Financed by the Norwegian Trust Fund, Supported by CF-Assist

Low-carbon Energy Projects for Development in Sub-Saharan Africa

Unveiling the Potential, Addressing the Barriers

Financed by the Norwegian Trust Fund, Supported by CF-Assist

Presentation to the Reference Group of the NTF, November 13, 2008

Christophe de GouvelloThe World Bank

Massamba Thioye Felix B. DayoSenior Energy and CDM consultant Senior Energy and CDM consultant

Presented by : Ashok SarkarThe World Bank

Summary of the Presentation

I. Strong development of the CDM Except in Sub Saharan Africa

II. Unveil the Potential of CDM Energy Projects in SSA

III. Addressing the Barriers Recommendations

Pace of releasing new approved Methodologies by

Regulatory Bodies (EB+MethPanel)

Ch. de Gouvello - WB / AFTEG - May 2006Member of the MethPanel of the CDMSource: UNFCCC data

y = 0.0435x - 1647.4R2 = 0.9791

0

10

20

30

40

50

60

May-03 Aug-03 Nov-03 Feb-04 May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07

More than 120 CDM Methodologies Approved

(August 2008)

The number of CDM eligible activities has expanded quickly

Cumulative Number of CDM Projects per Methodology (projects that officially began validation process)

-

10

20

30

40

50

12/1/

032/1

/044/1

/046/1

/048/1

/0410

/1/04

12/1/

042/1

/054/1

/056/1

/058/1

/0510

/1/05

12/1/

052/1

/064/1

/06

Nb Proj under ACM0002







Nb Proj under AM0001















Nb Proj under AMS-I.C

Nb Proj under AMS-I.D

Nb Proj under AMS-II.B

Nb Proj under AMS-II.C

Nb Proj under AMS-II.D

Nb Proj under AMS-III.B

Nb Proj under AMS-III.D

Nb Proj under AMS-III.ECh. de Gouvello - WB / AFTEG - May 2006Member of the MethPanel of the CDMSource: UNFCCC data

The Y axis has been truncated at 50


Each new approved methodology unleashes a new segment of the CDM projects potential

- 90 180 270 360 450 540 630 720 810 900 990 1,080 1,170 1,260 1,350

Dec. 1rst, 2003 Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007

Number of CDM projects that have already applied for validation

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600

2,800

Nb of calendar days since Dec 1rst, 2003

Nb of Projects

Number of projects submitted for validation is now doubling every 8 months

Ch. de Gouvello WB / LCSEG

Source: UNFCCC data

The number of CDM projects that have begun or completed the validation process increases as the following exponential /polynomial function of timey = 1E-06x3 + 4E-05x2 - 0.04xR2 = 0.99

August 1, 2008

N= 3,900

-

1

2

3

4

5

6

7

8

9

2003 2004 2005 2006 2007

Annual value of CDM/JIEmission Reductions Transactions (billion USD)

(up to 2012 vintages)

However still some uncertainties for post 2012 (second commitment period)

Already more than 5 billion dollars of North-South Net Transfer before end of 2012

Source: State and Trends of the Carbon Market 2008. Karan Kapoor and Philippe Ambrosi, World Bank, May 2008

Location of approved CDM projects (source: UNFCCC)

Very few CDM projects so far in Sub-Saharan Africa

Share in non-Annex 1 group

Number of SSA CDM projects in validation pipeline

1.4 %

Foreign Direct Investment, net inflows, 2004 (US$)

5.7 %

Gross domestic product, 2004 5.1 %

Electricity consumption, 2004 5.1 %

CO2 emissions, 2004 (without LULUCF)

5.4 %

GHG emissions, 2000 (with LULUCF) (tCO2e)

13 % The number of CDM projects should be greater

Same facilities hosting CDM projects in other regions also exist in Sub Saharan Africa

Flaring Power Plants Distribution Losses

Renewable Energy

Incandescent lamps Motors

Fossil fuel in Industry Cement Industry Transport

Woodfuel Biomass Landfill

II. Check the Potential :

How many potential CDM projects in SSA similar to projects developed in other countries with approved methodologies ? 22 types of projects 44 countries

III. Investigate the reasons why not implemented : Recommendations

•ACM007, ACM0013 •AMS-II.A, AM0045 •AM0020, AM0046

•AM0052, AM0061 •AMS-II.C, AM0044

•AM0062, AMS-II.B •AM0058

•AMS-I.B,C

•ACM0002, AM0019

•AM0026, AM0042

•AM0048, AM0015

•AMS-I.A,D, AM0005

•AM0032, ACM0004

•ACM0012, AM0024

•AMS-III.Q, AM0022

Power

Generation

Transport /

DistributionConsumption/

Use

Renewable Energy- CHP in sugar mills- Agricultural residue- Forest / wood-process residues- Typha australis- Jatropha biofuel- Hydroelectricity- Photovoltaics rural areas- Landfill gas

- Switch to compact fluorescent lamps

- Energy-saving household appliances

- Non-lighting electricity for industry

Grid loss reductionsGeneration from Fossil Fuels- Addition of 2nd cycle- CHP in industry

CDM Projects CDM Projects CDM Projects

Power Sector

Nb Proj = 204CERs = 36 MtCO2/yPower = 5.9 GWInv. Cost = $ 7.1 billion

CO2


Nb Proj = 67CERs = 2.4 MtCO2/yPower = 0.7 GWInv. Cost = $ 1 billion


Nb Proj = 406CERs = 20 MtCO2/yPower = 4 GWInv. Cost = $ 5.7 billion


Nb Proj = 555CERs = 177 MtCO2/yPower = 28 GWInv. Cost = $ 54 billion


Nb Proj = 3CERs = 0.9 MtCO2/yPower = 0.01 GWInv. Cost = $ billion


CH4CO2

Fuel production

CH4 CO2

Transport

CO2

Thermal Use/

Consumption

XX

CDM activities CDM activities CDM activities

Fuel for Industry (Coal, Fuel Oil, Gas)

Production- Flared gas recovery- Coal mine methane- Waste gases in crude oil refinery

Thermal Use and Consumption- Improved steam system- Reduced clinker use in cement manufacturing

Nb Proj = 55CERs = 92 MtCO2/yPower = 45 GWInv. Cost = $ billion

Nb Proj = 18CERs = 2.5 MtCO2/yPower = 0.1 GWInv. Cost = $ 0.1 billion

Nb Proj = 26CERs = 4.3 MtCO2/yPower = 0.7 GWInv. Cost = $ 0.9 billion

Nb Proj = 211CERs = 37 MtCO2/yPower = GWInv. Cost = $ billion

Nb Proj = 46CERs = 2.8 MtCO2/yPower = GWInv. Cost = $ 0.1 billion

CO2

Fuel production

CO2

Transport /

Distribution

CO2

Use/

Consumption


Fuel for vehicles

Production- Biodiesel from Jatropha

Consumption and Use-Shift to Bus Rapid Transit (BRT)

Nb Proj = 60CERs = 3.2 MtCO2/yInv. Cost = $ billion

Nb Proj = 63CERs = 12 MtCO2/yInv. Cost = $ billion

CO2 CO2 CO2

Production of woodfuel

Transport /

DistributionConsumption


Woodfuel for households

Production- Improved Charcoal Production

Nb Proj = 68 (PoA)CERs = 22 MtCO2/yInv. Cost = $ 0.2 billion

Technical Potential of Low Carbon Energy Projects in SSA

(available for each of the 44 countries considered – see attached CD)

$ 157,6 billionInvestment cost (only for projects for which cost data is available)

109 %Percent of the country emissions

740 MtCO2 /yearPotential GHG reductions

$ 97.8 billionValue of the GHG reductions over crediting period(10 or 21 years, base 10 US$/tCO2)

380 %Percent of actual generation

1,244 TWh/yearPotential of additional electricity generation

225 %Percent of installed capacity

155 GWPotential of additional power generation capacity

361Number PoAs

3,2272,866Number of Potential Projects

Many technologies could not yet be included at this stage: wind, geothermal, efficiency in building, solar water heaters, efficient cooking stoves, etc.

CountryProjects number

with PoAstCO2 Reduction

per year% of country emissions

Additional power (MW)

% of country power

Tot. inv. cost

of projects(million US$)

Angola 100 37,010,653 181% 11,170 1690% 6,957Benin 50 5,543,315 244% 788 1138% 1,161Guinea Biss 8 660,446 173% 91 407% 152Botswana 37 6,842,574 175% 1,032 817% 1,805Burkina 27 4,908,108 420% 874 610% 1,497Burundi 8 620,467 151% 105 284% 138Cameroon 61 11,785,479 173% 2,481 299% 2,882Cap-Vert 5 56,832 20% 8 12% 7CAR 27 6,424,020 1902% 1,026 2723% 1,917Chad 28 7,287,798 3806% 1,935 4804% 1,415Comores 5 106,484 103% 2 53% 3Congo Dem 154 42,578,995 1796% 7,790 324% 12,356Congo Rep 35 7,739,633 146% 2,297 725% 1,426E. Guinea 34 5,953,683 122% 2,505 19291% 383Ethiopia 122 36,907,421 844% 6,713 996% 10,174Gabon 58 8,150,009 165% 2,352 611% 1,372Gambia 1 84,700 29% 0 0% 1Ghana 88 14,776,572 222% 2,465 211% 3,335Guinea 26 6,490,115 485% 1,375 564% 1,818Ivory Coast 91 18,117,154 282% 3,327 287% 3,671Kenya 90 20,254,030 205% 3,172 363% 4,688Liberia 7 1,251,645 236% 169 18% 14

1/2

Country

Projects number with

PoAs

tCO2 Reduction per year

% of country emissions

Additional power (MW)

% of country power

Total inv. cost of projects

(million US$)

Madagascar 40 8,335,584 328% 1,269 707% 2,199

Malawi 37 7,815,080 913% 1,390 486% 1,994

Mali 28 5,431,353 817% 995 245% 1,889

Mauritania 17 1,918,762 73% 239 130% 379

Mauritius 27 1,093,742 27% 152 30% 126

Mozambique 79 24,374,433 1059% 5,045 239% 7,455

Namibia 37 10,876,649 111% 1,955 652% 3,690

Niger 18 2,752,417 223% 416 365% 767

Nigeria 460 138,136,175 131% 41,221 723% 18,917

Rwanda 10 705,297 91% 121 445% 156

Senegal 69 8,100,133 147% 1,250 285% 1,853

Seychelles 4 321,967 35% 54 203% 87

Sierra Leone 11 1,892,099 161% 298 271% 465

Somalia 41 13,045,616 1734% 2,060 2598% 3,830

South Africa 877 203,472,238 48% 31,037 100% 35,847

Sudan 36 11,805,500 109% 3,138 413% 717

Swaziland 16 1,161,144 102% 201 178% 259

Tanzania 112 24,100,692 607% 4,228 515% 6,469

Togo 40 3,576,891 150% 426 221% 619

Uganda 62 13,968,787 865% 2,536 868% 3,636

Zambia 68 17,583,532 719% 3,344 210% 3,573

Zimbabwe 79 11,930,198 101% 2,024 126% 2,657

SS AFRICA (All) 3,228 740,669,229 109% 155,076 225% 154,755

2/2

Potential for future emissions reductions in proportion of current emissions (CO2) (100% = 1)(Note: extremely high values observed for certain countries are due to the fact that flaring emissions where not reflected in official country emissions data)

Annual Emissions Reductions in tCO2 and in proportion of countries emissions

Investment Curves: - tCO2 Reductions Potential - Additional Power Generation Capacity

USDpertC02

Million tons of CO2 avoided

USDperMW

Additional Power in MW

During projects lifetime (10 or 21 years)

III. Barriers and Recommendations

1. Appropriate Regulatory Framework is missingExample : Cogeneration

Many cogeneration projects in UNFCCC validation/registration pipeline: Brazil, India, etc.

Very few in Sub-Saharan Africa. But there are sugar factories, agro-industry, refineries, chemical industry,…

Key bottleneck in Africa: No Feed-in Tariff no possibility to sale electricity no possibility to get credits no CDM project

Missing: Regulatory Framework for Auto-producers

Biofuels: Regulatory Framework also missing

1. Appropriate Regulatory Framework is missing

However, support can be provided by Technical Units of International Development Agencies for developing missing regulations

Carbon Finance cannot provide TA to fix it

1. Complementary Regulatory Framework needs to be developed

2. Market access requires appropriate infrastructure planning and policies to overcome logistics bottlenecks

3. Technical information on mature, clean energy technologies must be appropriately disseminated

4. The local skills required to run mature, clean technologies must be developed

5. Technical Assistance and R&D are required to achieve full efficiency and sustainability of clean energy technologies

6. Develop local expertise and institutional procedures to facilitate project developers’ access to an increasing range of financial resources earmarked for climate change

7. Post-Kyoto Carbon Funds are required

8. However, Carbon Finance alone will not solve the investment financing gap. Earmarked Climate Investment Funds (CIFs) are essential

Recommendations to overcome Barriers

Technical Units of Development Agencies are used to channel TA and Financing at Project Level – Integration is key

Thank You - Merci

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Financed by the Norwegian Trust Fund, Supported by CF-Assist