Transcript The World Bank`s Carbon Finance Business

The World Bank’s
Carbon Finance Business:
Joint Implementation Experience
UNFCCC JI Workshop
Moscow, May 26-27, 2004
Benoît Bosquet, World Bank Carbon Finance Business
Contents
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World Bank and Climate Change
World Bank Carbon Finance Products
Current JI Projects
Lessons Learnt from JI
Potential Future JI Projects
AAU Greening
Next Steps for Russia
World Bank and Climate Change
 World Bank’s mission is poverty reduction
 WB endorses IPCC predictions
 Climate change, a “global public bad”, affects
the poorest the most
 Private-public initiatives needed to mitigate
climate change
 Take advantage of Kyoto flexible mechanisms
 Develop core CDM/JI market
 Expand “carbon finance” into small projects
 Demonstrate implementation of carbon sinks
 Build capacity of Host Countries
World Bank Carbon Finance Products
Total funds under management, April 2004: ~ US$410 million
Prototype Carbon Fund. $180 million (closed).
Multi-shareholder. Multi-purpose.
Community Development Carbon Fund. $39.5 million (open).
Multi-shareholder. Small-scale CDM energy projects.
BioCarbon Fund. $12.5 million (open).
Multi-shareholder. JI and CDM LULUCF projects.
Netherlands Clean Development Facility. $125-180 million.
Netherlands Ministry of Environment. CDM energy projects.
Italian Carbon Fund. $35 million (open).
Italian Multi-shareholder. Multipurpose.
Netherlands
JI Facility
Netherlands JI Facility. $60 million with IFC (under negotiation).
Netherlands Ministry of Economic Affairs. JI projects.
Current JI Projects (PCF)
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Bulgaria Sofia and Pernik District Heating
Bulgaria Svilosa Biomass
Czech Energy Efficiency and Renewable Energy
Hungary Pannonpower
Latvia Liepaja Solid Waste Management
Poland Stargard Geothermal
Romania Afforestation of Degraded Agr. Land
Bulgaria Sofia and Pernik
District Heating
 Energy efficiency improvements (pipes,
pumps, substations)
 1,241,000 t CO2e (2005-2012)
 Pre-2008 credits under discussion: AAU
greening
 Baseline study, pre-validation
 Project submitted for Approval
 Contract under negotiation
Bulgaria Svilosa Biomass
 Switch from heavy fuel oil to wood residue
biomass in 13 MW boiler at wood pulp
plant
 450,000 t CO2e (2004-2012)
 Pre-2008 credits approved (1 t CO2e = 1
AAU)
 Baseline study, pre-validation, contract,
initial verification, start of generation
Czech Energy Efficiency and
Renewable Energy
 Umbrella agreement for several energy
efficiency and renewable energy projects
 Contracts with intermediaries: CEA, SEF
 2 district heating projects in Decin and Rozmital
approved and validated: 212,000 t CO2e (20042012)
 More projects under preparation, incl. Hydro
 Pre-2008 credits approved (1 t CO2e = 1 AAU)
Hungary Pécs Heat and Power
 Switch from coal to biomass (wood chips)
for co-generation (65 MWth and 49 MWe)
 Pannonpower will supply heat to the city of
Pécs and electricity to the grid
 1,193,000 t CO2e (2008-2012)
 Baseline study, pre-validation, contract
Latvia Liepaja Solid Waste Management
 Recovery of landfill gas for electricity
production
 388,000 tCO2e (2004-2014)
 Pre-2008 credits approved (1 t CO2e = 1
AAU)
 Baseline study, pre-validation, contract
Poland Stargard Geothermal
 13 MW geothermal project
 300,000 tCO2e (2004-2012)
 Pre-2008 credits approved (1 t CO2e = 1
AAU)
 Baseline study
 Contract under negotiation
Romania Afforestation
 Afforestation of 6,000 ha of degraded
state-owned agricultural land
 855,000 t CO2e (2003-2017)
 Pre-2008 credits approved (1 t CO2e = 1
AAU)
 Baseline study, pre-validation, contract,
initial verification, start of generation, first
ER delivery
Lessons Learnt from JI (a)
 Competitive market (more than CDM)
 Fewer projects than anticipated (only 10% of
PCF):
 Financing constraints in some countries
 What is the project approval process?
 Need to be creative for remunerating pre-2008
reductions: hybrid between Art.6 and 17 (“AAU
Greening”), but controversial with some governments
 Will there be enough headroom?
Lessons Learnt from JI (b)
 Apply Track 2: waste of money?
 “CDM process” is still heavy, especially methodology
approval: too project-specific, not generic enough
 Focus on additionality not needed: Host Country
could sell ERs as ERUs or AAUs
 EU accession countries: how will JI coexist with
EU ETS?
 Move to Track 1 desirable
 No need for establishing additionality, but
 Multiple standards, depending on Host Country
 JI (and CDM) window of opportunity is closing
due to long lead times
Potential Future JI Projects
(BioCF, Netherlands JI, ICF)
 Czech Republic: try Track 1 approach on
portfolio of projects
 Romania: N2O reduction, afforestation
 Poland: Biomass, biodiesel, afforestation
 Russia: Fuel switch, coal bed methane capture,
energy efficiency
 Ukraine: Coal bed methane capture, forest
management
AAU Greening
 “Project-based Art.17”, “early credits” and/or
“late credits”
 Sale of AAUs by Host, with reinvestment of
revenues into climate-friendly projects (energy
efficiency, carbon sinks, etc.)
 Sale of AAUs to raise capital and service debt
 Discussed with several Governments
 More palatable to buyers than straight Art.17
 Seller rebuilds its AAUs
Next Steps for Russia to Sell
 Ratification of the Kyoto Protocol
 JI or AAU Greening
 To deal with the World Bank carbon funds:
 Sign Memorandum of Understanding: who represents
Russia?
 Sign Host Country Agreement (if pre-2008 credits to
be sold)
 Endorsement/Approval of projects (many
proposals received)
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