Partnership for Market Readiness

Summary

The Partnership for Market Readiness (PMR) is a partnership of developed and developing countries administered by the World Bank, established to use market instruments to scale up mitigation efforts predominantly in middle income countries. Although initially geared towards promoting market readiness for the anticipated emergence of international carbon markets, this approach has become more flexible, providing grants and technical support for proposals for implementation of market tools that contribute to mitigation efforts.

Basic Description

Name of the Fund

The Partnership for Market Readiness

Official Fund Website

https://www.thepmr.org/

Date Created

Date fund proposed: 2010.

Date fund made operational: 2011.

Proposed Life of Fund

Undetermined.

Objectives

PMR’s objectives are:

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 November 2020, the cumulative pledges to the Fund amount to approximately USD 130 million.

The contributing countries are: Australia, Denmark, the European Commission, Finland, Germany, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, United Kingdom and United States.

The contributions from donor countries are included as Official Development Assistance (ODA).

Activities Supported

The PMR supports activities that use market instruments to scale up mitigation efforts in developing countries.
More specifically, it helps countries prepare carbon policy choices and their future implementation by focusing on the readiness components that include:

monitoring, reporting and verification (MRV) systems;
greenhouse gas emissions (GHG) inventories and emission reduction registers;
legal and institutional frameworks and first pilot activities.

For those countries ready to design and implement a carbon pricing instrument, the PMR provides a platform to pilot. Developing readiness components that support the implementation of carbon pricing instruments for GHG mitigation and piloting carbon pricing instruments come together in the PMR’s Country Work, which is embodied in the Market Readiness Proposal (MRP) for which the PMR provides grant financing.

As the partnership has evolved, two additional work programs have developed to enhance support: Technical Work and Policy Work.

Through its Technical Work, the PMR generates knowledge products and exchanges on technical elements related to carbon pricing. It also establishes common standards and approaches for GHG mitigation.

In its Policy Work, the PMR offers “in-depth support to countries to model the costs and benefits of policy options, analyse interactions between policies, and integrate this analysis into low-carbon development plans and strategies.”

Administrating Organization

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

Fund Finance and Access Modalities

Conditions and Eligibility Requirements

To become eligible to access funding, a country needs to complete a Market Readiness Proposal (MRP), which is an action plan for designing and piloting market-based instruments for GHG mitigation.

There are 19 ‘Implementing Country Participants’ in the PMR, including a number of middle income countries. The 19 PMR programmes are 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 are 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 is not restricted to ODA eligible countries.

Accessing the Fund

Access Modalities – The countries that are interested in becoming ‘Implementing Country Participants’ submit an expression of interest to the Secretariat. A country is then invited to present an Organising Framework for the Scoping of PMR Activities. The framework presents the types of activities a country is 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 is presented to the Partnership Assembly (PA) for consideration and endorsement.

Once the Partnership Assembly has endorsed the Organising Framework, the country participant uses the preparation phase funding (USD 350,000) to prepare a Market Readiness Proposal. The MRP provides “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 includes a timeline and budget for these activities”.

During the preparation phase, draft MRPs receive 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 is submitted to the PA for consideration of funding.

Financial Instruments – Grants.

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

Overview of implementing entities – The implementing entities are exclusively government ministries and agencies (see the Implementing Country Participants’ Implementation Status Report for more details). However, the national implementation strategy generally includes 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 are the main driver of the development and implementation of PMR programmes. To join the PMR as a ‘Implementing Country Participant’, a governmental entity needs to prepare its national mitigation objectives and emission profile as well as the Market Readiness Proposal (MRP). Then, it has the responsibility to implement the MRP. All programmes have 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 works as a liaison agency and has the responsibility to coordinate and implement the country’s market readiness proposal.

Allocation criteria – A preparation funding of USD 350,000 can be accessed during the preparation phase of a project after the country participant submits a Market Readiness Proposal. The funding amount for the implementation of individual projects under a country programme, which ranges between USD 3 million and 8 million, is disbursed after readiness components outlined in the Proposal are implemented.

The set of criteria used to assess the readiness of an MRP for an allocation of USD 3 million can be found at: https://www.thepmr.org/system/files

For an allocation of more than USD 3 million, an additional set of criteria is taken into consideration: https://www.thepmr.org/system/files

Safeguards, Gender and Indigenous Peoples

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

Gender – The PMR is subject to the World Bank’s gender strategy, but has no own gender action plan. However, the assessment of how gender aspects are taken into consideration during the design and implementation of carbon pricing instruments is currently under development. See the Report on FY20 Activities and Plan for FY21 for further details.

Indigenous Peoples – The PMR programmes align with the World Bank Environmental and Social Framework’s Standards 7 and 10 which require that meaningful consultation is conducted with Indigenous Peoples’ groups. This includes the necessity to obtain the consent of Indigenous Peoples before starting programme activities that affect them.

Fund Governance

Decision Making Structure	The PMR is governed by the Participant Assembly, the Technical Partners and the Delivery Partner. Participant Assembly The Participant Assembly is the decision-making body made up of representatives from all of the 19 Implementing Country Participants (countries that participate in the PMR) and 13 Contributing Participants (donors that have contributed financially to the PMR). Decisions about PMR funding allocation are made by the Partnership Assembly, which meets two to three times a year. Meetings are co-chaired by elected participants – one from the Implementing Country Participants and one from the Contributing Participants. Decisions of the Partnership Assembly are made by PMR Participants on a consensus basis. In the case that all efforts to reach a consensus have been exhausted and no decision has been reached, a decision will be taken by a two-thirds majority of contributing participants and the votes of two-thirds of Implementing Country Participants. Technical Partners The Technical partners represent “countries or sub-national jurisdictions that are at an advanced stage of carbon mitigation policy development”. These partners do not participate in decision-making but contribute importantly to the PMR’s knowledge exchange. World Bank The World Bank acts as the “Delivery Partner, overseeing the implementation of PMR funding to Implementing Country Participants”.
Accountability Mechanisms	There are three existing mechanisms of monitoring and evaluation. Independent Evaluation at the programme level Two independent evaluations have been 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 need to present an Implementation Status Report (ISR) every year. ISRs are available on the countries’ individual pages. In addition, the PMR Secretariat presents a monitoring report on country grant performance at each Partnership Assembly meeting. Monitoring and Evaluation carried out by PMR Participants United Kingdom has its own annual evaluation of PMR. The 2018 United Kingdom Annual PMR Review is available here.
Participation of Observers and Stakeholders	Stakeholders participate in decision-making through their representation in the Participant Assembly. PMR Observers include countries, multilateral development banks, UN organisations and other non-governmental organisations. The observers are associated with the dialogue on market readiness and market-based approaches at PMR meetings and events. In addition, technical experts provide feedbacks on country proposals and participate to workshops and trainings.
Transparency and Information Disclosure	While to our knowledge, PMR does not have a formal information disclosure policy, the Partnership Assembly meetings’ documentations and presentations are publicly available here. Details on individual projects are made available at: https://www.thepmr.org/pmrimplements/0
Other Issues Raised	Over the years, some members of the Participant Assembly have 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.