Transcript exploring new options for GEF-5 – Zhihong Zhang

GEF and Carbon Finance:
Exploring New Options for GEF-5
GEF-5 and Carbon Finance Meeting
November 15, 2010
Washington, DC
GEF-5 Replenishment
 Concluded in May 2010 for a record replenishment of $4.25
billion for GEF-5 (July 2010 to June 2014)
 By focal area
– Climate Change:
$1,360 million
– Biodiversity:
$1,210 million
– International Waters:
$440 million
– Chemicals:
$425 million
– Land Degradation:
$405 million
Plus
Corporate Programs, Small Grants Program, Private Sector, etc.
Funding for Climate Change Mitigation
 Focal Area Allocation
– $1,360 million
 Under STAR
– $1,088 million
 Contribution to SFM
– $100 million
 Focal Area Set-aside
– $172 million ($80 million + $92 million)
– Up to $20 million of the set-aside could be allocated to regional
or global carbon finance projects/programs.
Strategic Objectives in GEF-5:
Climate Change Mitigation
 Promote demonstration, deployment, and transfer of innovative
low-carbon technologies
 Promote market transformation for energy efficiency in industry
and the building sector
 Promote investment in renewable energy technologies
 Promote energy efficient, low-carbon transport and urban
systems
 Promote conservation and enhancement of carbon stocks
through sustainable management of land use and forestry
 Support enabling activities and capacity building
Features of GEF and CDM
(From a 2008 presentation, Zhang)
GEF
CDM
Mandate
Financial mechanism of
UNFCCC
Market-based mechanism of KP
Objective
To transform the markets
toward less-carbon-intensive
paths
To meet emissions targets for developed
countries and provide finances resources
and technology for developing countries
Strategy
Barrier removal; long-term;
catalytic
Project based; focusing on direct emissions
reduction
Modality
Upfront grant or concessional
financing for agreed
incremental costs
Payment on delivery of emissions reduction
(to improve project revenue streams)
Project
type
Preventive measures to
reduce/avoid CO2; primarily
RE, EE, and transport projects
End-of-pipe fixes to capture/decompose
gases of high GWP (HFC, CH4); relatively
few RE, EE, transport projects
M&V
Ex ante estimate; weak
traceability; self-reporting
Rigorous methodology; quantified,
monitored, verified, and certified
“Rule of Thumb” in the Past
What GEF has supported
What GEF has shied away from
GEF creates enabling legal, regulatory
environment; CF supports specific
projects.
o Creation and operation of DNAs
GEF demonstrates technical and
financial viability; CF replicates.
o PIN/PDD development
GEF provides partial risk guarantees;
CF participates in project financing.
GEF provides funding from non-CC
focal areas; CF project earns credits
from reduced/avoided emissions.
o CDM methodology development
o CDM project verification and
certification
o (Co-)Financing projects that earn
CERs
Options for Carbon Finance in GEF-5
 Capacity building to help create enabling legal and regulatory
environments
 Support of programmatic carbon finance and other activities
under the post-2012 climate regime
 Demonstration of technical and financial viabilities of
technologies
 Partial risk guarantees and contingent financing for carbon
finance projects
 Co-financing of innovative carbon finance projects
–
With credits to be retained in the recipient country for further project replication
Issues to Ponder
 Diversion from ODA
 Additionality for CDM (including programmatic CDM)
 Double dipping and double counting
 Sequencing of GEF and CF projects
 Voluntary vs. compliance markets
 New frontiers for GEF involvement
– Where to push the envelope, and how….
Contact Information
Zhihong Zhang, Ph.D.
Coordinator, Climate Change Mitigation
Email: [email protected]
Tel: 202-473-9852
Website: www.TheGEF.org