Bulgaria forum presentation


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  • A serious and immediate threat to development prospects, affecting disproportionately the poor.Increasingly severe warnings of the scientific communityDanger starts close to 2C warming above pre-industrial (likely the best we can achieve)Impacts already being felt, falling disproportionately on the poor (developing countries could bear 75-80% of the costs of CC damages while contributing for 35% of GHGs already in the atmosphere – 2% only for low-income countries)Economic growth alone is unlikely to be fast or equitable enough to counter threats from climate change. Action or inaction is not a matter of choice between growth and climate change.A climate smart world is possible if we:Act now, under the leadership of high-income countries to stay as close as possible: to address both the urgency of the problem as well as the tremendous inertia in the climate system, in infrastructure and human systems. Any delay will reduce development options for mitigation and adaptation and raise costs of action. Besides mitigation efforts to avoid the un-manageable, immediate and substantial adaptation efforts in countries that are most vulnerable (and already suffering from first signs of CC) are required.Act together, for equity and efficiency reasons: postponing mitigation in developing countries could double mitigation costs, and that could well happen unless substantial financing is mobilized. Act differently, to call upon the tremendous ingenuity the human race is capable of, in order to tackle a complex problem that affects all dimension of development.Still, a formidable challenge:Finance [scope of this presentation]Technology [radically transform energy systems, make climate-resilient investment] Capacity [to maximize impact of climate finance: build enabling environment, grab technology, financial innovation]
  • Bulgaria forum presentation

    1. 1. Climate change as a development challenge<br />JariVayrynen, Sr. Environmental Specialist, World Bank<br />Meeting the challenge is not a choice between growth and climate change…<br />a climate smart world is within reach if we act now, act together and act differently…<br />… and build on new finance, technology and capacity at scale.<br />
    2. 2. WB Strategic Framework for Climate Chance and Development<br />Objectives:<br /><ul><li>Enable WBG to effectively support sustainable development and poverty reduction, as climate risks and climate-related economic opportunities arise
    3. 3. Facilitate global action and interactions among all countries</li></ul>Key principles:<br /><ul><li>Working in partnerships guided by UNFCCC process
    4. 4. Country-led, country-driven, “no regrets” actions
    5. 5. Approach tailored to specific needs of diverse clients</li></ul>Knowledge &<br />Capacity<br />Bottom Up Momentum<br />MDB & UN<br />Partnerships<br />Resource <br />Mobilization<br />Climate <br />Investment <br />Funds<br />Regional / Country Strategies<br />
    6. 6. Financing Climate Change Mitigation<br />Scale of financing needs for mitigation estimated by UNFCCC at $200 billion annually<br />Concessional resources are very limited for low carbon investments in developing countries and transition economies<br />Mobilizing private sector finance is crucial<br />Market mechanisms can play a central role<br />
    7. 7. Finance scaled-up demonstration, deployment, and transfer of low carbon technologies<br />Country Investment Plans:<br /><ul><li>Support country development strategies
    8. 8. Leverage financial products of International Financial Institutions
    9. 9. Stimulate private sector engagement</li></ul>Clean Technology <br />Fund (CTF)<br />± $5 billion<br />Targeted programs with dedicated funding to pilot new approaches with potential for scaling up<br /><ul><li>Pilot Program for Climate Resilience: Mainstream climate resilience into core development planning
    10. 10. Forest Investment Program: Reduce emissions from deforestation and forest degradation
    11. 11. Scaling Up Renewable Energy in Low Income Countries</li></ul>Strategic Climate <br />Fund (SCF)<br />±$1 billion<br />
    12. 12. Investmentplans endorsed with a total funding envelope of US$1.85 billion<br />Average leverage US$ 1 to 10 <br />Pledges (+/-) US$5 billion<br />Energy Efficiency - Replacing inefficient lighting and appliances; expected<br />emissions reductions of 4 million tons of CO2 per year<br />Urban Transport - 20 bus rapid transit corridors with low-carbon bus technologies<br />Renewable Energy <br />Proposed CTF » $500 million leverages » $6.2 billion<br />Mexico<br />Turkey<br />Renewable Energy - Implementing "intelligent" grid management and control systems to support large-scale integration of wind power <br />Renewable Energy and Energy Efficiency - Promoting private sector development through credit lines to local development banks <br />Proposed CTF » $250 million leverages » 2.1 billion <br />Wind Power - From <1,000 MW to 2,500 MW of electricity from wind <br />Urban Transport - Six bus rapid transit corridors and five light rail route <br />Proposed CTF » $300 million leverages » $1.9 billion<br />Egypt<br />
    13. 13. 6<br />World Bank Carbon Market initiatives<br />World Kyoto Funds under implementation reaching over $2 billion in funding and about 130 ER purchase agreements signed<br />Progress with new facilities:<br />Exploring possibilities for further engagement<br /><ul><li>Carbon in Agriculture sector
    14. 14. Carbon Capture and Storage (CCS)</li></ul> Forest Carbon Partnership Facility (FCPF) <br />Operational since June 2008 - current donor pledges at $107 million<br />37 Developing Country Participants<br />Carbon Asset Development Fund (CADF) operational at €7 million<br />Carbon Fund currently €100 million (minimumtarget €200 million)<br />Carbon Partnership Facility (CPF)<br />
    15. 15. How do carbon markets work?<br />What is the underlying principle?<br />Cost-effectiveness: a ton of CO2 emitted anywhere in the world has exactly the same impact on climate change and should therefore be reduced/ mitigated where the cost of doing so is lowest.<br />Units = tons of carbon dioxide (or equivalent) allocated as part of an emission cap or “reduced” by a project or program activity. These units are labeled based on the market segment in which they are traded : AAUs, CERs, ERUs, EUAs, VERs, etc.<br />What is traded?<br /><ul><li>Lowers compliance costs for meeting emission reduction obligations; ;
    16. 16. Catalyzes financial and technology flows to developing countries to facilitate low-carbon growth;
    17. 17. Creates a global and long-term price signal to lower carbon intensity.</li></ul>What are the benefits?<br /><ul><li>Significant new investments and financial flows
    18. 18. Application of new technologies and financial instruments to reduce emissions at lower costs; and
    19. 19. Transition to a lower carbon economy better tuned to cope with future resource and environmental constraints. </li></ul>Why should this be of interest? <br />
    20. 20. Kyoto Protocol-based carbon markets<br />“Business as-usual” projected emissions by 2008<br />Project-based Offsets (CDM/JI)<br />Projected emissions increase between 1990 and 2008-2012<br />Sources of reduction<br />CDM: Offsets obtained from a non-Annex I country<br />JI: Offsets obtained from another Annex-I country;<br />Allowances from IET<br />Domestic actions<br />1990 Baseline<br />IET: Kyoto allowances obtained from another Annex-I country<br />Baseline emissions<br />Kyoto target<br />Kyoto allowed emissions<br />A significant amount of the reduction must be achieved through domestic measures<br />1990<br />2008-12<br />Beyond domestic actions to reduce emissions, a country can use trading to purchase reductions in another country to achieve compliance with its Kyoto obligations.<br />Examples of trading options include:<br /><ul><li>Buying emissions ALLOWANCES (called AAUs) from other countries with commitments which are below their Kyoto cap (International Emissions Trading)
    21. 21. Purchasing carbon OFFSETS from projects which reduce emissions
    22. 22. In developing countries (Clean Development Mechanism – CDM)
    23. 23. In economies in transition (Joint Implementation – JI)</li></ul>3<br />
    24. 24. Purchase of ERs<br />Emission<br />Reduction Units (ERUs)<br />ERU<br />Baseline emissions<br />Project emissions <br />Baseline Scenario <br />ProjectScenario<br />How does Joint Implementation (JI) work?<br />Industrialized country with an emissions cap<br />Domestic action<br />Purchase of allowances<br />$<br />Emissions target<br />$<br />Project benefits <br />from increased cash flow<br />
    25. 25. EU Emission Trading Scheme<br />91,910<br />Carbon Market Values in 2008 (in M US$)<br />Project-Based Transactions<br />Allowance Markets<br />Assigned Amount Units<br />210<br />JI<br />300<br />SecondaryCDM<br />CDM<br />6,500<br />26,300<br />
    26. 26. World Bank Carbon Finance Projects in Bulgaria<br />Joint Implementation projects:<br />Sofia District Heating<br />Pernik District Heating<br />Svilosa Biomass <br />Green Investment Scheme (GIS)–options study<br />GIS is a system where revenues from AAU trades are reinvested in environmental projects<br />To our knowledge Bulgarian Government has not yet concluded any GIS transactions<br />11<br />
    27. 27. 12<br />Conclusions<br />Climate change is fundamentally a development issue, not only an environmental issue<br />Huge financing needs<br />Carbon markets will continue to be play a major role in catalyzing low carbon investments in developing countries and transition economies<br />The World Bank, through a range of financial instruments and capacity building activities, is deeply engaged in this effort <br />
    28. 28. Thank You.<br />JariVayrynen<br />jvayrynen@worldbank.org<br />Please visit us online at<br />www.carbonfinance.org<br />