DLT: Exploring the potential of using distributed ledger technology (DLT) to improve infrastructure services for green financial services

Location:

Turkey

TCRS Number:

14405

Business sector:

Economics

Notice type:

Public

Status:

Approved

PSD disclosed:

24 Nov 2020

Project Description

Distributed Ledger Technology (DLT) is widely considered as a ground-breaking digital technology supporting decentralised methods for approval and/or consensus reaching as well as sharing, storing, synchronising and securing transactions and other data with fewer to no central intermediaries. In contrast to traditional operation systems used in the financing sector, the DLT-based solutions can automate, simplify and make more transparent all the operations of the entities involved in the decision making chain. Block chain is an implementation of DLT, a distributed and decentralized way to manage data by using unique electronic tokens that are safely stored and cannot be altered. Such tokens carry unique information associated to goods or services and related to a specific time period. In the climate context, such block chain based token may be used to represent greenhouse gas emission reductions, and can be used for Monitoring, Reporting and Verification (MRV) as an outcome for result-based climate finance. Over the years, the EBRD has a growing experience and interest in supporting countries adopting disruptive technologies that will promote private sector competitiveness, as well as facilitate trade and strengthen value chain integration. EBRD committed to fostering knowledge economy and innovation base in Turkey and strengthen the global value chain integration. Through its engagement in the design of a pilot blockchain platform, the EBRD will be in a better position to assess opportunities in block chain technology and possible replications in other economic fields, leading to more business and wealth generation in Turkey. Once the regulatory mind-set evolves towards an enhanced use of block chain technology in administrative procedures by public institutions, economic agents, especially MSMEs will need financial and advisory support (i.e. for technical and digital literacy skills) for technological adaptation.

In furtherance of broader climate goals in line with the Paris Agreement, the EBRD is keen to deploy new disruptive technologies, such as the DLT, to deploy more of climate finance, improve its governance, automate the associated services it provides to citizens. This assignment in particular considers the implementation of DLT technologies for the bank’s Green Economy Financing Facilities (GEFF). The overall objective of the Assignment is to support EBRD and its Turkish PFI counterparts in their climate objectives by:

i) Design of an Minimum Viable Product (MVP) for an end-to-end DLT network that will cover all transactions for GEFF credit lines which apply for selected sub-technology project types

ii) Introduce an automation of ex-ante assessments of environmental benefits for eligible categories of sub-projects and/or eligible technologies via data analytics and artificial intelligence

iii) Pilot an automated ex-post verification of greenhouse gas (GHG) emission reductions generated by selected GEFF credit lines in real-time through the block chain network to ascertain credit line project performance and identify options for potential monetization of GHG credits, as a basis to further inform carbon standards’ development (allowing for future recognition of such automated ex-post MRV)

iv) Inform a possible further development of a DLT based international carbon standard through a rule-change and/or Turkish Carbon Market Standard, subject to feasibility and market interest.

TC funds will allow for procurement of an expert consultancy firm to carry out the following tasks:

(1) Software Design Work Stream
(2) DLT Business Value Design Work Stream
(3) Governance Design Work Stream and
(4) Analytical support.

Specific Tasks include:

1. Software Design Work Stream:

The consultant will hold an inception workshop with participating stakeholders and will: (i) build the capacity of stakeholders to understand the DLT features, benefits and trade-offs; (ii) align parties on the business opportunities and use case objectives; and (iii) develop own understanding of the GEFF model and performance requirements of different stakeholders which shall be considered in detail. The Consultant will consider and built its approach on the D-MRV Protocol, and provide feed-back on the D-MRV Protocol during the project. This assignment will only account for an pilot MVP stage, to guarantee the future implementation of the pilot by all involved parties. Therefore,  the consultant will further outline a roadmap for the potential implementation and integration of the MVP into the bank’s IT systems, in collaboration with EBRD’s internal IT team which will be an integral part of the stakeholder network.

2. DLT Business Value Design Work Stream:

The consultant will include a Business Value Design Work stream with a focus on designing a business model that includes appropriate incentives to stimulate collaboration, network effects and maximum benefits for users and participating organizations (i.e. PFI, sub-borrowers. verification and project consultants and EBRD team).

3. Governance Design Work Stream:

•The consultant will include a Governance Design Work stream with a focus on developing an operational model aligned to member benefits
• The consultant will include a review and assessment of any legislator and regulatory requirements and how to best address them during the development of a sustainable governance model
• The consultant will ensure that the during the design and development phase of the block-chain architecture the right type of node holders will be considered as part of the value chain
• The consultant will in the governance value design stage deliver at a minimum the quantification of GHG emissions savings from the select GEEF credit line, as well as internal verification thereof in a fully automated fashion through the DLT system
• The consultant will also provide a roadmap and action plan on the delivery options for the potential monetization and trading of carbon credits supported by the DLT system on various global platforms
• The consultant will conduct a training of EBRD operation officers as well as of counterparts (as mentioned above) on the use of DLT infrastructure for any further operation of the Facility.

4. Analytical support:

The Consultant will review the flow of information under existing GEFF infrastructure and will identify opportunities to optimise and potentially automate it. More specifically the Consultant will review the following aspects:
• Develop algorithms allowing to automate the ex-ante assessment of environmental benefits for eligible categories of sub-projects and/or eligible technologies using the set of benchmarks and/or using the data from any open source databases as applicable and relevant on the subject.
• Follow applicable internationally recognized methodologies for energy and carbon assessment and comply with the principles laid out in the D-MRV Protocol.
 

Any competitive selections for business opportunities relating to this project will be published on the EBRD's website: Consultancy Procurement Opportunities.

General enquiries

EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

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