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Meeting the challenge is nota choice between growthand climate change

a climate smart world iswithin reach if we act now,act together and actdifferently

and build on new finance,technology and capacity atscale.

Climate change as a development challengeClimate change as a development challengeJari Vayrynen, Sr. Environmental

Specialist, World Bank


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Objectives:

Enable WBG to effectively support sustainable development

and poverty reduction, as climate risks and climate-relatedeconomic opportunities arise

Facilitate global action and interactions among all countriesKey principles:

Working in partnerships guided by UNFCCC process

Country-led, country-driven, no regrets actions Approach tailored to specific needs of diverse clients

WB Strategic Framework for Climate Chance andDevelopment

MDB & UNPartnerships

Knowledge &Capacity

ClimateInvestment

Funds

Bottom UpMomentum

ResourceMobilization

Regional / CountryStrategies


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Financing Climate Change MitigationFinancing Climate Change Mitigation

Scale of financing needs formitigation estimated by UNFCCC at$200 billion annually

Concessional resources are verylimited for low carbon investments

in developing countries and

transition economies Mobilizing private sector finance is

crucialMarket mechanisms can play a

central role


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Finance scaled-up demonstration, deployment,and transfer oflow carbon technologies

Country Investment Plans:q Support country development strategiesq Leverage financial products of International

Financial Institutionsq Stimulate private sector engagement

Clean Technology

Fund (CTF)

$5 billion

Strategic Climate

Fund (SCF)

$1 billion

Targeted programs with dedicated funding to pilotnew approaches with potential for scaling up

q

Pilot Program for Climate Resilience: Mainstreamclimate resilience into core development planningqForest Investment Program: Reduce emissions

from deforestation and forest degradationqScaling Up Renewable Energy in Low Income

Countries


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Mexico

Turkey

Egypt

Energy Efficiency - Replacing inefficient lighting and appliances;expectedemissions reductions of 4 million tons of CO2 per year

Urban Transport - 20 bus rapid transit corridors with low-carbon bustechnologiesRenewable EnergyProposed CTF $500 million leverages $6.2 billion

Renewable Energy - Implementing "intelligent" grid management andcontrol systems to support large-scale integration of wind power

Renewable Energy and Energy Efficiency - Promoting private sectordevelopment through credit lines to local development banksProposed CTF $250 million leverages 2.1 billion

Wind Power- From


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World Bank Carbon Market initiativesWorld Bank Carbon Market initiatives

World Kyoto Funds under implementation reaching over $2 billion infunding and about 130 ER purchase agreements signed

Progress with new facilities:

Exploring possibilities for further engagement Carbon in Agriculture sector Carbon Capture and Storage (CCS)

Carbon Asset Development Fund (CADF) operational at 7 million

Carbon Fund currently 100 million (minimum target 200 million)Carbon

Partnership Facility(CPF)

Forest CarbonPartnership Facility

(FCPF)

Operational since June 2008 - current donor pledges at $107 million

37 Developing Country Participants


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How do carbon markets work?How do carbon markets work?

What is traded?

What is the underlying principle?

ated as part of an emission cap or reduced by a project or program activity. These units are labeled based on t

of CO2 emitted anywhere in the world has exactly the same impact on climate change and should therefore be r

Why should this be of interest?Significant new investments and financial flowsApplication of new technologies and financial instruments to reduce emissions at lower costs; anTransition to a lower carbon economy better tuned to cope with future resource and environmen

What are the benefits?Lowers compliance costs for meeting emission reduction obligations; ;Catalyzes financial and technology flows to developing countries to facilitate low-carbonCreates a global and long-term price signal to lower carbon intensity.


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educe emissions, a country can use trading to purchase reductions in another country to achieve compliance withnclude:CES (called AAUs) from other countries with commitments which are below their Kyoto cap (International Efrom projects which reduce emissionsuntries (Clean Development Mechanism CDM)transition (Joint Implementation JI)

Kyoto Protocol-based carbon marketsKyoto Protocol-based carbon markets

Domesticactions

Baselineemissions

1990

Businessas-usualprojectedemissionsby 2008

1990Baseline

Kyototarget

Allowances fromIET

Project-basedOffsets (CDM/JI)

2008-12

Kyoto allowedemissions

Projected emissions increase between 1990 and 2008-2012

Sources ofreduction

CDM: Offsets obtained from anon-Annex I countryJI: Offsets obtained fromanother Annex-I country;

IET: Kyoto allowancesobtained from anotherAnnex-I country

A significant amount of thereduction must be achievedthrough domestic measures

3


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Industrialized countrywith an emissions cap

Baselineemiss

ions

Baseline Scenario

Emi

ssionReduction

Units

(ERUs)P

rojectemissions

ProjectScenario

How does Joint Implementation (JI) work?

Emissions target

Purchase ofallowances

Project benefitsfrom increased

cash flow

$

$

ERU

Purchase of ERs

Domestic action


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Carbon Market Values in 2008Carbon Market Values in 2008(in(in M US$)M US$)

Allowance MarketsProject-BasedTransactions

CDM

6,500

EU EmissionTrading Scheme

91,910

SecondaryCDM

26,300

JI

300

Assigned AmountUnits

210


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World Bank Carbon FinanceWorld Bank Carbon FinanceProjects in BulgariaProjects in Bulgaria

Joint Implementation projects: Sofia District Heating

Pernik District Heating

Svilosa Biomass Green Investment Scheme (GIS)

options study GIS is a system where revenues from AAU trades

are reinvested in environmental projects

To our knowledge Bulgarian Government has not yeconcluded any GIS transactions


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Climate change is fundamentally a development,issue not only an environmental issue

Huge financing needs Carbon markets will continue to be play a major

role in catalyzing low carbon investments indeveloping countries and transition economies

,The World Bank through a range of

financial instruments and capacity,building activities is deeply engaged

in this effort

ConclusionsConclusions


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Thank You.Thank You.

Jari Vayrynen [email protected]

Please visit us online at www.carbonfinance.org
http://www.carbonfinance.org/http://www.carbonfinance.org/

Documents

Bulgaria_forum_presentation