1 world bank carbon finance program dr. venkata r. putti team leader, cf-assist program west africa...
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World Bank Carbon Finance Program
Dr. Venkata R. PuttiTeam Leader, CF-Assist Program
West Africa Carbon Finance Investment ForumFebruary 12-14, Dakar, Senegal
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World Bank Pioneer in Carbon Finance
Develop the market through business transactions (honest broker)
Build stakeholder capacities to enable their effective participation in the market
Promote market policies and instruments through dialog and partnership
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July 1999. Board approves PCF
Prototype Carbon Fund, April 2000
‘96
‘97
‘992000
‘02
‘03
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Community Development Carbon Fund (CDCF), March 2003
Italian, Spanish carbon funds, March 2004
CF Business Evolution
Feb 1997 Approval of $3.5m PCF development funds
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Umbrella Carbon Fund
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FCPF, December 2007
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WB Carbon Funds/Facilities $2billion
Prototype Carbon Fund.
Netherlands Clean Development Mechanism Facility
Community Development Carbon Fund.
BioCarbon Fund
Italian Carbon Fund.
Netherlands European Carbon Facility
• Spanish Carbon Fund.
Danish Carbon Fund.
Umbrella Carbon Facility.
Carbon Fund for EuropeCFE
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WB Funds How They Work
Industrialized Governments
and Companies
EITs and Developing Countries
$$
TechnologyTechnology
FinanceFinance$$
TechnologyTechnology
FinanceFinance
CO EquivalentCO Equivalent22
Emission Reductions
CO EquivalentCO Equivalent22
Emission Reductions
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1
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4 6
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Mauritius, Bagasse Cogen
SS Africa Project Portfolio January‘08
South Africa, Tshwane LFG
Nigeria, SF6 red /T&D loss red
Uganda,2 LFG / Compost projects
Kenya, Greenbelt
Kenya, 3 Hydro
Ethiopia, Humbo Assisted regeneration
Rwanda, Lake Kivu + DSM
Mozambique, Distrib system extension
Nigeria, Cogen
Ghana, Energy Efficiency
Ethiopia, Elec Interconnect+Meth capt
Kenya, 2 geotherm/1 Comb Cycle
Uganda,1 Cogen project
16 ERPAs+ 30 in pipeline
1 3
1
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South Africa, Durban LFG
Swaziland, Bagasse Cogen
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Uganda,Nile Basin Reforestation
Nigeria Lagos LFG
MadagascarBiodiversity Corridor
MaliAcacia Plantations
NigerAcacia Plantations
Nigeria, Transmission loss
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Africa Assist Capacity Building
Launched in 2006 as part of CF-Assist program
Goal: Stronger Participation of AFR in CDM Market with Greater Sustainable Development Benefits
Focus: Strengthen Institutional Capacity Engage Financial and Private Sector Scale Up Project Pipeline and Deal Flow Create Knowledge and Awareness
Approach: Country, Regional, Sector
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Capacity Building National/Regional
Bangladesh, India, Nepal, Pakistan, Sri Lanka.
Argentina, Bolivia, Brazil, Ecuador, Mexico, Paraguay, Peru, Uruguay, Central America region
Benin, Botswana, Burkina Faso, Gambia, Kenya, Madagascar, Mali, Mozambique, Rwanda, Senegal, West African Region, Southern African Region
Cambodia, China, Indonesia, Mongolia, Philippines, VIetnam.
Albania, Armenia, Azerbaijan, Belarus, Georgia, Macedonia, Kyrgyzstan, Uzbekistan.
GIS Studies: Bulgaria, Latvia, Russian Federation, Ukraine.
Egypt, Morocco, Syria, Tunisia. Yemen
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Africa Assist Results
Over 1600 people exposed to training programs and events under Africa Assist
Baseline mitigation potential assessment done for SSA (to be released in March 2008)
Over 40 CDM projects in various stages of development in Sub Saharan Africa
Development of Forestry sector in Madagascar and Senegal
DNA creation facilitated in Botswana and The Gambia; another five DNAs being provided institutional support
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New Facilities Post-2012
Forest Carbon Partnership Facility (FCPF) To reduce emissions from deforestation and land
degradation (REDD; being discussed in the UNFCCC) To engender additional benefits in water management,
biodiversity, poverty reduction, adaptation To piloting possible approaches to provide incentives
Carbon Partnership Facility (CPF): To focus on large scale mitigation in a strategic manner To begin now, and not wait for a new mitigation regime
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Africa Assist Priorities
Increase coverage and scope of CDM assistance Develop local collaborations
Nairobi Framework Partners Bi-lateral and regional partners (CEFEB, IEPF, ECOWAS)
Launch pilots in Programme of Activities (POA) and sector-specific market development
Create and nurture Regional Capacity Hubs Develop innovative delivery mechanisms: e.g. e-
modules, distant learning Key upcoming events in 2008
CDM for Financial Institutions – Dakar (February 12-14) Lighting Sector Training – Madagascar (March) Africa Carbon Forum – Dakar (September)
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New Facilities Rationale
Urgent need to take action and scale up mitigation efforts. Support long-term investments for transition to
low-carbon economy; integrate CF into public/private investment decisions
Shift away from a project-by-project approach to strategic programs of investments
Establish a long-term regulatory framework that provides certainty of a carbon price signal
Provide incentives for development of low-carbon technology
Create incentives for avoiding deforestation
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“Avoided deforestation” excluded from the CDM WB experience in forestry sector:
Prototype Carbon Fund: global pioneer since 1999 BioCarbon Fund: LULUCF pioneer since 2004, including
W2 for avoided deforestation at project level Request from G8 Heiligendamm Communiqué to design
forest carbon partnership About 20 IBRD and IDA countries have already expressed
interest in participating $165m committed from donors
Forest Carbon Partnership Facility Why?
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South-North Partnership Both sellers and buyers represented in the governance
structure NGOs, Int’l orgs. and private sector have observer status
Not pre-empt negotiations Close cooperation with parties and UNFCCC secretariat
Learning by doing Pilot different approaches Test different implementation strategies
Include all actors and stakeholders Seek guidance from private investors Reach out directly to the drivers of deforestation during
implementation
FCPF Features
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FCPF Potential Countries
Subtropics LimitSubtropics Limit
Subtropics LimitSubtropics Limit
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Central African Republic Democratic Republic of Congo Gabon Ghana Kenya Liberia Republic of Congo
FCPF Interest from Africa
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Carbon Partnership Facility Features
Series of same and/or associated activities for which a common approach can be developed, e.g., elimination of gas flaring with same or different uses
of the gas. Undertaken through a program implementing agent,
e.g., government, national utility, financial intermediary. One purchase agreement with the implementing agent or
several purchase agreements, i.e., one for each activity under the program.
Scale-up through replication and “mass-production”, as opposed to the current project-by-project approach.
May use POA approach or new methodological approach (to be developed).
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Promotion of clean energy generation and transmission Rift Valley Geothermal Development (building on ARGeo) Southern Africa Power Pool Ethiopia –Sudan interconnect/Ethiopia/Kenya Interconnect
Technology leapfrogging, supporting near-commercial technologies IGCC technology for cleaner coal (Southern Africa) Carbon capture & storage (Botswana)
Energy efficiency scale-up Industrial energy efficiency – process improvements / energy
management systems Climate-friendly urban development: a city-wide approach
waste management and waste water treatment Transport public lighting building codes for energy efficiency / material use / energy use etc
Carbon Partnership Facility Examples
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Window 2:
Power rehabilitation
Window 1: Wind
Buyers x, y, z
Sellers / programsa, b, c
All buyers in window buy from all sellers in window.
Rationale for windows: Lower transaction costs. Packaged programs are relatively homogenous (methodology, risk, delivery schedule, etc). Buyers can participate in their choice of windows with different risk profiles.
Prepa-ration &Trans-action
Broad Partner-ship
Window 3:
Africa
Window 4Carbon capture & storage
The Carbon Partnership FacilityCommitments from buyers ($$) and sellers (ERs)
Both Buyers and Sellers are CPF Participants
CPF Window-approach
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Expressions of Interest Received
New Facilities Next Steps
Forest Carbon Partnership Facility
Early November: Release of Information Memorandum
November (8 – 9) 2007: Additional consultations with NGOs and International organizations
November (12 - 13) 2007: Final Consultation Round on the Term Sheet and Information Memorandum (potential donors, sellers and buyers)
December 2007: Launch at CoP13 (Bali)
March/April 2008: FCPF declared operational
Carbon Partnership Facility October-November 2007
Identification of programs in consultation with Regions
Bilateral consultations with potential participants from developed and developing countries
December 2007: Announcement at CoP13 (Bali)
January – March 2008: Joint consultative meetings with potential buyer and seller participants to finalize detailed design and governance of CPF; release of Information Memorandum
Spring 2008: CPF could start operations, if $500 million in purchase commitments has been reached by then.