WORLD BANK CARBON FINANCE UNIT

CARBON PARTNERSHIP FACILITY

CARBON PARTNERSHIP FACILITY

Buildingg a solid pportfolio

Growing from an early trailblazer, the World Bank Carbon Finance Unit has built a
mature portfolio while continuing to pioneer new products.
Growth of carbon funds

Global diverse experience

p

Crowding-in of the private sector the World Bank

catalyzes markets and pioneers new products.

The World Banks extended carbon finance family is

large 82 governments and private sector companies
together account for 28% of all CDM projects.+

The World Banks carbon funds are developing

projects in 57 countries for many their first
project.
j
carbon finance p

The World Bank is also a leader in forest carbon

development and active in many cutting-edge CDM
technology types and programs of activities.

Value of CDM & JI Transactions (per year)

(US$ billion)**

$6.9
billion

$5.9
$
billion

6
World
Bank

Other

4
2

World Bank active projects

$7.9
billion

WB
market
share

$3.0
billion

$2.6
billion
31%

14%

15%

$0.2
billion

$0.5
billion

2003

2004

39%

5%

3%

4%

1%

2005

2006

2007

2008

2009

0
2000

2001

2002

CARBON PARTNERSHIP FACILITY

+Source: UNEP RIS

**Source: State and Trends of the Carbon Market, 2010;

Up-to 2012 vintages only

Country with active project

The Carbon Finance Units first ggeneration of carbon funds

April 2000

May 2002

March 2003

March 2004

May 2004

Prototype Carbon
Fund

Netherlands Clean
Development
M h i
Mechanism
F
Facility
ili

Community
Development
C b Fund
Carbon
F d

Italian Carbon
Fund

BioCarbon Fund
Tranches I & II

Worlds First Global

Carbon Fund

Pioneer purchaser of
CDM

Poorest country focused

Government & private

sector

Afforestation,
Reforestation, REDD+
& soil carbon

$220,000,000
$
,
,

**

$128,600,000
$
,
,

$155,600,000
$
,
,

$90,400,000
$
,
,

August 2004

January 2005

March 2005

August 2006

March 2007

Netherlands
European Carbon
Facility

Danish Carbon
Fund

Spanish Carbon
Fund

Umbrella Carbon
Facility Tranches
I & II

Carbon Fund for

Europe

Purchasing JI

Government & private

sector

Government & private

sector

Adding liquidity to
market at key moments

Governments & private

sector

**

90,000,000

220,000,000

904,100,000

50,000,000

** Unpublished

CARBON PARTNERSHIP FACILITY

The World Bank has established public-private partnerships

to pioneer carbon markets
Public sector partners

CARBON PARTNERSHIP FACILITY

Private sector partners

The Carbon Partnershipp Facility

y
A fund to scale up investment in clean technology through programmatic and sectorbased approaches
Mission

Supportsystematicapproachestolowcarbon
growthbycountriestocatalyzeinvestmentin
cleantechnologies

ThegovernanceoftheCPFisbasedona
partnershipofbuyersandsellersofcarboncredits

CPFutilizesprogrammaticmodalitiestoscaleup
emissionreductionprogramsbeyondprojectby
projectapproach

Carbonfinanceincludedinintegratedfinancing
packageslinkedtoBankoperations

Developinnovativemethodologiesinareassuchas
energyefficiencyandcitywideprograms;and
promotetheintroductionofnewtechnologies

CARBON PARTNERSHIP FACILITY

Participation
p

132millioninbuyercommitmentstoCarbon
Fund;1sttrancheisclosed

AgreementssignedwithSellerParticipantsfor
Agreements
signed with Seller Participants for
sevenprograms

MoroccoSolidWasteManagement

VietnamRenewableEnergy

Brazil Solid Waste Management

BrazilSolidWasteManagement

AmmanGreenGrowth(Citywideapproach)

ThailandCleanEnergy

ChinaHebei RegionalFarmBiogas

T
TanzaniaRenewableEnergyProgram
i R
bl E
P

Undernegotiation:EgyptWindProgram

11millionindonorcontributionsinCarbonAsset
Development Fund (for program preparation and
DevelopmentFund(forprogrampreparationand
implementation;methodologydevelopment)

Governance/Participants
p
Participants

Governance

The CPF is a ppartnershipp of Buyer

y and Seller
Participants, also includes Donors and Host
Country Partners

Partnership Committee is comprised of an equal

number of Buyers and Sellers and makes decisions
on key policies

All Participants are entitled to attend and to

participate in Partnership Committee meetings

Decisions on programs to include in the First

Tranche portfolio are made by Buyers

Buyer Participants: Governments of Spain

Spain,
Norway and Sweden; Endesa SA, E.ON
Seller Participants: Caixa Economica (Brazil),
Min. of Industry and Trade (Vietnam), Fonds
Dequipement
D
equipement Communal (Morocco),
(Morocco) Greater
Amman Municipality; Provincial Electricity
Authority (Thailand), Hebei Green Agriculture Co.
China), Rural Electricity Agency (Tanzania)
Donors: Governments of Spain
Spain, Norway
Norway, Italy;
European Commission
Host Country Partner: NDRC (China)

Buyers

Program Development

Sellers

Public & private sector

Carbon Asset Development Fund

(CADF)

Public & private sector

Purchase emission reductions

over the long term

ER Sale & Purchase

Willingness to develop specific

emission reduction programs and
sell ERs

CPF Carbon Fund

P t
Partners
(Host
(H t Governments,
G
t Others)
Oth ) & Donors
D
CARBON PARTNERSHIP FACILITY

The CPF Pricing/Delivery

g
y Approach
pp
Fixed prices for the first five years of ERPA then option for floating price with cap + floor
Delivery
y

Pricing
g

Fixed pricing for at least first five years of ERPA;

variable pricing an option for out years

Price in ERPA based on p

post-2012 p
primary
y CER
market benchmark adjusted for operational and
regulatory risks (a.k.a. reference price)

Trustee proposes risk adjustment to reference price

for approval by Buyers and Seller

Benchmark reference price adjusted periodically -CPAs entering program are priced at prevailing
benchmark + / - risk adjustment

Variable price based on weighting of reference

price and spot CER price in market at delivery
Variable price available for delivery >5
years from ERPA start
Buyer and sellers agree on % weights fixed
vs. floating w/ max 50% floating
Variable price cap & floor at a maximum of
50% above/below reference price

CARBON PARTNERSHIP FACILITY

ERPA includes delivery plan based on identified

CPAs, with volumes and timing for delivery basis
for volume term in ERPA

Contractual delivery schedule (and default

provisions) to be based on sub-ERPAs, with two
years for CME to aggregate CPAs to meet ERPA
volume

If EPA volume/maximum value not met in two

years, can be re-allocated to another program

CPF will normally contract for 50% of PDD

volume from CPAs

Front-loading of delivery is envisioned if CPA has

volume available (seniority & sweeping clauses)

ERPA may include options for additional volumes

CPF Pipeline
p
pprograms
g
under development
p
Programs
Brazil
B il

with Seller Participation Agreements

Solid
S lid W
Waste
t M
Managementt P
Program

Vietnam

Renewable Energy Program

Morocco

Solid Waste Management Program

Jordan

Amman Green Growth Program (City-wide Approach)

Thailand
China

Hebei Regional Biogas Program

Tanzania
Under

Objective:

Clean Energy Program

Renewable Energy Program

Negotiation: Egypt Wind Program

Demonstrate efficacy of Programme of Activities approach in a

variety of situations

CARBON PARTNERSHIP FACILITY

Brazil Solid Waste Management

g
Program
g
Program Highlights

Objective: Enable public entities to access carbon markets through innovative

financing packages in the SWM sector
sector. Reduce environmental and social impacts
and GHG emissions from the solid waste management sector.
Strategic Relevance: The program is linked to a World Bank loan to Brazil to
support the implementation of a law on national solid waste policy that was enacted in
2010 to upgrade landfill practices.
Program Overview:

PoA Type: Land Fill gas Methane capture and use (flaring, electricity generation)

Contract Volume: 3 million tCO2e in ER Volume + 2 million tCO2e in Options

Methodology: ACM0001: Consolidated baseline and monitoring methodology for landfill

gas project activities --- Version 11.0

World Bank Operations/Safeguards: World Bank loan to Caixa to finance landfill

upgrading; Caixa lending to landfill operators collateralized with carbon finance revenues.
Pilot program for use of Country Systems for safeguards assessment.

Scaling up Potential: The program could eventually be extended to municipalities

throughout Brazil.

Coordinating and Managing Entity (CME): Caixa Economica Federal , a major

public sector development
p
p
bank.

CARBON PARTNERSHIP FACILITY

Vietnam Renewable Energy

gy Development
p
Program
g
((REDP))
Program Highlights

Objective: The objective of the Program is to increase the supply of electricity to the
grid from renewable energy
gy sources on a commercially,
y, environmentally
y and
national g
socially sustainable basis

Strategic Relevance: The Program is strategically aligned with Vietnam Socio-Economic

Development Plans (SEDP) 2006 2010 and 2011 - 2015, Renewable Energy Action Plan
(REAP), as well as the World Bank Group Country Partnership Strategy for Vietnam

Program Overview:
Development of 20 25 small hydropower projects (CPAs) with total installed
capacity of around 250 MW
REDP World Bank Credits (US$ 202 mil) are available through financial
intermediaries
Carbon Finance has been an integral
g p
part of the Program
g
design.
g
Contract volume of two million tCO2e from 2012-2020

Scaling up potential: The project represents around 9 % of total potential small

hydropower in Vietnam which is estimated to be around 2,900 MW which could generate
more than 6 million tCO2e of GHG emission reductions, annually

Coordinating and Managing Entity (C/ME): Ministry of Industry and Trade is the main
counterpart of the Bank loan and also serves as C/ME

CARBON PARTNERSHIP FACILITY

10

Morocco Municipal
p Solid Waste Management
g
Program
g
Program Highlights

Objective: The objective of the Program of Activities is to reduce greenhouse gas

emissions (methane and carbon dioxide) through flaring and/or use of landfill gas for
energy generation.

Strategic Relevance: The Program is strategically linked to two development policy loans
granted by the World Bank to the Moroccan government as part of a national program to
modernize the sector. The two loans are well aligned with the World Bank Group Country
Partnership Strategy for Morocco.

Program
g
Overview:
Development of 8-10 landfill gas management projects (CPAs) for flaring of CH4 or
use for energy generation
CPAs are implemented and financed by private sector operators, and are included in
th contracts
the
t t with
ith municipalities
i i liti
Carbon Finance has been an integral part of the Program design.
Contract volume of two million tCO2e from 2012-2018

Scaling up potential: For the moment,

moment the program targets only some of the main urban
areas of Morocco. It could be scale up to include most medium-size cities as well.

Coordinating and Managing Entity (C/ME): Fonds dEquipement Communal, the main
Moroccan local development bank (public entity)

CARBON PARTNERSHIP FACILITY

11

Amman Green Growth Program

g
Program Highlights

Objective:
Enable the Greater Amman Municipality (GAM)to access carbon markets through an
innovative city-wide approach
Pioneer and demonstrate the efficacy of the city-wide approach to carbon finance,
being used for the first time by combining approved methodologies in a single PoA, to
establish a model that can be replicated in cities throughout the developing world.

Strategic Relevance: GAM is developing a Green Growth Program based on the Amman
master plan 2025. The Program is intended to leverage the capacity of the Amman
government to catalyze investments and emission reduction activities across a range of
sectors within GAMs administrative purview.

Program Overview:

PoA coverage: The Amman Green Growth Program includes potential opportunities
in municipal waste, urban transport, sustainable energy and urban forestry.

Methodology: Multi-methodology framework approved by CDM EB in Sept. 2011

Financing: Donor contributions from AFD and KfW; possible World Bank lending

Scaling up Potential: 500,000 ton Co2e / year from multi sectors

Coordinating and Managing Entity (CME): Greater Amman Municipality

CARBON PARTNERSHIP FACILITY

12

Thailand - Renewable Energy/Energy

gy
gy Efficiencyy Programs
g
Program Highlights

Objective: Increase the supply of renewable electricity to the national grid and reduce
gy consumption
p
for Highway
g
y Street lighting,
g
g, nationwide.
energy

Strategic Relevance: The Program is strategically aligned with Thailand National

Economic and Social Development Plan 2007-2011, Alternative Energy Development Plan
2008-2022, as well as the World Bank Group Country Partnership Strategy for Thailand

Program Overview:
Renewable Energy (RE) Program: Development of up to 100 x 1 MW (CPAs)
biomass gasification power plants with total installed capacity of around 100 MW
Energy
E
Effi
Efficiency
i
(EE) off N
National
ti
l Hi
Highway
h
St
Streett Li
Lighting
hti P
Program : Replacement
R l
t off
up to 500,000 High Pressure Lamps with LED lamps
Carbon Finance has been an integral part of the Program design
Contract volume of one million tCO2e from 2013-2020
2013 2020

Scaling up potential: The project represents only 2.5 % of total potential biomass in
Thailand which is estimated to be around 4000 MW which could generate more than 14
million tCO2e of GHG emission reductions, annually.

Coordinating and Managing Entity (C/ME): Provincial Electricity Authority Energy

Company (PEA-ENCOM)

CARBON PARTNERSHIP FACILITY

13

China Hebei Regional

g
Farm Biogas
g Program
g
Program Highlights

Objective: To improve the local environment and human health through upgrading animal
manure management practices in Hebei Province.
Province

Strategic Relevance: Through providing carbon finance incentive and applying the PoA
approach, the program will support Ministry of Agriculture to establish provincial platforms in
order to facilitate application of biogas digester technology among medium- large farms.
Program Overview:

By replacing the current practice of anaerobic open lagoons with biogas digesters, the
program aims to improve manure management systems in about 40 livestock farms in
Hebei province. The generated biogas will be used to provide power and thermal
energy for the farms and households nearby.

Finance: Each participating farm will receive partial subsidy from provincial government
covering
i lless th
than 1/3 off ttotal
t l iinvestment
t
t costt and
d no more than
th RMB 1 million,
illi
th
the restt
will be financed by the participants own savings and equity.

Estimated Emission Reductions: 3.37 million tCO2e over a 10-year crediting period

Scaling
S
li up Potential:
P t ti l China
Chi targets iinstallation
ll i off 8
8,000
000 bi
biogas plants
l
at single
i l ffarm llevell b
by
2015.

Coordinating and Managing Entity (CME): Hebei Green Agriculture Co, Ltd, a bundling
agency at provincial level

CARBON PARTNERSHIP FACILITY

14

Tanzania Renewable Energy

gy Program
g
Program Highlights

Objective: Expand coverage of rural electrification in Tanzania, by promoting both off-grid

and on-grid renewable energy projects

Strategic Relevance: The Program is strategically aligned with Tanzanias Energy Sector
Policy. The Government has set up Rural Energy Agency (REA) to promote rural
electrification in the country

Program Overview:
Development of 10-12 small hydropower projects (CPAs) with total installed capacity
of around 100 MW
IDA Line of Credit long term financing through local banks
Preparation Grant financing upfront project preparation cost
Connection grant a form of capital subsidy (depending upon the number of rural
connections provided)
Carbon Finance - bridging part of equity gap
Contract volume of about 2.0 million tCO2e from 2012-2020

Scaling up potential: Tanzania has abundant renewable resources. Therefore,

S
f
the
scaling up potential is huge

Coordinating and Managing Entity (C/ME): The Rural Energy Agency (REA), the main
counterpart of the IDA project

CARBON PARTNERSHIP FACILITY

15

Egypt
gyp Wind Development
p
Program
g
Program Highlights

Objective: The carbon finance program will provide revenues to the Egyptian Electricity
Transmission Company to defray part of the costs of transmission infrastructure and
encourage wind power development.
Strategic Relevance: The Government of Egypt is planning a wind power development
program in the Gulf of Suez. The Bank and other agencies are providing loan financing for
transmission infrastructure to evacuate power from the wind farms to be built by the private
sector under a Build-Own-Operate framework.
Program Overview:
Component A - Transmission Infrastructure (US$ 342 million - US$ 70 million IBRD,
IBRD
US$ 148.25 million CTF, US$ 70million EIB and US$ 54 million GOE)
Component B - Technical Assistance (US$ 2.9 million)
Component C - Gulf of Suez 250 MW BOO project (US$ 450 million): development
and
d construction
t ti off a 250 MW wind
i d farm
f
(1stt CPA) iin G
Gulflf off Suez
S
by
b a private
i t sector
t
operator under a BOO approach
Contract volume of about 2.0 million tCO2e from 2012-2020
PoA p
project
j
activities ((CPAs)) will be p
paid from selling
g electricity
y to the EETC.

Scaling up Potential: Up to 3000MW by 2020

Coordinating and Managing Entity (CME): Egyptian Electricity Transmission Company

(EETC)

CARBON PARTNERSHIP FACILITY

16

Future Directions for CPF

Key objective of CPF is to innovate in developing

programmatic
ti carbon
b market
k t mechanisms
h i
But the future market is uncertain:
no international agreement thus far
only LDCs will have access to EU ETS for CDM projects registered
after 2012

Looking forward,
forward the CPF can pilot prototypes or develop
approaches that bridge to new market mechanisms

CARBON PARTNERSHIP FACILITY

17