The NAMA holds the promise of allowing the emissions reduction to be the co-benefit of other worthy initiatives without forgoing the chances of attracting finance that is motivated by the emissions reduction effect. Most actions will therefore be motivated by other concerns – which would perhaps leave them as ‘high hanging fruits’ in emissions reduction terms. But the NAMA, contrary to the CDM, does not have a specific cost efficiency objective with a focus on reducing one ton of carbon emission in the cheapest way possible. The CDM tried, and failed. The NAMA will not fail on that account, allowing the high hanging fruits to be worthy initiatives that may attract climate-related financing and benefit from either existing instruments, or those that could be added to the toolbox as illustrated in the previous chapters.

Thus far, NAMAs have avoided the discussion of additionality. Even though it requires a deviation from a baseline scenario the effect of this avoidance is likely to promote a wave of ‘NAMAfication’ of already existing policies and practices. Some NAMAs may therefore not be much other than a labelling exercise. Such NAMAs will ultimately stand the test of appropriateness, not only in their host countries, but among those that are asked to finance them.

The transformational change that bilateral and multilateral donors are expecting from the NAMA is tightly linked to the financial engineering behind it. Although such a change can be achieved by a single investment, a permanent change in cash flows in an economic sector will be the origin of most transformational changes.

The entire exercise in the financial engineering has a double purpose. The first is to reduce the cost of a desirable initiative. The second is to promote that the largest possible share of the financing is provided by the existing financial system with known financial products and known agents. The starting point will always be the current financial flows in a given NAMA host sector and a determination to alter it. It is from here the financial engineering can begin – and where the design of the NAMA starts.

Such changes set certain requirements for the identity of the NAMA proposer. The institutional setting of a ‘NAMA development system’ in a NAMA host country has not been discussed and is an entirely different subject – and yet the two are linked.