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Presentation at the Workshop on
Tools for Greenhouse Gas Analysis: Exploring Methodologies for Development Finance
The World Bank, Washington DC, 14 July 2009
www.worldbank.org/climatechange
Development and Climate Change:
Background
Energy
Transport
Forestry
Key Issues and Challenges
Sameer AkbarClimate Change Team, ENV
Analytical Work◦ Guidelines for Climate Change Global Overlays, 1997
Analytical tool to enable sector-wide analysis of GHG emission impacts and possible mitigation options
◦ The GHG Assessment Handbook, 1998
A reference manual for estimating the net impact of project-based GHG emissions
◦ A Carbon Backcasting Exercise, 1999
To assess the effect of placing a shadow price on carbon emissions in the energy project portfolio of the World Bank
Projects (with Climate Finance) ◦ Have to provide an assessment of how much CO2 equivalent emissions
they are expected to save
Global Environment Facility (GEF), 1991
Carbon Finance under the CDM & JI, 1999
Climate Investment Funds (CIFs), 2009
The Strategic Framework for Development
and Climate Change (SFDCC) for the WB
Group A consensus document of 185 member countries
Endorsed by the Development Committee on October 12, 2008
Involved wide-ranging consultations: ~2000 participants in 76 countries plus via www
Technical Report launched in February 2009
Progress-to-date: Booklet issued for Bonn Climate Change Talks in June 2009
Under the SFDCC, GHG Analysis is meant to,
◦ Build staff and client capacity to understand and apply the
analytical tools to prepare for a carbon constrained future
◦ Gather information to better understand the implication of
possible new approaches
◦ Identify low cost mitigation opportunities across operations
◦ Facilitate analysis of alternatives
◦ Help promote efficient use of emerging climate funds
However, ◦ It should be demand driven◦ Undertaken as analytical exercise◦ Not used for decision making
Developing and testing GHG analysis methodologies and tools, stating with emission-intensive sectors◦ Energy, Transport, and Forestry
Regional projects for pilot assessments to be identified on a demand basis, and undertaken in cooperation with clients
Sharing findings and lessons from methodology developmentand pilots
Co-ordination with other MDBs with a view to harmonizing concepts while preserving approaches appropriate for each institution
Summarize lessons and develop a proposal for World Bank Board consideration on the application of these tools, if/as appropriate ◦ Based on client needs and priorities, and the outcomes of the UNFCCC
deliberations on global climate policy and financing
Timeframe: 2009-2011
Marcelino Madrigal ETWEN
Energy: Sector challenges and WBG support
Fewer than half of African countries will reach universal access by 2050. People without access in Sub-Saharan Africa will rise from 177 million today, to 191 million in 2030 if no action is taken
Many developing countries are experiencing electricity shortages or will do so in the coming years
The transformation of global energy production and consumption is an imperative given the emerging scientific evidence on the pace of climate change.
More countries are increasingly impacted by energy price volatility affecting governments’ budgets, transition by households to more efficient fuels, and the introduction of new technologies
Improve
access and
reliability
Facilitate shift to
sustainable energy
development
Strengthen governance
Improve operational and financial performance
Challenges Strategic support framework
Energy: Past GHG analysis-related work
• 1991. Global Environmental Facility. Long history of climate-finance
oriented methodologies
Energy efficiency in buildings and industry
Off- and on-grid renewable energy projects
• 1998. Greenhouse Gas Assessment Handbook. Methodologies to measure
the net impact of Bank‟s interventions
Methodologies using a net-based approach: comparing “with” and “without”
Bank‟s intervention scenarios. Energy: Among others, methodologies for
conventional power generation, solar, wind, and transmission and
distribution loss reduction projects
• 2009. Climate Investment Funds
Provide additional grants and concessional financing to developing countries to
address urgent climate change challenges. Clean Technology Fund (i.e.,
investment plans)
Source: World Bank
Energy: Current GHG analysis-related activities
• Assistance to Client Countries:
Country low carbon studies
• Support countries in developing national low carbon development
strategies
• Identify GHG reduction opportunities
• Policy interventions GHG accounting
• To understand the impact on GHG emission from different types of policy
reforms and regulations: introducing private participation, electricity
market structure, subsidy reform, and others.
• Project-based GHG accounting
• To understand emissions at the project level for traditional Bank-financed
projects
• Following a net emission approach and other guidelines established by
the SFDCC
Source: World Bank
Energy: Low carbon studies
• Target countries: Brazil, China, India, Indonesia, Mexico, Poland and South Africa
• Emerging results: experience demonstrates that structured engagement on growth and GHG mitigation brings benefits
▫ South Africa: converting 1 million households and businesses to solar water heating reduces peak demand by 700 MW
▫ Mexico: main energy savings in the industrial sector from co-generation and energy efficiency improvements
▫ Indonesia REDD is a large opportunity and financial incentive for [$0.5-2 billion per year]
• Support: TA, capacity and institution building, knowledge dissemination and exchange underpinned by extensive stakeholder engagement
• Cost: $ 7.3 m [inc. $2.8 m from DFID]
Support to developing countries to transition to lower carbon economy
Source: World Bank
Energy: Project-based GHG accounting
• Lending portfolio project types
• New Renewable Energy
• Energy Efficiency
• Policy interventions: reform & regulation
• Large Hydro
• Transmission and Distribution
• Upstream Oil, Gas & Coal
• Thermal Generation
Energy: Project-based GHG, Transmission and Distribution
Understand more the GHG intensity of our T&D portfolio
Regional electricity interconnection projects
Improve supply adequacy and reliability
Bring renewable resources to the market
Increase scales to make more efficient projects viable: hydro power, natural
gas; displacing inefficient fuel oil generation
Improve technical and commercial flexibility, key for variable renewables
National transmission investment to improve reliability and adequacy
Improve reliability and service quality at high voltage levels
Improve system operations with new “smart” technologies
Reduce losses at the transmission level
Increase transmission capacity for renewable energy interconnection and
demand growth
Distribution projects for loss reduction
Improve technical and administrative management
Improve financial performance of T&D
Increase opportunities for more access
Energy: Project-based GHG, key objective and methodology
Objective
Review existing and propose principles for methodologies that can quickly and
reasonably provide estimations of T&D net GHG emissions.
Methodology considerations
Net emission approach, to measure the impact of Bank‟s intervention on
emission as described by SFDCC. (i.e., “with” and “without” Bank
intervention scenarios)
Some key principles: credibility, transparency, feasibility, and ease of
harmonization
Not pursuing climate finance methodologies where additionally tests and
ex-post verification is crucial for certificate awarding
Andreas Kopp ETWTR
1. A narrow carbon accounting approach in transport is likely to be used as a severely selective evaluation device excluding the sector from GHG reducing efforts.
2. Transport sector specifics do not lend themselves to a „technical fix‟; account for characteristics of transport demand are essential for a response to a strong political demand to reduce the carbon intensity of transport.
3. GHG reducing measures reduce other external costs; inclusion of these co-benefits in GHG analysis is essential for effective intervention in the transport sector.
17
18
G = A S i I i F i, j
C a rb o n E m is s io n sfrom T ra n s p o rt
T o ta lA c tiv ity
(p a s s e n g e r o rfre ig h t tra ve l)
M o d a lS tru c tu re(tra ve l b y
m o d e )
M o d a l E n e rg yIn te n s ity
C a rb o n C o n te n to f F u e ls
* * *
I i
M o d a l E n e rg yIn te n s ity
V e h ic le F u e lIn te n s ity
V C i
V e h ic leC h a ra c te ris tic s
E i
T e c h n o lo g ic a le n e rg y e ff ic ie n c y
O R iO n -ro a d im p a c ts(e .g . d r iv e c yc le s ,
tra ff icc o n g e s tio n )
L i
L o a d fa c to r(p a s s e n g e rs o r to n s
p e r v e h -k m )
M S i
M o d a l tra ve ls h a re
Largely identical accounting outcomes are used for
evaluation purposes: UNFCCC Approved baseline
methodology AM0031 “Baseline Methodology for
Bus Rapid Transit Projects”
Limits:
◦ Ad hoc comparison of modes, excluding transport benefits
◦ Accounting in merely physical units, unrelated to economic
values and development objectives
◦ Void of account of drivers of parameters
19
Only one large-scale transport CDM project
registered among 1300, TransMilenio Bogota
Ad hoc modal comparison and assumptions on
consequences of interventions render GHG
„analysis‟ unconvincing
Returns on resources invested in reduction of GHG‟s
in transport appear to be low: e.g. changes in
ridership due to mass transit projects emission
reducing?
20
Transport demand shifts towards high carbon
intensity with increasing income, intensified by
accommodating infrastructure policy
In comparison to other sectors acceptance of low-
carbon opportunities in transport may be or is even
likely to be very low
Incentives have to be provided to ensure that
opportunities of modal or technical shift appear
attractive
21
Secondary effects may dominate expected direct
technical effects, e.g. modal shift
◦ Decreasing load factors reverse technical accounting
parameters.
◦ Induced congestion in technical alternatives lead to
reversal of expected GHG emission effects.
22
Include demand for attributes of transport subsystems into GHG analysis
Analysis of demand for features of transport subsystems allows derivation of value parameter, accounting prices
Accounting prices indicate required intensity of demand management to achieve modal shift or technical change
Accounting prices allow for the commensurability of simultaneous reductions of external costs, co-benefits
23
Co-benefits are of greater importance and motivate
local action, US values 2000, Resources for the
Future
24
Comprehensive assessment of transport policies
and projects report, ESW in FY 10
Identification of least cost data requirements and
rapid assessment
Accompanying field trials
25
Gerhard DieterleARD
Erick FernandesARD
Good progress has been made in developing GHG Analysis methodologies and
tools for the forestry sector.
Developed by the Centro Agronómico Tropical de Investigación y Enseñanza (CATIE)
in Costa Rica.
◦ Scope: afforestation /reforestation (A/R), land conservation (LC), and
sustainable forest management (SFM) activities.
Tool follows the general design principles of the “Tool for ex-ante estimation of
forestry CERs” (TARAM, which applies a set of CDM approved methodologies)
◦ Boundaries are conservative, restricted to geographical boundaries
◦ Upstream and downstream emissions are not included
◦ Emissions from project management are considered
◦ Leakage from only activity shifting
◦ For a number of parameters the user may specify values or use default values (from IPCC)
Draft tools for A/R and SFM projects have been delivered, along with their user‟s
manuals.
Currently seeking regional pilots to implement and test A/R and SFM tools, against
other tools as well
28
Employment Generation
andLivelihood
ClimateChange
Mitigation and
Adaptation
Land-Use Change
• Deforestation causes 20% of carbon emissions
• Dieback of forests in boreal zones and the Amazon?
• 1.6 billion dependent on forests for survival
• 11 million directly employed in forestry in organized sector, 2–3 times more in unorganized sector
• Tens of millions employed in downstream processing
• Growing pressure on land – conversion to agriculture, bioenergy and fiber plantations
• Land-use change becoming key socio-economic issue across industries
• Large scale investments lead to “land grab” and fights over tenure
Impacts of large scale
farming and forest
plantations, Riau,
Indonesia
Source: Uryu, Y. et al. 2008 (used with permission
3030
42%
33%
14%
11%Shifting agriculture
Conversion to
agribusiness and cattle
ranching
Illegal logging
Every year we lose an area the size of England to deforestation
Emissions from deforestation exceed total annual CO2 emissions
from USA or China
Emissions from deforestation far exceed those of transportation
sector – more than every car, airplane and train in the world
Accelerating trend towards large scale investments in agribusiness
and biofuels
Poverty and agricultural conversion are the main causes of deforestation
Investments in institutional capacity, forest governance and information
Increasing forest benefits through investments in: ◦ SFM including forest certification, ◦ Afforestation, reforestation, ◦ Restoration
Investments outside the forest sector◦ Energy◦ Transport◦ Agribusiness◦ Agro-forestry
Forest Investment Lending◦ Community Forest Management (Mexico,
Albania, Laos)
◦ Afforestation/Reforestation (China)
◦ Sustainable Forest Management (Congo DR)
BioCarbonFund
Forest Carbon Partnership Facility ◦ 38 countries/around US$ 138 million
Forest Investment Program◦ Large scale, transformational investments
◦ Currently US$ 349 million
IFC Investments in Forest Industries◦ New IFC Forest Investment Strategy
approved
Considerable progress has been made in developing geospatial and time-referenced tools for both measuring and modeling forestry and associated agricultural GHG accounting and analyses.
Tool for tracking land cover, land use, and surface hydrology (important drivers of GHG sink/source functions) developed with assistance from the University of Washington (Richey et al.) is being tested and refined in WB and GEF operations in nine countries in Africa, East Asia and the Pacific, and South Asia.
Smoke & Aerosols from deforestation & slash & burn agriculture
CongoBrazil
Smoke & Ozone pollution from peat fires
Source: NASA
Source: NASA
Saturated Subsurface Flow
Overland Flow
Quickflow from
Impervious Surfaces
Vertical
Unsaturated
Flow
Channel
Segment
Flow
Channel Segment Flow
Ci Qoutflow
Segment i
Crunoff QrunoffCi,in Qinflow
Csoilwater Qsubflow
Basin Cell
Soil column
Ground surface
Upstream-Downstream Quantitative remote sensing, time sensitive, geospatial data sets
Effects of land use change on the hydrologic regime of the Mae Chaem river basin, NW Thailand (land use change and hydrology as key drivers of GHG sinks and sources)
Source: Thanapakpawin et al (2008) J. of Hydrology
Proposed dams
Existing dams Source: Thanapakpawin et al (2008) J. of Hydrology
*Land Use–Hydrology-Hydropower as key drivers of GHG sinks/sources (Richey & Fernandes (in prep))
Sameer AkbarClimate Change Team, ENV
GHG Analysis within a development context
Gross vs. Net Emissions Estimation
Boundaries and Scopes
◦ Geographic vs. operational vs. co-financing
◦ Construction / upstream / downstream / lifecycle
emissions
Timeframe of emissions
◦ First year / economic life of project / loan
repayment period
Replication / catalytic impacts
Please visit us online:
www.worldbank.org/climatechange
www.worldbank.org/cif
www.carbonfinance.org
www.forestcarbonpartnership.org