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Carbon Finance and Carbon Finance and Opportunities in Opportunities in
AfricaAfrica
Patrick KaraniPatrick Karani
BEA InternationalBEA International
Situation of CDM and Situation of CDM and Carbon Markets TodayCarbon Markets Today
Low Level of Activities in relation to registration Low Level of Activities in relation to registration of new projects similar to the initial years of of new projects similar to the initial years of learning curvelearning curve
Compliance-driven market demand has out-Compliance-driven market demand has out-paced voluntary offset demandpaced voluntary offset demand
Collapse of the CER/EUA, due to global Collapse of the CER/EUA, due to global economic melt-down, uncertainty about Kyoto economic melt-down, uncertainty about Kyoto ProtocolProtocol
Decline of requests correlated to international Decline of requests correlated to international markets conditions for CER excluding non-LDC markets conditions for CER excluding non-LDC in the EU-ETSin the EU-ETS
Speculation on CDM for Speculation on CDM for possible Carbon Financepossible Carbon Finance Redefining the role of CDM to attract Redefining the role of CDM to attract
private investmentsprivate investments Changing stakeholders’ attitude, Changing stakeholders’ attitude,
perception and conception and embrace perception and conception and embrace business approach and fundingbusiness approach and funding
Promoting CDM as a transition to full Promoting CDM as a transition to full fledged carbon market driven by forces of fledged carbon market driven by forces of demand and supplydemand and supply
Carbon Finance Opportunities in Carbon Finance Opportunities in AfricaAfrica
Financing Financing ToolsTools
(1) Mobilize(1) Mobilize
ConcessionalConcessional
ResourcesResources
(2) Catalyze(2) Catalyze
PrivatePrivate
CapitalCapital
(3) Maximize(3) Maximize
MarketMarket
MechanismsMechanisms
MitigationMitigation
MeasuresMeasures
Renewable Renewable EnergyEnergy
Energy Energy EfficiencyEfficiency
Low Carbon Low Carbon PathPath
Transport Transport Policy & Policy & LULUCFLULUCF
Application of Application of Efficiency Efficiency SystemsSystems
Urban Urban SanitationSanitation
MethaneMethane
AdaptationAdaptation
MeasuresMeasures
Vulnerability Vulnerability risks into risks into development development strategiesstrategies
Climate Climate resilience of resilience of vulnerable vulnerable sectorssectors
Climate Climate proofing proofing projects & projects & social social dimensionsdimensions
EDF/CIH/RDD/ECO/ E.BRANCHE
Hydropower and CDM in Africa: situation at the end of 2009
All registered African CDM projects (country, type) - state December, 29th 2009 (source: UNFCCC, 2010)
Morocco (5), incl.
-Biomass energy (2) -Landfill gas (4) -Solar (1) -Wind (2)
Ivory Coast (1), incl.
-Landfill gas (1) Nigeria (3), incl.
-Energy efficiency (1) -Fugitive (2)
EDF analysis 2010
Tunisia (2), incl.
-Landfill gas (2)
South Africa (17), incl.
-Biomass energy (2) -Energy efficiency (2) -Fossil fuel switch (2) -Hydro (1) -Landfill gas (4) -Methane avoidance (2) -N2O (4)
Egypt (4), incl.
-Energy efficiency (1) -Landfill gas (1) -N2O (1) -Wind (1)
Uganda (2), incl.
-Hydro (1) -Reforestation (1)
Kenya (1), incl.
-Biomass energy (1)
Tanzania (1), incl.
-Landfill gas (1)
ISSUESISSUES
Countries are installing massive Countries are installing massive power/thermal capacity with conventional power/thermal capacity with conventional systemssystems
Green technology is expensiveGreen technology is expensive Initial capital is lackingInitial capital is lacking Banking sector and capital markets not Banking sector and capital markets not
up to speed with green fundingup to speed with green funding High risks linked to Post Kyoto 2012High risks linked to Post Kyoto 2012
ProspectsProspects
Carbon credit is becoming a common link Carbon credit is becoming a common link in financingin financing
African can generate about 4,000,000 African can generate about 4,000,000 CER per yearCER per year
More PoA with added CPA will reduce More PoA with added CPA will reduce transaction costs per activity and transaction costs per activity and increase volumes of CER from Africaincrease volumes of CER from Africa
Carbon Financing for Revenue Certainty
Carbon financing can be defined as financial resources provided to projects generating (or expected to generate) green house gas emission reductions in the form of the purchase of such emission reductions.
In simple term, carbon finance is a purchase contracts whereby one party pays another party in exchange for a given quantity of Green House Gas (GHG) emission reductions.
Payment made in different forms to abate GHGPayment made in different forms to abate GHG
EQUITYDEBT/
SOFT LOANIN KIND
CONTRIBUTION FOR TECHNOLOGIES
CASH
Carbon Concept
Industrialized Country (Annex B)
②Carbon Credits
Entity A GHG Emissions
①Finance
Technology
(Capacity Building)
Developing Country (non-Annex B)
Entity B Project Activity
Emission Reduction
Industrialized Country (Annex B)
Entity A GHG Emissions
Carbon Reality
① Carbon Credits
②Payment
Developing Country (non-Annex B)
Entity B Project Activity
Emission Reduction
Way ForwardWay Forward
Reduce capital cost by leveraging carbon Reduce capital cost by leveraging carbon investments and promoting tradeinvestments and promoting trade
Remove Financial and Institutional Remove Financial and Institutional barriers and provide incentives for private barriers and provide incentives for private sector participationsector participation
Mobilize Resources for Technical Mobilize Resources for Technical Assistance and Build Local CapacityAssistance and Build Local Capacity