NAMAs and CETs in ACP countries (Challenges, status and opportunities)

1. NAMAs and CETs in ACP countries (Challenges, status and opportunities) for Workshop on Nov 14 2011 at ACP House in Brussels by Martin Zwanenburg

2. Overview of presentation 1. Introduction and approach 2. On NAMAs and their status 3. On NAMAs and CETs (RE & EE) 4. On NAMAs and involvement of the PS 5. Link to present assignment with ECREEE 6. Link to selected sources of information

3. 1. Introduction and approach • Background and involvement of consultant • Approach in this presentation

4. Background and involvement of consultant • Martin Zwanenburg is a Dutch development economist who has been active since 1978 mainly as a project economist involved in Cost-Benefit-Analysis and feasibility studies. • His initial focus on Asia shifted to Africa and renewable energy became his major area. He has been involved in PDD development for CDM projects - for small hydro and biomass - and in the evaluation of proposals for the EU ACP EFU (Energy Facility Unit). He has worked as an Advisor on Climate Change for the UNDP in Ghana. • Currently he is active in the BizClim project with ECREEE (Ecowas Regional Centre on Renewable Energy and Energy Efficiency) on the opportunities that NAMAs (Nationally Appropriate Mitigation Actions) can provide for private sector involvement in both RE and EE and which conditions will be required to facilitate this. The contractor of this  project is  Particip GmbH.

5. Approach in this presentation • Assumption of some familiarity with UNFCCC, CDM and NAMA • Selection of topics partly on basis of other presentations and hence focus on NAMAs • And within that additional selections • And more info in sheets than time allows for • No Q&A foreseen during presentation • Easy reference to info in final slides • Core sources of info; ECN, Climate Focus, Ecofys

6. 2. On NAMAs and their status

7. Box 1: NAMAs at a glance (Climate Focus October 2011) • Conceived in Bali in 2007 (COP13), confirmed and elaborated in Cancun 2010 (COP16) Voluntary mitigation actions by developing countries • Any government-sponsored and prioritized policy, program, project that results in measurable GHG reductions can be a NAMA • Enabled in part by domestic investments and in part by international financial support Performance based - stringency of MRV depends on the source of finance

8. Importance of NAMAs (Climate Focus March 2011) At CP16 in Cancun, Nationally Appropriate Mitigation Actions (NAMAs) have emerged as the single most important framework to recognize and support emission reduction in developing countries within the UNFCCC framework.

9. Pending issues (Climate Focus March 2011) A robust international framework for NAMAs needs to be developed. Three key challenges remain. The first is to design a performance matrix that allows effective international support of NAMAs. The second is to attract the private funding to complement public pledges for support. The third is to ensure complementarity among existing and emerging mechanisms to credit and support emission reductions in developing countries.

10. Examples of NAMAs under development (Ecofys, March 2010) 2.1.2 Optimizing bus transport in Mexico City • The conventional bus system in Mexico City is suffering from a lack of regulation. This results in a highly inefficient transport system characterized by congestion, safety problems and air pollution (leading to related health problems). The optimization of the conventional bus system has been identified in a recent study conducted by the World Bank as one of the opportunities with the highest net benefits and considerable GHG emission reduction potentials. • Elements of the proposal include the following: • Establishing a new institutional and regulatory framework enabling bus system optimization, including a new regulatory entity as well as an operation and management entity. • Planning and implementing a new route design, concession management and standards for quality of service (to be carried out by the regulatory entity). • Implementing awareness, raising measures to inform the public. • Establishing a fund to finance the scrapping of replaced units • Implementation of a public transport monitoring system. • The development of this NAMA has been funded by the Inter-American Development Bank (IDB).

11. Examples of NAMAs under development (Ecofys, March 2010) 2.1.4 Renewable electricity support program (specific cases under development) • Financing available through the NAMA mechanism could be used to implement a national support scheme for renewable electricity production through a feed-in tariff. The activities seek to increase the electricity generation from renewable energy sources. To achieve this, producers of renewable electricity receive a fixed price per kWh, which is set above the market price in order to cover the additional cost related to renewable electricity production. This tariff must be guaranteed for a period, long enough to make it attractive for investors. • In developed countries, the price difference is paid for by the consumers. In developing countries this may be seen as inhibiting the development of the country, and might not be feasible. The price difference can be covered by other sources. Determining the exact amount of the incremental cost is complex and requires a substantial amount of solid data. The determination of the total funding need is further complicated by the fact that it depends on the actual production from renewable sources and needs to be guaranteed for a long period of time. • The setup of such a system also requires substantial legislative and administrative capacity which needs to be constructed. In many countries, the grid infrastructure is also not suited to support large amounts of fluctuating renewable energy and also needs to be enhanced. • A program to support the implementation of a feed-in tariff could therefore include: • -  Covering of the incremental cost for renewable electricity generation. • -  Capacity-building to expand national technical and regulatory expertise • -  Supporting the set up of institutions to operate the system. • - Investing in an enhanced grid capacity to support the increased supply of renewables.

12. Current status and open questions (ECN September 2011) • there are currently no actions being implemented and supported as a ‘NAMA’ • currently no internationally agreed definition of a NAMA outside of text that is still under negotiation in the UNFCCC. A tentative definition (by ECN) : “A NAMA is a voluntary action perceived as appropriate in the national context by a developing country government that leads to a reduction of greenhouse gas emissions and contributes to sustainable development in that country”. • A wide variety of proposed NAMAs have been submitted …. These submissions range from existing policies and proposed concrete actions, to general focus areas for mitigation and needs assessments for capacity building efforts …. Some of the proposed NAMAs are expected to have a direct mitigation effect, such as energy efficiency measures, whereas other proposed NAMAs, such as capacity building activities, could be expected to have an indirect mitigation effect over a longer time-frame

13. Current status and open questions (continued)(ECN September 2011) • It is commonly stated that the financing structure of a NAMA may consist of domestic funding by the developing country (so-called ‘unilateral NAMAs’), international support (‘supported NAMAs’), and/or income from a market based mechanism ( ‘credited NAMAs’) … • The latter form of financing is the most challenging, as it would require a demand for some form of carbon-credit from developed countries by means of a ‘cap’ or ‘target’ with an obligation – which is exactly what was not agreed in Copenhagen or Cancun. • Any discussions on eligibility and additionality (in defining unilateral versus supported actions) are likely to be politically sensitive. • The implementation of NAMAs and the associated support will need to be subject to clear MRV arrangements. There is a call for simple guidelines that are flexible enough to accommodate different types of NAMAs (UNFCCC, 2011c), and although there has been considerable progress in Cancun, agreement on the details of these requirements are likely to take a few years (Ecofys, 2011).

14. 3. On NAMAs and CETs (RE & EE)

15. A mixed picture on share of RE&EE • On the basis nr. of original NAMAs; 60 % • On the basis of WI paper of august 2011 ; 5 out of 16 NAMAs analysed (developed beyond concept stage, government lead & supported) • On the basis of www.nama-database.org • Lessthan half in terms of NAMAsdeveloped • Dominant in terms of emissions to be reduced • In turndominated by RSA with CSP, wind & EE • From ACP countriesonly RSA (4) & Tunisia (2)

16. Some lessons learnt from WI paper • Development of NAMA takes a lot of time • And easiest as a scaling up of existing project • Residential buildings in Mexico and RSA • biowaste treatment in Tunisia • Only a few had all components developed • Only one probably up to ‘support standard’ • Support always only minor portion of finance • NAMA development easily up to 0.5 mill. €

17. 4. On NAMAs and involvement of the PS

18. Stakeholders and responsibilities (ECN september 2011) Several groups of stakeholders and responsibilities can be identified: • Government technical team: Identification of opportunities, fact finding and checking, policy design, impact assessment, design of MRV system, implementation. • Government decision makers: Prioritizing and selecting NAMAs to develop, liaising with potential support providers, agreeing on finance and MRV conditions, buy-in and commitment for implementation. • Private sector: Information, potential identification of opportunities for the attention of government, identification of barriers to implementation and financing structure, buy-in for implementation, implementation. • Support providers: Selecting NAMAs to support, negotiating finance and MRV conditions, funding. • Civil society: Information, identification of barriers to implementation and sustainable development impact, buy-in and advocacy.

19. Mutual support and dependencies(Climate Focus October 2011) • Regardless of the eventual rules for applying international support to NAMAs, public sector finance alone will not be able to carry the burden of financing low-carbon development in developing countries. • Catalyzing private sector resources for NAMAs will therefore be a priority for national governments as much as for international institutions. • From a business point of view, the link of NAMAs to predictable, stable and longer-term policies can offer substantial investment opportunities. • At the same time, standards formulated in the context of NAMAs may change the political framework for business, for example through the introduction of feed-in tariffs for renewable energy generation, building efficiency codes, low-carbon transport and energy infra-structure, performance standards for heavy industries or other relevant measures. • The emerging nature of NAMAs, their relevance for business on national and international levels, the opportunity to shape supportive investment frameworks for a green economy, and the need for private investment to support NAMA implementation in developing countries, provide good arguments for business to understand the context in which NAMAs are being developed as well as an assessment of business opportunities.

20. Improper subsidies and misperceptions on subsidies • In 2011 409 billion $ (= 280 billion €) of subsidy went to fossil fuels and only 66 billion $ (= 45 billion €) of subsidy went to renewable energy (at 1 € = 1.46 $). • This situation needs to be analyzed per country and sector. • The detrimental consequences for RE have further implications; poor financial prospects will lead to more expensive finance, less economies of scale and so on. • This ‘reverse subsidy’ is often ignored in public debate.

21. 5. Link to present assignment with ECREEE

22. The study initiated by BizClim & ECREEE • E(R)CREEE is the ‘ECOWAS Regional Centre for Renewable Energy & Energy Efficiency • The project/study title is “Promoting Investments in the Renewable Energy & Energy Efficiency Sector in West Africa” • The major result will be “Existing policy, regulatory and institutional framework to promote investments in NAMAs reviewed and recommendations made on policies to create of further strenghten the enabling environment for investments in Renewable Energy & Energy Efficiency”

23. Some results and questions at the inception stage • Often the implicit assumption on PS and finance is their foreign origin, whereas in W-Africa substantial national & regional financial resources are available as well as a vibrant PS. • ECREEE promotes a broad range of RE & EE and suggests that the common emphasis on FITs over-emphasizes grid connected electricity and may be to the detriment of the rural sector • And raised the question to what extent the enabling conditions required depend on the technologies to be promoted

24. 6. Link to selected sources of information

25. Contact data of consulting team and of the contractor of the BizClim study for ECREEE The 2 members of the consulting team; • team leader DembaDiopddiop@antenna.nl • economist Martin Zwanenburg m.zwanenburg@gmail.com - (for this ppt and for comments and suggestions) Contact person at contractor; • Martin Gayer martin.gayer@particip.de Full references to documents used in this presentation in next slide of this ppt

26. Easiest link to documents in this pptwww.nama-database.org http://www.nama-database.org/resources-links/ provides links, both on research papers and on sources of finance (e.g.) The research papers /publications mentioned there include; • UNFCCC(2011) Compilation of information on nationally appropriate mitigation actions to be implemented by Parties not included in Annex I to the Conventionpdf • Consultancy and research reports
 - Climate Focus (October 2011) Nationally Appropriate Mitigation Actions in Developing Countries: Emerging opportunities for private sector engagementpdf - ECN (September 2011) Discussion paper: On developing a NAMA proposalpdf - Ecofys(April 2010) Nationally Appropriate Mitigation Actions: Insights from example developmentpdf The reference section in the ECN (September 2011) pdf includes direct links to several other publications used in the present ppt

27. Thank you for your attention