Renewable Energy and Low Carbon Financing

Transcription

1 Renewable Energy and Low Carbon Financing Roberto G. Aiello World Bank, LAC Energy Sector Carbon Expo Barcelona May 28, 2009

2 Climate change is a development, economic, and investment challenge. It offers an opportunity for economic and social transformation that can lead to an inclusive and sustainable globalization. That is why addressing climate change is a critical pillar of the development agenda. World Bank Group President Robert B. Zoellick BALI, INDONESIA, December 12, 2007

3 New financing instruments 1- Clean Technology Fund (CTF) 2- Carbon Partnership Facility (CPF) In addition to GEF, IBRD loans and other existing financial instruments and guarantees

4 Synergies in Project Finance Grant: subsidy for public good (+) C a s h GEF CF Cashflow: payment for climate service F l o w Year (-) CTF Concessional investment finance

5 1- Clean Technology Fund (CTF) Criteria Promote scaled-up financing for demonstration, deployment, and transfer of low carbon technologies with significant potential for long-term GHG emission reduction Based on country strategies and programs Investment Plan Eligible programs/projects: Power sector: renewable energy, highly efficient technologies to reduce carbon intensity Transport sector: efficiency and modal shifts Energy efficiency: buildings, industry, agriculture Country access: ODA-eligibility with active MDB country program Financing: IDA-like terms to be co-financed with MDBs Combination of climate financing instruments (GEF, CF, CTF possible for larger impact)

6 CTF Investment Criteria Significant GHG emissions savings Cost-effectiveness Demonstration potential at scale Development impact Implementation readiness Additional cost/risk premium Private sector projects and programs will adhere to these principles

7 CTF Investment Plans Est. CTF ($ million) Financing Est. Cofinancing ($ million) Egypt 300 1,560 1,860 Mexico 500 5,700 6,200 Turkey 250 1,850 2,100 Est. Total Investments ( $ million) TOTAL 1,050 9,110 10,160 First Investment Plans for Egypt, Mexico, and Turkey endorsed by CTF Trust Fund Committee in January 2009

8 CTF Investment Plans Egypt Wind: Scale up wind power from 1000 MW to 2500 MW Urban Transport : 6 BRT corridors, 5 Light Rail links, etc Mexico Energy Efficiency: Lighting and Appliances replacement program Wind: IFC provide private sector support for wind power upscale Urban Transport: 20 BRT corridors Turkey Renewable energy and EE: promote private sector development Smart grid: grid management and control systems for wind integration

9 CTF Investment Plans Pipeline Preparations underway for Morocco, South Africa, Colombia, Philippines and Ukraine Discussions on potential joint MDB missions for Thailand and Kazakhstan. Major initiative to scale up Concentrated Solar Power in the Middle East and North Africa region.

10 2 Carbon Partnership Facility (CPF) Towards a new approach Use carbon markets to catalyze a transformation toward low-carbon development Be more strategic than before, work at the country level: Support long-term investments programs and technologies for transition to lowcarbon economy Integrate carbon finance into public and private investment decisions Shift away from a project-by-project approach to programs of investments & sector based approaches Provide inputs to establishing a long-term regulatory framework post-2012

11 CPF - Buyers and Sellers in a Partnership BUYERS (governments, companies) Minimum financial contributions Willingness to purchase Emission Reductions (ERs) generated over the long term Program development Carbon Asset Development Fund (CADF) ER sale and purchase Carbon Fund SELLERS (governments, companies) Emission Reduction contribution Willingness to develop and implement specified emission reduction programs and sell ERs Partners (Host Governments, other) and Donors

12 Principles of the Pricing Approach The Pricing Approach needs to safeguard both Buyers and Sellers interests in a reasonable manner Needs to be transparent, reflect the risk profile and the risk allocation between Buyers and Sellers in each transaction Partnership Committee endorses a Pricing Approach based on Trustee s proposal The Pricing Approach is utilized for all Emission Reduction Purchase Agreements (ERPA) Expected to include at least the following elements: May use both fixed and variable pricing components Floor and ceiling prices can further reduce price fluctuations in the contract and limit down or upside market risks. A benchmark/reference representing the asset type transacted e.g. for primary CER contracts would utilize primary CERs as the benchmark Appropriate risk adjustments to the benchmark price, reflecting the specifics of any given ER program at the time of ERPA signature

13 Examples of ER Programs under development Scaling up of geothermal energy in Indonesia Country wide waste management programs in Morocco and Brazil Small hydro roll out in Vietnam Locomotive electrification in India Energy efficient lighting and urban bus transport systems in Mexico Provincial biogas program and high efficiency coal (IGCC, including pilot CCS) in China All of these with IBRD, GEF or CTF financing, many others being discussed

14 Questions? Roberto G. Aiello Phone: