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UNDP - Fortis MDG Carbon Facility

UNDP - Fortis MDG Carbon Facility. Marcel Alers Thursday, February 14, 2008 West Africa Carbon Finance Investment Forum for Financial Institutions, Dakar, Senegal. MDG Carbon Facility: The Rationale. Geographical Imbalance in the CDM (Projects). Technological Imbalance in the CDM (Credits).

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UNDP - Fortis MDG Carbon Facility

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  1. UNDP - Fortis MDG Carbon Facility Marcel Alers Thursday, February 14, 2008 West Africa Carbon Finance Investment Forum for Financial Institutions, Dakar, Senegal

  2. MDG Carbon Facility: The Rationale Geographical Imbalance in the CDM (Projects) Technological Imbalance in the CDM (Credits) Renewables 24% Industrial Gases 43% CH4 Reduction 18% Other 3% Cement & Coalmine 5% Fuel Switch 3% Energy Efficiency 7% Source: UNEP Risoe Centre

  3. UNDP’s core objectives in carbon finance • Improve access to carbon finance for a broader range of developing countries and project types through creating effective carbon markets (capacity development and one-stop shop service in carbon project development in pre-market situations) • Maximize carbon development dividend through developing an MDG Carbon portfolio that strike a balance between cost-effective projects (e.g. landfill methane recovery projects) and high development impact projects (e.g. small agro-forestry projects) • Develop capacity of programme countries to combine & sequence different funding sources (EFR, ODA, GEF, CDM/JI) to channel direct investment towards climate-friendly technologies

  4. MDG Carbon Facility Mission: Market Transformation Objective for MDG Carbon Facility MDG Impact CurrentCDM Market Geographical & Sectoral Diversity

  5. UNDP’s approach to leveraging carbon finance for development • Step 3: • MDG Carbon Facility -project management services to individual project developers (carbon finance) • Project management services to individual project developers to demonstrate the profitability of carbon finance in nascent CDM markets • Compilation, analysis and dissemination of lessons learned and experiences • Step 1: • Remove barriers to direct investments in climate-friendly technologies (EFR, GEF, ODA, foundations) • Analysis of key barriers for targeted sectors • Initiation of policy dialogue with regulatory authorities on barrier removal strategies • Development of sector-specific strategies • Implementation of barrier removal activities • Step 2: • Establishment of efficient host-country procedures for CDM & JI review and approval (EFR, ODA) • Assistance in establishing DNA, CER ownership and approval procedures • Identify priority sector to maximize the development dividend

  6. Attractivelow-carbon project CDM revenue Infeasiblelow-carbon project GEF financing Combining & sequencing GEF and CDM financing Financial Return Risk of Investment

  7. UNDP’s Project Development Services Signing of ERPA with Fortis Project registered with CDM First Credits Issued • Part 1: • Due Diligence • Part 2: • Project • Documentation Part 3: EstablishMonitoring System • Five Tools • Carbon Layer • Technical • Finance & Legal • MDGs/Environment • Country risk • Two step process • Initial screening • In depth evaluation • Preparation of documentation • Approval by host country and CDM Board • Review by 3rd party auditors • Implementation and oversight of monitoring system in project’s first year

  8. MDG Carbon Facility: What it is MDG Carbon Facility CDM Activities UNDP Fortis Bank Purchase of Carbon Credits Technical Assistance in Project Development CDM Projects

  9. Opportunity for Provision of Underlying Finance UNDP Fortis Bank Carbon Finance Technical Assistance Purchase Of Credits CDM Projects Loans Underlying Finance to Project 3rd Party Bank

  10. Carbon Projects: MDG Impact Components by Project Type Aggregate Portfolio Attributes GHG Emission Reduction # 1 e.g. a renewable electricity project with employment effects, rural electrification and local air quality improvement Carbon component # 2 e.g. a forest conservation or reforestation project with land rehabilitation benefits # 3 Poverty Alleviation e.g. a landfill gas project with small local air benefits, or a clean coal project MDG component Biodiversity Protection # 4 e.g. a series of school building projects with solar power Other MDG Benefits

  11. www.undp.org/mdgcarbonfacility/ • www.mdgcarbonfacility.org/

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