PoA Support Center Germany First experiences December 11, 2008 COP14, EU side event, Poznan. Klaus Oppermann, KfW Carbon Fund

Transcription

1 PoA Support Center Germany First experiences December 11, 2008 COP14, EU side event, Poznan Klaus Oppermann, KfW Carbon Fund

2 What are PoAs? Incentive or policy implementation program as CDM/JI project. Program is CDM/JI project; CDM/JI revenues finance program. Program operator receives CDM/JI revenues; Program participants receive incentive payment; Incentives are provided against CER/ERU ownership. Examples: Grants for efficient water pumps; Price discounts for efficient lights; Soft-loans for solar water heating; Feed-in-tariffs for renewable power. 2

3 What does the PoA Support Center Germany do? Disseminate PoA-know-how in CDM/JI countries. Enable public and private entities to identify PoA potential. Develop concrete and realizable PoA proposals. Advise on PoA implementation and operation. Advise on PoA funding and marketing of carbon credits. Fast track initiative: enable PoA prompt start. 3

4 How does it work? Phase I: Step 0: Identification of PoA potential and opportunities. Step 1: Partnership (MoU) KfW potential PoA operators. Phase II: Step 2: Development of PoA-PINs for and with PoA operators. Step 3: Mutual decision-making on going ahead: Exit option 1. Phase III: Step 4: Development of PoA concept and CDM documentation. Step 5: PoA entity decides on PoA implementation: Exit option 2. Phase IV: Step 6: Support PoA implementation & marketing of carbon credits. 4

5 Rational of the PoA initiative Strength: Overcoming market entry barriers for PoAs: Institutional capacity for PoA operation: partnership approach. Capacity for PoA development: development support. Regulatory uncertainty: knowledge center & portfolio approach. Operational & funding risks: step-wise approach & expertise. Concrete and focused: PoA portfolio development versus general capacity building and training. Limitations of PoA initiative: General policy and sector capacity development: synergies with ongoing initiatives on capacity building. Seed funding for PoAs: potential future extension of PoA initiative. 5

6 PoA operators Required: institutional capacity; program experience. Not required: carbon market experience. Potential PoA operators include (core interest/policy): Financial institutions: attractive loan conditions. Utilities: demand side energy efficiency measures. Producers of climate friendly technology: marketing. Public agencies: funding of policies. NGOs: funding of sustainable development activities. Substantial synergy effects: Ex. 1: Microfinance loan monitoring and CDM/JI monitoring. Ex. 2: Utility customer database/billing and quality control. Ex. 3: Bank s loan contracts and CER/ERU ownership transfer. 6

7 PoA development Standard CDM/JI: Project exists; Development = CDM/JI documents/monitoring procedures. PoA - main task is program development: What type of activity to address?: Cost efficiency. What type of incentive to offer?: Sector Economics. How to structure the program: Financial Engineering. The partnership approach: State level cooperation; Direct Cooperation with potential PoA operators in CDM/JI countries (PoA Support Center Germany). 7

8 Challenges in PoA funding PoA operator: Costs: development, implementation, operation. Revenues: carbon credits are only source of income. Funding requirements: Development (concept, business plan, capacity, CDM/JI): all PoAs. Seed Funding first generations of activities/incentives: all PoAs except payment on delivery programs. Risk profile seed funding Risk - : often stable consumption activities; step wise implementation. Risk +: complete reliance on CDM/JI monitoring; micro activities: often no recourse to program participants. Banks have no experience with PoA funding. 8

9 Experiences from the ground Phase I Target: Partnerships with potential PoA operators and acquisition of first PoA ideas. Serial of workshops: October 20,Bangladesh October 23, India November 3, Egypt November 6, Peru November 13, Vietnam November 17, Indonesia November 20, South Africa November 23 within CTI, Berlin (Eastern Europe, Central Asia) Size of workshops: participants. 9

10 First PoA ideas Sector Region Operator Typ Energetic Building Rehabilitation Eastern Europe (3) Banks Soft loans Household stoves and domestic biogas South Asia (4) NGOs, public agencies, MFIs Grants, microfinance Fuel switch, Energy efficiency in SMEs, service sector, transport MENA, Asia, Latin America (8) Banks, public agencies Payment on delivery + credit lines, soft loans Small and micro renewable energy Africa, Latin America, South Asia (3) Banks, public agencies Soft loans, payment on delivery + credit lines CFLs Africa, Latin America (2) Utilities Price discounts 10

11 Lessons learnt: PoA development and operation Strong PoA operators required: Right incentive to right activities against claimable carbon. High quality monitoring system. PoA development: Economic/financial competence required. Often coordinated efforts (e.g. sector & baseline studies). Seed funding: In general PoA operators cannot provide seed funding. Pure payment-on-delivery programs or public/private investors. 11

12 Lessons learnt: PoA policy Ownership of carbon credits: Distribution of potential carbon revenues above costs. Required legal structure: DNA approval versus contracts. PoA policy in CDM/JI countries: Active use of PoAs within policy schemes. DNA approval policy: exclusivity versus competition. PoA rules and procedures: lack of clarity & predictability. Rules must be understandable for investors: delivery risks/possible delays in delivery. Methodologies: interest to buy more certainty with more conservativeness (e.g.: deemed savings). Long term (post 2012) certainty on carbon revenues. 12

13 Thank you for your attention! For further information: Dr Klaus Oppermann Vice President KfW Carbon Fund KfW Bankengruppe Palmengartenstrasse 5 9 D Frankfurt Tel: Fax: carbonfund@kfw.de