GEF Investment in Climate Change Mitigation and Sound Chemicals Management Dr. Ming YangSr. Environment Economist / Climate Change Specialist myang@theGEF.org Global Environment Facility October 5, 2011 Trinidad (Prepared in September, 2011)
Outline • The GEF • GEF’s 20 Years’ Investment in Climate Change Mitigation and Sound Chemicals Management • GEF 5 Resources and Strategy in Climate Change Mitigation and Chemicals Investment • Case Studies on GEF Investments • Key Points in GEF5 Project Development
The GEF Secretariat GEF’s Operation: Based in Washington, D.C, the GEF Secretariat reports directly to the GEF Council and Assembly, ensuring that their decisions are translated into effective actions. GEF’s Mission: A mechanism for international cooperation for the purpose of providing new, and additional, grant and concessional funding to meet the agreed incremental costs of measures to achieve agreed global environmental benefits The GEF is the Financial Mechanism of the UNFCCC, CBD, Stockholm Convention, UNCCD and the Nagoya Protocol. The GEF also provides assistance to International Waters and the Montreal Protocol. The GEF provides Secretariat Services to the Adaptation Fund Board.
The GEF 1991-2011 • 10 Agencies • Over 2,700 projects • 182 participating countries, private sector, and civil society • US$ 16.13 billion as of June 2010 • US$ 16.22 billion as of June 2011
20 Years – Financing for Climate Change Mitigation • GEF Trust Fund invested about US$3 billion in over 150 countries • Mitigation • Adaption • Technology Needs Assessments • National Communications to the UNFCCC
20 Years – Financing for ODS and POPs • GEF Trust Fund invested about US$613 million including • $ 187 million in ODS • 26 ODS projects • 19 individual countries and 6 regional projects • $ 426 million in POPs • 219 POPs projects • Over 154 countries
20 Years – Catalyzing investment • Catalytic • Leveraged more than US$18 billion in co-financing on its US$3 billion of investments in CC • Leveraged more than US$875 million in co-financing on its US$ 613 million of investments in ODS/POPs • US$ 179 in ODS • US$ 696 in POPs • Cost-effective • Over 2.5 billion tonnes of CO2 avoided • The ODS portfolio of the GEF additionally eliminated 1.155 GT of CO2 Equivalent. • About US$ 1.2 per ton CO2
Continued Financing Climate Change Mitigation: Strategic Objectives for GEF-5 (2010-2014) • Demonstration, deployment, and transfer of innovative low-carbon technologies • Market transformation for energy efficiency in industry and the building sector • Investment in renewable energy technologies • Energy efficient, low-carbon transport and urban systems • Conservation and enhancement of carbon stocks through sustainable management of land use and forestry (LULUCF) • Enabling activities and capacity building
Continued Financing ODS and POPs: Strategic Objectives for GEF-5 (2010-2014) • Phase out POPs and reduce POPs releases; • Phase out ODS and reduce ODS releases; and • Pilot sound chemicals management and mercury reduction.
Climate Change Allocation in GEF 5 STAR $ million
GEF 5 Set-aside Funds for Climate Change and Chemicals Climate Change Total: US$272 million (US$1360 million X 20%) • National Communications and Technology Needs Assessments (US$80m) • Global and regional technology centers and network (US$42m) • Incentives for countries to participate (with STAR) in global and regional projects (US$20m) • Global and regional projects (targeted research, etc.) (US$10m) • Support for carbon finance (US$20m) • Sustainable Forest Management/REDD + incentives (US$100m) • ODS and POPs Total: US$35 million for national communications
Full-sized projects (> $1 Million) *Work Program consists of PIFs cleared by the CEO ** GEF Agency approval of project signifies start of project implementation *** Project completion follows terminal evaluation and financial closure
Medium-sized projects (< = $1 Million) * Agency approves MSP after CEO approval of the project and starts implementation.
Country endorsement(by Country National Operational Focal Point) All Project Identification Forms should have endorsement of Operational Focal Point when submitted to GEF for clearance (in case of full-sized projects) or approval (in case of medium-sized projects requesting project preparation grants)
Review criteria for FSP/MSP • Country eligibility and ownership; • Agency’s Comparative advantage; • Resource availability; • Project consistency; • Project design; • Baseline of the project; • Incremental costs of the project; • Project co-financing; • Monitoring and evaluation; and • Agency’s responses to comments and reviews.
Project baseline ProjectBaseline: Activities that would happen without GEF’s investment The costs of the baseline activities: to be covered by normal development expenditures such as government budgets, bilateral aid, the private sector, NGO resources, and loans from international financial institutions, including IDA and the Multilateral Fund. The impacts of the baseline activities (GHG emissions and global environmental benefits): to be estimated through historical projects and/or trend analyses
Alternative project and incremental costs Unit Cost Long run average cost – HCFC chillers Net incremental cost Net incremental cost Long run average cost – NON-HCFC chillers Operation years Year 1 Year 2 • Alternative Project: Activities that would happen with GEF’s investment • Incremental costs of the alternative project may include • technology licensing; • procurement of equipment and engineering services; • acquisition of additional natural resources, such as land for wind farm development; • training for professionals to manage new technologies, etc. • Net incremental costs can be negative
Case study 1: Commercialization of CFC-Free Refrigerators in China 1998-2006
Case study 2: Financing Energy Efficient Building Chillers in Thailand 1998-2005
Case study 3: Promotion of HCFC-free Energy Efficient Refrigeration and Air-Conditioning Systems in the Russian Federation CEO Endorsed 2010
GEF Co-financing • Total of cash and in-kind resources committed by: • governments, • other multilateral or bilateral sources, private sector, • NGOs, project beneficiaries, andconcerned GEF agencies. • Essential for meeting the GEF project objectives
Historical GEF Co-financing (US$ million)Ratio in climate change mitigation 3:18
Key for HCFC/EE project development • Policy and regulation of the government; • Involvement of multilateral and local commercial banks; • Development of energy service companies (ESOCs); • Incentives to technology users; • Capacity building and development for technology users and commercial bank professionals; • Removing other barriers; and • Working together.
Conclusions (1) • GEF’s achievements in climate change • Financial mechanism for the UNFCCC • US$3 billion, over 850 projects, 150 countries • Leveraged US$18 billion co-financing in climate change projects • Mitigated about 2.5 billion tons of CO2 • GEF’s achievements in ODS and POPs • Invested US$ 613 million • Leveraged US$ 875 co-financing • Mitigated 1.155 GT of CO2 Equivalent
Conclusions (2) • Looking forward Climate Change GEF5 (2010-2014) • US$1.36 billion in climate change • Six strategic objectives • Greater positive impacts on global environment benefits • Baseline and co-financing are important in project development • Looking forward ODS and POPs GEF5 (2010-2014) • Three strategic objectives • More funds available • Developing projects that meet strategic objectives of CC, ODS, and POPs has high priority in the GEF. Linkages can be made with ODS and Hazardous Waste Management and ODS and Energy Efficiency.