Dialogue. I ns ight . S olut ions.

P O L I C Y R E P O R T:

B E N C H M A R K I N G : A TO O L TO R A I S E A M B I T I O N TO WA R D S T R A N S F O R M AT I O N A L C L I M AT E O U TC O M E S

WRIT TEN BY:

Hannah Pitt, Stacey Davis, Ned Helme

D E C E M B E R 2015

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Acknowledgements This paper was conceived by Ned Helme, President, and written by Hannah Pitt, International Policy Associate and Stacey Davis, Senior Program Manager. A special thank you to Carmen Martinez, Communications and Events Assistant, who put this report together.

This project is part of the International Climate Initiative (IKI). The German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB) supports this initiative on the basis of a decision adopted by the German Bundestag.

The views expressed in this paper represent those of CCAP and not necessarily those of any other institution or individuals mentioned above. For further information, please contact Hannah Pitt at hpitt@ccap.org.

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Acronyms

CCAP Center for Clean Air Policy

CIF Climate Investment Funds

CDM Clean Development Mechanism

COP Conference of Parties

CO2 Carbon Dioxide

CSI Cement Sustainability Initiative

EU European Union

EU ETS European Union Emissions Trading Scheme

GCF Green Climate Fund

GDP Gross Domestic Product

GEF Global Environment Facility

GNI Gross National Income

GHG Greenhouse Gas

INDC Intended Nationally Determined Contribution

ITAP Independent Technical Advisory Panel

IPCC Intergovernmental Panel on Climate Change

IRENA International Renewable Energy Agency

LDCs Least Developed Countries

MBT Mechanical Biological Treatment

MSW Municipal Solid Waste

OECD Organization for Economic Cooperation and Development

SIDS Small Island Developing States

UNFCCC United Nations Framework Convention on Climate Change

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Table of Contents Acknowledgements ....................................................................................................................................... 1

Acronyms ...................................................................................................................................................... 2

I. Introduction ............................................................................................................................................... 4

Using benchmarks to guide ambitious NDCs ............................................................................................ 5

Using benchmarks in the GCF proposal selection process ....................................................................... 5

II. Current applications of benchmarking ..................................................................................................... 7

III. Approach to defining benchmarks for paradigm shift ............................................................................. 9

Application to the GCF ............................................................................................................................ 11

IV. Defining waste sector benchmarks for paradigm shift .......................................................................... 12

What do the data tell us about transformation in waste? ..................................................................... 12

Recent experience in the sector ......................................................................................................... 12

Factors that may impact paradigm shift in the waste sector ............................................................. 13

Defining benchmarks and application to the GCF .................................................................................. 18

Qualitative benchmarks in the waste sector ...................................................................................... 18

Quantitative benchmarks in the waste sector .................................................................................... 19

Evaluating transformation and improvement relative to the starting point ...................................... 24

V. Defining power sector benchmarks for paradigm shift .......................................................................... 26

What do the data tell us about transformation in renewable energy supply? ...................................... 27

Recent experience in the sector ......................................................................................................... 27

Factors that may impact paradigm shift in renewable energy supply ............................................... 28

Defining benchmarks and application to the GCF .................................................................................. 35

VI. Other considerations for international finance of mitigation proposals ............................................... 40

VII. Conclusion ............................................................................................................................................. 41

Appendix: IRENA renewable energy potential categories .......................................................................... 43

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I. Introduction Under a new international climate change agreement adopted in Paris in December 2015, countries committed to keeping the rise in global average temperature to “well below” 2 degrees Celsius, and for the first time agreed to pursue efforts to limit warming to 1.5 degrees Celsius. Two processes will be critical in determining whether the ambition of mitigation actions on-the-ground match the scale of effort required to thwart the worst impacts of climate change: 1) the process of defining, implementing, measuring and improving Nationally Determined Contributions (NDCs), which form the foundation of the 2015 Paris Agreement, and 2) the successful launch of the Green Climate Fund (GCF), established as the financial mechanism to the United Nations Framework Convention on Climate Change (UNFCCC), and intended to serve as a primary means of supporting climate change initiatives in the developing world.

As developing country Parties to the UNFCCC work to operationalize the mitigation goals set out in their NDCs, and seek financing from the GCF to achieve greater ambition than they can achieve on their own, the ability to evaluate the relative ambition of climate change mitigation action can help encourage replication of best practices and support transformative outcomes. However, understanding relative ambition requires looking beyond facile metrics; evaluations of national mitigation contributions and activities should consider the country context, including the presence of intrinsic barriers that make progress more difficult, as well as the level of effort on the part of the developing country to promote low-carbon investment.

This paper illustrates how benchmarks can be used to assess the relative ambition of climate change efforts in developing countries. Benchmarks can help developing countries define ambitious NDCs, as well as develop concrete projects and programs to implement their targets that can attract financing from international donors and the private sector. Benchmarks can also be used by potential funders to evaluate mitigation proposals in a fair and consistent manner in order to select the most ambitious proposals for funding1, and can provide greater transparency on donor funding priorities. Using examples from the municipal solid waste and renewable energy sectors, this paper demonstrates how benchmarks can support these evaluations.

We consider benchmarks that measure the degree of transformation– or “paradigm shift”—towards low carbon development in a given sector. Whereas benchmarks directly pertaining to abatement in the target sector (e.g., proposed reduction in emissions per kilowatt hour of electricity generated) will be important to evaluate the mitigation impact potential of a proposal, paradigm shift potential can be assessed against benchmarks that reflect fundamental changes in the sector (e.g., a shift away from fossil fuels to renewable energy sources).

In addition to minimum and/or high-performance benchmarks, a graduated scale of benchmarks can be used to assess relative performance within the same sector or sub-sector. We illustrate how these scales can be defined for the waste and renewable energy sectors, taking into consideration country conditions and starting points. These resulting assessment scales are designed with the GCF proposal approval 1 At the same time, we note that benchmarks alone are not sufficient to determine the amount of funding that should be allocated to a strong proposal.

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process in mind, but the recommended approach can be used to evaluate climate mitigation actions more broadly.

Using benchmarks to guide ambitious NDCs At the 2015 UNFCCC climate negotiations in Paris, the international community reached a landmark agreement to limit global greenhouse gas (GHG) emissions and strengthen the ability to deal with the impacts of climate change. In preparation, more than 185 countries representing more than 95% of GHG emissions put forward their Intended Nationally Determined Contributions (INDCs), which outline the specific pledges countries intend to take post-2020 toward reducing their emissions, as well as broad adaptation goals.2 These pledges will become Nationally Determined Contributions at the time each country ratifies the agreement.

While much emphasis has been given to the development of comprehensive emissions reduction goals within countries’ contributions, the focus of Parties will now turn to how to effectively operationalize these goals by converting NDCs into implementable actions that achieve transformational impacts. Thirty-five out of the thirty-nine highest emitting developing countries have indicated they need support to achieve greater ambition than they can achieve on their own.3 For countries seeking international support to fulfill their contribution, converting NDCs into policies and measures and financeable investment plans will be key to attracting public and private international financing at scale.

Developing countries can therefore benefit from understanding the level of ambition achieved by other countries in the same economic sectors and under similar circumstances. Such benchmarks can help policymakers evaluate the ambition of their country’s proposed actions, identify implementable policies and measures that can contribute to their NDC goals, and for those seeking support for implementation, assess the additional mitigation they could achieve with international financing.

At the global level, benchmarks can provide a way for the international community to compare the ambition of national contributions, taking into consideration country circumstances. The Paris Agreement provides a framework for a bottom-up and iterative process, wherein the ambition of national contributions will be ratcheted up every five years. In this context, sectoral benchmarks could be used to help assess progress toward stated goals and revise targets in each subsequent commitment period.

Using benchmarks in the GCF proposal selection process At the 9th GCF Board meeting in March 2015, the GCF Board agreed to use indicative minimum benchmarks and assessment scales to review funding proposals against the Fund’s six investment

2As of December 12, 2015, 158 INDCs had been submitted representing 185 countries (with the EU counted as one due to the common INDC). 3 Based on an assessment of the 39 highest-emitting developing countries that submitted their INDC as of October 2 2015. See: CCAP 2015. Converting INDCs into Action. http://ccap.org/assets/INDC-Conversion-Paper_11-25-15.pdf

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criteria (see Table 1).4 While this decision is expected to provide predictability in how proposals will be reviewed, as called for by the Board, further guidance is needed on how these assessment methodologies can be applied by the GCF Secretariat and independent technical advisory panel (ITAP) to contribute to an objective and transparent proposal selection process that supports ambitious projects and programs.

Table 1: GCF investment criteria for assessing program/project proposals

Criteria Description

1. Impact potential Mitigation and adaptation impact

2. Paradigm shift potential Contribution to transformational shift toward low-carbon, climate-resilient development

3. Sustainable development potential

Wider benefits and priorities (economic, social and environmental)

4. Needs of the recipient Vulnerability and financing needs of beneficiary country and population

5. Country ownership Beneficiary country ownership of and capacity to implement a funded project or program

6. Efficiency and effectiveness Economic and financial soundness of program or project

Indicative minimum benchmarks will be used to ensure proposals meet basic requirements, and some Board members have also suggested the use of “aspirational benchmarks”—defined, for instance, by best-practices in a given sector—to encourage greater levels of ambition. While CCAP plans to provide input on the development of these benchmarks, the focus of this paper is on the assessment scales, which will be used to evaluate the relative expected performance of proposals on each of the six investment criteria on a “low”, “medium”, and “high” scale. As such, this scaling system will serve as one key element by which the Secretariat and ITAP make funding recommendations to the Board. Moreover, it seems natural that the development of these scales will help inform the selection of minimum and aspirational benchmarks, as applicable.

A graduated scale based on how different countries perform across a particular metric can be used by the GCF Secretariat and ITAP to define 3-point assessment scales to evaluate funding proposals. Our recommended approach offers a methodology that can be used to define specific parameters for what constitutes a low, medium and high rating for each of the principal metrics associated with an investment criteria—or “coverage areas”5—which would then be weighted and summed to arrive at the

4At the 9th Board meeting, the Board requested the Secretariat to present indicative minimum benchmarks for consideration at the 13th Board meeting (July 2016). At the 10th Board meeting in July 2015, the Board agreed to apply the assessment scales to all medium and large proposals (above $50 million in total project size). See GCF decisions B.10/17 and B.09/05. 5 Coverage areas were defined by the GCF Board as the principle metrics for the six main selection criteria. Certain coverage areas that pertain to adaptation or mitigation only may not be relevant for all proposals. See GCF decision B.07/06 for GCF criteria and coverage areas.

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overall rating for the criteria. These assessments take into consideration differences across sectors, as well as country conditions and starting points where relevant. In addition, in order to take into account the special circumstances of particularly vulnerable countries (e.g., least developed countries (LDCs), small island developing states (SIDS), and African States), proposals from these countries should be evaluated in a separate comparison group.

This paper focuses in particular on assessment scales that can be used to evaluate the “paradigm shift potential” criterion, with an emphasis on the contribution of regulatory frameworks and policies to sector transformation. A similar approach could be used by the Secretariat and ITAP to assess proposals against each of the other five investment criteria.

II. Current applications of benchmarking Benchmarks to evaluate the ambition of climate action have been effectively applied in existing climate finance institutions, industry, and government. While benchmarks are often used to set minimum thresholds, benchmarks can also be used to denote a high level of performance, or to enable comparisons across a hierarchy of outcomes. Benchmark scales showing gradations of performance can be defined for both quantitative and qualitative indicators as a way to compare relative ambition and impact. In making these comparisons, it may be appropriate to take country or local circumstances and/or sector context into consideration. Examples of benchmarks used in international climate finance programs, to define government policies, and to support industry self-evaluations are described below and summarized in Table 2.

The following assessment methodologies are used in existing international climate finance programs:

• Climate Investment Funds (CIF) Private Sector Set-Aside: Proposals are evaluated on a set of quantitative and qualitative criteria specific to each target area (forestry, resilience, and renewable energy6) based on the rating of each criterion from “low” to “high” by a panel of experts. Individual criteria ratings are weighted and totaled to reach a final score.

• Global Environment Facility (GEF): Country resource allocations for the GEF are determined using a weighted index based on country performance on governance and key climate and environmental indicators.7 The addition of a GDP-based index to the GEF allocation formula aims to address the fact that countries with lower income levels face greater barriers in taking meaningful mitigation action.

Renewable energy benchmarks are used in defining United States and European Union (EU) policies:

6 The CIF has launched calls for proposals for private sector set-asides in three funding windows, the Forest Investment Program (FIP), Pilot Program for Climate Resilience (PPCR), and the Scaling-up Renewable Energy Program (SREP). 7 Note that this differs from the non-competitive, generally qualitative methodology used by GEF for evaluating project proposals noted by the Secretariat in the Investment Framework document.

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• United States Clean Power Plan: The United States Environmental Protection Agency’s approach to setting state mitigation goals sets regional benchmarks for emissions reductions from renewable energy generation based on historical renewable energy generation data aggregated to a regional level, supported and confirmed by projections of renewable energy market potential for states in that region.i

• EU Renewable Energy Directive: The Directive sets targets for renewable generation for each EU member state, taking into consideration the country’s starting point, renewable energy potential and energy mix.ii In addition, adjustments are made based on country income level and past efforts to increase the use of renewables.

Industrial benchmarking is used in European policy, and also helps industry assess its own performance relative to other installations:

• EU Emissions Trading Scheme (EU ETS) allocation benchmarks: Emission allowances are allocated to facilities based on performance relative to sector benchmarks, set at a level reflecting the average performance of the 10% most efficient installations in a sector or subsector in terms of emissions per unit product.iii

• Cement Sustainability Initiative (CSI): CSI defines emission-intensity benchmarks for the cement industry designed to help firms earn Clean Development Mechanism (CDM) credits. Baseline and “additionality” benchmarks are set at the average and the top 30% performing facilities, respectively. In addition to carbon credits, benchmarking allows firms to understand their current and future potential to improve efficiency and reduce emissions, which can lower energy costs. It should be noted that the CDM methane panel has not adopted the CSI’s recommended approach.

• The Solomon Index: The Solomon Index is used to benchmark the efficiency of oil refineries against others in the sector. This proprietary index captures the many different inter-dependent processes within a refinery that together produce a range of products. The index is developed so that refineries that are more complex (in order to process lower quality crudes or create higher quality products) are not disadvantaged relative to refineries that are less complex.

Other benchmarks are under development, including the following:

• Germanwatch and Yale University have each created indices that are used to evaluate country progress toward climate and environmental policy objectives, taking into consideration country income level. For example, Yale’s index differentially weights components of the index based on a country’s GDP per-capita in order to account for level of economic development. For both indices, performance on individual indices are aggregated and used to assign a final score, which is used to rank countries based on relative overall performance.

• The German government, through the Federal Environment Agency, has recently commissioned a study, “2°C Compatible Investment Criteria,” which investigates how public financial institutions can develop selection processes that evaluate whether project proposals are consistent with a 2°C global temperature stabilization goal. While some investments may be clearly compatible (e.g. renewable energy) or incompatible with a 2°C trajectory (e.g. unabated

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coal), the report examines criteria and benchmarks that could be used to assess investments where alignment is less clear (e.g. natural gas), taking country and sector context into consideration.

Table 2: Use of benchmarking to assess ambition in climate change mitigation

Institution or initiative Type of benchmark Sector-specific Considers country or state circumstances

CIF Private Sector Set-Aside Minimum and graduated scale Yes Yes

GEF country resources allocations

Graduated scale Yes Yes

U.S. Clean Power Plan RE targets

Benchmark based on top performers

Yes Yes

EU ETS Benchmark based on top performers

Yes Yes

Cement Sustainability Initiative

Benchmark based on top performers

Yes No

The Solomon Index Graduated scale Yes No

Germanwatch Graduated scale Yes Yes

Yale Graduated scale Yes Yes

III. Approach to defining benchmarks for paradigm shift The focus of this paper is to look at how benchmarks can be used to help countries develop effective strategies to reduce GHG emissions towards their national contributions, and to help the GCF and other potential funders fairly evaluate proposals, particularly when the impact or criterion being evaluated might seem somewhat subjective. We focus on one of the GCF investment criteria—paradigm shift potential—that seeks to understand how impactful the proposal will be in driving broad-based change towards low-carbon development. In an effort to elaborate a methodology that can be applied and result in useful comparisons in a variety of sectors, we discuss several general factors to consider: sector context; country circumstances; absolute achievement and improvement relative to starting point; and vulnerability. We also offer specific guidance on how the GCF can implement this approach.

Sector context: While the ultimate goal is to move towards decarbonization across the economy, a “paradigm shift” will necessarily entail different types of technologies and investments in each sector. Accordingly, sector-specific benchmarks offer a way to compare proposals in the same target sector. We look specifically at two sectors—waste and renewable energy—with a focus on identifying graduated benchmark scales that can be used to evaluate the degree to which proposed policy action is expected to contribute to transformational outcomes in the sector. In each case, we find that sector policy and technology hierarchies can provide a useful framework for prioritizing low-carbon strategies in a sector.

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These hierarchies can be used to assess the extent to which proposed policy and regulatory change will move a country “up the hierarchy”, driving investment in low-carbon development.

For example, in the waste sector, a graduated scale of benchmarks for policy transformation would closely coincide with approaches under the waste management hierarchy, which prioritizes waste prevention, followed by composting, recycling, reuse and recovery as opposed to disposal in landfills or dumps (see Figure 1). Ambitious policy can lead to improvements in the proportion of waste diverted from disposal altogether (e.g. through recycling or composting), as well as adoption of low- or zero-carbon alternative waste treatment technologies.

In the case of the power sector, the energy sector hierarchy prioritizes the reduction of wasteful consumption of resources through efficiency improvements and controlling demand growth, and a shift toward clean energy sources. Relevant benchmarks include reduced end-user energy intensity on the demand side, and the share of renewable energy in power generation on the supply side.

A graduated scale of benchmarks can be defined based on an analysis of recent experience in the sector across countries. Top-performing countries set a “high” benchmark, and additional “low” and “medium” performance levels can be defined to form a 3-point scale.

Country circumstances: Beyond the special circumstances of particulary vulnerable countries (addressed separately, below), an assessment of climate action should take into consideration fundamental differences in country circumstances that affect a country’s ability to spur low-carbon transformation in a given sector. For instance, in the renewable energy sector, key factors influencing the deployment of renewable energy technologies include renewable energy potential and the country’s domestic endowment of fossil energy (e.g. coal, oil, and natural gas). In sectors where country endowments of fossil fuels are significant determinants of the economic competitiveness of low-carbon investment, we recommend that policymakers assess ambition within groupings of countries that have similar endowed energy resources. For example, a proposed expansion in renewable energy penetration can be assessed within groupings of countries with comparable renewable energy potential and domestic fossil fuel resources.

Absolute achievement and improvement relative to starting point: In the evaluation of paradigm shift, priority can be given to 1) actions expected to achieve a high level of policy transformation in a given sector, and/or 2) actions that support a significant improvement in the ambition of low-carbon policy relative to the country’s starting point. Projects and programs that implement ambitious policy and regulatory reform can demonstrate best practice and encourage replication, while those that make significant improvements along the sector hierarchy—even if they do not reach the highest performance

Prevention

Recycling, Composting,

Reuse

Energy Recovery

Disposal

Figure 1: Waste management hierarchy

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level due to a lower starting point—can demonstrate the potential to “leapfrog” high emitting infrastructure and technology.

Vulnerability: The focus of this paper is to identify potential benchmarks that are applicable to middle income developing countries, including lower and upper middle income economies as determined by the World Bank’s country classifications.8 In order to take into account the needs of countries most vulnerable to the adverse impacts of climate change, including LDCs, SIDS and African States, as called for by the GCF Board, we recommend that prospective funders separately evaluate mitigation proposals from these countries.9 In the context of the GCF, a separate comparison group for these countries, together with the “needs of recipient” investment criterion and the previously-approved 50% allocation floor for adaptation activities—of which at least half must be allocated to LDCs, SIDS and African States—can ensure vulnerable countries have sufficient access to GCF resources.

Application to the GCF Assessing proposals against coverage areas: CCAP recommends evaluating funding proposals against a 3-point assessment scale for all coverage areas associated with a given investment criterion in order to arrive at the overall criterion rating. 10 With two to five coverage area metrics per criterion, coverage areas provide a simple and transparent way to assess expected performance for each criterion. This approach ensures that a proposal cannot perform highly on a criterion simply by scoring well on any one coverage area. For example, in the case of the paradigm shift criterion, the proposal should address each of the four coverage areas: potential for scaling-up and replication, potential for knowledge and learning, contribution to the creation of an enabling environment, and contribution to the regulatory framework and policies. Moreover, in order to promote balanced proposals in the overall assessment, CCAP recommends that the GCF Board prioritize proposals that perform adequately (e.g. receiving at least a “medium” rating) on all six investment criteria.

Benchmarks can be used to define specific parameters for what constitues a low, medium and high rating for each coverage area, taking into consideration differences across sectors and country conditions and starting points where relevant. Ratings across coverage areas could then be weighted and summed to arrive at the total score for each investment criterion.

8 We define middle income countries in this paper as lower and upper middle income countries, using the World Bank’s 2013 classifications of the world’s economies based on estimates of gross national income (GNI) per capita for the previous year. Definitions are as follows, expressed in GNI per capita:

High Income: $12,745 or more

Upper middle income: $4126-$12,745

Lower middle income: $1046-$4125

Low income: $1045 or less

9The GCF Secretariat faces a challenge in determining which countries are most susceptible to the impacts of climate change beyond the LDCs, SIDS and African States. CCAP recommends that the needs of recipient investment criteria be used to assess whether a proposal should be considered within this group. For example, the Secretariat could set thresholds for performance on the coverage areas under needs of recipient criteria that they could use to determine whether a country is considered “highly vulnerable” (e.g. based on income level per capita of the country and/or target population, proportion of total and/or target population exposed to climate change risks and impacts). 10 See GCF decision B.07/06 for GCF criteria and coverage areas.

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A job for the Secretariat and the ITAP: Due to the technical nature of the task, we recommend that the Secretariat and ITAP define the assessment scales, consulting with external experts as necessary. The Secretariat can use the assessment scales as part of their second-level due diligence evaluation, and the ITAP should consider the scales as part of their independent assessment, in accordance with the GCF’s proposal review process. The outcomes of these evaluations can then be included in the full funding proposal package submitted to the Board for their consideration.11

IV. Defining waste sector benchmarks for paradigm shift As a first example, we look at setting sector benchmarks to evaluate the degree of “paradigm shift” in the waste sector, a sector that accounts for 3-5% of global GHG emissions. In the waste sector, most GHG emissions come from methane gas—with 25 times the warming potential as CO2

iv—resulting from decomposing organic waste in landfills.

Strategies for abatement and transformation in the waste sector closely coincide with the measures in the waste management hierarchy, which emphasizes (in preferential order) waste prevention, composting, recycling and reuse, and energy recovery as opposed to disposal in landfills or dumps. The EU Waste Directive makes use of this hierarchy, emphasizing measures such as waste prevention, composting and recycling that lower emissions by reducing the volume of waste that is landfilled while also conserving raw materials and reducing energy use in manufacturing.v For the remaining waste, methane gas can be controlled or avoided through low-carbon waste treatment technologies (e.g. Mechanical Biological Treatment (MBT) 12, landfill gas to energy, and landfill gas capture and flaring13).

What do the data tell us about transformation in waste?

Recent experience in the sector Focusing on the top two sections of the waste management hierarchy, many industrialized countries have been increasingly focused on “upstream” interventions in waste management that divert waste from landfills (and prevent GHG emissions), including minimizing waste generation and increasing recovery of solid waste materials through recycling and composting. The EU in particular has made large strides through its ambitious directive on solid waste. Between 2001 and 2010, municipal waste disposed of in landfills in the EU fell from 55% to 41%, while the material recovery rate—defined as the proportion of the total waste stream that is recycled or composted—rose from 23% to 35%.vi

11The funding proposal package submitted by the Secretariat to the Board includes the funding proposal, a no-objection letter from the beneficiary country, the Secretariat’s review outcomes, and the ITAP’s independent assessment. See GCF/B.07/11, Annex VII. Available at http://gcfund.net/fileadmin/00_customer/documents/ MOB201406-7th/GCF_B07_Decisions_Seventh_Meeting_fin_20140619.pdf 12 MBT is a generic term for a variety of technologies that can be combined to mechanically separate/sort municipal solid waste and then treat it biologically through composting or anaerobic digestion. MBT facilities can produce simultaneously recyclables, compost, refuse derived fuels, and electricity depending on configuration. 13 Methane gas can be collected and treated in closed and active landfills to generate energy or simply recovered and flared.

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In general, middle income developing countries are behind wealthier nations in adopting technologies that limit methane emissions from landfills, as well as implementing strategies for waste prevention and material recovery. As waste generation rates increase with economic development, many governments have invested in sanitary landfills in light of the health and environmental risks of improper disposal. However, a focus on landfilling without efforts to control methane gas and divert waste from land disposal increases GHG emissions from the waste sector.

Currently, very little municipal waste is diverted from land disposal as a result of organized recycling and composting in middle income developing countries. Regional surveys suggest that 2.2% of municipal solid waste is recycled in Latin America and the Caribbean, and roughly 2% to 8% among middle and low income countries in Asia.vii,viii It is important to note, however, that estimates of organized recycling in the developing world may underestimate the true extent of recycling, since many countries have a large and active informal waste sector.

Factors that may impact paradigm shift in the waste sector Investment and performance in the waste sector is influenced both by income level and policy choices.

Income level

Relative to high income countries, developing countries face more limited financial capacity to invest in low-carbon waste management solutions. Comprehensive approaches that reduce the most emissions tend to have the highest up-front costs, yet governments in developing countries cannot fully pass the cost of low-carbon solid waste management along to consumers. In many developing countries, the cost of waste collection and disposal is largely assumed by municipal governments, with limited financial support from the federal budget. City governments are reluctant or unable to recover costs from citizens directly. The burden of these costs may be particularly high as countries industrialize and urbanize, which drives up wages and land values and increases the volume and complexity of the solid waste stream. Table 3 shows that although waste management expenditures per capita are highest among high income countries, upper and lower middle income countries spend the most as a percentage of gross national income (GNI) per capita.

Table 3: City solid waste budget per capita and as a percentage of GNI per capita by income level

Income level City solid waste budget per capita

City solid waste budget as a percentage of GNI per capita

High income $75 0.17%

Upper middle income $33 0.59%

Lower middle income $10 0.69%

Low income $1.4 0.32%

Income levels based on World Bank categorization in 2010 Source: Wilson D.C. et. al. Comparative Analysis of Solid Waste Management in 20 Cities. Waste Management & Research. 2012.

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Regulatory framework and policies for the waste sector

While financial capacity may act as a barrier, putting in place enabling policies to address key barriers to low-carbon investment in the waste sector has helped some countries achieve more than others for a given level of economic development.

The diverging experiences of relatively new EU countries offer a compelling example. Upon joining as member states, Hungary, Poland, Estonia, and Slovakia had similar income levels14, as well as comparable waste management practices that focused heavily on landfill disposal. As new members, each took on stringent EU legislative and regulatory frameworks for waste management and regional targets for the sector. They also received financial assistance to support compliance.

Hungary, Poland and Estonia were successful in introducing policies to support the achievement of the EU directives, including adopting incentive schemes that drive investment in low-carbon waste management technologies, and putting in place effective regulations to level the playing field for alternative waste management approaches. These efforts helped these countries move from material recovery rates around 2% in 2001 to rates of 20% or higher by 2010 (see Table 4).ix While still lower than many other EU and OECD countries, the improvements in recycling in these countries were among the greatest in Europe over the same period. Despite starting from a similar starting point, Slovakia’s policies primarily targeted the bottom step of the waste management hierarchy, with the result that material recovery rates increased by far less.x Case Study 1 compares the different approaches in more detail.

14 In 2001, Hungary, Poland, Estonia, and Slovakia were all middle income countries as classified by the World Bank. They have all since become high income countries.

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Table 4: Improvement in material recovery rate and waste management policy from 2001 to 2010 in Slovakia, Hungary, Poland, and Estonia

Country Material recovery

rate, 2001

Material recovery

rate, 2010

Waste management policy initiatives in the period 2001-2010

Slovakia 3% 9%

Limited standards on landfills (only apply to hazardous waste) and enforcement of illegal dumping, no separate waste collection for recyclables

Hungary 2% 21%

Ban on landfilling of untreated waste, interim targets for diversion of MSW from landfills, landfill tax, separate waste collection for recyclables, pay-as-you-throw policies, extended producer responsibility, programs to demonstrate and raise awareness around alternative waste treatment technologies

Poland 2% 26% Key policy has been significant increase in landfill tax

Estonia 2% 23%

Ban on landfilling untreated waste, targets for diversion of MSW from landfills, landfill tax, focus on closing old landfills and investments in fewer, higher-standard landfills and private MBT facilities

Sources: Aleksic, Danko. European Environment Agency. Municipal waste management in Slovakia. 2014; Herczeg, Márton. European Environment Agency. Municipal waste management in Hungary. 2013; Fischer, Christian. European Environment Agency. Municipal waste management in Poland. 2013; Fischer, Christian. European Environment Agency. Municipal waste management in Estonia. 2013. OECD Municipal Waste Statistics, Municipal waste, Generation and Treatment, 2001-2011.

Undoubtedly, many countries seeking international climate finance for waste sector programs will have more limited financial resources and capacity than EU member states, and may not be expected to match the achievements of these countries in the short term. However, the policies and achievements of Hungary, Poland, and Estonia offer benchmarks for the level of transformation possible for similarly-situated countries.

While directives such as those under the EU waste management framework can help provide long-term policy certainty to investors, more specific economic incentives and policy mandates are likely needed to spur low-carbon investment in the sector at scale. Some examples include:

• Economic incentives: Incentives such as disposal tariffs, landfill taxes and collection fees can level the playing field for alternative waste management technologies and practices, stimulating markets for recyclables, compost, energy generation from waste, and other waste products. These incentives can encourage waste minimization and recycling among manufacturers, waste disposal operators and consumers. In addition to affecting operating costs of the different waste management technologies, economic incentives can help address capital availability, financing costs and other financial barriers to investments in low-carbon solutions.

• Government policies: An array of government policies can provide near-term signals and long-term policy direction that will influence new investments in the waste sector. For example:

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o Mandatory targets for the proportion of waste diverted from landfills can encourage investment in material recovery and alternative waste treatment technologies.

o Renewable energy standards in the power sector can provide an added incentive for investments in energy recovery technology at landfills, particularly where electricity prices alone are too low to justify investments in waste management options that produce electricity (e.g., incineration and anaerobic digestion).

o Solid waste disposal regulations, including enforced bans on illegal disposal and landfill standards that raise the costs of conventional waste management practices, can be effective in spurring alternative waste management technologies. Standards for landfill performance can also encourage or require methane emission control technologies at landfill sites.

o Regulatory frameworks can enable an expanded set of waste management services to receive compensation (via the tariff) for waste diverted from the landfill. Regulations can also remove regulatory hurdles that preclude the use of non-hazardous waste for fuel and other products.

In some cases, countries that have already invested in small-scale landfill infrastructure may find themselves at risk of “lock-in” to a solid waste management system that precludes certain mitigation actions at disposal sites, such as landfill gas collection and treatment (with energy generation or simple flaring) and MBT. Other alternative practices such as composting may still be economically viable, even at smaller sites. It may also be possible to increase the scale of existing landfills, presenting other mitigation opportunities.

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Case Study 1, Hungary and Slovakia: Opportunities for rapid transformation of the waste sector through policy action

Figure 2: Material recovery rate, 2001 and 2010

Under the EU Waste Framework Directive, Hungary and Slovakia are obligated to meet the region’s 50% recycling target by 2020. These countries had similar per-capita income levels and comparable starting points for solid waste management in the late 1990s, with low material recovery rates and high rates of landfill disposal. Despite these similar baseline conditions, Hungary’s material recovery rate significantly surpassed its neighbor over the subsequent decade (see Figure 2), putting it on route to achieve a rate of 47% by 2020. In contrast, Slovakia is projected to achieve only 20% material recovery in the same time, which is far below the 2020 EU target.

The dramatically different trajectories of Hungary and Slovakia demonstrate the power of effective policy to make meaningful change in the waste sector. A comprehensive set of policy measures implemented by the Hungarian government focus on improving source separation, encouraging diversion of waste from landfills through a mix of regulation and economic incentives, and extensive public information campaigns. Although Slovakia, like Hungary, has adopted the EU legislative framework for waste, there has been a lack of strong implementation and enforcement of regulations, with 300 old and illegal dump sites still in operation. Illegal dumping and low fees for landfill disposal give weak economic signals to promote diversion of waste, and the country’s separate collection systems are in need of improvement. Moreover, there has been a lack of strong incentives to attract private sector investment in alternative waste treatment technologies.

Through relatively low-cost measures, Hungary has been able to achieve significant mitigation in the waste sector. Avoided emissions from recycling in 2010 were roughly 1,500 megatons of CO2 equivalent, or 33% of gross sectoral emissions. In Slovakia, avoided GHG from recycling were only 10% of gross emissions in the same year.

Sources: 1. Aleksic, Danko. European Environment Agency. Municipal waste management in Slovakia. 2014; 2. Herczeg, Márton. European Environment Agency. “Municipal waste management in Hungary.” 2013; 3. OECD Municipal Waste Statistics, Municipal waste, Generation and Treatment, 2001-2011.

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Defining benchmarks and application to the GCF

Qualitative benchmarks in the waste sector Transformational proposals in the waste sector will demonstrate how existing and proposed policies and incentives in the waste sector can drive low-carbon investment. We define a graduated scale of benchmarks that reflects the extent to which policies and incentives are expected to shift investment away from traditional landfills and towards alternative waste management technologies and practices. In the context of the GCF, the Secretariat and ITAP can use these benchmarks to define a 3-point assessment scale for the “contribution to regulatory framework and policies” coverage area under the paradigm shift potential criterion. Table 5 presents an illustrative assessment scale, with example policies and regulations for each rating level.

Table 5: Illustrative GCF assessment scale for paradigm shift potential, “contribution to policy and regulatory frameworks” coverage area, for mitigation proposals in the waste sector

Waste management hierarchy

Rating Example of policy measures Performance on the waste management hierarchy

High Waste prevention/reduction via Extended Producer Responsibility, unit pricing (“Pay as You Throw”) policy, source separation, landfill taxes and policies in “Medium”

Waste prevention

Medium Incentives and policies to promote recycling, compost, and alternative waste treatment technologies (e.g., landfill-gas-to-energy and MBT) and policies in “Low”

Energy recovery, recycling/ compost/reuse and MBT

Low Regulation and standards for landfills, ban on illegal dumping.

Regulated landfills, preferably with emission controls

*Below disposal is illegal dumping and burning, no formal solid waste collection.

Source: CCAP

Proposals that seek support solely for traditional landfill investments should be rated lowest by the GCF or ruled out entirely, as landfilling without efforts to control methane gas and divert waste from land disposal increases sectoral emissions. At minimum, countries should put in place landfill regulations and standards that raise the cost of conventional disposal, and any new landfills should be built at a large enough scale to be compatible with methane control options.

Prevention

Recycling, Composting,

Reuse

Energy Recovery

Disposal*

19

Countries that propose to progress further along the waste management hierarchy – earning a “medium” rating—divert waste from landfills (and avoid the associated landfill emissions) through recycling and composting, as well as promote waste treatment technologies that reduce the volume of disposed waste and/or recover methane gas, including landfill gas to energy, MBT, and incineration with waste-to-energy.

Landfill gas to energy technologies achieve emissions reductions as well as generate co-benefits in the form of electricity or fuel, increasing the likelihood of sustained political support and the economic viability of the investment. This is generally preferred to landfill gas capture, which involves flaring of biogas in closed landfills. While flaring reduces methane emissions from decomposition, it provides no byproduct of economic value.

MBT can significantly reduce waste volumes, and can produce a number of marketable products including compost, recycling, electricity, and refuse-derived fuel. Although countries that have already invested in landfills can later adopt MBT technologies, early investment in MBT can avoid the need for substantial land disposal infrastructure.

Incineration with waste-to-energy and other thermal processes also reduce landfill volumes and can be used to convert waste to usable electricity and/or heat. While prevalent in much of Europe, incineration with waste-to-energy is not viable in much of the developing world due to the high water content of solid waste, and the need for high-cost investments in air pollution control technologies at incineration sites.

Finally, the “high” rating corresponds to policy that incentivizes waste prevention, such as extended producer responsibility and other mandatory regulations that improve manufacturing methods, extend the lifetime of products, and reduce packaging, while encouraging consumers to demand these types of products. Although waste prevention is the most transformative approach, countries must also have policies that fall under the “medium” and “low” tiers in place which maximize productive reuse of waste products and help limit emissions from the smaller amount of waste destined for disposal.

Quantitative benchmarks in the waste sector Quantitative benchmarks that measure country performance in the waste sector can also be used to assess paradigm shift. We focus here on material recovery rate, although a similar methodology can be used to define benchmarks for other quantitative metrics related to the waste management hierarchy, such as share of products sold that are covered by extended producer responsibility, or share of methane emissions captured and used. Quantitative benchmarks of this type should not be used as rigid measures of performance, but instead can provide an indication of how policy change might be expected to impact key indicators of low-carbon transformation in the sector.

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To set benchmarks, we define high, medium and low levels of performance as follows15:

• High performance: Set based on the average of the top 10% of performers across all countries with reliable data. This is comparable to the emissions benchmarks used to allocate allowances under the EU ETS program.

• Medium performance: Set between the average level of performance for the sector, up to the high performance level. This medium level of performance could be used to set a minimum level of ambition.

• Low performance: Performance is below average for the sector.

Benchmarks can be defined both for the level of material recovery achieved, as well as the improvement in the rate over time. We focus here on the level of material recovery achieved.

Figure 3 shows material recovery rates for high and middle income countries (high, upper middle and lower middle income countries as defined by the World Bank) for the most recent year data are available.16 The average of the top 10% of performers (the “high” benchmark) comes to a material recovery rate of 59%. The average level of material recovery for the group as a whole (the “low” benchmark) is 24%. Using these data, breakpoints can be established along the curve in Figure 3 to define three performance levels (high, medium and low). These ranges are shown in Table 6 below.

15 The recommended definitions offer a suggested methodology to calculate benchmarks in a consistent manner across different metrics and sectors. 16 The most recent data on material recovery rate for the countries examined here ranges from between 2010 and 2012.

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Table 6: Illustrative benchmark scale for material recovery rate, high and middle income countries

Performance level Material recovery rate

High >59%

Medium 24-59%

Low <24%

Source: CCAP

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Sources: OECD Municipal Waste Statistics, Municipal waste, Generation and Treatment, 2010-2011; Hoornweg, Daniel and Bhada-Tata, Perinaz. The World Bank. What a Waste: a Global Review of Solid Waste Management. 2012.

High benchmark

Countries, ordered from high to low performance

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Benchmarks applied to middle income developing countries could be adjusted to reflect the more modest rate of material recovery even top performers in that group have achieved to-date. For example, a similar benchmarking analysis conducted over only middle income countries yields a different performance scale, with the results shown in Table 7.

Table 7: Illustrative benchmark scale for material recovery rate, middle income countries only

In the context of the GCF, the Secretariat and ITAP can use these quantitative metrics as broad guidelines to better understand the expected impact of proposed regulatory and policy changes on material recovery rates, and how the expected impacts compare to performance levels in similar countries. In Table 8, below, we provide an illustrative assessment scale that could be used to evaluate the contribution of waste sector proposals to policy and regulatory frameworks—one of four coverage areas used to evaluate the paradigm shift criterion.

Performance level Material recovery rate

High >21%

Medium 8-21%

Low <8%

Source: CCAP

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Table 8: Illustrative GCF assessment scale for paradigm shift potential, “contribution to policy and regulatory frameworks” coverage area, for mitigation proposals in the waste sector with quantitative benchmarks

Waste management hierarchy

Rating Example of policy measures

Performance on the waste management hierarchy

Material recovery rate (Proportion of waste stream recycled or composted)

High Waste prevention/reduction via Extended Producer Responsibility, unit pricing (“Pay as You Throw”) policy, source separation, landfill taxes and policies in “Medium”

Waste prevention >21%

Medium Incentives and policies to promote recycling, compost, and alternative waste treatment technologies (e.g., landfill-gas-to-energy and MBT) and policies in “Low”

Energy recovery, recycling/ compost/reuse and MBT

8-21%

Low Regulation and standards for landfills, ban on illegal dumping.

Regulated landfills, preferably with emission controls

<8

*Below disposal is illegal dumping and burning, no formal solid waste collection. Source: CCAP

Prevention

Recycling, Composting, Reuse

Energy Recovery

Disposal*

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Evaluating transformation and improvement relative to the starting point In the evaluation of paradigm shift, the GCF Secretariat and ITAP, as well as other potential funders, should prioritize proposals that achieve a high degree of policy transformation in a given sector, as well as those that demonstrate improvement along the benchmark scale relative to the country’s starting point. Using the waste sector example, we illustrate how the Fund can compare and rate the following elements:

Degree of policy transformation acheived: Prioritizing proposals expected to acheive ambitious policy and regulatory reform in a given sector can demonstrate best practice and encourage replication, particularly early on in the life of the Fund.

Improvement relative to a country’s starting point, or “leapfrogging”: Prioritizing proposals that support significant improvement in the ambition of low-carbon policy relative to the country’s starting point can help avoid lock-in to high-emission infrastructure and technologies and move a country directly to more advanced stages of low-carbon development.

Table 9 illustrates how this might work using the waste sector example. Scenario 1 shows the starting points and expected improvement along the waste management hierarchy for two hypothetical waste sector mitigation proposals to the GCF from countries of similar income levels. Country A has already achieved a high standard of solid waste disposal with about 95% of urban solid waste being disposed of in regulated landfills. With the support of the GCF, the country aims to increase recycling, composting and alternative waste treatment technologies through international equity support coupled with domestic tariff reform and a landfill tax that will put alternative technologies on a level economic playing field with landfills. The establishment of an internationally-financed equity fund would mobilize private sector investment in such projects.

Country B is meant to reflect the starting situation in the waste sector of the average Latin American country, where solid waste collection remains basic, limiting the economic feasibility of investments in alternative waste treatment technologies.xi The proposal will support a shift from open dumping to sanitary landfills through enforcement of a ban on illegal dumping, landfill regulations, as well as financial incentives to municipalities to support initial investments in low-carbon waste treatment approaches, including landfilling with energy recovery, recycling programs, and MBT.

While each proposal has the potential to move the affected country significantly along the waste hierarchy in Scenario 1 of Table 9, we believe that preference should be given to the proposal from Country A, which achieves a higher level of policy transformation.

In Scenario 2 of Table 9, Country A’s proposal remains the same, but in this case Country B proposes to move comparitively farther from its weak starting position. Its efforts would shift planned investments in landfills towards recycling, composting and alternative waste treatment technologies, thereby “leapfrogging” traditional disposal methods altogether. In this case, preference should be given to the proposal from Country B, provided their proposal demonstrates sufficient national capacity to make such a “leap”. Providing support to a country early on in their development of a formal solid waste

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management system can help prevent lock-in to carbon-intensive traditional landfill management infrastructure.

Table 9: Prioritizing waste sector proposals based on degree of policy transformation achieved and leapfrogging

Source: CCAP

Waste management hierarchy

Rating Performance on management hierarchy

Scenario 1: Preference for higher degree of transformation (Country A)

Scenario 2: Preference for leapfrogging (Country B)

High Waste prevention

Medium Energy recovery, recycling/ compost/reuse and MBT

Low Regulated landfills, preferably with emission controls

*Below disposal is illegal dumping and burning, no formal solid waste collection.

Prevention

Recycling, Composting,

Reuse

Energy Recovery

Disposal*

Country A’s proposal Country A’s

proposal

Country B’s proposal Country B’s

“leapfrog” proposal

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V. Defining power sector benchmarks for paradigm shift Electricity generation contributes well over half of total emissions in most countries, with the exception of regions like Central and South America where extensive hydropower resources reduce reliance on fossil fuels. A transformation of the power sector will therefore play an essential role in many countries in mitigating climate change. Preferred mitigation actions in the energy sector include the reduction of wasteful consumption of resources through efficiency improvements and controlling demand growth (see Figure 4). These approaches represent the most cost-effective and easily accessible means of reducing energy use. At the same time, stabilization of global GHG emissions will require a shift away from conventional fossil fuel sources for electricity generation towards low-carbon alternatives. These policy priorities – energy conservation, energy efficiency, expanded reliance on renewables electricity or other low/zero-emitting technologies - form the pillars of sustainable electricity management. A good example for such a policy approach is the California Loading Order, adopted by the state’s principle energy agencies to guide their energy policies and decisions.xii Similar priorities are set and implemented in the City of London Energy Strategy.xiii The continued reliance on conventional resources, particularly fossil fuels, is considered the least desirable course of action in these programs (see Figure 4).

In selecting benchmarks in the power sector, there are relevant metrics pertaining to energy use, which evaluate energy conservation and energy efficiency, and those related to deployment of low-carbon energy technologies, either using emissions rates or penetration levels of clean technologies. Because the electricity sector is growing rapidly and the climate risk due to fossil fuel lock-in at new generation facilities is significant in many developing countries, this analysis focuses on metrics that measure growth in renewable energy supply.17

Renewable energy proposals can be evaluated based on the extent to which proposed policies and measures are expected to support an expansion of the share of renewables in power generation. Specifically, we consider the change in the proportion of electricity generated from renewable energy sources, including wind, solar, biomass, and hydroelectric power.

We note, however, that different metrics will be needed to evaluate other types of policies in the power sector. For example, a cross-cutting cap-and-trade program might best be evaluated by a sector-wide indicator, such as absolute GHG emissions, or emissions per kilowatt hour, which measures the carbon intensity of power generation. In the case of energy efficiency, a range of indicators reflect different

17 A similar analysis would be possible to evaluate growth in nuclear energy.

Figure 4: The energy sector hierarchy

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levels of disaggregation, from aggregate sector-wide energy intensities (energy use per unit GDP) to indicators of energy use in sub-sectors and end uses, including specific energy services or end-use appliances. For example, key indicators of efficiency in residential electricity consumption include energy consumption per capita or per square meter of floor area for lighting and space heating and cooling, as these represent the largest electricity users in the residential sector in most countries.xiv

What do the data tell us about transformation in renewable energy supply?

Recent experience in the sector According to data from the International Energy Association, middle income developing countries —focusing on lower and upper middle income economies as defined by the World Bank—derived 30% to over 40% of power generation on average from renewable energy in 2011, with the majority of renewable generation from hydropower resources.xv Renewables, including hydropower, make up a smaller share of generation as income rises. High income countries have integrated the highest proportion of non-hydropower renewables (see Figures 5 and 6).

Figure 5: Share of hydropower in power generation by income group, 2011

Source: IEA Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2001-2011.

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Figure 6: Share of non-hydropower renewables in power generation by income group, 2011

Source: IEA Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2001-2011.

Within middle income developing countries there is a great deal of variation in the share of renewables as a percent of total generation. Leaders among middle income countries in renewable power generation fulfill nearly all of their electricity needs from renewable sources, yet half of the middle income countries examined derive less than 25% of electricity generation from renewables, and 10% have a 1% share or less.xvi

Factors that may impact paradigm shift in renewable energy supply There are a number of factors that drive variation in renewable energy generation within middle income developing countries, including: 1) the availability of renewable energy resources, 2) endowed fossil fuel resources, which impacts the relative cost of conventional fossil fuel and renewable energy resources, and 3) the national policy framework, which can help address key barriers and promote investment in renewable energy deployment. When evaluating how well a given country performs in boosting renewable energy supply as a share of total electricity generation, it makes sense to assess countries against those that have similar endowed attributes. This way, sector proposals are evaluated based on factors they can readily control: national policy frameworks. The different factors are discussed in more detail below.

Renewable energy potential

While renewable energy potential can be defined based on technical, economic and market conditions, at the most fundamental level, renewable energy penetration will be constrained by the technical potential, defined by the physical conditions including natural and climactic parameters, such as wind speed, solar radiation, and the number of sites suitable for hydropower and geothermal plants. The International Renewable Energy Agency (IRENA) rates the technical potential for major renewable energy technologies in a given country based on the presence of these physical conditions. The ratings

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suggest that countries with low renewable potentials are indeed constrained in their performance: countries deemed to have a high potential for a given resource have harnessed more of that technology than those with low potential (see Table 10).

Table 10: Share of renewable energy technologies in power generation for middle income countries by high and low technical potential for each type of renewable energy technology, 2011

Technical potential Share of renewable energy technology in power generation

Wind Solar Hydropower Geothermal

High 0.6% 0.02% 35.2% 2.5%

Low 0.3% 0.0% 3.0% 0.0% IRENA categorizes a country’s technical potential for each renewable energy technology based on a “low”, “medium” and “high” scale. In the table above, low potential includes countries in IRENA’s “medium” and “low” categories, because there are very few countries with IRENA’s classification of “medium”. High potential is the same as IRENA’s “high” category. See the appendix for details on how IRENA categorizes renewable potentials. Sources: IEA Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2011; IRENA Renewable Energy Country Profiles, 2012.

Yet even where resources availability is high, the extent to which countries have taken advantage of their renewable potential varies considerably. For example, while Nicaragua, Costa Rica, and Morocco have a substantial and growing share of wind power generation, the majority of middle income countries with high potential for wind have not tapped into this resource, as seen in Figure 7 below.

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Figure 7: Untapped wind potential: Share of wind in power generation among middle income countries with high wind potential, 2011

Sources: IEA Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2011; IRENA Renewable Energy Country Profiles, 2012.

A country’s ability to cost-effectively transition to low-carbon energy generation will depend on the types of renewable energy resources that exist domestically. Countries with substantial potential for hydropower are at an advantage. With the right environmental and social safeguards in place, hydropower is a commercially available technology that produces some of the most dependable and cost-effective renewable power available, and suitable sites can generate cheap electricity at scale.xvii In comparison, investment opportunities in other large-scale, non-conventional renewable energy resources are generally more limited. Geothermal is another commercially-viable resource, but generation is often hindered by the risky and capital-intensive exploration and exploratory drilling process. While dramatic technology cost reductions are helping wind and solar become cost-competitive with fossil fuel alternatives, these technologies have generally not been as commercially-competitive as hydropower to date. In addition, many developing countries face financial and grid-integration barriers that limit investments in these renewable technologies.

Fossil fuel endowment

A country’s endowment of conventional energy resources may explain why some countries have exploited their renewable energy potential while others have not. Countries with limited domestic fossil fuel resources have a higher-than-average incentive to pursue renewables in order to achieve energy independence. In contrast, pursuing renewables may represent a significant opportunity cost for a country with abundant and low-cost coal or natural gas alternatives. For these countries, exploiting

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conventional fuels can also offer a comparative advantage for the international competitiveness of export-oriented industries. Key considerations include:

• Net energy importers: Many of the countries with the most ambitious renewable energy policies have inadequate domestic fossil fuel sources to meet energy demand, and the transition to renewables serves as a means to end heavy dependence on energy imports. In Morocco, Nicaragua, and Turkey, achieving greater energy independence and a more diversified energy portfolio has been a major impetus for a shift to renewables. Figure 8 suggests that these goals have indeed encouraged investment in renewables. Compared to net energy exporting countries, net importing countries show somewhat higher shares of total renewables (about 4% higher) and greater changes in percentage share of renewables from 2001 to 2011.18 On average, net-exporting countries have actually reduced their share of renewables over this period.

Figure 8: Share and change in share of renewables in power generation for net energy importing and exporting middle income countries

Source: IEA Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2011; IEA, World Indicators, 2011.

• Availability of low-cost coal or natural gas resources: Renewable energy technologies may fail to be cost-competitive in countries with significant natural gas or coal reserves. Indeed, countries with higher natural gas or coal reserves relative to their total electricity consumption – an indicator of a country’s remaining stocks– generally have lower shares of renewable energy generation.19 Regression analysis suggests that the addition of coal reserves sufficient to move a

18 Net energy imports are calculated as imports minus exports for total energy, expressed in million tons of oil equivalent (Mtoe). See International Energy Association, World Indicators, 2011. 19 The ratio of coal or natural gas reserves to total electricity consumption provides an indicator of a country’s ability to switch to alternative energy sources. A high ratio suggests that at the current rate of consumption, a country can derive its power needs from that resource for many years in an economically feasible manner.

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country from the 25th to the 75th percentile in the distribution of countries by coal reserves would result in a 23% fall in the share of renewable energy in power generation. Likewise, a similar shift in natural gas reserves would result in a 10% fall in the share of renewable energy in power generation.20 Energy systems in countries with significant coal or natural gas resources may have developed to favor fossil fuels, making the addition of new renewable capacity costly as existing power plants are long-lived assets that take many years to depreciate. In addition, pricing and regulatory schemes may have developed to disadvantage renewable technologies. Moreover, there may be substantial political costs to a transformation of the energy sector, which may threaten jobs and economic activity associated with domestic production, and end long-standing consumer subsidies.

Regulatory framework and policies for the renewable energy sector

Regardless of a country’s energy resource endowment, policies to address regulatory and economic barriers are critical to promoting the deployment of renewable technologies. In particular, policy reforms that end discriminatory regulation and facilitate integration of renewable energy can encourage investment in renewable energy technologies. Examples include:

• Elimination or reduction of intermittency and capacity penalties; • Establishing clear legal frameworks for independent power producers; • Establishment of renewable energy targets (e.g. renewable portfolio standards); • Removing barriers to grid access through investments in grid infrastructure to reach locations

where renewable energy is generated, and/or the introduction of standard interconnection agreements for renewable technologies and priority grid access.

At the same time, economic incentives through removal of pricing structures and subsidies that disadvantage renewable energy technologies, including phasing out fossil fuel subsidies, can help put renewables on a level playing field with conventional alternatives. The provision of positive economic incentives (e.g. tax subsidies or feed-in-tariffs) can encourage investment in renewable energy generation.

Certain policy barriers to investment in renewable energies may be more prevalent in countries with low-cost conventional energy resources, where policy and investments may have historically favored fossil fuels. However, the rate of renewable deployment can be expected to increase over time as the necessary regulation, markets and infrastructure are put in place. For example, South Africa’s innovative Replacing this energy source with renewables is therefore less attractive. See: Siddiqi, Toufiq. Natural gas reserves/total energy consumption: A useful new ratio for addressing global climate change. 2002. 20 Regression analysis was conducted using data from low, medium and high income countries. Electricity generation data from International Energy Association Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2011, data on coal and natural gas reserves from U.S. Energy Information Administration, Coal and natural gas reserves, 2011, and data on electricity consumption from International Energy Association, World Indicators, 2011.

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renewable energy program has been able to bring substantial non-hydropower renewable energy generation online over the past years, helping to transform an energy system long-dependent on domestic coal. With virtually no wind or solar power generation in 2012, these sources now account for more than 4% of the country’s total generating capacity.xviii A competitive bidding program has attracted private investment and continuously lowered prices for clean energy, while significant public investments in transmission have connected wind and solar generation sites (see Case Study 2).xix

Although renewables may be more competitive in countries where conventional fuels are limited, domestic action to put in place enabling policies will likely be necessary to drive investment in renewable energy at scale. Historically dependent on imported energy, Nicaragua has introduced an ambitious regulatory and legal framework along with financial incentives to promote clean energy investments (see Case Study 3). This has helped the country achieve a dramatic increase in the share of renewables in power generation, including non-hydropower renewables like wind and solar.

The ambitious pace of change set by Nicaragua and South Africa imply that developing countries—both with and without significant fossil fuel resources—can achieve a meaningful shift in their energy matrix within their national context. GCF support can help accelerate this kind of transition in other countries that demonstrate similar commitment to transformational outcomes.

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Case Study 2, South Africa: Promoting renewables in fossil fuel-rich countries

South Africa’s innovative renewable energy program provides an example of energy transformation in a country historically reliant on domestic coal resources for power. Since its launch in 2011, the country’s Renewable Energy Independent Power Producer Procurement Program (REIPPP), has used competitive tenders to attract significant private sector investment to bring grid-connected renewable capacity online quickly and at competitive prices. More than $14 billion from local institutions and international investors has so far been committed for the construction of 3,922 MW of renewable energy capacity. Over the course of the program’s three competitive bidding rounds, renewable energy tariffs have come down sharply, with the average bid price for solar photovoltaic falling by 68% and wind by 42%. The procurement process has evolved to become more streamlined and transparent over subsequent rounds, building confidence in project proponents and investors.

In addition to economic incentives, South Africa’s energy strategy sets a renewable energy target of 17.8 GW of total installed capacity as well as a target to meet 42% of all new generation capacity developed up until 2030 with renewable energy. The government has implemented a number of policy tools and incentives to meet these goals, and has made substantial public investments in transmission to connect new renewable energy installations to the grid.

With 90% of electricity still provided by coal, much more remains to be done to scale-up investments in renewable energy in South Africa to meet the government’s ambitious targets. Under the REIPPP program, this includes continuing to invest in transmission to match the pace of renewable energy capacity additions, and continuing to streamline the procurement process to attract a broader set of investors. Beyond the REIPPP, an ongoing debate in the country involves moving from a national utility model to a partially privatized and liberalized energy market, which could further promote private sector investment in renewable energy.

Sources: 1. Eberhard, Anton et al. Public-Private Infrastructure Advisory Facility. South Africa’s Renewable Energy IPP Procurement Program: Success Factors and Lessons. 2014. http://www.gsb.uct.ac.za/files/PPIAFReport.pdf. 2. Papapetrou, Pamela. World Wildlife Fund. Enabling Renewable Energy in South Africa: Assessing the Renewable Energy Independent Power Producer Procurement Programme. 2014. http://awsassets.wwf.org.za/downloads/enabling_re_in_sa.pdf 3. “Country Energy Profile: South Africa.” Clean Energy Information Portal – reegle. 2014. http://www.reegle.info/countries/south-africa-energy-profile/ZA.

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Defining benchmarks and application to the GCF Based on our analysis, one way to evaluate the effectiveness of policy and regulatory changes to decarbonize the electric power sector is to assess the expected impact on the share of renewable energy as a percent of total power generation. As we have shown, key factors influencing deployment of renewable energy include renewable energy potential, as well as domestic endowments of fossil energy (e.g. coal and natural gas). Accordingly, we recommend that policy ambition towards renewable energy deployment be evaluated within groupings of countries that reflect similar renewable energy potential and domestic fossil fuel resource endowments.

Using the example of wind power, we illustrate how separate benchmark scales can be defined that measure expansion in renewable energy within countries of similar energy resources. The graphs below show the change in the share of wind energy in electricity generation from 2001 to 201121 using data for middle and high income countries (as defined by the World Bank) from the International Energy Association for two country groupings:

• Figure 9 shows the change in the share of wind in power generation for countries that are net energy importers22—and therefore are more likely to have a limited domestic endowment of conventional fuels.

• Figure 10 shows the change in the share of wind in power generation for countries that are net energy exporters, likely due to the availability of low-cost domestic fossil fuel resources.

To control for renewable energy endowment, both groupings include only countries with high technical potential for wind power generation as classified by IRENA.23 While additional groupings are possible, it seems reasonable to assume that countries proposing renewable energy projects will have relatively high potential for the proposed technology.

We define separate low, medium and high scales for each of these groupings based on actual performance across countries, using a similar methodology as for material recovery rate in the waste sector. In the case of the net energy importing countries, the top 10% of performers across countries within the group increased their share of wind power by an average of 11% from 2001 to 2011. This average defines the “high” benchmark for the group, while the lower benchmark is set at the average level of improvement for the group, or roughly 2% (see Figure 9). We define benchmarks for net energy exporters in a similar manner (see Figure 10). Ranges for both groups are shown in Table 11.

21Change in share of wind in power generation is the percentage point change from 2001 to 2011. 22Net energy imports are calculated as imports minus exports for total energy, expressed in million tons of oil equivalent (Mtoe). See International Energy Association, World Indicators, 2011.

23 See the appendix for details on IRENA’s classification.

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Figure 9: Change in the share of wind in power generation (2001-2011) for net energy importing countries with high wind potential

Sources: IEA Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2001-2011; IEA, World Indicators, 2011; IRENA Renewable Energy Country Profiles, 2012.

Figure 10: Change in the share of wind in power generation (2001-2011) for net energy exporting countries with high wind potential

Sources: IEA Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2001-2011; IEA, World Indicators, 2011; IRENA Renewable Energy Country Profiles, 2012.

0%

2%

4%

6%

8%

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18%

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Countries, ordered from high to low performance

Low benchmark

High benchmark

High Medium Low performance

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High Medium Low performance

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Table 11: Illustrative benchmark scales for change in the share of wind in power generation for countries with high wind potential

Performance level Change in the share of wind in power generation Net energy importers Net energy exporters

High >11% >7% Medium 2 - 11% 1 - 7%

Low <2% <1%

Change in share of wind in power generation is the percentage point change from 2001 to 2011 Source: CCAP

For renewable energy proposals to the GCF, we suggest using the benchmark scales above to define illustrative assessment scales for the “contribution to regulatory framework and policies” coverage area under the paradigm shift potential criterion, shown in Table 12 below. Proposals for wind power can be evaluated based on the extent to which the proposed policy actions are expected to support an expansion of wind energy generation, relative to countries with similar energy endowments. The table provides illustrative policies that can help overcome key barriers to promote the deployment of renewable energy.

Table 12: Illustrative GCF assessment scale for paradigm shift potential, “contribution to policy and regulatory frameworks” coverage area, for wind power generation proposals

Rating Example policy/regulatory measures

Change in the share of wind in power generation for countries with high wind potential and comparable fossil fuel endowments

Limited fossil fuels (net energy importers)

Substantial fossil fuels (net energy exporters)

High Comprehensive incentive and regulatory structure with certainty of enforcement and implementation, plus policies in “Medium”

>11% >7%

Medium Incentives to increase penetration of renewable energy and mandatory renewable energy targets with proposed enforcement structure, policy to facilitate renewable energy grid integration, removal of fossil fuel subsidies

2-11% 1-7%

Low Voluntary renewable energy target <2% <1%

Source: CCAP

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While these assessment scales reflect the expansion of renewable energy in power generation over time, a similar methodology can be used to define scales for the absolute level of renewable energy achieved. Similar to the waste sector, the GCF Secretariat and ITAP can prioritize proposals in the electric power sector that achieve a high degree of policy transformation—supporting high levels of renewable energy penetration—as well as proposals expected to support significant improvements relative to the country’s starting point, leapfrogging heavy reliance on a fossil-fuel based energy system. These evaluations should be made taking into consideration fossil fuel endowment and renewable energy potential.

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Case Study 3, Achieving energy independence through renewable energy, Nicaragua and Belize

For countries dependent on fuel imports, there is often a strong impetus to pursue renewables in order to achieve greater energy independence. However, a transformation of the energy matrix requires a predictable and comprehensive policy framework for renewable energy that addresses regulatory and structural barriers to investment, while mobilizing public and private funding through economic incentives.

Until recently, Nicaragua was highly-dependent on imported fossil fuels, fulfilling 80% of its electricity needs through imported oil derivatives. Despite significant renewable energy potential, in 2000 the country was far below its neighbors in its share of renewable power generation. Over the subsequent 10 years, the country increased the share of renewables in electricity generation from 20% to 34%, among the largest increases of any country over that time period. In addition to an increase in hydropower, Nicaragua also achieved the greatest increase in the share of electricity generation from wind among middle income countries over the same period.

The dramatic transformation of the country’s energy matrix can be attributed to a shift in government energy policy. The Promotion of Electric Generation from Renewable Sources Law, passed in 2006, made key changes to the existing legal framework, removing administrative barriers to investment in renewable energy projects and encouraging the participation of the private sector. Included in the law were a series of tax exemptions and fiscal incentives for renewable energy projects. As a result, the country has seen public and private funding flowing in. From 2006 to 2012 Nicaragua has attracted US $1.5 billion in investment in the renewable energy sector, which constitutes 5.6% of the country’s GDP.

Not all countries dependent on energy imports have been able to stimulate investment in renewables in the same way. Belize has the potential to ease its dependence on imported energy—half of the country’s electricity is imported from Mexico—by taking advantage of large hydropower, wind, solar and biomass resources, as well as high energy costs that make renewables more cost-competitive with fossil fuel alternatives. However, the government has not yet introduced renewable energy policies or incentives as part of its national energy plan, limiting the country’s progress in renewable deployment. In addition, the government has a limited ability to finance renewable energy investments from internal revenues in part due to the increasing burden of fulfilling electricity consumption subsidies which increase with growing demand.

Sources: 1. “Nicaragua: a renewable energy paradise in Central America.” The World Bank News, 25 October 2013. 25 August 2014. Web. http://www.worldbank.org/en/news/feature/2013/10/25/energias-renovables-nicaragua 2. Latin American Energy Organization and the United Nations Industrial Development Organization. Nicaragua, Final Report. 2011. http://www.renenergyobservatory.org/uploads/media/Nicaragua_Producto_1_y_2__Eng__05.pdf 3. “Country Energy Profile: Belize.” Clean Energy Information Portal – reegle. 2014. http://www.reegle.info/countries/belize-energy-profile/BZ 4. OAS. Toward a National Energy Policy: Assessment of the Energy Sector in Belize. 2011. http://www.oas.org/dsd/Energy/National_energy_policy_Belize.htm.

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VI. Other considerations for international finance of mitigation proposals Our recommended approach to defining benchmark scales can help the GCF and other potential funders identify ambitious proposals and decide which ones warrant financial support. For example, in the case of the GCF, we recommend selection of proposals based on performance on the six investment criteria, without regard to the amount of funding requested. However, once a proposal is selected for support, the benchmark scales alone are insufficient to determine the level of support needed to promote the transformational goals for each selected project and program. Some additional considerations include a country’s income level, a country’s unilateral efforts to promote low-carbon investment, as well as the estimated cost of overcoming the target barriers.

Income level is an important factor in determining the level of support. In particular, low-income countries may warrant higher levels of support due to national budgetary constraints and limited access to domestic sources of finance. Such countries may also have a more limited ability to pass on the incremental costs of low-carbon technologies to consumers. In contrast, countries with higher levels of economic development can be expected to make greater investments themselves.

A second important consideration is the degree of unilateral action committed to support decarbonization in the target sector. Autonomous efforts can include taking appropriate policy actions to require or promote low-carbon investment and enhance the effectiveness of international support in the target sector. It can also mean committing funds from the national budget proportional to the country’s economic resources. International finance can then be used strategically to overcome remaining barriers to low-carbon investment.

A third factor to consider in determining the amount of funding to allocate to a given proposal is the incremental cost to overcome the barrier(s) in question. For example, countries with sizeable initial barriers to action such as coal exporters planning renewable energy investments could warrant more support than a country with much lower barriers. In a similar way, countries that are investing in capital-intensive technologies such as MBT in lieu of landfills in the waste sector could warrant more support than a country that is investing in technologies that are already nearly economical.

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VII. Conclusion This report examines how sector-specific benchmarks can be applied to assess proposed climate mitigation actions. In particular, we illustrate how a graduated scale of benchmarks, based on sector policy and technology hierarchies, can be used to evaluate the expected contribution of policy action to low-carbon transformation in a sector.

As developing countries work to operationalize the mitigation goals set out in their NDCs, sector-specific benchmarks can help provide a better understanding of the achievements realized by countries with similar national circumstances. In the context of the GCF, the Secretariat and ITAP can use benchmarks to develop the 3-point assessment scales agreed on by the Board, and identify priority proposals in a given sector. This in turn can offer greater transparency to project proponents on donor funding priorities, contributing to the development of transformational proposals that are well-positioned to benefit from international support.

These tools are not intended to act as rigid or prescriptive standards. Instead, the approach assesses sector transformation taking into consideration country context, and rewards efforts that result in the highest levels of ambition, encouraging replication, as well as efforts that improve a country’s performance relative to its starting point. These considerations can promote the delivery of climate finance not only to top-performing countries, but also to those making meaningful efforts to address barriers and avoid higher-carbon development pathways.

Once priority projects and programs have been identified, funders can determine the level of support needed to promote the transformational goals for each selected proposal by taking into consideration income level, unilateral efforts already undertaken by the country, and the scale of financial and other barriers.

Our main findings based on an analysis of the waste and renewable energy sectors include the following:

The waste sector: Policy ambition in the waste sector can be assessed against a graduated scaled of benchmarks that reflect the extent to which proposed policies and incentives are expected to drive improvements along the waste management hierarchy. Assessments should take into consideration how far proposed policy will move a country “up the hierarchy”, as well as improvement relative to the starting situation in the sector.

Financial capacity may act as a barrier to investment in low-carbon waste management in developing countries. However, the meaningful improvements in low-carbon waste management achieved by Hungary and other new EU member states suggests that effective policy frameworks can help some countries achieve more than others for a given level of resources. While directives such as those under the EU waste management framework can help provide long-term policy certainty to investors, more specific economic incentives and policy mandates are likely needed to create new markets for alternative waste treatment technologies, shift incentives for consumers and waste operators, and mobilize private sector investment at scale.

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The renewable energy sector: The effectiveness of policy and regulatory changes in this sector can be evaluated based on their expected impact on the share of renewable energy as a percent of total power generation in the country, taking into consideration the country’s renewable energy potential and domestic endowment of fossil energy. Accordingly, we recommend that ambition is compared for groups of countries with similar energy resource endowments.

Through the achievements of countries like Nicaragua and South Africa, which have both dramatically shifted their energy supply over the last ten years toward renewables, we have seen that effective national policy and adequate unilateral efforts can lead to significant investments in renewable energy for countries with and without significant fossil fuel endowments. As we have seen, however, countries with substantial conventional energy resources may face greater barriers in achieving the same level of renewable penetration as those without. International finance can be used to help countries overcome these barriers provided that governments take substantial efforts to change domestic policies to support investment in renewable energy.

Moreover, as the cost of renewable technologies fall, there is an opportunity for developing countries to avoid the level of fossil fuel-dependency of many developed countries – and the costly lock-in to fossil fuels that will make a transition to renewables more difficult. They can instead meet fast-growing demand with a cleaner power mix.

While this paper focuses on paradigm shift potential, further work is needed to develop benchmark scales for additional investment criteria used to evaluate mitigation action, including sustainable development benefits and economic viability. In the case of the GCF, future work can help define assessment scales for the full set of six investment criteria. In addition, next steps could look at applying the concept to other sectors beyond waste and renewable energy.

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Appendix: IRENA renewable energy potential categories Technical renewable energy potential is determined by the presence of physical conditions including natural and climactic parameters, such as wind speed, solar radiation, and the number of sites suitable for hydropower and geothermal plants. The International Renewable Energy Agency (IRENA) rates the technical potential for major renewable energy technologies in a given country based on the presence of these physical conditions using a “low”, “medium” and “high” scale as shown in Table 13 below.

Table 13: IRENA renewable energy potential categories

Wind Solar Hydro Geothermal

High Several areas with average wind speed above 7 m/s at 50 m high

Several areas with global horizontal irradiation above 1800 kWh/m2 per year

One or more sites can be equipped with a large hydro- power facility (>10 MW)

One or more sites can be equipped with a large scale facility (>10 MW)

Medium Several areas with average wind speed between 5 and 7 m/s at 50 m high

Several areas with global horizontal irradiation between 1200 and 1800 kWh/m2 per year

One or more sites can be equipped with a medium scale hydro- power facility (1-10 MW)

One or more sites can be equipped with a medium scale facility (1-10 MW)

Low No area identified with average wind speed above 5 m/s

No identified area with global horizontal irradiation above 1200 kWh/m2 per year

One or more sites can be equipped with a small scale hydro- power facility (<1 MW)

One or more sites can be equipped with a small scale facility (<1 MW)

Source: IRENA Renewable Energy Country Profile Glossary, 2012.

i EPA. Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units; Final Rule. October 2015. http://www.gpo.gov/fdsys/pkg/FR-2015-10-23/pdf/2015-22842.pdf. ii Directive 2009/28/EC of the European Parliament and of the Council. http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32009L0028&from=EN iii European Commission. “Free allocation based on benchmarks.” September 2014. http://www.emissions-euets.com/product-benchmarks iv Environmental Protection Agency. “Overview of Greenhouse Gases.” http://www3.epa.gov/climatechange/ghgemissions/gases/ch4.html

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v Bogner, J., et. al. Waste Management. Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. 2007. http://www.ipcc.ch/pdf/assessment-report/ar4/wg3/ar4-wg3-chapter10.pdf vi Eurostat, European Commission, Municipal waste statistics, 2001-2012. http://ec.europa.eu/eurostat/statistics-explained/index.php/Municipal_waste_statistics vii Martínez Arce, Evelyn, et. al. Regional Evaluation on Urban Solid Waste Management in LAC. the Inter-American Development Bank (IDB). 2010. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=36846537 viii Visvanathan, C. and J. Trankler. Municipal Solid Waste Management in Asia: A Comparative Analysis. Environmental Engineering & Management, School of Environment, Resources and Development, Asian Institute of Technology. 2003. ix Eurostat, 2001-2012. x Aleksic, Danko. European Environment Agency. Municipal waste management in Slovakia. 2014. xi IDB, 2010.

xii Bender, Sylvia et al. Implementing California’s Loading Order for Electricity Resources. California Energy Commission. July 2005. http://www.energy.ca.gov/2005publications/CEC-400-2005-043/CEC-400-2005-043.PDF xiii Energy Hierarchy". The London Plan. Greater London Authority. February 2013. http://www.london.gov.uk/thelondonplan/climate/sustainable_energy.jsp xiv Houssin, Didier et al., Energy Efficiency Indicators, Essentials for Policy Makers. OECD and International Energy Association. 2014. https://www.iea.org/publications/freepublications/publication/IEA_EnergyEfficiencyIndicators_EssentialsforPolicyMaking.pdf xv International Energy Association Renewables Information Statistics, World - Renewable and Waste Energy Statistics, 2001-2011. xvi Ibid. xvii IRENA 2014. Renewable Power Generation Costs in 2014. International Renewable Energy Agency, 2015. http://www.irena.org/DocumentDownloads/Publications/IRENA_RE_Power_Costs_2014_report.pdf xviii Patrick, McGroatry. The Wall Street Journal. “South Africa Pushes to Expand Renewable Energy,” 13 September 2015. http://www.wsj.com/articles/south-africa-pushes-to-expand-renewable-energy-1442197718 xix ibid.

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