London Market Initiative

1. London Market Initiative Progress on Company led facility to support project identification and preparation in Africa Martin Hession UK DNA

2. CDM is a Market • Requires a Focus on Opportunities • It is driven by competition and least cost • CDM dependant on identification of potential - emissions and emission growth • Significant Investment Barriers in Africa • Need to focus on commercial opportunities and viable project opportunities

3. London and the Carbon Market • Worth $30 billion in 2006 • EU ETS = $24 billion • CDM = $5 billion • London Accounts for 50% of Trade • Several Funds with capitalisation in the hundreds of millions – (Total £3 - 4billion) • Small niche funds • Carbon Market Big Business motivated by profit – but Corporate Social Responsibility • CERS used for compliance across the EU ETS • Use of Credits Traceable to Projects • Evidence that some companies will pay a premium for some classes of project

4. Government Response to Framework • Secretary of State statements calling on industry to respond to Nairobi framework • Statements of Major industry associations • Repeat call in Autumn • Industry lead – with government support • Support includes trade networks • CCPO • UKTI

5. City Initiative - Vision Vision: • To boost Africa’s sustainable development and share in the CDM Focus • Commercial focus • Projects that suit local conditions • Maximise value for the host country and community • Fair and transparent allocation to buyers

6. “Africa Springboard Proposal” • The Springboard will be a for-profit sub-Saharan African CDM Project Development company. It will initially focus on developing CDM projects in sub-Saharan African countries where: • There is no DNA; or • There is a DNA but there are no projects • The Springboard organization will assist CDM development in these countries by establishing CDM projects and, if necessary: • Working alongside Government agencies and Multilaterals to establish and resource a DNA • Working to establish locally applicable Methodologies • Completing PDDs and working them through the registration process • Allocating the projects to end buyers through a fair and transparent allocation process that maximizes returns to the community that the project is in • Because of the difficulty and additional cost of developing projects under these conditions, the Springboard will initially be subsidized but expected to reach breakeven within [3] years.

7. Africa Springboard Implementation • Secretariat and Network of Offices • Project Identification per quarter • To the greatest extent possible, offices will be borrowed from the Springboard’s funding partners at least until the enterprise becomes cashflow positive.

8. Progress so far • Core Movers • Standard Bank, Climate Change Capital, Shell Trading so far • Business Plan Developed • Support of several others • Interest of major foundations • Looking for £1 million kick off • Financial Contributions • Secondments/Project Preparation • In-kind Offices and Networks • Look forward to reporting back at Bali

9. General Investment Climate Facility - £30million – dedicated to improving investment conditions in Africa Purchasing Government Offsetting Fund - Offset Travel Emissions via CDM – Contract Awarded to EEA/TEP Government Offsetting Standard – Proposing use of CDM Credits for Voluntary Offsetting – Controversial as many would prefer to pursue voluntary quantification Climate and Energy Focus Environmental Transformation Fund £800 million, Initial £50m to Forestry Congo Basin – Details under development and negotiation. Support to Clean Energy Investment Frameworks of WB and AFDB Access to Energy Carbon Finance Adaptation Review of Government Activities • Networks • REEEP Network – Renewable Energy and Energy Efficiency Policy Network. 11% of Projects in Africa • Biofuels Partnership – Brazil- SADC (Mozambique-South Africa) – Exploring Methodologies • Global Opportunities Fund FCO – Support to Methodological Development –