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Financed by the Norwegian Trust Fund, Supported by CF-Assist

Low-carbon Energy Projects for Development in Sub-Saharan Africa Unveiling the Potential, Addressing the Barriers . Financed by the Norwegian Trust Fund, Supported by CF-Assist Presentation to the Reference Group of the NTF, November 13, 2008. Presented by : Ashok Sarkar The World Bank.

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Financed by the Norwegian Trust Fund, Supported by CF-Assist

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  1. Low-carbon Energy Projects for Development in Sub-Saharan AfricaUnveiling the Potential, Addressing the Barriers Financed by the Norwegian Trust Fund, Supported by CF-Assist Presentation to the Reference Group of the NTF, November 13, 2008 Presented by : Ashok SarkarThe World Bank

  2. Summary of the Presentation • Strong development of the CDM Except in Sub Saharan Africa • Unveil the Potential of CDM Energy Projects in SSA • Addressing the Barriers Recommendations

  3. y = 0.0435x - 1647.4 2 R = 0.9791 60 50 40 30 20 10 0 May-03 Aug-03 Nov-03 Feb-04 May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 Ch. de Gouvello - WB / AFTEG - May 2006 Member of the MethPanel of the CDM Source: UNFCCC data The number of CDM eligible activities has expanded quickly Pace of releasing new approved Methodologies by Regulatory Bodies (EB+MethPanel) More than 120 CDM Methodologies Approved(August 2008)

  4. Cumulative Number of CDM Projects per Methodology (projects that officially began validation process) Ch. de Gouvello - WB / AFTEG - May 2006 Member of the MethPanel of the CDM Source: UNFCCC data Nb Proj under ACM0001 50 Nb Proj under ACM0002 The Y axis has been Nb Proj under ACM0003 truncated at 50 Nb Proj under ACM0004 Nb Proj under ACM0005 Nb Proj under ACM0006 40 Nb Proj under ACM0007 Nb Proj under ACM0008 Nb Proj under AM0001 Nb Proj under AM0002 Nb Proj under AM0003 30 Nb Proj under AM0004 Nb Proj under AM0005 Nb Proj under AM0006 Nb Proj under AM0008 Nb Proj under AM0009 20 Nb Proj under AM0011 Nb Proj under AM0013 Nb Proj under AM0014 Nb Proj under AM0015 Nb Proj under AM0016 10 Nb Proj under AM0018 Nb Proj under AM0021 Nb Proj under AMS-I.C Nb Proj under AMS-I.D Nb Proj under AMS-II.B - Nb Proj under AMS-II.C Nb Proj under AMS-II.D 2/1/04 4/1/04 2/1/05 4/1/05 6/1/05 8/1/05 4/1/06 6/1/04 8/1/04 2/1/06 12/1/03 10/1/04 12/1/04 10/1/05 12/1/05 Nb Proj under AMS-III.B Nb Proj under AMS-III.D Nb Proj under AMS-III.E Each new approved methodology unleashes a new segment of the CDM projects potential

  5. 2,800 2,600 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 - - 90 180 270 360 450 540 630 720 810 900 990 1,080 1,170 1,260 1,350 Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007 Dec. 1rst, 2003 August 1, 2008 N= 3,900 Number of CDM projects that have already applied for validation Nb of Projects The number of CDM projects that have begun or completed the validation process increases as the following exponential /polynomial function of time y = 1E-06x3 + 4E-05x2 - 0.04x R2 = 0.99 Number of projects submitted for validation is now doubling every 8 months Ch. de Gouvello WB / LCSEG Source: UNFCCC data Nb of calendar days since Dec 1rst, 2003

  6. Annual value of CDM/JIEmission Reductions Transactions (billion USD) (up to 2012 vintages) Already more than 5 billion dollars of North-South Net Transfer before end of 2012 • However still some uncertainties for post 2012 (second commitment period) Source: State and Trends of the Carbon Market 2008. Karan Kapoor and Philippe Ambrosi, World Bank, May 2008

  7. Very few CDM projects so far in Sub-Saharan Africa Location of approved CDM projects (source: UNFCCC) The number of CDM projects should be greater

  8. Same facilities hosting CDM projects in other regions also exist in Sub Saharan Africa

  9. Check the Potential : How many potential CDM projects in SSA similar to projects developed in other countries with approved methodologies ?  22 types of projects  44 countries • Investigate the reasons why not implemented :  Recommendations

  10. Power Sector CO2 Power Generation Transport / Distribution Consumption/ Use CDM Projects CDM Projects CDM Projects Generation from Fossil Fuels - Addition of2nd cycle - CHP in industry • - Switch to compact fluorescent lamps • Energy-saving household appliances • Non-lighting electricity for industry Grid loss reductions Renewable Energy - CHP in sugar mills - Agricultural residue - Forest / wood-process residues - Typha australis - Jatropha biofuel - Hydroelectricity - Photovoltaics rural areas - Landfill gas Nb Proj = 204 CERs = 36 MtCO2/y Power = 5.9 GW Inv. Cost = $ 7.1 billion Nb Proj = 204 CERs = 36 MtCO2/y Power = 5.9 GW Inv. Cost = $ 7.1 billion Nb Proj = 3 CERs = 0.9 MtCO2/y Power = 0.01 GW Inv. Cost = $ billion Nb Proj = 373 CERs = 73 MtCO2/y Power = 17.8 GW Inv. Cost = $ 17.8 billion Nb Proj = 67 CERs = 2.4 MtCO2/y Power = 0.7 GW Inv. Cost = $ 1 billion Nb Proj = 553 CERs = 141 MtCO2/y Power = 27.5 GW Inv. Cost = $ 38.5 billion Nb Proj = 406 CERs = 20 MtCO2/y Power = 4 GW Inv. Cost = $ 5.7 billion Nb Proj = 40 CERs = 3 MtCO2/y Power = 0.6 GW Inv. Cost = $ 0.8 billion Nb Proj = 555 CERs = 177 MtCO2/y Power = 28 GW Inv. Cost = $ 54 billion Nb Proj = 26 CERs = 25 MtCO2/y Power = 6.4 GW Inv. Cost = $ 9.4 billion

  11. Fuel for Industry (Coal, Fuel Oil, Gas) CH4CO2 CO2 CH4CO2 Thermal Use/ Consumption Fuel production Transport CDM activities CDM activities CDM activities Production - Flared gas recovery - Coal mine methane - Waste gases in crude oil refinery Thermal Use and Consumption - Improved steam system - Reduced clinker use in cement manufacturing Nb Proj = 211 CERs = 37 MtCO2/y Power = GW Inv. Cost = $ billion Nb Proj = 46 CERs = 2.8 MtCO2/y Power = GW Inv. Cost = $ 0.1 billion Nb Proj = 55 CERs = 92 MtCO2/y Power = 45 GW Inv. Cost = $ billion Nb Proj = 18 CERs = 2.5 MtCO2/y Power = 0.1 GW Inv. Cost = $ 0.1 billion Nb Proj = 26 CERs = 4.3 MtCO2/y Power = 0.7 GW Inv. Cost = $ 0.9 billion X X

  12. CO2 CO2 CO2 Transport / Distribution Use/ Consumption Fuel production CDM activities CDM activities CDM activities Fuel for vehicles • Production • Biodiesel from Jatropha • Consumption and Use • Shift to Bus Rapid Transit (BRT) Nb Proj = 63 CERs = 12 MtCO2/y Inv. Cost = $ billion Nb Proj = 60 CERs = 3.2 MtCO2/y Inv. Cost = $ billion

  13. CO2 CO2 CO2 Transport / Distribution Production of woodfuel Consumption CDM activities CDM activities CDM activities Woodfuel for households • Production • Improved Charcoal Production Nb Proj = 68 (PoA) CERs = 22 MtCO2/y Inv. Cost = $ 0.2 billion

  14. Number of Potential Projects 2,866 3,227 Number PoAs 361 Potential GHG reductions 740 MtCO2 /year Percent of the country emissions 109 % Value of the GHG reductions over crediting period(10 or 21 years, base 10 US$/tCO2) $ 97.8 billion Potential of additional electricity generation 1,244 TWh/year Percent of actual generation 380 % Potential of additional power generation capacity 155 GW Percent of installed capacity 225 % Investment cost (only for projects for which cost data is available) $ 157,6 billion Technical Potential of Low Carbon Energy Projects in SSA(available for each of the 44 countries considered – see attached CD) Many technologies could not yet be included at this stage: wind, geothermal, efficiency in building, solar water heaters, efficient cooking stoves, etc.

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  17. Annual Emissions Reductions in tCO2 and in proportion of countries emissions Potential for future emissions reductions in proportion of current emissions (CO2) (100% = 1)(Note: extremely high values observed for certain countries are due to the fact that flaring emissions where not reflected in official country emissions data)

  18. USDpertC02 Million tons of CO2 avoided USDperMW Additional Power in MW Investment Curves: - tCO2 Reductions Potential - Additional Power Generation Capacity During projects lifetime (10 or 21 years)

  19. III. Barriers and Recommendations

  20. 1. Appropriate Regulatory Framework is missing Example : Cogeneration • Many cogeneration projects in UNFCCC validation/registration pipeline: Brazil, India, etc. • Very few in Sub-Saharan Africa. But there are sugar factories, agro-industry, refineries, chemical industry,… • Key bottleneck in Africa: No Feed-in Tariff  no possibility to sale electricity  no possibility to get credits  no CDM project Missing: Regulatory Framework for Auto-producers Biofuels: Regulatory Framework also missing

  21. 1. Appropriate Regulatory Framework is missing Carbon Finance cannot provide TA to fix it However, support can be provided by Technical Units of International Development Agencies for developing missing regulations

  22. Recommendations to overcome Barriers 1. Complementary Regulatory Framework needs to be developed 2.Market access requires appropriate infrastructure planning and policies to overcome logistics bottlenecks 3. Technical information on mature, clean energy technologies must be appropriately disseminated 4. The local skills required to run mature, clean technologies must be developed 5.Technical Assistance and R&D are required to achieve full efficiency andsustainability of clean energy technologies 6. Develop local expertise and institutional procedures to facilitate project developers’access to an increasing range of financial resources earmarked for climate change 7.Post-Kyoto Carbon Funds are required 8. However, Carbon Finance alone will not solve the investment financing gap.Earmarked Climate Investment Funds (CIFs) are essential Technical Units of Development Agencies are used to channel TA and Financing at Project Level – Integration is key

  23. Thank You - Merci Le Résumé pour Décideurs est aussi disponible en Français

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