1. The emerging picture of carbon
financing and implications for renewable
energy and energy efficiency projects in
the MENA region – Situation analysis
Emerging Carbon Finance Instruments
GIZ Workshop
Nicolas Müller, Perspectives
29.04.2011, Tunisia
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2. Agenda
 Situation analysis
- CDM
- NAMAs
 Relevance for RCREEE member states
 Possible next steps
 Conclusion and recommendations
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3. Situation analysis: I - CDM
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4. Situation analysis: CDM (Carbon Markets)
 The CDM has created carbon revenues and has in most cases not
helped to structure project financing (due to associated regulatory
risks)
 EU remains the biggest demand center for CERs after 2012
 The demand for CERs after 2012 is highly uncertain (especially for
non-LDCs)
- The CDM is a bargaining chip for the EU in the international
negotiations
- EU language: replace/extend CDM by/ to a Sectoral Mechanism
- EU prefers CERs from LDCs after 2012
 PoAs might see preferential treatment in the future, especially when
scalable to a Sectoral Mechanism
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5. Situation analysis: II - NAMAs
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6. Situation analysis: NAMAs
 Compared to CDM, NAMAs can potentially involve larger sums of
financing in the long-term
 The topic of NAMAs is at its infancy
- 3 stages of NAMA development (depending on country status and
level of preparedness) – in our view:
- Phase 1: Support for NAMA selection and formulation (2011/12):
Studies, reports and showcasing NAMA towards donors (indicative
financial support: ~100,000 EUR)
- Phase 2: Support for NAMA final design incl. complete delivery
framework (2012/2013): Studies, reports, institution building, legislative
actions (indicative financial support: ~0.25 - 1.0 million EUR)
- Phase 3: Support in terms of large-scale funding for incremental costs
of NAMA implementation (2013 onwards): Technology implementation
and investments (indicative financial support: > several million EUR)
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7. Situation analysis: NAMAs
- First feasibility studies undertaken and further activities in the
pipeline (e.g. WB etc)
- First pilots are needed to define clear rules and procedures
- At the UNFCCC level the NAMA registry is a necessary first step
 Strings attached
- DCs might prefer LCDS first (to understand priorities and identify
unilateral and supported NAMA options)
- Unlikely that support will come without the condition to develop
a unilateral NAMA in parallel
- Most of the technical assistance tenders have a unilateral
component
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8. Situation analysis: NAMAs
 Donor funding
- WB, GEF etc continue to operate financing programmes
- Existing programmes are promised to be scaled-up
- New initiatives are promised to be established
- How much new money will be available is not always easy to tell
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9. Relevance for RCREEE Member States
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10. Relevance for RCREEE Member States
 Energy efficiency and renewable energy projects are well suited
projects for climate financing
 Suitability of mechanisms for RE and EE
 CDM (incl. PoAs)
Renewable Energy:
- large success due to early standardization of methodology
(ACM0002) (political will)
- supported by “marginal” profit of RE measures
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11. Relevance for RCREEE Member States
 CDM (incl. PoAs)
Energy Efficiency:
- Underrepresented in CDM due to many methodological challenges
(complex baseline determination and MRV due to energy flows, e.g.
CHP)
- Problems with additionality determination (measures at apparent
negative cost however no BAU implementation)
- Problems with complex interactions of measures
CDM PoAs most relevant for "smaller" projects types (equally suited
for EE and RE)
- Highly replicable very small project type
- Geographically dispersed
- Implementation can be spread over time
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12. Relevance for RCREEE Member States
 NAMAs
Renewable Energy:
- Opportunity of packaging grid-connected RE projects in a single
country-wide NAMA (relatively easy MRV)
Energy Efficiency:
- For ease of implementation option to focus on
- single technology (e.g. air-conditioning; refrigerators)
- single sector (e.g. buildings, industry)
- mix of both increases complexity
 NAMAs most relevant for "larger" projects, programmes and policies
 NAMAs should ideally encompass “nationally appropriate”
supportive actions (e.g. policy implementation (e.g. building codes,
feed-in-tariff), capacity building, etc)
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13. Relevance for RCREEE Member States
 Sectoral mechanisms
Sectoral Trading (installation level)
- Less of a stimulus for RE (see EU ETS)
- Large incentive for EE financing in covered installations
Sectoral Crediting
- Can provide large incentive for both RE and EE, if relevant
sectors (power, industry, oil and gas are covered) are included
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14. Possible next steps
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15. Possible next steps
 Identify national priorities (environmental, social and financial)
 Define and map policy/programmes/projects
- Priority
- Ease of implementation (what is the right tool?)
- Timelines
- Technology needs
- Investment needs
- National contribution
 Also: identify the right set of institutions
- Does it make sense to create a “national ESCO” (energy service
company) in order not to let opportunities get wasted?
- EE and RE investments in national companies/private sector/public
sector
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16. Possible next steps
 Identify suitability for parts of the portfolio
- CDM PoA with a view to scale up to a Sectoral Mechanism
- NAMA
 Establish network with the existing DCs institutions that financially
support NAMA conceptualization and identification, e.g.
- German International Climate Initiative
- WB Partnership for Carbon Market Readiness
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17. Conclusions
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18. The emerging picture of carbon financing and implications for
renewable energy and energy efficiency projects in the MENA region
 A Low Carbon Development Strategy can assist this process
 Countries will probably continue to see a mix of different sources of
climate financing that is best suited for the underlying project type
 Consultants might be able to assist in structuring and presenting the
policy/programmes/projects in light of on-going climate financing
discussion
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19. Many Thanks for
Your Attention!
Emerging Carbon Finance Instruments
GIZ Workshop
Nicolas Müller, Perspectives
29.04.2011, Tunisia
www.perspectives.cc · info@perspectives.cc © 2011 Perspectives GmbH