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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. World Bank and Climate Change World Bank Carbon Finance Products Current JI Projects Lessons Learnt from JI

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Presentation Transcript
slide1
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
Contents
  • 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 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
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
Current JI Projects (PCF)
  • 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
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
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
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 (2004-2012)
  • More projects under preparation, incl. Hydro
  • Pre-2008 credits approved (1 t CO2e = 1 AAU)
hungary p cs heat and power
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
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
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
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
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
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
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
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
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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