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Views on POAs

Views on POAs. Martin Schröder SEVENTH CDM JOINT COORDINATION WORKSHOP 12 th March 2011 . KfW Carbon Programmes & POA facility. © KfW • KfW Carbon Fund. KfW Carbon Fund PoA Pipeline - PoA Support Center . © KfW • KfW Carbon Fund. 3. 3. A reminder: the original intent of POAs.

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Views on POAs

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  1. Views on POAs Martin Schröder SEVENTH CDM JOINT COORDINATION WORKSHOP 12thMarch 2011

  2. KfW Carbon Programmes & POA facility © KfW • KfW Carbon Fund

  3. KfW Carbon Fund PoA Pipeline - PoA Support Center © KfW • KfW Carbon Fund 3 3

  4. A reminder: the original intent of POAs EXAMP L ES Small Hydro Mini-Hydro Cook-stove SWH CFLs CH4: Animal waste / WW / landfill Figures / ESMAP 2007

  5. Content • Experiences in the application of PoAs • Thoughts on possible innovations • Views on standards and rules

  6. PoA experience – key lessons • The incentive structures needed are sophisticated • Project ownership and strong management on the ground are essential • The regulatory side still bears open issues

  7. POAs & incentives: Typical approaches: • Improvement of loan conditions • Offering price discounts/subsidies for climate friendly products • Funding of demand side management programmes

  8. Example: South African SWH Programme - Project Structure Association for Registration Registration Manufacturers / Installers Applying for Registration UNFCCC Purchase, sale and installation of systems Issuance of CERs Project Participant Project Participant CoordinatingEntity Households KfW CarbonFund Transfer of CERs rights ERPA Subsidies CER revenues (partly): Payment on Delivery or Upfront payment Administration Fee insurance policy Payment of additional subsidies Debt financing (Upfront)-Payment for CERs Trustee of funds Local Bank Donor of additional subsidies Insurance 8 8

  9. POA experience – hurdles & measures

  10. Coordinating / Managing Entity (CME) Early lesson on CMEs: • Smaller CMEs overestimate capacity – partly first time CDM movers. • Ownership partly more on consulting side than on (plant) operator side. • Much focus on validation – but what (also) counts is getting ready for implementation & monitoring & issuance. Conclusions: • CME needs to analyze strengths and stay in its core business. • Remaining needs can be covered by strong partners (i.e. CDM consultant and monitoring experts). Avoid private knowledge. • Develop a robust business model and an institutional structure. • Working on PoAs requires patience / thus be prepared to be patient.

  11. Content • Experiences in the application of PoAs • Thoughts on possible innovations • Views on revised standards and rules

  12. Possible innovations I POAs - the stepping stone towards NAMAS • In future embedding to national action may be more important • Standardized baselines are crucial also for wider approaches • Linkages to post 2012 setup currently undefined Source: A concept for the development of NAMA on the basis of scaled-up programmatic CDM activities (Draft, KfW / Southpole)

  13. Possible innovations II Further options of improvement (besides rules & regulations) • Facilitating upfront payments / absorbing risks – beyond coverage of transaction costs in a loan scheme. • Gathering best practice on incentives schemes – including contractual side. • Facilitating specific exchange on POAs with regulatory bodies (i.e. POA contact point)

  14. Views on revised standards and rules Key challenge: unsolved regulatory issues result in an over-average risk for POAs in the rush towards registration prior to 2012.

  15. Views on revised standards and rules

  16. Thank you for your attention! For further information:martin.schroeder@kfw.de www.kfw.de/carbonfund

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