Transcript Agriculture as % of GDP 1993

World Bank
involvement in GIS
development
Oleksandr Filonenko
Carbon Finance Business Consultant, WB Ukraine office
25 April, Budapest
CEU/REC Workshop
What is GIS?
A voluntary mechanism established by the
selling country to assure buyers that
proceeds from AAU trade will finance
bilaterally agreed environmental projects
and programs through and beyond 2012.
Market Realities
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CDM and JI not expected to deliver all
compliance needs
Demand for 400-2000 million AAUs
• If Canada remains out of the international
market, likely in lower end of range
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Supply: at least 3 times larger
Implications:
• Likely to be a buyers’ market
• Sellers may have to be price takers, however
Ukraine and Russia can have more impact on
trade terms than others
• Early movers could have advantage
JI Projects vs. GIS
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Kyoto Protocol Rules
Direct “GHG reduction/
ERU” -link
Project by project
ERUs issued after actual
GHG reduction
P & P sector market
ERU fully fungible
Direct transaction between
seller and buyer
no conditions on revenue
use
Payment on ERU delivery
Revenue stream until 2012
Large number of projects
under implementation
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No Kyoto Protocol rules
No direct “GHG reduction/
AAU traded” -link
Programmatic/sector wide
AAUs can be traded ahead of
physical GHG reduction
Market mainly governments
AAU limited fungibility
Financial intermediary or
fund structure used
Scope and terms of revenue
use negotiated bilaterally
Flexible financing schemes
Revenues possible post-2012
Less experience. WB
supports market
development
Buyers’ and Sellers’ Concerns
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Transparency
Accountability
Efficiency, clear procedures/criteria
Environmental integrity
Robustness
Legal authorization for trading AAUs
Price
Green Investment Scheme:
Generic structure and financial flows
Greening reports
AAU
buyers
Host
Government
AAUs
$
$
Special budget arrangement
Supervisory/Invest
ors’ Board
$
Financial
instrument
Verification of
environmental
results
$
Investment
financing
• Equity
investors
• Banks
Energy supply
Industry
emission reductions/environmental benefits
$
E Eff. buildings
Other: “hard”
and “soft”
2008
2012
2020
Negotiation and Pricing
Mechanism
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Auctioning
• Politically more acceptable, transparent
• However, works best if well developed market
and large number of potential buyers
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Bilateral negotiations
• Works best in particular for pilot phase
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Hybrid solutions
• E.g. pre-screening or tendering of EoI from
buyers against a minimum price and other
criteria
Options for Revenue Use
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Climate change mitigation investment projects
across sectors
Reduction of local/regional pollutants
GIS management, monitoring, verification,
reporting
Technical support to project developers
Policy development, market barrier removal,
education?
Adaptation to climate change?
Biodiversity conservation?
World Bank Support for GIS (1)
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Analytical work (GIS options studies in Bulgaria,
Latvia, Ukraine)
Technical assistance for development of institutional
and regulatory framework for AAU trading (paid by
the Bank for Ukraine and reimbursable for Latvia)
Grants for preparation of green investment schemes
(Japanese trust fund grants for Ukraine and Russia)
Underlying finance for GIS projects (build GIS
windows around lending products)
Purchase of greened AAUs via carbon funds’
participants including the CPF
Securitization of AAU receivables (potentially in
future)
World Bank Support for GIS (2)
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Ukraine: GIS Options Study 2007. WB T/A and
PHRD grant work will be completed by the end of
2008. The GoU has indicated its strong interest in a
pilot transaction, and that the WB is welcome as a
participant;
Latvia: GIS Options Study 2007. WB T/A to
support implementation will be completed in late
2008. Negotiations with several buyers on a pilot
transaction are underway. Since the WB provided
fee-based TA for the preparation/implementation of
the GIS the WB will not participate in the pilot
transaction.
World Bank Support for GIS (3)
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Bulgaria: GIS Option Study in 2004. WB has
discussed provision of a loan to finance AAU
greening activities. The GoB’s position on the sale of
AAUs is not yet confirmed;
Czech Republic: Became eligible for AAU transfers
in February 2008. No direct WB support for GIS but
strong relationship through long cooperation on GEF
and JI. The GoCR has indicated its interest in a WB
purchase of AAUs and some TA for GIS
development. The first target GIS activity might be
energy efficiency in the residential sector;
World Bank Support for GIS (4)
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Hungary: Became eligible for AAU trading
in December 2007. No direct WB support for
GIS. The government has indicated its
interest in a transaction with the WB’s
carbon funds. The first target GIS activity
will be energy efficiency in the residential
sector.
Russia: PHRD grant for the Russian GIS was
launched in January 2008; huge greening
potential, but not likely to be a quick mover.
World Bank Support for GIS (5)
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Romania: The WB has discussed loan
support for a low carbon investment facility
that could include AAU transactions as one
financing tool;
Poland: The Government is interested in
discussion a potential transaction with WB. A
GIS forum (workshop) is being organized
and will be held in Warsaw in June.
Ukraine and GIS
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National Environmental Investment Agency of
Ukraine was established in April 2007. Currently
gains political weight, and becoming a key authority
on emissions trading
Ukraine will become eligible for GIS and JI Track 1
after April 29th, 2008
Pilot AAU transaction is under preparation; the
procedure for this transaction is adopted by GoU on
March 19, 2008, however conditions will still be
negotiated individually with concrete buyer(s)
Trading of greened AAU will be available after the
Law on GHG Regulation will be re-drafted and pass
the Parliament
Possible GIS Projects in Ukraine
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Large potential for GHG reductions, but
shortage of investment and incentives
Sectors with large GHG emissions and a
large reduction potential:
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Fuel extraction, transport and processing
Iron and steel production
Power and heat production
Industrial energy use
Opportunities are also with end-users:
• Residential sector
• Transport sector
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Forestry
Carbon Partnership Facility
CPF – long-term carbon trading platform for buyers
and sellers with flexibility to current and future
climate policy regimes, and scale of carbon
abatement activities
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Approved by WB Executive Board on Sept. 25, 2007
Focuses on large-scale and long-term activities
Taking a sectoral/ programmatic approach to asset
development
Minimum required starting capital: 0.5 billion USD
Operation will start as soon as minimum funds are committed
by buyers (expected 4Q/2008)
Encompasses ER trading for at least 10 year period beyond
2012
CPF structure will contain:
 Carbon Asset Development Fund
 Carbon Fund
Generic Selection Criteria for
CPF Programs
1. Priority sector
- for Ukraine and in accordance with WB Country
Partnership Strategy
2. Partner reliability
- Committed towards program implementation
- Capable to implement program or attract technical
capacities externally
3. Manageable risks
- Ability to generate steady flow of emission reductions
(ERUs, AAUs, VERs, RMUs) over a long period of time
- Political “green light” at local and state level
- Absence of environmental and other externalities
4. Robust financing plan
- Access to investment
- Carbon finance disbursements based on ERPA
GIS and CPF
GIS
CPF
Possible
Target
Sector
CPF + Forestry
Energy Generation, Energy
Efficiency, Waste
Management, Oil and Gas,
Transport
Target
Partners
The Host Country (and Project entities of
the activities eligible for the GIS)
Private and Public Sector
Type of
Approach
Program and/or Projects
Mainly Program
 Commitment to establish and implement
Role of the
Host Country transparent and accountable GIS and sell
AAUs to the buyers (MoU, AAUPA)
 Establishment of regulatory, budgetary
and administrative frameworks
 Selection of the target projects/program
 Verification and Monitoring
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Immediate
Recipient of
Carbon
Revenue
Commitment to develop one
or more programs for the CPF
and to sell ERs to the CPF
(LOI, ERPA)
 Establishment of the criteria
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Transfer of AAUs
The government of the Host Country or
authorized institution(s)
Partners including the
government of the host
country
Thank You!
OLEKSANDR FILONENKO
Carbon Finance Business Consultant, Ukraine CO
E-mail: [email protected]