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World Bank Carbon Finance Bangladesh April, 2008 Chris Warner & Arun Banerjee World Bank.

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Presentation on theme: "World Bank Carbon Finance Bangladesh April, 2008 Chris Warner & Arun Banerjee World Bank."— Presentation transcript:

1 World Bank Carbon Finance Bangladesh April, 2008 Chris Warner & Arun Banerjee World Bank

2 Outline of Presentation Bank carbon finance project cycle Bank carbon program Bangladesh and Bank carbon finance

3 Bank Carbon Finance Project Cycle

4 PIN Development and Letter of Intent 1.PIN developed and reviewed by Bank and approved 2.Bank and project sponsor sign a Letter of Intent which releases project prep funds Negotiation of Project Agreements Periodic verification & certification Construction and start up Project completion 3 months PIN development, approval and signing of Letter of Intent

5 Preparation and review of the Project Project Design Document and Bank review 1.Project Design Document prepared (a. Determine whether existing methodology is applicable b. may require baseline study) 2. Monitoring Plan prepared 3. Bank begins technical, financial, environmental and social due diligence Periodic verification & certification Construction and start up Project completion months Prepare the Project Design Document and Bank due diligence

6 Preparation and review of the Project Carbon Asset Due Diligence Validation process 1. Bank contracts the Independent Validator 2. Validator studies project design document, including baseline study and monitoring plan where applicable 3. Documents are posted for 30-day comment period 4. Validator issues a report and opinion 5. Registration request is submitted to the Executive Board (can be after the ERPA signature) Negotiation of Project Agreements Periodic verification & certification Construction and start up Project completion 3 months months Validation Process

7 Preparation and review of the Project Carbon Asset Due Diligence Validation process Negotiation of Project Agreement Periodic verification & certification Construction and start up 1. Bank prepares term sheets and draft ERPA and negotiations initiated. 2. Project Due Diligence is completed and World Bank internal approvals are secured. 3. Letter of Approval obtained from Host Country 4. ERPA is signed Project completion months Negotiation of Project Agreement (ERPA) Project Registration

8 Preparation and review of the Project Carbon Asset Due Diligence Validation process Negotiation of Project Agreements Periodic verification & certification Project Registration 1.Executive Board reviews the Validation Report 2.Executive Board registers the project Project completion 1-3 years Project registration by Executive Board

9 Preparation and review of the Project Carbon Asset Due Diligence Validation process Negotiation of Project Agreements Periodic verification & certification Project Construction and ER generation 1. At construction completion, Bank contracts Independent Verifier 2. Verifier checks that specifications of the monitoring plan are met (Initial Verification) 3. Project implementation starts 4. Project entity monitors in accordance to the monitoring plan Project completion 1-3 years Project Construction and ER Generation

10 Preparation and review of the Project Baseline Study and Monitoring Plan (MP) Validation process Negotiation of Project Agreements Periodic verification & certification Construction and start up 1. Verifier issues periodic verification report 2. Bank pays project sponsor for ERs 3. Certified ERs are issued by the CDM Exec. Board 4. Verification undertaken annually or as deemed appropriate Project completion 3 Up to 21 years Verification and Certification

11 Preparation and review of the Project Carbon Asset Due Diligence Validation process Negotiation of Project Agreements Periodic verification & certification Construction and start up Project completion Up to 21 years Crediting period either 10 years fixed or 7 year renewable (maximum 21 years) Project Completion

12 Questions, What problems and issues do you forsee ?

13 World Bank Carbon Program

14 Bank is the Trustee of carbon funds Industrialized Governments and Companies Developing Countries/ Economies in Transition Bank Managed Carbon Funds (Trust funds) Bank Managed Carbon Funds (Trust funds) $ $ Technology Finance $ $ Technology Finance CO Equivalent2 Emission Reductions CO Equivalent2 Emission Reductions

15 World Bank Carbon Funds & Facilities Total funds pledged: US$ 2.19 billion (16 governments, 66 firms) Prototype Carbon Fund: $180 million (closed). Multi-shareholder. Multi-purpose. Netherlands Clean Development Mechanism Facility: 220 (closed). Netherlands Ministry of Environment. CDM energy, infrastructure and industry projects. Community Development Carbon Fund: $128.6 million (closed). Multi-shareholder. Small-scale CDM energy projects. BioCarbon Fund: $91.9 million (Tranche One closed totaling $53.8 million). Multi-shareholder. CDM and JI LULUCF projects. Italian Carbon Fund: $155.6 million (closed). Multi-shareholder (from Italy only). Multipurpose. Netherlands European Carbon Facility: 51.6 (closed). Netherlands Ministry of Economic affairs. JI projects. Spanish Carbon Fund: 220 million (closed). Multi-shareholder (from Spain only). Multipurpose. Danish Carbon Fund: 58 million (closed). Multi-shareholder (from Denmark only). Multipurpose. Umbrella Carbon Facility: $737.6 million (Tranche One closed). 2 HFC-23 projects in China. Carbon Fund for Europe: million. Multi-shareholder. Multi-purpose.

16 The Bank and carbon finance 75 projects registered with the Executive Board. This is the third largest number of registered projects of any organization 102 emission reduction purchase agreements signed 207 million tCO2e committed in signed emission reduction purchase agreements with options on several million tons Another 90 projects under active preparation 29 ERPAs signed in East Asia and South East Asia Executive Board has approved 24 Bank methodologies (over 27% of all methodologies)

17 New Initiatives Carbon Partnership Facility : First Tranche = 350 million Estimated date of operation: September 2008 Forest Carbon Partnership Facility : $300 million Estimated date of operation: June 2008 Existing Carbon Funds Investible Capital: $2.2 bill. Committed Capital: $1.6 bill. # Volume Purchased (mill. tons CO 2 ) Value (US$ mill.) WBG financed Projects 2831$246 Non-WBG financed Projects 74176$1,395 Total102207$1,641 Leverage*: * (Total Investment Cost divided by Total ERPA Value) Pipeline9462$617 Banks Carbon Funds Portfolio Market share (project based): 17% ( ) 5% (2006)

18 Bangladesh carbon finance opportunities

19 Bangladesh: carbon finance setting Carbon Finance opportunities reflect the size, and structure the economy, infrastructure status and household incomes –150 million inhabitants (75% rural) – 6 municipal corporations (18 million inhabitants) –63% of population employed in agriculture –Per capita GDP: $1400 (purchasing power parity) –Main resources are arable land, natural gas (some coal), timber, –Power (± 5,000MW installed): mostly gas; major power shortages

20 Bangladesh: key carbon finance opportunities Rural household power: –solar home systems*, biogas and cooking stoves Rural power: rice husk Urban: demand side management (energy efficient lighting*) Brick making: more energy efficient technologies* Gas leakage avoidance ? Municipal solid waste: composting and landfill gas methane capture Most carbon finance opportunities will be small and need to be bundled together or developed through programs

21 Bangladesh Solar Home Systems program Install 1 million solar home systems IDCOL (192,000 CERs) and Grameen (372,000 CERs) are the lead implementing agents Purchase period 2008 to 2013 ERPA signed, December 2007 Projects under validation

22 End

23 Industrialized country with an emissions cap Baseline emissions Baseline Scenario Developing country/economy in transition with no emissions cap Emission Reductions (ERs) Project emissions Project Scenario Carbon trade Emissions target Purchase of allowances Developing country/economy in transition benefits from technology and financial flows $ $ ER Purchase of ERs Domestic action

24 PoA Develop an overall program framework which the Executive Board approves CPA Develop subsequent mini projects or program activities with streamlined approval by the executive Board Program of activities One POA & Many CPAs : One Methodology


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