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World Bank Carbon Finance Program

Dr. Venkata R. PuttiTeam Leader, CF-Assist Program

West Africa Carbon Finance Investment ForumFebruary 12-14, Dakar, Senegal

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World Bank Pioneer in Carbon Finance

Develop the market through business transactions (honest broker)

Build stakeholder capacities to enable their effective participation in the market

Promote market policies and instruments through dialog and partnership

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July 1999. Board approves PCF

Prototype Carbon Fund, April 2000

‘96

‘97

‘992000

‘02

‘03

‘04

Community Development Carbon Fund (CDCF), March 2003

Italian, Spanish carbon funds, March 2004

CF Business Evolution

Feb 1997 Approval of $3.5m PCF development funds

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Umbrella Carbon Fund

‘07

FCPF, December 2007

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WB Carbon Funds/Facilities $2billion

Prototype Carbon Fund.

Netherlands Clean Development Mechanism Facility

Community Development Carbon Fund.

BioCarbon Fund

Italian Carbon Fund.

Netherlands European Carbon Facility

• Spanish Carbon Fund.

Danish Carbon Fund.

Umbrella Carbon Facility.

Carbon Fund for EuropeCFE

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WB Funds How They Work

Industrialized Governments

and Companies

EITs and Developing Countries

$$

TechnologyTechnology

FinanceFinance$$

TechnologyTechnology

FinanceFinance

CO EquivalentCO Equivalent22

Emission Reductions

CO EquivalentCO Equivalent22

Emission Reductions

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1

2

4 6

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Mauritius, Bagasse Cogen

SS Africa Project Portfolio January‘08

South Africa, Tshwane LFG

Nigeria, SF6 red /T&D loss red

Uganda,2 LFG / Compost projects

Kenya, Greenbelt

Kenya, 3 Hydro

Ethiopia, Humbo Assisted regeneration

Rwanda, Lake Kivu + DSM

Mozambique, Distrib system extension

Nigeria, Cogen

Ghana, Energy Efficiency

Ethiopia, Elec Interconnect+Meth capt

Kenya, 2 geotherm/1 Comb Cycle

Uganda,1 Cogen project

16 ERPAs+ 30 in pipeline

1 3

1

2

South Africa, Durban LFG

Swaziland, Bagasse Cogen

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Uganda,Nile Basin Reforestation

Nigeria Lagos LFG

MadagascarBiodiversity Corridor

MaliAcacia Plantations

NigerAcacia Plantations

Nigeria, Transmission loss

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Africa Assist Capacity Building

Launched in 2006 as part of CF-Assist program

Goal: Stronger Participation of AFR in CDM Market with Greater Sustainable Development Benefits

Focus: Strengthen Institutional Capacity Engage Financial and Private Sector Scale Up Project Pipeline and Deal Flow Create Knowledge and Awareness

Approach: Country, Regional, Sector

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Capacity Building National/Regional

Bangladesh, India, Nepal, Pakistan, Sri Lanka.

Argentina, Bolivia, Brazil, Ecuador, Mexico, Paraguay, Peru, Uruguay, Central America region

Benin, Botswana, Burkina Faso, Gambia, Kenya, Madagascar, Mali, Mozambique, Rwanda, Senegal, West African Region, Southern African Region

Cambodia, China, Indonesia, Mongolia, Philippines, VIetnam.

Albania, Armenia, Azerbaijan, Belarus, Georgia, Macedonia, Kyrgyzstan, Uzbekistan.

GIS Studies: Bulgaria, Latvia, Russian Federation, Ukraine.

Egypt, Morocco, Syria, Tunisia. Yemen

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Africa Assist Results

Over 1600 people exposed to training programs and events under Africa Assist

Baseline mitigation potential assessment done for SSA (to be released in March 2008)

Over 40 CDM projects in various stages of development in Sub Saharan Africa

Development of Forestry sector in Madagascar and Senegal

DNA creation facilitated in Botswana and The Gambia; another five DNAs being provided institutional support

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New Facilities Post-2012

Forest Carbon Partnership Facility (FCPF) To reduce emissions from deforestation and land

degradation (REDD; being discussed in the UNFCCC) To engender additional benefits in water management,

biodiversity, poverty reduction, adaptation To piloting possible approaches to provide incentives

Carbon Partnership Facility (CPF): To focus on large scale mitigation in a strategic manner To begin now, and not wait for a new mitigation regime

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Africa Assist Priorities

Increase coverage and scope of CDM assistance Develop local collaborations

Nairobi Framework Partners Bi-lateral and regional partners (CEFEB, IEPF, ECOWAS)

Launch pilots in Programme of Activities (POA) and sector-specific market development

Create and nurture Regional Capacity Hubs Develop innovative delivery mechanisms: e.g. e-

modules, distant learning Key upcoming events in 2008

CDM for Financial Institutions – Dakar (February 12-14) Lighting Sector Training – Madagascar (March) Africa Carbon Forum – Dakar (September)

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New Facilities Rationale

Urgent need to take action and scale up mitigation efforts. Support long-term investments for transition to

low-carbon economy; integrate CF into public/private investment decisions

Shift away from a project-by-project approach to strategic programs of investments

Establish a long-term regulatory framework that provides certainty of a carbon price signal

Provide incentives for development of low-carbon technology

Create incentives for avoiding deforestation

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“Avoided deforestation” excluded from the CDM WB experience in forestry sector:

Prototype Carbon Fund: global pioneer since 1999 BioCarbon Fund: LULUCF pioneer since 2004, including

W2 for avoided deforestation at project level Request from G8 Heiligendamm Communiqué to design

forest carbon partnership About 20 IBRD and IDA countries have already expressed

interest in participating $165m committed from donors

Forest Carbon Partnership Facility Why?

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South-North Partnership Both sellers and buyers represented in the governance

structure NGOs, Int’l orgs. and private sector have observer status

Not pre-empt negotiations Close cooperation with parties and UNFCCC secretariat

Learning by doing Pilot different approaches Test different implementation strategies

Include all actors and stakeholders Seek guidance from private investors Reach out directly to the drivers of deforestation during

implementation

FCPF Features

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FCPF Potential Countries

Subtropics LimitSubtropics Limit

Subtropics LimitSubtropics Limit

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Central African Republic Democratic Republic of Congo Gabon Ghana Kenya Liberia Republic of Congo

FCPF Interest from Africa

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Carbon Partnership Facility Features

Series of same and/or associated activities for which a common approach can be developed, e.g., elimination of gas flaring with same or different uses

of the gas. Undertaken through a program implementing agent,

e.g., government, national utility, financial intermediary. One purchase agreement with the implementing agent or

several purchase agreements, i.e., one for each activity under the program.

Scale-up through replication and “mass-production”, as opposed to the current project-by-project approach.

May use POA approach or new methodological approach (to be developed).

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Promotion of clean energy generation and transmission Rift Valley Geothermal Development (building on ARGeo) Southern Africa Power Pool Ethiopia –Sudan interconnect/Ethiopia/Kenya Interconnect

Technology leapfrogging, supporting near-commercial technologies IGCC technology for cleaner coal (Southern Africa) Carbon capture & storage (Botswana)

Energy efficiency scale-up Industrial energy efficiency – process improvements / energy

management systems Climate-friendly urban development: a city-wide approach

waste management and waste water treatment Transport public lighting building codes for energy efficiency / material use / energy use etc

Carbon Partnership Facility Examples

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Window 2:

Power rehabilitation

Window 1: Wind

Buyers x, y, z

Sellers / programsa, b, c

All buyers in window buy from all sellers in window.

Rationale for windows: Lower transaction costs. Packaged programs are relatively homogenous (methodology, risk, delivery schedule, etc). Buyers can participate in their choice of windows with different risk profiles.

Prepa-ration &Trans-action

Broad Partner-ship

Window 3:

Africa

Window 4Carbon capture & storage

The Carbon Partnership FacilityCommitments from buyers ($$) and sellers (ERs)

Both Buyers and Sellers are CPF Participants

CPF Window-approach

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Expressions of Interest Received

New Facilities Next Steps

Forest Carbon Partnership Facility

Early November: Release of Information Memorandum

November (8 – 9) 2007: Additional consultations with NGOs and International organizations

November (12 - 13) 2007: Final Consultation Round on the Term Sheet and Information Memorandum (potential donors, sellers and buyers)

December 2007: Launch at CoP13 (Bali)

March/April 2008: FCPF declared operational

Carbon Partnership Facility October-November 2007

Identification of programs in consultation with Regions

Bilateral consultations with potential participants from developed and developing countries

December 2007: Announcement at CoP13 (Bali)

January – March 2008: Joint consultative meetings with potential buyer and seller participants to finalize detailed design and governance of CPF; release of Information Memorandum

Spring 2008: CPF could start operations, if $500 million in purchase commitments has been reached by then.