Rubino190503

Slide1: 

New Funds Development BioCarbon Fund

World Bank Carbon Finance Strategy: 

World Bank Carbon Finance Strategy Expand Core Carbon Market Development Extend Carbon Finance to poorer communities in developing countries and smaller, poorer countries Demonstrate sustainable development impact of carbon finance for “sinks” (LULUCF) Strengthen Capacity Building for mitigation [and adaptation]

Summary: 

Summary CF to small projects in small CDM countries, poor areas Generate high value ERs “Development + Carbon” ($3-6 = 7/t/CO2e) Catalyze private capital to alleviate poverty Local intermediaries Highly replicable Multiple tranches Developed with IETA Community Development Carbon Fund (CDCF) BioCarbon Fund Extend CF to agricultural, forestry sectors Generate cost-effective ERs from sequestration and conservation ($3-6=?) Support projects that conserve biodiversity, combat desertification, alleviate poverty CDM and JI Learn by doing prototype

How the Funds Work: 

How the Funds Work Industrialized Governments and Countries Host Countries and Communities $ Technology Finance $ Technology Finance CO Equivalent 2 Emission Reductions CO Equivalent 2 Emission Reductions

PCF/CDM Project Cycle: The Manufacturing Process for CDM/JI Emissions Reductions: 

PCF/CDM Project Cycle: The Manufacturing Process for CDM/JI Emissions Reductions Preparation and review of the Project Baseline Study and Monitoring and Verification Plan (MVP) Validation process Negotiation of Project Agreements Periodic verification & certification Construction and start up Project completion 3 months 2 months 2 months 3 months 1-3 years Up to 21 years Project Idea Note Project Concept Note Project Concept Document (or equivalent) Project Design Document Baseline study and ER projections Monitoring and Verification Plan Validation protocol and report Project Appraisal and related documentation Term sheet Emission Reduction Purchase Agreement Initial verification report Verification report Supervision report

Benefits: 

Benefits Acquire high value ERs for compliance, trading, insurance Cheaper: expertise of World Bank carbon finance team Risk mitigation via diversification, hedge future costs Knowledge of carbon asset creation, market intelligence: internships, training, advice Club of leading international companies and govts Demonstrate social responsibility Bring projects to fund – project finance Access to additional CO2e in each deal Leverage private investment for sustainable development Influence future regulations Participants (Companies & Governments)

Benefits: 

Benefits Private capital flows for projects to alleviate poverty Investment in cleaner technologies and best practices Partnerships Capacity building for communities and intermediaries Host Countries and Projects

Terms: 

Terms Minimum contributions CDCF – Private sector $ 2.5 million; governments $ 5 million BioCarbon – $ 2.5 million Draw-down over 17 years Parallel funds for technical assistance Target Fund Size $ 100 million Minimum Fund Size $ 50 million $

CDCF Portfolio Model: Illustrative Drawdown Schedule for $2.5m Participation by Company: 

CDCF Portfolio Model: Illustrative Drawdown Schedule for $2.5m Participation by Company

Fund Development Steps: 

Fund Development Steps Design: Advisory Group Meetings, project and portfolio criteria, drafting terms sheets Marketing: 40 MOUs signed CDCF Launch: Sept 02 at WSSD in Joburg BioCarbon Fund Launch: Nov 02 in Tokyo Nov 02 CDCF, Feb 03 BioCF: Meeting of MOU signatories Mar 03 CDCF, July 03 BioCF: Bank Board approval, Issue Information Memorandum, Open for subscriptions Mid 2003 CDCF, Fall 2003 BioCF: Minimum fund size achieved, Operations begin

MOUs Signed: 

MOUs Signed CDCF (19): Governments of Canada, Italy, The Netherlands, Norway. Commonwealth Bank of Australia, Suncor (Canada), Elsam (Denmark), RATP (France), WestLB, 500PPM (Germany), Pirelli (Italy), Chugoku Electric, Idemitsu Kosan, Okinawa Electric, Shikoku Electric (Japan), Rabobank (The Netherlands), Swiss Re (Switzerland), Marsh/MMC, Future Forests (UK) BioCarbon Fund (21): Government of Canada, Suncor (Canada), Caisse des Dépôts, Eco-Carbone (France), 500PPM (Germany), ST Microelectronics (Italy/France), Chugoku, Okinawa, Shikoku, and Tokyo Electric, Mitsui, Kyushu Oil, and Tokuyama (Japan), Rabobank (The Netherlands), Swiss Re (Switzerland), Future Forests, Marsh/MMC, Sustainable Forest Management (UK), Conservation International, General Motors, The Nature Conservancy (US)

CDCFplus and BioCFplus: Implementation Partners: 

CDCFplus and BioCFplus: Implementation Partners Governments, multilateral and international programs, NGOs, foundations Italy and Germany (GTZ) signed an Expression of Interest for CDCF IP. IP interest from Switzerland, France, Sweden, Belgium, Norway, Finland First program partnership with World Bank’s Global Village Energy Partnership (GVEP) for CDCF

Implementation Partnership Activities: 

Implementation Partnership Activities Identify and prepare projects Identify, train and collaborate with local intermediaries to prepare project proposals Develop their capacities to bundle and deliver projects Develop simplified baseline and monitoring methodologies Develop local capacity to undertake baseline, monitoring, and verification studies Encourage and support the participation of local stakeholders in CDCF projects

Slide14: 

Development + Carbon = Carbon with a human face

CDCF Rationale: 

CDCF Rationale Extend CF to small projects in small CDM countries, poor areas Generate high value ERs “development + carbon” ($3-$6=$7/t/CO2e) – acceptable by all regimes Catalyze private capital to alleviate poverty Use local intermediaries, streamlined procedures, replicable projects Multiple tranches Developed with International Emissions Trading Association (IETA)

CDCF Portfolio Criteria: 

CDCF Portfolio Criteria Small projects (UNFCCC definition: less than 15MW or equivalent) CDM countries only No more than 10% of capital in one country Minimum of 25% of capital in LDCs and other poor smaller developing countries Limit of 10% of capital in small-scale afforestation, reforestation Measurable, certifiable community benefit from ER project

CDCF Deal Flow Examples: 

CDCF Deal Flow Examples

Current PCF Projects That Fitthe CDCF Criteria: 

Current PCF Projects That Fit the CDCF Criteria Nicaragua Gemina Rice Husk-to-Power: Small Scale (1.6 MW). Located in a poor rural area. Improved local air quality and local employment benefits. Colombia Jepirachi Wind: 19.5 MW wind farm on indigenous community land. Sponsor provides jobs, potable water supply, access to power for schools and clinics and small fishing port, to the local community. Carbon price + Social premium. Uganda West Nile Hydro: Small Scale (5.1 MW) project in LDC. Local environmental + socioeconomic benefits (rural electrification, capacity building for local community in project operation, employment creation)

CDCF Potential Early Deal Flow-1: 

CDCF Potential Early Deal Flow-1 22 project proposals/ ideas in hand: Africa: 5 Asia: 9 Latin America: 8 More than half of proposals are from IDA countries Togo, Ghana, Kenya, Sri Lanka, Bangladesh, Nepal, Vietnam, Honduras, Nicaragua.

CDCF Potential Early Deal Flow-2: 

CDCF Potential Early Deal Flow-2 Wide variety of technologies represented: Hydro power: 6 Energy efficiency: 5 Bagasse/ Sawmill Cogeneration: 2 Biomass: 4; Wind: 2; Solar: 1; Geothermal: 1 Fuel-switching in transport sector: 1 All fit CDM definition of “small-scale projects” Capacity ranges from 0.1 MW – 15 MW

Summary: 

Summary High value, cost effective ERs Lower cost and risk through a fund Learning by doing with World Bank CF team CDCF: “carbon with a human face” BioCarbon Fund: demonstrate LULUCF CDCFplus and BioCFplus for TA