Transcript AMCEN Special Session on Climate Change Nairobi 25 – 29 May, 2009 CDM and Africa John Christensen Director, UNEP RISOE Centre.

AMCEN
Special Session on Climate Change
Nairobi 25 – 29 May, 2009
CDM and Africa
John Christensen
Director, UNEP RISOE Centre
Outline of presentation
• Carbon markets
• CDM projects status and perspectives
•
•
•
•
•
 Global overview
 African projects and regional share
Barriers and how to overcome them
UNEP activities in support of African engagement in the
emerging carbon market – part of Nairobi Framework
Engaging the finance and business community
Analytical and information support activities
COP 15 and future directions for the CDM
 Examples of UNEP contributions
2
Global Carbon Market
Fragmented market
• Project-based (baseline and credit system)
• Emission reductions are created and traded through a given project or
•
•
activity (JI and CDM)
Allowance market (cap and trade system)
• Emission allowances are defined by regulations at the international,
national, regional or firm level - Kyoto-ET, EU-ETS, Domestic: UK,
Japan, Canada, Korea. Firms: BP, Shell
• Linkage between EU ETS and project-based mechanisms
Voluntary market
• Individuals and companies account and trade their greenhouse gas
emissions on a voluntary basis (carbon compensation and travel
compensation schemes)
• Several companies expressed interest in buying project-based credits
(CERs and ERUs)
Market structures are likely to change with a new agreement
3
Status on CDM Projects May 2009
4
Share of credits from different projects
5
277 million CERs have been issued
(at 10€/tCO2 that is 2,7 Billion €)
CDM projects in the pipeline
Type
Afforestation
Agriculture
Biogas
Biomass energy
Cement
CO2 capture
Coal bed/mine methane
Energy distribution
EE households
EE industry
EE own generation
EE service
EE supply side
Fossil fuel switch
Fugitive
Geothermal
HFCs
Hydro
Landfill gas
N2O
PFCs
Reforestation
Solar
Tidal
Transport
Wind
Total
CDM project with CERs issued
Projects
Issued kCERs
Issuance success
39
7
106
7
1
3
3782
1139
11796
1103
43
733
45%
64%
86%
66%
191%
45%
22
30
1
5
18
3
2
17
94
36
12
938
10701
4
345
2329
5153
318
151782
9984
5902
58952
85%
90%
61%
76%
85%
112%
29%
106%
91%
34%
122%
1
1
18%
2
89
495
132
11647
276784
47%
84%
97,6%
6
Regional Distribution a political concern
Market dominated by +5 countries
7
Cumulative number of projects
Country
Egypt
Morocco
Tunisia
North Africa
Cameroon
Cape Verde
Congo DR
Ethiopia
Ivory Coast
Kenya
Liberia
Madagascar
Mali
Mauritius
Mozambique
Nigeria
Rwanda
Senegal
South Africa
Swaziland
Tanzania
Uganda
Zambia
Sub-Sahara Africa
Total Africa
Total global
2004
0
1
0
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
1
2005
0
4
0
4
0
0
0
0
1
0
0
0
0
0
0
2
0
0
7
0
0
1
0
11
2006
5
5
2
12
0
0
0
0
1
1
0
0
0
0
0
2
0
0
16
0
1
1
0
22
2007
7
5
2
14
0
0
0
0
1
4
0
0
1
1
1
2
0
1
23
0
2
2
0
38
2008
12
10
2
24
0
0
2
1
2
7
0
1
2
1
1
4
1
2
27
1
5
8
1
66
2009
12
10
2
24
1
1
2
1
2
9
1
1
2
1
1
6
1
2
29
1
6
10
1
78
2
15
34
52
90
102
60
533
1370
2779
4340
4733
Now more than 100
African CDM
Projects
With a potential
carbon value
around 1 billion
USD by 2012
-but almost half will go to only
two countries!
(RSA & Nigeria)
8
Project types in Africa
Demand-side EE
5%
Afforestation &
Reforestation
10%
Supply-side EE
6%
Renewables
41%
HFC & N2O reduction
5%
Fuel switch
7%
Landfill etc
26%
•Even if African countries have made significant progress
•The regional share of the global market has remained constant
•Africa’s share of CDM market is low on all comparisons
10
CDM Challenges
• Non Africa-specific:
• Complex CDM Modalities & Procedures:
• Transaction cost to hire service providers.
• Heavy institutional requirements for project cycle.
• Knowledge gap between ER buyers & sellers.
• Africa-specific:
•
•
•
•
•
•
Limited access to finance by potential developers.
Financial intermediaries lack of knowledge about CDM.
Lack of trained national CDM consultants.
Investment climate.
Limited budgets for operations of DNAs.
Majority of potential in small projects, difficult to attract financing:
• Lack of entities capable of bundling projects for the buyers.
11
The Nairobi Framework - catalysing the CDM in Africa
• The Nairobi Framework was initiated at COP 12 in Nairobi by UNDP,
UNEP, World Bank, African Development Bank, and the UNFCCC
Secretariat with the specific target of helping developing countries,
especially those in sub-Sahara Africa, to improve their level of participation
in the CDM.
• The NF partners work to:
•
•
•
•
Build and enhance capacity of DNAs to become fully operational
Build capacity in developing CDM project activities
Promote investment opportunities for projects
Improve information sharing/outreach / exchange of views on activities /
education and training
• Inter-agency coordination.
12
UNEP is in a unique position
• Not a buyer. Not a seller:
• Unbiased advisory services & research products
• Trusted by both buyers & sellers.
• In-country CDM CD activities in more than 35 developing
countries:
• Cross-fertilization of experiences from different regions and sectors.
• Intimate knowledge of host countries’ situation
• Access to valuable field information
• Ability to invest time & effort in activities unattractive to private
sector:
• Research products (CDM Pipeline database).
• Operate & pave way in high sovereignty risk countries (e.g. Sub-Saharan
•
Africa).
Diversified experiences (geographic & sectoral) among carbon finance team in
UNEP.
13
UNEP’s CDM support program
•
Key CDM activities
o Structured, country-level capacity
building programs
• Regulatory advisory, DNA/
institutional capacity building
o Targeted, hands-on workshops &
training sessions
o Analytical work (guidebooks;
market surveillance and analysis
& targeted research)
o Promotion Activities –
organization/participation in
regional/global carbon events
• CDM Bazaar
o Facilitation of information
management – web-based tools.
•
Part of UNEP CC strategy
o Supporting low carbon policy
development
• Capacity building
• Analytical support
o Facilitating Finance
• Innovative approaches
• Engaging with FI’s
o Technology transfer and
deployment
• Supporting “New TNAs”
• Regional TT networks
• Piloting EE implementation
o Strong basis for possible future
support to countries wanting
NAMAs and sector planning
14
UNEP – in country activities
Institutional Capacity
Development
Individual Capacity
Development
Promote
commitment of
policy makers
project approval
raising workshops
• Regional workshops
• Sector specific
Core business &
regulatory frameworks
for CDM investment
Modalities &
Procedures for CDM
projects approval
• National awareness
Identify, assess and
implement CDM
projects
National CDM
investor guidebook
Organize national
CDM workshops and
training sessions
Identify, formulate
and secure financing
for CDM projects
workshops (e.g RE;
landfill; EE, etc) for
sector experts;
practitioners; project
developers
• Executive briefings for
key officials
project origination
Creates a national CDM projects portfolio and the institutional capability to attract CDM investments
15
UNEPcapacity development
activities in Africa
•
•
•
•
•
CD4CDM
Green Facility
UNDP-UNEP
CASCADE
Upcoming CB for MEAs
(CDM) interest statements
21 Countries + 7 to be selected
16
Regional Activities
Investment mobilization and
engaging the finance sector
•
African Bankers’ Carbon Finance Investment
Forum. May 2007, Johannesburg
•
Dakar, Senegal: Carbon finance perspectives
for the banking sector. Feb 12-14, 2008
•
Finance guidebook
Regional Carbon Forums
• Africa Carbon Forum, Senegal, Sep.
2008 & 2nd Forum in Nairobi early 2010
 Knowledge and information sharing platforms
 Updates on Carbon markets; technical
knowledge sharing on conferences; trade fair
and capacity-development sessions,
 Organizers: IETA, UNEP, WB, UNDP, and
UNFCCC Sec.
• Latin America Carbon Forums, Quito 2006,
Lima 2007, Santiago 2008, Panama 2009
17
Virtual platform for information exchange
18
19
Measures of Results and Impacts
• Operationalizing of DNAs: business & regulatory
frameworks for CDM investment
• Pipeline of PINs/PDDs by national CDM experts.
• Local financial institutions have good understanding of
CDM, possibly able to provide underlying project financing.
• Organized capacity building workshops
• Skills and Knowledge provided to local experts
• Local experts able to deal with the complete cycle of CDM projects
• Local relevant institutions have good understanding of CDM and Climate
Change
• Inter-institutional networks and coordination have been generated and
enhanced through country team activities and the DNAs.
20
Implementing in Partnership
• All national activities are
undertaken with government
focal points and engage
local experts and institutions
• Technical support is
provided using regional
Centres of excellence and
trained experts from other
countries in the region
• Partnership with UNFCCC
Secretariat on CDM Bazaar
and Pipeline
• Partnership with UNDP on
CDM and adaptation
activities in Africa, currently
supporting 7 countries on
CDM
• Partnership with World Bank
on national projects and e.g.
regional finance events
• One UN Training Service
Platform for CC (TSP4CC)
led by UNITAR
21
Some of the CDM issues on the table for COP 15
“Political” enhancing
regional distribution
“Normative and CB”
support enhancement
 Higher threshold for small
 Streamlining programmatic
scale projects
 Simpler additionality criteria
for small scale projects
 Elements of financing for
validation and verification
 Broader inclusion of forests
 Inclusion of NAMA and
sectoral crediting
CDM and targeting CB
support to this area
 Developing projects and
approaches to forestry and
bio energy CDM projects
 Establishing targeted
finance to further CDM
project development
22
UNEP supporting new directions for the CDM to become more
effective, especially for African countries:
•Programmatic guide and project support
•Forestry projects and methodologies
•African Carbon Finance Facility
Programmatic CDM making slow progress
- 8 projects still only at validation
• Installation of solar home systems in Bangladesh
• Methane capture and combustion from Animal Waste
•
•
•
•
•
•
Management System (AWMS) of the 3S Program farms of the
Sadia Institute. Brazil
Solar water heaters in South Africa
Efficient light bulbs in Households in Mexico
Composting of household waste in cities in Uganda
Efficient light bulps in rural Senegal
Masca Small Hydro Programme in Honduras
Solar water heater programme in Tunisia - PROSOL
developed based on UNEP supported program
24
Main features of the PROSOL
programme
1. Loans financed through local banks



repayments made through electricity bills
interest rates initially softened
interest subsidy phased out after 18 months
2. Subsidy equalized between SWH and LPG
 underwritten for a trial period by Italy

after successful trial made permanent
- change in Tunisian legislation
Carbon mitigation
PROSOL Result
 113,400m2 SWH (58,000 installations)


Equivalent to 280,000 tonnes of CO2
Worth $4.5 million at market prices

NB: programme cost $2.4 million
GOVERNMENT Target 2011
 540,000m2 (~180,000 installations)



1.3 million tonnes of CO2
market value $19 million
CDM documentation prepared

project being marketed to governments
Programmatic
CDM
CASCADe - Carbon Finance for Agriculture, Sylviculture,
Conservation and Action against Deforestation
• CASCADE – A UNEP Forestry-CDM Initiative
Objectives
• Fostering CDM capacity enhancement
• Evaluate applicability of existing methodologies vis-à-vis the African
ONFi
context
• Putting "theory into practice" by developing and implementing pilot
transactions
• Contributing to a more inclusive post-2012 climate regime
• Promoting the establishment of a Francophone network of expertise for
CDM-LULUCF in Africa
 Results-oriented capacity development…
27
Forest Carbon in Africa
Key Benefits of Forest Projects
 Climate benefits: Tropical deforestation and subsequent land use
accounts for an estimated 20% of global carbon emissions.
 Economic benefits: Least cost intervention, agriculture and forest sector
are main pillars of African economy.
 Social benefits: More that 250 million people in Africa depend on forests
for their livelihoods.
 Environmental benefits: Rehabilitation of degraded lands, biodiversity
conservation.
 Adaptation benefits: Enhancing economic and environmental resilience
of rural communities to climate change.
Forest projects as champions of sustainable development
and key instruments for adaptation.
28
CASCADe
Target Countries and Partners
• Simultaneous implementation in 7 countries
•
•
•
•
•
•
•
Benin
Cameroon
Democratic Republic of the Congo
Gabon
Madagascar
Mali
Senegal
• Implementing Partners
•
•
•
•
•
•
UNEP- DTIE / UNEP-Risoe
Office National des Forêts (ONF International)
CIRAD
ERM
Winrock
Local Partners
29
Examples of Selected Projects
• Rehabilitation of degraded lands to agroforestry using Jatropha curcas, Benin
• Improved woodstoves project, Mali
• Rural electrification / fuel switch based on rice husks, Madagascar
• Reforestation of degraded lands with various species generating non-wood byproducts for local population (fruit,Arabic gum, nuts), Senegal
• Reforestation with biodiversity / endangered species component, D R Congo
30
•
Sisal Biogas CDM Projects in Tanzania at two sites
CDM projects convert sisal waste into biogas which is used in generation of electricity.
The project claims credits from the avoided methane emissions from the disposal site and the
replaced fossil fuel in the national grid.
•
Regional Forestry and Biocarbon Workshop, Addis Ababa (21st-24th April 2009)
Workshop was jointly organised by UNEP RISOE, FAO, and UNDP and other organizations:
- to raise awareness of the bio-carbon opportunities offered by the carbon market;
- to enhance technical understanding of carbon finance;
- to create a ‘carbon community of interest’ in the region; and
- to catalyse a bio-carbon project pipeline.
31
African Carbon Finance Facility
Working with local project developers, financial institutions, national
legislators and regulatory agencies, the ACFF will:
Facilitate the completion of costly project proposal development stages,
such as the validation of project design documents
Provide training on critical issues such as proving project additionality,
developing of financing plans or export guarantee applications, and
negotiating carbon credit sales
Shepherd carbon projects through financial closure by facilitating financial
sector intermediation and raising awareness of carbon finance among local
and regional financial institutions
Pilot phase starting 2nd half of 2009
Thank you!!
Upcoming – May 2009
Visit us…
www.uneprisoe.org
www.cd4cdm.org
www.cdmbazaar.net
www.cdmpipeline.org
33