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Challenges of crafting ambitious and transformational climate action projects

Based on the provision of technical support to several project applicants in the preparation of so-called project outlines on behalf of the Mitigation Action Facility (MAF) some lessons learned, and conclusion can be drawn regarding the difficulties many applicants from the Global South face. The time and human and financial resources required for developing full-fledged applications based on first concepts are often underestimated. Understaffed and capacity and time-constrained proposal development teams on the side of the applicants are overwhelmed by the amount of work and the expertise required by preparing convincing and theory of change based, transformative and bankable applications. At the same time filling the pipelines of funds and facilities with such projects becomes increasingly challenging as well. Hence, there is an inherent interest on both sides to invest time and resources into developing feasible and bankable projects.


This blog delves into some lessons learned based on the experiences from technical support provided during two rounds of applications to MAF, i.e., in 2023 and 2024. Limited and tailored assistance was provided to selected candidates, trying to bring their applications to the next level by developing convincing project outlines or full-fledged proposals. In particular, areas such as GHG emission reduction calculations, business model development, collection of data, analysis and design of a financial mechanism, a budget and a detailed project preparation (DPP) concept, amongst others, need to be covered.



Source: Mitigation Action Facility 2025
Source: Mitigation Action Facility 2025

Resource constraints and timing

There are applicants that do underestimate the amount of time and resources required to bring a project concept to the next level, a competitive full-fledged proposal or project outline in the case of MAF – bearing in mind that the time for developing the outline after the approval of a concept is approximately two months. Aside from this being a significant step change between what it means to prepare a project concept and a project outline, which is often not understood by applicants, the short timeframe often leads to challenges. Government agencies that must comply with interagency or ministerial processes, for instance, may require a significant amount of time for such processes. Even more so, the time available to move forward with engaging with additional funding sources that may complement the funding to be provided by the funding source at hand (here MAF) can be difficult or is not aligned.


Applicants often lack the skills and expertise to develop the demanding project outlines, particularly but not only when it comes to developing sound GHG mitigation potentials and related calculations or designing financial mechanisms that demonstrate real transformational change and related ambition. Some applicants do need some time to realize this, often it is too late in the process then. Many do not have the (financial) means to complement this lack of expertise with experts and consultants within the given time.


Grasping (the design of) transformational interventions

Another fundamental challenge that is frequently encountered is a lack of understanding or grasping the overall aim and the underlying philosophy of funding or facilitation mechanisms like MAF - supporting or providing seed funding to innovative initiatives or projects that are of transformational nature, indeed. This is about initiating transformational change in a sector, for instance, and providing seed funding for kick starting ambitious GHG mitigation projects as well as leveraging public and private investments.


Obviously, this lack of understanding is related to the abovementioned lack of resources and preparing interventions with ambitious and transformational GHG mitigation and financial potential, showing clearly how they can be scaled up and replicated based on a related rollout plan. There is a crucial and challenging distinction when looking at a project timeline of 5 years and an 'impact timeline' of another 10 years thereafter. Simple grant-based project proposals do not provide for this transformational change and ambition potential.


Again, understanding the step change when moving from concept to full proposal stage is related to the abovementioned transformational and ambition potential. Increasingly demanding application processes and compliance with the funding criteria such as by MAF require successful applications developed by teams with a variety of skills and experiences to do so. The backbone of such applications is a project design that is based on a theory of change and a results-based framework that demonstrate how a transformational and ambitious project can realistically be rolled out, implemented and measured over the course of 5 and then another 10 years.


This framing translates into more complex project designs, compared to a ‘usual’ donor project cycle of three to four years, including financial mechanisms that blend different instruments and sources. At the same time direct and indirect GHG emissions reductions take place over 5 and further 10 years, respectively. All this requires a proper and more complex project structuring, which is challenging for many applicants and, unless this has already happened beforehand, can lead to the development and submission of weak, unconvincing or non-competitive project outlines. This weakness is often reflected in the inability or feeling overwhelmed by the demands regarding stakeholder engagement required at this stage of the process, unless this has already happened beforehand, at least partially. Engaging with private sector players such as SMEs, financial institutions like commercial banks and development banks, government agencies, and other actors can be overwhelming and is related to proper (prior) planning and the abovementioned ability to mobilize additional resources, if needed.


Financing and business model challenges

The design of respective financial mechanisms that allow or enable such ambitious and transformational projects to be implemented and delivering the related GHG emission reductions are a crucial part of grasping the underlying philosophy and crafting the related proposals or project outlines. This is about blended finance, combining grant, debt and innovative finance (e.g., revolving fund models) packaged in a way that the implementation and roll out over 5 and then another 10 years seems feasible and can be reasonably assumed. Additionally, many applicants struggle to understand the role of the private sector and the mobilization of private finance, apart from private sector applicants or related partnerships. Such private sector engagement and bringing private investments to the table or to a project requires the development of viable business models with the ability to be scaled up and replicated to be transformative and ambitious enough – delivering respective ambitious GHG emission reductions (see above).


The inability to design the abovementioned financial mechanisms is linked to lack of knowledge about the climate finance landscape, its actors and workings. Many applicants struggle with clearly understanding what climate finance is, where does it come from and how to access the finance. Even more so, structuring projects making use of innovative financial instruments like green or impact bonds, securitization (green assets securities), impact investments, results-based financial incentives and policies, services to SMEs (incubators), initial finance mechanisms (seed capital) and SME development finance (private equity, mezzanine finance, etc.) require sophisticated financial expertise.


The way forward – filling the pipeline with feasible, ambitious and transformative projects

Many applicants face a lack of capacities and technical hurdles as part of the demanding process when putting together feasible, bankable and convincing proposals. Hence, the pool and potentially ambitious projects entering the pipeline and eventually contributing to and filing the portfolio of mechanisms like MAF are limited.


These developments require such climate action facilities or similar support programmes, whether attached to an existing fund or funding programme or independent, to react. The inherent nature and the mandate of such facilities and funds are to find or attract and eventually finance such well-prepared project applications. They should lead to the expected transformational climate actions that they are asked to finance by their donors. Finding enough such projects is a challenge due to the increasing complexity and technicalities in designing measurable interventions that justify the use of scarce public (climate) funding. Thus, ramping up the supply and uptake of the required and wanted quality projects needs to rely, inter alia, on measures such as the following; here in the case of MAF.


  • Improved, tailored and easy-to-understand guidance material: Guidance materials and documents as well as visuals like tutorials need to better explain (incl. successful examples) aspects such as: innovative financial mechanisms that leverage private and public finance for sectoral transformation; addressing identified barriers with technical assistance; thorough stakeholder engagement from the beginning (incl. addressing gender matters); realistic, achievable, conservative and cost-effective GHG mitigation potential; competitive funding and resubmissions addressing previous failures. They should be discussed with the selected candidates at the beginning of the process and before providing actual assistance.

  • A dedicated guidance document on preparing a successful project outline should cover the following, amongst others: engagement with project partners early on in the process; definition of roles and identification of proposal and project design team members with required financial and business knowledge and experiences; engagement with target groups and financial institutions as soon as possible; provision of well-reasoned and transparent data which underpins the financial, business and GHG models; projects have to be well-designed, transparent, financially sustainable, and attractive to investors; emphasis that different partners/groups (e.g., financial, technological) continuously communicate to ensure the project is fully aligned; knowledge of GHG accounting methodologies; level of effort clearly defined, known and accepted by those working on the application and design of the project; and making sure a mixed team with the necessary skill sets, knowledge, and experiences is in place.

  • Provision of hands-on support to applicants through expert teams during the outline phase – including the provision of local or on-site expertise for a limited amount of time next to remote guidance and mentoring. Applicants with limited preparedness or readiness for the outline phase may benefit from such a hand-holding approach when further developing and fine-tuning their Theory of Change, M&E framework and indicators, DPP concepts aside from the abovementioned key challenges related to strong and ambitious financial mechanisms and GHG mitigation potentials for transformational change. 

  • Selecting applicants that receive technical support carefully: Experience has shown that there are applicants who lose valuable time trying to understand the logic and what is required for putting together convincing proposals or project outlines. This makes ineffective use of technical support provided, which is financed by public finance through donors investing in funds or facilities such as MAF. Sanity or KYC checks and related, not too cumbersome due diligence processes should be used at the beginning or prior to any actual technical support happening. Then only those applicants willing or somewhat capable to invest in the project preparation with regards to resources receive such targeted and tailored technical support. Well-prepared applications or resubmissions obviously do have an advantage. Others may need to be able to provide or bring on board even more resources immediately to compensate the lack of well-prepared project and do the design or related fine-tuning during the application process.


On the occasion of the OECD Community of Practice on Private Finance for Sustainable Development Conference 2025 on 4th – 5th February in Paris, which brings together different actors from across the international development finance ecosystem, Robert Tippmann, Managing Director at Climatekos, said: “In times of ever increasing constraints and demands on public finances with environmental and development matters currently and in the foreseeable future under particular pressure the effective and efficient use of public (climate) finance is much needed. Even more so is leveraging and mobilization of private finance, which has been much trumpeted for a long time now. Continuing, improving and potentially upscaling such tailored support to willing and receptive applicants that can absorb the assistance will help both the ones aiming to develop transformational projects and those who are mandated with providing the financial means for doing so.”


Climatekos gGmbH is an independent social enterprise in the field of environment and development focusing on international climate protection.

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