FINANCING PLAN (IN US$):addis.unep.org/projectdatabases/00574/documents/Request... · Web viewOne report containing the assessment of GHG emission reduction potential and estimation

Re-Submission Date: 13/07/2012

Expected Calendar (mm/dd/yy)Milestones Dates

Work Program (for FSPs only) 05/15/2010Agency Approval date 08/15/2012Implementation Start 10/01/2012Mid-term Evaluation (if planned) 03/01/2014Project Closing Date 09/30/2015

PART I: PROJECT INFORMATION GEFSEC PROJECT ID: 4254PROJECT DURATION: 36 monthsGEF AGENCY PROJECT ID: COUNTRY(IES): BrazilPROJECT TITLE: Mitigation Options of Greehhouse Gas (GHG) Emissions in Key Sectors in Brazil (Project)GEF AGENCY(IES): UNEP, (select), (select)OTHER EXECUTING PARTNER(S): Ministry of Science, Technology and Innovation (MCTI)GEF FOCAL AREA(s): Climate Change GEF-4 STRATEGIC PROGRAM(s): Enabling Activity NAME OF PARENT PROGRAM/UMBRELLA PROJECT: NA

A. PROJECT FRAMEWORK (Expand table as necessary)Project Objective: To assist the Government of Brazil to strengthen its technical capacity in supporting the implementation of its mitigation actions for greenhouse gas emissions in key economic sectors (industry, energy, industry, transportation, household and services, LULUCF and other cross-sector alternatives) in Brazil (including costs) as identified in the Brazilian National Policy and Plan on Climate Change.

Project Components

Indicate whether Investment, TA, or STA2

Expected Outcomes Expected Outputs GEF Financing1 Co-Financing1 Total ($)c=a+ b($) a % ($) b %

1. Mitigation alternatives identified and their respect-ive potentials and costs quantified for the periods 2012-2035 and 2035-2050

TA Sector specific results for greenhouse gas (GHG) abatement potential and costs have been prepared

Sector marginal abatement cost curves prepared

Sector GHG emission scenarios (baseline and low carbon) elaborated

Technical and economic potential for GHG emission reductions estimated

Estimates of learning curves prepared

Analysis of potential cross-sectoral

One report containing an assessment of GHG emissions reduction potential and estimation of abatement costs for the industrial sector

One report assessing the GHG emission reduction potential and estimation of abatement costs for the energy sector.

One report assessing the GHG emission reduction potential and estimation of abatement costs for the transport sector

One report containing the assessment of GHG emission reduction potential and estimation

1,669,732 28% 4,380,922 72% 6,050,654

REQUEST FOR CEO ENDORSEMENT/APPROVALPROJECT TYPE: FULL-SIZED PROJECT THE GEF TRUST FUND

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abatement options developed

of abatement costs for the household and services sectors

One report assessing the mitigation alternatives and estimation of abatement costs for land use, land use change and forestry (LULUCF).

One report assessing the mitigation alternatives and estimation of abatement costs for the Waste Management Sector.

One report containing the assessment of GHG emission reduction potential and estimation of abatement costs for cross-sector mitigation alternatives.

2. Integrated analysis of the different mitigation alternatives in an inte-grated opti-mization framework, considering the non-additivity of the different mitigation alternatives and other economic considera-tions; and an evalua-tion of the possible impacts of different climate poli-cies on the Brazilian economy; testing domestic measure-ment, repor-ting and verification (MRV) of

TA Integrated optimization framework adapted to the Brazilian case

Integrated baseline and low carbon scenarios for Brazil up to 2050 prepared

Computerized General Equilibrium model adapted to the Brazilian case

One report on the integrated analysis of GHG emission abatement alternatives in an optimization model comprising all energy chains in the Brazilian energy sector

One report analyzing the impacts of low carbon policies on the Brazilian economy and including a CGE model adapted to the Brazilian case.

One report analyzing the difference of economic impacts in item (b) above with distinct cap assignment criteria: considering grandfathering, cost-related and auction schemes and relative and absolute targets.

1,227,765 22% 4,380,918 78% 5,608,683

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proposed mitigation alternatives

3. Capacity building for federal, state and 2014 FIFA World Cup host cities government institutions, as well as civil society organiza-tions, for implementa-tion of mitigation actions for GHG emis-sions in key economic sectors

TA Government (federal and state level) staff with increased technical skills and capable of identifying mitigation alternatives and quantifying their respective potentials and costs for the different sector of the Brazilian economy; and evaluating possible impacts of different climate policies on the Brazilian economy. Decision makers and civil society organizations with increased awareness on climate change mitigation

Targeted training of federal and state level institutions, and civil society organizations on climate change mitigation issues.

902,503 31% 2,047,160 69% 2,949,663

8. Project management 380,000 24% 1,183,400 69% 1,563,400Total Project Costs 4,180,000 11,992,400 16,172,400

1 List the $ by project components. The percentage is the share of GEF and Co-financing respectively of the total amount for the component. 2 TA = Technical Assistance; STA = Scientific & Technical Analysis.

B. SOURCES OF CONFIRMED CO-FINANCING FOR THE PROJECT (expand the table line items as necessary)Name of Co-financier

(source) Classification Type Project %*

MCTI Exec. Agency Cash 1,078,000 9%MCTI Exec. Agency In-kind 10,812,000 90%UNEP Imp. Agency In-kind 102,400 1%Total Co-financing 11,992,400 100%

* Percentage of each co-financier’s contribution at CEO endorsement to total co-financing.

C. FINANCING PLAN SUMMARY FOR THE PROJECT ($)

Project Preparation a

Project b

Totalc = a + b

Agency FeeFor comparison:

GEF and Co-financing at PIF

GEF financing 47,273 4,180,000 4,227,273 422,727 4,180,000Co-financing 0 11,992,400 11,992,400 11,890,000Total 47,273 16,172,400 16,219,673 422,727 16,070,000

D. GEF RESOURCES REQUESTED BY AGENCY(IES), FOCAL AREA(S) AND COUNTRY(IES)1

GEF Agency Focal Area Country Name/

Global(in $)

Project (a) Agency Fee ( b)2 Total c=a+bUNEP Climate Brazil 4,180,000 418,000 4,598,000

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http://gefweb.org/Documents/Council_Documents/GEF_C21/C.20.6.Rev.1.pdf

ChangeTotal GEF Resources 4,180,000 418,000 4,598,000

1 No need to provide information for this table if it is a single focal area, single country and single GEF Agency project. 2 Relates to the project and any previous project preparation funding that have been provided and for which no Agency fee has been

requested from Trustee.

E. CONSULTANTS WORKING FOR TECHNICAL ASSISTANCE COMPONENTS:

Component Estimated person weeks

GEF amount($)

Co-financing ($)

Project total ($)

Local consultants* 284 153,600 0 153,600International consultants* 0 0 0 0Total 284 153,600 0 153,600

* Details provided in Annex C.

F. PROJECT MANAGEMENT BUDGET/COST

Cost ItemsTotal Estimated

person weeks/months

GEF amount

($)Co-financing

($)Project total

($)Local consultants* 156 174,000 0 174,000International consultants* 0 0 0 0Office facilities, equipment, vehicles and communications*

6,953 3,000 9,953

Travel* 0 0 0Others** 199,047 1,180,400 1,379,447Total 380,000 1,183,400 1,563,400

Details provided in Annex C. ** Others: GEF: UNEP Brazil Office cost recovery for support to project execution. Cofinancing: Government: US$1,081,000 comprising salaries of the Project coordination team (6 persons, including National Director, Coordinator, technical staff and secretariat). UNEP: US$102,400 comprising salaries of technical and administrative support team, office expenses)

G. DOES THE PROJECT INCLUDE A “NON-GRANT” INSTRUMENT? yes no (If non-grant instruments are used, provide in Annex E an indicative calendar of expected reflows to your agency and to the GEF Trust Fund).

H. DESCRIBE THE BUDGETED M &E PLAN:

1. The Project will follow UNEP standard monitoring, reporting and evaluation processes and procedures. Project M&E will be implemented by the MCTI/Rede Clima-Project Management Unit (PMU) and UNEP. The project M&E plan (Appendix 6 of project document) is consistent with the GEF Monitoring and Evaluation policy. The Project Results Framework presented in Annex A below and Appendix 3 of the project document includes SMART indicators for each expected outcome as well as mid-term and end-of-project targets. These indicators along with the key deliverables and benchmarks included in Appendix 5 of the project document will be the main tools for assessing project implementation progress and whether project results are being achieved. The means of verification and the costs associated with obtaining the information to track the indicators are summarized in Appendix 6. Other M&E related costs are also presented in the Costed M&E Plan and are fully integrated in the overall project budget. The M&E plan will be reviewed and revised as necessary during the project inception workshop to ensure project stakeholders understand their roles and responsibilities vis-à-vis project monitoring and evaluation. Indicators and

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their means of verification may also be fine-tuned at the inception workshop. Substantive and financial project reporting requirements are summarized in Appendix 7. Reporting requirements and templates are an integral part of the UNEP legal instrument to be signed by the Executing Agency and UNEP. 2. M&E will be undertaken at three levels: project outcomes and impacts in relation to the logical framework; delivery of project outputs in accordance with the annual work plans; and monitoring of project implementation and performance. The Project Steering Committee (PSC) will receive periodic reports on progress and will make recommendations to UNEP concerning the need to revise any aspects of the Results Framework or the M&E plan. Project oversight to ensure that the project meets UNEP and GEF policies and procedures is the responsibility of the Task Manager in UNEP-GEF. The Task Manager will also review the quality of draft project outputs, provide feedback to the project partners, and establish peer review procedures to ensure adequate quality of scientific and technical outputs and publications. 3. A mid-term evaluation will take place on project year two. The review will include all parameters recommended by the GEF Evaluation Office for terminal evaluations and will verify information gathered through the GEF CC Mitigation Tracking Tool (Annex F below and Appendix 13 of project document), as relevant. An independent terminal evaluation will take place at the end of project implementation. The Evaluation and Oversight Unit (EOU) of UNEP will manage the terminal evaluation process. The standard terms of reference for the terminal evaluation are included in Appendix 8. These will be adjusted to the special needs of the Project.

4. The PMU will develop and implement a project visibility plan and disseminate information on a regular basis among the different agencies, institutions and beneficiaries involved in the project, including project reports and results, project website and other dissemination means. The following table summarizes the M&E plan and budget:

M&E activity Responsible Parties Total Budget US$

Period

Inception Workshop

Project Officer MCTI UNEP

US$5,000 (GEF)US$1,000 (co-financing)

Within 2 months of Project start-up

Inception Report Project Team UNEP None

Immediately after Inception Workshop

Measurement of progress and performance indicators

Project Officer /team None Annually, before the APR/PIR and preparation of AWPs

Quarterly Progress Reports Project Officer /team None Quarterly

Annual Report/Project Implementation Report(APR/PIR)

Project Officer /team MCTI UNEP

None Annually

Steering Committee Meetings Project Officer MCTI UNEP


Following Inception Workshop and subsequently at least once a year

Mid-term Evaluation Project Officer MCTI/UNEP External Consultants

US$20,000 Project mid-term

Terminal Evaluation Project Officer MCTI/UNEP External Consultants

US$20,000 End of Project implementation

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M&E activity Responsible Parties Total Budget US$

Period

Terminal Report Project Officer MCTI/UNEP None

At least one month before end of project

Audit UNEP Project Team US$45,000

Annually

Publications (lessons learnt, technical reports, impact studies)

Project Officer MCTI/UNEP External Consultants


Annually

Field visits UNEP Government

representatives

Paid through Agency fees and operational budgets

Annually

TOTAL INDICATIVE COSTExcluding project team staff time and travel expenses of UNEP staff


PART II: PROJECT JUSTIFICATION:

A.STATE THE ISSUE, HOW THE PROJECT SEEKS TO ADDRESS IT, AND THE EXPECTED GLOBAL ENVIRONMENTAL BENEFITS TO BE DELIVERED: 5. Brazil is the 8th largest world economy if the purchasing power parity (PPP) criterion is used and the 7th when the nominal exchange rate criterion is considered (International Monetary Fund, 2010). Recently, Brazil surpassed the world average value of the GDP PPP per capita, occupying the 72 th position (China occupies the 94th position and India the 129th). In spite of the low per capita income value of these countries their specific weight in the international trade is high with a large space for economic growth. Economic growth in these countries will increase their contribution to global GHG emissions. The way that this growth will be achieved is of major importance for the future of greenhouse effect emissions. The position Brazil occupies in the world economy and the size of its territory and population corroborate the potential for the Brazilian economic growth (and also of the GHG emissions). However the abundance of natural resources also points to the possibility of finding a different path for development that could keep its present low carbon emission by GDP for energy uses.

6. Brazil has a peculiar GHG emissions profile. According to the Second National GHG Emissions Inventory (MCT, 2009), land use, land use change and forestry (LULUCF) was the major source of GHG emissions in the country in 2005. Over 80% of total emissions came from LULUCF in that year, where land use change and deforestation accounted for 61% and land use for 19%. Energy consumption was the next largest emitter (15%), followed by industrial processes (3%) and wastes (2%). The GHG emissions included in the Brazilian Inventories Nº 1 and 2 are carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O), the hydrofluor carbons (HFCs), the perfluorocarbons (PFCs) and sulfur hexafluoride (SF6). The emissions of the so called indirect GHGs, such as the nitrogen oxides (NOx), carbon monoxide (CO) and other non-methane volatile organic compound gases (NMVOCs) were also estimated. See Appendix 7 on estimates for GHG emissions included in the Brazilian Inventories Nº 1 and 2. Brazil is one of the largest GHG emitters worldwide when it comes to LULUCF. Between 1970 and 2007, 18% of the Amazon forest was deforested and, in the last fifteen years, the Cerrado lost 20% of its original area, while the already devastated Mata Atlântica decreased by 8% (De Gouvello, 2010). Although deforestation rates in Brazil have declined recently, deforestation still remains as the single most important source of GHG emissions in the country. Agriculture and livestock also represent a significant source of GHG emissions, mainly due to the use of fertilizers, irrigated rice crops, sugarcane burning prior to harvesting and enteric fermentation by cattle. 7. Contrary to the majority of countries in the world, the Brazilian energy matrix relies mainly on renewable sources, reaching 45% of the primary energy consumed in the country in 2010 (EPE, 2010). This feature has been

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kept relatively stable since the last 3 decades, oscillating between 40% and 50%. Among the renewable sources utilized in the country sugarcane products (18%) and hydraulic energy (14%) stand out. With regards to the contribution of the use of energy in Brazil to climate change, the impact of the national energy matrix in the climate resulted in greenhouse gas emissions intensity per unit of primary energy consumed of 1.8 tCO 2/tons of oil equivalent (toe) in 2010. This value is low, when compared to the world average of 2.8 tCO 2/toe. For comparison, C intensities of selected countries are given as follows: China (3.4 tCO2/toe); India (3.3 tCO2/toe); USA (2.7 tCO2/toe); Germany (2.6 tCO2/toe); Japan (2.6 tCO2/toe); and Russia (2.5 tCO2/toe).

8. However, although Brazil is in a relatively comfortable position when it comes to the energy mix, the country now faces a dilemma concerning the use of energy in the future. There is the necessity of increasing the per capita energy consumption to enhance economic growth and universalize, to all social classes, access to energy services. However, due to the proximity of the exhaustion of the usable hydroelectric potential – especially considering environmental restrictions in the Amazon – the expansion of the national energy system will probably take Brazil toward a more carbon intensive energy matrix. The path to be followed by the country in regard to emissions will be defined by the level of future uses of renewable sources of energy with great potential - notably wind power, solar power, small hydroelectric dams, biomass stations - and by the adoption of energy efficiency measures. 9. Energy consumption trends (Table 1 below) show a large growth in energy consumption in the last ten years, mainly in the industrial and energy (a sector that produces and transforms energy) sectors. Also, one can observe intensification in the use of energy per GDP (energy intensity), which means a more carbon-intensive energy matrix and, consequently, an increasing trend in GHG emissions. On the other hand, in sectors where the energy intensity decreased (e.g., transport and agriculture), energy consumption and emissions still increased, but at rates lower than that for their value added. It is therefore imperative to improve the current knowledge base on the energy consuming sectors in order to develop strategies, plans and policies to promote mitigation actions and low carbon initiatives. Understanding and assessing the energy sector in Brazil and all the major energy consuming sectors in the country would help the Government to establish actions to continue as a low-emitting country when it comes to energy and to implement new possibilities within the framework of its National Plan on Climate Change.

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Table 1: Final Energy Consumption and Energy Intensity of Brazilian Economical Sector’s

Sector / Activities

Energy Consumption (103 toe / year)

GDP (106 US$ / year)

Energy Intensity (toe/103 US$)

2001 2010 2001 2010 2001 2010Agriculture and Livestock 7,729 9,904 74,854 102.727 103.3 96.4

Industry 61,521 85,678 302,544 385.765 203.3 222.1

Mining1 2,268 3,113 12,126 19.080 187.1 163.2

Non-metals2 6,370 8,637 2,517 4.205 2,530.7 2,053.9

Ferrous and non-ferrous3 19,700 24,132 13,504 20.338 1,458.9 1,186.5

Chemical 6,357 7,443 18,522 32.267 343.2 230.7

Foods and Beverages 14,418 23,646 24,714 36.574 583.4 646.5

Textiles 1,068 1,212 7,021 9.066 152.1 133.7

Pulp and Paper 6,161 10,076 4,224 6.985 1,458.4 1,442.5

Other industries 5,179 7,419 219,915 257.250 23.5 28.8

Energy4 13,575 25,332 62,325 92.008 217.8 275.3

Services 55,669 79,669 1,048,723 1.507.191 53.1 52.9

Commerce and other5 7,868 10,238 984,605 1.412.662 8.0 7.2

Transportation 47,802 69,430 64,118 94.530 745.5 734.5

Residential (households) 20,149 23,669 - - - -

TOTAL 138,494 200,583 1,488,446 2,087,692 93.0 96.11 Exclusive oil extraction, natural gas and coal.2 It corresponds to the cement and ceramics industries.3 It corresponds to the sectors iron and steel, iron-alloys and non-ferrous metals.4 Corresponds to the extraction of oil, natural gas and coal; oil refining; alcohol distillation, electricity generation and coking production.5 Matches commerce, communications, financial institutions, public administration, rent, other services and SIUP less power generation.

10. Brazil gives full importance to the problem of climate change, considering that it is an issue of concern for the future generations of all nations. Brazil has played an important role in the international discussions and scientific assessment of climate change, as well as in setting up an international institutional framework. Although Brazil, as a developing country, does not have commitments to reduce or limit its anthropogenic emissions of GHGs, it has many programs that result in a considerable reduction of GHG emissions and contribute to the ultimate objective of the UNFCCC. The Project will help the Government of Brazil to strengthen its technical capacity so that mitigation actions concerning greenhouse gas emissions in key economic sectors will lead to sustainable development and low emission principles.

11. Estimating mitigation potentials and the associated costs is ultimately necessary in climate policy design and implementation. Two recent studies have made progresses in identifying GHG emission reduction alternatives, their abatement potentials and costs: “Brazil Low Carbon–Country Case Study 2010”, a study carried out by the World Bank; and “Pathways to a Low-carbon Economy for Brazil”, a report produced by the McKinsey & Company consulting firm. It is crucial to continue this research effort by producing more recent estimates for baseline emission projections, specific sector’s mitigation potential and marginal cost of abatement curves, as well as providing innovative analyses that can help guiding future climate policies in the country.

12. Some promising mitigation alternatives have a cross-sector nature. Identifying such options can help estimating the total emission reduction potential of the country. However, many abatement options can be excludable, which means that the full mitigation potential cannot be measured by adding all alternatives. Also, even if different abatement options are comparable, the adoption of all alternatives can be limited by other economic considerations. Therefore, some abatement options may not be comparable, and the full potential cannot be deduced by adding all the potentials. There is, for example, a conflict between energy efficiency measures and cogeneration

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heat delivery. If efficiency measures are implemented, less excess heat will be available for export. The potential for carbon capture may compete with excess heat delivery and energy efficiency measures due to the energy penalties associated with the capture process (i.e., oxygen separation or absorbent regeneration). Moreover, even if several abatement options are compatible, economic considerations will likely limit the number of measures employed at any single industrial facility.

13. The adoption of policies for GHG reduction emissions is increasingly promoting a debate about the possible impacts on the competitiveness of the industrial sectors, which would be more critical over the energy intensive segments. Losses and gains on competitiveness are susceptible to the structure of climate policies to be adopted with the aim to decrease emissions. In the short term, fossil fuel intensive production segments would have their costs increased by climate restrictive policies, vis-à-vis non-intensive sectors. Given the urgency to adopt climate change mitigation measures and the need to adapt the Brazilian economy to a new competitive structure based on a low carbon economy, it is imperative to assess the impacts of different climate regulation options on the country’s industrial sector and the repercussions they might have on the Brazilian economy. 14. In addition, research on mitigation potential in the country needs to envisage the possibility of gains through innovation. These gains can provide important contributions to abating GHG emissions in the country in, basically, two ways: firstly, by reducing the costs of technologies, thus increasing their potential use for reducing GHG emissions; secondly, by enabling the use of frontier and foreseeable technologies that are not yet used for either economic or technical reasons. Finally, evaluating the country’s mitigation options and their costs is an ongoing effort which should not only assist in climate policy design, but also in its monitoring. Policy makers should be able to elaborate emission reduction plans as well as conduct them, which raises the need to provide capacity building to Brazilian public institutions both at the federal and state levels. Hence GEF assistance is being requested to assist the Government of Brazil to strengthen its technical capacity to support the implementation of its mitigation actions for GHG emissions (NAMAs) in key economic sectors (industry, energy, transportation, household and services, LULUCF, waste management and other cross-sector alternatives). At present, monitoring of GHG emissions only occurs at the aggregate level, through the elaboration of the national inventory, which is part of the National Communication to the UNFCCC. With the current implementation of sectoral mitigation plans, training on mitigation actions and monitoring methodologies will be needed, since monitoring will be enhanced and disaggregated at the state level. Besides, 2014 FIFA World Cup host cities will minimize the carbon footprint of the event, in line with FIFA Green Goal Program and according to the Federal Government Sustainability Agenda for 2014 FIFA World Cup (a partnership between The Ministry of Environment and the Ministry of Sports) . Host cities are: Rio de Janeiro - RJ, São Paulo - SP, Belo Horizonte - MG, Porto Alegre - RS and Recife - PE, Brasília - DF, Cuiabá - MT, Curitiba - PR, Fortaleza - CE, Manaus - AM, Natal - RN, Salvador – BA. Therefore, in coordination with federal and state governments, these 12 cities will elaborate, implement and verify results of mitigation and compensation plans for their Large Metropolitan Areas, based on the ex ante inventory of GHG emissions are to be elaborated in 2012. 15. The Project will support the Government of Brazil in its efforts to reduce GHG emissions and, at the same time, allow the country to grow sustainably. The Brazilian government has defined its policy regarding GHG emission reductions in the National Plan on Climate Change (PNMC) and the National Policy on Climate Change and the project will generate data and information to support the implementation of mitigation options aiming at contributing to the achievement of the stated goals within a sustainable development framework. 16. The Project´s objective is to assist the Government of Brazil to strengthen its technical capacity in supporting the implementation of its mitigation actions for GHG emissions in key economic sectors (industry, energy, transportation, household and services, LULUCF, waste management and other cross-sector alternatives). Through the implementation of the project, consistent analysis of the expected overall potential and costs for reducing GHG emission will be performed. This analysis will be based on solid economic foundations in order to evaluate the feasibility of mitigation alternatives and, if necessary, to present alternatives which might better suit the Brazilian economic conditions. At the same time, the project will allow Brazil to collaborate to the maximum extent possible for the common goal of reducing GHG emissions. Given that the goals for overall reduction of GHG established in the National Policy for Climate Change will involve the efforts of many stakeholders, the project proposes a thorough discussion with third parties representing the Brazilian society and Government agencies during

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the performance, which should help improve the solutions to be proposed. The project document includes a comprehensive stakeholder mapping (Section 2.5 and Appendix 15) as well as the coordination mechanisms for stakeholder engagement (Section 5). 17. The Project will build upon existing plans, programs and policies for the proposed sectors, namely: industrial sector, energy sector, transport sector, household and service sectors, LULUCF, including deforestation; and waste management (e.g. the National Plan on Climate Change and the National Policy on Climate Change; the 25 and 10-year Energy Plans; the Plan for Reduction of Emissions of the Steel Industry; the National Plan for Logistics and Finally, the Action Plan for the Prevention and Control of Deforestation of the Legal Amazon; the Action Plan for the Prevention and Control of Deforestation and Fires of the Cerrado; and the Plan for Consolidation of Low Carbon Agriculture. The project will also build upon recent studies such as “Brazil Low Carbon–Country Case Study 2010”, a study carried out by the World Bank; and “Pathways to a Low-carbon Economy for Brazil”, a report produced by the McKinsey & Company consulting firm. Besides, it will take into account the “Comparative Study among Three GHG Emission Scenarios in Brazil and a Cost-Benefit Analysis” elaborated by Centro Clima, under the coordination of Emilio Lèbre La Rovere, on demand of the Brazilian Ministry of Environment. Given the lack of a centralized long-term integrated economic planning a key result to be sought will be to unify the language of the existing plans and to elaborate plans for sectors not covered by the official plans (such as Chemicals, Pulp and Paper, Mining, Construction, Household and Service sectors) in a single scenario. 18. The Project’s intervention strategy comprises the following three outcomes and its outputs. The outcomes will be conducted sequentially so as to be consistent with achieving the project’s objectives. Annex A includes the project’s results framework and indicators.

Outcome 1: Mitigation alternatives identified and their respective potentials and costs quantified for the periods 2012-2035 and 2035-2050.

19. Under this outcome, the Project will establish sector specific baseline scenarios based on the newest available data (reference scenario) for the 2012-2035 and 2035-2050 periods and estimate the technical and market potentials for GHG emissions abatement. This will be done for each one of the selected sectors: industry, energy production and transformation, transports; household and services, LULUCF, waste management, as well as specific cross-sector alternatives. This effort should lead to the creation of a database on GHG mitigation for each of the above-mentioned sectors, which will help in directing climate policy and in building capacity for climate change mitigation actions by the Government of Brazil.

Output 1.1: Assessment of the potential for GHG emission reduction and estimation of abatement costs for the industrial sector. In this output, the project will produce a technical report containing: a) a description of the Brazilian industrial sector and the Best Available Technologies (BAT) for industrial processes; b) a baseline scenario for GHG emissions from the industrial sector; c) estimates of abatement cost curves for the industrial sector; d) an assessment of technical, economic and market potentials for the abatement of GHG emissions; e) evaluation of innovation potential and estimates of learning curves for the industrial sector; and f) a proposal of policy instruments for promoting low carbon measures in the industrial sector.

Activities for Output 1.1:

a. Sector description and definition of the “Best Available Technology” (BAT): a detailed description of the Brazilian industrial sector will be used to identify the BAT that could be implemented to reduce GHG emissions. Data source and cost estimation procedures should be explicitly described for each BAT choice. Sector aggregation should follow the National Energy Balance, but the analysis should not be restricted to it, so as to provide detail on specific industrial processes. Emissions from energy use and from industrial processes will both be analyzed.

b. Definition of a baseline for energy consumption and GHG emissions from the industrial sector: construction of a reference scenario for the industrial sector’s GHG emissions (energy consumption and industrial processes).

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c. Identifying industrial sector’s discount rate: different discount rates will be used in order to reflect different perceptions of the opportunity cost of capital, from a social perspective, with a lower short term preference; and from a market perspective, reflecting the investor’s perception of opportunity costs in which short term preferences are higher.

d. Economic assessment: evaluation of mitigation alternatives feasibility, based on BAT and considering:

i. Total GHG emissions abatement: technical potential and costs for different industrial segments;

ii.Economic and market potentials for GHG emission abatement in the different industrial segments

e. Innovation analysis: evaluation of innovation potential and costs for mitigation alternatives in the industrial sector. Learning curves modeling and estimation by using different approaches to assess technological improvement and cost reductions in the industrial sector.

f. Identification of policy instruments to promote GHG abatement in the industrial sector: economic and command and control instruments.

Output 1.2: Assessment of the potential for GHG emission reduction and estimation of abatement costs for the energy sector. Energy sector, as analyzed in this project, refers to the activities that produce and transform energy, as defined in the Brazilian National Energy Balance. The study to be carried out under this output will produce a technical report containing: a) a description of the Brazilian energy sector and the BAT for the energy sector with explicit description of data sources and cost estimation procedures; b) a baseline scenario for GHG emissions from energy use; c) estimates of abatement cost curves for the energy sector; d) an assessment of technical, economic and market potential for the abatement of GHG emissions; e) evaluation of innovation potential and estimates of learning curves for the energy sector; and f) a proposal of policy instruments for promoting low carbon measures in the energy sector.

Activities under Output 1.2:

a. Sector description and definition of the BAT: a detailed description of the Brazilian energy sector will be used to identify the BAT that could be implemented to reduce GHG emissions. Specific segments should be considered:

i. Conventional Technologies: thermal power plants, oil refineries, offshore oil production platforms, sugar-cane distilleries;

ii. Wind and solar power: assessment of potential and costs for electricity generation from wind and solar power in different regions of Brazil. For the case of solar power, two technologies should be considered: photovoltaic panels (PV) and concentrated solar power (CSP), including technological alternatives for heat storage and hybridization of the systems.

iii. Co-combustion of coal/natural gas and biomass for electricity generation: survey of coal and natural gas generation capacity in the country and the fraction that could be used for co-combustion. Development of a model to evaluate the co-combustion of renewable woody biomass in large scale coal power plants. Estimate of co-combustion GHG emissions abatement potential and impacts on local social and economic development.

b. Definition of a baseline for energy consumption and GHG emissions from the energy sector: construction of a reference scenario for the energy sector’s GHG emissions.

c. Identifying energy sector’s discount rate: identification of social and market discount rates.


i. Total GHG emissions abatement: technical potential and cost for different energy segments;

ii. Economic and market potentials for GHG emission abatement in the different energy segments (see footnote 2).

e. Innovation analysis: evaluation of innovation potential and costs for mitigation alternatives in the energy sector. Learning curves modeling and estimation by using different approaches to assess technological improvement and cost reductions in the energy sector.

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f. Identification of policy instruments to promote GHG abatement in the energy sector: economic and command and control instruments.

Output 1.3: Assessment of the potential for GHG emission reduction and estimation of abatement costs for the transport sector. The Project will produce a technical report on GHG emissions reduction potential and abatement costs for the transport sector containing: a) a description of the Brazilian transport sector and the BAT for the transport sector; b) a baseline scenario for GHG emissions from transport sector; c) estimates of abatement cost curves for the transport sector; d) an assessment of technical and market potential for the abatement GHG emission; e) evaluation of innovation potential and estimates of learning curves for the transport sector; f) a proposal of policy instruments for promoting low carbon measures in the transport sector.


a. Sector description and definition of the BAT: a detailed description of the Brazilian transport sector will be used to identify the BAT that could be implemented to reduce GHG emissions. Specific segments should be considered:

i. Identification of GHG abatement options in the passenger transport sector in Brazil: assessment of the potential for energy efficiency and BAT; abatement from improving public passenger transport in major cities; potential for fuel substitution.

ii. Identification of GHG abatement options in the freight transport sector in Brazil: assessment of the potential for energy efficiency and BAT with explicit description of data sources and cost estimation procedures; abatement from modal changes and modal integration; potential for fuel substitution; analysis of potential co-benefits from reducing freight transport costs.

b. Definition of a baseline for energy consumption and GHG emissions from the transport sector: construction of a reference scenario for the transport sector’s GHG emissions.

c. Economic assessment: evaluation of mitigation alternatives feasibility, based on BAT and considering:

i. Total GHG emissions abatement: technical potential and cost for different transport segments;

ii. Economic and market potentials for GHG emission abatement in the different transport segments (see footnote 2).

d. Innovation analysis: evaluation of innovation potential and costs for mitigation alternatives in the transport sector. Learning curves modeling and estimation by using different approaches to assess technological improvement and cost reductions in the transport sector.

e. Identification of policy instruments to promote GHG abatement in the transport sector: economic and command and control instruments.

Output 1.4: Assessment of the potential for GHG emission reduction and estimation of abatement costs for the household and services sectors. Through this study, the project will produce a technical report for the household and services sectors, containing: a) a description of the Brazilian household and service sectors and the BAT for these sectors with explicit description of data sources and cost estimation procedures; b) a baseline scenario for GHG emissions from the household and service sectors; c) estimates of abatement cost curves for the household and service sectors; d) assessment of technical, economic and market potentials for GHG emission abatement; e) evaluation of innovation potential and estimates of learning curves for the household and services sectors; f) a proposal of policy instruments for promoting low carbon measures in the household and service sectors.


a. Sector description and definition of the BAT: a detailed description of the Brazilian household and service sectors should be used to identify the BAT that could be implemented to reduce GHG emissions.

b. Definition of a baseline for energy consumption and GHG emissions from the household and service sectors: construction of a reference scenario for the household and service sector’s GHG emissions.

c. Identifying household and service sectors’ discount rate: identification of social and market discount rates, in which, for the case of the household sector, the later reflects the cost of financing for households.

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i. Total GHG emissions abatement: technical potential and cost for household and service sectors;

ii. Economic and market potentials for GHG emission abatement in the household and service sectors.

e. Innovation analysis: evaluation of innovation potential and costs for mitigation alternatives in the household and services sectors. Learning curves modeling and estimation by using different approaches to assess technological improvement and cost reductions in the household and services sectors.

f. Identification of policy instruments to promote GHG abatement in the household and service sectors: economic and command and control instruments.

Output 1.5: Assessment of mitigation alternatives and estimation of abatement costs for land use, land use change and forestry (LULUCF). For the LULUCF sector the study will produce a technical report containing: a) a description of methodologies for estimating GHG emissions from LULUCF; b) an analysis of land use change and direct/indirect repercussions on the conversion of native forest into production areas; c) a baseline scenario for GHG emissions from LULUCF; d) estimates of abatement cost curves from LULUCF with explicit description of data sources and cost estimation procedures; e) an economic assessment of the potential for GHG emission abatement in LULUCF in Brazil; and f) a proposal of policy instruments for promoting low carbon measures for LULUCF.


a. Description of methodologies for estimating GHG emissions from LULUCF: analysis and comparisons of existing methodologies and proposal of the one that is best suited to the Brazilian case.

b. Analysis of land use for food and energy purposes: interactions between energy and food crops. Analysis of land use change and direct/indirect repercussions on the conversion of native forest into production areas. Evaluation of the net GHG emission abatement from biofuel use.

c. Definition of a baseline for GHG emissions from LULUCF: construction of a reference scenario for GHG emissions from LULUCF using biophysical and economic models.

d. Identification of mitigation potential and evaluation of mitigation alternatives feasibility in LULUCF in Brazil: abatement cost estimates and analysis of the abatement potential in LULUCF. Evaluation of mitigation repercussions on agricultural and livestock sectors.

e. Identification of policy instruments to promote GHG abatement in LULUCF: economic and command and control instruments.

Output 1.6: Assessment of mitigation alternatives and estimation of abatement costs for the Waste Management Sector. The study under this output will produce a technical report containing: a) a description of the Brazilian waste management sector and the BAT; b) a baseline scenario for GHG emissions from the waste management sector; c) estimates of abatement cost curves for the waste management sector; d) an assessment of technical, economic and market potentials for the abatement of GHG emissions; e) evaluation of innovation potential and estimates of learning curves for the waste management sector; and f) a proposal of policy instruments for promoting low carbon measures in the waste management sector.


a. Definition of BAT: waste treatment sector description and identification of Best practices and their GHG emission reduction potential.

i. Municipal Solid Waste (MSW): identification of the main technological alternatives for electricity generation and co-generation from MSW. Assessment of the potential for energy production and GHG mitigation in Brazil.

ii. Sewage and effluent treatment: waste treatment systems for domestic sewage; waste treatment systems for industrial effluents.

iii. Mitigation cost estimation with explicit description of data sources and cost estimation procedures

b. Definition of a baseline for the waste management sector: build a reference scenario for GHG emissions from the waste treatment sector.

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c. Identifying energy sector’s discount rate: identification of social and market discount rates.


i. Total GHG emissions abatement: technical potential and cost for the waste management sector;

ii. Economic and market potentials for GHG emission abatement in the waste management sector.

e. Innovation analysis: evaluation of innovation potential and costs for mitigation alternatives in the waste management sector. Learning curves modeling and estimation by using different approaches to assess technological improvement and cost reductions in the waste management sector.

f. Identification of policy instruments to promote GHG abatement in the waste management sector: economic and command and control instruments.

Output 1.7: Assessment of GHG emission reduction potential and estimation of abatement costs for cross-sector mitigation alternatives. The study on cross-sector mitigation alternatives will produce a technical report containing: a) a description of the carbon capture and storage, and smart grid technologies and assessment of their role as possible GHG abatement options; b) estimates of learning curves for these mitigation alternatives; and c) a proposal of policy instruments for promoting these alternatives.


a. Carbon Capture and Storage (CCS) CO2 pipelines and hubs: description of different CCS technologies and technical and economic analysis of their application in Brazil. Mapping of main stationary CO 2 emission sources in the country. Technical and economic analysis of sites for CO2 storage. Assessment of existing pipelines and proposal of a network (including pipelines and hubs) for linking emission sources clusters to storage sites.

b. Smart grids: cost-benefit evaluation of the implementation of smart grids in Brazil. Technical and economic assessment of smart meters and dynamic pricing. Identifying and modeling electricity storage possibilities, such as electric plug-in vehicles, and their benefits to the national power grid in terms of coping with renewable generation variability. Cost estimation with explicit description of data sources and cost estimation procedures

c. Learning curves modeling and estimation: use of different approaches to technological improvement and cost reduction in cross-sector mitigation options.

d. Identification of policy instruments to promote GHG abatement in cross-sector mitigation options: economic and command and control instruments.

Outcome 2: Integrated analysis of the different mitigation alternatives in an integrated optimization framework, considering the non-additivity of the different mitigation alternatives and other economic considerations; and an evaluation of the possible impacts of different climate policies on the Brazilian economy; testing domestic measurement, reporting, and verification (MRV) of proposed mitigation alternatives.

20. The purpose of this outcome is to assess the real mitigation potential, considering the Brazilian economy as a whole avoiding double counting of mitigation measures and analyze the potential impacts that adopting low carbon policies may have on the Brazilian economy.

Output 2.1: Testing MRV and integrated analysis of GHG emission abatement alternatives in an optimization model comprising all energy chains and all GHG emitting sectors analyzed for Brazil. The Project will produce a technical report containing: a) a description of the modeling framework; b) a description and consolidation of sector specific low carbon policies; c) an integrated baseline scenario; d) an integrated low carbon scenario; and e) an integrated low carbon scenario with innovation.


a. Model development and description: detailed description of the optimization tool and the iterative procedures used for the integrated analysis of mitigation alternatives. Consistency analysis.

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b. Evaluation of sector specific low carbon policies: consolidation of sector specific policies in an integrated framework.

c. Test domestic MRV: evaluation of MRV for GHG emission alternatives.

d. Construction of integrated scenarios: formulation of an integrated baseline scenario for GHG emissions up to 2050, consolidating sector specific baselines. Construction of an integrated low carbon scenario considering the mitigation alternatives discussed in Outcome 1 and the non-additivity of measures.

e. Construction of integrated low carbon scenario with innovation and estimated learning curves: analysis of the impact innovation and of reducing costs in sector specific mitigation alternatives as estimated by the learning curves of Outcome 1 in the integrated optimization framework.

f. Integrated energy and LULUCF abatement scenarios: linking credits from reducing emissions from LULUCF to carbon markets and analysis of the effects on energy mitigation and technology innovation.

Output 2.2: Analysis of the impacts of low carbon policies on the Brazilian economy. The study will produce a technical report containing: a) a description of Computable General Equilibrium Models (CGE) modeling framework; b) an analysis of economic impacts on industry, agriculture, energy and transport; c) an analysis of intangible impacts of low carbon policies on selected economic sectors


a. Model development and description: detailed description of the CGE modeling framework and model adaptation for the Brazilian case.

b. Analysis of the impacts of low carbon policies on the competitiveness of Brazilian economy: use of Computable General Equilibrium Models (CGE) to evaluate eventual positive or negative effects of adopting low carbon policies (policies or activities) on:

i. Industrial sector: production costs, value added, jobs created and final demand.

ii. Agricultural sector: production costs, value added, jobs created and final demand.

iii. Energy system: Brazilian energy sector exports.

iv. Transport sector: the transport infrastructure costs and its repercussions on the economic sectors and exports.

c. Analysis of intangible1 impacts of low carbon policies on selected economic sectors: measure and analysis the impacts of a ‘carbon risk’ on the cost of financing for Brazilian energy intensive companies. Causality tests for the relationship between achieving a sustainability index and the companies’ market value. Identification of eventual restrictions by carbon intensive companies to accessing financial capital from portfolios based on environmental criteria.

d. Analysis of innovation costs and financing sources: consolidation of innovation costs for mitigation technologies in different sectors and analysis of investment requirements and sources.

e. Analysis of the difference of economic impacts in item (b) above with distinct cap assignment criteria : considering grandfathering, cost-related and auction schemes and relative and absolute targets.

Outcome 3: Capacity building for federal, state and 2014 FIFA World Cup host cities government institutions, as well as civil society organizations, for implementation of mitigation actions for GHG emissions in key economic sectors. 21. The Project will seek to increase technical skills and abilities of government and non-government stakeholders to identify mitigation alternatives, to quantify their respective potentials and costs for the different sectors of the Brazilian economy and to evaluate the possible impacts of different climate policies on the Brazilian economy. The primary goal of the Project is to enhance local capacities and readiness for the implementation of climate change

1 For example, intangible value can be related to the image that an industry or economic activity has among its stakeholders. For example, a sector with a negative environmental image may suffer a drop in its market value in the face of the consumer boycott.

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mitigation policies (Brazilian NAMAs). At the same time, it will increase awareness of decision makers and civil society organizations with regard to options for climate change mitigation. Capacity building will take into account three dimensions: i) institutional capacity to promote the development of policies, procedures, regulations and the systems of goals and incentives that constitute the mitigation actions for GHG emissions; ii) organizational capacity for increasing the planning and management capacity of individuals by creating goals, internal mechanisms and resources; and finally iii) human resource capacity by training government personnel to define objectives, to design and manage climate policy programs, to mobilize resources and to implement the climate policy. The outcome comprises the following output:

Output 3.1: Targeted training of federal and state level institutions, as well as 2014 FIFA World Cup host cities and civil society organizations, on climate change mitigation actions. The Project will prepare training and information material and will organize and carry out training workshops for key federal government and state level institutions, as well as for 12 selected Large Metropolitan Areas (São Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre, Recife, Salvador, Fortaleza, Brasília, Cuiabá, Curitiba, Manaus and Natal) that will host the 2014 FIFA World Cup, in climate change related issues, seeking to build technical skills to support the implementation of mitigation actions. Selected nation-wide confederations and civil society organizations may also participate in capacity-building activities.


a. Development of training and information materials: presentations, reports and other technical materials re-lated to climate change mitigation policy.

b. Development of workshops for technical personnel: aimed at strengthening the capacity of Government in-stitutions to implement climate policies and to promote the integration of national and state mitigation strategies.

c. Development of training events for technical personnel of federal, state and 2014 FIFA World Cup host cities institutions: seminars and training events; contents to be covered by the training programme:

i. Methodologies of the National Inventory;

ii. Use of the National Inventory databank;

iii. Monitoring of sectoral mitigation actions;

iv. Baseline scenarios; mitigation options; abatement costs and impacts on the economy; domestic mea-surement, reporting and verification (MRV) of proposed mitigation alternatives.

d. Dissemination strategy: targeted at stakeholders representing the different sectors and communities, aimed at promoting accountability and social control of mitigation actions.

22. The Project will provide valuable input to governmental planning, insofar as its results will be discussed as pol-icy proposals under the appropriate forums for decision-making and policy design concerning climate change. More -over, and most importantly, the Project will prepare governmental agencies for monitoring and evaluating the effec-tiveness of implementation of sectoral mitigation plans by carrying out capacity-building activities at federal and state levels, besides targeting the 12 (twelve) 2014 FIFA World Cup host cities. Furthermore, such activities are in -tended to promote the harmonization of national, state and local mitigation strategies.

23. The Project is innovative for Brazil since no other initiative has ever performed an integrated analysis of the dif -ferent mitigation alternatives in an integrated optimization framework, considering the non-additivity of the different mitigation alternatives and other economic considerations; nor a comprehensive evaluation of the possible impacts of different climate policies on the Brazilian economy. Another aspect to be noted is the inclusion of cost analysis re -lated to innovation in terms of mitigation technologies for the Brazilian context. 24. The implementation of project activities by the country is expected to generate indirect global environmental benefits through the reduction of GHG. The information raised by the Project (abatement costs and potentials) is fun-damentally necessary for the country to implement its Nationally Appropriate Mitigation Actions (NAMAs), by de-

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tailing the emission reduction targets established by the National Policy on Climate Change (Federal Law No. 12,187 of December 29, 2009) and Decree n. 7.390, dated 9 December 2010. Effectively implementing these NA-MAs will provide global benefits in terms of reducing GHG emissions. The global environmental benefits have not been estimated at project preparation stage given that the Project falls under the category of enabling activity. Never-theless these benefits can be measured by the economic and market potentials for mitigation which will be estimated for all emitting sectors in Brazil. The identification of mitigation options and their costs can also lead to more effi-cient policies, new legislations at federal and state levels. Therefore, the Project has the potential to help change Brazil’s policies on energy efficiency (and associated GHG emissions) and assist the country in moving towards a less carbon-intensive and more sustainable energy consumption path.

B. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH NATIONAL AND/OR REGIONAL PRIORITIES/PLANS: 25. Brazil ratified the UNFCCC by Legislative Decree N. 1, dated 3 February 1994, having entered into force after ninety days. The Project has been endorsed on 15 April 2010 by the Secretariat for International Affairs of the Ministry of Planning, Budget and Management as GEF Focal Point. The Project is aligned with Brazil’s 2012-2015 UNDAF, more specifically with Output 2 “Green Economy and Decent Jobs in the context of sustainable development and poverty eradication”. The Green Economy initiative, launched in 2008, aims to provide a macroeconomic analysis of investments on green sectors, evaluating how these sectors can contribute to economic growth, to the creation of decent jobs, to social equity and to a decrease on poverty levels. Green Economy itself defends that the contexts of business and of biodiversity are changing towards a low carbon economy, anchored to innovative technology. The impact of these technologies is transversal and affects the energy, transportation, industry and food sectors among others. Following the same standard, the promotion of Decent Jobs is a fundamental condition to overcome poverty, to reduce social inequality and to guarantee democratic governance and sustainable development, as established on the Decent Work National Agenda launched by the Brazilian government in 2006. 26. The Project is aligned with MCTI´s mandate to conduct the National Policy on Science, Technology and Innovation, and to plan, coordinate, oversee and control science and technology activities, with the purpose of making this sector into a strategic component in social and economic development of Brazil. More specifically, the Project is part of the National Strategy for Science, technology and Innovation 2012-2015 (ENCTI 2012-2015) , which directs MCTI´s actions. The Strategy establishes that fostering green economy is a priority program aimed at strengthening the scientific and technological basis for the transition to a green economy, as well as fostering innovation in the following areas: renewable energies, energy efficiency, biodiversity, biotechnology and climate change. The goal is to make Brazil a world leader in green economy, which encompasses the concept of low-carbon economy. Among the climate change related strategies, are R & D and innovation focused on climate change mitigation and adaptation. 27. Moreover, the Project is aligned with MCTI´s role in coordinating and overseeing the implementation of the UNFCCC in Brazil. The Project shall contribute to the implementation of the Nationally Appropriate Mitigation Actions (NAMAs) presented by Brazil at Cop-15, of which the Executive Secretary of the UNFCCC had been notified on 29 January 2010. In total, the NAMAs are intended to lead to a 36.1% to 38.9% reduction in Brazil's emissions by 2020 compared with the "business as usual" scenario. The envisaged domestic actions as indicated are voluntary in nature and will be implemented in accordance with the principles and provisions of the UNFCCC, particularly Article 4, paragraph 1, Article 4 paragraph 7, Article 12 paragraph 1(b), Article 12 paragraph 4 and Article 10 paragraph 2(a). However, as a result of COP-17, a legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties shall be developed by the Ad Hoc Working Group on The Durban Platform for Enhanced Action and presented by 2015, to be negotiated and enter into force in 2020. Taking into consideration that developing countries will probably enter into new commitments under the UNFCCC, thus increasingly converging with developed countries obligations; the Project has the potential to support Brazil in fulfilling such new commitments. 28. The Project will thus contribute to the achievement of the objectives established by the National Plan and the National Policy on Climate Change, which contains the actions announced as NAMAs. Project results shall offer important input to the implementation, monitoring and evaluation, as well as revision of the National and sectoral

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plans. More specifically, the Project will be a building block for the achievement of the following objectives set by the Policy: I - making social-economic development compatible with the protection of the climate system; II - reducing anthropogenic greenhouse gas emissions with regard to their different sources; IV - strengthening anthropogenic removals by sinks of greenhouse gases in national territory; VIII - encouraging the development of the Brazilian Emissions Reduction Market - MBRE (Mercado Brasileiro de Redução de Emissões). 29. The Project contributes to the following guidelines of Plano Mais Brasil (PPA 2012-2015): promotion of environmental sustainability, increasing efficiency in public spending, sustainable economic growth and fostering education, science and technology (Law 12.593/2012, Article 4). The Project is in line with the Climate Change Program (n. 2050), which, amongst others, includes objective 0540 – to generate and disseminate knowledge and technologies for climate change mitigation and adaptation through a network comprised of public and private research and education institutions (Rede Clima); Objective 0698 – to develop and implement climate change mitigation and adaptation instruments, considering sustainable development and regional diversity; and Objective 0536 – to generate environmental scenarios with regional specificities, through the construction of the Brazilian Model of the Global Climate System, aiming at the formulation of public policies for mitigation, adaptation and vulnerability reduction. 30. Moreover, the Project is in line with “Projeto Brasil 3 Tempos: 2007, 2015 e 2022”, once sustainable development is a common guideline, considered to be a process of continuously improving and protecting the population´s well-being and ecosystems. The Project will also build upon the National Energy Plan 2030– PNE 2030, which provides inputs for the development of an expansion strategy for energy supply in the long term . This plan will be relevant for the elaboration of the scenarios, since energy production and consumption represent a main source of GHG emissions.

C. DESCRIBE THE CONSISTENCY OF THE PROJECT WITH GEF STRATEGIES AND STRATEGIC PROGRAMS: 31. The Project is consistent with GEF’s operational criteria for enabling activities in the area of climate change that aim to facilitate the implementation of GEF operational programs. In particular, the Project will strengthen the capacity of the Government of Brazil to estimate GHG emissions in key sectors, enhance its capacity to address environmental threats with adapted strategic policies and measures, make a better assessment of climate change mitigation potential and cost and determine the best climate change mitigation actions, and support the implementation of such mitigation actions.

D. JUSTIFY THE TYPE OF FINANCING SUPPORT PROVIDED WITH THE GEF RESOURCES. 32. The Project will support the Government of Brazil in its efforts to reduce GHG emissions and, at the same time, allow the country to grow sustainably. To this effect, the Project has been designed within the framework of the Brazilian government´s policy regarding GHG emission reductions as stated in the National Plan on Climate Change (PNMC) and the National Policy on Climate Change, and GEF resources will be used to: i) identify mitigation alternatives and their respective potentials and quantification of their costs, ii) develop an integrated analysis of the different mitigation alternatives in an integrated optimization framework, and evaluating the possible impacts of different climate policies on the Brazilian economy; and iii) build the capacity of the Brazilian government and key stakeholders at federal and state levels for implementation of mitigation actions for GHG emissions in key economic sectors. The Project is expected to contribute to more efficient policies and new legislations at federal and state levels that mainstream mitigation options. GEF resources will be used to leverage additional government funding that will help Brazil contribute to generating global and environmental benefits. For these reasons financing support will be provided as a grant.

E. OUTLINE THE COORDINATION WITH OTHER RELATED INITIATIVES:

33. The Climate Change Group of the Ministry of Finance is currently engaged in the following efforts: (i) to consolidate existing information and data related to emissions, mitigation options and its potentials as well as the associated costs in industry, energy, transport and waste management sectors in Brazil; (ii) to assess data and

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information gaps and/or how to improve existing ones; and (iii) to facilitate the identification of relevant sectors for the application of market based instruments. The main goal is to promote collective innovation and piloting of market-based instruments for GHG emissions reduction in Brazil.

34. Such endeavor is being financed by the Partnership for Market Readiness (PMR), a grant-based, capacity building trust fund that provides funding and a platform for fostering new and innovative market-based instruments, sharing experience, and building market readiness capacity for countries to scale up climate change mitigation efforts. The World Bank serves as secretariat of the PMR. Brazil is a PMR Implementing Country since October 2011, and is starting the preparation phase to formulate its Market Readiness Proposal (MRP). The budget for elaboration of the MRP is US$350,000 and the country intends to present its Organizing Framework by the end of May 2012. The implementation phase can be supported by PMR funding of US$3 million up to US$10 million. The Project will integrate the necessary actions to form the building blocks for Market Readiness in Brazil, by: producing national and sectoral projections; identifying mitigation options; and assessing national and sectoral abatement potentials (low-carbon scenario), thus contributing to build a baseline scenario and to set national/sectoral targets that haven´t been established by law yet. The Ministry of Finance and the MCTI are working in close coordination in order to ensure the complementarity of these efforts. The Ministry of Finance will be part of the GEF Project´s Steering Committee (PSC), which will provide overall guidance and supervision (see Section 4 on institutional framework). It is thus expected that the present Project will provide the aforementioned input to the Market Readiness Proposal of Brazil, since the Ministry of Finance has found out that there are large gaps of information concerning mitigation options and associated costs. 35. Moreover, concerning other ministries actions, there are linkages with the monitoring and evaluation system of the sector-specific plans for mitigating and adapting to climate change, which is under construction by the Ministry of Environment. The present Project can provide important inputs to such system in the near future. 36. With regard to the Ministry of Science, Technology and Innovation – MCTI interventions, the Project is inextricably linked to the Third National Communication of Brazil to the UNFCCC, which encompasses the Inventory of net anthropogenic emissions of GHG not included in the Montreal Protocol, as well as a general description of the steps taken or envisaged to implement the Convention in the country. The Inventory will cover the period of 2000-2010, and the description of national circumstances and steps envisaged will be updated. The Third National Communication is a GEF-financed project currently under implementation by the MCTI (2010-2014). The projects are linked in that they are under the responsibility of the same division – the Secretariat for Research and Development Policies and Programs (SEPED) – and unit – the General Coordination on Global Climate Change, within MCTI. Besides, they are aligned in time, so they can exchange information and be complementary: on the one hand, models to be adopted by the present Project will depend on data generated by the Third National Communication; on the other hand, mitigation opportunities for the different sectors generated by the Project could represent important inputs for the National Communication. The inventory and modeling efforts make up the basis for sectoral policy design. The National Communication does not include scenario development nor cost abatement projections insofar as it is not supposed to analyze and put forward mitigation strategies. Thus, the Third National Communication will only update the GHG emissions baseline, which is used for all scenario development. Therefore, there is no risk of duplication of efforts.

37. MCTI also fosters studies on climate change mitigation through public selections and specific orders to research institutions. Many studies on energy efficiency and renewable energies are currently being financed. Grants are provided by the National Fund for Scientific and Technological Development (FNDCT), which goal is to give financial support to priority projects and programs for scientific and technological development. Revenues come from specific taxes charged by the federal government. The National Fund is subdivided into the so-called Fundos Setoriais (Sector Funds), in which a portion of incoming resources from a given sector is used for generating and aggregating knowledge in the same sector. Sector Funds include, among others, agribusiness, Amazon, energy, water resources, and petroleum. Grants are issued either via the National Council for Scientific and Technological Development (CNPq) or the Studies and Projects Finance Organization (FINEP). 38. Furthermore, the Project is closely related to studies conducted by the Brazilian Research Network on Global Climate Change – Rede Clima, a national network which involves several dozen research groups and institutes, and

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is linked to the Ministry of Science and Technology, as previously mentioned. It focuses on all relevant issues regarding climate change, including generating knowledge and developing technologies for climate change mitigation. In the past two years, studies on mitigation at national and global levels have been carried out, foreseeing a greater participation of renewable energies in the energy mix. Other studies, for instance, have demonstrated the importance of technological innovation for the production of fuel-efficient cars. Besides, a geo-referenced database was created containing information on GHG flows in natural aquatic environments (lakes, rivers, estuaries) and man-made ones (hydroelectric reservoirs), subdivided in four regions, considering biological, geographic and climate conditions (austral, boreal, tempered and tropical).

F. DISCUSS THE VALUE-ADDED OF GEF INVOLVEMENT IN THE PROJECT DEMONSTRATED THROUGH INCREMENTAL REASONING : 39. The Project falls under the category of enabling activities, therefore the GEF funding covers the full agreed costs of the activity. GEF support is expected to generate indirect global environmental benefits through the reduction of GHG. Through the data and information to be generated by the Project, and the identification and analysis of mitigation options and their costs, the Project will help the Government of Brazil in the development of more efficient policies and regulations on energy efficiency (and associated GHG emissions) and assist the country in moving towards a less carbon-intensive and more sustainable energy consumption path. In the absence of the Project it is likely that this effort will be focused on national priorities (focused mainly in the economic domain) and will pay less attention to data collection, analysis and development of policies to support the generation of global and environmental benefits. In particular, policy reform is likely to be more difficult with limited resources that would probably be devoted to national coordination, capacity building and analysis in support of policy reform. The high level of proposed Government co-financing for the Project certainly indicates that with GEF support, Brazil will continue to gather more data and information on its energy resources and aiming at contributing to global and environmental benefits.

G. INDICATE RISKS, INCLUDING CLIMATE CHANGE RISKS, THAT MIGHT PREVENT THE PROJECT OBJECTIVE(S) FROM BEING ACHIEVED AND OUTLINE RISK MANAGEMENT MEASURES:

Risk Description Rating Mitigation

Political riskThe results of technical reports are not taken up to design policies.

Low

Reports should be regularly discussed as policy proposals under the Inter-ministerial Committee and Commission. Political forces and civil society organizations should be regularly informed of the Project and its benefits for the nation.

Institutional riskRisk of a lack of institutional involvement from key ministries in conducting the Project and risk that tax incentives will not be granted to businesses that are developing low carbon projects in Brazil.

MediumImplementation of a Cross-Sectoral Coordination Committee that will bring together all the key ministries and planning agents.

Technical riskThe public and semi-public institutions involved in the technical activities may not have the required human resources and technical means to meet the assistance needs of the Project.

Medium

All key institutions of the environment, energy, research and development and finance sectors have been mobilized. In addition, international and national private institutions are already working on the development of low carbon technologies.

Technical riskDuplications with the National Communication efforts. Low

Both initiatives should be implemented by the Ministry of Science, Technology and Innovation under close coordination bearing in mind that these initiatives serve different purposes.

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Organizational riskThere is a lack of technical and managerial coordination for the Project.

Low

The government should provide adequate human resources and means to ensure the Project's overall coordination, which calls for significant national expertise. To do this, it is expected the cooperation of researchers and public officials to support the Government of Brazil in building and strengthening its technical capacity for implementing its mitigation actions.

H. EXPLAIN HOW COST-EFFECTIVENESS IS REFLECTED IN THE PROJECT DESIGN: 40. The Project is cost-effective in its design, as it aims to strengthen existing human and institutional capacities to implement mitigation actions within the framework of the National Plan and National Policy on Climate Change. The Project will thus create an enabling policy environment conducive to climate change mitigation mainstreaming in different sectors, which will result in more stable support for mitigation activities.

PART III: INSTITUTIONAL COORDINATION AND SUPPORTA.INSTITUTIONAL ARRANGEMENT:

41. Climate Change is one of UNEP´s six thematic priorities/focus during 2010-2013 as per decision taken by the Governing Council / Global Ministerial Environment Forum as well as the global framework agreed through the UNFCCC. The Project falls in the area of developing tools for promoting climate change awareness at the national level, to support the development of criteria and indicators for assessing ecological and economic vulnerabilities to climate change and to enhancing scientific and technical capacities for the assessment of impacts of mitigating and adapting to climate change in multiple regions and sectors. The Project is expected to take advantage of the science-based knowledge gathered by UNEP in connection with its different assessments and analysis on mitigation, as well as its extensive network of research centers, collaboration institutions and roster of experts. As such, and based on existing GEF policies, UNEP is the Implementing Agency for the Project and will be responsible for overall project supervision to ensure consistency with GEF and UNEP policies and procedures and will provide guidance on linkages with related UNEP and GEF-funded activities. The Project will be implemented by the Division of Technology, Industry and Economics (DTIE) of UNEP, through its Office in Brazil and in coordination with national Executing Agency, will provide support in the execution of the Project in accordance with its expected objectives, results and activities, as defined in the project document.

B. PROJECT IMPLEMENTATION ARRANGEMENT:42. MCTI is the Project´s Executing Agency and will be responsible for the implementation of the Project in accordance with the objectives and activities outlined the project document. The MCTI will work closely with UNEP and provide free access to all relevant information so as to allow the organization to fulfill its responsibilities to the GEF. The main responsibilities of MCTI as Executing Agency will include the following: (i) jointly selecting with UNEP the staff for the Project Management Unit; (ii) planning for and monitoring the technical aspects of the Project, and monitoring progress benchmarks and outputs; (iii) actively participating in all relevant project activities where appropriate; (iv) Adopting, during the course of the Project, the information and results generated by the Project to ensure sustainability of the project outcomes; (v) play an active role in coordinating with other stakeholders throughout the Project; (vi) preparation and submission of periodic progress reports, and regular consultations with beneficiaries and contractors; (vii) maintaining a separate project account for the accountability of project funds; (viii) ensuring advanced funds are used in accordance with agreed work plans and project budget; (ix) preparing, authorizing and adjusting commitments and expenditures; ensuring timely disbursements, financial recording and reporting against budgets and work plans; (x) managing and maintaining budgets, including tracking commitments, expenditures and planned expenditures against budget and work plan; and (xi) maintaining productive, regular and professional communication with UNEP and other project stakeholders to ensure the smooth progress of project implementation.

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43. Being part of the MCTI structure, the Brazilian Research Network on Global Climate Change (Rede Clima) will be charged with the responsibility of project implementation and to such effect will set up a Project Management Unit (PMU). Rede Clima was established in 2007 with the mission to generate and disseminate knowledge about the causes and effects of global climate change; it produces information for the formulation and follow-up of public policies on climate change and to support the Brazilian negotiations under the UNFCCC. The PMU will be responsible for day-to-day management of the Project and will consist of appropriate professional and support staff and the staff of this team may be augmented through secondment of national staff to the Project. The PMU will be staffed with the following professional and support staff to be funded with GEF resources: (i) Project Officer, and (ii) Project Assistant (1). Further details on the responsibilities of the PMU and the Terms of Reference for each position are included in Section 4 and Appendix 9 of the project document. 44. A Project Steering Committee (PSC) will provide political and strategic guidance for the Project. The PSC will meet at least once a year and will be responsible for overseeing and approving annual work plans, budgets, and other strategic decisions. Membership of the PSC will include UNEP, MCTI and other key institutions that have a strategic or practical interest in the Project, e.g. INPE, Ministry of Environment, Ministry of Finance, Ministry of Mines and Energy, Ministry of Transport, Ministry of Agriculture and Livestock. Due to the highly technical nature of the Project there will be the need for more targeted support and advice and, when the need arises, separate committees or working groups will be created by the executing agency to give advice on specific scientific and technical issues. 45. To accord proper acknowledgement of GEF for providing funding, a GEF logo should appear on all relevant GEF project publications, including among others, project hardware and other equipment purchased with GEF funds. Any citation on publications regarding projects funded by GEF should also accord proper acknowledgment to GEF.

PART IV: EXPLAIN THE ALIGNMENT OF PROJECT DESIGN WITH THE ORIGINAL PIF:

46. The Project is similar to the PIF submitted to the GEFSEC and approved by the GEF Council in terms of the expected global environmental benefits, the co-financing levels and the concept on which the Project is based. Moreover, the GEF grant requested for the Project has not been modified. 47. The project design presented here is aligned with the original PIF. However, given the importance of some components that were not emphasized before, the project framework has been expanded to include different aspects of climate change mitigation analysis for Brazil. The alterations to the original PIF include: adding new GHG emitting sectors to the analysis (household, services, LULUCF, waste management and cross sector alternatives); a more comprehensive analysis of GHG emission sectors; adding an integrated component to long term scenarios; conducting an impacts assessment of mitigation alternatives on the Brazilian competitiveness; expanding the modeling framework for mitigation alternatives (former component 3 of the PIF which has been included in component 2 of the GEF CEO Endorsement/Approval document) to include mitigation alternatives in addition to the use of biofuels; adding a capacity building component to the Project (new component 3). 48. The reason for such modification under the project preparation phase is the need to adjust this initiative to new policy-making demands, bearing in mind all the progress Brazil has recently made in the implementation of the National Policy on Climate Change. In line with GEF guidelines, we understand that the Project must be consistent with the current revision of the national plan on climate change, which encompasses the elaboration of mitigation and adaptation plans for the different sectors. 49. The elaboration of mitigation plans for specific sectors by the relevant Ministries, as well as cross-sector debate under the Inter-ministerial Committee on Climate Change, was inaugurated by Decree n. 7.390, dated 9 December 2010, which regulates the general dispositions of the National Policy on Climate Change (Law n. 12.187/2009). Therefore, the project document was adjusted so as to reflect the most recent progress achieved by the Government in climate change policy, thereby enhancing potential inputs to policy-making. 50. During the project preparation phase the Brazilian Research Network on Global Climate Change (Rede Clima), which is linked to MCTI (executing agency), has been identified as the entity that will be responsible for project

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implementation. To reach the new, more comprehensive goals set in this project design the categorization of outcomes and outputs has changed. The Project has been rearranged into three outcomes that encompass all components of the original PIF. The table below compares the components presented at PIF stage with the outcomes at the CEO endorsement stage:

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PIF CEO Endorsement RequestProject Components

Expected Outcomes Expected Outputs Project Components Expected Outcomes Expected Outputs

1. Three long range emission scenarios for Brazil established

1.1 Historical data has been consolidated and revised

1.2 The logic and basic structure of the economic model to be used has been defined

1.3 The logical structure of the emissions model to be used has been defined

1.4 Economic sectoral scenarios A, B and C – definitions of inputs and results have been established

1.5 Sectoral emissions results for Scenarios A, B, and C have been established and proposals for achieving the best results possible have been elaborated.

1.6 Cost benefit evaluation among Scenarios A, B, and C have been made

1.7 Final reports are published and made available

1.8 The system for 3 years has been run and yearly updated

About 20 review and summarization reports have been elaborated

About 8 summarization reports: “anchor variables” and economic models have been elaborated and made available

About 7 reports (one for each economic sector) have been elaborated.

About 24 reports for each of the 7 economic sectors, for the economy as a whole, and for Scenarios A, B and C have been elaborated.

About 8 reports on the results for each economic sector and for the economy as a whole have been elaborated and compared with announced mitigation actions through a broad discussion with interested groups.

About 4 reports withcost and benefits for each scenario and a general

1. Mitigation alternatives identified and their respective potentials and costs quantified for the periods 2012-2035 and 2035-2050

Sector specific results for CO2 abatement potential and costs have been prepared

Sector marginal abatement cost curves prepared

Sector GHG emission scenarios (baseline and low carbon) elaborated

Technical and economic potential for GHG emission reductions estimated

Estimates of learning curves prepared

Analysis of potential cross-sectoral abatement options developed


One report assessing the GHG emission reduction potential and estimation of abatement costs for the energy sector.


One report containing the assessment of GHG emission reduction potential and estimation of abatement costs for the household and services sectors



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comparison among them have been elaborated

About 3 reports (Portuguese and English), other documents, etc

About 10 reports every year, for the Scenarios, for the economy as a whole, and each economic sector have been elaborated and made available.


2. Identification of mitigation, cost and efficiency opportunities for specific sectors

2.1 Mitigation opportunities and costs for improved efficiency of energy use in appliances and buildings have been identified

2.2 Mitigation opportunities and costs for improved efficiency of industrial production have been identified

2.3 Mitigation opportunities and costs for improved energy efficiency of electricity generation from power plants have been identified

2.4 Mitigation opportunities and costs of increased production of renewable energy in electricity grids have been identified

2.5 Mitigation opportunities and costs of innovative sustainable transport systems have been identified

2.6 Mitigation opportunities and costs of selected low GHG-emitting

a) One report on analysis of business as usual practices in appliances and buildings has been elaborated; b) About 4 reports on analysis of GHG mitigation potential in appliances and buildings (air conditioning, thermal insulation in buildings, building techniques for better thermal comfort, comparative evaluation of buildings materials life cycle emissions) have been elaborated and made available.

a) About 5 reports on analysis of business as usual practices in 5 industrial production and manufacturing processes have been elaborated.b) About 6 reports on analysis of GHG mitigation potential in industrial production and manufacturing processes in sectors chosen (iron, cement, chemistry, food and beverages, oil extraction and

2. Integrated analysis of the different mitigation alternatives in an integrated optimization framework, considering the non-additivity of the different mitigation alternatives and other economic considerations; and an evaluation of the possible impacts of different climate policies on the Brazilian economy; testing domestic measurement, reporting and verification (MRV) of proposed mitigation alternatives

Integrated optimization framework adapted to the Brazilian case

Integrated baseline and low carbon scenarios for Brazil up to 2050 prepared

Computerized General Equilibrium model adapted to the Brazilian case



One report analyzing the impacts of low carbon policies on the competitiveness of Brazilian economy:Analysis of intangible impacts of low carbon policies on selected economic sectors

One report analyzing innovation costs and financing sources for mitigation technologies in different sectors

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energy technologies have been identified

refining) have been elaborated and made available.

a) One report on analysis of business as usual practices in existing power plants has been elaboratedb) Five reports on analysis of GHG mitigation potential in existing power plants on spill-over loss in hydroelectric plants, coal plants and self-producers of energy have been elaborated and made available.

a) One report on analysis of the influence on emissions of the new policy of building hydroelectric plants with small reservoirs has been elaborated. b) 3 reports containing analysis of business as usual practices of on-grid renewable energy, as well as the legal, financing and technical situation of producers of energy by biomass, have been elaborated. c) Analysis of GHG mitigation potential of renewable energy areas (mainly sugar and ethanol, food and beverages, paper and cellulose, etc) have been elaborated and made available d) One report on suggestions for new governmental programs on renewable energy as PROINFA (national program designed to stimulate greater use of


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electricity generated from non-traditional renewable energy resources) has been elaborated and made available

a) About 2 reports on analysis of business as usual practices in transport systems (cargo and passengers) has been elaborated; b) One report on analysis of GHG mitigation potential in medium or big cities has been elaborated; c) Four reports on analysis of the mitigation potential of the change of transportation modals between cities and regions have been elaborated and made available

a. Analysis of GHG mitigation using low GHG-emitting energy technologies (1 report) b) About 20 booklets and divulgation material intended for important stakeholders.

3. Testing domestic MRV: Reduction of GHG emissions from the use of biofuels applying the GBEP methodological framework

3.1 Draft methodological framework in the lifecycle analysis (LCA) of bio-energy production has been tested and used applying GBEP methodological framework

a) One report on testing of the draft methodological framework in the life cycle analysis (LCA) of bio-fuels in Brazil;b) One report on the revision of historical GHG emission reduction resulting from ethanol program (production and consumption) in Brazil (1970-2010) have been elaborated and made

3. Capacity building for federal, state and 2014 FIFA World Cup host cities government institutions, as well as civil society organizations, for implementation of mitigation actions for GHG emissions in key economic sectors

Government (federal and state level) staff with increased technical skills and capable of identifying mitigation alternatives and quantifying their respective potentials and costs for the different sector of the Brazilian economy; and evaluating possible impacts of different climate policies

Targeted training of federal and state level institutions, and civil society organizations on climate change mitigation issues.

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available applying GBEP methodological frameworkc) One report on projected GHG emission reduction resulting from increased use (production and consumption) of ethanol in Brazil (2010-2020) applying GBEP methodological framework have been elaborated and made availabled) One report on projected GHG emission reduction resulting from increased use (production and consumption) of biodiesel in Brazil (2010-2020) applying GBEP methodological framework have been elaborated and made available

on the Brazilian economy. Decision makers and civil society organizations with increased awareness on climate change mitigation

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51. During the project preparation phase, the budget was altered in order to reflect changes in outcomes and outputs, thus altering GEF financial contribution per component. However, the total GEF financing remains unchanged, as well as GEF contribution with respect to project management. The changes in the GEF contribution per component are summarized in the following table:

Project Components at

PIF Stage

Project Components at CEO Endorsement Stage

Indicative GEF Financing at PIF Stage

(USD)

Indicative GEF Financing at CEO Endorsement Stage (USD)

1. Three long range emission scenarios for Brazil established

1. Mitigation alternatives identified and their respective potentials and costs quantified for the periods 2012-2035 and 2035-2050

1,200,000 1,669,732

2. Identification of mitigation, cost and efficiency opportunities for specific sectors

2. Integrated analysis of the different mitigation alternatives in an integrated optimization framework, considering the non-additivity of the different mitigation alternatives and other economic considerations; and an evaluation of the possible impacts of different climate policies on the Brazilian economy

2,100,000 1,227,765

3. Testing domestic MRV: Reduction of GHG emissions from the use of biofuels applying the GBEP methodological framework

3. Capacity building and awareness raising at federal and state levels, for implementation of mitigation actions for GHG emissions in key economic sectors

500,000 902,503

Project Management 380,000 380,000Total GEF Financing 4,180,000 4,180,000

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PART V: AGENCY(IES) CERTIFICATIONThis request has been prepared in accordance with GEF policies and procedures and meets the GEF criteria for CEO Endorsement.

Agency Coordinator,

Agency name SignatureDate

(Month, day, year)Project Contact

Person Telephone Email AddressMaryam Niamir Fuller, Director

GEF Coordination Unit, UNEP.

07/13/2012 Edu Hassing +33144371472

[email protected]

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ANNEX A: PROJECT RESULTS FRAMEWORK

StrategyObjectively Verifiable Indicators

Sources of Verification Risks and AssumptionsIndicators Baseline Target

Project Objective:To assist the Government of Brazil to strengthen its technical capacity in supporting the implementation of its mitigation actions for GHG emissions in key economic sectors (industry, energy, transport, household and services, LULUCF, waste management, cross-sector) in Brazil (including costs) as identified in the Brazilian National Policy and Plan on Climate Change.

Number of policy instruments proposed by the Project as a result of the studies carried out, and agreed to by relevant Ministries

Increase in government resources allocated to mitigation activities as a result of information produced and awareness raising among key decision makers

National Plan on Climate Change

National Policy on Climate Change establishes GHG voluntary reduction goals intended to lead to a 36.1 percent to 38.9 percent reduction in Brazil's emissions by 2020 compared with "business as usual" scenario.

Other national and sectoral plans (Plano Mais Brasil, Energy Plan 2030 and 2020), Reduction of Emissions of Steel Industry; Logistic and Transport; Action Plans for Amazon and Cerrado

By end of Project:

At least 1 policy instrument for each sector (industry, energy, transport, household and services, LULUCF, waste management, and cross-sector).

Percentage of increase in government allocation to the Climate Fund to finance mitigation options proposed by the Project (percentage to be determined after project inception on the basis of an appraisal to be carried out)

Policy instruments Reports by

international institutions

Reports by national public institutions and private sector/NGOs

Project mid term and terminal evaluations

Lack of appropriate legislation

Political support to establish legal and regulatory framework

Technical capability of government agents

Outcome 1:Mitigation alternatives identified and their respective potentials and costs quantified for the periods 2012-2035 and 2035-2050

Number of reports elaborated and made available, containing: i) sector specific results for CO2 abatement potential and costs; ii) sector

The “Plano Mais Brasil” envisages economic growth in the 2015 horizon.

National Policy on Climate Change

25 and 10-year Energy Plan (PNE 2030 and PDE 2020)

By the end of 1st semester of PY2:


One report assessing the GHG emission reduction potential and

Report for the industrial sector

Report for the energy sector

Report for the transport sector

Report for the household and services sectors

Report for the

Unavailability of data to obtain the abatement costs

Resistance to adopt mitigation measures by sectors.

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marginal abatement cost curves; iii) sector GHG emission scenarios (baseline and low carbon); iv) technical, market and economic potential for GHG emission reductions; v) estimates of learning curves; and vi) analysis of potential cross-sectoral abatement options

Plan for Reduction of Emissions of Steel Industry

National Plan for Logistic and Transport

Action Plan for the Prevention and Control of Deforestation of the Legal Amazon – PPCDAm

Action Plan for the Prevention and Control of Deforestation and Fires of the Cerrado – PPCerrado

Plan for Consolidation of Low Carbon Emission on Agriculture – ABC.

estimation of abatement costs for the energy sector.


One report containing the assessment of GHG emission reduction potential and estimation of abatement costs for the household and services sectors




LULUCF sector Report for the waste

management sector Report for the

cross-sector alternatives

Minutes of Meetings and Workshops

Reports/Publications by institutions dealing with environment, CC, energy issues containing information produced by the Project

Outputs for Outcome 1:

Output 1.1: Assessment of GHG emission reduction potential and estimation of abatement costs for the industrial sector.

Output 1.2: Assessment of GHG emission reduction potential and estimation of abatement costs for the energy sector.

Output 1.3. Assessment of GHG emission reduction potential and estimation of abatement costs for the transport sector.

Output 1.4: Assessment of GHG emission reduction potential and estimation of abatement costs for the household and services sectors.

Output 1.5: Assessment of mitigation alternatives and estimation of abatement costs for land use, land use change and forestry (LULUCF).

Output 1.6: Assessment of mitigation alternatives and estimation of abatement costs for the Waste Management Sector.

Output 1.7: Assessment of GHG emission reduction potential and estimation of abatement costs for cross-sector mitigation alternatives.

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Outcome 2:Integrated analysis of the different mitigation alternatives in an integrated optimization framework, considering the non-additivity of the different mitigation alternatives and other economic considerations; and an evaluation of the possible impacts of different climate policies on the Brazilian economy; testing domestic measurement, reporting and verification (MRV) of proposed mitigation alternatives

Number of reports elaborated and made available containing an integrated optimization framework adapted to the Brazilian case; Integrated baseline and low carbon scenarios for Brazil up to 2050 and CGE model adapted to the Brazilian case

Existing mitigation studies (e.g. Brazil Low Carbon –Country Case Study 2010; Pathways to a Low-carbon Economy for Brazil).

No integrated mitigation analysis has been performed for Brazil in any of the studies produced up to this date.

By end of 2nd semester of PY2:



One report analyzing the impacts of low carbon policies on the competitiveness of Brazilian economy: Analysis of intangible impacts of low carbon policies on selected economic sectors


Report on integrated analysis of GHG abatement alternatives and their MRV

Report on the impact of low carbon policies

Minutes of Meetings and Workshops

Reports/Publications by institutions dealing with environment, CC, energy issues containing information produced by the Project

Resistance to adopt mitigation measures by sectors.


Output 2.1:Testing MRV and integrated analysis of GHG emission abatement alternatives in an optimization model comprising all energy chains and all GHG emitting sectors analyzed for Brazil.

Output 2.2: Analysis of the impacts of low carbon policies on the Brazilian economy.

Outcome 3:Capacity building for federal, state and 2014 FIFA World Cup host cities government institutions, as well as civil society organizations, for

Number of training events and participants

No comprehensive capacity-building activities focused on mitigation for the selected public have

At least 20 training events for technical personnel in Brasilia with at least 20 members of Federal Government institutions

Minutes of Meetings, Seminars and Workshops

Reports/Publications

Agreements

Willingness of stakeholders to participate in awareness raising and training events

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implementation of mitigation actions for GHG emissions in key economic sectors

Number of technical staff of federal and state level institutions, as well as of 2014 FIFA World Cup host cities trained in CC mitigation actions implementation

Number of Brazilian states with monitoring teams/units regarding mitigation actions.

Number of Brazil-ian states applying the National Inven-tory methodologies for the different sectors and using the National Inven-tory databank.

Number of 2014 FIFA World Cup host cities with monitoring teams/units regarding mitigation actions.

been conducted in Brazil

11 states have enacted specific legislation on climate change: Amazonas, Tocantins, Goiás, Bahia, Pernambuco, Sergipe, Espírito Santo, Rio de Janeiro, São Paulo, Santa Catarina and Rio Grande do Sul); 5 states have draft legislation (Paraná, Mato Grosso, Minas Gerais, Pará and Amapá).

The states are not yet making use of the National Inventory methodologies.

Rio de Janeiro municipality has presented its inventory in 2011 and is developing its monitoring system; São Paulo municipality is

At least one training event in each region (5 in total), with at least 5 representatives from each State government; at least 2 representatives of each 2014 FIFA World Cup host city government; and at least 2 representatives of nongovernmental stakeholders

At least 20 technical cooperation agreements signed between MCTI and States for establishment of monitoring teams/units regarding mitigation actions

At least 20 Brazilian states applying the National Inventory methodologies for the different sectors and using the National Inventory databank;

At least 8 technical cooperation agreements between MCTI and 2014 FIFA World Cup host cities for establishment of monitoring teams/units

States´ administrative structure

States rules and regulations

Administrative structure of 2014 FIFA World Cup host cities; local rules and regulations

and make use of the information and knowledge generated

Lack of availability of data as input to training

• Political support to establish specific units/teams in states

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elaborating its inventory; Belo Horizonte municipality has presented its inventory in 2009.

Porto Alegre -RS, Recife - PE, Brasília - DF, Cuiabá - MT, Curitiba - PR, Fortaleza - CE, Manaus - AM, Natal – RN and Salvador – BA don´t have any specific legislation or monitoring system.


Output 3.1: Targeted training of federal and state level institutions, as well as 2014 FIFA World Cup host cities and civil society organizations, on climate change mitigation actions.

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ANNEX B: RESPONSES TO PROJECT REVIEWS (from GEF Secretariat and GEF Agencies, and Responses to Comments from Council at work program inclusion and the Convention Secretariat and STAP at PIF)

RESPONSE TO STAP REVIEWTitle: Mitigation Options of Greenhouse Gas (GHG) Emissions in Key Sectors in BrazilGEFSEC Project ID: 4254 Date of screening: 5 May 2010STAP Guidance UNEP´s ResponseThis Project aims at building technical capacity to assist the Brazilian Govt. in identification and implementation of mitigation actions as identified in the Brazilian policy and plan on climate change. This will be a very useful exercise and an assessment of mitigation opportunities and costs in different sectors will build a long-term foundation for the implementation of mitigation actions. STAP recommends that the following questions and suggestions are considered during the next steps of project development.

1. Structure of Mitigation assessment reports: IPCC has conducted sectoral assessment of mitigation potential at global and regional levels. The IPCC sectors include energy supply, transport, residential and commercial buildings, industry, agriculture, forestry, and waste management. Brazil could benefit by evaluating the IPCC sectoral approach as well as the structure of mitigation assessment chapters, while preparing the Mitigation assessment reports taking into account:a. Status of the sector and emission trends;b. Description and assessment of mitigation technologies, practices and options;c. Estimation of mitigation potential for 2010, 2020, 2030 and 2050;d. Estimation of costs;e. Assessment of barriers, opportunities, policies and implementation issues;f. Socio-economic and sustainable development implications;g. Technology research, development, diffusion and transfer;h. Long-term outlook.

UNEP thanks STAP´s guidance. The STAP comments and suggestions have been duly noted and taken into account in project preparation.

The Project now takes into account the structure of the IPCC sectoral assessment and considers all of the sectors mentioned by STAP. Actually, the proposal goes further into assessing other abatement measures that can be applied over a number of different sectors. Project Outcome 1 “Mitigation alternatives identified and their respective potentials and costs quantified for the periods 2012-2035 and 2035-2050” consists of sector specific analyses and takes into account items a, b, c, d, e, g and h. Project Outcome 2 “Integrated analysis of the different mitigation alternatives in an integrated optimization framework, considering the non-additivity of the different mitigation alternatives and other economic considerations; and an evaluation of the possible impacts of different climate policies on the Brazilian economy” comprises item f (socio-economic and sustainable development implications). Please refer to Part II.A above and Section 3.3 of the UNEP project document.

2. National Communication: What is the link between this Project and the 3rd National Communication of Brazil? Opportunities for synergy between these two projects could be explored.

The Project is linked to the Third National Communication of Brazil to the UNFCCC, which encompasses the Inventory of net anthropogenic emissions of GHG not included in the Montreal Protocol, as well as a general description of the steps taken or envisaged to implement the Convention in the country. The Inventory will cover the period of 2000-2010, and the description of national circumstances and steps envisaged will be updated.The Third National Communication is a GEF-financed project currently under implementation by the MCTI (2010-2014). The projects are linked in that they are under the responsibility of the same division – the Secretariat for

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Research and Development Policies and Programs (SEPED) – and unit – the General Coordination on Global Climate Change, within MCTI. Besides, they are aligned in time, so they can exchange information and be complementary: on the one hand, models to be adopted by the present Project will depend on data generated by the Third National Communication; on the other hand, mitigation opportunities for the different sectors generated by this Project could represent important inputs for the National Communication. The inventory and modeling efforts make up the basis for sectoral policy design.

3. Linking with LULUCF and agriculture sector: These two sectors dominate the GHG emissions in Brazil. Though these sectors are not included in this report and the reference is provided to complimentary work at the national level, clear links have to be built with the current Project and certain level of integration achieved to obtain the full national picture. This information is requested at the CEO endorsement stage.

LULUCF and agriculture have been included in the project intervention. More specifically Output 1.5 “Assessment of mitigation alternatives and estimation of abatement costs for land use, land use change and forestry (LULUCF)” will analyze land use change and direct/indirect repercussions on the conversion of native forest into production areas as well as the abatement costs and potentials for LULUCF in Brazil. Furthermore, Project Outcome 2, LULUCF will be linked with other emitting sectors within an integrated analysis of the real mitigation potential, considering the Brazilian economy as a whole, and analyzing the potential impacts that adopting low carbon policies may have on the Brazilian economy. Please refer to Part II.A above and Section 3.3 of the UNEP project document.

4. National Policy and climate change: Under which scenario of Component 1 will the National Policy and climate change actions would be incorporated? Will scenario A be a BAU scenario? Copenhagen Accord recognizes the need for limiting the warming to 2 degrees C and also aim at early peaking of GHG emissions. The Project could extend the analysis to develop a better understanding of the feasibility of achieving these two goals applied to Brazil.

Given the importance of some components that were not emphasized before, the project framework has been expanded in relation to the PIF to include different aspects of climate change mitigation analysis for Brazil. The reason for such modification under the project preparation phase is the need to adjust this initiative to new policy-making demands, bearing in mind all the progress Brazil has recently made in the implementation of the National Policy on Climate Change. In line with GEF guidelines, we understand that the Project must be consistent with the current revision of the national plan on climate change, which encompasses the elaboration of mitigation and adaptation plans for the different sectors. Therefore actions of the National Policy on Climate Change will be considered in all project scenarios.The Project considers building three scenarios: baseline/business as usual scenario; a low carbon scenario; a low carbon scenario with innovation. The baseline scenario, as explained in section “Baseline analysis and gaps”, will incorporate different elements of the Brazilian climate and energy policy into a single integrated scenario that will be compared against scenarios in which a greater effort for mitigation will be assessed.

5. Generation of database: The Project could also consider development of a good database on GHG emissions, mitigation technologies, cost, potential etc. at a decentralized level to assist future mitigation project development under CDM and other emerging mechanisms.

This database is an output of the sectoral analyses performed in outcome 1. Also, it should be used as material for outcome 3 (capacity building).

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RESPONSE TO SECRETARIAT´S COMMENTS AT CEO ENDORSEMENTTitle: Mitigation Options of Greenhouse Gas (GHG) Emissions in Key Sectors in BrazilGEFSEC Project ID: 4254 Date of screening: 16 April 2012

Questions Secretariat Comment At CEOEndorsement(FSP)/Approval (MSP)

Responses

8. Is the global environmental benefitmeasurable?

DER, April 16, 2012. Not clear. The section on page 15 of the CEO endorsement provides no estimates. Please clarify the global environmental benefits that will be delivered by this Project, even if the benefits are only indirect.

The information raised by the Project (abatement costs and potentials) is fundamentally necessary for the country to implement its Nationally Appropriate Mitigation Actions (NAMAs), by detailing the emission targets established by the National Policy on Climate Change (Federal Law No. 12,187 of December 29, 2009) and Decree n. 7.390, dated 9 December 2010. Achieving such targets will provide global benefits in terms of reducing GHG emissions. The global environmental benefits have not been estimated at project preparation stage given that the Project falls under the category of enabling activity. Nevertheless, these benefits can be measured by the economic and market potentials for mitigation, which will be estimated for all emitting sectors in Brazil. This information has been included in Part II.A, page 15 of the CEO Endorsement Request and Section 3.1, page 20 of the project document to better clarify the global environmental benefits.

9. Is the project design sound, itsframework consistent & sufficientlyclear (in particular for the outputs)?

DER, April 16, 2012. Please respond to the following comments:a) The Project includes an extensive amount of modeling, scenario development, analysis, and report development, including the adaptation of a computerized general equilibrium model for Brazil. Based on the project design presentation, all of these highly technical activities will be performed in country with no international consultants or advisors. Please confirm and under these conditions, please describe how local capacities will be enhanced.

b) Component 3 has been changed from the PIF. The capacity building activities are not justified and very expensive for the weak outputs. The baseline of zero awarenessraising activities on page 52 cannot be accurate. We question the need for 27 awareness raising events. We prefer testing of MRV as in the original PIF. Please replace this component with one similar to the PIF.

a) There is sufficient in country capacity to carry out the proposed activities. Currently, in Brazil, there are groups of highly qualified experts working for the Brazilian Research Network of Climate Change (Rede Clima) and also serving as experts for the IPCC. There are also research and education institutions with well-structured programs of human resource training focused on climate change. The Project aims at involving such experts and institutions in project activities and capacity building activities primarily addressed at government personnel at different levels. The goal is to enhance Brazilian capacities and readiness for the implementation of climate change mitigation policies (NAMAs).

b) In the original PIF, MRV only referred to biofuels. Former Component 3 accounted for Testing domestic MRV: Reduction of GHG emissions from the use of biofuels applying the GBEP methodological framework. The proposed approach expands the analysis of MRV to other sectors, and is included in Component 2, Output 2.1. For better clarification, Outcome 2 has been re-stated as Integrated analysis of the different mitigation alternatives in an integrated optimization framework, considering the non-additivity of the different mitigation alternatives and other economic considerations; and an evaluation of the possible impacts of different climate policies on the Brazilian economy; testing domestic measurement, reporting and verification (MRV) of proposed mitigation alternatives. Output 2.1 has been re-

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stated as Testing MRV and integrated analysis of GHG emission abatement alternatives in an optimization model comprising all energy chains and all GHG emitting sectors analyzed for Brazil. A specific activity has been added under Output 2.1 Test domestic MRV: evaluation of MRV for GHG emission alternatives (see CEO Endorsement Request, Part II.A, page 13 and Section 3.3, page 27 of the project document)

The capacity building activities now included in Component 3 are justified by the need to prepare the government for monitoring and evaluating the effectiveness of implementation of sectoral mitigation plans. Moreover, such activities are intended to promote the integration of national and state mitigation strategies. Another reason for proposing the capacity building activities is that since sectoral mitigation plans are currently being concluded, there are yet no specific capacity-building activities undertaken based on them, therefore the zero baseline and the interest of the Government of Brazil in implementing capacity building. The need for implementing capacity building has been better clarified under Part II.A, page 8 of the CEO Endorsement Request and Section 2.3 Project Justification, page 8 of the project document. Likewise, the description of Component 3 has been adjusted to better clarify an approach addressing governmental needs for capacity building (see Part II.A, page 15 and Appendix A Logical Framework of the CEO Endorsement, and Section 3.3, page 29 and Appendix 3 Logical Framework of the project document).

The proposed capacity building activities will aid in achieving sustainability through training on mitigation actions and monitoring methodologies. Such activities will enable federal, state and selected local governments (2014 FIFA World Cup host cities) to establish monitoring units and technical teams dedicated to the implementation of mitigation plans. Since these technical teams will have access to the open tools and methodologies used by the Project, databanks will be continuously updated after the Project is concluded, thus guaranteeing transparency and country ownership.

11. Is the Project consistent and properlycoordinated with other relatedinitiatives in the country or in theregion?

DER, April 16, 2012.a) Please clarify more deeply the linkage with 3rd National communications.

b) There appear to be two ProjectManagement Units - one under MCTI and one under the sub-group Rede Clima. Pleaseclarify.

a) The National Communication is comprised of the inventory of GHG emissions as well as information on actions that are under way in the country regarding climate change mitigation and adaptation. The National Communication does not include scenario development nor cost abatement projections insofar as it is not supposed to analyze and put forward mitigation strategies. Thus, the Third National Communication will only update the GHG emissions baseline; which is used for all scenario development. In this sense, there is no risk of duplication of efforts. This information has been included in Part II.E page 17 of the CEO Endorsement Request and Section 2.7, page 19 of the project document.

b) There is only one Project Management Unit, which will be under the direction of Rede Clima. Rede Clima is part of MCTI structure.

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13. Has the cost-effectiveness sufficientlybeen demonstrated in project design?

DER, April 16, 2012. No. The cost effectiveness of component 3 is not justified.

Component 3 is cost-effective in that it will seek to increase technical skills and abilities of government and non-government stakeholders to identify mitigation alternatives, to quantify their respective potentials and costs for the different sectors of the Brazilian economy and to evaluate the possible impacts of different climate policies on the Brazilian economy. The goal is to enhance local capacities and readiness for the implementation of climate change mitigation policies (Brazilian NAMAs). Capacity building will take into account three dimensions: i) institutional capacity to promote the development of policies, procedures, regulations and the systems of goals and incentives that constitute the mitigation actions for GHG emissions; ii) organizational capacity for increasing the planning and management capacity of individuals by creating goals, internal mechanisms and resources; and finally iii) human resource capacity by training government personnel to define objectives, to design and manage climate policy programs, to mobilize resources and to implement the climate policy Moreover, and most importantly, the Project will prepare governmental agencies for monitoring and evaluating the effectiveness of implementation of sectoral mitigation plans besides targeting the 12 (twelve) 2014 FIFA World Cup host cities. Furthermore, such activities are intended to promote the harmonization of national, state and local mitigation strategies. As mentioned before, the description of Component 3 has been strengthened to reflect this information.

14. Is the project structure sufficiently close to what was presented at PIF?

DER, April 16, 2012.a) Please provide a clear explanation for the differences on former component 3: testing domestic MRV. The MRV component seems to be eliminated and converted to a capacity building task. Meanwhile the GEF funding has increased substantially compared to the PIF. This is a major change. See comment in box 9.

a) As mentioned under 9 b) above, MRV is a part of Outcome 2, Output 2.1. Both outcome and output have been rephrased to reflect the inclusion of MRV. Likewise a specific activity covering MRV has been included under Output 2.1.

15. Does the Project take into account potential major risks, including the consequences of climate change and includes sufficient risk mitigation measures?

DER, April 16, 2012. The Project has the opportunity to incorporate analysis of risks into the modeling and scenario development. Please ensure it is addressed.

Risk analysis is included in Output 2.2: Analysis of the impacts of low carbon policies on the Brazilian economy. This output will analyze impacts on income, job creation, Gross Domestic Product, value added, and competitiveness, among others.

16. Is the value-added of GEFinvolvement in the Project clearly demonstrated through incremental reasoning?

DER, April 16, 2012.a) We are somewhat confused by the reference to TNAs and NAMAs in the tracking tool (one entry for each). Will this Project be delivering TNA directly through its outputs? Or is a there expected to be a separate TNA project forthcoming?Please clarify.

a) The enabling activity is better classified as NAMA. The tracking tool has been corrected accordingly.

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b) We are aware that many existing activities are already underway, some supported by the World Bank. For example, the World Bank is aiding in the development of a marginal abatement cost curve for Brazil. Please clarify how the Project will avoid duplication with similar efforts.

c) We are concerned that there will be duplication of effort with the 3rd national communications. Please clarify how this will be avoided.

b) As mentioned in the project justification, this Project aims to build upon the World Bank “Brazil Low-carbon country case study” (2010) and other studies previously carried out for Brazil. The effort should update, improve and expand the results of previous studies to include the most recent information/data available. The activities currently underway by the Ministry of Finance, financed by the Partnership for Market Readiness (PMR – Carbon Finance unit – World Bank) aim at the collective innovation and piloting of market-based instruments for GHG emissions reduction in Brazil. The Project will integrate the necessary actions to build the blocks for Market Readiness in Brazil, by (a) producing national and sectoral projections; (b) identifying mitigation options; and (c) assessing national and sectoral abatement potentials (low-carbon scenario), thus contributing to build a baseline scenario and to set national/sectoral targets. This information has been included in Part II.E page 17 of the CEO Endorsement Request and Section 2.7, page 19 of the project document.

c) As stated in 11a) above, the National Communication is comprised of the inventory of GHG emissions as well as information on actions that are under way in the country regarding climate change mitigation and adaptation. The National Communication does not include scenario development nor cost abatement projections insofar as it is not supposed to analyze and put forward mitigation strategies. Thus, the Third National Communication will only update the GHG emissions baseline; which is used for all scenario development. In this sense, there is no risk of duplication of efforts.

17. Is the type of financing provided by GEF, as well as its level of concessionality, appropriate?

Yes. DER, April 16, 2012. Please see box 22 and adjust the GEF financing if needed.

20. Is the GEF funding level of other costitems (consultants, travel, etc.)appropriate?

DER, April 16, 2012.a) Please justify the high international consultant weekly cost rate.

a) The costs of international consultants correspond to external evaluations.Mid-term evaluation: 2 international consultants x 2,5 weeks x US$4,000/week = US$20,000. Final evaluation: 2 international consultants x 2,5 weeks x US$4,000/week = US$20,000. These amounts are treated as subcontracts (see Appendix 1 of the project document) in the current budget.

22. Are the confirmed co-financing amounts adequate for each project component?

DER, April 16, 2012.a) Please explain 0% co-financing for component 2 and 2% co-financing for component 3. This is not justifiable. Without co-financing, there is no clear commitment or participation by the executing agencies and the Government of Brazil to ensure implementation. Even as an enabling activity it is difficult to see such a low-level of co-financing.

a) Co-financing has been re-assessed as per comment. The current co-financing distribution per component is indicated below.

Outcome 1 4,380,922 72%Outcome 2 4,380,918 78%Outcome 3 2,047,160 69%

The CEO Endorsement Request (Part A. Project Framework) and project document (section 7.2 Co-financing budget page 41, and Appendix 2 UNEP budget lines) have

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b) The confirmed co-financing by the implementing agency seems inadequate for the task.

been adjusted accordingly.

b) UNEP’s contribution is in addition to what will be financed from the GEF fee that UNEP will receive, which is not shown. UNEP-Brazil will enter into a contract with the Executing Agency for assisting with the execution of the Project; however it will incur additional costs that are considered as in-kind contribution (please also refer to Appendix 2 of the UNEP project document). UNEP’s overall contribution is therefore considered as adequate for the task.

23. Has the Tracking Tool3 been included with information for all relevant indicators?

DER, April 16, 2012.a) The tracking tool has to be submitted separately in EXCEL format.

b) Both TNA and NAMA rows are listed as enabling activities. Would it not be more appropriate to identify only 1 enablingactivity in the tool?

a) The excel file is included.

b) The enabling activity is correctly classified as NAMA. The tracking tool has been corrected accordingly.

24. Does the proposal include a budgeted M&E Plan that monitors and measuresresults with indicators and targets?

DER, April 16, 2012.a) Please clarify which budget will fund the M&E costs $150,000.

a) The M&E table (Part I.H of the CEO Endorsement Request) originally included only the GEF budget. The table has been adjusted to reflect total costs (the item Publications has been included in this version) and funding sources. GEF: US$200,000. Co-financing: US$34,000.

STAP DER, April 16, 2012.b) comment 2 on coordination with 3rd National communications is responded to, but the response is vague. Please clarify how duplication of efforts will be prevented.

b) As stated in 11a) above, the National Communication is comprised of the inventory of GHG emissions as well as information on actions that are under way in the country regarding climate change mitigation and adaptation. The National Communication does not include scenario development nor cost abatement projections insofar as it is not supposed to analyze and put forward mitigation strategies. Thus, the Third National Communication will only update the GHG emissions baseline; which is used for all scenario development. In this sense, there is no risk of duplication of efforts.

Agencies’ response to GEFSECcomments

DER, April 16, 2012.a) Our comments at PIF stage "Please elaborate the relationship of this Project with NAMA and MRV as the negotiations under the UNFCCC evolve." were not addressed. Please clarify.

a) This Project will enhance technical capacities and promote readiness for the implementation of climate change mitigation policies (NAMAs). Raising information on abatement costs, potentials and impacts is a necessary step, provided that emission reduction targets established by the National Policy on Climate Change need further detailing. Studies will also test MRV for the proposed mitigation alternatives. Moreover, the Project will carry out training activities for federal, state and selected local governments on: (i) methodologies of the National Inventory; (ii) use of the National Inventory databank; (iii) monitoring of sectoral mitigation actions; (iv) baseline scenarios, mitigation options, abatement costs and impacts on the economy; domestic measurement, reporting and verification (MRV) of proposed mitigation alternatives.

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ANNEX C: CONSULTANTS TO BE HIRED FOR THE PROJECT USING GEF RESOURCES

Position Titles$/

person week*

Estimated person

weeks**Tasks to be performed

For Project ManagementLocalProject Officer 1,230.77 156 The Project Officer will and

will be responsible for overall project implementation and supervision of the Project Management Unit staff; elaboration of annual work plans and budgets; overseeing the work of consultants/subcontracts; preparation of reports; project M&E; and dissemination of information

Justification for Travel, if any:

For Project AssistanceLocalProject Assistant 403.85 156 The Project Assistant will

provide support to the Project Officer in coordination and implementation of project components, including preparation of work plans, budgets and reports, project M&E; and providing assistance to consultants and external reviews.

Consultants for training 750 32 These consultants will be experts in climate change and/or economic issues, and will be responsible for delivering workshops and training activities for governmental and non-governmental personnel, with the aim of disseminating information resulting from Components 1 and 2.

Consultant to specify requirements for Outcome 3

600 48 This consultant will be responsible for formatting, editing, and standardizing results from each output of Component 1, thus elaborating training materials.

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Consultant to specify requirements for Outcome 3

600 48 This consultant will be responsible for formatting, editing, and standardizing results from each output of Component 1, thus elaborating training materials.

Consultant – dissemination strategy

461.54 156 This consultant will be a communication specialist in charge of designing and implementing a dissemination strategy, as well as producing communication materials.

Justification for Travel, if any:

* Provide dollar rate per person week. ** Total person weeks needed to carry out the tasks.

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ANNEX D: STATUS OF IMPLEMENTATION OF PROJECT PREPARATION ACTIVITIES AND THE USE OF FUNDS

A. EXPLAIN IF THE PPG OBJECTIVE HAS BEEN ACHIEVED THROUGH THE PPG ACTIVITIES UNDERTAKEN.

The PPG objective has been fully achieved, since the project design, implementation arrangements, and the M&E plan have been duly finalized, after data gathering and analysis, as well as consultations.

B. DESCRIBE FINDINGS THAT MIGHT AFFECT THE PROJECT DESIGN OR ANY CONCERNS ON PROJECT IMPLEMENTATION, IF ANY: NONE

C. PROVIDE DETAILED FUNDING AMOUNT OF THE PPG ACTIVITIES AND THEIR IMPLEMENTATION STATUS IN THE TABLE BELOW:

Project Preparation

Activities Approved

Implementation Status

GEF Amount ($)Co-

financing($)

Amount Approved

Amount Spent To

Date

Amount Committed

Uncommitted Amount*

Review of the preliminary

project design and design of detailed

workplan

Completed 3,000 2,600 400 0

Collecting and analyzing

additional data

Completed

Payments to be issued

12,000 4,570 7,430 0

Consulting with public and private

sector stakeholders

regarding the project objective,

seek the collaboration of

market parties and NGOs

Completed


7,500* 1,360 6,140 0

Analyzing cost-effectiveness and

sustainability plan

Completed


3,000 - 3,000 0

Detailing final project design,

implementation arrangements, and

the M&E plan

Completed


21,773 21,773 0

Total 47,273 8,530 38,743 0*Please note that these funds were used to hire two other technical experts to provide support on detailing final project design, implementation arrangements, and the M&E plan.

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ANNEX E: CALENDAR OF EXPECTED REFLOWS

Provide a calendar of expected reflows to the GEF Trust Fund or to your Agency (and/or revolving fund that will be set up)

NA

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ANNEX F: GEF CC MITIGATION TRACKING TOOL

Tracking Tool for Climate Change Mitigation Projects

(For CEO Endorsement)

Special Notes: reporting on lifetime emissions avoidedLifetime direct GHG emissions avoided: Lifetime direct GHG emissions avoided are

the emissions reductions attributable to the investments made during the project's supervised implementation period, totaled over the respective lifetime of the investments.Lifetime direct post-project emissions avoided: Lifetime direct post-project emissions avoided are the emissions reductions attributable to the investments made outside the project's supervised implementation period, but supported by financial facilities put in place by the GEF project, totaled over the respective lifetime of the investments. These financial facilities will still be operational after the project ends, such as partial credit guarantee facilities, risk mitigation facilities, or revolving funds.Lifetime indirect GHG emissions avoided (top-down and bottom-up): indirect emissions reductions are those attributable to the long-term outcomes of the GEF activities that remove barriers, such as capacity building, innovation, catalytic action for replication. Please refer to the Manual for Calculating GHG Benefits of GEF Projects.

Manual for Energy Efficiency and Renewable Energy ProjectsManual for Transportation ProjectsFor LULUCF projects, the definitions of "lifetime direct and indirect" apply. Lifetime length

is defined to be 20 years, unless a different number of years is deemed appropriate. For emission or removal factors (tonnes of CO2eq per hectare per year), use IPCC defaults or country specific factors.

General Data Target Notesat CEO Endorsement

Project TitleMitigation Options of Greenhouse Gas (GHG) Emissions in Key Sectors in Brazil

GEF IDAgency Project ID 4016

Country BrazilRegion

GEF Agency UNEP

Date of Council/CEO ApprovalSeptember 1,

2010Month DD, YYYY (e.g., May 12, 2010)

GEF Grant (US$) 4.180.000Date of submission of the tracking

toolMonth DD, YYYY (e.g., May 12, 2010)

Is the project consistent with the priorities identified in National Communications, Technology

Needs Assessment, or other Enabling Activities under the

UNFCCC?

1

Yes = 1, No = 0Is the project linked to carbon

finance? 0 Yes = 1, No = 0

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Cofinancing expected (US$) 11.992.400

Objective 1: Transfer of Innovative Technologies

Please specify the type of enabling environment created for technology transfer through this projectNational innovation and technology

transfer policy Yes = 1, No = 0Innovation and technology centre

and network Yes = 1, No = 0Applied R&D support Yes = 1, No = 0

South-South technology cooperation Yes = 1, No = 0

North-South technology cooperation Yes = 1, No = 0

Intellectual property rights (IPR) Yes = 1, No = 0Information dissemination Yes = 1, No = 0

Institutional and technical capacity building Yes = 1, No = 0

Other (please specify)

Number of innovative technologies demonstrated or deployed

Please specify three key technologies for demonstration or deployment

Area of technology 1 Type of technology 1 specify type of technologyArea of technology 2Type of technology 2 specify type of technologyArea of technology 3Type of technology 3 specify type of technology

Status of technology demonstration/deployment

0: no suitable technologies are in place1: technologies have been identified and assessed2: technologies have been demonstrated on a pilot basis3: technologies have been deployed4: technologies have been diffused widely with investments5: technologies have reached market potential

Lifetime direct GHG emissions avoided

tonnes CO2eq (see Special Notes above)

Lifetime direct post-project GHG emissions avoided


Lifetime indirect GHG emissions avoided (bottom-up)


Lifetime indirect GHG emissions avoided (top-down)


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Objective 2: Energy Efficiency

Please specify if the project targets any of the following areas

Lighting Yes = 1, No = 0Appliances (white goods) Yes = 1, No = 0

Equipment Yes = 1, No = 0Cook stoves Yes = 1, No = 0

Existing building Yes = 1, No = 0New building Yes = 1, No = 0

Industrial processes Yes = 1, No = 0Synergy with phase-out of ozone

depleting substances Yes = 1, No = 0Other (please specify)

Policy and regulatory framework

0: not an objective/component1: no policy/regulation/strategy in place2: policy/regulation/strategy discussed and proposed3: policy/regulation/strategy proposed but not adopted4: policy/regulation/strategy adopted but not enforced5: policy/regulation/strategy enforced

Establishment of financial facilities (e.g., credit lines, risk guarantees,

revolving funds)

0: not an objective/component1: no facility in place2: facilities discussed and proposed3: facilities proposed but not operationalized/funded4: facilities operationalized/funded but have no demand5: facilities operationalized/funded and have sufficient demand

Capacity building

0: not an objective/component1: no capacity built2: information disseminated/awareness raised3: training delivered4: institutional/human capacity strengthened5: institutional/human capacity utilized and sustained

Lifetime energy saved

MJ (Million Joule, IEA unit converter: http://www.iea.org/stats/unit.asp)Fuel savings should be converted to energy savings by

49

using the net calorific value of the specific fuel. End-use electricity savings should be converted to energy savings by using the conversion factor for the specific supply and distribution system. These energy savings are then totaled over the respective lifetime of the investments.









Objective 3: Renewable Energy

Please specify if the project includes any of the following areas

Heat/thermal energy production Yes = 1, No = 0On-grid electricity production Yes = 1, No = 0Off-grid electricity production Yes = 1, No = 0




revolving funds)


Capacity building

0: not an objective/component1: no capacity built2: information disseminated/awareness raised3: training delivered4: institutional/human capacity

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strengthened5: institutional/human capacity utilized and sustained

Installed capacity per technology directly resulting from the project

Wind MWBiomass MW el (for electricity production)

BiomassMW th (for thermal energy production)

Geothermal MW el (for electricity production)

GeothermalMW th (for thermal energy production)

Hydro MWPhotovoltaic (solar lighting

included) MWSolar thermal heat (heating, water,

cooling, process)MW th (for thermal energy production, 1m² = 0.7kW)

Solar thermal power MW el (for electricity production)Marine power (wave, tidal, marine

current, osmotic, ocean thermal) MW

Lifetime energy production per technology directly resulting from the project (IEA unit converter: http://www.iea.org/stats/unit.asp)

Wind MWhBiomass MWh el (for electricity

production)Biomass MWh th (for thermal

energy production)Geothermal MWh el (for electricity

production)Geothermal MWh th (for thermal

energy production)Hydro MWh

Photovoltaic (solar lighting included)

MWh

Solar thermal heat (heating, water, cooling, process)

MWh th (for thermal energy production)

Solar thermal power MWh el (for electricity production)

Marine energy (wave, tidal, marine current, osmotic, ocean thermal) MWh









Objective 4: Transport and Urban Systems

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Please specify if the project targets any of the following areas

Bus rapid transit Yes = 1, No = 0Other mass transit (e.g., light rail,

heavy rail, water or other mass transit;

excluding regular bus or minibus) Yes = 1, No = 0Logistics management Yes = 1, No = 0

Transport efficiency (e.g., vehicle, fuel, network efficiency) Yes = 1, No = 0

Non-motorized transport (NMT) Yes = 1, No = 0Travel demand management Yes = 1, No = 0

Comprehensive transport initiatives (Involving the coordination of

multiple strategies from different transportation sub-sectors) Yes = 1, No = 0

Sustainable urban initiatives Yes = 1, No = 0




revolving funds)


Capacity building 0: not an objective/component1: no capacity built2: information disseminated/awareness raised3: training delivered

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4: institutional/human capacity strengthened5: institutional/human capacity utilized and sustained

Length of public rapid transit (PRT) kmLength of non-motorized transport

(NMT) kmNumber of lower GHG emission

vehiclesNumber of people benefiting from the improved transport and urban

systems









Objective 5: LULUCF

Area of activity directly resulting from the project

Conservation and enhancement of carbon in forests, including

agroforestry haConservation and enhancement of

carbon in nonforest lands, including peat land ha

Avoided deforestation and forest degradation ha

Afforestation/reforestation ha

Good management practices developed and adopted

0: not an objective/component1: no action2: developing prescriptions for sustainable management 3: development of national standards for certification 4: some of area in project certified5: over 80% of area in project certified

Carbon stock monitoring system established

0: not an objective/component1: no action2: mapping of forests and other land areas3: compilation and

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analysis of carbon stock information4: implementation of science based inventory/monitoring system5: monitoring information database publicly available

Lifetime direct GHG emission avoided


Lifetime indirect GHG emission avoided


Lifetime direct carbon sequestration


Lifetime indirect carbon sequestration


Objective 6: Enabling Activities

Please specify the number of Enabling Activities for the project (for a multiple country project, please put the number of countries/assessments)

National CommunicationTechnology Needs Assessment

Nationally Appropriate Mitigation Actions 1

OtherDoes the project include

Measurement, Reporting and Verification (MRV) activities?

0Yes = 1, No = 0

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