From PoAs to NAMAs a pilot case

1. From PoAs to NAMAsa pilot case

2. Agenda Context of discussions Objective and concept for NAMA Pilot Case Introduction to example PoA – EE in SME Steel cluster 2 2

3. The Context Indian Context • India is committed to contribute to the global efforts towards Climate Change mitigation • Mitigation target envisioned in Copenhagen Accord: Reduce emissions intensity of GDP by 20-25% by 2020 in comparison to the 2005 level. • Successful participation in the flexible Kyoto mechanisms; but with limited impact on EE projects • Climate change policy in India embraces a vision in the form of NAPCC and related 8 missions and has evolved several measures and actions International discussions context • On the Agenda since Bali Action Plan 2007 • Cancun Agreements differentiates NAMAs into three types (Unilateral NAMAs; Supported NAMAs; Credited NAMA)  How to come to fast track practical concepts and pilot NAMAs? 3

4. Low Carbon Development Policy NAMA PoA CPA … CPA CPA Bridging the Gap – PoA to NAMAWhy PoA as starting point? • Various strategies are possible • Top-Down • Bottom-Up • Combination • Bottom-Up strategy for NAMA development can use elements of a PoA • Baseline definition • Monitoring and Verification • Incentive systems • Assumption • Fast track pilot schemes using PoAs are possible Scoping study for four case studies

5. Bridging the Gap – How to get from PoA to NAMAResearch Study* • Module 1: Understand the PoA: scope, eligibility criteria, implementation arrangements, targeted GHG emission categories • Module 2: Analyse four key technical PoA design elements and their suitability for scaling up: • eligibility criteria / baseline setting procedure / MRV process and PoA management and • identify if PoA design is a) already fully applicable, b) needs to be adjusted or c) needs to be developed for NAMA design. • Module 3: Evaluate the domestic policy & institutional framework to assess whether the existing framework is supportive of NAMA implementation or not. • Module 4: Identify follow-up actions for NAMA readiness based on the need for adjustments and new designs as identified • *Study by South Pole on behalf of German Ministry for Environment and KfW

6. Case Study India – PoA EE in SME Steel Cluster • PoA Objective: Improve Energy Efficiency of furnaces and burners in Indias SME Steel Industry by 20-50%. • Scope: Nationwide – In Clusters / Jodhpur cluster first CPA • PoA Managing Entity: Small Industries Development Bank (SIDBI) supported by India SME Technology Services (ISTSL) • GHG Emission Source: Reduce fossil fuel use in SME Steel Mills • Methodology: AMS II. D Energy Efficiency and fuel switching measures for industrial facilities. • Module 2: Analyse four key technical PoA design elements and their suitability for scaling up: • eligibility criteria / baseline setting procedure / MRV process and PoA management and • identify if PoA design is a) already fully applicable, b) needs to be adjusted or c) needs to be developed for NAMA design. • Module 3: Evaluate the domestic policy & institutional framework to assess whether the existing framework is supportive of NAMA implementation or not. • Module 4: Identify follow-up actions for NAMA readiness based on the need for adjustments and new designs as identified • *Study by South Pole on behalf of German Ministry for Environment and KfW

7. Furnace without a door, the opening filled with non-insulating materials. Inefficient burner in operation in one of the SRRM Conventional refractory brick lining in one of the annealing furnaces. Measures of the PoA • Controlling supply of excess air • Installation/retrofitting Recuperators • Insulation of furnace surfaces • Retrofitting/Modification of furnace doors • Fuel preparation and heating • Automation of furnace operation Furnace without a door, the opening filled with non-insulating materials.

8. Advantages and Limitations of the PoA Advantages • National scale of PoA • Nationally operating, state owned, privately acting CME • PoA goals contribute to Indias political will to reduce GHG Emissions • Investments straight forward • Target group are bankable SMEs Limitations • No new facilities allowed – only existing • No capacity upgrade allowed • Only the 6 measures are allowed • Changing the fuel type not allowed • PoA is limited to steel sector

9. Draft NAMA Design Sheet (of desk study) • Scope: Energy intensive SME Sector (not covered under Perform, Achieve Trade Scheme) that operates similar equipment • glass, cement, pulp and paper, textile etc. • allows for measures not permitted under AMS II.D • Management: Under National Mission for Enhanced Energy Efficiency • Nodal Agency: Bureau of Energy Efficiency. • Potential Implementation partner: SIDBI using similar incentive structure (subsidised loan scheme). • Baseline setting: standardisation approaches and benchmark system must be developed, MRV and eligibility criteria can be adapted. • Link to carbon market: PoA issued CERs should be deducted from NAMA achievements when a NAMA target is defined. Further linkages tbd.

10. Conclusions and next Steps • Up-scaling is possible, but adaptation work would need to be undertakten • Evaluation of SME to be included needs to be done • Adaptation of MRV Structure • Development of standardised Baseline based on AMS II. D

11. Contact KfW Carbon Fund KfW Bankengruppe Palmengartenstrasse 5–9 60325 Frankfurt am Main Germany Tel +49-69-7431-4218 Fax +49-69-7431-4775 klimaschutzfonds@kfw.de Contact us for further information! Carolyn Neufeld Tel +49-69-7431-3233 Carolyn.neufeld@kfw.de