Co-benefits of private investment in climate change ... of private investment in climate change...

Co-benefits of private investment in climate change mitigation and

adaptation in developing countries Final report

A S USTAI N ABLE ENE RGY SUPPLY FOR EVERYONE


By: Eliska Bystricky, Alyssa Gilbert, Sebastian Klaus, Jan Rordorf With contributions from: Murray Ward (GtripleC) Steering Group: Radhika Bharat (DFID), Helen Edmundson (DECC), Giedre Kaminskaite-Salters (DFID), Malcolm Smart (DFID), Greg Briffa (DFID) and Nick Godfrey (DFID) Date: 3 November 2010

Project number: PSTRGB101474

Co-benefits of private investment in climate change mitigation and

adaptation in developing countries Final report

This project was financed by the UK Department for International Development (DFID). However, the views presented in this paper are those of the authors and do not necessarily represent the views of DFID or the project steering group. The authors wish to thank DFID and other stakeholders who were consulted in the preparation of this report for their comments, suggestions and insights. The authors take full responsibility for any errors or omissions contained in the report. © Ecofys 2010

Co-benefits of private investment in climate change mitigation and adaptation in developing countries I


Executive Summary

General context and concepts

Investments related to climate change mitigation and adaptation can also result in many broad societal and sustainable development benefits in the areas of energy (access and security), environment, health, and economic and social welfare. The aim of this study is to inform the international community of the potential co-benefits that developing countries may gain from private sector finance for climate change mitigation and adaptation, over and above that of public finance alone. Few quantitative estimates of such co-benefits are available, irrespective of the source of the finance, and even fewer for private sector finance alone. However studies of renewable energy projects provide some indication of the numbers of jobs created per MW of installed capacity, ranging from around five to around 40, depending on the type of renewable energy. Two studies have quantified job creation resulting from investments that include private sector funding in technologies related, at least to some extent, to climate change. A $254 million wind farm in Ethiopia ($199 million private financing) resulted in the creation of 120 to 500 jobs, and a $120 to $240 million rapid bus transport system in Mexico City ($35 to $70 million private financing) in 330 to 1 000 jobs. A comprehensive study of programmes on energy-efficiency measures in buildings found that 10 500 to 23 600 jobs were created per US$billion invested, but the sources of funding are not specified. There are some studies of co-benefits related to reductions of air pollution and increased energy efficiency that may result from investments related to climate-change mitigation. For example, the use of improved charcoal stoves in Senegal and Mexico, as well as reducing fuel consumption and therefore greenhouse gas emissions, has resulted in reductions in particulate emissions and less need to spend much time collecting firewood. The 2009 World Energy Outlook gives a very high estimate of health benefits from reduced exposure to small particulates resulting from investments in renewable energy and energy-efficiency measures; in total, for an estimated US$ 2.64 trillion invested, 1.16 billion life-years could be saved between 2010 and 2030 in total in China and India, for a CO2 emission reduction of about 5.88 Gt. A study of rural electrification in Sri Lanka, one of the few quantified examples of private-sector investment in climate change delivering co-benefits, resulted in 160 000 homes being electrified as a result of the investment of US$102.5 million in solar systems, of which 51% was from private sources. The co-benefits of rural

Co-benefits of private investment in climate change mitigation and adaptation in developing countries II


electrification include extended daylight time for studying or working, improved internal air quality and therefore health because of the replacement of traditional lighting and cooking, and lower work burdens for women. In the forestry sector, providing financing to reduce emissions from deforestation and degradation is an increasingly important part of international discussions on climate change. Reducing deforestation and forest degradation can deliver significant co-benefits, including maintained ecosystems services, water conservation and preservation of biodiversity, and benefits to communities and indigenous people, such as clarification of land tenure, provision of jobs, and improvement in local participation. Adaptation, as well as mitigation investments, may have a wide range of co-benefits, such as the development of more resilient rural economies and reduced flood risks, but there is a paucity of quantitative data, and no calculations of the benefits that come specifically from private sector investment are available. The scale of investment required for climate change mitigation and adaptation will amount to more than US$ four trillion in energy efficiency and clean power alone between 2010 and 2020 (and more than US$10 trillion in 2021-2030), if the world is to follow a 2ºC path. Public resources for climate finance are scarce compared to the magnitude of the need, therefore private sources must be mobilised whenever this is a viable option. However this may not apply in all cases, in all sectors, in all countries. The reasons for, and the roles of, public and private sector investment are different. Governments make commitments within multilateral and bilateral agreements for a range of domestic/national and global public good reasons. For the private sector, the primary objective is usually to get an appropriate risk-adjusted return on investment. The public sector therefore has a crucial role in reducing the risks for private sector investors. Many of the co-benefits of investment arise regardless of the source of financing. In some cases, the primary effect of engaging private sources will lie in the scale of the co-benefits achieved due to the additional financing. Well-designed public-private financing instruments can leverage multiples between 3 and 15 in private finance, and potentially even more for some new policy innovations. In addition, there may be non-linear ‘threshold’ effects associated with scale, where it takes a certain amount of finance for activities to proceed at all, or at a much accelerated pace. In some cases, such thresholds may be reached with just public sector funding, but often use of private sector finance will be critical to reach them. Some co-benefits may only occur as a result of private finance, for example when it is the business know-how and proven systems that accompany the finance that are important, not just the amount of finance.

Co-benefits of private investment in climate change mitigation and adaptation in developing countries III


The focus of this study has been to assess qualitatively, and where possible quantitatively, the co-benefits of private sector investment. In developing appropriate methodologies for such assessment, private investment needs to be distinguished from private sector involvement in the delivery of finance as projects and programmes are implemented. Many projects and programmes that are financed by the public sector will involve the private sector as delivery agents. While the co-benefits of many investments in climate change mitigation and adaptation activities are well understood and documented, they are not necessarily easy to quantify as the benefits are generally country- and location-specific. Moreover, there may be a tendency to attempt to quantify only those parameters that are easily quantifiable. Other benefits, though real, may be unvalued. Furthermore, many of the co-benefits of climate change investment constitute primary objectives in their own right, so it may be difficult to define which is the benefit and which the co-benefit. Ideally both should be optimised, but this is not always possible. In some cases, particularly related to land-based actions, objectives may conflict with each other. Researchers have used a range of top-down and bottom-up methodological approaches in recent years to make quantitative estimates of co-benefits. Some of the approaches have been controversial, especially top-down valuation estimates of health benefits which assume a ‘value of life’. For the scope of this project a bottom-up approach with aggregation and subsequent analysis of project-level data has been found to be the best approach. There is also a need to identify and quantify the negative effects that investment in one area (e.g. zero- and low-carbon systems) may have on other aspects, or regions, of the economy. Quantitative assessments should seek to identify the net co-benefits, but this has not been possible in this report. Further steps

While this study provides some figures, it found few strictly relevant case studies. Further work is needed to:

• broaden the scope of the case studies in terms of sources of funding and countries;

• establish monitoring and reporting procedures to collect data on financial flows and co-benefits;

• create better tools for assessing the co-benefits of private sector investment; • develop and implement an investment screening programme aimed at projects

that meet as many sustainabile development criteria as possible; • set up joint projects with developing country governments and private sector

investors to assess, prioritise and realise the co-benefits of climate-change investment.

Co-benefits of private investment in climate change mitigation and adaptation in developing countries


Table of contents

1 Introduction ............................................................................................. 1

1.1 Aim of the report ................................................................................... 1

1.2 Background: private investment in context ............................................... 1

1.3 Structure of the report ........................................................................... 2

2 Definition of co-benefits ........................................................................... 3

2.1 Definition.............................................................................................. 3

2.2 Link to private finance............................................................................ 3

3 Methodological background...................................................................... 7

3.1 General approach .................................................................................. 7

3.2 Job creation .......................................................................................... 7

3.3 Health co-benefits.................................................................................. 8

3.4 Rural electrification ...............................................................................10

3.5 Co-benefits of forestry projects ..............................................................11

4 Quantified co-benefits ............................................................................ 12

4.1 Job creation .........................................................................................12

4.2 Private sector investment creates jobs: some examples ............................16

4.3 Health co-benefits.................................................................................19

4.4 Rural electrification ...............................................................................21

5 Topic focus ............................................................................................. 26

5.1 The forestry sector................................................................................26

5.2 Adaptation ...........................................................................................31

6 Barriers, Pre-conditions and Risks.......................................................... 37

6.1 Barriers and pre-conditions ....................................................................37

6.2 Risks...................................................................................................40

7 Conclusion ............................................................................................. 42

Appendix A Additional considerations for the development of an

assessment methodology ...................................................................... 44

A 1 Bottom-up or Top down.........................................................................44

A 2 Choice of Filter .....................................................................................45

A 3 Level of input resolution ........................................................................45

A 4 Indirect impacts / risks..........................................................................46

A 5 Timeframe considerations ......................................................................49

A 6 Financial considerations.........................................................................50



Appendix B Additional background on job creation ................................. 53

B 1 Direct versus indirect and induced jobs....................................................53

B 2 Impact on overall economy....................................................................53

B 3 Local versus foreign jobs .......................................................................54

B 4 Estimating job creation..........................................................................54

Appendix C References............................................................................ 56

C 1 Reports and publications........................................................................56

C 2 Websites..............................................................................................59

Appendix D Glossary................................................................................ 61



List of Illustrations

Figure 1: Learning rate experience from renewables and LNG as capacity is installed......................................................................... 6

Figure 2: Comparison of health and climate cost-effectiveness .............10 Figure 3: Diagram taken from Persson et al (2009).............................32

List of Boxes

Box 1: Scope of this document ...................................................... 2 Box 2: Private sector finance ......................................................... 3 Box 3: Selco: Innovative solar solutions for the poor ........................ 5 Box 4: Job creation in India by 2020..............................................17 Box 5: Job creation in South Africa by 2020 ...................................18 Box 6: Dissemination of improved charcoal stoves in Senegal ...........19 Box 7: Co-benefits of improved cookstoves in Mexico ......................20 Box 8: Success factors for renewable energy investment in developing

countries..........................................................................39 Box 9: Example of a badly implemented programme where women

should have been consulted ...............................................41 Box 10: Further steps....................................................................43 Box 11: The concept of Lock-in.......................................................49

List of Tables

Table 1: Ranges of job creation figures ............................................14 Table 2: Private investments creating jobs........................................16 Table 3: Job creation from energy efficiency measures in buildings......16 Table 4: Estimates of potential links between GHG emission reduction

and health........................................................................21 Table 5: Rural electrification ...........................................................25 Table 6: Quantifying forestry co-benefits ..........................................29



Appendices

Appendix A Additional considerations for the development of an assessment methodology ............................................................................44

Appendix B Additional background on job creation .........................................53

Appendix C References ...............................................................................56

Appendix D Glossary ..................................................................................61

Co-benefits of private investment in climate change mitigation and adaptation in developing countries 1


1 Introduction

1.1 Aim of the report

The aim of this report is to inform the international community of the potential benefits for development that can be gained from adding private sector finance to public finance for climate change mitigation and adaptation. Specifically it considers whether, in addition to helping to reduce emissions, leveraging private finance through public-private financing mechanisms can result in other benefits that may not be achieved through public financing alone. These include among others access to electricity for the poorest communities from off-grid renewable electricity investments, new jobs, and transfer and development of skills and expertise.

An initial literature review suggests that there has been little quantification of the

developmental co-benefits of private investment, and little methodology available to estimate the additional benefits that may result. The purpose of this document is to address this analytical gap. Without a clear understanding of the co-benefits, developing countries will continue to view private finance as being less important than public finance. This may act as a barrier to them enjoying the developmental benefits of private investment.

1.2 Background: private investment in context

Any analysis related to the role of the private sector in climate change finance should reflect the following: • For the world to be on a 2oC path, the investment required in the energy

sector alone is over US$ 4 trillion in 2010-2020 and over US$10 trillion in 2021-20301;

• This does not include investment in mitigation for agriculture or forests, or for adaptation;

• Public resources for climate finance are scarce compared with the scale of the need, so private investment must be used as often as possible, when viable.

Many of the co-benefits of climate change mitigation, in particular, will derive mostly from private sector investment.

1 according to the International Energy Agency, in WEO 2009, one of a number of similar, authoritative estimates



1.3 Structure of the report

The next section defines co-benefits, and their link to private sector finance. Section 3 presents the methodology needed to help quantify these co-benefits, and section 4 presents some numbers based on projects and case studies. Forestry and adaptation have been looked at specifically, with results presented in section 5. Co-benefits can also carry risks, and there may be pre-conditions for them to be realised, as discussed in section 6. Section 7 gives conclusions and further steps needed. Appendices A and B cover general aspects of methodology and job creation. References are listed in appendix C, and appendix D is a glossary of acronyms. Box 1 presents the scope and limits of the research that has been carried out for this study.

Box 1: Scope of this document

SCOPE AND LIMITS

Research in this project aimed to collect data from case studies where private finance was

shown to deliver co-benefits from climate change investments in developing countries. The

number of case studies is limited, however, because:

- co-benefits are seldom evaluated, as they are not the primary aim of the

projects;

- the financial flows are often poorly monitored and reported, and it is not

always clear what, if anything, comes from the private sector;

- many of the co-benefits are difficult to quantify, as they are influenced by

factors other than the one investment.

As a consequence, and given the short timeframe of the study, a limited number of co-benefits

have been researched: job creation, health, and rural electrification. Little data was found on

co-benefits that accrue from private finance alone, so they are only briefly mentioned. Given the lack of data and often clarity on the source of financing, we have had to supplement private sector case studies by those where finance is coming from the public sector.



2 Definition of co-benefits

2.1 Definition

Co-benefits are benefits that result from an investment or a project in addition to the targeted impact. Co-benefits of investments in climate change mitigation and adaptation include:

• Job creation • Health improvements • Rural electrification • Energy security • Contribution to gender equality. Some of these may lead to a number of secondary co-benefits

2.2 Link to private finance

Box 2: Private sector finance

WHAT ARE PRIVATE INVESTMENTS?

Investment by the private sector can be divided into:

- Foreign Direct Investment (FDI), the largest source of private finance from developed to developing countries2. FDI has many potential benefits, including financing capacity expansion with equity (so without incurring debt), supporting technology and knowledge transfer, and acting as a catalyst for further capital inflows

- South-South FDI: financing by investors in developing countries

- International private loans, often used to finance debt

- Private domestic financing. In addition, financial flows from carbon markets including the Clean Development Mechanism (CDM), the voluntary market and other potential future flows such as financing to reduce emissions from deforestation and degradation (REDD+) may be considered a source of public-private mitigation support.

Co-benefits of climate-change finance can be divided into three levels: • Level 1 co-benefits are roughly proportional to the amount of investment,

irrespective of the source, for example job creation and health benefits. Private

2 FDI is defined as an investment made by a resident entity in one economy (the direct investor) with the objective of establishing a lasting interest in an enterprise in another economy (the ‘direct investment enterprise’), in which the direct investor owns 10% or more of the ordinary shares of voting power.



sector money simply increases the scale of financing and therefore of the co-benefits.

• Level 2 co-benefits only happen above a certain scale of financing. They are not proportional to the scale of the investment, but require it to reach a critical level, or may demonstrate a snowball effect. Private investments may play a key role in reaching the critical level: well-designed public-private financing instruments can leverage multiples between 3 and 15 for private finance3.

• Level 3: Co-benefits specific to private investment, for example technology know-how, improved productivity and improved financial sustainability of local communities.

Most Level 3 co-benefits are interlinked and not easy to quantify: innovation can lead to capacity building as well as improved productivity, which in turn can boost market growth, with additional co-benefits, for example new jobs. Given the few quantified examples of Level 3 co-benefits, this report focuses mainly on the more general co-benefits of Levels 1 and 2, with some additional input on Level 3 in the following paragraphs. Level 3 co-benefits

Case studies to follow-up

The Clinton Climate Initiative is currently involved in several plans for the development of solar parks in Gujarat and Rajasthan (India)4, as well as in South Africa, Morocco and Australia. These projects are still at a very early stage, but are case studies to follow up closely: private money is being leveraged to stimulate delivery of huge solar parks in order to create a local industry and improve competitiveness. Co-benefits of the private sector in terms of overall approach

Benefits include: •••• Investor rigour

The need for private sector investors to get adequate risk-adjusted returns on their investment calls for clear checks and balances and ensuring that the project has been well-scoped. The early stages of project development may take longer, but investment structures and project outcomes – for both the headline benefit and the co-benefits, including capacity building – are likely to be better.

•••• Project experience Where private sector involvement brings in project development expertise as

3http://sefi.unep.org/fileadmin/media/sefalliance/docs/Resources/UNEP_Public_Finance_Report.

pdf. 4 Source: Discussions with the Clinton Climate Initiative



well as investment, other co-benefits such as improvement of local skills and quality of outputs can result.

•••• Competitive drive to quality If well managed, the engagement of the private sector can improve the quality of outputs through competitive tendering processes. However, this requires good management and clear specifications.

•••• Less complex requirements Public sector funding often comes with a raft of other requirements that can lead to challenges in actually delivering a project outcome.

Contribution to energy security

Private sector investments can contribute substantially5 to: - diversity and physical security (avoid interruptions of supply) of energy sources - price security (provide energy at a reasonable price) - geopolitical security (avoid dependence on other countries)6 - reducing energy intensity - technical and economic feasibility of future improvements.

Innovation

Innovative products and services translate into more choices, services better adapted to needs, and lower prices. This in turn can lead to improved productivity for the suppliers and users. Innovation fosters competitiveness and market growth. Responding to market pressure and the need to stay competitive, the private sector is generally more entrepreneurial than the public sector, and will often develop new technologies or adapt its operations to boost efficiency and productivity. The Selco India project (Box 3) shows how technological innovation can work well in combination with innovative financial packages.

Box 3: Selco: Innovative solar solutions for the poor

CASE STUDY SELCO: INNOVATIVE SOLAR SOLUTIONS FOR THE POOR

Selco India was established in 1995 to provide solar energy

solutions for households and businesses, providing electricity for

lighting, water heaters, inverter systems (for use in

communications and computing), and small business appliances.

Selco is an energy service provider, not a technology supplier,

and the products are designed for end-user needs. One example is a 50:50 solar/grid-powered

sewing machine with additional features, for a local sewing training institute where unreliable

electricity affected income, work and training hours. Selco collaborated with a financial

institution to provide a customised loan plan over five years to purchase five sewing machines;

as a result, income increased, with bonus earnings from the additional features of the

machines and savings on electricity bills, ensuring quicker repayment of the loan.

Selco employs 140 employees in India, and has financed more than 100 000 solar systems.

5 CSIS, 2009 6 M Wicks, 2009



Source: Selco-India.com

Transfer and development of skills and expertise

Renewable energy (and liquefied natural gas) systems are being more efficiently used as a result of high learning rates, resulting in significant reductions in capital expenditure, which in turn benefit developing countries: Figure 1 shows learning rates for different energy technologies. At the project level, working with private institutions can result in the transfer of know-how, skills and expertise such as bookkeeping, marketing, managing a plant, and building and operating low-carbon technologies. Development of expertise can also empower people to take charge of their own lives and communities. The self-confidence developed by project activities can sometimes increase people’s ability to make other changes in their lives and those of their families. Here we differentiate between skills development and capacity building. Traditionally, capacity building is the domain of the public sector and often NGOs. Capacity building enables a country to move in a certain direction through institutional change, public awareness, or facilitating the movement of people and jobs. However, the private sector can help develop skills through technological know-how and efficient delivery experience. Embracing this type of knowledge transfer from the private sector helps to create a sustainable economy and to improve productivity, in turn leading to improved living standards and growth.

Figure 1: Learning rate experience from renewables and LNG as capacity is installed

Source: Mc Kinsey & Company, 2008



3 Methodological background

A bottom-up approach7 with analysis and aggregation of project-level data has been used in this project as the most efficient assessment method. A top-down approach using national statistics and an economy-wide model would have been too general or too complex. Even with more resources, it seems doubtful whether such a model can be set up and consistently adapted to cover all relevant countries, sectors and potential co-benefits. This section presents a methodological background to the evaluation of job creation, health co-benefits, and rural electrification. Co-benefits for the forestry sector are also discussed. There has been little quantification of co-benefits for many topics and sectors, so the section also gives an indication of how this might be rectified.

3.1 General approach

As a general approach, the methodology for assessing the co-benefits of a specific project or policy comprises:

1- creating a list of the potential impacts of the project or policy 2- predicting quantitative impacts 3- attaching monetary values to these impacts 4- if the project or policy extends over several years, using appropriate discount

rates8 to calculate the net present value 5- adding up the benefits and costs.

3.2 Job creation

Climate-change mitigation actions can affect the economy and therefore job creation in a number of ways, generally resulting in a net gain in jobs but also in fewer jobs in some sectors such as fossil fuels. In the context of the renewable energy industry, most quantitative studies focus on direct jobs, usually categorised into: manufacturing, construction and installation, operation and maintenance, and, for biomass energy, fuel collection. Indirect jobs created in the economy by multiplier effects in the renewable energy sector, for example second-tier supplier industries producing intermediate goods and component parts as well as the service sector,9 are not usually included. In some studies, the

7 By bottom-up, we mean gathering a set of project-specific data on which to base conclusions. 8 Usually, higher discount rates are used for private than for public investment 9 REN21, 2005



number of induced jobs created as a result of low-carbon economic development is also estimated. These can result for example from efficiency savings being invested in new businesses. Especially relevant in developing countries are jobs created as a result of the expansion of energy services through the use of low-carbon technologies, for example biofuel cultivation for rural electrification in Indian villages.10 Most studies tend to approach the issue of employment potential from a national and/or regional perspective, and few look at the global supply and value chains for low-carbon industries and products. However, investment in clean-energy technologies in one location may create employment opportunities elsewhere, because supply and value chains are globally organised. Thus, when assessing the employment effects of investment in renewable energy it is important to consider whether jobs are being

created in the country where investments take place or elsewhere. The impact will vary depending on the type of technology and the type of job created: manufacturing components such as blades and generators for wind parks, for example, is quite complex, and initially these are likely to be imported, creating jobs abroad. This can also apply to early-stage installations which will generally also be by experts from abroad. Local investment in manufacturing capacity, and thus more local jobs, will only occur after a substantial stable domestic market is created. Operation and maintenance, on the other hand, generally creates local jobs.

3.3 Health co-benefits

Climate change affects the basic requirements for maintaining good health: clean air and water, sufficient food and adequate shelter. Each year about 1.2 million people die from causes attributable to urban air pollution and 2.2 million from diarrhoea largely resulting from lack of access to clean water and from poor hygiene. Excluding more frequent and extreme storms, climate change is estimated to have been responsible for 3% of diarrhoea, 3% of malaria and 3.8% of dengue fever deaths worldwide in 2004. About 0.2% of total world deaths (including natural deaths) were attributable to climate change, of which 85% were child deaths11. One key aspect to consider when assessing health co-benefits is which metric to use. Most studies translate health benefits into a monetary value. The health effect most commonly quantified in connection with mitigation of climate change is that of air pollution from the use of fossil fuels. Air pollution causes a relatively small loss of life expectancy, so the most appropriate parameter for estimating mortality costs linked to air pollution is the Value of a Life Year (VOLY). VOLY is generally based on contingent valuation surveys to estimate willingness to pay to avoid a loss. A typical VOLY in developed countries is 40 000 EUR12 to 50 000

10 WRI – Houser et al, 2009; UNEP, 2008 11 WHO, 2009 12 NEEDS project, 2006



EUR13. Uncertainties in these numbers are high, as can be seen from the European Commission’s Impact Assessment Guidelines, where a median value of VOLY is given as 52 000 EUR, whereas the mean value is 120 000 EUR14. The World Health Organization extends the concept of lost years by defining a Disability-Adjusted Life Year (DALY), as one lost year of ‘healthy’ life, which is the sum of Years of Life Lost (YLL) due to premature mortality and Years Lost due to Disability (YLD) for incident cases of the health condition. These numbers are generally given in number of life-years, with the aim of reducing the number of DALYs, but studies often also translate DALYs into financial values, using similar values to VOLYs, weighting them according to the Gross National Income per capita of the country being analysed. Figure 2 illustrates the total societal benefit from the combined value of carbon offsets (shown in yellow and valued at US$ 10/tCO2eq) and DALYs averted (shown in blue and valued at US$ 7 450/DALY, which is representative of valuing each DALY at the world average GDP per capita). The figure clearly shows that actions that reduce local air pollution, although having less impact on global greenhouse gas emissions, will have a high impact in terms of health co-benefits (i.e. a low cost per DALY avoided); larger-scale renewable or nuclear projects have proportionately less health co-benefits. This is because traditional energy use for cooking has a proportionately higher negative impact on health than large-scale electricity production, so that substantial improvements are therefore needed, and easier to achieve.

13 ExternE project, 2005 - based on results in France, Italy and UK: 14 EC, 2009



Source: University of

California – Berkeley,

2008

Figure 2: Comparison of health and climate cost-effectiveness

However, these costs are based on assumptions about the willingness of people to pay to reduce health risks. They will therefore vary greatly from one country to another, due to different standards of living, but also diversity in clinical practice and limited availability of health-care resources, and great caution should be taken to avoid generalisations about cost-effectiveness. The valuation of health benefits is highly controversial, and when looking at co-

benefits in developing countries, a non-financial quantification is preferable. When looking at a specific project or the impact of a policy on health, it is advisable to use DALYs as indicators, the aim being to reduce the number of DALYs based on a reference year. This approach is used in Table 4 in section 4.3.

3.4 Rural electrification

Many people, mainly in remote rural areas of the developing world, have no access to electricity. Investments in climate-change mitigation, in particular mini-grid and off-grid renewable energy projects, may deliver electricity to these remote regions as a co-benefit. One way of quantifying this is to divide the total cost of the project by the estimated average cost of providing a connection to a rural household to give an



estimate of the number of households connected, which is one measure (although not in money terms) of the co-benefit of the mitigation project. However, the actual cost per rural connection may differ considerably from the estimated average cost. Real figures for rural connections, if available, would therefore provide a more reliable measure. Another way of estimating the number of households connected is to divide the amount of electricity that the investment provides by the International Energy Agency’s minimum electricity requirement to cover basic needs (50-100 kWh per person per year). Such a calculation would also provide an estimate of the co-benefit, but would require some initial qualitative assessment of whether this benefit can genuinely be achieved, and ensuring that double-counting is minimised. The work carried out in the Kyoto Clean Development Mechanism (CDM) context to minimise double-counting of project delivery could be a good basis for developing an appropriate methodology.

3.5 Co-benefits of forestry projects

Any methodology which attempts to evaluate the co-benefits associated with forestry projects either at the project or at a wider level, should:

• Take note of the location of the project and the forest type, the local population and population density, and biodiversity indices, in order to fully understand the specific potential to deliver co-benefits.

• In the case of a more generic estimates of co-benefits, assumptions need to be made about factors such as the average characteristics in terms of population makeup and the biodiversity index;

• Consider the risks that can be or are already being managed through the application of a recognised project standard, and the co-benefits that may be or are already being met as a result of that standard, or by going beyond it.

• For co-benefits to ecosystem services, use figures already available from current estimates of the value of such services, if they are available at an appropriate level of resolution.



4 Quantified co-benefits

This chapter looks specifically at the literature on the quantified co-benefits associated with projects for mitigating climate change, in terms of jobs, health and rural electrification. Where numbers are available these are presented and discussed.

4.1 Job creation

Two complementary approaches to estimating job creation resulting from renewable energy projects are used: • One is based on REN21’s (Renewable Energy policy Network for the 21st century)

simplified methodology: an analytical approach using employment coefficients based on:

- Information on labour in person-years per MW of installed capacity - Data on expenditure necessary to support a full-time job (person-years per

US$ invested) - A broad range of studies, most of them covering developed countries, but a

few estimating job creation in developing countries, which tends to be higher than in developed countries.

• The second is based on New Energy Finance (NEF) data for the wind and solar PV sector, taken from published accounts and interviews with representatives of leading companies in the sector; NEF takes a global approach, however, mostly covering projects and companies in developed countries

The first approach provides an estimate of job creation within a range; the second, available only for some renewable energy technologies, provides examples with which the data can be compared. Table 1 gives data for different technologies. The following clarifications relate to the numbers in this table: For solar PV: • The cost per MW installed varies with developing country, but also depends on the

size of the installation. For example, 1 MW installed in Abu Dhabi as part of a 40 MW project costs US$3.3 million; 1 MW installed in Southern Africa for a 1MW project costs US$4.5 million – the cost can reach US$9 million per MW for small roof-top installations.15

For the wind sector: • NEF estimates that a total of 10.2 full-time equivalent jobs are created for each

MW installed, taking into account direct jobs in companies supplying materials (0.6 jobs), components, sub-assemblies and assemblies for wind turbine manufacturing (7.5), plus those in firms developing and servicing (0.2), research (0.1) and constructing wind farms (1.6), and those in the operation and maintenance of wind assets (0.2).

15 based on expert estimation by Wiep Folkert, Ecofys



• The numbers of full-time equivalent jobs created per MW installed can be translated into the same number of jobs created per US$ million invested, since an estimate of the cost of wind power per MW installed is US$ 1million16.

UNEP (2008), looking at job creation in the energy sector in the United States and Europe, compares the renewable sector and fossil-fuel power plants. The latter creates on average one job per MW of average capacity (coal-fired and natural-gas fired), including manufacturing and installation part as well as operations and maintenance. According to the study, the renewable sector, in these countries, can create up to 3 times as many jobs for biomass and wind power, and 7 to 11 times as many for solar PV.

16 Ecofys, 2010


A SUSTAI N ABLE ENERGY SUPPLY FOR EVERYONE

Table 1: Ranges of job creation figures

Measure Range of jobs created

per MW new capacity

Estimates by

NEF (2009)

Regional scope

Manufacturing and installation of solar photovoltaic power plants 7.1-36.4

- rooftop installation

- other than rooftop installation

36.4

21.417,

Operation and maintenance of solar photovoltaic power plants 0.1-2.5 0.6

Manufacturing and installation of solar thermal electricity power plants 6.25-22.4 22.418

Operation and maintenance of solar thermal electricity power plants 0.7-1.58 0.8

Manufacturing and installation of wind power plants 2.6-37.5 10.0 The highest figure is suggested by TERI

(2010), assessing the wind industry in

India (including gross direct, indirect

and induced job creation).

AGAMA Energy (2003) puts the

(conservative) number of gross direct

jobs created in manufacturing and

installation of a typical 37.5 MW wind

farm in South Africa at a total of 3.7

jobs per MW installed.

Operation and maintenance of wind power plants 0.1-5.0 0.2 Again, the highest figure is based on

TERI (2010)

AGAMA Energy (2003) puts the number

of jobs created in operation and

maintenance in South Africa at 1.0.

17 FTE workers in project construction (20 jobs for rooftop installation vs. 5 jobs for open terrain installation), production of silicon and wafers (3.5 jobs), cells (5.0), modules (6.0), and inverters (1.3) and research (0.4), development and services (0.2). 18 Includes project construction (12.0 jobs), manufacturing (10.0), and development and services (0.4).



Manufacturing and installation of biomass power plants 2-8.5 The highest figure is taken from Singh

et al (2001) covering direct

employment impacts of a set of co-

firing plants (100 MW-750 MW) and

several biofuels based on industry

surveys of labour requirements. Only

OECD countries are covered.

Operation and maintenance of biomass power plants 0.32-2.3

The highest figure is based on EPRI

(2001) covering OECD countries.

Manufacturing and installation of small-scale hydro power plants 11.3

Operation and maintenance of small-scale hydro power plants 0.22

Manufacturing and installation of geothermal power plants 4-17.5

Operation and maintenance of geothermal power plants 1.7

Sources: References: UNEP/SEF, 2009; REN21, 2005; GCN, 2010; nef, 2009; Pembina Institute, 2004; Singh et al., 2001; Learning rates of low carbon technologies,

Ecofys 2010, Heavner & Churchill 2002



4.2 Private sector investment creates jobs: some examples

Table 2 presents two of the few quantified examples of private sector investment in climate change delivering employment co-benefits.

Table 2: Private investments creating jobs

Project

Timeline Country/ measure

Total

Project

Budget

Amount of

Private

Financing

Co-benefit,

relating to total

investment

Construction

2009-2012; CDM

timeline: 21

years

Ethiopia: Ashegoda

wind farm $254 million

$199 million

(78%)

120 to 500 jobs

created

2005-on-going

(2nd line out of

10 is being built)

Mexico city: Bus rapid

transport system

$120 to 240

million

$35 to 70

million

330 to 1 000 jobs

created

Sources: Addis Fortune 2009; GTZ 2006; CTF; EMBARQ; MEDEC

Table 3 presents the result of a comprehensive review of studies conducted by UNEP/MISI (2009) on the economic job impact of ‘green stimulus’ and related sustainable programmes and investments, compared to more traditional infrastructure and energy programmes. The table shows the numbers of jobs created by programmes on energy efficiency measures in buildings.

Table 3: Job creation from energy efficiency measures in buildings

Measure Indicator Metric Amount

Energy efficiency retrofit

measures in buildings

Local

employment

Jobs created per

$billion invested 10 500 to 23 600

Source: UNEP/MISI, 2009

Additional figures are given on job creation in India (Box 4), and South Africa (Box 5). No information is available on the role of the private sector in these two country plans.



Box 4: Job creation in India by 2020

FOCUS JOB CREATION IN INDIA BY 2020

According to The Energy and Resource Institute (TERI), New Delhi, renewable energy

production offers significant job creation prospects for India. Using the most optimistic

assumptions about labour intensity of the wind, solar PV and biofuels sectors, and also about

market expansion in these sectors, a total of almost 10.5 million new jobs could be created by

2020. These will be based on domestic market development and, especially in the wind energy

sector, also on global market growth. TERI assumes that up to 288 500 additional Indian jobs

could be created, largely in manufacturing, if wind power expands globally to 352 GW by

202019 and if India’s share of the global market increases from 7% to 10%.

The Government of India plans to increase domestic wind capacity by 2 GW per year from the

2008 baseline of 9.6 GW. TERI assumes that wind power in India creates 37.5 jobs per mega-

watt (MW) including gross direct, indirect and induced job creation during construction and

installation (including manufacture) and five jobs per MW for operation and maintenance.

These figures are much higher than the above-mentioned estimates as indirect and induced

jobs are also taken into account. TERI therefore estimates that a total of 243 225 jobs would

be created if 2GW were installed per year to 2020.

For solar PV, the Indian Government plans to increase installed capacity from 100 MW in 2008

to 20 000 MW in 2022. Based on Greenpeace & EPIA (2006) figures on the creation of jobs per

peak MW installed20, the TERI study estimates that up to 234 350 jobs could be created by

2022 if government targets are met. If solar PV expands globally and India increases its

manufacturing capacity and market share, the number could be significantly higher.

In the biofuels sector the Government of India plans to grow energy crops on 3 million

hectares by 2020 in 200 000 villages, ‘substantially on wastelands’ to prevent the

displacement of food crops. In addition to this a further 4 million hectares of energy

plantations are to be established. The government assumes that this could lead to the creation

of one direct job per hectare in establishing and managing plantations and a further 15 jobs

per village both directly from processing the crops and indirectly through increased commercial

activity as a result of energy access or the availability of cheaper energy supplies. In total up

to 5 million jobs could be created by growing energy crops in villages and an additional 5

million from industrial biofuel production.

Source: GCN (2010)

19 Assumption based on International Energy Agency (2007) 20 Estimating 10 jobs created per peak MW installed in production, 33 in installation, 3-4 in wholesaling of the system, 3-4 in indirect supply (for example in the production

process) and 1-2 in research.



Box 5: Job creation in South Africa by 2020

FOCUS JOB CREATION IN SOUTH AFRICA BY 2020

In a study on the potential of renewable energies for job creation in South Africa, AGAMA

(2003) estimates that if South Africa were to generate 15% of its electricity from renewable

energy technologies in 2020, this could create as many as 36 400 new direct jobs and 109 100

indirect jobs, without any additional cost to the economy. While there is likely to be a decline

in employment in the conventional energy sector, the study finds that this will not be a result

of an increased uptake of renewable energy technologies.

In the wind power sector, the paper estimates – conservatively, by the authors’ admission –

that 3.7 direct jobs per MW could be created in manufacturing and installation, and a further 1

job per MW for operation and maintenance (see AGAMA 2003). If renewable energies were to

account for 15% of total installed electricity capacity in 2020 and wind power contributed 50%

of this the study calculates that a total of 22 400 new direct jobs could be created.

Importantly, the study suggests that not all the jobs will necessarily be domestically based.

Wind technologies are likely to be imported from, and hence manufacturing jobs located in,

other countries. Instead, it is estimated that the majority of local jobs in wind power

generation will be in professional and management services. However, it is stated that

ambitious renewable energy targets trigger the development of a local value chain for wind

energy components and thus lead to a much higher local share of jobs created.

In the solar PV sector AGAMA estimates that the construction, transport and installation of

2KWpeak photovoltaic arrays could generate a total of 35.5 jobs per MW installed. If

renewable energies were to account for 15% of total installed electricity capacity in 2020 and

solar PV contributed 0.5% of this a total of 2 475 new direct jobs would be created. Thus,

given ambitious political targets and incentives to attract investments, the PV industry offers

substantial domestic job creation potential.

Source: AGAMA, 2003



4.3 Health co-benefits

Box 6 and Box 7 illustrate the co-benefits of climate-change investments in terms of reducing local air pollution.

Box 6: Dissemination of improved charcoal stoves in Senegal

CASE STUDY USE OF IMPROVED CHARCOAL STOVES IN SENEGAL

Increasing use of improved charcoal stoves has, since 1998, been registered in the Sustainable

and Participatory Energy Management Programme (PROGEDE), implemented by Senegalese

authorities with the financial support of the Netherlands government, the GEF and IDA. The

aim of the programme is to ‘contribute to the supply of households with domestic fuel in a

regular and sustainable way, while ensuring environmental protection and by offering

alternatives and options as well as comfort to end users.’ The aim of the improved charcoal

project is to support the reorganisation and modernisation of the charcoal trade to establish

long-term supply agreements between rural communities and urban traders.

The project yielded the following co-benefits:

- Urban and peri-urban households using the improved charcoal stove save at least 1.4

kg of charcoal per day

- The financial returns are:

o Per household: US$ 128/year

o Per restaurant: US$ 207/year;

- An average of six direct jobs were created at manufacturing sites, with US$ 22 to

US$ 62 income/month, along with indirect job creation at retailer sites;21

- Medical consultations relating to respiratory affections, skin diseases and sore eyes

were reduced in a number of health centres in the regions where the improved stoves

are used;22

- Rural women now only need to collect firewood once a week, compared to two or three

days per week previously;

- Daily time saving on cooking is 40 minutes to 1 hour.

Source: IEE – DEA, 2006

21 No information is available on potential indirect negative impacts. 22 In rural areas, 50% of affected individuals currently suffer from respiratory problems, 34%

from sore eyes and 16% from other diseases; the average cost of the treatment of smoke-

related diseases is US$ 3.6.



Box 7: Co-benefits of improved cookstoves in Mexico

CASE STUDY HEALTH BENEFITS AND TIME SAVINGS FROM IMPROVED COOKING STOVES

In a study on the Low Carbon Development potential in Mexico published in May 2010, the

Energy Sector Management Assistance Programme of the World Bank estimated the net

benefits in terms of mitigation costs of installing improved cooking stoves in Mexican

households:

- The net direct benefits in terms of reduced GHG emissions are estimated at US$ 0.07/

tonneCO2eq.

- When taking into account the time saved by the family by not having to collect as

much fuelwood, the net benefits increase to US$ 2.34/tonneCO2eq.

- When both the time saved and improved health from reduction to exposure to fine

particulate matter and carbon monoxide are taken into account, the resulting net

benefits are estimated at US$ 18.9/tonneCO2eq.

Source: ESMAP, 2010

Few studies have made non-monetary estimates of life-years saved from climate-change policies and investments. In its 2009 World Energy Outlook edition, the IEA gives a very high estimate of health benefits from reduced exposure to PM2.5

23 resulting from investments in renewable energy and energy-efficiency measures; in total, for an estimated US$ 2.64 trillion invested, 1.16 billion life-years could be saved between 2010 and 2030 in total for China and India, for a CO2 emission reduction of about 5.88 GtCO2. Table 4 illustrates the use of DALY to quantify health co-benefits, and shows that the potential links between the reduction in greenhouse gas emissions and health co-benefits seem to be strong.

23 PM2.5 is particles of less than 2.5 micrometers in diameter.



Table 4: Estimates of potential links between GHG emission reduction and health

Measure Country

/ City

Health

effect

Main

health

outcome(s)

affected

Estimation

of reduced

DALY/M

population

Approximate

cost

Potential

adverse

health

effects

Clean-burning

stoves India

Reduction in

exposure to

indoor

pollution

Infections

and disease 12 500

US$ 5 every 5

years + fuel

savings

and/or time

savings

None

identified

Low-carbon and

more active

transport

Delhi,

India

Less air

pollution,

changes in

injury risk,

changes in

physical

activity

Disease,

road traffic

injuries,

depression

13 000

Possibly

negative

(cost-saving)

for

households

Trade-off

between

reduced

road traffic

danger and

increased

danger from

walking and

cycling

China 550 US$ 70/tCO2

Low-carbon

fuels/technologies

Low-carbon

fuels/technologies India

Reduced

(particulate)

air pollution

Reduced

(particulate)

air pollution

Disease and

mortality

Disease and

mortality 1 500 US$ 40/tCO2

Increase in

fuel poverty

from higher

electricity

costs, health

risks from

nuclear

generation

and CCS

Source: The Lancet, December 19/26 2009

4.4 Rural electrification

The scale of the potential benefits of rural electrification is large. A recent report by the UN Secretary General’s office24 estimates that 1.5 billion people currently do not have access to electricity and a further 1 billion have access to unreliable electricity. The International Energy Agency (IEA) estimates that 50-100kWh of electricity per person per year is needed to cover basic needs.

24 Energy for a Sustainable Future. Secretary General’s Advisory Group on Energy and Climate Change, Summary Report and Recommendations, April 2010.



Over the coming decades, economic development, as well as increasingly urban populations, should increase the percentage of people with access to electricity. However, the large expected population growth will swamp any increases in percentage access, increasing the number of people without access to electricity in real terms between 2006 and 2050. The IEA’s assessment of several sub-Saharan African countries notes that in 2006 179.6 million people, or 65% of the population, were without electricity, but in 2030 this will increase to 191 million, or 44% of the population.25 The majority of people affected live in rural areas, although a significant urban poor population still has no access to electricity. The provision of electricity to rural homes brings additional benefits, including: • Extended daylight time for studying or working; • Improved internal air quality and therefore health because of the replacement of

traditional lighting; • Particular advantages to women because of the work burdens that can, in part, be

replaced by electricity; • Improved communications; • Reduced impact on the environment, for example by phasing-out traditional

battery systems. Further advantages include health benefits from refrigeration, although some refrigeration systems may only be practical for certain types of power systems.

a) Rural electrification and the co-benefit story

The link between rural electrification and renewable systems is important in terms of understanding the real challenges and factors involved and there is significant interest, funding and literature related to the topic. Projects already in place do not necessarily provide any climate-change benefit. WEO 2008 estimates that providing electricity access for the 191 million people in sub-Saharan Africa now without it by 2030 would cost about US$ 15 billion. However, this estimate includes a whole range of technologies including grid extensions and off-grid diesel and assumes little use of PV technology because of its generally higher costs. There are many factors that determine the most cost-effective and efficient approach to rural electrification. There is a range of estimates for when PV becomes cost-effective compared to a grid connection (WEO, 2008; ESMAP 2000)26 and much discussion on whether or not PV systems are optimal for targeting the poorest groups in society.27 It is clear from literature that where renewable energy is provided by an off-grid service, it may not be the most desired option for a given population28: often the poorest population lives in urban areas, where connection to the grid is the

25 WEO, 2008 26 NRECA International, UNDP, 2000 27 The World Bank, 2008 28 IEA, 2010



cheapest access to electricity (and in most cases the grid supplies a majority of non-renewable energy); furthermore, access to the grid is often symbolically considered as the ultimate goal in terms of electrification in developing .countries, and PV systems are sometimes in that sense considered as a less attractive option or only as a step towards a final option which would be access to the grid. This vision seems however to be changing. Although climate-change finance could bring additional mini-grid or off-grid systems to some regions, there are further cost considerations that make calculation of the benefits complex, for example there may be connection charges and charges for use that are too high for the poorest people. There has recently been an increasing interest in diesel/PV systems and PV/Storage battery systems to tackle some of the problems of continuity of supply of PV systems alone. If these hybrid systems are seen as a better solution, there could be a compromise between achieving maximum climate-change mitigation and rural electrification benefits. It is also important to note that people, communities or government of a given region may have a preference for grid extension, seeing PV systems as just an interim solution to their needs. In many cases, remote electrification figures do not count solar electricity only as ‘electrification’29. There are some indications that this attitude is now changing in some regions.30

b) The private sector delivers co-benefits

The private sector already plays a crucial role in delivering some of these off-grid and mini-grid renewable energy solutions. The Alliance for Rural Electrification (ARE) represents a range of private sector players who already play an active part in making rural electrification happen, often through renewable or renewable/diesel off-grid and mini-grid applications. This type of private sector involvement can bring specific co-benefits, in particular: • technology transfer; • capacity building through developing local skills; • demonstration effects. However this type of private sector involvement currently usually relies on public sector funding, combined with private sector expertise and technology, usually in setting up demonstration projects, as shown in a variety of case studies.31

29 IEA, 2010 30 IEA, 2010 31 ARE: Shining a Light for Progress. Best practises of the ARE: what renewable energy can deliver to developing countries.



The International Finance Corporation (IFC) has provided a sobering review of their engagement in finance structures to support the roll-out of solar PV in general, focusing particularly on the benefits that solar PV can bring to rural electrification (see Box 8). Such experience can be very useful when considering that similar mechanisms may be envisaged for delivering climate-change mitigation investment programmes. Up until 2007 the IFC managed five GEF-funded solar PV initiatives including: • The IFC/GEF Small and Medium Scale Enterprise Program (SME Program), • The Photovoltaic Market Transformation Initiative (PVMTI); • The Solar Development Group (SDG). The five programmes together led to the installation of over 84 000 Solar Heater Systems (SHS) but the IFC reports a failure on the financial front, with an inability to significantly transform markets or create sustainable businesses. Because the cost figures are not given by programme, it is impossible to calculate the cost per SHS, as money was spent on other types of supporting investments as well as the SHS themselves. IFC notes that trends in the PV market were not correctly anticipated and that the market in general was more complex than initially thought. For example, the cost of PV units did not decrease as rapidly as anticipated. IFC has rethought what type of financing is most appropriate to develop successful solar PV companies and is now focusing on a broader approach to rural electrification that supports a wider range of technologies, including distributed power generation32. The Selling Solar report noted that investments in solar PV in the developing world cannot deliver the returns on investment required by private equity and venture capital type investors, and structures. These types of returns are only possible for off-grid investors by investing in solar PV manufacturing with export opportunities to the developed world. The IFC also reflected on the fact that there were too many shareholders with different perspectives (a total of 15) involved in the running of the IFC’s private equity fund. This made it difficult to be flexible within the structure and make changes when it was necessary. The IFC would also recommend that investments should try to stimulate the entire industry e.g. solar PV industry through market development and capacity building, rather than taking such a concentrated focus on developing individual businesses. Other financial structure used by the IFC, such as the Solar Development Foundation was more successful. This approach was non-profit and fit better with the needs of developing solar PV businesses by providing grants, loans technical assistance etc.

32 Distributed power generation feeds directly into a local distribution system, rather than the national system. This can reduce transmission losses and can often make use of smaller-scale technologies.



Rural electrification programmes already involve a very complex mix of engagement between various utility companies, with different public/private ownership structures, charges to private consumers, and complex subsidy structures for some of the poorest customers and for companies that help achieve rural electrification goals. The structures of current rural electrification programmes, including those involving grid connections, may be instructive for investors who wish to achieve rural electrification as a co-benefit of climate change investments.33

c) Quantifying the rural electrification co-benefit

Some case studies of particular efforts to achieve rural electrification give an indication of the level of investment needed to deliver climate-change benefits with a rural electrification co-benefit. There also has been some exploration of rural electrification as a co-benefit of other development activities34 which show that a range of development projects could deliver co-benefits in terms of rural electrification, but the examples given rarely refer to projects that would fit under a climate-change umbrella, and when they do, figures are not always available. Generic estimates of rural electrification co-benefits are more difficult, mainly because the specific circumstances of where and how the money is spent are so variable. Estimates of the co-benefits at a project level are more straightforward, as it is easier to look at specific circumstances that may determine variability. Reviewing the success of these schemes, as the IFC did in 2007, will also help determine how realistic the estimates are. Table 5 presents one of the few quantified examples of private-sector investment in climate change delivering co-benefits in the form of rural electrification. The estimated cost is approximately $640/home but this may not include the costs of connection.

Table 5: Rural electrification

Project

Timeline Country/ measure

Total

Project

Budget

Amount of

Private

Financing

Co-benefit,

relating to total

investment

2002-2011

Sri Lanka: rural

electrification through solar

home systems

US$ 102.5

million

US$ 52.7

million

(51%)

160 000 rural

homes electrified

Source: RERED

33 IEA, 2010 34 UNDP/ESMAP, 2004



5 Topic focus

5.1 The forestry sector

Providing financing to reduce emissions from deforestation and degradation (REDD+) is an increasingly important part of international discussions on climate-change action. Reducing deforestation and forest degradation, as well as afforestation, can deliver significant co-benefits, including:

• Environmental benefits, such as maintained ecosystem services, water conservation and preservation of biodiversity;

• Co-benefits for communities and indigenous people, such as clarification of land tenure, provision of jobs, improvement in local participation.

High quality forestry and REDD+ programmes should be tackling not just the forestry sector, but the drivers of deforestation, which involves engaging in a wide range of initiatives that touch on sectors other than forestry. In this context it is important that alternative jobs are created as a core part of any REDD+ programme. Forestry investments thus differ from other mitigation activities in that the co-benefits are in fact a crucial part of creating REDD+ interventions that will actually work in the longer-term.

a) The value of co-benefits

The potential for forestry and REDD+ initiatives to deliver co-benefits is widely recognised. A recent UN-WCMC initiative has established a website http://www.carbon-

biodiversity.net/ that describes the full range of co-benefits that result from forest-based

climate-change initiatives. Initial results of the UN-sponsored ‘The Economics of Ecosystems and Biodiversity’ (TEEB) programme suggest an economic cost of global deforestation of US$ 2-5 trillion of lost services each year. Examination of 100 studies on the value of supporting services (excluding climate regulation) provided by tropical forests resulted in a preliminary estimate of US$ 4 155 per ha per annum35. The services include maintenance of soil fertility, pollination and genetic diversity as well as cultural services and resource provision e.g. food, water and raw materials. Further studies should result in better evaluation of these co-benefits. For comparison, taking a conservative estimate of 100 tonnes of carbon per hectare, and a conservative carbon price of $10/tonneCO2 for issued credits, gives a carbon value of $37 000 per hectare.

35 The Economics of Ecosystems and Biodiversity (TEEB), TEEB (2009) TEEB Climate

Issues Update. September 2009. Ecosystem value figures are quoted in the report as preliminary and part of ongoing research as TEEB develops a database for this purpose.



b) Current REDD+ projects and co-benefits

The Centre for International Forestry Research (CIFOR) has reviewed a wide range of REDD+ projects36, including readiness projects, demonstration projects and forestry projects without explicit carbon goals. The report concluded that co-benefits can be very location-specific, depending on forest type. In general, dry forests have a greater population density and a poorer population with a large potential for social co-benefits (lower starting point, higher multiplier) but these are also the areas least likely to benefit from REDD+ schemes, and least represented by the current (small) forestry portfolio, particularly in terms of demonstration projects, although REDD+ readiness activities are more balanced. The report includes countries such as Paraguay, Argentina, Kenya, Ethiopia and Tanzania as having dry forests; countries with humid forests include Indonesia, PNG, DR Congo, Brazil and Guyana. The study concluded that REDD+ practitioners may have to consider balancing cost-effectiveness considerations related to climate-change mitigation against the delivery of other co-benefits. There is a range of REDD+ projects, some of which aim to reduce activity through traditional forest protection and others, such as community-based natural resource management, which aim to increase activities that improve overall forest condition. The improvement projects, as outlined in the CIFOR paper, may offer more potential to deliver social co-benefits. Improved data sets would enable REDD+ investment decisions to maximise the cost-effectiveness of carbon delivery rather than the delivery of other co-benefits. Supplementary finance may also be needed to steer forestry investments/projects in a way that optimises the delivery of the desired co-benefits.

Many emerging forestry demonstration projects are initiatives between several parties. Several by private sector entities such as Bank of America, Merill Lynch and Macquarie Bank have been carried out in partnership with NGOs, in this case Fauna & Flora International (FFI). FFI noted37 that they were only at the initial stages of setting up monitoring and measuring of co-benefits at the time of writing this report. No further data are yet available.

c) The role of the private sector

The private sector has several ways of engaging with forestry projects, including creating jobs as a result of other investments outside the sector that might help to tackle the drivers of deforestation. Projects designed to tackle these drivers will need to be carefully and specifically designed to match the local economic, social and environmental situation. Such programmes can only succeeed with a good understanding of the local stakeholders involved, their motivations and operational context.

36 CIFOR, 2009 37 Email correspondence with Ecofys and Natasha Calderwood (FFI)



The private sector may also become involved through the concept of Payment for Environmental Services (PES) and in future increasingly through some sort of carbon market or financing elements. An IIED review of experiences38 noted that the limited examples (12) of PES being used to date suggest that the relationship between the schemes and the social impact or implications for communities has to be carefully monitored. PES is not necessarily detrimental to local communities, but social issues need to be carefully considered to ensure that impacts are positive and risks are controlled. The PES idea has been more widely explored in Latin America than in Africa. The CIFOR paper notes that PES alone will not be enough to address the root causes of forest emissions. Other approaches, for example improved governance and policy reforms, will also be important. There needs to be a balance between private sector and public sector investment and each has an appropriate role to play in delivering carbon emission reductions.

d) Integrating a co-benefit focused approach

In forestry there is a more concerted approach to encourage, monitor and control co-benefits because of an early awareness of the co-benefits available in the sector and, perhaps, because of a concern that there are also risks of damage being done through some types of forestry work. A range of standards has therefore been established to help project developers focus on co-benefits. The Climate, Community and Biodiversity Alliance (CCBA) is a partnership of international NGOs and research institutes seeking to promote integrated solutions to land management around the world. CCBA has developed voluntary standards to help design and identify land-management activities that simultaneously minimise climate change, support sustainable development and conserve biodiversity.39

e) Quantifying co-benefits

Information from the CCBA verification reports can provide some information about anticipated, if not always measured, co-benefits of REDD+ projects that can be quantified. Importantly, the availability of this information provides good resolution at the project level, but taken with the CIFOR conclusion that delivery of co-benefits is very location-specific, it is clear that any scaling-up of these numbers should be done with care. Table 6 includes some of the co-benefits quantified in the CCBA Project Design Documents (PDDs) and confirmed in verification reports for two forestry projects, illustrating a range of tangible and measurable co-benefits at the project level. Both projects have some private sector finance.

38 Bond et al. 2009 39 This paragraph is taken from the CCBA’s website www.climate-standards.org/



Table 6: Quantifying forestry co-benefits

Project Duration Cost Carbon goal Co-benefits Measured impacts

Juma Reserve

RED project40

2006-

2050

US$ 24m over

lifetime at 5%

discount rate. $2m

provided by Marriot

Hotels to cover first 4

years. Other funding

from Amazonas State

Government and

Bradesco Bank41

Avoided deforestation of

329 483 hectares of

tropical forests avoiding

emissions of

189 767 028 tons of CO2

over project lifetime

• Income generation

through sustainable

business

• Education and

community

development

• Direct payments for

ecosystem services

to traditional

communities

• Health improvements

• Access to clean water

• Access to electricity

• Biodiversity

conservation

• Monitoring capacity

• Range of community-based initiatives

throughout the forest production chain

• Construct three new schools

• Develop high school programme

• Development of the Bolsta Floresta

programme to provide finance to most

vulnerable populations

• Health agent training

• Pro-Chuva programme for rain water

collection and storage treatment

• Solar panels installed

• Monitoring and conservation of species

(versus baseline of 62% deforestation,

expect only 10%)

• Addition of one monitoring base and four

communication bases and implementation of

remote sensing

Reforestation in

grassland areas

of Uchindile,

2000-

2020

(planned

$34.58m private

money, including

loans and equity.

Reforestation of 18 379

ha of grassland,

sequestering emissions

• Socio-economic

benefit to rural poor

• Development aid: approx $300 000 spent on

preparing development plans for the regions

since approx. start of project in 2000.

40 Information taken from the Juma RED project CCBA PDD document September 2008 41 The cost of REDD: lessons from Amazonas. Maryanne Grieg-Gran. IIED briefing November 2009



Kilombero,

Tanzania &

Mapanda,

Mufindi,

Tanzania42

crediting

period)

Overall

project

period 99

years.

Plans also to gain

funding through IFC

loan and other public

sources. 43

of 2 899 222 tCO2eq

over project lifetime

• Infrastructure

improvements

• Biodiversity

• Water conservation

• Health

• Women

• Education

• Job creation, year round employment. At

least 50 full time jobs in local area. Approx

600 casual workers per project per year.

• Road, communications and water supply

building

• Protection and management of flora and

fauna

• Awareness raising of biodiversity

management

• Groundwater charging

• Education on health issues and transport to

medical facilities, where necessary. Approx

$150 000 spent on health since approx

2000.

• Improve employment opportunities for

women, estimate that one third of jobs go to

women44

• Provide materials for school construction,

training also provided. Approx $31 000

spent on education since 2000.

42 Information taken from the CCBA PDD document February 2009 43 Information taken from the VCS PDD document July 2009 44 A forestry CDM/VCS case study from Tanzania, Green Resources, 23 January 2010



5.2 Adaptation

This section looks at voluntary planned climate-change adaptation activities. Some adaptation will take place as part of autonomous change, or as the result of innate adaptive capacity. However, direct investment in adaptation will relate to specific planned activities. Furthermore, some adaptation will occur as a direct co-benefit of mitigation activities. However, the focus here is on co-benefits realised where the core goal is adaptation itself.45 Some climate-change financing mechanisms may require the private sector to make mandatory contributions to adaptation. Here, the engagement of the private sector is assumed to be voluntary. The UNFCCC Contact Group on Enhanced Action on Adaptation views adaptation as ‘action to reduce the vulnerability and build the resilience of ecological and social systems and economic sectors to present and future adverse effects of climate change in order to minimise the threats to life, human health, livelihoods, food security, assets, amenities, ecosystems and sustainable development’ (October, 2009). In the developing world, adaptation activities can overlap significantly with general development activities. Indeed there are certain types of adaptation investment that may in fact be directly funding more traditional development activities, therefore subsuming a potential co-benefit as the main and core benefit. For example, the vulnerability of a country to climate-change impacts may be reduced by investing in infrastructure such as roads and bridges. These could, however, also be viewed as development investments. If they are categorised as adaptation investments, all the benefits in terms of improved mobility, and resultant stronger economic conditions, could be considered as co-benefits. However, if the investments are seen as development-focused, then climate-change adaptation is itself a co-benefit.

45 In the adaptation literature, ‘co-benefit’ refers to the adaptation benefit that might arise from mitigation action and ‘ancillary benefits’ is used to describe additional benefits that arise specifically from the adaptation action. For consistency with the rest of the discussion in this report, we also refer to these ancillary benefits as co-benefits



Figure 3: Diagram taken from Persson et al (2009)

Figure 3 shows the adaptation-development continuum, as presented by Persson et al (2009). It demonstrates that investments to manage climate risk and confront climate change impacts, as opposed to tackling vulnerability, show less overlap with traditional development funding. This concept is important when considering what co-benefits adaptation activities can deliver. Investments that seek to address the impacts specifically, rather than the vulnerabilities, are more clearly exclusively climate-change adaptation finance, e.g. building of sea defences, as opposed to development finance. Adaptation measures can take place across a wide range of sectors. Adaptation investments can flow to infrastructure investments in transport, energy and buildings, more generic investments and changes implemented in agriculture, health and planning, as well as process improvements in order to climate-proof investments in general. This broad scope of activities means that a wide range of sector-specific co-benefits are possible. These include: • Activities related to stresses on agriculture and land-use can provide more

resilient rural economy systems and improved livelihoods e.g. drought-resistant crops;

• Some adaptation activities will prevent climate change impacts that would undo or undermine the development benefits of other projects e.g. schools built on flood plains;

• Investments in infrastructure (e.g. buildings, urban drains) can help strengthen the operation of the wider economy and society, thus achieving development aims as co-benefits. An example is investment in capacity and infrastructure by a mining company to ensure security of supply of water for its operations which also results in improved water availability through efficiency gains and lower water tariffs for the local community;

• Reduce vulnerability to current climate variability, as a co-benefit of adaptation which tackles vulnerability to future climate change.



It is also important to note that these co-benefits may not be distributed uniformly - some may have a stronger effect, particularly on the poorest and most vulnerable members of society. This consideration is important when considering how to measure or value the co-benefits of these investments.

a) Private sector investment in adaptation

The role of private sector investment in adaptation has been closely explored in the literature, with a clear and distinct role for private sector funding, differing somewhat from its role in climate-change mitigation. 46,

This section seeks to identify the specific co-benefits for development that result from private sector investment in adaptation. A report by the Stockholm Environmental Institute (SEI) in 2009 sets out four main roles for the private sector in adaptation: • Providing a new source of finance to tackle climate-change adaptation; • Providing risk management mechanisms; • Providing goods and services in various parts of the supply chain; • Working to climate-proof private investments.

1 Financing

The SEI paper breaks down the different types of private sector finance, including private debt and private equity, to clarify where the private sector may be relevant to adaptation. There is also a role for philanthropy and individual adaptation finance, for example through adaptation offsets, although these function very differently from larger-scale private sector investment. While equity financing for adaptation may remain unattractive to the private sector, because much of the value of very large-scale adaptation programmes is in avoided costs to society rather than direct returns, innovative financing structures may bring other benefits. Similarly, governments could provide subsidies for adaptation activities to achieve such social returns and channel them through private investors. Private sector funds could be provided up-front for adaptation, backed by longer-term public sector adaptation pledges, enabling both the main benefits and the co-benefits of the funding to be realised. An appropriate innovative structure for this could be based on the IFFIm (International Finance Facility for Immunisations) bonds that draw on a future guarantee of public sector aid money to bring in up-front private money. This structure uses the promise of public money in the future to pay returns on private investments made today, enabling benefits to be realised straight away.



In addition, private sector funding, while focusing on the most commercially viable propositions, could free up public sector money to be spent on other goals and thus achieve co-benefits. It is important to note, however, that the private sector will look carefully at risks when making investments, particularly in developing countries. Private sector investments are therefore more likely to flow to developing countries and regions with low risk profiles, so that only such developing countries, which may also have more middle-income communities, will be able to benefit from the co-benefits of private sector investment.

2 Risk Management

In terms of risk management, providing assistance and guarantee structures to cope with climate change-related events is extremely important in the developing world. The private sector is already developing innovative schemes, such as index-based micro-insurance schemes, to help support communities and individuals to cope with climate-change impacts. While these have the immediate benefit of reducing at least some of the financial consequences of climate change, the increased resilience of society also helps to secure its social and economic wellbeing and fabric. For example, insurance schemes that support institutions and infrastructure as well as health may be able to withstand other impacts that are not climate change-related. This is a significant co-benefit, but one that is difficult to measure.

3 Procurement

The private sector can deliver co-benefits where they are the implementer, as well as when they are the investor. The knowledge and skills of the private sector can be important in achieving effective adaptation. Involvement of the private sector can therefore build local skills and experience, if applied to climate-change adaptation in the developing world. In general, adaptation activities are undertaken at the community, regional or national level and therefore local skills, engagement and perspectives are vital to success. Although external expertise will be useful, the private sector can focus on building capacity within a country to deliver services locally. This is sound business from a private sector perspective and delivers the co-benefits within a developing country. Again, such co-benefits are difficult to quantify.

4 Climate-proofing

Finally, private sector investments can be targeted towards climate-proofing existing investment flows in the developing world. The World Bank estimates that 10% of foreign direct investment in the developing world, approximately US$ 16billion/year, is subject to climate risk.46

46 SEI, 2009



b) Calculating co-benefits

It is clear that a range of co-benefits can result from adaptation investments, some of which are specific to involvement of the private sector. The close relationship between adaptation interventions and sustainable development initiatives makes it difficult to identify the incremental and/or additional costs of adaptation activities over and above ‘development as usual’47. This close relationship also makes it difficult to quantify development co-benefits that may come from the implementation of an adaptation project or programme. Indeed in many cases, climate-change outcomes could be considered as co-benefits of sustainable development activities. A recent UNFCCC report48 reviewed a range of cost-benefit analyses of adaptation activities. It noted that while co-benefits are highly relevant to such analyses, very few included co-benefits at the qualitative level. However two studies did try to quantify these. The Dutch Routeplanner exercise49 used multi-criterion analysis, ranking each proposed adaptation activity from 1 to 5, where 1 represented a very low level of co-benefits (or even negative consequences) and 5 a very high level. These scores represented one fifth of the total assessment of a project, the other main parameters being urgency, no-regret options, and mitigation effects. This methodology for including co-benefits in decision-making is a pragmatic one that deals effectively with the difficulties of quantification, while recognising their genuine value. A second study50 used a specific model for a river project. This quantitative approach was shown to be very relevant at the direct project level, but may be more difficult to apply at a level higher than the project or sectoral level. The paucity of quantitative data on any type of co-benefit means that no calculations of the benefits that come specifically from private sector investment are available.

47 J. Brown, N. Kaur, 2009 48 Potential costs and benefits of adaptation options: A review of existing literature Technical paper, 7 December 2009. 49 A qualitative assessment of climate adaptation options and some estimates of adaptation costs E.C. van Ierland, K. de Bruin, R.B. Dellink and A. Ruijs, Environmental Economics and Natural Resources, Wageningen UR, February 2007 (Part of the Netherlands Adaptation Routeplanner work) 50 The Berg River Dynamic Spatial Equilibrium Model: A New Tool for Assessing the Benefits and Costs of Alternatives for Coping With Water Demand Growth, Climate Variability, and Climate Change in the Western Cape. M. Callaway et al. 2007 AIACC Working Paper No. 31



Attempts to calculate the value of co-benefits are also closely related to attempts to assess the global costs of adaptation, which requires projections of economic growth, structural change, climate change, human behaviour, and government investments 40 years into the future. An EACC study51 aimed to establish a new benchmark for research of this nature, by adopting a consistent approach across countries and sectors and over time. In the process however, it had to make important assumptions. This type of work should gradually lead to better assessment of the co-benefits of investment in climate-change adaptation.

c) Conclusion

In summary, investment in adaptation can bring a wide range of co-benefits. However, these may already be accounted for in other assessments of overall development activities, depending on the relationship of the climate-change investment with other development activities. Private sector and its finance play several roles in adaptation, and may bring co-benefits. But there has been very little work on quantifying or even generally assessing these, making it difficult to recommend any single methodology. However, literature demonstrates that multi-criterion analysis can be helpful at the level of overall policies and programmes, while there is merit in a cost-benefit approach when assessing at the project or sector level. There are no significant studies that can be scaled up to assess the total value of the co-benefits that could result from the amount of international finance for adaptation that is currently proposed. The specificity of the sectors in which money would be invested, as well as the country and the mechanism by which the money would be channelled, all have an impact on the value of co-benefits achievable.

51 EACC 2010



6 Barriers, Pre-conditions and Risks

While carrying out this project, it became increasingly evident that there were certain pre-conditions for realising the co-benefits described in this report. Often there are barriers to be overcome – some of which can be dealt with by these preconditions. There may also be significant risks associated with climate-change finance and the attempts to realise the co-benefits.

6.1 Barriers and pre-conditions

a) Ensuring a rigorous approach

Chapter 2 suggests that private sector investors can improve the focus on rigorous assessments of costs and delivery within a project or programme context. This increased rigour may mean that the early stages of project development take longer, but ultimately this is likely to lead to more successful investment structures and project outcomes – both for the headline benefit and for co-benefits. If a project involves several local parties, such an approach should also have an inherent skills-transfer benefit.

b) Giving the private sector space to operate

Engagement of the private sector can improve the quality of outputs through competitive tendering processes. However, this is dependent on well-managed processes, and clear specifications. The public sector needs to allow the private sector space to make recommendations and deliver improvements at the tendering stage.

c) Job creation requires a local market

Job creation associated with renewable energy technologies depends on the development of significant local markets, which may require a strong political commitment and favourable economic support mechanisms.

d) Climate-change mitigation funding results in rural electrification

only when some preconditions are met

The case of rural electrification shows that climate change mitigation investments will only deliver this co-benefit where certain pre-conditions are met: • the renewable application is cost-effective in the region and for that

population, or sufficiently subsidised; • appropriate communication, engagement, skill-building and ownership are

achieved to make the application genuinely sustainable; • the renewable option is not just seen as a stepping stone to full electrification

using other sources of energy.



e) Removing barriers to innovation

Innovation can take place in all parts of the economy and can include, but is not limited to, low-carbon technologies and services. Private sector investment in climate-change activities may stimulate wider innovation. It is possible, though, that for private sector investment to bring about innovation co-benefits specific to the low-carbon sector, governments may need to pay special attention to identifying and removing barriers such as market prices that do not incorporate externalities such as pollution, misplaced incentives, vested interests, lack of effective regulatory agencies and imperfect information.

f) Considering the time it takes to deliver co-benefits

Co-benefits that are directly linked to projects are more likely to be realised, and be realised earlier, than those that are only linked indirectly.52 Private sector investments, which often demand shorter payback times than public investments, is therefore likely to also deliver co-benefits earlier.

g) The structure and operation of the financing mechanism is

important

Box 8 gives an example of how the structure and operation of a finance mechanism can have a significant impact on the successful delivery of the headline benefit and the co-benefits.

52 As ‘indirect’ co-benefits are mediated by direct effects, the former cannot occur without the latter, but may not occur at all. For example, a hydroelectric project that replaces fossil-fired plants creates better air quality with the first kilowatt hour generated. Better cooking stoves might save fuelwood-gathering time for women, but this time may not be used for beneficial activities.



Box 8: Success factors for renewable energy investment in developing

countries

SUCCESS FACTORS FOR RENEWABLE ENERGY INVESTMENT IN DEVELOPING

COUNTRIES – IFC’S ‘SELLING SOLAR’

The 2007 study ‘Selling Solar: Lessons from more than a

decade of IFC’s experience’ analyses results and

experience from IFC’s several solar energy programmes

in developing countries. Although the findings relate to

several programmes that focus on solar energy, they can

also be applied to other forms of renewable energy.

• Match funding sources to realistic profit

expectations

Private equity may be better suited for larger-scale

than smaller-scale projects. Investors from the

private sector usually seek a certain level of risk-

adjusted profit. These expectations can be met by

large-scale projects, like wind parks, but are usually

difficult to meet by projects that focus on business

with SMEs and end-use customers. The latter still

bear substantial risks, and the costs of overheads

and other staff take up a higher share of small-scale projects, therefore reducing

profitability but possibly increasing co-benefits.

• Define your target group in detail

With an appropriate client profile, it is possible to improve the product/market

combination, and therefore the success of the project. Poor definition of the target

group can lead to false assumptions on actual market demand, perceived value of

the offer, and creation of co-benefits. Knowing the specific needs and preferences of

targeted clients, distinctions can be made between sub-groups with different profiles,

and products can be designed accordingly. Important client attributes include their

demand for energy services, their ability and willingness to pay, their technical skill

and knowledge, and cultural values.

• Be flexible

As discussed above, it can be difficult to foresee all relevant success factors. Even

so, the dynamic renewable energy market environment can quickly change a

project’s opportunities and risks. It is therefore important to be able to adjust to

these market dynamics to have long-term success. For example, consumer

preferences can necessitate a switch to smaller PV modules, or an economic

downturn may require a grace period.

• Create stability and trust with partners and politicians

Stable and trustworthy relationships with political decision-makers and other

influential partners are a valuable component of a successful project. Commercial

partners can lend brand value and marketing experience to facilitate sales,

relationships with political decision-makers can support administrative procedures

and mitigate risks due to changes in energy taxes, or grid extension.

Source: IFC, 2007



6.2 Risks

a) Negative impacts on the overall economy

The expansion of low-carbon technology markets due to public policy measures to reduce emissions inevitably leads to the contraction of some carbon-intensive sectors, reducing some jobs in those sectors. In addition, jobs may be lost in other sectors due to the possible financial impact of the low-carbon energy alternatives, such as higher taxes linked to the fiscal costs of green stimulus programmes, or higher electricity costs due to environmental policies. These impacts, although recognised, are rarely taken into account in job creation estimates, and could therefore not be included in the case studies mentioned in this report.

b) Facing innovation

Implementing new technologies can represent a real challenge, especially in rural areas: in its early years, Selco India (see Box 3) had to overcome the reluctance of local inhabitants for new technologies and had to build faith in alternatives to unreliable rural lighting – it took them five years to electrify the first 500 houses. In some cases the private sector will be willing to fully incorporate this extra capacity-building into its business models as initial investment. In other cases, there will have to be a well thought-through balance of the expenditure of private and public funds. The public sector may be responsible for some level of capacity-building in the population, making it attractive for the private sector to take the next step and invest and innovate further in terms of technology and market penetration.

c) Social barriers

Energy poverty is a problem that has a disproportionate effect on women and girls, especially in rural areas: many women in developing countries have to spend long hours gathering fuel and hauling water, carrying heavy loads over long distances, and thus also facing additional health problems. They are especially vulnerable to the adverse impacts of deforestation, desertification and ecosystem disruption, having to travel farther when fuelwood becomes scarce. Overburdened women are more likely to keep their daughters at home from school to help with household activities, limiting their education and making it increasingly likely that the families remain in poverty. When properly designed, energy projects can be extremely important in terms of reducing existing domestic burdens on women and girls, and can also generate opportunities for women to engage in income-producing activities. Although women play a key role in the use and conservation of energy resources, they are generally marginalised and kept away from energy planning. As the case study in Box 9 illustrates, it is essential to involve women in energy project



developments, in order to avoid not only negative social impacts, but also possibly environmental co-impacts. This can prove difficult as social habits often constitute a barrier to their involvement – because of lack of time but also and mainly because of the traditional role distribution between men and women.

Box 9: Example of a badly implemented programme where women should have

been consulted

CASE STUDY BIOGAS PROJECT IN INDIA: A SOCIAL FAILURE

A community biogas plant installed in Fateh Singh ka Purwa (India) to provide cooking

energy, although technologically sound, has proved a social failure: male community

leaders, not interested in cooking, welcomed energy for milling machines or to power

irrigation pumps; women were not consulted when it was decided that the gas supply of

the plant would be limited to two hours (8-10am) when they are working in the fields, a

fact completely ignored by the plant organisers. As a result, the gas provides less than

25% of the day’s cooking energy and the women need to look for wood as substitute for

the dung cakes now used for the biogas plant.

Source: Ministry of Non-Conventional Energy Sources, 2001

Women who learn new skills and obtain improved access to energy for household and income-generating activities can create new resources for investing in better conditions for themselves, their families, and their communities.

d) Impacts of adaptation

It is also important to note that it may not always be right, from a pure climate-change adaptation perspective, to focus only on an approach with minimum initial climate damage.53 Investment in adaptation measures may be cost-effective only once some climate change damage to communities and physical assets has actually been absorbed. This means that decisions on adaptation investments may come at a stage where some damage has been done already, and therefore such investments may eventually bring co-benefits to society, but this may come at some initial cost.

53 Basque Center for Climate Change (BC3), 2010



7 Conclusion

The scale of the climate-change challenge is such that public resources must be used efficiently as well as private investment being catalysed. The primary effect of using public finance to leverage private sources is to increase the scale of financial flows mobilised, provided the public-private financing mechanisms are correctly designed. This will result in developmental co-benefits for individual citizens and communities around the world also being scaled up. Many of these co-benefits can be measured in general terms and for specific case study examples. The quantification of co-benefits though is not straightforward, and relatively few numbers are available. The figures presented in this paper help to illustrate how well-planned and coordinated investment can bring real benefits. The lack of available figures can be explained by the difficulty in putting a value on many of the co-benefits, as well as a greater interest in economic than in societal and social benefits. The quantification of co-benefits at a generic or global level is especially difficult because the delivery of co-benefits is very dependent, for example, on: • geographic location • overlap with other funding and initiatives • type of private sector funding used Furthermore, because of the fundamentally different nature of the private sector, investments can bring added benefits, such as skills development and greater access to technology markets. These additional benefits need to be better documented, but not without acknowledging and assessing the associated risks, real or perceived. Further steps (Box 10) will be necessary to ensure that the structure of leveraging and investment mechanisms maximises these benefits and fully addresses and reduces these risks.



Box 10: Further steps

FOCUS FURTHER STEPS

This report tackles a complex topic for which little data is currently available. Further

steps to continue the work started here include:

- Research additional data:

o Broaden the scope of the case study analyses both in terms of source of

funding, and countries (e.g. look at success stories such as the development

of renewables in Germany and see how these can be compared with the

situation of developing countries);

o Collect field data on financial flows and co-benefits, with particular emphasis

on differentiating Level 1, 2 and 3 co-benefits;

o Make an in-depth analysis of a specific co-benefit: one which has been

researched in this study, or one less investigated such as energy security.

- Create tools for the short term, such as a modeling approach based on assumptions

used in the literature and using proxy figures to quantify the co-benefits. Initially, this

would require much approximation, and have to use data sets from developed

countries (e.g. USA), resulting in large ranges of data with only limited regional

applicability.

- Support the development of mechanisms that will result in solid data sets on the

delivery of co-benefits from private sector investments:

o Develop and implement an investment screening programme aimed at

projects that meet as many sustainability criteria as possible, and check

possible opportunities for improvements in this field for on-going projects (a

similar approach has been taken by EBRD54);

o Learn from other initiatives aimed at good financial returns on investment,

while focusing on projects screened for environmental co-benefits (e.g.

CalPERS55, and on-going discussions at the P-80 forum of the world’s largest

pension funds);

o Set up monitoring and reporting guidelines on the sources of financial flows.

- Demonstrate to developing countries that co-benefits can be realised, and should be

prioritised, through joint projects to assess which co-benefits should be seen as a priority

on a case-by-case basis. Support could then be given to governments, working with

private sector investors, to help realise these co-benefits. This could include meeting pre-

conditions for investments, workshops with investors, and links with experienced entities

(e.g. GuarantCo56).

54 Sourced from discussions with the European Bank for Reconstruction and Development. 55 http://www.calpers.ca.gov/ 56 http://www.guarantco.com/



Appendix A Additional considerations for the

development of an assessment methodology

It is important to consider carefully the methodological approach to calculating the co-benefits that financing climate-change mitigation and adaptation activities can bring. The overall approach to measuring the impacts of financing will influence the inputs that are needed, the complexity of the calculations, and ultimately the results in terms of their validity and limitations.

A 1 Bottom-up or Top down

The first decision is whether to use a bottom-up or a top-down approach (or both). A bottom-up approach identifies the most important co-benefits, then tries to quantify each one separately, and then aggregates the individual results into an overall result, including possible interdependencies. A top-down approach tries to model the economy (or a certain part thereof) as a whole by defining its parts and interactions, and assesses the co-benefits in financial terms as a response of the economic system and its parts. A bottom-up approach has the advantage that it links specific, concrete co-benefits directly to their finance and can assess these in direct, non-derived units, e.g. regarding electrification rate and health benefits. But the approach is only efficient if it is applied to a limited number of co-benefits where causal links are known and easy to quantify. In the case of the wide range of potential co-benefits under discussion here, this limitation may lead to inaccurate results. Climate-change investments may have a wide range of indirect co-benefits that might not be captured by a bottom-up approach, and results may be difficult to compare or use in other work. For example, rural electrification may lead to increased lighting hours and therefore more working time. This enhances employment opportunities as well as the overall quality of life, though the scale of impact for men and women may be different. Less rural-urban migration may also be a consequence. Counter-effects may include a higher overall use of energy, increased waste from appliances, negative effects on social habits, and lower chances for education due to less rural to urban migration. In contrast, a top-down approach is beneficial if either a complete set of co-benefits is desired or if co-benefits have to be quantified where the link with finance is indirect and not clear. Also, results will be given in one uniform unit irrespective of the effects, which makes the results more comparable. The disadvantage of a top-down approach is that it either takes a lot of effort to set up or it is too general to discriminate finance impacts in specific, smaller parts of the system. In some contexts, it is also desirable to have results in ‘real’ units, such as rural electrification or life-years saved, rather than a derived monetary value.



A 2 Choice of Filter

Apart from the decision between a bottom-up and a top-down approach, the type of lens or filter through which to view the data may also be important. In the case of co-benefits, several different categorisations are possible. For example, the co-benefits from investments in different types of technologies may be compared, e.g. the co-benefits of financing renewable energy, forestry or transport projects. Alternately the co-benefits could be compared for different financing structures, or through a filter that looks across all types of investment and examines only the co-benefits themselves. There is a logic to justify any of these choices because some co-benefits are technology-sensitive while others are not. Furthermore, some effects such as employment may be dependent on the financing structure involved, or the specific conditions of the country in which the project is located. To get a comprehensive understanding of the effects of finance, all possible factors that influence co-benefits should be taken into account and a filter should be selected that illustrates the information in the most accurate and useful manner.

A 3 Level of input resolution

When trying to assess the co-benefits of climate-change investments in developing countries, it is not clear how much project information should go into the assessment method. Should the method require detailed information on every aspect of the project to increase precision but also the complexity and data needs? Or should it be limited to few key parameters, common to all projects and easy to measure, but possibly neglecting important differences and risking considerable errors in the estimated benefits? This study assumes that project-specific information at all level of detail is available, so input is not a problem, which would favour using a higher resolution level of project information. However, while Box 8 shows that there has been some research and experience on success factors for these kinds of projects, a clear and strong link between the potential success factors and the scale of co-benefits cannot yet be seen. This is especially true when considering the dynamics of the relatively young and growing climate-change market. Furthermore, increased precision of project input may or may not affect the overall precision of the assessment. Uncertainties regarding the approach, indirect impacts and time lags may overshadow increased precision resulting from higher input resolution. Also, given the range of different project types and circumstances, it is unlikely that an extensive list of parameters is applicable to all these different projects, and can be correctly applied by all users.



It therefore seems appropriate to aim for a few key project parameters and indicators that factor into the assessment of a project’s co-benefits. If necessary, the assessment results can be used with a more specific project background, allowing them to be viewed as rather conservative or optimistic.

A 4 Indirect impacts / risks

Any methodology to calculate the benefits of financing should also take account of the risks and negative effects of investments and funding. In many cases, these are rather indirect and difficult to quantify. In broad economic terms, the negative effects or risks of climate change finance in developing countries are job losses, rebound effects and crowding out. It may be important to consider the overall effects, for example some job losses may occur in a small sector or region but there may be an overall job increase because of jobs created in other sectors or regions.

a) Indirect job losses

Job losses can occur as a direct result of the financed activity or as an indirect effect of the employment demands of the project. For example, if a project that increases energy efficiency reduces the need for grid power, this may decrease employment in the power sector, and the construction and operation of a wind turbine may draw construction and operation workers from the pool of workers of conventional plants. From a macroeconomic view, the net job effects of a project may depend on available employment capacity. If there is free capacity (unemployment), the jobs created by the project may be additional to the existing jobs. If there is none (full employment), jobs directly created by the project may be lost elsewhere. In practice, there will be a mixture of both, depending on the specific project design and the labour market and other conditions. A similar logic can be applied to other co-benefits. For example, a wind park may necessitate the logging of part of a forest (gross biodiversity loss). But this may reduce the logging of wood for a conventional plant elsewhere and the need for firewood at the same time, and thus lead to net biodiversity gains compared to the reference case.



b) Rebound effect

The rebound effect is mostly associated with energy-efficiency measures which aim to reduce energy demand.57 These may lead to a reduced energy price, which then makes energy use more attractive, so the net result may be more energy being used. Such a rebound effect may also apply to transport (more person-kilometres and more emissions due to cheaper prices and more convenient transport) and other projects.

c) Crowding-out

Crowding out is a macroeconomic term that describes the potential of public investment to hinder private investment,58 in pure economic terms, because of interest rate and other effects. If public money is added to the supply side of the capital market, interest rates will decrease in order to balance supply with demand for capital, making private investment less attractive. There is also a risk that money sent to a developing country focusing exclusively on a particular outcome e.g. climate-change mitigation or adaptation, will crowd out local providers. This is a risk for all types of financing, particularly where the level of the funding or the pressure to deliver particular outcomes, e.g. an increase in renewable energy, is high or focused on short-term results. Recipient countries should therefore try to use both public and private sector finance in ways that effectively stimulate the local market and encourage it to take on the investment and risk-taking role over time.

d) Lock-in

A lock-in to just one renewable technology or supply company (see Box 11) may increase the effectiveness of investment in early years, but may risk foregoing the co-benefits of other technologies or a broad, competitive and robust market in later years.59 While focused investment in a specific technology can result in rapid development and creation of co-benefits, it brings the typical problems of risking everything on a single endeavour. Even if there is early success, there is a risk that the technology will not meet expectations, with the loss of all investments and co-benefits. Such dependency may benefit the particular technology but harm

57 see, for example [Madlener, Alcott 2006] or [Barker, Athanasios & Dagoumas 2009]_ 58 see, for example, [Shields 2007] 59 see, for example, [Cowan, Kline 1996] or [Leydesdorff, Van den Besselaar 1998]



competing ones, further increasing dependency and risk. The same logic can be applied to a focus on creating just one or a few strong companies as suppliers. In contrast, investing in a range of technologies and climate-change measures and creating a broad and diversified business landscape that supports and benefits from the investments may take more time but should lead to more successful investments. More and more long-term investment is needed to create tangible results this way, with more robust co-benefits and broader cross-benefits. Because of the higher short-term effectiveness of focused investment, private investors may tend to build on early front-runners in technology or market share, enhancing lock-in. Public investment in other technologies is then needed to ensure development at a certain minimum rate, in order to have alternatives available if the first-choice option does not meet long-term expectations. The same is true regarding companies, but domestic public investors may also tend to support a dominant domestic company to enable it to compete in international markets, instead of a broad business landscape that may need international supplies.



Box 11: The concept of Lock-in

THE CONCEPT OF LOCK-IN

The lock-in concept has been studied extensively since the 1980s, and is particularly

relevant to renewable energy technologies.60 Regarding technologies, lock-in means that

a certain technology has gained sufficient advantage over competing technologies to

dominate the market so that other technologies cannot increase their market share

without external help.

One reason for lock-ins to occur is the positive externalities of adoption: every adopter

makes it more likely that others will choose this technology over its competitors. Positive

externalities may be due to network effects (a phone is more useful if more people have

one; more natural gas-driven cars means more natural gas stations), reduced risk

(experience gained by early adopters reduces risks to later adopters) or simply signalling

effects (the more a certain technology is adopted, the more people will believe that it is

the one to buy). While the concept of lock-ins may explain market dominance, there is

also evidence that initial advantages may be gained by chance, and inferior technologies

may dominate the market because of chance followed by lock-in.

Lock-ins can also apply to suppliers or regions. Especially in knowledge-intensive sectors,

certain suppliers or regions may gain an advantage over competitors in an infant market,

resulting in a dominant supplier or a regional cluster of technology leaders.

Job losses, rebound effects, crowding out and lock-in are all important to consider when assessing the co-benefits of finance. The challenge for developing a methodology is that the scale of these negative effects for a specific project is very dependent on its specific circumstances. This favours a bottom-up approach to assessment. At the same time, the mostly indirect nature of these effects favours a top-down approach that covers more than just one region and one sector. It may therefore only be possible to assess the indirect impacts and risks of a certain project qualitatively or to factor in these impacts and risks by using a conservative default factor in co-benefit calculations. This should lead to robust results for the majority of projects, but may lead to considerable deviations for some.

A 5 Timeframe considerations

When considering investment in climate-change activities, it is important to have a feel for the dynamism of the system: any methodology that looks at co-benefits should establish whether the assessment is simply a snapshot, or has a time dimension.

60 Cowan, Kline, 1996; Foxon, 2002



Some co-benefits may be immediate, for example job creation for construction and operation of a wind turbine, others may be delayed, for example health benefits of cleaner power generation or the development of a local supply industry and local capacity for operation and maintenance. The timeframe depends on the nature of the co-benefits and their links to the project: for example a renewable energy project may lead directly to local jobs and health benefits, then to regional employment and health benefits, then to capacity building and social benefits. It also depends on local, regional and national circumstances, project design, including the technology involved, and the financing structure. A higher share of private investment may have a higher probability of short-term and commercially-sustainable benefits. In some cases, a relatively small public investment can speed up the achievement of co-benefits from private investment. For example, if the price of PV power is only slightly above the market price for conventional power, public investment might bridge this gap, and lead to capacity building by manufacturers and private businesses as well as reduced production costs through economies of scale. As a result, the costs might decrease so that PV can compete without public finance. Public investment in more efficient and climate-friendly transport systems cannot usually be replaced by private investment, as the upfront investment costs, for example, may only be recaptured after a some decades, too long for private organisations. However in this example public investment aims primarily at non-financial benefits (emission reductions, health, life-quality improvements) and may or may not make sense from a limited financial perspective. Private investment, except by development NGOs which resemble public institutions in this regard, typically aims at maximising profit. The delivery of ecological, social and other benefits may to some extent be factored into investment decisions as a minimum requirement for public acceptance, but is not usually a goal in itself. Private investment may therefore be an indicator of quicker realisation of co-benefits, but may also signal less co-benefits overall.

A 6 Financial considerations

Important questions when assessing the benefits of private sector investments are61:

•••• Who is the investor?

Domestic private sector investors are likely to contribute more to the

61 Information in this section comes from discussions with GuarantCo during an interview with Ecofys. The information is based on the experience that GuarantCo has had in making investments in different parts of the developing world.



development of the local economy and markets than offshore private sector investors. Private sector domestic investors are also more likely to boost local employment and related industries and to take into account local environmental and social impacts. Offshore private sector investors can sometimes gain a reputation for being fickle: with less at stake in the country being invested in, they can easily pull out if there is a crisis in their home country, or political pressures in the investment country. At the same time, the same factors make private offshore investment less vulnerable to unprofitable investment and local political pressure, increasing the opportunity to make riskier investments and independent decisions.

•••• What currency is used for the investment?

Investments in local currency, as opposed to hard currency, provide a more stable signal to the local markets, as they are not affected by currency exchange risks and the political context that determines the value of a hard currency investment. They are also more likely to stimulate local businesses and markets as returns can be directly fed back into the local economy. Own-currency investment is genuinely sustainable, reducing the need for further aid investment in the future, and thus provides an even greater multiplier of the efficacy of private sector investment.

•••• Where is the investment located?

The private sector investment community is developed to a very different extent in different regions of the world. For example, in most of India, there will be domestic private sector investors available for projects that offer real returns, unlike in most of Africa, where there is still a very high dependency on aid funding and fewer local investors. The potential to deliver some of the co-benefits will therefore be higher in India, where the starting point is already strong. Furthermore, Africa has many small countries, where it is more difficult to realise co-benefits such as building a new set of local skill sets or a new industry for renewable power, since a project is unlikely to be repeated within a short timeframe.

•••• What are the barriers to the investment?

Where investments are marginal or do not provide a return at the outset, there will need to be a partnership between the public and private sector investors to provide the right core outcome, making investment attractive to the private sector. Such partnerships can help overcome barriers to investment, while still enabling the private sector co-benefits to be realised. The nature of these co-benefits will depend on who the private sector parties are. The types of structures needed to enable private sector investment should consider the needs of the domestic private sector and local currency investors, not just offshore investors. It is important to



note that some support structures already exist in many developed countries, e.g. feed-in tariffs.

•••• Is the investor new to the country?

The delivery of benefits and the risks will depend on the relationship of the investors with the recipient country i.e. do they have other investments there? Do they have a vested interest in developing the markets, skills sets, etc. in that country or region? The overall number of players in the system will also have a bearing on the co-benefits that can be achieved.



Appendix B Additional background on job creation

Climate-change investments, and particularly renewable energy projects, clearly create jobs. How the number of the jobs created is calculated is however quite contentious. Few subjects in clean energy have attracted such diverse claims and estimates. In general, job creation by renewable energy development is difficult to measure precisely, especially if total employment - direct and indirect jobs - is to be estimated.

Estimating job creation linked to a specific investment in renewable energy requires consideration of direct versus indirect and induced jobs, the impact on the overall economy, and local versus foreign jobs.

B 1 Direct versus indirect and induced jobs

Most studies focus on direct jobs, usually disaggregated into manufacturing, construction and installation, operation and maintenance, and fuel collection (in the case of biomass energy). They do not include indirect jobs created in the economy by multiplier effects. These include second-tier suppliers producing intermediate goods and component parts as well as the service sector.62 In some studies, the likely creation of induced jobs (see main text for definition) as a result of low-carbon economic development is also estimated. These include new businesses that are enabled as a result of efficiency savings in the economy and invested in businesses and new jobs. Especially relevant in some developing countries are jobs resulting from the expansion of energy services such as biofuel cultivation in Indian villages.63

B 2 Impact on overall economy

Some jobs will be transferred from other sectors

When calculating the number of jobs created through investments in renewable energies, the overall effects on the economy also have to be taken into account. Investment shift from traditional to low-carbon energy technologies results in changes in employment. The expansion of low-carbon technology markets due to public policy measures to reduce emissions is expected to lead to the contraction of some carbon-intensive sectors such as coal-based electricity generation and therefore some job losses.

62 REN21, 2005 63 WRI - Houser et al, 2009; UNEP, 2008



Jobs may be lost in other sectors as a result of higher taxes to compensate the fiscal cost of green stimulus programmes, while the initially higher electricity costs of low-carbon alternatives – which ultimately fall on consumers – may also lead to induced job losses elsewhere in the economy. Many studies however show that at this stage renewable energy technologies are labour intensive, especially in developing countries64. The energy sector is a relatively small direct employer and in most countries provides a relatively low contribution to GDP65. Global energy demand is nevertheless growing. While job numbers in energy production may be low, growth in the sector has a catalytic effect on the wider economy, creating better prospects for economic development and job creation across the economy. Decarbonising the energy sector is thus not only a promising means of stimulating additional employment66, but arguably also the key to wider decarbonisation.

B 3 Local versus foreign jobs

Investment in clean-energy technologies in one country creates employment both there and in other countries. There is a notable absence in the literature of analysis of global supply and value chains for low-carbon industries and products, and their impact on job creation. Studies tend to approach the issue from a national and/or regional rather than an integrated global perspective. Nevertheless, analysis of the wider literature on low-carbon development suggests that countries are likely to capture maximum employment opportunities along the value and supply chains either when domestic companies move up the value chain and become global leaders in their sector or when domestic opportunities arise for firms to be key links in the supply chain, often as a result of large foreign manufacturers setting up in that country.

B 4 Estimating job creation

REN21 suggests building input-output analysis models as a more precise approach, an analytic tool that macroeconomists use to derive employment multipliers with which to predict the number of jobs (direct and indirect) created

64 Analysis from GCN (2010), based on contributions from the Research Centre for Sustainable Development (China), The Energy and Resources Institute (India) Vitae Civilis (Brazil), the International Centre for Energy, Environment and Development (Nigeria) and IMBEWU Sustainability Legal Specialists Pty Ltd (South Africa). 65 Fankhauser et al, 2008 66 UNEP, 2008



by sales increases from a given sector or industry. The simplified methodology proposed by REN21, and used here, is based on an analytical approach to define employment coefficients, generally based on (a) information on labour time needed for a unit of power (i.e. person-years per MW), or (b) data on expenditure necessary to support a full-time job annually (person-years/US$ invested). This approach has been adopted in most of the literature reviewed here. There are different ways to build employment impact indicators. Many studies report on employment in the manufacturing and installation segment in terms of person-years per MW, referring to the amount of labour time required to manufacture equipment (or build a power plant) per installed MW. With regard to the operation and maintenance and fuel collection segments of labour, many studies use the indicator jobs per MW which refers to permanent employment, that is the number of workers needed continuously to support the ongoing operation of a power plant with a maximum output of one MW. To simplify matters, we have decided to give all values in terms of jobs per MW, assuming that person-years necessary to manufacture and install renewable energy installations will translate into the same number of permanent jobs. As the development of renewable energies is expected to keep growing, we expect that production facilities will work to more or less full capacity, thus sustaining jobs created in the construction phase of the plants. Another methodology has been developed by New Energy Finance for the wind and solar PV sector. Here, employment effects are estimated from published accounts and interviews with representatives of leading companies from the sector. The figures have been included in two complementary approaches from the various existing methodologies to estimate job creation.



Appendix C References

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[2] AGECC (The Secretary General’s Advisory Group on Energy and Climate Change), Energy for a Sustainable Future, Summary Report and

Recommendations, 28 April 2010 [3] AIACC Wokring Paper N0. 31: The Berg River Dynamic Spatial Equilibrium

Model: A New Tool for Assessing the Benefits and Costs of Alternatives for

Coping With Water Demand Growth, Climate Variability, and Climate

Change in the Western Cape, M. Callaway et al., 2007 [4] ASTRA (The Alliance for Science and Technology Research in America),

Defining innovation: a new framework to aid policymakers, USinnovation [5] B. Desaigues, Monetary Valuation of Environmental Damages, workshop

May 10th 2005 [6] BC3 (Basque Center for Climate Change), Adaptation to Climate Change:

Assessing costs and evaluating measures, Anil Markandya, presentation June 2010

[7] Bond et al, Incentives to sustain forest ecosystem services: A review and [8] C. Jeanrenaud, J. Marti, The cost of Reduced Life Expectancy Due to Air

Pollution: Assessing the Value of a Life Year (VOLY) Using Contingent

Valuation, 2007 [9] CCBA PDD document, February 2009 [10] CCBA PDD document, Juma RED project, September 2008 [11] CIFOR Working Paper 46, Emerging REDD+ A preliminary survey of

demonstration and readiness activities, Sheila Wertz-Kanounnikoff, Metta Kongphan-apirak, 2009

[12] CSIS, Evaluating the Energy Security Implications of a Carbon-Constrained

U.S. Economy, January 2009 [13] EC, Part III: Annexes to Impact Assessment Guidelines, January 15th 2009 [14] Ecofys, Learning rates of low carbon technologies (confidential report), 2010 [15] ESMAP (the World Bank), Low-Carbon Development for Mexico, May 2010 [16] European Trade Union Confederation (ETUC) and Social Development

Agency (SDA), Climate Change and Employment: Impact on employment in the European Union-25 of climate change and CO2 emission reduction measures by 2030, Belgium: Maison syndicale internationale (ITUH), 2007

[17] ExternE project (EC project on Externalities of Energy), Methodology 2005 Update, 2005

[18] Global Climate Network, Low-carbon Jobs in an Interconnected World,2010 [19] Green Resources forestry CDM/VCS case study from Tanzania, 23 January

2010



[20] Greenpeace International and EPIA, Solar Generation IV – 2007: Solar electricity for over one billion people and two million jobs by 2020, 2006

[21] GTZ, Feasibility Study for Wind Park Development in Ethiopia and Capacity

Building, 2006 [22] GWEC, Global Wind Energy Outlook, 2008 [23] IEA, Comparative study on rural electrification policies in emerging

economies: a key to successful policies, A. Niez, March 2010 [24] IEA, World Energy Outlook, 2007 [25] IEA, World Energy Outlook, 2008 [26] IEA, World Energy Outlook, 2009 [27] IFC, Selling Solar: Lessons learnt from more than a decade of IFC’s

experience, July 2007 [28] IIED briefing, The cost of REDD: lessons from Amazonas, Maryanne Grieg-

Gran, November 2009 [29] IIED, Working paper: the possibilities for combining mitigation and

adaptation in vulnerable communities in the developing world, 2006 [30] International Labour Conference, Skills for improved productivity,

employment growth and development, 2008 [31] IPPR, Green Jobs: Prospects for creating jobs from offshore wind in the UK,

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[35] Kammen D, Kapadia K and Fripp M, Putting Renewables to Work: How Many

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Extension for Rural Electrification, February 2000



[62] UNDP/ESMAP, Bank Experience in Non-Energy Projects with Rural

Electrification Components: A Review of Integration Issues in LCR, February 2004

[63] UNEP, Green jobs: towards decent work in a sustainable, lowcarbon world, 2008

[64] UNEP/SEF Alliance, Why Clean Energy Public Investment Makes Economic Sense: The Evidence Base, 2009

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[66] University of California – Berkeley, Co-Benefits of climate mitigation and

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qualitative assessment of climate adaptation options and some estimates of

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C 2 Websites

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Appendix D Glossary

ARE Association for Rural Electrification CDM Clean Development Mechanism CIFOR Centre for International Forestry Research DALY Disability-Adjusted Life Year DEA Development and Energy in Africa FDI Foreign Direct Investment FFI Fauna & Flora International FTE Full Time Equivalent GEF Global Environment Facility IEA International Energy Agency IFC International Finance Corporation IIE Intelligent Energy for Europe NEF New Energy Finance PDD Project Design Document PES Payment of Environmental Services PV Photovoltaic REN21 Renewable Energy policy Network for the 21st century REDD+ Reducing Emissions from Deforestation and forest Degradation +

conservation, sustainable management of forests and enhancement of forest carbon stocks

REMP Renewable Energy Master Plan RET Renewable Energy Technology TERI The Energy and Resources Institute UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change VOLY Value of a Life Year VSL Value of a Statistical Life WEF World Economic Forum WEO World Energy Outlook WHO World Health Organisation YLD Years Lost due to Disability YLL Years of Life Lost

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