World Bank Carbon Finance Program

1. World Bank Carbon Finance Program Dr. Venkata R. Putti Team Leader, CF-Assist Program West Africa Carbon Finance Investment Forum February 12-14, Dakar, Senegal

2. World Bank Pioneer in Carbon Finance • Develop the market through business transactions (honest broker) • Build stakeholder capacities to enable their effective participation in the market • Promote market policies and instruments through dialog and partnership

3. CF Business Evolution FCPF, December 2007 Umbrella Carbon Fund ‘07 Italian, Spanish carbon funds, March 2004 ‘05 ‘04 ‘03 Prototype Carbon Fund, April 2000 ‘02 Community Development Carbon Fund (CDCF), March 2003 2000 ‘99 July 1999. Board approves PCF ‘97 Feb 1997 Approval of $3.5m PCF development funds ‘96

4. WB Carbon Funds/Facilities $2billion Prototype Carbon Fund. Netherlands Clean Development Mechanism Facility Community Development Carbon Fund. BioCarbon Fund Italian Carbon Fund. Netherlands European Carbon Facility • Spanish Carbon Fund. Danish Carbon Fund. Umbrella Carbon Facility. Carbon Fund for Europe CFE

5. Technology Technology $ $ Finance Finance Industrialized Governments and Companies EITs and Developing Countries CO Equivalent CO Equivalent 2 2 Emission Reductions Emission Reductions WB FundsHow They Work

6. SS Africa Project Portfolio January‘08 Nigeria, SF6 red /T&D loss red Nigeria, Cogen Ethiopia, Humbo Assisted regeneration Ethiopia, Elec Interconnect+Meth capt Nigeria Lagos LFG Uganda, 2 LFG / Compost projects 4 3 1 Uganda, 1 Cogen project 4 Kenya, 2 geotherm/1 Comb Cycle 6 Ghana, Energy Efficiency Nigeria, Transmission loss 2 Kenya, 3 Hydro Rwanda, Lake Kivu + DSM Mali Acacia Plantations Kenya, Greenbelt 1 Niger Acacia Plantations South Africa, Tshwane LFG 1 Mauritius, Bagasse Cogen 1 16 ERPAs+ 30 in pipeline 2 Uganda, Nile Basin Reforestation South Africa, Durban LFG Swaziland, Bagasse Cogen Madagascar Biodiversity Corridor Mozambique, Distrib system extension

7. Africa Assist Capacity Building • Launched in 2006 as part of CF-Assist program • Goal: Stronger Participation of AFR in CDM Market with Greater Sustainable Development Benefits • Focus: • Strengthen Institutional Capacity • Engage Financial and Private Sector • Scale Up Project Pipeline and Deal Flow • Create Knowledge and Awareness • Approach: Country, Regional, Sector

8. Egypt, Morocco, Syria, Tunisia. Yemen Albania, Armenia, Azerbaijan, Belarus, Georgia, Macedonia, Kyrgyzstan, Uzbekistan. GIS Studies: Bulgaria, Latvia, Russian Federation, Ukraine. Cambodia, China, Indonesia, Mongolia, Philippines, VIetnam. Bangladesh, India,Nepal, Pakistan, Sri Lanka. Benin, Botswana, Burkina Faso, Gambia, Kenya, Madagascar, Mali, Mozambique, Rwanda, Senegal, West African Region, Southern African Region Argentina, Bolivia, Brazil, Ecuador, Mexico, Paraguay, Peru, Uruguay, Central America region Capacity Building National/Regional

9. Africa Assist Results • Over 1600 people exposed to training programs and events under Africa Assist • Baseline mitigation potential assessment done for SSA (to be released in March 2008) • Over 40 CDM projects in various stages of development in Sub Saharan Africa • Development of Forestry sector in Madagascar and Senegal • DNA creation facilitated in Botswana and The Gambia; another five DNAs being provided institutional support

10. New Facilities Post-2012 • Forest Carbon Partnership Facility (FCPF) • To reduce emissions from deforestation and land degradation (REDD; being discussed in the UNFCCC) • To engender additional benefits in water management, biodiversity, poverty reduction, adaptation • To piloting possible approaches to provide incentives • Carbon Partnership Facility (CPF): • To focus on large scale mitigation in a strategic manner • To begin now, and not wait for a new mitigation regime

11. Africa Assist Priorities • Increase coverage and scope of CDM assistance • Develop local collaborations • Nairobi Framework Partners • Bi-lateral and regional partners (CEFEB, IEPF, ECOWAS) • Launch pilots in Programme of Activities (POA) and sector-specific market development • Create and nurture Regional Capacity Hubs • Develop innovative delivery mechanisms: e.g. e-modules, distant learning • Key upcoming events in 2008 • CDM for Financial Institutions – Dakar (February 12-14) • Lighting Sector Training – Madagascar (March) • Africa Carbon Forum – Dakar (September)

12. New Facilities Rationale • Urgent need to take action and scale up mitigation efforts. • Support long-term investments for transition to low-carbon economy; integrate CF into public/private investment decisions • Shift away from a project-by-project approach to strategic programs of investments • Establish a long-term regulatory framework that provides certainty of a carbon price signal • Provide incentives for development of low-carbon technology • Create incentives for avoiding deforestation

13. Forest Carbon Partnership Facility Why? • “Avoided deforestation” excluded from the CDM • WB experience in forestry sector: • Prototype Carbon Fund: global pioneer since 1999 • BioCarbon Fund: LULUCF pioneer since 2004, including W2 for avoided deforestation at project level • Request from G8 Heiligendamm Communiqué to design forest carbon partnership • About 20 IBRD and IDA countries have already expressed interest in participating • $165m committed from donors

14. FCPF Features • South-North Partnership • Both sellers and buyers represented in the governance structure • NGOs, Int’l orgs. and private sector have observer status • Not pre-empt negotiations • Close cooperation with parties and UNFCCC secretariat • Learning by doing • Pilot different approaches • Test different implementation strategies • Include all actors and stakeholders • Seek guidance from private investors • Reach out directly to the drivers of deforestation during implementation

15. FCPF Potential Countries Subtropics Limit Subtropics Limit

16. FCPF Interest from Africa • Central African Republic • Democratic Republic of Congo • Gabon • Ghana • Kenya • Liberia • Republic of Congo

17. Carbon Partnership Facility Features • Series of same and/or associated activities for which a common approach can be developed, • e.g., elimination of gas flaring with same or different uses of the gas. • Undertaken through a program implementing agent, • e.g., government, national utility, financial intermediary. • One purchase agreement with the implementing agent or several purchase agreements, • i.e., one for each activity under the program. • Scale-up through replication and “mass-production”, as opposed to the current project-by-project approach. • May use POA approach or new methodological approach (to be developed).

18. Carbon Partnership Facility Examples • Promotion of clean energy generation and transmission • Rift Valley Geothermal Development (building on ARGeo) • Southern Africa Power Pool • Ethiopia –Sudan interconnect/Ethiopia/Kenya Interconnect • Technology leapfrogging, supporting near-commercial technologies • IGCC technology for cleaner coal (Southern Africa) • Carbon capture & storage (Botswana) • Energy efficiency scale-up • Industrial energy efficiency – process improvements / energy management systems • Climate-friendly urban development: a city-wide approach • waste management and waste water treatment • Transport • public lighting • building codes for energy efficiency / material use / energy use etc

19. The Carbon Partnership Facility Commitments from buyers ($$) and sellers (ERs) Both Buyers and Sellers are CPF Participants Window 2: Power rehabilitation Window 3: Africa Window 1: Wind Window 4 Carbon capture & storage CPFWindow-approach Broad Partner-ship Prepa-ration & Trans-action Buyers x, y, z Sellers / programsa, b, c All buyers in window buy from all sellers in window. Rationale for windows: Lower transaction costs. Packaged programs are relatively homogenous (methodology, risk, delivery schedule, etc). Buyers can participate in their choice of windows with different risk profiles.

20. Expressions of Interest Received New FacilitiesNext Steps Carbon Partnership Facility • October-November 2007 • Identification of programs in consultation with Regions • Bilateral consultations with potential participants from developed and developing countries • December 2007: Announcement at CoP13 (Bali) • January – March 2008: Joint consultative meetings with potential buyer and seller participants to finalize detailed design and governance of CPF; release of Information Memorandum • Spring 2008: CPF could start operations, if $500 million in purchase commitments has been reached by then. Forest Carbon Partnership Facility • Early November:Release of Information Memorandum • November (8 – 9) 2007: Additional consultations with NGOs and International organizations • November (12 - 13) 2007: Final Consultation Round on the Term Sheet and Information Memorandum (potential donors, sellers and buyers) • December 2007: Launch at CoP13 (Bali) • March/April 2008: FCPF declared operational