NAMAS: OVERVIEW, DESIGN, AND FINANCING SOURCES Ned Helme, CCAP President Global Methane Initiative Vancouver, Canada Wednesday, March 13, 2013 Dialogue. Insight. Solutions.
OUTLINE OF PRESENTATION Canada s support for Waste NAMAs in Latin America NAMAs as a key to transformation NAMAs and the CDM Elements of a successful NAMA Process of designing a successful NAMA Financing for NAMAs Lessons Learned and Conclusions CCAP 1
CANADA S SUPPORT FOR WASTE NAMAS IN LATIN AMERICA Canada provided CCAP financial support to help partner countries identify policy opportunities for mitigating emissions in the waste management sector that also support national priorities. Goal to Design NAMAs: Bali Action Plan calls for developing countries (DCs) to implement nationally appropriate mitigation actions (NAMAs) In the context of sustainable development Supported and enabled by technology, financing and capacity building In a measurable, reportable and verifiable manner (both actions and support) Cancun Agreements add that NAMAs are aimed at achieving a deviation in emissions relative to business as usual emissions in 2020 CCAP 2
CANADA S SUPPORT FOR LAC (CONT). Canadian waste program has worked with 5 countries: Chile, Colombia, Costa Rica, Dominican Republic, and Mexico Chile, DR and Colombia will present today each has taken a different waste NAMA direction based on national conditions Colombia: comprehensive approach now emphasizing tariff reform, 3 R s & MBT, and solving pickers issue Chile: industrial waste Dominican Republic: Tourism and waste/renewables CCAP 3
WHAT IS A SUCCESSFUL NAMA? Incentives NAMA Reg/Leg Action NAMAs are national actions that include significant developing country action (regulation, legislation, improved enforcement of existing laws, etc.) combined with a financial mechanism that provides incentives to the private sector to invest. CCAP 4
NAMAS: KEY TO TRANSFORMATION A new playing field Supported NAMAs move beyond the carbon offset model of the CDM Developing Countries retain reductions to meet Cancun pledges instead of selling them overseas NAMAs are partnerships between developing and developed countries and the private sector Goal is to develop transformative sector-wide policies that produce development as well as climate benefits Scale of investment that could be leveraged by supported NAMAs far exceeds that under CDM Alignment with immediate sustainable-development needs Developing countries can direct NAMAs to support their desired development pathway while delivering GHG reductions (as opposed to CDM where GHG reductions are major focus) In the waste sector, NAMAs should optimize the environmental, social and development policy goals as well as methane and GHG reduction CCAP 5
NAMAS: KEY TO TRANSFORMATION Supported NAMAs can create a race to the top where developing countries compete for up-front financing Up-front financing from developed nations is available for policy implementation that catalyzes private sector investment in mitigation actions Financial support likely to include grants, concessional loans, risk and loan guarantees, policy support, writing down the cost of technologies, etc. Bilateral NAMA finance will define the initial design of NAMAs with the GCF to follow. It will not be defined in the near term by the UNFCCC. Full recognition of investment value NAMA donor finance is negotiated by governments based on consultation with banks and investors to insure mechanisms will work NAMAs are broader and more flexible than CDM projects and can finance efforts in sectors that CDM has ignored (transport, buildings, etc) CCAP 6
CDM: SUPPLY AND DEMAND 7 Billion CERs Supply of CERs in 2013-2020 7.0 Large surplus = few new CDM projects will be developed, unless demand is increased through more ambitious developed-country targets Current price (2/8/13): 0.34 EUR/CER (expected to stay like this) Many existing contracts will not be renewed in 2013, as price is below the cost of verification of reduction CCAP 7
WHAT DOES CDM DECLINE MEAN FOR THE WASTE SECTOR? Bad News: Many CDM methane gas flaring projects will not be renewed and may be terminated - economics of many LFGE projects will be threatened Existing pipeline of new gas flaring and waste CDM projects will languish or disappear Good News: Supported NAMA option can lead to financing for more comprehensive waste projects at same landfills involving waste diversion, composting, recycling and RDF produces larger environmental, social and GHG benefits than CDM flaring projects Would be desirable to build CDM flaring project developers into new comprehensive projects if possible CCAP 8
WHAT WILL IT TAKE TO MAKE NAMAS WORK? Tailored approaches. NAMAs must meet the specific sustainable development needs of host countries and produce multiple benefits Leveraging private-sector resources. NAMA investment must leverage private-sector investment and enable initiatives to become selfsustaining. Effective MRV. MRV will need to assure both implementing and donor countries that NAMA financing is received, effectively applied and that results are achieved on a full set of metrics. National buy-in and Institutional capability. Implementing countries must build the institutional capability to attract NAMA finance, transform national policies, engage the private sector, and deliver results. Financial resources. Both host countries and contributing countries must provide some financing. CCAP 9
STEPS TO DEFINING A NAMA Stakeholder input and buy-in 1. Define development and climate priorities 2. Identify policy and technical options 3. Conduct economic, technical, and policy research 4. Define potential NAMA 5. Conduct feasibility study 6. Develop financing options and structure 7. Develop NAMA Proposal CCAP 10
FINANCING SOURCES FOR NAMAS Cancun established a Green Climate Fund (GCF) to support policies and programs in DCs with funds coming from both public and private sources Goal is to mobilize jointly $100 billion per year by 2020 GCF in transitional process, may be 2-3 years away from disbursing initial funds. The bilateral market for funding NAMAs will move first and set stage for establishment of the GCF Real-world experiences with NAMAs through existing bilateral and multilateral channels can help define NAMAs, MRV, and funding criteria and contribute to the design of the GCF CCAP 11
BILATERAL FUNDING KEY IN NEXT YEARS Mid-term climate finance (2013-2015) pledged at Doha amounts to approximately USD 15.5 billion Of this, USD 7 billion will be committed in 2013 Funding will be available to implement climate mitigation and adaption programs, policies, and initiatives during this period Portion of this funding will be directed toward implementation of NAMAs specifically Broader sectoral policies/programs rather than individual projects CCAP 12
MID-TERM CLIMATE FINANCE UK committed USD 2.9 billion towards mitigation and adaptation initiatives between 2013-2015 Germany will provide about USD 2.3 billion total in 2013 and potentially a similar amount in 2014 Denmark announced a continuation of climate finance for 2013-14 in the amount of USD 87 million France (AFD) is spending USD 2.6 billion in 2013 on energy efficiency and renewable energy and the same amount in 2014 Norway pledged USD 1 billion from 2013-2015 towards energy and REDD+ projects Additional financing commitments from EU, Finland, Switzerland, Belgium, Australia, and Sweden CCAP 13
ATTRACTING LARGER INVESTMENTS Goal is to leverage bilateral NAMA support to attract other funding Multilateral Development Bank Support, etc. Bilateral NAMA Support Private-Sector Investment CCAP 14
GERMANY/UK FINANCING FACILITY Announced at Doha COP specifically for implementation of NAMAs (beyond capacity support, feasibility studies) Total amount committed equals USD 94 million in 2013 (more later) Competitive program open to all developing countries Mexico housing NAMA was first to be selected for funding at Doha. Decisions on first set of NAMAs likely in July 2013 Financial instruments likely to include grants, concessional loans, guarantees, etc. CCAP 15
NAMA FACILITY SELECTION PROCESS Facility will have a call for NAMA proposals likely in April 2013 Proposal guidelines also likely to be issued in April Project proposals will be selected in July based on criteria, likely to include: transformational action, cobenefits, GHG benefits, private sector engagement, country buy-in and capacity, financial design In collaboration with Germany/UK, selected NAMA proposals will be developed into NAMAs which can be implemented in near term CCAP 16
GLOBAL NAMA FINANCING SUMMIT: MAY 15-17 IN COPENHAGEN, DENMARK Participation of 15 countries across Asia and Latin America, 6 10 donor countries, private sector Investors, banks and other financial experts Several ministers from developed countries to attend 2 participants from each developing country Objectives: Begin to match NAMAs with financing Before June/July 2013 Germany/UK decision, etc. Advance NAMAs toward implementation Share lessons learned on the ground CCAP 17
KEY CONCLUSIONS Now is the window of opportunity for countries to design NAMAs and attract international support Bilateral NAMA support will help unlock much larger pools of development bank and private finance NAMA policy and financial mechanisms must be designed to take advantage of this larger finance (move beyond projects) Early NAMAs will help shape the design of bilateral, IFI and GCF programs For the solid waste sector, NAMAs offer support for much more comprehensive policies than were possible under the CDM CCAP 18
THANK YOU For more information, please contact Ned Helme at, nhelme@ccap.org, or visit us at www.ccap.org