carbon financing in the residential sector
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All data in this presentation is drawn from public or commercial sources; no client-proprietary data has been used. The analyses and conclusions contained in this document are based on various assumptions that Carbonding has developed which may or may not be correct, being based upon factors and events subject to uncertainty. Future results or values could be materially different from any forecast or estimates contained in the analyses. The analyses are partly based on commercially-sourced information that has not been generated by Carbonding and has not, therefore, been entirely subject to independent verification. Carbonding believes such information to be reliable and adequately comprehensive but does not represent that such information is in all respects accurate or complete.
Carbon Financing in the Residential SectorLatin American Carbon Forum
Alberto Carrillo Pineda
San José, Costa Rica
28 September, 2011
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Contents
Setting the Context
Case study: Demand-Side Water Efficiency and Carbon Finance
Objective and Contents
• To discuss the potential of CDM to finance and facilitate the adoption of “third-generation” low-carbon measures in the residential sector in Latin America.
• To present one case study of “third-generation” Program of Activities under development in the region.
Objective
environmental market solutionsenvironmental market solutions
Contents
Setting the Context
Case study: Demand-Side Water Efficiency and Carbon Finance
Objective and Contents
• To discuss the potential of CDM to finance and facilitate the adoption of “third-generation” low-carbon measures in the residential sector in Latin America.
• To present one case study of “third-generation” Program of Activities under development in the region.
Objective
environmental market solutionsenvironmental market solutions
Three mega-trends shaping the climate in the region
Urbanization
• LA is the region with the highest urban population concentration in the developing world. (IAI, 2007)
• By 2030, about 83% of the population in LA will be living in cities. (IAI, 2007)
• Cities (and especially capital cities) concentrate a large share of the GDP in the region.
Vulnerability
Increasing GHG EmissionsIncreasing GHG Emissions• Cities represent between 40 and 80% of the global greenhouse gas emissions. (ICLEI, 2010)
• According to the International Energy Agency cities accounted for 67% of the world primary energy demand and more than 70% of global CO2 emissions in 2006.
• Continued urbanization and economic growth is expected to increase the GHG emissions associated with cities.
• The high (uncontrolled) urban growth has considerably increased the vulnerability to natural disasters of a large share of the population in the region.
• Climate change is likely to increase many of the already existing urban stresses (i.e. heat islands, insufficient sanitation / water supply, inadequate housing, etc.).
Increasing GHG Emissions
Vul
nera
bilit
yUrbanization
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Need to design and implement carbon-finance instruments that respond to these mega-trends
3rd Generation Carbon Initiatives
Key Elements
• Strong focus on projects that reduce emissions from urban infrastructure (supply side).
• Some co-benefits addressing urban issues.
• Projects that reduce emissions changing energy consumption patterns (demand-side)
• Typically disaggregated project activities
• Energy consumption patterns and/or urban infrastructure (demand side)
• Mitigation + Adaptation Co-benefits
Type of Projects
• Landfills• WWTP (not
Industrial)
• BRT• Demand-Side Energy
Efficiency
• Demand-side water efficiency
• Sustainable Housing
Examples
• LFG (several throughout the region)
• BRT(Transmilenio, Medellin, Mexico City, Guatemala)
• Solar Water Heaters (Peru, Chile), Efficient appliances (Mexico, Brazil)
• Green Mortgage / Subsidy (Mexico)
• Water & Energy Efficiency PoA (Mexico)
environmental market solutionsenvironmental market solutions
Contents
Setting the Context
Case study: Demand-Side Water Efficiency and Carbon Finance
Objective and Contents
• To discuss the potential of CDM to finance and facilitate the adoption of “third-generation” low-carbon measures in the residential sector in Latin America.
• To present one case study of “third-generation” Program of Activities under development in the region.
Objective
environmental market solutionsenvironmental market solutions
Water Demand Scenario
Case study: Demand-Side Water Efficiency and Carbon Finance
Water Marginal Cost Curve
Water Availability
Cost
Efficient Water
Fixtures
CO2 Marginal Abatement Curve
Cost
Efficient Water Fixtures
Household Hot-Water Efficiency
CO2
H2O
0.5 – 1 tCO2 / yr
30 – 50%
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Mitigation Potential for the largest cities in the region
Case study: Demand-Side Water Efficiency and Carbon Finance
Clean Development Mechanism
•AMS-II.M “Demand-side energy efficiency activities for installation of low-flow hot water savings devices”
Gold Standard
•Indicative Program, Baseline and Monitoring Methodology for Large-Scale Supply and Distribution of Efficient Light Bulb, Showerheads and Water Saving Products to Households
Methodologies
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Who gets the water-saving benefits?Financial profile for a 100,000 household project
Case study: Demand-Side Water Efficiency and Carbon Finance
Low volume
High volume
Very low income
Lowincome
Middleincome
Highincome
Household
Government
Who gets the water benefits?
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Case study: Demand-Side Water Efficiency and Carbon Finance
Sustainability co-benefits Challenges / Barriers
Environmental•Reductions of GHG emissions and water-consumption•Reduction in local air pollution and generation of wastewater
Social / Economic•Significant savings for households and governments (or water utilities)•Economic way to address water stress issues
Cultural•Water perceived as a free, infinite resource
Regulatory•Post 2012-deadline
Economic•Difficult to realize the water-saving benefits benefits for investors•Unusual project for traditional financing
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