance programmes.
- Co-creating and sharing knowledge: In addition to capacity building and technical advisory services for individual stakeholders, knowledge sharing is a crucial enabling factor in ensuring that transformations can be achieved at scale. Participating NDBs and urban project owners will engage in peer learning events to share best practices for public and private urban climate finance across cities and with national and international stakeholders of urban climate finance.
Resulting from the different project activities and outputs, NDBs will have systematically increased their capacity/readiness for urban climate finance and advisory and will have committed significant amounts of funding to urban projects with climate benefits, there by unlocking further financing from a range of local/international private and public sources.
About IKI funding
This programme is a grant financed by the German Federal Ministry for Economic Affairs and Climate Action (BMWK) with counterpart of the Agence Française de Développement (AFD) on behalf the International Development Fi-nance Club (IDFC). IKI is one of the main instruments of the German federal government for international financing of climate change mitigation and adaptation. To date, IKI has approved financing for more than 750 climate and biodiversity projects in more than 60 developing and emerging countries, with a total financing volume of 4.5 billion euros for the period 2008-2020. It will have a duration of six years, from November 2022 to December 2028.
What’s next for NUCAP?
The NUCA Program has a six-year duration, commencing with the preparatory phase in November 2022 and concluding with the end of implementation in December 2028.
In 2023, preliminary country missions were conducted to identify stakeholders’ needs and engage them in the programme. These were followed by multi-stakeholder workshops organized between April and September 2024 to define local priorities for the NUCA Programme and to develop working plans for the implementation phase starting early 2025.