Ecology, Economy and Social Responsibility Carbon Finance Capacity Building Programme Carole Küng,...

Ecology, Economy and

Social Responsibility

Carbon Finance Capacity Building Programme

Carole Küng, ecos, Project Leader

CFCB Sao Paulo Workshop

São Paulo City Hall, 4 May 2010



2Sao Paulo Carbon Finance Workshop, April 26, Carole Küng

ecos

• Is an internationally working consultancy based in Basel, Switzerland.

• Since 1987 ecos develops, realises, supports and evaluates processes, projects and products that harmonise the needs of the economy, the environment and society.

• Is a facilitator and manager of public and business innovation processes for sustainable development.

• ecos initiated the CFCB programme together with its partners.




Agenda

Starting position

1. Why capacity building: CDM – a rewarding path for cities after

Copenhagen?

2. What is capacity development?

3. How can Carbon Finance capacity be integrated in Cities?

4. The CDM survival kit for city officers




Why capacity building?

CDM - a rewarding path for cities after Copenhagen?

Carbon Finance(with focus on CDM)

Facts •Bottom up market approach

accessible through regulatory mechanisms such as CDM

•CDM can continue after 2012 even without a treaty (ETS based on EU reduction targets)

•Co-financing of infrastructure based on actual CO2 reduction and its market price (risks)

Other climate related financing: Climate Finance, Namas...

•Continuous top-down political process.

•Dependent on donor countries.•(Up-front) financing or co-financing of infrastructure reducing CO2 (closing of financing gaps, technology transfer)

•Not finalised near-term -> future opportunity





• Investment in CDM is considered risky. Depends on: Reforms of the mechanism (no agenda yet) Development of supply (e.g. REDD) and demand (EU, Japan,

Australia, other new markets)

• Trend towards high quality CDM projects (e.g. gold standard), but overall decline of registration of new projects

• Probably neither Carbon nor Climate Finance (...) will dominate future climate mitigation efforts completely.

• A mix of both is most likely and promising, the complexity of financing through Carbon or Climate Finance will rise in the short term.

CDM - a rewarding path for cities after Copenhagen?





• There will be financing options.• A city task force/ cross-sectoral committee on climate which closely

observes the developments to seize opportunities is recommended.

=> Put the city as major emitter into the position to assess opportunities and to drive the processes.

Summary: CDM - a rewarding path for cities after Copenhagen?




Carbon Finance Challenge for a city administration

Technical know-how:Project as such + CDM

Organisational Development: Strategic, dynamic structures

Changing environment/framing conditions•Interdisciplinary, global challenges

•Financial- , Environmental-, and Social questions...

Tasks

The 3 building blocks of capacity development in a dynamic environment.





What happens in cities without structured Carbon Finance capacity? An example

Waste Manager

EconomyLaw

Environment

FinanceMunicipal Services

Welfare Transport

Carbon Finance/ CDM





What happens in cities without structured Carbon Finance capacity? An example

Waste Manager

CDM solid waste

Revenue 15%

(of estimated 200‘000t CER/year)

Contract

15% of 20‘000t CER/year

Ltd



10

Sao Paulo Carbon Finance Workshop, April 26, Carole Küng

TransportManager

?

?

EconomyLaw

Environment

Finance

Municipal Services

Welfare Transport

leaves

Waste Manager

Ltd

Know-how


Lessons learned

Interconnection! => Knowledge management!

City



11


Capacity development of city‘s CF management skills

Capacity Development as:“The process of strengthening the capabilities of cities in order to achieve their own goals on a sustainable basis.“

Success factors:•The city is put in a position to organise complex processes on its own. •A receptive organisational setting and process is put in place that can receive knowledge and expertise and convert it to practice and action.•Ownership of projects is guaranteed.•Continuous and frequent handholding and daily business support is available.



12


Capacity development of city‘s CF management skills

CFCB programme as a learning-by-doing approach: Working on a concrete project and developing it as a CF project. Establishing a nucleus institutional body of capacity within the city

administration that can manage Carbon Finance together with a network of technical experts.

Technical know-how Organisational Development

Tasks



13


CDM Pilot Project Idea for Sao Paulo

Environmental•GHG emmission reduction

•Reduction of waste going to landfills

Social•Local Job creation

•Improved health/ quality of life

•Awareness for resource management

Economic•Co-financing of Sustainable infrastructure through Carbon Finance

Sustainable waste treatment systems for Favelas

Task: Sustainable city development through high quality CF project



14


City CFCB Task team

Possible implementation structure in each city/ city group

CFCB-Programme

City GovernmentMayor‘s/Governor‘s OfficePolitical CFCB champion

CFCB to local link

LIPLocal Implementation Partner

City OfficersHead of Divisions

(General-) ManagersExpert officials

Technical/Legal/Finance

Private sectorTechnical Partners

Carbon Mgmt. Consultants

City ManagementCity Manager

Head of DepartementsExecutive CFCB champion

MoU/ LoICFCB – City

Financial sectorTraders, Asset management

Investors, banks

Mode of Cooperation

Agreement

Assignment

Cooperation

Strategic steeringImplementation

Later



15


Organisational set-up for cooperation with cities

MoU/ LoI between CFCB programme and each city/ city group: High-level supportLocal implementation partner (LIP)City representation

Mayor‘s / Governor‘s office -> political CFCB champion City task team (CTT)

– City Management -> executive CFCB champion (CFCB contact)– City Officers

Other City stakeholders Private sector: Technical partner(s)/carbon management consultant(s) Financial sector: Traders, Asset management, Investors, banks Advice and consultancy: Periodic short meetings for a more comprehensive discussion of

general operational and strategic matters.

Technical partner/carbon management consultant Identification of unbiased consultants and technical partners to be hired by the cities, is

mentioned as one of the key requests by the cities. Although technical-/carbon partners have a clear focus and range of responsibilities they

might be included in the LPSG as a guest to ensure coherence of the CFCB intervention.

KvR? tbd



16


City representation/City task team

CFCB-Political Champion: The CFCB activities can only be successful if they are under an explicit

and committed patronage of the Mayor/Governor of the city.

City Task team: Carbon Finance requires a cross-sectional approach. Thus the city has to be involved with the relevant departments forming

a City task team that mutually coordinates the CFCB involvement.

CFCB-Executive Champion Chairs the City Task Team Drives the CFCB activities within the City administration Main contact person to Local Implementation Partner and CFCB

Programme Management

KvR? tbd



17


City task team

City CFCB Task team

City OfficersHead of Divisions

(General-) ManagersExpert officials

Technical/Legal/Finance

Private sectorTechnical Partners

Carbon Mgmt. Consultants

City ManagementCity Manager

Head of DepartementsExecutive CFCB champion

1-2 years

Carbon and ClimateFinance Knowledge Hub

Strategic decisions

(PoA, Namas...)

Potential projects

Exchange of

knowledge gained

Tec

hnic

al

Exp

ertis

eK

ey K

now

-how

Effective

Interconnected

Learning



18


Local implementation partner (LIP)

Ensures ongoing support. Coordinates between the city and the technical partners and represents the CFCB programme in the city.

Core element of the locally based support for each city includes: Help-desk: Continuous consulting by email and phone regarding

issues arising from daily business that can be solved by immediate consultation.

The LIP has to be jointly defined.

KvR? tbd



19


CDM survival kit for city officiers: 1. Baseline

The 3 key points: 1. Baseline; 2. Additionality; 3. CDM Toolbox

Reveals how much GHG can be saved and therefore demonstrates

Carbon Financing potential (ex-post and market-dependent!)

Carbon credits = emissions

Carbon credits = emissions

Gre

en

hou

se g

as

em

issio

ns

Historical Trend

Project start

Project start

Time

Baseline

Actual emissions

Recall:



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CDM survival kit for city officiers: 2. Additionality


Proves that the targeted emmissions wouldn‘t be saved without

CDM (precondition for every CDM project)

Project without carbon revenue is profitable – but not

sufficiently profitable compared with

alternatives

Project without carbon revenue is profitable – but not

sufficiently profitable compared with

alternativesProject without carbon

element

Project with carbon

element

Carbon revenue makes the project

attractive relative to investment alternatives

Carbon revenue makes the project

attractive relative to investment alternatives

Investmentthreshold

Revenue /

NPV

/

IRR

Recall:



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The Carbon Finance add-on challenge!

CDM survival kit for city officiers: 3. CDM Toolbox

Project

Recall: CDM Project Cycle Depicts the step-by-step approach to CDM as well as the key institutions

6 to 12 months 1.5 months Crediting period of the project

Pro

ject

D

evel

op

erD

NA

DO

EC

DM

EB

PINPIN PDDPDD

Host country approval

Host country approval

Project validation

Project validation

Project registrati

on

Project registrati

on

CER issuance

CER issuance

Project verificatio

n

Project verificatio

n

http://cdm.unfccc.int/methodologies/index.html

Recall: CDM Methodologies Depict the approach for different project types

CDM Cycle



22


Roles and timing for starting a CDM project in Cities

Who

Key points

City officers/ Project teams

Technical experts

Timing

1. BaselineCollect basic data First estimate Before PIN

2. Additionality Announce project as under CDM

Initial adoption Before official announcement/ project tender

3. Toolbox •Refer to expert for choosing methodology•Become project participant and work on a contract•Plan project according to CDM project cycle

Technical expertise, guiding through project cycle

According to steps in CDM project cycle



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Thank you very much for your attention!

Contact:ecos team:

Daniel Wiener, [email protected], +41 61 205 10 10 Daniel Lehmann Pollheimer, [email protected], +41 61 205 10 56 Carole Kueng, [email protected], +41 61 205 10 46

t. +44.(0)207.983.4627



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References (amongst others)

CFCB: www.lowcarboncities.info

Carbon Finance Assist/Carbon Finance Unit, World Bank

www.climatefinanceoptions.org (WB/ UNDP)

t. +44.(0)207.983.4627

Ecology, Economy and Social Responsibility Carbon Finance Capacity Building Programme Carole Küng,...

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