mdg carbon facility project sourcing matt spannagle technical manager millennium development goals...
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MDG Carbon Facility project sourcing
Matt SpannagleTechnical Manager
Millennium Development Goals Carbon Facility
Bureau for Development PolicyUnited Nations Development Programme
Session 3, Bratislava, October 14th, 2008
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UNDP MDG Carbon Facility
SuccessesOf 9 projects in pipeline:
• virtually all in underrepresented countries • Yemen & Rwanda likely 1st registered CDM
• with strong MDGs • including innovative GIS in Uzbekistan
• have significant capacity development in host countries
MDG Impact
Number of CountriesLow High Low
High Objective for UNDP’s Carbon Strategy
CurrentCDM Market*
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UNDP MDG Carbon Facility
BUT…Uzbekistan - (average 800kt/year from 2009) ~ 3,000kt by 2012
Yemen – (100kt/year from 2009) 300kt by 2012
Macedonia – (50kt/year from 2009(?)) 150kt by 2012(?)
Rwanda – (100kt/year from 2010(?)) 200kt by 2012(?)
Honduras palm oil - (30kt/yr from 2009) 120kt by 2012
Ukraine landfill – (100kt/yr from 2009) 400kt by 2012
Albania – small hydro (80kt/yr from 2010) 200kt by 2012
Honduras – small hydro (80kt/yr from 2010) 200kt by 2012
Tanzania EE stoves – (50kt/yr from 2010) 150kt by 2012
4,720,000tCO2e
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UNDP MDG Carbon Facility
SO…
9 projects out of 36 (~ 25%) sourced
~ 4.7Mt by 2012 … 1/3rd 15Mt target ( ~ 30%)
NEED TO ACCELERATE SOURCING!
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Lessons learnt (a)
• Overall the MDGCF offers a very competitive package with good conditions and probably best price in the market
• UNDP well respected as a non-partisan player
• host governments keen to see UNDP enter & promote carbon markets
• Project proponents WANT to be part of the MDGCF objectives
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UNDP MDG Carbon Facility
Lessons learnt (1)
• Host Country MoU an impediment • letter exchange significant improvement
• Underlying financing is a major hurdle – highest likelihood of success with proponents with:
• financing available • at least some equity and/or• established links with financing organisations
• support/assistance/tools from HO/specialists on how to handle commercial financing issues needed
• Project proponent should be established in the host country – start-ups are much more difficult
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Lessons learnt (2)
• CO capacity and support is critical
• new markets, LDCs and smaller countries are not as difficult as assumed – often more interest from host government
• must overcome the (common) assumption amongst governments and project proponents that we are:
• a donor/free funding• only looking for community-based/small projects
• better marketing/communications needed
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UNDP MDG Carbon Facility
Lessons learnt (3)• need for some flexibility (when appropriate) on cost recovery fee
• structured, targeted inception mission well-planned between COs, RTAs, & HO can be effective to drive sourcing
• programmatic approach and small scale methodologies are promising/interesting, but have high transaction costs: cannot have the portfolio consisting mostly of these
• Late to the party
• Others/input?
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UNDP MDG Carbon Facility
Other questions/developments?• how to maximise benefits from relationships with other institutions working on CDM - UNEP, WB, systematically within Nairobi Framework?
• How to coordinate/avoid duplication/conflict with bilateral donors, development NGOs – avoiding conflict of interest, but maximising benefits/opportunities?
• Can we engage other parts of UNDP to provide input – BRSP (Growing Sustainable Business); Governance Group, others?
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Other questions/developments?
• how to link effectively and systematically with capacity development work without having conflict of interest • how to have maximum flexibility in MDGCF while ensuring meet DD & UNDP requirements – where can we streamline and/or target efforts in different project types
• How/where to use consultants effectively?
• DD finalisation & getting financing – guidance/decisions• When do we extend LoE/MoUs etc• competition from those who provide underlying financing? How/should we counter this?
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UNDP MDG Carbon Facility
Sourcing strategyRecognise that we’re not going to achieve all of our objective in first phase
To meet long term objective, we also need short-term success!
MDG Impact
Number of CountriesLow High
Low
High Objective for UNDP’s Carbon Strategy
CurrentCDM Market*
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Pipeline development issues
Areas of development• Leads from capacity development projects in Africa, LAC• partnerships/collaboration with other organisations
Where UNDP looks good• in more difficult countries (LDCs)• in conjunction with national strategic policy priorities• leveraging other UNDP work
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Pipeline development issues
Opportunities coming up
• programmatic approach to reach community-level, smaller sites
• suppressed demand
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Sourcing strategy
MDG performance on PORTFOLIO basis: – complex & high MDG project ‘subsidises’ MDGs of simpler but lower MDG projects
- vice versa for costs/timing etc
For volume targets, need > projects that can deliver quickly
Does NOT mean we ignore more complex projects: – but must recognise that complex projects take longer
2 tracks:- For current portfolio – rapid implementation- For ongoing UNDP objectives - Sourcing ALL project types
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WHERE to source…
Original thinking:• Several/most projects from established markets (BRIC)• supplemented by some ‘boutique’ projects – with gradual expansion to LDCs (few in pilot phase)• Mostly from replications/expansions of GEF projects
This has not eventuated, and MDGCF seems to have greater opportunity:
• in more difficult countries (LDCs)• in conjunction with national strategic policy priorities• leveraging other UNDP work (FNC/SNC, DNA set-up)
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UNDP MDG Carbon Facility
WHERE to source… (cont’d)
Evolved thinking:• Still aim for some projects in established markets• larger proportion from nascent/secondary markets • Low-risk projects in LDCs/higher risk countries•Focus now on countries with Host Country agreement
We do NOT ignore any countries – good projects are good projects wherever they are
- but adjust focus/priority
Remember – not a ‘one shot’ pipeline:
Sourcing is an ONGOING process
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Potential (known) sources: GEF Portfolio
What were successful projects that could potentially utilise carbon finance?
Can these be replicated/scaled-up?
Has the ‘back-catalogue’ been reviewed?
Are there successful/dynamic GEF project partners that might have opportunities (not necessarily the same project type)
Are there current GEF projects that provide spin-off ideas or possible interesting project proponents?
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UNDP MDG Carbon Facility
Potential (known) sources: GovernmentsDoes the DNA have a list of potential projects – have they been reviewed/met with PPs?
Typically work with Ministry Environment/NR – do they have any ideas?
Introductions to other ministries with greater links to emitting sectors?
Government planning/infrastructure development?
State/provincial/municipal governments?
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UNDP MDG Carbon Facility
Potential (unknown) sources: Domestic banks and development banks
Domestic and locally engaged banks could be valuable sources of projects
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UNDP MDG Carbon Facility
Potential (unknown) sources: Dominant industriesWhat are the dominant industries in the country that are emissions intensive?Eg: - oil & gas, cement, pulp & paper, power generation, intensive agriculture,
• who are established businesses that are financially stable/successful?• projects that could potentially utilise carbon finance?• have any of them engaged (or been interested in) CDM?• for state-corporations, do we have relations with the govt that can be leveraged?
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UNDP MDG Carbon Facility
Potential (unknown) sources: Dominant industries
Are there dynamic sectors that are cashed-up or have solid financial backing that either have their own potential projects, or might be interested in projects outside their sector?
Eg – mobile phone companies may have an interest in power generation projects
How to engage these?Do other practices have usable relations with good project proponents?