BUSINESS CASE FOR KNOWLEDGE, EVIDENCE AND ENGAGEMENT PORTFLIO (KEEP)

SUMMARY INFORMATION

Title: The Knowledge, Evidence and Engagement Portfolio (KEEP): The UK’s Support to global knowledge, evidence and engagement supporting a 2 degree pathway.

Country/ Region: Global

Senior Responsible Owner: ICF SRO - Deputy Director, International Climate Finance Portfolio and Strategy Team

Start Date: March 2018

End Date: March 2021

Project Budget: £18 million

Executive Summary/Intervention Summary

1. The Department for Business, Energy and Industrial Strategy (BEIS) will ringfence up to £18m of International Climate Finance between 2018/19 and 2020/21 as part of a new three part Knowledge, Evidence and Engagement Portfolio (KEEP). This new Portfolio will help inform the focus and design of International Climate Finance programmes and support lesson learning in order to maximise the transformational impact and value for money of UK Climate Finance Portfolio and reinforce strong UK thought leadership on Climate Change. In this Business Case we are seeking approval for this budget and a new proportionate and delegated approval and scrutiny process that is an integral part of this portfolio.

2. Climate change is one of the biggest threats to our national and economic security and we need to act now in order to avoid more detrimental and costly effects in the future. According to the World Bank, 100 million people are at risk of being pushed into extreme poverty by rising temperatures and increasing floods by 20301, with associated political instability and migration. We are currently not on track to limit global temperature rise to well below 2 degrees and therefore need to understand priority action to help close the gap and where the UK can have the greatest impact.

3. Together with other developed countries, the UK therefore committed to jointly mobilise $100bn per year in climate finance to developing countries from public and private sources by 2020. As part of this commitment, the UK pledged to provide at least £5.8bn of International Climate Finance (ICF) between 2016 and 2020 placing us amongst the world’s leading providers of climate finance. All of ICF is classified as Official Development Assistance (ODA).

4. While developing countries will need to finance most of their low-carbon transition themselves there are many barriers that are stopping finance flowing at the scale needed. Well-targeted climate finance can help to pay the incremental cost of making infrastructure investment climate-smart and avoiding high-carbon lock-in. It can demonstrate that low-carbon, climate-resilient development paths are viable and compatible with economic growth and poverty alleviation.

1 Shock Waves: Managing the Impacts of Climate Change on Poverty, World Bank Group, 2015. At: https://openknowledge.worldbank.org/bitstream/handle/10986/22787/9781464806735.pdf

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5. The ICF has not focussed on buying down the cheapest carbon to reduce emissions in the short term. Instead it has had a strong focus on ‘transformational change’, by which is meant change that catalyses further changes and ultimately results in a global shift towards low-carbon, sustainable growth in line with 2 degrees.

6. However, there is no clear-cut evidence base available on how to devise interventions that would be transformational: a global shift to low carbon has never been done before. Therefore BEIS ICF has focused on developing a broad portfolio of interventions that have the potential to make a transformational impact; for example by de-risking clean growth investments through demonstrating their commercial viability or by building confidence in a technology like solar in a national context, or by seeking to reduce the costs of a technology globally. Because of this uncertainty, understanding the evidence that does exist (and which continues to emerge) is essential to maximising the impact of ICF investments and ensuring that they deliver the required multiple climate, poverty reduction and economic outcomes.

7. The scale of evidence needing to be collected and disseminated is large, in terms of scope and volume. At any one time, there are generally 8-16 project concepts and business cases in development which all need to be carefully shaped by the available evidence. There is also a need to ensure that the lessons from the existing portfolio of 30 projects are being effectively pulled together and positioned in such a way as to effectively inform our own and others’ investments and interventions. The scope of research required is likewise large, ranging across technologies, financial mechanisms, markets and geographies – from local up to national and regional levels – and this knowledge only exists externally so needs procuring externally.

8. Timely collection of evidence is critical if it is to inform tight business case timetables, respond in time to Ministerial priorities and requests for UK support for external research that will help inform our own programming and global understanding of the challenges and potential solutions.

9. Whilst our current practice is to undertake discrete, individually commissioned pieces of evidence, this runs the risk of, along with being an inefficient approach, not having a strategic view of the evidence we want to gather, and of the wider research landscape and which parts we want to support. By having a programmatic approach, we can ensure that we have some standard criteria, can see our evidence needs in the round, and that our dissemination and communication of this research will also be more coherent.

What support will this business case provide?

10. This business case will help address these issues by: Supporting coherence and a strategic approach to ICF evidence and research; pulling existing funding from the ICF together into a ringfence/approved budget; and, implementing a rigorous and efficient ICF commissioning and approval process to ensure

quality.

11. The process will draw in research, finance and procurement colleagues as appropriate, with this business case clearly setting out the expectations from all parties. Procurement will be

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delivered, as much as possible, through existing DFID frameworks which will also create efficiency savings.

12. This business case also has an engagement pillar, which will help, amongst other objectives, ensure that the evidence collected is able to influence and impact on wider international climate finance flows and sustainable development, thereby underlining the UK’s thought leadership role globally.

13. The £18m portfolio represents 0.9% of BEIS’s £2bn ICF budget for this Spending Review period and will directly impact the quality and effectiveness of the existing and future portfolio. It includes Programme Management costs up to £0.2m over four years. It is affordable within BEIS ICF allocation. Approval of this business case does not mean automatic approval for any future research, evidence and engagement activity within this portfolio. Nor does it represent an irrevocable commitment to spend it in full. This is because all activity within this portfolio will still be subject to a rigorous approvals process that assesses with colleagues across the Department ODA eligibility; value for money; methodological rigour and impact. The approvals processes set out are designed to be proportionate to the size and type of proposed activity and all have clear link back to BEIS’s Research and Evidence Committee, which is responsible for ensuring high standards in commissioning evidence.

14. This portfolio is separated out into three pillars, which are described below. Amounts per pillar are based on our current best estimates of both need and supply. In practice there is likely to be some adjustment between Pillar 1 and Pillar 2 figures. Pillar 3 is not expected to exceed the amount set out and should the situation occur that additional finance for this pillar was required this will require approval from the ICF SRO.

15. A Research Assessment Form (RAF) will be completed for all proposals from Pillar 1 and 2, and a light touch Business Case for Pillar 3, to allow scrutiny and approval. All proposals will have a Procurement Template released by central BEIS Procurement team in April 2018. All documents will be approached in a proportionate manner to ensure the efficiencies sought in this portfolio can be achieved.

Pillar One – HMG identified research and evidence proposals (up to £7.5m)

16. This pillar will support up to 30 short studies of under £100k each to inform ICF programming and business cases across priority low carbon, private finance, and forestry areas. Studies could include initial scoping related to a policy or strategy or research to strengthen analytical methodology. It could also support up to 4 larger studies or thematic evaluations of the ICF portfolio, for example considering the impact of results based finance or private finance leverages across multiple programmes. Research in this pillar would be procured via existing DFID frameworks. This pillar is based on DFID’s successfully run Low Carbon Studies programme, which has now expired.

Pillar Two – Externally identified Research and Evidence proposals (up to £5m)

17. This pillar could support UK participation in up to 8 larger external studies that are clearly aligned to delivery of BEIS ICF objectives. They could include, for example, national low carbon road maps and implementation plans (worked up with partner countries such as Mexico and Colombia) and it

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could cover country and sectoral deep dives. Delivery approach would be assessed on a case by case basis using the Research Assessment Form (RAF) and BEIS procurement template. Finance, Legal and Procurement will decide the most suitable approach e.g. grants or competitive bids through the relevant DFID framework.

Pillar Three – Engagement using Evidence (up to £5.5m)

18. This pillar supports wider transformation by ensuring that evidence generated is used to inform and influence other decisions makers, helping them take actions to address barriers and unlock finance. Activities under this work strand are likely to be varied and a proportionate approach in approval and commissioning allows them to be responsive to opportunities and Ministerial priorities. This could include events or workshops that support effective dissemination or products and events that demonstrate best practise which could include UK’s leadership in areas such as climate change legislation. Other outputs could include the building of more permanent coalitions or development of initiatives that apply the evidence to generate the solutions and the drive the change needed to tackle barriers and unlock private finance. Multilateral Development Banks (MDBs), the private sector, Governments, and non-governmental organisations (NGOs) would be key here with the UK playing a strong and influential convening role. For example, this pillar could support a joint approach between civil society, government and businesses to tackle deforestation, where a co-ordinated set of principles and actions is needed. Approval will be via standard ICF Small Business Cases with procurement options assessed with colleagues on a case by case basis which includes approval based on ODA eligibility, strategic fit and value for money.

How does the programme fit with the department’s strategic objectives?

19. The BEIS Single Departmental Strategy sets out the intention to ‘continue to support international action on climate change’. This business case facilitates BEIS taking effective action by strengthening the approach taken to commissioning and communicating evidence so that interventions are designed to have the best chance of generating the greatest impact in developing countries. The programme will help: Safeguard the quality of research and ensure robust governance consistent with BEIS

processes Ensure efficiency in the commissioning, approval, procurement and publication processes. Facilitate and monitor how research and evidence is communicated, shared and stored in

order to achieve effective knowledge management and engagement. Provide enhanced coherence and consistent prioritisation across BEIS ICF evidence.

20. Many of the proposals within this portfolio are likely to contribute towards the UK’s commitment on Research and Development (R&D), including the financial commitment announced at the budget, the exact amount dependant on the proposals funded.

What are the key risks to the success of the programme?

21. The programme has been designed on the basis of a bottom up analysis of the ICF pipeline combined with the experience of the type of evidence required to inform effective climate finance

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projects and business case development. Estimates have also been pulled together on the basis of a review of the landscape for externally commissioned research to understand which are best aligned to UK priorities, will have a clear impact and will help deliver strategic priorities too. However, as of yet, no projects exist within this proposal so there is a risk that once operational: Assumptions do not hold; for example, efficiency gains may have been overestimated and

demand may have been under or overestimated. While good design and early engagement with teams across BEIS and the ICF should have helped reduce this risk, it is likely that there will be some changes in demand, hence the need for some flexibility between the pillars. The introduction of a dedicated programme manager will help ensure these assumptions are tested and managed. Ultimately though, the downside is limited given that the status quo could always be returned to if efficiency is not sufficiently demonstrated and there is no requirement to spend the full amount if demand is low. High demand will meanwhile help improve competition and drive up quality. Service level agreements with Finance and Procurement, along with the clear intention to approach these projects in a proportionate manner, will help mitigate the risk of not gaining efficiency. Other teams across BEIS that may be involved, such as Research and Legal, have been involved in the development of this programme and process and will strive to help deliver its objectives. A ‘check in’ on how the process of this programme is working after 6 months will also enable us to manage this specific risk.

The quality of research or engagement work is weak and there is poor strategic alignment across the portfolio. The approvals process for work is designed to rigorously test quality of proposals under each pillar and, given there is no requirement to spend the full £18m within this budget, perverse incentives to spend in full are minimised. Use of DFID procurement frameworks also helps mitigate risk, while strategic coherence and quality are significantly improved by the addition in this business case of a full time programme manager for research and evidence work for the first time. They will, for example, be able to proactively manage demand, working with suppliers, OGDs and within the ICF team to ensure a reasonable pipeline is developed and prioritised. They will work with analysts and others to do horizon scanning to ensure that we are planning for the most relevant and high impacts pieces of research.

Demand from evidence and engagement delivery partners outstrips this portfolios budget or resourcing impacting on relationships with key stakeholders. This portfolio may result in raising expectation for the UK to fund significantly more evidence and engagement projects than this programme, or our resourcing allows. This could result in us needing to reject many proposals risking damage to our relationship with key stakeholders. A rigorous assessment process combined with clear communication on our need to prioritise high quality and strategically aligned proposals that represent value for money will help manage this risk.

STRATEGIC CASE

1. What is the need for the Programme?

In Paris, the UK - alongside 195 other countries - committed to act together to keep a global temperature rise to well below 2 degrees. While the need to deliver on this is clear, the route to delivering it is not and a gap has already emerged2. Therefore, ambitious action is needed to address barriers and tip markets towards green investments, particularly in infrastructure. This is the main

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STRATEGIC CASE

purpose of ICF.

Getting this right is not straightforward. Ensuring these interventions are effective and good value for money requires access to timely and appropriate evidence, which then subsequently needs to be applied with strong engagement to ensure greatest possible impact.

Evidence has always been central therefore to ICF portfolio and has generally been commissioned in two ways - via the DfID managed Low Carbon Studies Programme (LCS) and via a small private sector research fund called Capital Market Climate Initiative (CMCI). The Low Carbon Studies Programme ended in 2015 and the CMCI Initiative is now fully spent. This leaves a large gap and restricts our ability to procure efficiently and quickly high quality, independent research to inform our programmes and influence wider climate flows.

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The previous approaches were in a large part effective but not in themselves perfect. The approach proposed in this Business Case is designed to learn lessons from the Low Carbon Studies programme – having a more flexible approach to funding different studies including those of higher financial value. The programme manager proposed in this Business Case will introduce a more coherent plan for dissemination of both individual pieces of research (with associated engagement activities) as well as a more comprehensive way of demonstrating UK thought leadership.

The UK has a strong track record in its academic and consultancy sectors in a wide range of energy and low carbon sectors, such as Carbon Capture and Storage (CCS), biomass and anaerobic digestion, and Ocean power, as evidenced in the ICF Low Carbon Energy Study produced for FCO in 20173. Internal BEIS ICF research conducted by VIVID in 2017 also identified the experience of Committee on Climate Change, Client Earth, 2050 Pathways Initiative and Chatham House (on areas such as long term emission scenarios and governance), the Forestry Commission (including Forest Research) and National Centre for Earth Observation (NCEO) for forestry data analysis and modelling. This report also

2 New Climate Economy (NCE) research shows that the next 15 years of investment will determine whether or not well-below 2°C is feasible, and similarly the UNEP Gap report stresses that the 2020 opportunity to revise NDCs could well be the last opportunity to close the gap to well below 2°C.3 ICF Consulting Services, 2017. Low-Carbon Energy Scoping Study. Available at: https://www.icf.com/-/media/files/icf/reports/2017/fco-low-carbon-energy-scoping-study.pdf

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STRATEGIC CASE

highlighted the international standing of the UK Met Office.

The UK boasts some of the most respected academic and research organisations in the world in the field of climate change economics, such as the ESRC Centre for Climate Change Economics and Policy at Leeds and the LSE, the Grantham Research Institute - Climate Change and the Environment at the LSE and the Grantham and Energy Institutes at UCL. The Bank of England has been at the forefront of investigating climate risks to financial stability, and in promoting Green Finance – in 2016 it co-chaired the G20 Green Finance Study Group.

In conclusion this portfolio, with its associated budget, streamlined approval process and coherent programme management, is needed because;

ICF Business Cases and Strategy require ongoing research, scoping and evidence to deliver the greatest impact. This need is increasing with the volume of Business Cases undertaken and their increasingly innovative and complex nature.

If knowledge, evidence and engagement projects are commissioned separately with each project navigating the approval and commissioning process, this holds risks to coherence and loses any opportunities for economies of scale. Although important pieces of work, doing them individually is not efficient.

ICF requires both large and small projects in knowledge, research, evidence and engagement, as well as internally and externally generated ideas.

Research and evidence projects often lack the clear dissemination and engagement strategies that are vital in ensuring their messages have the greatest impact by targeting key decision makers.

The individual projects need to be greater than the sum of their parts with lesson learning driving strategic direction, quality, impact and value for money of the projects.

Our inability to fund small research and evidence projects in a resource, time efficient and a coherent manner misses a significant opportunity for UK visibility and thought leadership. Many UK universities, think tanks and research institutions are world leading, we are currently unable to fund or shape their agendas or get the associated visibility for this.

The need for evidence and engagement is only going to become increasingly important with the remaining gap to 2 degrees and significant questions that need to be answered.

In response to these challenges, this portfolio is designed to improve procurement and coherence of ICF research and in doing so shape an increasing volume of ICF spend and underscore a larger international role. This approach will provide;

the ability to develop high quality, vfm evidence proposals as a result of - strategic coherence across all BEIS ICF Research Spend,- an outline and ring-fenced budget from BEIS ICF, - a streamlined governance and approval process that maintains standards and

safeguards for quality and value for money, - access and agreement to use appropriate and quality assured procurement

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STRATEGIC CASEframeworks (largely provided by DfID)

- Dedicated research only focused programme management resource New focus on wider dissemination and engagement, recognising the crucial role that has in

bridging effectively and influentially the step between research and action.

2. Alignment with BEIS ICF Strategy and Priorities

As with all ODA funding the overarching objective of this finance is to reduce poverty and support economic growth in ODA eligible developing countries. The ultimate beneficiaries of this work are the poor and vulnerable communities in developing nations. The Theory of Change in Annex D describes how we are proposing to deliver transformational change by reducing emissions. This proposal is key in delivering BEIS objectives for the following reasons:

i. Maximises the impact and value for money of ICF Spend by working across our three thematic areas: leveraging private finance, halting deforestation and accelerating decarbonisation. The programme will also deliver against our three indicators of transformational change:Innovation: Delivering timely high quality evidence to inform stronger ICF programming strategy, project

design and develop the low carbon evidence base more widely. Research could help to identify sectoral and technological mitigation priorities, review needs within a country or market or analyse innovative approaches taken by others.

Taking a programmatic approach to evidence, ensuring flexibility to deliver the growing evidence needs of an increased volume of finance in ICF: the BEIS ICF spend trajectory will increase significantly (reaching £618m in 2020/21).

Inspiring: Supporting and feeding lesson learned back into the BEIS ICF Strategy and new programming,

addressing in particular portfolio-level learning needs given the existing BEIS/DfID/Defra shared portfolio evaluation programme (HMG Compass) has been reduced in scope and will expire in 2019.

Applying and demonstrating UK leadership internationally by using evidence and lessons learned to drive up ambition and project quality beyond ICF – drawing, for example, on UK evidence for transformation change and expertise in private sector leverage.

Impact:

Ability to respond to opportunities and Ministerial priorities in evidence and engagement – allowing this response to be timely and proportionate to secure maximum impact.

Spearheading the vital role engagement activities have in delivering our objectives, ensuring proactive engagement to deliver the right evidence to the right decision makers. With previous UK engagement work demonstrating how effective these activities can be, along with the value for money they represent. For example, UK ICF’s support of developing countries’ engagement was crucial in the run up to the negotiation of the Paris Agreement in 2015.

Value for money through efficient use of resources - providing ringfenced/pre-assigned funding with streamlined governance yet maintaining safeguards that ensure value for money and methodological rigour.

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STRATEGIC CASE

ii. Supports wider UK strategic objectives in the Climate Negotiations Influences others to raise ambition and keep global temperature thresholds to well below

2⁰C. In order to raise ambition, credible and up-to-date evidence must be available in order to convince policymakers, politicians and private sector leaders on what is both beneficial and economically and technically feasible. Despite advances in some areas driven by policy there remain substantial challenges to tackle to set the world on a path to well below 2°C. The start of assessing global ambition under the UNFCCC Talanoa Dialogue creates additional urgency and an opportunity. Research from this programme looking at the impact of UK investments, as well as evidence on how best to deliver sustainable low carbon growth, therefore acts as an important contribution to global thinking and supports a global public good.

Engagement activity then supports applying this evidence to support UK negotiations, building on the successful work we did with developing countries in the lead up to the Paris Agreement in 2015 through the Climate Diplomacy Knowledge Network (CDKN).

Set a new collective Climate Finance Commitment prior to 2025. At Paris in 2015 countries agreed that prior to 2025 the Conference of the Parties would set a new collective target, with the existing $100bn commitment representing a floor. The UK needs to agree its contribution first and use that to influence others. If judged to meet our criteria, research commissioned via this programme could help ensure evidence gaps are addressed; would support Spending Review discussions for post 20/21 finance and help ensure high quality climate finance into the 2020’s. Engagement activity under this programme will then support its application to climate negotiations.

iii) Strengthens the UK’s position as a global leader in tackling climate change and promotes UK expertise. Increases the UK’s ability to support high profile pieces of globally significant research bringing

significant recognition and visibility in ways that could not be achieved to the same degree through much larger investments in multilateral funds. Enabling more engagement around UK and external research reinforces this.

Design of the Knowledge, Evidence & Engagement Portfolio

The programme has been designed to:

Deliver strategic objectives Ensure value for money and efficiency Ensure the right level of safeguards to avoid duplication are in place.

This section, along with Diagram A (below) sets out a 3 pillar approach which will be effective at enabling the UK to respond to needs within ICF programmes and internationally across the climate finance negotiations and landscape.

Managing the evidence and engagement needs across the full breadth of International Climate Change issues within a common management approach will secure value for money through efficiencies and avoiding of duplication, whilst maintaining necessary safeguards to ensure analytical rigour. Through an

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STRATEGIC CASE

ICF specific BEIS Research Approval Form (RAF), with delegated authority for certain approvals, and using DfID procurement frameworks where suitable, time taken will be reduced.

In all individual cases safeguards will be maintained including assessment of: ODA eligibility and suitable use of Climate Finance Appropriate procurement approach BEIS Research Committee oversight of newly procured evidence.

This is consistent with the delegated arrangements from the Project and Investment Committee to the ICF Approvals Panel for projects between £20m and £70m, which was signed off as part of the ICF Governing Principles in 2017.

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DFID Procurement Frameworks:There are a number of existing DFID Frameworks that would provide us with access to the right international expert technical advice and that have quick and simple tender processes to a wide range of pre-approved suppliers. Appropriate use of these frameworks satisfies procurement rules. The Expert Advisory Call Down Service (EACDs) framework is likely to be the most useful but there are others such as the Knowledge for Development (K4D) framework, designed for short term pieces of work under 5 days such as literature reviews, or a new economic development framework being currently developed.

Diagram A

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KEEP Governance

Diagram A sets out approval processes and management arrangements for activities under this programme that are intended to ensure much needed flexibility and responsiveness while also demonstrating that every proposal funded can stand up on value for money, quality and compliance grounds.

There are a number of programmes that have already had the budget for their evidence needs approved in recent months but have not been commissioned. In the coming months whilst we set up KEEP there will be a transition period and our proposal is that all ICF evidence and engagement needs yet to be commissioned are approved, managed and delivered through this KEEP process, including those whose budget are have been approved separately in the last few months. This will enable the ICF to manage evidence and engagement needs as one coherent piece from day one. In the future we anticipate this programme capturing almost all of the research and evidence needs for the ICF, however, there may be a very small number of exceptions. Any research and evaluation activity not considered part of KEEP would revert to BEIS standard processes.

Approval Process

All proposals will need to be able to demonstrate they meet core common criteria including ODA eligibility, strategic fit, value for money and additionality. Additional criteria are required for individual pillars (details on criteria can be found in the commercial case).

For pillars 1 and 2 this case will need to be set out in a slightly extended Research Approval Form (RAF), allowing scrutiny over the methodological rigour of the research and evidence. All of these projects will be seen by the Research Committee to allow critique on methodological rigour, duplication across the department and value for money (with ICF approval systems having budgetary control). The Research Committee will host sessions for the ICF every two weeks and take a proportionate approach on dealing with ICF proposals, fully supporting the intention of this programme to create a nimble process. This will be reviewed after 3 months of implementation.

For pillar 3, the case for funding would be put into a proportionate ICF Small Business Case. The detail required, sign-off levels and turnaround time is dependent on delivery mechanism and financial value. All cases will fill in the newly designed procurement template in a proportionate manner (anticipated to be one page for proposals under £100k).

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APPRAISAL CASE

The options appraisal follows a two tiered approach: (1) Overarching programme options appraisal to deliver the activities within each of the three pillars; and (2) Individual delivery options of each pillar that fit within the preferred overarching approach.

(1) Tier 1 Appraisal: Overarching options

Five options were considered (including the ‘do nothing’ option) against four different criteria that reflect the objectives and requirements set out in the Strategic Case. RAG ratings for each option are indicative based on judgement given the information available and experience within the ICF team. This analysis is included in Annex B in full and summarised in the table below:

Delivery OptionDelivery in timely manner

Ability to deliver research/engagement activities and maximise coherence & learning

Flexibility Cost andResource time

Option A; Support initiatives as set out in recommended approach (i.e. 3 pillars with tailored procurement and approval routes)

Option B; Individually procure each evidence and engagement proposal/need.

Option C; Conduct all evidence and engagement work in house

Option D; Subcontract all evidence and engagement work to one Managing Partner that would subcontract research.

Option E; Do nothing (i.e. do not carry out any research, evidence building, or engagement activities outside what is already planned under existing programmes)

As indicated in the table above, most options assessed were not feasible or fared poorly against 3 out of 4 criteria. Option A – the approach taken in this business case- is therefore recommended as the best route for developing, in a timely and efficient way, a robust evidence base to support international climate change policy and ensuring the processes and oversight are put in place to facilitate a coherent approach that enables proactive horizon-scanning to identify evidence gaps and opportunities, cross-learning from existing and planned research, and the introduction of a framework to ensure we are learning and disseminating the research effectively and assessing this via the standard ICF M&E process. Although it has new resourcing requirements, these are significantly lower than the other feasible option (option B), which is to procure in full each individual proposal.

The second tier of options appraisal is set out below, which considers the individual delivery options of each pillar that fit within the preferred overarching approach.

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(2) Tier 2 Appraisal: procurement options for each Pillar

The options considered for appraisal at this tier were: Using individual Business Cases for each project with different procurement mechanism set up

for each project. Using DfID’s framework (recommended preferred option for Pillar One and in some cases

Three) Procuring individual suppliers for each project Using single tender action BEIS setting up its own framework.

The 5 options above were considered using the criteria of value for money, internal resources required, procurement best practise and flexibility. The conclusion for each Pillar is summarised below. Overall, a hybrid approach is recommended, with each Pillar requiring its own bespoke procurement route. For each Pillar, for reasons such as funding size and/or content of proposed project or context, approval may revert to standard ICF Business Case process if deemed appropriate.

Pillar One – Using EACDS framework is the preferred delivery option, as projects under Pillar One will be HMG driven, and expected to be high volume and with no attached delivery partner. Where not possible (e.g. if no suitable contractors are included in EACDS pool) other frameworks (e.g.K4D) or individual procurement approaches will be used.

Pillar Two – Procuring individual suppliers for each project through Grants or similar approaches is considered likely to be the most appropriate for this Pillar due to projects under this Pillar being supply driven. There are far fewer numbers of projects expected under Pillar 2 compared to Pillar One.

Pillar Three – This Pillar will be both supply and demand driven (focusing on engagement and evidence collation, rather than primary research) and therefore each proposal will need to considered on a case by case basis. In some cases, particularly HMG demand driven work, there might be a case to use the preferred procurement framework set up for Pillar 1 (EACDS). In comparison a supply-led project would follow the approach of Pillar 2 where a delivery partner is already attached and is the only one suitable for delivery, whether deemed a procurement or a grant.

As discussed in previous sections, establishing the KEEP within the ICF portfolio will ensure an appropriate framework is available to develop the necessary evidence base, learning, dissemination strategy, and engagement activities that are required for future BEIS ICF delivery. The recommended approach outlined in the options appraisal above will allow sufficient flexibility to achieve the intended outcomes but provide a clear Governance structure and criteria for proposals to ensure ongoing strategic relevance and VfM can be achieved. The framework approach will also be an easier concept to communicate to stakeholders and encourage participation, i.e. it will be visible and demonstrate the ICF commitment to building the evidence base and ensuring evidence can be translated through engagement work to lead to tangible outcomes.

The impacts of conducting and supporting research, engagement activities, and knowledge dissemination that the KEEP will facilitate are inherently difficult to quantify and frequently indirect. It

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is therefore not possible to quantify expected benefits, and expected results are discussed in qualitative terms, in line with ICF standard approach to Technical Assistance interventions. At this stage, there are uncertainties over the exact content, number and types of outputs that will be supported through the programme, as this will depend on the evidence needs brought forward and the engagement activities that emerge as priorities given a dynamic political context. However, the governance of the three Pillars will ensure that all proposals meet the threshold against the criteria set (set out in the Management Case) and that the Framework as a whole is subject to the standard ICF monitoring process. Further, funding and planned outputs will be agreed in advance of funding being disbursed, with no arbitrary target for total annual disbursement, therefore avoiding any perverse incentives to fund activities and ensure VfM.

Value for money assessment

VfM Summary

Overall, our recommended option, delivering Pillars 1 to 3 through tailored procurement options, is considered to provide value for money over the intended lifetime of the portfolio (three years). It will address a clear requirement for increased research and evidence and targeted engagement activities to support HMG’s objectives for international climate change, and importantly, aim to deliver wider benefits through adopting a more strategic approach to evidence building, sharing information, and building links and networks to maximise the impact of the research undertaken. Without this framework in place, either increased HMG resource (specifically ICF staff) would be employed inefficiently to procure individual pieces of work separately, or (more likely) the level of research undertaken would fall below what is required to ensure the ICF and wider international climate policy is based on robust and up to date evidence.

The risks outlined in the risk section above are considered reasonably mitigated by the governance structure proposed in the management case and the payment according to need approach.

Three E Framework

ICF project appraisal uses the ‘three E’ framework to assess value for money, with the aim to maximise each of the 3Es, so that we achieve maximum effectiveness, efficiency and economy for each ICF intervention:

Economy - Are we or our agents buying inputs of the appropriate quality at the right price? (Inputs are things such as staff, consultants, raw materials and capital that are used to produce outputs)

Pillar 1:

The arrangements would be based on the current DfID-led framework contract, which is specifically designed to deliver expert advisory services quickly and efficiently, and includes contractors suited to the thematic areas of research likely to come up under Pillar 1. By using this contract as a basis and ensuring lessons learnt from the DfID experience of the framework feeds into final contracts will help

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ensure its fit for purpose and delivers VfM.

The key cost drivers for Pillar 1 will include payment for the platform services and the funds allocated to each project proposal. Experience within HMG of procuring comparable research, and the competitive tender process, will all act to ensure we are paying the right price for quality research reports. This will be kept under review and documented through the monitoring and evaluation process.

Each proposal we will call down from the EACDS will be subject to a mini competition, with sub-contractors submitting bids via the Lot Supplier. This competitive process will enable us to scrutinise the bids to ensure quality and VFM. The use of EACDS does offer overall potential cost/VFM advantages in terms of enabling a more direct route to an expert supplier (with administrative costs associated with going through a Lot Supplier factored into the day rates). Seeking to use an alternative framework4 will not provide direct access to the same group of expert suppliers or going to a single suitable management partner could result in overall increased costs, as we would need to agree a management/administrative fee plus actual supplier rates. We will monitor the costs of using the EACDS to ensure it delivers VFM in comparison with alternative funding routes.

Pillar 2:

Research proposals under Pillar 2 will already have an associated delivery partner; therefore, they will, in large, not be subject to the bidding process or competitive tender that is apparent under Pillar 1. The approach will be considered by the Procurement Department and where it is beneficial and appropriate competitive tenders or the supplier framework will be used to ensure competition. Whichever approach is using high levels scrutiny will be maintained, by assessing: costs of proposals against type and scope of research (against comparable projects); staff costs (taking into account appropriate grade and time allocated to tasks); administration and travel costs; and miscellaneous costs. This will be done through project proposal documents used to assess and approve proposals under this Pillar. This will include the key cost information that would be expected in the standard Economy assessment carried out for ICF Business Cases, e.g. key cost drivers and a full breakdown of budgets and admin and fees incurred, would be provided in order for ICF analysts to assess VfM in the context of comparable projects and past ICF experience. Due diligence will also need to be carried out on the delivery partner (in line with DfID practice on Accountable Grants) before funding is awarded.

Pillar 3:

Economy considerations will be assessed on a case by case basis, this is necessary given the breadth of engagement and communication activities that could fall within this Pillar, each having proposal-specific issues that would represent key cost drivers and therefore areas that would need to be

4 Alternative Crown Commercial Service frameworks considered were: Project Management & Full Design Team Services http://ccs-agreements.cabinetoffice.gov.uk/contracts/rm3741 Grants and Programmes Services Framework https://ccs-agreements.cabinetoffice.gov.uk/contracts/rm949 Management Consultancy Framework https://ccs-agreements.cabinetoffice.gov.uk/contracts/rm3745But we did not consider that these had the right level of specific expertise to do climate finance related research and evidence in a developing country context and/or they more suited to setting up a more outsourced delivery model – which is not the delivery model we wanted to use.

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assessed for VfM (this would involve an assessment of past and projected expenditures, which will then be compared to prior delivery plans). The level of scrutiny applied would be consistent with the current approach taken in ICF Business Cases.

Efficiency - How well do we or our agents convert inputs into outputs? (outputs are results delivered by us or our agents to an external party. We or our agents exercise strong control over the quality and quantity of outputs)

Pillar 1:

As noted above, the arrangements with the EACDS framework would be based on, and learn lessons from, the current DfID-led framework contract. The ICF project lead will have a key role in ensuring the ICF team are aware of, and factoring in, their research needs at the earliest opportunity in the development of ICF projects or strategy work, e.g. consideration of evidence needs included in ICF Project Delivery Plans. Appropriate output indicators will be selected, covering the efficiency of the EACDS process, the ICF-run bidding process, and the design and running of the communications/outreach plan and knowledge management.

Pillar 2:

Efficiency assessment for Pillar 2 will have similarities with Pillar 1 above, regarding how research proposals would be assessed to ensure systems and processes involved are likely to achieve efficient outcomes. Proposal templates will be expected to contain clear information setting out the key activities and systems in place to ensure deliverables are to time and of high quality and will be assessed against previous ICF experience with comparable projects.

Pillar 3:

Efficiency for Pillar 3 will be assessed consistently with pillar 1 and 2, and in keeping with the standard ICF approach in Business Cases that cover engagement activities. As a guide, areas for scrutiny could include: agreeing with the delivery partner a set of activities that fit the scope of the UK’s support, and ensure any agreement includes clauses to that effect; and identifying and agreeing clear governance arrangements and points of review (with opportunity to influence); and assessment of products/activities compared to prior delivery plans, and evidence of success (delivery partners would be assessed to see what systems they have in place to ensure efficient conversion of inputs into outputs).

Effectiveness - How well are the outputs from an intervention achieving the desired outcome on key objectives? (Note that in contrast to outputs, we or our agents do not exercise direct control over outcomes)

Pillar 1:

Indicators will be used to assess whether projects are contributing to the overall objectives of KEEP. These include:

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- Increased use of up to date and relevant evidence in Business Cases and on-going management of ICF portfolio;

- Use of evidence and research to improve methodological approaches and share this knowledge with wider climate stakeholders (e.g. climate accounting research shared with OECD Research Collaborative and participating member countries); and

- Development of climate policy that is underpinned by up to date and targeted evidence (e.g. new technologies or regulation).

Pillar 2:

Text in section above on Pillar 1 also applies to Pillar 2. In addition, we would look to monitor the impact of delivering research through alternative, and potentially more internationally recognised, delivery partners, and the impact of UK leadership and increased visibility in these projects, i.e. by providing a leading contribution to research proposed by internationally recognised delivery partners there may be additional benefits associated with the ability to communicate the research outputs and ensure they are utilised effectively, for example, organisations such as International Energy Agency.

Pillar 3:

Outcomes are likely to have long-term benefits that would be difficult to accurately estimate or directly attribute to UK interventions (e.g. capacity building interventions). However, there are ways in which outcomes can be monitored and evaluated through the ICF Annual Review process. This could include looking at indicators that could demonstrate progress or change undertaken directly related to engagement activities or made possible due to information sharing or enhanced knowledge management. The ICF has experience of this kind of activity, e.g. through the Climate & Development Knowledge Network (CDKN), and therefore has a basis on which to build robust VfM governance of similar activities.

There are a number of programmes that have already had the budget for their evidence needs approved in recent months, but have not been commissioned. In the coming months whilst we setting up KEEP there will be a transition period and our proposal is that all ICF evidence and engagement needs yet to be commissioned are approved, managed and delivered through this KEEP process, including those whose budget are have been approved separately in the last few months. This will enable the ICF to manage evidence and engagement needs as one coherent piece from day one.

MANAGEMENT CASE

Overall, the programme will be assessed, consistent with standard ICF practice, on an annual basis against the logframe. The logframe will be finalised within six months of programme implementation and based on draft outlined below. After completion there will be a project completion form comprising a thorough BEIS-led assessment of achievements against results, which will include consideration of OGDs who participated in the programme in any way. The monitoring and evaluation section below sets out in more detail these arrangements. The logframe, annual review and project completion report will be underpinned by short assessments of each of the pieces of work against the success criteria set out in the proposal alongside an overall assessment of programme effectiveness.

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A standard contract/grant agreement will be issued for each project. To drive forward a culture of results and impact, the contracts will be output focussed. If this resource is used by those outside ICE a clear ToR will be set up by the ICF team and this will be approved by the head of the relevant ICF team (G6-level). The delivering agents will be pushed to provide solid methodologies from the outset which will be able to demonstrate what they intend to achieve and how they will get there.

The overall relationship with EACDS framework and process for completing and approving RAFs and Business Cases will be managed by the KEEP manager and the economic adviser in the ICF team. Each project proposal will have a project lead (who may be from ICF, wider BEIS, or OGD) who will have responsibility for producing a good, clear contract/grant agreement and ToR which sets out the key objectives of the study and when they need to be achieved by, including expectations regarding the suppliers’ quality assurance (QA) and how they will engage with BEIS QA process. The project lead must ensure each project has analytical oversight, either led from the commissioning team or from ICF analysts. The project lead is responsible for organising peer review for every study by the most relevant person across Whitehall or appropriate analytical specialist, and ensuring that reporting requirements needed to complete the short assessments referred to above are adhered to.

Resourcing required

After assessing the risks to delivering the objectives required from this programme, along with lessons learnt from other similar programmes (e.g. DfID’s Low Carbon Studies programme), the need to provide sufficient programme management resource is a key element of successful programme design for KEEP. We are anticipating the resource requirement to be 1 SEO FTE for strategic programme management along with 0.4 FTE analysts’ resource. The service level agreements from Finance, Legal and Procurement will also require resourcing accordingly, and will be reviewed by the ICF PMO, alongside other ICF requirements. Procurement will have a dedicated KEEP liaison to help further streamline and target the advice provided on these projects.

Following DfID precedent5 and reflecting the rules applied to using programme funds on staff we recommend that RDEL programme funds are used in funding the programme management for this position. Analytical resource will come from within the planned increase in analytical headcount from business planning, adding another M&E and economist post.

This resourcing approach will provide an opportunity to proactively influence and steer what evidence questions are answered and how we engage key decision makers on the new evidence alongside coordination and ensuring good programme management processes. This will include ongoing dialogue with key stakeholders, ongoing proactive technical engagement with the key evidence and engagement projects and driving forward HMG’s thinking and strategy in this field, in particular around identifying and meeting strategic evidence gaps.

The HMG Compass programme, an analytical programme of similar budget, has 0.3 FTE G7 + 0.3 HEO in programme management roles, supported by 1.5FTE G7 analyst resource (across multiple professions). This portfolio is unlikely to need the same resource requirements as unlike Compass it is envisaged that

5 An equivalent member of staff in DfID working is funded through programme funds

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individual projects within this portfolio will received their own management resource, and that it will not be co-managed across three government departments.

Savings anticipated

Beyond the advantages of coherence and ability to respond to research and engagement opportunities we anticipate this portfolio will create significant efficiency savings for the ICF Team, freeing up resource to invest in other priorities.

The programme does require an additional ICF programme manager to ensure the successful running of the programme, including delivering on the wider dissemination, learning and communication objectives.

MONITORING AND EVALUATION

The Theory of Change for KEEP is presented in Annex D. Overall the expected Impact is that:

Policy and programming interventions around the world transform the political and economic landscape in ways that move countries towards ambitious low carbon pathways that avoid emissions.

The desired outcome of KEEP is:

To positively influence through the use of robust evidence both global conversations and the way climate finance is spent, in support of a well below 2 degree pathway.

As the first programme to bring together the evidence and engagement needs across ICE, KEEP presents a significant opportunity to improve the coherence, safeguarding and promotion of evidence. There is also a risk that without a well-managed programme these opportunities are not realised, and the evidence and engagement activities are not fully drawn upon.

To mitigate this risk this programme, whist different in nature to traditional ICF programmes, which are commonly delivered through delivery partners, will draw on the same monitoring and evaluation (M&E) protocols, albeit adapted to suit the specific context and challenges of the KEEP programme. Setting up the M&E framework for the programme will be an immediate priority of the programme lead should KEEP be approved.

The M&E of KEEP will primarily rely on four tools as well as the maintenance of an ICF delivery plan by the programme lead. These tools are:

i) A before and after report for each project, ii) A programme level annual review,iii) A programme level logframe iv) A programme completion report.

i) A ‘before’ and ‘after’ report for each project:

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Each project should begin with the completion of a ‘before’ report. At a minimum this will detail the expectations that the work is hoping to achieve, and what would be sufficient evidence at the end of the project that those expectations had been met. At the end of any project an ‘after’ report would be completed. This report will assess delivery against the objectives providing evidence, and explanation for any difference in outcome. This will also include any lessons learnt for future commissions and next steps where necessary. These will be completed and then collated by the programme manager and contribute towards the monitoring described below.

ii) An annual review:

KEEP will undergo a thorough internal assessment combining evidence gathered through the logframe, with stakeholder feedback and programme management judgement to score the programme’s progress and recommend improvements.

iii) Portfolio level logframe:

A logframe capturing expectations for the overall KEEP portfolio will be finalised within six months of implementation. This logframe will detail indicators of expected outputs, outcomes and impacts from the theory of change (See Annex D). Each indicator will have annual targets set, based on the pipeline of work identified that year. The portfolio will then be assessed annually against these targets in the annual review. A draft logframe can be found in Annex E.

It will also be important to monitor portfolio set up and the financials. Therefore, draft activity / management indicators have been included. The financials (e.g. £’s dispersed) could also be monitored through the logframe, but it is suggested that this forms a separate worksheet which may either be included in the delivery plan or logframe.

ICF Key Performance Indicators should also be reported on where possible. For this programme KPI 15 (level of transformational change) will be reported and the methodology for this should be completed once the logframe is agreed (as it will rely on some common indicators). It may also be possible for KPI 14 to be reported depending on the projects undertaken, this will be considered by the programme manager.

iv) A programme completion report:

At the end of the three year cycle, or sooner if required, a programme completion report will be compiled. This will aggregate evidence from the after-reports, logframe, annual review, and stakeholder feedback to make a critical assessment of the programme. This will provide a basis for accountability and learning. The framework for this report should be similar to a theory-based evaluation taking a contribution analysis approach. In short, this entails compiling evidence against the theory of change to judge the likelihood or otherwise that the programme has contributed to the overall outcome and impact that were envisaged. The nature of the programme, focussing on influencing HMG internal workings (e.g. business case design) is likely to limit the value of, and ability to conduct, a full independent external evaluation. So it is suggested that this programme completion

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report is conducted internally, but open to scrutiny from stakeholders involved in the programme.

RISKS

Many of the significant risks inherent in this programme are significantly mitigated by the inclusion of three characteristics;

- A strong, clear commissioning and proportionate approval and scrutiny process, for all projects that puts ODA eligibility, methodological rigour, value for money, strategic fit and transformational impact at the centre of its decision making and criteria.

- Strong dedicated programme management that brings greater coherence to evidence and engagement across ICF and consistent resourcing to ensure quality and delivery.

- The large majority of projects will use the pre-approved frameworks of DfID, ensuring nimble commissioning along with the inherent safeguards and checks that come with frameworks.

These characteristics will help mitigate the risk of low quality projects being funded – be that projects that do not represent value for money, or produce low quality products or do not fit with ICF objectives. Experience shows, even with strong programme management, clear commissioning and a trusted delivery partner there can be outputs that are sub-standard. This risk can be managed, but not completely eliminated.

A risk associated with using the DFID pre-approved framework, where supplier day rates are capped, is ensuring the quality of the bids received to deliver our proposal, in particular with appropriate senior involvement from the delivery partners which may be required. These day rates incorporate the costs of the sub-contractor and also the administrative costs of the lot supplier. This can mean that sub-contractors are dis-incentivised to bid for work as they cannot charge their required rates and would incur a loss from working on projects called down from the framework. This will need to be carefully monitored to ensure we are receiving high quality bids from a range of suppliers, and if it is judged that quality is being significantly compromised other commissioning routes should be considered.

The risk of duplicative projects being funded is strongly mitigated by the Research Committee being at the centre of our approval process and regularly updated. This coupled with the dedicated programme manager will mean OGDs have clear sight of our pipeline (also aiding effective involvement of OGDs in the approval, QA and final dissemination).

Demand being under or overestimated is managed with the budget being ‘up to’ and flexible between pillars ensuring only quality projects are funded. The scale of this project in comparison with the overall ICF budget means that the risk of significant underspend can be managed to a low and manageable risk.

Demand outstripping the budget or resourcing could then present a risk to our relationship with key stakeholders, with the development of this programme resulting in raising expectations on our ability to fund this type of work. The result could be us rejecting many proposals, which risks impacting on our relationships and reputation. A rigorous assessment process combined with clear communication on our need to prioritise high quality and strategically aligned proposals that represent value for money

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will help manage this risk.

A key objective for the dedicated programme manager will be ensuring strategic direction in line with the ICF as a whole, and ensuring lesson learning across all the projects is brought together. This will help mitigate the risk that the projects undertaken are not a coherent package or greater sum of their parts.

Working closely with Finance, Legal and Procurement Departments with a shared understanding of the aims of this programme, will be vital in helping ensure we deliver the increased efficiency and timeliness in the approval/commissioning process which is an objective of this portfolio. This, along with other major risks, will be monitored as part of the annual review.

Timely communication and dissemination of the final products is key to ensuring products are used to their potential and deliver a global public good. We have had difficult experiences in timely efficient publications of reports in the past. To help manage this risk the programme manager will work closely with communications on annual publication to increase efficiency.

A significant risk in future years that will need to be managed is the ability for BEIS to continue to use DfID procurement frameworks, in particular EACDS or its successor. With EACDS expiring before the end of this programme of work, and new frameworks currently being designed, there is no guarantee of BEIS access to these frameworks, but the early indications from DfID is that this risk is low. We will attempt to further mitigate these risks by working closely with DfID in design and ensuring DfID are aware of our needs and successful delivery once work has started. The Climate Finance Boards give us opportunity to raise this with DfID at a senior level, however, no guarantees can be made at this stage, so the risk remains at medium and one to be monitored.

A more in-depth assessment of the risks can be found in Annex F.

TRANSPARENCY AND PUBLICATIONTo demonstrate the UK’s continuing commitment to transparency and creating public goods, and to deliver on a key objective of the programme to ensure sharing and accessibility of knowledge and information, all final reports and deliverables will be published on the ICF web pages (subject to appropriate confidentiality consideration)6. All delivery partners will also be encouraged to publish reports on their web sites to encourage the sharing and flow of evidence.

Publication of research in BEIS involves multiple steps including Quality Assurance sign-off from a senior analyst, SRO sign-off, and SpAds and ministerial review and approval. Owing to these multiple steps, efficient publication of research documents can be a challenge in HMG. To address this, KEEP plans to publish research reports commissioned under it, appropriately redacted, as a batch annually, thus, only going through the process once per year as opposed to once per document. The process, led by the KEEP programme manager, is envisaged to involve an annual submission detailing what will be published.

6 To note, appropriate redactions may need to be made to reports if necessary due to confidential or commercial content. If this is considered to have a material impact on the interpretation and use of the report then it may not be published.

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The EACDS framework terms of reference requires framework participants to comply with International Aid Transparency Initiative (IATI) standards. COMMERCIAL CASE

How projects will be selected

As set out in Diagram A, Pillar One will have a competitive bidding process where bids from within BEIS or OGDs are judged against agreed criteria as set out below. This will allow officials to ensure value for money is met along with methodological rigour, whilst maintaining a streamlined and efficient process to assess and select bids.

Criteria to select studies

The following criteria will be used to assess suitability for all three pillars. As explained below there are then additional criteria for each pillar to reflect the different types of activities that we are focusing on. In considering which studies to complete, the following decision making criteria will be applied. Projects RAF’s will be scored against the criteria and assessed to determine whether they meet requirements. In the case where the total budget limit is reached, those with the highest score will be prioritised7:

- Strategic fit to UK objectives on international climate change, with particular focus on ICF objectives and effective programme delivery

- Maximising value for money and link to actual HMG objectives

- Contribution to transformational change consistent with achieving UK objectives on international climate change

- HMG additionality and where UK has credibility

- Distinction and added value from the work of other evidence and engagement bodies

- Effective dissemination/engagement plan

- Methodology and QA process

Additional Criteria for Pillar One and Two;

- ‘Fit’ with BEIS’s climate change research portfolio (to ensure no duplication and complementary work where possible) and other knowledge organisations

- Application or relationship to any research and evidence commissioned by HMG (primarily BEIS and DfID) or wider climate finance stakeholders (e.g. CIFs and GCF)

Additional Criteria for Pillar Three;

- Potential for UK to demonstrate leadership and increased visibility through engagement

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activities.

Additional criteria where appropriate

- Where already attached the proposed delivery partner suitability, value for money and track record will be considered

In the selection/approval of all proposals, the monitoring and evaluation against success criteria will be highlighted in the proposal and completed by the programme manager. These short assessments, along with a list of pipeline, considered and ongoing programmes will be kept in an easily accessible form to allow all BEIS stakeholders easy access. For those proposals over £1m there will be a review at the end of each piece of work similar to a Project Completion Report (PCR).

FINANCIAL CASE

The fundamental basis of this business case is to support more effective spend of International Climate Finance through building the evidence base for better climate finance programme development and decision making. The engagement activities that would come under Pillar 3 would aim to address critical gaps to facilitate moving forward the global conversation and enabling political conditions to move closer to a well below 2 degree pathway.

A key way in which this portfolio will drive down costs is through efficient use of BEIS staff administrative time for procurement of studies and the development of policy areas. The frameworks used enable suppliers to bid for work and quality and value for money be maintained.

The set-up of EACDS framework rates does result in efficiency savings for longer-term pieces of work and we will monitor the pipeline of proposals to ensure we can maximise these savings where possible. For example, identifying linked smaller/shorter proposals that could be bundled into a single proposal. We can also use a weighted cost methodology to compare the total costs of bids that will factor in additional VFM benefits such as work from more senior experts.

How each different pillar is managed has been outlined in the description section at the front of the Business Case. The programme will be both managed by one ICF programme manager, with input from ICE analysts. With support from the ICF PMO each budget line will be managed in accordance with the relevant BEIS and ICF guidance. Guidance, such as overhead thresholds, will be considered in the proposal selection/approval and will be monitored by the programme manager.

Breakdown of Budget for Evidence and Engagement Programme (Jan 2018 to March 2021)

Detail Estimated Budget

Total Estimate

Pillar 1

Up to 30 projects of up to £300K each (with an average of ~£125k each)

£3.85m

£7.34mLarger projects £300k to £1m £3.5m

Pillar 2 Up to 3 larger studies of up to £2m each (likely to £5m £5m

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be £1-2m)

Pillar 3

Up to 3 large projects of on average £1.5m each £4.5m

£5.5mUp to 10 smaller activities at an average of £100k each

£1m

Programme staff resourcing

RDEL used for up to 1 SEO FTE for programme management and proactive technical engagement*

£0.160m£0.160m

Total £18 m

To note: the budget breakdown in this table is based on previous experience of research undertaken, but each proposal will be considered on a case by case basis and total project costs will be considered against type of research and analysis undertaken benchmarked with comparable projects. Many of the projects may be considerably smaller than outlined above, but would not breach upper bounds presented.

*(based on average SEO annual staff cost of £48.8k per year and additional £15k for travel costs across the 3 years)

Annual and budget type breakdown

Year Amount (£m) Budget (RDEL/CDEL)

2018/19 5 At this stage we cannot determine the specific budget type (CDEL/RDEL). R&D spend should be classed as CDEL and some of the activities intended to be supported through KEEP will meet the HMT definition of R&D8. Some work, particularly Pillar 3, will not meet the R&D definition. There is capacity in BEIS ICF budgets to spend the full KEEP budget as either CDEL or RDEL, therefore the programme manager will work with finance to agree correct budget scoring for each activity on a case by case basis.

2019/20 6.5

2020/21 6.5

Depending on the outcome of the Spending Review for post 20/21 we will also consider putting in place a cut-off point in 2020 for new projects being procured.

Expenditure and results will be monitored monthly by the programme manager and the portfolio management office with the use of a logframe that will capture results for the overall programme. Individual analysts and project leads will be responsible for confirming the quality of the work produced in accordance with the terms of contract.

There is a financial risk that studies will be delayed, and that the disbursement of funds will be later than anticipated. This risk will be managed through strong and dedicated programme management and with each project having a dedicated thematic lead. The risk to spend targets and budgets will be managed through close liaison with ICF PMO. There is limited risk of fraud in this project as funds will only be paid out once the studies (or in larger studies key deliverables) have been received and quality assessed. No BEIS funds will pass to other governments as financial aid.

Procurement approach

There are two main categories of procurement routes within this portfolio:

1) Delivery through procurement frameworks of pre-approved suppliers e.g. EACDS and K4D.

8 HMT Consolidated Budgeting Guidance: https://www.gov.uk/government/publications/consolidated-budgeting-guidance-2017-to-2018 - Annex C (pg 123 onwards)-Guidance on Research and Development under ESA10

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Further details to be found in the Management Case 2) Considering delivery mechanism on a case by case basis

There may be a number of cases (largely in Pillars 2 and 3) where the use of procurement frameworks is not suitable. This may be because the proposal is externally driven and a supplier has approached HMG and/or the project is more suitable for a grant. On these occasions proposals will, with the use of the procurement template (and business case template for Pillar 3) the approach will be considered on a case by case basis with input from finance, legal and procurement teams on both the route taken (see below) along with the implications of approach. Decisions will be approached with proportionate action in mind. Options include (not exhaustive);

The use of the grants (either competitive or sole) – using best practice from Cabinet Office, DfID and BEIS. The decision for this will be made by Finance and Legal based on previously agreed principles and criteria.

Procurements with the use of Single Tender Actions Open tenders (although it is recommended this is done through the frameworks mentioned

if possible) – we anticipate this to be a rare occurrence.

Procurement process

The procurement process under each pillar will be managed as follows (these processes commence at the point when proposals have gone through the shortlisting process, summarised above):

Pillar One (if using EACDS framework, which will be the case in the majority of cases, other frameworks have similar or equivalent processes that will be followed)

i) Proposal sponsor (thematic lead) drafts Terms of Reference for use by EACDS framework with support from KEEP programme manager who identifies chosen lot supplier. The KEEP programme manager is responsible for submitting final ToR to lot supplier.

ii) Lot supplier will provide relevant CVs and cost estimates from sub-contractors interested in bidding for the work.

iii) The proposal sponsor is responsible for leading assessment of bids, with support from the KEEP programme manager.

iv) Preferred bid selected and KEEP programme manager is responsible for communicating this back to lot supplier. This communication will include any negotiations on areas such as fees, again this will be done by the proposal sponsor working with the KEEP programme manager.

v) Call down contract is agreed (using EACDS template). The proposal sponsor is the contract manager and is the contact point for working with lot supplier.

vi) Contract in place. Work is delivered, signed-off and paid for. The proposal sponsor is responsible for checking quality of work and ensuring outputs/lessons are fed back to KEEP

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programme manager. The KEEP programme manager is responsible for ensuring payments are made to the lot supplier as per call down contract.

Pillar Two

i) KEEP programme manager to provide steer to proposal sponsor on appropriate procurement route (procurement or grant, competitive or not).

ii) Proposal sponsor to seek approval from finance, legal and procurement on selected delivery route.

a. If competitive procurement is recommended then process under Pillar 1 is followed. However, the KEEP programme manager must consult/seek approval from EACDS fund manager if proposal exceeds £300k/12 month threshold and/or sub-contractors under selected lot can bid for work e.g. they are the originators of the proposal.

b. If grant is approved, then a decision on whether it is competed is made by finance and legal. The proposal sponsor is responsible for drawing up a grant agreement and getting this signed off by relevant colleagues (legal, finance & procurement). The ICF Deputy Director is responsible for final approval. Grant agreement in place. Process managed as per vi) under Pillar One.

Pillar Three

i) This will be managed on a case by case basis and the expectation is that the process will follow either Pillar 1 or 2.

Exceptions

There may be exceptions to proposals following these processes. These would be where the EACDS framework is not suitable (proposal sponsor does not consider that sub-contractors can deliver requirements and/or length/cost beyond scope of framework) or if another route can be utilised e.g. K4D. Where possible this should be flagged during the process of shortlisting proposals and should be a consideration in the shortlisting process as too many exceptions will require greater use of resources.

It is expected that exceptions will be treated in a similar way to stand-alone procurement business cases and will follow the appropriate procurement process, but with spend coming from the KEEP budget.

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ANNEX A - Knowledge Evidence and Engagement Portfolio: potential pipeline

Strong likelihood of early submission to KEEP

Title Sector Possible Value

Detail Sponsor

Assessing new technologies

Economics /technical/ mitigation

Approx. £70k The ICF team frequently have to assess programmes and project proposals that involve new innovative technology or processes, and it is important to appraise the potential and expected results (in relation to ICF KPIS) as robustly as possible. For example, the recent India CTF proposal involving storage, and whether or not this could claim direct or indirect GHG savings. A literature review, consideration of appraisal of novel low carbon technologies, differing approaches, and principles for analysis in the context of ICF and Green Book guidance would be beneficial. Resources are too limited to undertake this work in house.

BEIS Economists (ICF)

ICF Results Verification

M&E / Analytical Approx. £100k

The ICF has an established M&E framework and collects results and monitors performance for all ICF programmes, this includes quality assurance processes and sense checking project data received from project developers. However, there is variability (in terms of complexity, type, and extent of quality assurance carried out) in the performance data collected for ICF programmes. The risk around self-reporting impacts the robustness of aggregate ICF published results and limits our ability to verify VfM. It would be beneficial to carry out independent spot check results verification to quality assure methodologies and verify actual data collected to the source project (i.e. site visits).

BEIS Analysts (ICF)/PMO

Green Jobs v Brown Jobs research

Analytical / technical

Approx. £70k There is a reasonable amount of evidence available on existing and potential green jobs versus jobs related to fossil fuels, for example, sources we utilise in the joint DfID/BEIS Appraisal Guidance for ICF analysis. However, it would be useful to have a wider source of data i.e. from literature review), and enable sense checking of assumptions. Further detail around jobs estimates would be useful, such as: long term job creation vs shorter term jobs, the quality of jobs (skill level, permanent/contract etc.), geographical spread, potential for skill transfer from fossil fuel industry workers etc.

Joint: FCO/ BEIS (Analysts)

Impact of Technical Assistance in mobilising private

M&E / Analytical Approx. £100k

There is clear evidence that technical assistance and capacity building can often be the most effective way to mobilise private climate finance flows. However, currently there are no robust methodologies available to attribute quantitative results (finance flows,

BEIS ICF Analysts

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finance GHG savings) to TA activities. This is an issue being considered by the OECD Research Collaborative, who are leading the international work to agree consistent climate finance accounting methodology in the context of $100bn reporting. The UK takes a leadership role in this area and with an expanding ICF TA portfolio has an interest in expanding research (this could be via funding work carried out by OECD RC (or planned under their work programme) or independent work related more specifically to BEIS ICF TA programmes.

Update on $100bn roadmap

Analytical / technical / negotiations

Approx. £100k

The 2016 ‘Roadmap’ set out a plan to meet the collective goal of mobilising US$100 billion a year in climate finance for developing countries by 2020. This builds on OECD/CPI 2015 report on progress to the $100bn commitment. An update to the Roadmap would inform developed and developing countries in regards to progress to fulfilling 2020 obligations, but also highlight the challenges of retaining climate finance flows at that level until at least 2015. Useful for negotiations and forward looking ICF strategy.

BEIS Analysts

The future demand for carbon credits as flexibilities to meet NDCs

Carbon Markets Approx. £70k Research looking at future demand for carbon credits, considering time periods up to 2030 and potentially to 2050. Scope would cover multiple geographies and related to NDC achievement and raising of ambition. The research would help guide the UK’s strategy for global carbon markets and our interaction with the development of the rule book. It would inform policy development, ideally from early 2018.

BEIS Carbon Markets team / ICF Analysts

Research that asks the question of how carbon markets can help countries raise the ambition of their NDCs.

Carbon Markets Approx. £70k Research that identifies how carbon markets can help countries raise their ambition of their NDCs could help guide the UK’s strategy for global carbon markets and BEIS broader negotiations strategy to encourage an increase in country ambition and a re-aligning of finance flows. This research would be most useful in 2018. This research could be linked to the proposal above if there was considered to be suitable suppliers that could provide a quality output for both.

BEIS Carbon Markets team / ICF Analysts

Economic analysis of the costs and benefits of different interventions to reduce deforestation and establish forest-friendly industries

Forest and land use sector / Analytical

Approx. £1-2m for an initial project focussing on 1-2 geographies.

There is a gap in the evidence base surrounding detailed quantitative and qualitative assessment of the costs and benefits of forestry interventions. The research would look at the economy, efficiency and effectiveness of real-world examples to draw out lessons on what is most effective interventions in different contexts. Focus on leading jurisdictions, particularly Acre State in Brazil. Package lessons in a way that would be useful for less advanced geographies to learn from. It would include difficult to monetise interventions such as impacts of enforcement of forest law. This would inform ICF programme development to ensure interventions designed to maximise impact and VfM, and also help the design of host government programmes to address deforestation and

BEIS ICF Forestry team / ICF Analysts

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building global confidence in the feasibility and best approaches of addressing deforestation.

REPP replication Private Finance Approx. £100k

REPP supports renewable energy project developers in sub-Saharan Africa (leveraging private finance, and using Results Based finance). It has a technical assistance facility which helps developers with environmental impact assessments, financial structuring and other services up until financial close. Research is required to test how applicable this model is to other geographies. This will feed into decisions regarding extending REPP in other countries/regions. Timing preferably after the REPP midterm formative evaluation in 2018.

ICF Private Finance team / ICF Analysts

Future ICF portfolio:

New delivery vehicles? Gap analysis for ICF portfolio? Next step in private finance for the UK BEIS

Cross cutting Approx. £100k

Overarching research is required to help inform and build the evidence base to shape the ICF portfolio into the future. The scope and specification of this research would be designed within the context of existing and planned research at the time – so it filled gaps and verified, rather than duplicated. Keys areas of analysis could cover: demand for climate finance; BEIS and HMG ICF priorities; status (i.e. how near to closure) of existing ICF programmes; need for new ICF vehicles; issue of future negative ODA (from projected repayments to loans).

ICF PMO / Commercial / Analysts

Non GHG benefits / costs of interventions

Cross cutting / Analytical

Approx. £70-100k

There is a need to ensure the most robust and appropriate appraisal methodologies are being applied when assessing ICF proposals. Increasingly ICF analysts are considering more ‘non-traditional’ mitigation sectors. For example: pollution/congestion benefits of transport initiatives; waste/recycling projects; Energy Efficiency projects (sub-sectors requiring different approaches); and wider/indirect benefits. There is currently a gap in our evidence base and guidance on methodological decisions around these areas.

ICF Analysts (with engagement with DfID and Defra analysts)

Review of IFC GHG modelling approaches

Cross cutting / Analytical

Approx. £70-100k

There is a need to ensure the most robust and appropriate appraisal methodologies are being applied when estimating potential GHG impacts due to ICF proposals. Research would enable ICF analysis to be updated to ensure it aligned with appropriate best practice and approaches and remained robust to the breadth of scope of the latest and planned ICF portfolio. Specifically it would consider: - Consistency with MDB and other country analysis,- country/sector specific discount rates, - analysing loan repayments and re-investments, - Differences in modelling of grants, loans, guarantees and other financial

instruments.

Joint: ICF Economists, DfID Economists and Defra Economist

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- Sensitivity analysis approaches.- Monte Carlo/uncertainty analysis required- Wider economic values (this proposal could be linked with proposal above on non-

GHG benefits).Further information required but strong Potential for submission to KEEP

Modelling and assessing private finance proposals

Cross cutting / Analytical

Approx. £70-100k

Potential to carry out research that reviews existing ICF analytical approach for private finance interventions, and preferably from other institutions that analyse comparable interventions, and make recommendations on our approach. This could be combined with actual production of modelling required for an ICF private finance proposal in 2018 as a means to demonstrate the improved methodology. Issues that would be covered would include: any appropriate benchmarks; sense checking leverage assumptions; risk of optimism bias; establishing robust estimates of additionality; evidence for rationale for level of concessionality.

ICF Analysts

Gas and energy system transformation

Energy markets Approx. £70k Further research required to assess the contribution of gas to promote international energy system transformation: impact on decarbonisation and inclusive growth.

FCO

Case studies on Growth

Energy markets Approx. £50-£70k

Further research required to produce case studies demonstrating the direct inclusive growth benefits and indirect co-benefits from improved functioning of power markets over a breadth of geographies.

FCO

Energy planning and NDCs

Energy / regulation

Approx. £50-£70k

Further research required to help understand how to make better connections between energy planning by Governments and implementation of NDCs in developing countries.

DFID

Integrated assessment models review

Analytical Approx. £100k

Work is required to improve and develop the existing integrated assessment models that estimate the impact of climate change and their effects on drivers of growth.

DFID

Marginal Abatement Cost Curves (MACCs)

Analytical Approx. £100k

Further work is required to update and develop existing analysis related to MACCs, specifically separating national co-benefits from global externalities. This would help build underlying climate change evidence base.

DFID

Tracking global climate finance

Analytical Approx. £100k

The CPI landscape report tracks overall climate finance (i.e. total global flows, not just those flows that align with $100bn goal definition and accounting methodology assuming only finance mobilised from developed countries). The last time the report was produced was in 2015, and the numbers were used for the 2016 SCF Biennial Assessment. If CPI do not produce this report again for 2017 then there would be a data gap in the 2018 BA, and potentially KEEP could fund, given BEIS ICF interest in this data.

BEIS Analysts

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https://climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2015/

Programme effectiveness analysis

Cross cutting / Analytical

Approx. £100k

Identifying key areas that require focused effectiveness analysis to inform the strategy and provide lessons learnt for the future ICF portfolio. For example, looking at private finance mobilised by different projects by different sector, region, instrument used, and particularly by ICF Technical Assistance/Capacity Building projects.

ICF Analysts

Biodiversity and climate change

Forestry / Analytical

Approx. £70k Further evidence is required to understand the link between forest biodiversity levels, carbon content, and climate change impacts. Research would cover broad geography and identify key hot spots for biodiverse forests and potential for climate benefits. This work would help inform ICF strategy and portfolio related to forests.

Defra

Costs of deforestation

Forestry / Analytical

Approx. £100k

Evidence gaps exist around the opportunity costs of deforestation in the main countries where UK ICF operates. Better data and evidence on this would help inform project development and ensure interventions were designed that had better potential at changing the incentives related to deforestation.

Defra

Future projections on deforestation drivers-

Forestry / Analytical

Approx. £70k Evidence gaps exist around future projections of deforestation drivers in ICF target geographies, how projections of baselines may change, and how this will impact existing ICF projects and future intervention design. This would consider commodity price forecasts and relationship with future deforestation rates.

Defra/ BEIS ICF Forestry team

Market research for a PACE-like programme within the ICF priority countries

Private Finance Approx. £50-150K

PACE (Property Assessed Clean Energy) legislation is a means of financing energy efficiency upgrades or renewable energy installations for residential, commercial and industrial property owners. There could be useful research to be done to consider the conditions where this type of programme is successful, its potential fit with the ICF strategy and any links to existing ICF work with green bonds and the city of London. Timing would be around 2018-2019.

ICF Private Finance team / ICF Analysts

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ANNEX B – Tier 1: Overarching options analysis

Five options were considered using four criteria in the tier 1 options appraisal. This analysis is set out in the table below with indicative rag ratings.

Delivery Option Delivery in timely manner Ability to deliver research/engagement activities

Flexibility Cost and

Resource time

Option A; Support initiatives as set out in recommended approach (i.e. 3 pillars with tailored procurement and approval routes)

3 pillar routes designed to provide clarity and streamlined process to approve and commission research, enabling efficient, nimbler, processes without sacrificing scrutiny.

Tailored procurement routes and ability to respond quickly, coupled with better oversight and communication of cross cutting evidence, will deliver against ICF and int. climate change research needs, and enable a more strategic approach to be taken to the overall evidence base for ICC.

Tailored procurement routes allow maximum flexibility given the different requirements for each Pillar.

This option will require significant additional ICF policy and analysts time (see ‘resourcing required’ in Management Case) linked to oversight of increased volume of research work and delivering objectives around communication, dissemination and knowledge management.

Option B; Individually procure each evidence and engagement proposal/need.

The time taken to procure individual research or engagement proposal would mean not delivering many pieces of work at the most effective time; this reduces impact and VfM of the project.

This option would allow some research and engagement activities to come through: most likely 1 or 2 studies per year (max) could be undertaken, severely limiting the evidence base that is used to develop ICF programmes and policy. There is no reason why research and engagement work procured would not be of comparable quality to option A. But projects would likely have to

Potentially individual procurement could allow for flexibility, however, this approach may be difficult to apply in any opportunistic or reactive activities (likely to be a problem for Pillar 3 where engagement opportunities are often reactive and time bound). This approach would be more workable for more overarching evidence requirements that were not directly related to ICF project

Particularly for Pillar 1, this would involve significant policy and analyst time over and above Option A. Even if ICF staff resource was increased to allow for this it would also have knock on impacts on the volume of project proposals that would need to be considered by other BEIS teams such as legal and finance. This approach could be possible for the larger individual cases, but these are still likely to be

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be more overarching research proposals rather than specific research related to ICF investments.

development or time critical policy decisions. In practice flexibility would be held back by timing and resource constraints.

very resource intensive with at least 1-2 a year having to be taken through a full Business Case, Research and Evidence Committee, Ministerial approval and procurement process.

Option C; Conduct all evidence and engagement work in house

This option would not achieve research and engagement activities in a timely manner. The expertise and staff resource is not available in house, especially for projects that require detailed developing country/local knowledge and/or technical knowledge.

Only very limited desk based research (e.g. literature reviews) and communication activities could be carried out, which would be unlikely to have significant impact therefore this would be unlikely to deliver much over and above the do nothing option.

This option would not provide any flexibility in terms of procurement options.

The resource capacity and expertise required to undertake this work means this option is unworkable to meet the objectives set out in the Strategic Case (i.e. only limited research activities could be done even in ICF resources were increased).

Option D; Subcontract all evidence and engagement work to one external organisation (this is considered infeasible due to the depth and breadth of expertise required - no single organisation could deliver this - therefore RAG rating here refers to viable alternative of managing partner

Potentially a managing partner could present a solution to ensure research and engagement work could be procured in a timely fashion by operating the three pillars in a similar manner to option A. However, this option would take a long time for initial procurement which could lead to delays in procuring urgent research.

The agreement and framework set up between BEIS and the managing partner could deliver research and engagement activities to respond to demand. However, an additional layer is likely to result in some inefficiency or potentially less take up from OGDs who may consider the process more burdensome (this would especially be the case in Pillar 1 where most of the volume of projects are expected). BEIS may find the objectives around communicating and networking to better disseminate research more challenging though a third party.

The agreement has the potential to deliver flexibility. However, there is more uncertainty via this option and the ability for the managing partner to be able to offer flexible solutions to such a potentially diverse range of demands. For Pillar 1, arguably this would be less flexible as an additional layer would be added in comparison to option A.

Given the potential for Pillar One (which will represent the largest number of projects) to go through DfID’s EACDS framework and the framework already having a managing partner, another layer would not be appropriate or justifiable from a cost (or need) perspective.

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that would sub-contract research).

Option E; Do nothing (i.e. do not carry out any research, evidence building, or engagement activities outside what is already planned under existing programmes)

This option does not address the current gap in our ability to procure and obtain research and engagement activities to fulfil objectives.

This option means no research, evidence building, or engagement activities outside what is already planned under existing programmes will be carried out. This would result in a significant research and evidence gap for the international climate work within HMG and internationally. The most immediate impact would be that the development of international climate finance business cases and strategy would, unfortunately, be less evidence based. It also means that the research that is in existence may not be as well communicated and utilised.

This option does not address the current gap in our ability to respond flexibly to diverse research and engagement requirements. It limits the number of requests we can respond to and means we may not be funding the most impactful or VfM activities. For example, evidence would be limited to what is already in existence, and that produced by delivery partners and may, due to this limitation, lead to less innovative UK Climate Finance and policy and reduce our ability to influence in our priority areas.

There would be no immediate cost or resource implied with this option.

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ANNEX C – Tier two: Analysis on procurement options Assessment criteria / option

1. Project specific procurement route

2. Use a preferred framework for all appropriate projects

3. Procure single supplier for all projects

4. Single tender action

5. Set up own framework

VfM High (5): *Enable full market to bid for work.*Tender documents can be better tailored to specific project needs. *Could result in better quality bids

High /Medium (4): *Framework already used and tested for VFM*Focussed supplier list provides assurance on ability to deliver*Could exclude preferred suppliers not on framework although exceptions and additions can be made.

Low /Medium (2):*Limits competition and restricts access to market.*Single supplier could sub-contract but will involve additional layer of admin costs compared to option 2.

Low (1):*No competition*Full available market not able to bid for work.

High / Medium (4):*Similar outcome to option 2 – but could lead on wider access to market and a more suitable preferred supplier list.*Framework requirements might need to broad enough in scope to attract suppliers

Resources High/Medium (2):*Business cases and tender documents will take longer to write/approve*Some procurement routes (OJEU) have longer timeframes*Assessment of bids will require more time

Medium /Low (4):*Light-touch business case and standard tender documents – but still requires some tailoring per project*Framework contracts are already negotiated*Shorter timeframe for bids and more straightforward assessments.

Medium /Low (4):*Initial resource effort on procuring supplier, value will probably mean using OJEU route.*Individual project proposals can go through process agreed with supplier – trade-off between light-touch approach and greater BEIS oversight/involvement.

Medium /Low (4):*Won’t require tender and bidding process*Would need case by case approval

High (1):*Setting up framework takes approximately 9 months*Would still to run individual project tenders within framework

Procurement best practice

Medium (3):*Advice is to use framework if one available

High (5):*Uses suitable framework in line with best practice

Low /Medium (2):*Not using a suitable framework* Bundling diverse needs into one tender is not advised.

Low (1):*Not advised and unlikely to be approved.

Medium (3):*Would need to justify that there is not an existing framework suitable for our

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needs.Flexibility Medium/Low (2):

*Will be difficult to adopt a nimble approach*Will need to adopt different processes depending on procurement route

Medium (3):*Straightforward and nimble approach when in scope of framework rules*Potential challenge if project ideas fall outside for framework scope

Medium /High (4):*Could be nimble and straightforward once supplier is in place.*Reliant on supplier being able to deliver/sub-contract work – if issues we may be locked into longer-term overall contract

Medium /Low (2):*Would be nimble if approval of each case is straightforward

Medium /Low (2):*Time to set-up framework might require use of interim option*Once framework is set-up then assessment is similar to option 2.

Total score 12/ 20 16/ 20 12/ 20 8/ 20 10/ 20

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ANNEX D – KEEP Theory of Change

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ANNEX E - Draft KEEP Logframe

Summary Indicators Data Source Risks / Assumptions

Impact Policy and programming interventions around the world transform the political and economic landscape in ways that move countries towards ambitious low carbon pathways that avoid emissions.

Assessment of transformational change potential

KPI 15 methodology Assumptions:

We will not be able to see this change, so will need to rely on the outcome assessment of KPI 15, to assume contribution to the overall impact.

Impact unlikely to be visible in the lifetime of the programme

Outcome To positively influence through the use of robust evidence both global conversations and the way climate finance is spent, in support of a well below 2 degree pathway

Assessment of transformational change potential (incorporating stakeholder feedback)

KPI 15 methodology Annual stakeholder forum

(potential)

Output 1 Robust evidence created

No. of Research reports, evaluations etc. produced that are judged as robust.

Bid proposal documents; final project before/after reports;

Credible reports influence policy and programme decisions.Evidence and activities supports a well below two degree pathway

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Output 2 Effective international or bilateral communication and engagement activities take place that draw on the robust evidence created under this programme

Number of events that take place with significant use of the evidence

Quality of the events as judged by attendees.

Feedback response forms within projects

Management information

Engagement activities supports a well below two degree pathway

Output 3 Evidence used in HMG Business Case design.

% of new business cases developed by HMG that draw directly from the evidence created

Management information Evidence supports a well below two degree pathway

Output 4 Evidence used in HMG policy and strategic documents

No. of new strategic and policy documents developed by HMG that draw directly from the evidence created.

Review of business cases Evidence supports a well below two degree pathway

Output 5 Evidence used by international partners

Qualitative assessment of evidence use internationally in policy design, NDC ambition, private sector design etc.

stakeholder consultation / survey

Evidence supports a well below two degree pathway

Activities / Management 1

KEEP is an efficiently managed process

Proportion of users of the system rates the framework as fast and easy to use

% of commissioned research for BC was delivered in time to provide impact

stakeholder consultation / survey

There is demand for the evidence

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Activities / Management 2

Pillar 1: HMG Research is identified and commissioned

No. of project identified and commissioned

Management information Evidence is published

Activities / Management 3

Pillar 2: Proposals are submitted and funded

No. of proposals received from externals

Management information Proposals align to stakeholders needs in the future

ANNEX F – RISK TABLE

The table explores risks associated with this portfolio further. The category of risk response is included in the ‘Mitigating action’ column and follows the ICF guidelines for risk management.

Risk Likelihood Impact Mitigating action

Significantly lower or higher number of proposals received compared to expectations.

Medium If lower than expected proposals (that meet criteria) are received then the ability to deliver the objectives set out will be diminished. If this was persistent, then it would have VfM implications in regards to sunk costs related to setting up the procurement processes and governance framework. Higher than expected demand will increase competition for funding, this could drive standards up, but could also mean quality proposals did not receive funding at time critical opportunity.

Reduce: Effort has been taken to assess demand from key teams across BEIS with a direct international climate change focus, see Annex A for pipeline information. However, this is inherently uncertain, and priorities for research and evidence and availability of staff resource could change. Perverse incentives to spend the allocated budget are minimised by setting clear criteria for proposals which is based on reaching a threshold and not having an annual target that would be considered critical to meet ICF spend in any given year.

A communications and promotion plan will be put in place to ensure all relevant departments and BEIS teams are aware of the opportunities and objectives of the portfolio and are clear on the process and timings to apply to the fund, and international teams are able to proactively identify potential proposals or up-coming events/engagement activities that should be considered under this portfolio.

Prepare contingency plans: Consistently higher than anticipated demand from proposals meeting the criteria and quality standard could trigger consideration to develop an extension Business Case at a later date. However, the headroom built into the budget is considered adequate to provide flexibility for higher than anticipated demand.

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Duplication of effort with other research undertaken by HMG, other knowledge platforms and BEIS’s academic network on energy

Medium Reduced VfM and impact for individual projects and overall programme (including resource time and budget).

Reduce: Key role for programme lead to develop evidence and knowledge network to minimise duplication, and ensure evidence builds on what is already available or planned. The regular communication with the Research and Evidence Committee and other ODA spending Government Departments will help mitigate this risk.

This role will be crucial in designing and driving forward action in this area, and ensuring the right actions are taken to communicate, promote and encourage use of the research and evidence that is generated. These objectives will be monitored as part of the M&E of the portfolio.

Ineffective dissemination within BEIS, OGD’s and external stakeholders

Low Individual projects may deliver direct benefits in terms of providing evidence to inform Business Cases or supporting negotiation objectives, but wider objectives on knowledge management, sharing and improving research will not be achieved (as above).

Reduce: Each project will be required to produce a dissemination plan and this may be factored into the budget. BEIS programme manager will help ensure these are of an appropriate quality. All outputs will be published.

Time slippage will mean studies are not useful for business case design and will reduce the returns to investment

Medium Business Cases will not benefit from required research and evidence and potentially good proposals could be rejected (or not taken to Approvals stage) or may not be designed optimally due to uncertainty (which lowers impact and VfM of ICF spend).

Reduce: Pillar one has the key objective of balancing a time efficient route to commission and deliver evidence and the need to ensure robust scrutiny of research proposals. This has worked via the previous DfID Low Carbon Studies programme and the chosen frameworks are designed with time pressure in mind. However, given the often unpredictable nature of ICF project development, and availability of suitable suppliers this risk is still rated as medium. Key will be the delivery of proportionate approach from Finance, legal and Procurement in line with the service level agreement set out in this Business case.

This risk can be mitigated further by ensuring research tenders are designed to ensure ongoing relevance and the ability to feed in evidence at later stages of programmes, e.g. in finalising contracts, agreeing project proposals or agreeing log-frames.

Involvement and buy in from finance, legal and procurement will be vital in ensuring this risk is mitigated.

Difficulty in robustly measuring the overall effectiveness of the portfolio

Medium Inability to robustly demonstrate VfM of portfolio, which weakens overall VfM position for ICF.

Reduce: A key objective of the portfolio is to set out an ambitious M&E plan that will agree clear outcome indicators, directly related to the responsibilities of the project lead and delivery partners, that will enable the benefits of the increased use and communication of evidence and strategic engagement activities to be monitored.

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However, this risk remains medium given the inherent difficulty in robustly judging performance for programmes without direct quantitative results such as CO2 savings.

Risk that engagement activities are ineffective, through poor choice of timing, audience or messengers

Medium Directly reduces VFM and potential for wider transformational change

Reduce: All engagement activities will be required to clearly identify their proposed objectives, audience, communicators and methods of engagement, justifying their choices and how this maximises the potential for changing real decision making. BEIS programme manager will ensure these are quality assured within HMG, and with suitable external contacts.

Insufficient quality of commissioned research and evidence

Low Research and evidence deliverables that were below the required professional or academic standard would have a significant impact on the objectives and credibility of the portfolio.

Reduce: The governance process proposed is designed to ensure safeguards are maintained and all research and evidence proposals meet the agreed criteria. The programme M&E process will require feedback from each project in terms of demonstrating the quality of final outputs, intended and then verified use and how it has been communicated. In the event a project fell short in terms of quality, this would be reported and lessons learnt recorded as part of the ICF Annual Review process.

Significant Delays to publication of reports

High Arguments that reports are a global public could (as funded by ODA) are called into question.

Evidence is not available to those who need it, stopping the programme achieve intended impacts.

Reduce: By having one dedicated programme manager, scheduling an annual publication process of all reports, the process for publication should be significantly more efficient than the alterative (publishing each report independently.)

DFID framework capped rates prevent some suppliers bidding for work

Medium Suppliers with higher daily rates cannot bid for work called down from framework. This could include expert suppliers whom we consider being able to deliver high quality work. Overall result is quality of evidence is reduced.

Reduce: Monitor quality of bids and range of suppliers when using DFID frameworks. Agree the use of a minimum benchmark score when setting assessment criteria to help ensure quality.

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