Partnership for Market Readiness

Summary

The Partnership for Market Readiness (PMR) was a collaborative initiative of developed and developing countries, administered by the World Bank from 2011 until its conclusion in June 2021. Established to utilise market instruments to scale up mitigation efforts, primarily in middle-income countries, the PMR initially aimed to prepare countries for participation in international carbon markets. Over time, it adopted a more flexible approach, providing grants and technical support for the design and implementation of various market-based tools contributing to mitigation efforts.

Basic Description

Name of the Fund

The Partnership for Market Readiness (PMR)

Official Fund Website

The official website for the PMR is no longer active.

Date Created

Date fund proposed: 2010.

Date fund made operational: 2011.

Proposed Life of Fund

The PMR was operational from 2011 to 2021.

Objectives

PMR’s objectives were:

Providing grants for countries to build market readiness components
Piloting, testing, and sequencing new concepts for market instruments
Creating a platform for sharing experiences and information about market readiness, promote south-south cooperation and innovation
Creating and disseminating a body of knowledge on market instruments that could be tapped for country-specific applications
Sharing lessons learned, including with the UNFCCC.

Financial inputs and fund size

As of the time of closing of operations, cumulative pledges to the Fund amounted to approximately USD 131.5 million.
The contributing countries were: Australia, Denmark, the European Commission, Finland, Germany, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom and United States.
The contributions from donor countries were included as Official Development Assistance (ODA).

Activities Supported

The PMR supported developing countries in using market-based instruments to scale up greenhouse gas (GHG) mitigation efforts. The PMR assisted countries in preparing carbon policy choices and their implementation by focusing on readiness components such as:

Monitoring, Reporting, and Verification (MRV) systems
GHG inventories and emission reduction registers
Legal and institutional frameworks
Pilot activities

Countries ready to design and implement carbon pricing instruments utilised the PMR platform to pilot these initiatives. The development of readiness components and piloting efforts were encapsulated in the Market Readiness Proposal (MRP), for which the PMR provided grant financing.
To enhance support, the PMR developed two additional work programmes:

Technical Work Programme: Generated knowledge products and facilitated exchanges on technical elements related to carbon pricing, establishing common standards and approaches for GHG mitigation
Policy Analysis Work Programme: Offered in-depth support to countries for modeling the costs and benefits of policy options, analysing policy interactions, and integrating this analysis into low-carbon development plans and strategies.

Administrating Organization

Secretariat or Administrative Unit	The World Bank served as the Secretariat of the PMR. It provided secretariat services and technical support for day-to-day operations.
Trustee	The World Bank acted as the permanent trustee.

Fund Finance and Access Modalities

Conditions and Eligibility Requirements

To become eligible to access funding, a country needed to complete a MRP, which was an action plan for designing and piloting market-based instruments for GHG mitigation.
There were 19 ‘Implementing Country Participants’ in the PMR, including a number of middle income countries. The 19 PMR programmes were implemented in Argentina, Brazil, Chile, China, Colombia, Costa Rica, India, Indonesia, Jordan, Mexico, Morocco, Peru, South Africa, Sri Lanka, Thailand, Tunisia, Turkey, Ukraine, and Vietnam.
There were also four developing countries among the PMR technical partners, which do include developed countries, namely Côte d’Ivoire, Kazakhstan, Panama and the Philippines.
The country eligibility was not restricted to ODA eligible countries.

Accessing the Fund

Access Modalities – The countries that were interested in becoming ‘Implementing Country Participants’ submitted an expression of interest to the Secretariat. A country was then invited to present an Organising Framework for the Scoping of PMR Activities. The framework presented the types of activities a country was prepared to explore in its Market Readiness Proposal, including:

Overview of a country’s mitigation objectives and emissions profile
Potential core readiness components (and potential market-based mechanisms if a country is at this stage) for development
Identification of sectors to be targeted
Inclusion of other relevant work streams that could complement the PMR work.

The Organising Framework was presented to the Partnership Assembly (PA) for consideration and endorsement.
Once the Partnership Assembly had endorsed the Organising Framework, the country participant used the preparation phase funding (USD 350,000) to prepare a MRP. The MRP provided “a detailed roadmap of the market readiness components and – if appropriate – market-based mechanisms a country intends to explore as part of its participation in the PMR. The MRP also included a timeline and budget for these activities”.
During the preparation phase, draft MRPs received feedback from two entities: an independent expert group with technical expertise specific to the proposal; and other PMR Participants during a presentation to the PA. Following revisions based on this feedback, a final version of the MRP was submitted to the PA for consideration of funding.

Financial Instruments – Grants.

Accreditation process – While there was no formal accreditation procedure, countries interested in accessing funding under the PMR needed to complete and submit a MRP, which was an action plan for designing and piloting market-based instruments for GHG mitigation.

Overview of implementing entities – The implementing entities were exclusively government ministries and agencies. However, the national implementation strategy generally included a multi-stakeholder domestic approach complemented by expertise from the World Bank, the PMR Secretariat, and external experts.

Nature of recipient country involvement – The recipient countries’ governments were the main driver of the development and implementation of PMR programmes. To join the PMR as an ‘Implementing Country Participant’, a governmental entity needed to prepare its national mitigation objectives and emission profile as well as the MRP. Then, it had the responsibility to implement the MRP. All programmes had their own designated National Focal Point (e.g. the Ministry of Natural Resources and Environment of Vietnam, the Department of Environmental Affairs of South Africa), which worked as a liaison agency and had the responsibility to coordinate and implement the country’s market readiness proposal.

Allocation criteria – During its operational period, the PMR provided financial support to participating countries in two main phases:

Preparation Phase: Countries could access a preparation grant of USD 350,000 to assist in formulating a MRP. This proposal served as an action plan for designing and piloting market-based instruments for GHG mitigation
Implementation Phase: Upon approval of the MRP by the PMR’s governing body, countries were eligible for implementation funding ranging from USD 3 million to 8 million. This funding supported the execution of readiness components outlined in the MRP, including the piloting of proposed market instruments. The exact funding amount and disbursement were contingent upon the MRP’s approval and adherence to the PMR’s evaluation criteria.

Safeguards, Gender and Indigenous Peoples

Safeguards – The World Bank’s social and environmental safeguard policies applied to all PMR programmes.

Gender – The PMR was subject to the World Bank’s gender strategy, but had no own gender action plan.

Indigenous Peoples – The PMR programmes aligned with the World Bank Environmental and Social Framework’s Standards 7 and 10 which required that meaningful consultation was conducted with Indigenous Peoples’ groups. This included the necessity to obtain the consent of Indigenous Peoples before starting programme activities that affected them.

Fund Governance

Decision Making Structure	The PMR was governed by the Participant Assembly, the Technical Partners and the Delivery Partner. Participant Assembly The Participant Assembly was the decision-making body made up of representatives from all of the 19 Implementing Country Participants (countries that participated in the PMR) and 13 Contributing Participants (donors that had contributed financially to the PMR). Decisions about PMR funding allocation were made by the Partnership Assembly, which met two to three times a year. Meetings were co-chaired by elected participants – one from the Implementing Country Participants and one from the Contributing Participants. Decisions of the Partnership Assembly were made by PMR Participants on a consensus basis. In the case that all efforts to reach a consensus had been exhausted and no decision had been reached, a decision was taken by a two-thirds majority of contributing participants and the votes of two-thirds of Implementing Country Participants. Technical Partners The Technical partners represented “countries or sub-national jurisdictions that are at an advanced stage of carbon mitigation policy development”. These partners did not participate in decision-making but contributed importantly to the PMR’s knowledge exchange. World Bank The World Bank acted as the “Delivery Partner, overseeing the implementation of PMR funding to Implementing Country Participants”.
Accountability Mechanisms	There were three existing mechanisms of monitoring and evaluation. Independent Evaluation at the programme level Two independent evaluations were conducted in 2015 and 2018. The first evaluation was carried out by the University of Southern California’s Development Portfolio Management Group whereas the second was undertaken by Ipsos MORI and SQ Consult. Monitoring and Evaluation at the country level Implementing Country Participants needed to present an Implementation Status Report (ISR) every year. ISRs were available on the countries’ individual pages. In addition, the PMR Secretariat presented a monitoring report on country grant performance at each Partnership Assembly meeting. Monitoring and Evaluation carried out by PMR Participants The United Kingdom had its own annual evaluation of PMR.
Participation of Observers and Stakeholders	Stakeholders participated in decision-making through their representation in the Participant Assembly. PMR Observers included countries, multilateral development banks, UN organisations and other non-governmental organisations. The observers were associated with the dialogue on market readiness and market-based approaches at PMR meetings and events. In addition, technical experts provided feedbacks on country proposals and participated to workshops and trainings.
Transparency and Information Disclosure	PMR did not have a formal information disclosure policy but the Partnership Assembly meetings’ documentations and presentations were publicly available on PMR official website. With the PMR’s conclusion in June 2021, and the deactivation of its official website, accessing these documents may require contacting the World Bank for further assistance.
Other Issues Raised	Over the years, some members of the Participant Assembly had expressed concern with PMR Secretariat’s transparency regarding implementation grant and budget allocation decisions, reporting, and consultant selection. Additionally, some members of the Participant Assembly wanted more information about the Secretariat’s coordination and relationship with the World Bank, as well as greater clarity about the eligibility and selection of non-voting Participant Assembly members and Technical Partners TPs. In the past, the non-governmental organisation Carbon Trade Watch criticised the operations and approach of the PMR, broadly challenging its focus on market readiness, which they argued “is designed to expand a carbon trading system that has proven to be environmentally ineffective and socially unjust.” At the time of its establishment, they critiqued the PMR for “pre-empt[ing] international negotiations on controversial new carbon markets” during the UN climate negotiations in Durban in 2011. They noted that the market proposals favoured by the PMR, including “sectoral crediting,” were controversial within the UNFCCC negotiations, and accused PMR of bypassing negotiations entirely. Carbon Trade Watch also pointed out that the PMR grants provided only part of the cost of project development.