carbon financing in the residential sector

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

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


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


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)


Contents

Setting the Context


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


Water Demand Scenario


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%


Mitigation Potential for the largest cities in the region


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


Who gets the water-saving benefits?Financial profile for a 100,000 household project


Low volume

High volume

Very low income

Lowincome

Middleincome

Highincome

Household

Government

Who gets the water benefits?



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


Thanks for your attention!

Contact Information

Alberto Carrillo PinedaManaging [email protected]

Carbonding Climate Community S. de R. L. de C.V.Tel. +52 55 8421 7749www.carbonding.comWe are looking for

partners!

carbon financing in the residential sector

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