Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES11868 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THIRD NATIONAL COMMUNICATION TO THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE PROJECT GLOBAL ENVIRONMENT FACILITY GRANT (TF-098640) Approved by the Board on February 1, 2011 TO THE ARGENTINE REPUBLIC December 19, 2014 Environment and Natural Resources Global Practice Argentina, Paraguay and Uruguay Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. ABBREVIATIONS AND ACRONYMS BUR Biennial Update Report COP Conference of the Parties FY Fiscal Year GEF Global Environment Facility GEO Global Environmental Objective GHG Greenhouse gas PIU Project Implementation Unit P&M Policies and Measures SAyDS Secretariat of Environment and SustainableDevelopment (Secretaría de Ambiente y Desarrollo Sustentable) SEPA Procurement Plan ExecutionSystem (Sistema de Ejecución de Planes de Adquisiciones) TNC Third National Communication ToR Terms of Reference UNFCCC United Nations Framework Convention on Climate Change V&A Vulnerability and Adaptation WB World Bank Regional Vice President: Jorge Familiar Country Director: Jesko S. Hentschel Acting Practice Manager: Emilia Battaglini Task Team Leader: Tuuli Bernardini ARGENTINA THIRD NATIONAL COMMUNICATION TO THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE PROJECT CONTENTS A. SUMMARY………………………………………………………………………1 B. PROJECT STATUS………………………………………………………………1 C. PROPOSED CHANGES……………………………………………………….....2 ANNEX 1: RESULTS FRAMEWORK AND MONITORING……………………….....6 0 ARGENTINA THIRD NATIONAL COMMUNICATION TO THE UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE PROJECT RESTRUCTURING PAPER A. SUMMARY This project restructuring covers a second extension of the grant's closing date of an additional seven and half (7.5) months, from November 13, 2014 to June 30, 2015, to (i) finalize ongoing studies under component 1 and 2 on climate mitigation and adaptation, (ii) prepare a basic Biennial Update Report (BUR) of the Argentine Republic to the United Nations Framework Convention on Climate Change (UNFCCC), and (iii) conduct related dissemination work and provincial level workshops on related capacity building. The proposed restructuring includes reallocation of funds between disbursement categories and the components, as well as a revision of the results framework. Said revision reduces the number of targeted adaptation studies and excludes the final studies on mitigation and adaptation policies and measures (P&M). Further, it improves measuring of intermediate results. The reductions reflect that the project will not be able to complete key contributions to P&M and integration of climate change priorities into the Recipient’s development strategies and relevant sector programs. However, the project will undertake all efforts to produce a final report on the project results that could be presented to the UNFCCC. B. PROJECT STATUS The project was approved in February 2011, but became effective only in July 2012; just 10 months before the original closing date. After reaching effectiveness, the project took additional six months to start implementation. The first project extension of 18 months was granted in February 2013, after which getting ministerial approval of the first major contract further slowed down implementation. As of November 11, 2014, the project has disbursed US$800,000 (33 percent of the total grant) and executed US$528,948 (22 percent), and has commitments for an additional US$614,450 (25 percent). The Project Implementation Unit (PIU) consists of a team of qualified and dedicated technical consultants hired with grant funds and complemented by members of Secretariat of Environment and Sustainable Development (SAyDS) staff, who are in charge of the political liaison and provide technical and administrative/red-tape support. In June, 2013, the project implementation was upgraded from moderately unsatisfactory to moderately satisfactory, and said rating got improved to satisfactory in September, 2014. This improvement was due to the following key results: 1) the major climate modeling study and related database were ready for use by the sectoral vulnerability and adaptation (V&A) studies; 2) the four sectoral greenhouse gas (GHG) inventories and mitigation studies had been advancing well; 3) the terms of reference (ToRs) had been finalized for the V&A studies and their procurement processes advanced to the point feasible within the framework of the November 2014 closing date; and 4) capacity building and communication activities have created an increasing interest in and demand 1 for project results, particularly at the provincial level, and key stakeholders have continued active participation in reviewing and contributing to project documents. Despite slower than expected implementation, the project remains technically sound and strategic. Even when the remaining implementation period will not be sufficient to conduct most of the planned adaptation studies, the participatory process applied to prepare the respective ToRs in collaboration with the related Government agencies will facilitate development of future studies in key sectors under the National Climate Change Strategy. C. PROPOSED CHANGES Development Objectives/Results  Results framework The results framework is revised to reduce the targeted adaptation studies and exclude the final studies on mitigation and adaptation P&M. Further, the revision will improve measuring of intermediate results indicators. The revised intermediate result indicators focus on tracking the advance of the studies and key stakeholders' participation in contributing to their development. Overall, though work-intensive and time-wise challenging, promoting active participation of key sectoral stakeholders is considered crucial and worth the effort, as at the end the aim is to develop feasible proposals of P&M for mitigation and adaptation. The revised results framework is presented in Annex I and will be reflected in the project’s Operational Manual. Financing  Grant Closing Date(s) The second project extension of seven and half (7.5) months, from November 13, 2014 to June 30, 2015, is needed to allow the project to (i) finalize ongoing studies under component 1 and 2 on climate mitigation and adaptation, (ii) prepare a basic Biennial Update Report (BUR) of the Argentine Republic to the UNFCCC, in time for the UN Climate Change Conference (COP21) to be held in Paris, France in December 2015, and (iii) conduct related dissemination work and provincial level workshops on related capacity building. Even with the second closing date extension, progress towards reaching the GEO will remain moderately unsatisfactory, as most of the V&A studies, the final study on mitigation and adaptation P&M, and key training and dissemination activities cannot be implemented. Consequently, the project will not be able to complete key contributions to P&M and integration of climate change priorities into the Recipient’s development strategies and relevant sector programs. However, the project will undertake all efforts to produce a final report on the project results that could be presented to the UNFCCC. Whether the Government will submit a reduced version of its originally planned TNC to COP21 will depend on its discretion. 2 After an exceptionally slow start-up and beyond an overly ambitious initial implementation period of two years, expeditious project implementation has been challenged due to (i) complex procurement processes; (ii) need to sequence studies as the results of the first climate modeling study provides the basis for the sectoral V&A studies and adaptation P&M, and the sectoral GHG inventories and related studies provide the basis for the mitigation P&M; and (iii) time-demanding institutional collaboration needed to collect inputs for and build ownership of the project results. In addition, the PIU suffered of lack of capacity in procuring consultant services, and administrative procedures within the SAyDS have slowed down implementation. Currently, the PIU has been strengthened through lessons learnt and counts with a full- time procurement assistant with earlier experience on a World Bank project. Once extended and able to sign new contracts, the project is set to follow a carefully prepared implementation plan to allow achievement of the above referred results. The SAyDS authorities are aware of the project’s critical need to advance promptly, and related coordination meetings have been and will be organized as needed. The below table resumes the status of the project’s closing dates. Original Current Proposed TF Status Closing Date Closing Date Closing Date TF-98640 Effective 31-May-2013 13-Nov-2014 30-Jun-2015  Reallocations During project implementation, the PIU has faced less need for procuring goods or covering operating costs than originally projected. Instead, said savings are needed to cover additional consultant services to cover the additional implementation period and a couple of amended and additional consultant services that have been incorporated under component 1. The latter contribute to preparing the basic BUR of the Argentine Republic to the UNFCCC; a responsibility for all Non-Annex I (developing country) Parties to the UNFCCC since late 2011. Said consultant services are fully aligned with the project objective and synergistic with the four ongoing sectoral GHG inventory/mitigation studies. The following table presents the applicable categories of expenditure as per the Grant Agreement, including their current and proposed budget allocations. 3 Disbursement % Current Category of Allocation (Type Total) Expenditure Current Proposed Current Proposed GOODS 98,000.00 19,000.00 100.00 100.00 CONSULTANTS 1,514,209.00 1,710,209.00 100.00 100.00 SERVICES NON- CONSULTANTS 400,000.00 400,000.00 100.00 100.00 SERVICES TRAINING 250,000.00 250,000.00 100.00 100.00 OPERATING COSTS 177,000.00 60,000.00 100.00 100.00 Total: 2,439,209.00 2,439,209.00  Disbursement Estimates The project has suffered major delays that have affected its originally estimated disbursements as explained under the section on Change in Grant Closing Date(s). The original disbursement estimates and the revised estimates under the proposed second project extension are presented in the following table: Fiscal Year Current (USD) Proposed (USD) 2011 200,000.00 0.00 2012 1,739,209.00 200,000.00 2013 500,000.00 300,000.00 2014 0.00 700,000.00 2015 0.00 1,239,209.00 Total 2,439,209.00 2,439,209.00 Components  Components and Costs Additional grant funding is proposed for component 1 in order to cover costs of preparing the Argentine BUR presented under the previous section: As the Non-Annex 1 countries are expected to submit their first BURs to the UNFCCC by December 2014, and the requested content is fully aligned with the ongoing mitigation studies, the Government of Argentina opted for incorporating the preparation of a basic BUR under the project. This requires extending the contracts on the four sectoral GHG inventories/mitigation studies and contracting of four minor consultant services; these processes are under way. Further, additional grant funding is proposed for component 4 on project management, taken the 4 cumulative additional implementation period of 25.5 months from the original closing date. The revised amount for the project management is 8.6 percent of the grant. Regarding the need to decrease funding for components 2 and 3, an important part is absorbed by the “additional resources” that the project has gained during its active implementation period due to beneficial exchange rates between the US$ and ARS. The exchange rates have had the most beneficial impact under component 3 that finances printing of final reports and dissemination activities whose value is not tight to the US$. Overall, the greatest challenge the project has faced since its inception has been the limited implementation period rather than available funding. The following table presents the project components as per the Project Appraisal Document, including their original/current and proposed budget allocations. The numbers include a total of US$615,764 of the government in-kind counterpart funding allocated across the components. The counterpart amount and allocations remain unchanged. Current Component Proposed Component Current Proposed Action Name Name Cost (US$) Cost (US$) Harnessing National Potential for Climate 665,913.00 746,116.00 Revised Change Mitigation Strengthening the National Adaptation 1,163,372.00 1,075,412.00 Revised Agenda Institutional Strengthening, Capacity Building and 1,093,646.00 998,499.00 Revised Information Management Project Management 132,042.00 234,946.00 Revised Total 3,054,973.00 3,054,973.00 Other Change(s)  Implementation Schedule Please see under Change in Grant Closing Date(s). 5 ANNEX 1: RESULTS FRAMEWORK Project Project AR Third National Communication UNFCCC (P116974) Restructuring Status: DRAFT Name: Stage: Team Requesting Tuuli Johanna Bernardini LCC7C Created by: Tuuli Johanna Bernardini on 30-Aug-2013 Leader: Unit: Product Responsible Global Environment Project GENDR Modified by: Tuuli Johanna Bernardini on 17-Dec-2014 Line: Unit: Country: Argentina Approval FY: 2011 LATIN AMERICA AND Lending Region: Specific Investment Loan (GEF grant) CARIBBEAN Instrument: Global Environmental Objectives Global Environmental Objective (from Project Appraisal Document): The objective of the Project is to strengthen the information base and institutional capacity of the key members of the Steering Committee, in order to integrate climate change priorities into the Recipient’s development strategies and relevant sector programs by providing financial and technical support to prepare the TNC. Results Core sector indicators are considered: Yes Results reporting level: Project Level Global Environmental Objective Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Marked for Capacity building for Percentage Value Deletion mainstreaming climate change Date 14-Feb-2011 20-Dec-2013 13-Nov-2014 mitigation and adaptation Comment The survey used Please see At least 6 in conjunction progress updates satisfactory with each TNC under percentage (50- event will Implementation 75%) of the include Status Overview. survey questions on responses respondents# collected at the capacity to take TNC events climate change confirms considerations increased into account in perception of their work prior capacity to to their understand involvement in climate change the TNC considerations activities. and address them by concrete measures New The Biennial Update Report Yes/No Value No No Yes (BUR) of the Argentine Date 14-Feb-2011 17-Dec-2014 30-Jun-2015 Republic delivered to the Ministry of Foreign Affairs to Comment The Second The related be submitted to the UNFCCC National procurement Communication processes are was submitted well advanced. to the UNFCCC in 2007 Revised Management tools and/or Number Value 0.00 0.00 19.00 studies on sector-specific Date 24-Sep-2014 17-Dec-2014 30-Jun-2015 mitigation potential developed to evaluate and design feasible Comment Studies carried 15 of the targeted The list of the mitigation policies and out within the management tools 19 targeted 7 measures framework of and/or studies are management the Second being developed. tools and/or National studies is Communication included in (mitigation Annex 1 of the studies as of December 2014 2007) project restructuring paper. Revised A Climate Modeling Study and Number Value 0.00 2.00 4.00 studies on sector-specific Date 14-Feb-2011 17-Dec-2014 30-Jun-2015 impact, vulnerability, and adaptation options developed Comment Studies carried The Climate The list of the out within the Modeling Study targeted outputs framework of and related is included in the Second database have Annex 1 of the National been finalized and December 2014 Communication disclosed. project (adaptation restructuring studies as of paper. 12 longer 2007) studies with demanding procurement processes will not be doable by the June 2015 closing date. Intermediate Results Indicators Status Indicator Name Core Unit of Measure Baseline Actual(Current) End Target Marked for Enabling environment for Yes/No Value Yes Yes Yes 8 Deletion policies to mitigate climate Date 14-Feb-2011 20-Dec-2013 13-Nov-2014 change Comment There is a The Government Enabling number of counts with a environment for ongoing Governmental adoption of mitigation Committee on policies to related Climate Change mitigate climate initiatives, but and has approved change has been the baseline a National strengthened by remains to be Climate Change targeted sectors defined upon Strategy. (energy and beginning of transport, waste, project agriculture and implementation. forestry) having access to mitigation- related information (e.g. updated and new GHG emission inventories) and feasible options and policies and measures for climate change mitigation. Marked for Estimated GHG intensity of the Number Value Deletion proposed mitigation policies Date 14-Feb-2011 20-Dec-2013 13-Nov-2014 and measures Comment To be generated Implementation No specific through related of component 1 is numeric target TNC studies at its initial stage was set for the 9 under as described GHG intensity component 1. under (mitigation Implementation potential) of the Status Overview. proposed mitigation options, but they are toidentify their estimated potential to reduce related GHG emissions. Marked for Enabling environment for Yes/No Value Yes Yes Yes Deletion policies to adapt to climate Date 14-Feb-2011 20-Dec-2013 13-Nov-2014 change Comment There is a The Government Enabling number of counts with a environment for ongoing Governmental adoption of adaptation Committee on policies to related Climate Change increase initiatives, but and has approved resilience to the baseline a National climate change remains to be Climate Change has been defined upon Strategy. strengthened by beginning of targeted sectors project having access to implementation. new adaptation- related information: Regional Circulation Models (RCMs); climate change 10 scenarios generated through various RCMs; and studies on impacts of past climate variability and change in the country, as well as to sectoral impact and vulnerability studies and feasible options and policies and measures for climate change adaptation. Marked for Estimated total losses and Number Value Deletion benefits of the proposed Date 14-Feb-2011 13-Dec-2013 13-Nov-2014 adaptation policies and measures Comment To be extracted, Please see No specific if feasible, progress updates numeric target based on under was set for the ongoing Implementation total losses and initiatives to be Status Overview. benefits of the identified along proposed the studies adaptation under options and component 2. P&M, but they are to present an attractive cost- 11 benefit ratio. Marked for Increased awareness on climate Percentage Value Deletion change concerns Date 14-Feb-2011 13-Dec-2013 13-Nov-2014 Comment The survey used Please see At least in conjunction progress updates satisfactory with each TNC under percentage (50- event will Implementation 75%) of the include Status Overview. survey questions on the responses general collected at the awareness level TNC events of the confirms respondents increased prior to their understanding involvement on climate with the TNC. change, and at least satisfactory amount (50- 75%) of the registered teachers have approved the designed distance course on climate change. Marked for Timely project implementation Percentage Value 100.00 Deletion Date 14-Feb-2011 13-Dec-2013 13-Nov-2014 Comment No meaningful The Project All the planned baseline. Implementation studies are 12 Unit (PIU) has expected to be consolidated its initiated and staff. Overall, the delivered in a PIU is complying timely fashion. with an action plan to speed up project implementation with a satisfactory manner. However, actual project execution remains low as the nature of the project design implies a lot of up-front work on procurement before actual execution. New Level of progress achieved in Percentage Value 0.00 49.00 100.00 creating the targeted Date 14-Feb-2011 17-Dec-2014 30-Jun-2015 information base for climate mitigation Comment Studies carried The The out within the methodology methodology framework of used to measure used to the Second the result is measure the National described in result is Communication Annex 1 of the described in (2000 inventory December 2014 Annex 1 of the of GHGs/ project December 2014 mitigation restructuring project studies as of 13 2007) paper. restructuring paper. New Level of progress achieved in Percentage Value 0.00 75.00 100.00 creating the targeted Date 14-Feb-2011 17-Dec-2014 30-Jun-2015 information base for climate adaptation Comment Studies carried The The out within the methodology methodology framework of used to measure used to the Second the result is measure the National described in result is Communication Annex 1 of the described in (adaptation December 2014 Annex 1 of the studies as of project December 2014 2007) restructuring project paper. restructuring paper. New Level of participation in the Number Value 0.00 8.00 8.00 development of the mitigation Date 14-Feb-2011 17-Dec-2014 30-Jun-2015 studies by the key agencies Comment Key agencies The The participated in methodology methodology the used to measure used to identification of the result is measure the the priority described in result is topics to be Annex 1 of the described in addressed under December 2014 Annex 1 of the the TNC project December 2014 mitigation restructuring project component paper. restructuring during the paper. project design 14 New Level of participation in the Number Value 0.00 7.00 7.00 development of the adaptation Date 14-Feb-2011 17-Dec-2014 30-Jun-2015 studies by the key agencies Comment Key agencies The The participated in methodology methodology the used to measure used to identification of the result is measure the the priority described in result is topics to be Annex 1 of the described in addressed under December 2014 Annex 1 of the the TNC project December 2014 adaptation restructuring project component paper. restructuring during the paper. project design New Proportion of procurement Percentage Value 0.00 76.00 100.00 processes initiated Date 14-Feb-2011 30-Sep-2014 30-Jun-2015 Comment The The methodology methodology used to measure used to the result is measure the described in result is Annex 1 of the described in December 2014 Annex 1 of the project December 2014 restructuring project paper. restructuring paper. New Proportion of procurement Percentage Value 0.00 33.00 100.00 processes completed Date 14-Feb-2011 30-Sep-2014 30-Jun-2015 15 Comment The The methodology methodology used to measure used to the result is measure the described in result is Annex 1 of the described in December 2014 Annex 1 of the project December 2014 restructuring project paper. restructuring paper. Additional information relevant to measuring some of the indicators GEO indicators Indicator 2: Management tools and/or studies on sector-specific mitigation potential developed to evaluate and design feasible mitigation policies and measures The list of the total of 19 targeted management tools and studies on mitigation ispresented below: Number Management Tools and Studies1 19 1. GHG Inventories – Historical series 1990-2012 – Forecasts 2013-2030 2. Emission indicators (10 per sector) 3. Provincial Index Cards (24) 4. Priority mitigation measures by sector 5. Report on adoption of the 2006 inventory methodology of the Intergovernmental Panel on Climate Change (IPCC) 1 In some cases, the management tools and studies will be based on deliverables of several consultancy services. 16 6. Plan for improving each GHG inventory 7. Study on renewable energy 8. Study on carbon capture and storage 9. Study on bio-fuels and biomass 10. Study on mitigation options in the industrial sector 11. Study on mitigation options in agriculture 12. Study on mitigation options in raising beef and dairy cattle 13. Study on changes in land use and forestry 14. Sugar cane case study 15. Study on mitigation options in waste/wastewater sector 16. Study on mitigation options in transport sector 17. Study on mitigation through improved energy efficiency 18. Study on climate change related financial instruments 19. Biennial Update Report (BUR) of the Argentine Republic to the UNFCCC, a simplified version GEO indicator 3: A Climate Modeling Study and studies on sector-specific impact, vulnerability, and adaptation options developed The list of the four adaptation outputs that can be concluded with the second closing date extension is presented below: Number Studies 4 1. Climate database: Data observed for the recent past (1960-2010) and forecast by regional and global climate models for the near future (2016-2035) and in the longer term (2081-2100) 2. Report on changes in mean climate and in extreme weather events, observed in the recent past, as well as those forecast by regional and global climate models for the near future and in the longer term 3. Climate change impact, opportunities and adaptation options related with labor force 4. Social vulnerability, threat and risk from climate change 17 Intermediate Indicators Indicators 3.1 and 3.2: Level of participation2 in the development of the mitigation/adaptation studies by the key agencies The PIU sends each ToRs and consultancy reports for review by the project’s two institutional advisory bodies: the Steering Committee (SC) and Technical Advisory Committee (TAC), and by the Federal Council of Environment (COFEMA) for provision of written comments through a specially designed template3. The comments are grouped as “editorial”, “general”, and “technical”. Reviewers are also invited to fill out their opinion on the relevance of the document content. Additionally, the SC has face to face meetings to discuss with the PIU on provided feedback and PIU responses, usually combining review of a couple of documents per meeting. For both indicators and each study, the PIU identified the key agencies within the SC and set the targets for their participation in the development of the studies per semester. Each key agency identified for a particular study that contributes at least one relevant comment directly related with the reviewed document, either in writing and/or orally during a SC meeting, qualifies for these indicators as having participated in the review in question. Indicator 4.1: Proportion of procurement processes initiated This indicator is constructed by comparing the number of initiated procurement processes with the number of processes expected to initiate each semester. The initiation of a process is defined as follows: in the case of goods, the date of the invitation to bidders to quote; for consulting services, the date of publication of the request for expressions of interest; and for individual consultants, the date of announcement of the position to be filled. To define the targets, all the processes covered by the SEPA (Procurement Plan Execution System) were considered, as in the SEPA in force at the time of the restructuring of the project (December 2014). While this number of processes may vary during project implementation, potential amendments are not expected to be substantial. Indicator 4.2: Proportion of procurement processes completed This indicator is constructed by comparing the number of completed procurement processes with the number of processes expected to complete each semester. The completion of a process is defined as the signing of any type of contract between the parties. To define the targets, all the processes covered by the SEPA were considered, as in the SEPA in force at the time of the restructuring of the project 2 “Participation” is defined as a contribution with at least one relevant comment on the revised document. 3 The World Bank and specialized SAyDS departments also review and comment each document. 18 (December 2014). While this number of processes may vary during project implementation, potential amendments are not expected to be substantial. 19