Carbon Finance Capacity Building Programme

1. Carbon Finance Capacity Building Programme Carole Küng, ecos, Project Leader CFCB Sao Paulo Workshop São Paulo City Hall, 4 May 2010

2. ecos • Is an internationally working consultancy based in Basel, Switzerland. • Since 1987 ecos develops, realises, supports and evaluates processes, projects and products that harmonise the needs of the economy, the environment and society. • Is a facilitator and manager of public and business innovation processes for sustainable development. • ecos initiated the CFCB programme together with its partners.

3. Agenda Starting position Why capacity building: CDM – a rewarding path for cities after Copenhagen? What is capacity development? How can Carbon Finance capacity be integrated in Cities? The CDM survival kit for city officers

4. Why capacity building? CDM - a rewarding path for cities after Copenhagen?

5. Why capacity building? Investment in CDM is considered risky. Depends on: Reforms of the mechanism (no agenda yet) Development of supply (e.g. REDD) and demand (EU, Japan, Australia, other new markets) Trend towards high qualityCDM projects (e.g. gold standard), but overall decline of registration of new projects Probably neither Carbon nor Climate Finance (...) will dominate future climate mitigation efforts completely. A mix of both is most likely and promising, the complexity of financing through Carbon or Climate Finance will rise in the short term. CDM - a rewarding path for cities after Copenhagen?

6. Why capacity building? There will be financing options. A city task force/ cross-sectoral committee on climate which closely observes the developments to seize opportunities is recommended. => Put the city as major emitter into the position to assess opportunities and to drive the processes. Summary: CDM - a rewarding path for cities after Copenhagen?

7. Carbon Finance Challenge for a city administration • Changing environment/framing conditions • Interdisciplinary, global challenges • Financial- , Environmental-, and Social questions... Technical know-how: Project as such + CDM Organisational Development: Strategic, dynamic structures Tasks The 3 building blocks of capacity development in a dynamic environment.

8. Why capacity building? Carbon Finance/ CDM What happens in cities without structured Carbon Finance capacity? An example Law Economy Environment Waste Manager Municipal Services Finance Welfare Transport

9. Why capacity building? What happens in cities without structured Carbon Finance capacity? An example Revenue 15% (of estimated 200‘000t CER/year) Waste Manager CDM solid waste 15% of 20‘000t CER/year Contract Ltd

10. Law leaves Economy Ltd Environment ? Waste Manager Municipal Services Finance Transport Welfare Know-how Why capacity building? Lessons learned City Transport Manager ? Interconnection! => Knowledge management!

11. Capacity development of city‘s CF management skills • Capacity Development as: • “The process of strengthening the capabilities of cities in order to achieve their own goals on a sustainable basis.“ • Success factors: • The city is put in a position to organise complex processes on its own. • A receptive organisational settingand process is put in place that can receive knowledge and expertise and convert it to practice and action. • Ownership of projects is guaranteed. • Continuous and frequent handholding and daily business support is available.

12. Technical know-how Organisational Development Tasks Capacity development of city‘s CF management skills • CFCB programme as a learning-by-doing approach: • Working on a concrete project and developing it as a CF project. • Establishing a nucleus institutional body of capacity within the city administration that can manage Carbon Finance together with a network of technical experts.

13. CDM Pilot Project Idea for Sao Paulo Task: Sustainable city development through high quality CF project • Economic • Co-financing of Sustainable infrastructure through Carbon Finance • Social • Local Job creation • Improved health/ quality of life • Awareness for resource management • Environmental • GHG emmission reduction • Reduction of waste going to landfills Sustainable waste treatment systems for Favelas

14. Mode of Cooperation Agreement Assignment Cooperation Possible implementation structure in each city/ city group City Government Mayor‘s/Governor‘s Office Political CFCB champion CFCB-Programme MoU/ LoI CFCB – City City CFCB Task team City Management City Manager Head of Departements Executive CFCB champion CFCB to local link Strategic steering Implementation City Officers Head of Divisions (General-) Managers Expert officials Technical/Legal/Finance LIP Local Implementation Partner Later Financial sector Traders, Asset management Investors, banks Private sector Technical Partners Carbon Mgmt. Consultants

15. KvR? tbd Organisational set-up for cooperation with cities • MoU/ LoI between CFCB programme and each city/ city group: High-level support • Local implementation partner (LIP) • City representation • Mayor‘s / Governor‘s office -> political CFCB champion • City task team (CTT) • City Management -> executive CFCB champion (CFCB contact) • City Officers • Other City stakeholders • Private sector: Technical partner(s)/carbon management consultant(s) • Financial sector: Traders, Asset management, Investors, banks • Advice and consultancy: Periodic short meetings for a more comprehensive discussion of general operational and strategic matters. • Technical partner/carbon management consultant • Identification of unbiased consultants and technical partners to be hired by the cities, is mentioned as one of the key requests by the cities. • Although technical-/carbon partners have a clear focus and range of responsibilities they might be included in the LPSG as a guest to ensure coherence of the CFCB intervention.

16. KvR? tbd City representation/City task team • CFCB-Political Champion: • The CFCB activities can only be successful if they are under an explicit and committed patronage of the Mayor/Governor of the city. • City Task team: • Carbon Finance requires a cross-sectional approach. • Thus the city has to be involved with the relevant departments forming a City task team that mutually coordinates the CFCB involvement. • CFCB-Executive Champion • Chairs the City Task Team • Drives the CFCB activities within the City administration • Main contact person to Local Implementation Partner and CFCB Programme Management

17. City task team Interconnected Effective Learning City CFCB Task team City Management City Manager Head of Departements Executive CFCB champion • Strategic decisions (PoA, Namas...) • Potential projects • Exchange of knowledge gained Key Know-how Carbon and Climate Finance Knowledge Hub City Officers Head of Divisions (General-) Managers Expert officials Technical/Legal/Finance 1-2 years Private sector Technical Partners Carbon Mgmt. Consultants Technical Expertise

18. KvR? tbd Local implementation partner (LIP) • Ensures ongoing support. Coordinates between the city and the technical partners and represents the CFCB programme in the city. • Core element of the locally based support for each city includes: • Help-desk: Continuous consulting by email and phone regarding issues arising from daily business that can be solved by immediate consultation. • The LIP has to be jointly defined.

19. CDM survival kit for city officiers: 1. Baseline The 3 key points: 1. Baseline;2. Additionality; 3. CDM Toolbox Reveals how much GHG can be saved and therefore demonstrates Carbon Financing potential (ex-post and market-dependent!) Carbon credits = emissions Recall: Baseline Greenhouse gas emissions Actual emissions Project start Time Historical Trend

20. CDM survival kit for city officiers: 2. Additionality The 3 key points: 1. Baseline;2. Additionality; 3. CDM Toolbox Proves that the targeted emmissions wouldn‘t be saved without CDM (precondition for every CDM project) Carbon revenue makes the project attractive relative to investment alternatives Recall: Investmentthreshold Revenue / NPV / IRR Project without carbon revenue is profitable – but not sufficiently profitable compared with alternatives Project without carbon element Project with carbon element

21. 6 to 12 months 1.5 months Crediting period of the project Project Developer PIN PDD Recall: CDM Project Cycle Depicts the step-by-step approach to CDM as well as the key institutions Recall: CDM Methodologies Depict the approach for different project types Host country approval DNA Project verification Project validation DOE Project registration CER issuance CDM EB http://cdm.unfccc.int/methodologies/index.html CDM survival kit for city officiers: 3. CDM Toolbox • The 3 key points: 1. Baseline;2. Additionality;3. CDM Toolbox • The Carbon Finance add-on challenge! Project CDM Cycle

22. Roles and timing for starting a CDM project in Cities

23. Thank you very much for your attention! Contact: ecos team: Daniel Wiener, daniel.wiener@ecos.ch, +41 61 205 10 10 Daniel Lehmann Pollheimer, daniel.lehmann@ecos.ch, +41 61 205 10 56 Carole Kueng, carole.kueng@ecos.ch, +41 61 205 10 46 t. +44.(0)207.983.4627

24. References (amongst others) CFCB: www.lowcarboncities.info Carbon Finance Assist/Carbon Finance Unit, World Bank www.climatefinanceoptions.org (WB/ UNDP) t. +44.(0)207.983.4627