Investment Frameworkon
Clean Energy & Development
CDM DNA Forum
Addis Abeba; 4-6 October 2007
Dr. Yogesh Vyas
Lead Environmentalist
African Development Bank
Slide 2
AfDB Clean Energy For Development Investment Framework
1. Climate Change Impacts
2. G8 request to MDBs
3. MDB Clean Energy Investment Framework (CEIF)
4. Energy & Development nexus
5. AfDB Strategy on CEIF
6. AfDB CDM Facility
Slide 3
1. Climate Change effects and impacts
1990 CO2 emissions from fossil fuel combustion and land-use change
Africa is not a major contributor to GHG emissions. Largest share of Africa’s contribution is from land use change and not from energy consumption
Slide 4
1. Climate Change effects and impacts
Slide 5
1. Climate Change effects and impacts
Slide 6
1. Climate Change effects and impacts
More severe droughts Desertification Changing eco systems Reduced crop yields Floodings and storms Increased vector diseases Rising sea level Etc.
Slide 7
2. G8 request to MDBs
G8 Gleneagles Communiqué (July 2005) Focus on Africa and on Climate Change Secure, reliable and affordable energy sources
are fundamental to economic stability and development
Action has to be taken now to slow, stop and reverse greenhouse gas emissions promote energy efficiency conservation of energy improvement of policy-, regulatory- and financing-
frameworks accelerated deployment of cleaner technologies
Slide 8
2. G8 request to MDBs
World Bank and RDBs requested to develop a
clean energy investment framework to: increase the volume of investments on
renewable energy and energy efficiency assist regional member countries to identify less
greenhouse gas intensive growth options support private sector to develop and finance
cost-effective projects on energy efficiency and low-carbon energy sources
Slide 9
2. G8 request to MDBs
Timeframe: July 2005: request by G8 to MDBs November 2005: meeting with finance ministers
(London) April 2006: World Bank to report at IMF Spring
Meeting 3rd / 4th quarter: RDBs to present IF strategies /
action plans to their Boards G8 summit 2007 (Germany): report progress G8 summit 2008 (Japan): report outcomes
Slide 10
3. AfDB Clean Energy For Development Investment Framework
3 Pillars: Increase Energy
Access in Sub-Saharan Africa
Transition to Low Carbon Economy
Adaptation to Climate Change
Slide 11
Energy in Africa
Gas Flaring in Gulf of Guinea
Slide 12
Energy in Africa Africa has 13% of global population but consumes 5% of
global energy and 3% of global electricity
Only 23% of population in SSA and 91% in North Africa has access to electricity yet world average is 73%
Lowest energy consumption per capita of 0.7 toe compared to world average of 1.6 toe
Traditional biomass (wood fuel and charcoal) contributes to over 82% of energy used in SSA-less South Africa
Between 2000 and 2050, absolute number of people depending on biomass expected to rise from 583 to 823 million
Slide 13
Energy in Africa
Abundant resources available (hydro, oil, natural gas, biomass) but not developed
Unevenly distributed resources yet poor interstate energy trade. (Oil and Natural gas are in North and West Africa and Coal in Southern Africa)
Energy fuel/source
reserves consumption / year
Reserves / consumption
Oil (in Mtoe) 9300 347 27 years
Natural Gas (in trillion m3)
9.9 0.14 71 years
Coal (in Mt) 61700 231 266 years
Slide 14
Energy and development nexus
Energy is central to all developmental interventions
Energy is a pre-requisite for poverty alleviation and attainment of the MDGs
The poor are forced to pay a higher price for their energy. The price is paid in form of: Human time and labour Economic cost Health costs (mainly indoor air pollution), and Social and gender impact of energy services.
Slide 15
4. Clean Energy Investment Framework
Two pronged approach to Climate Change: Clean energy and low-carbon economy
Focus on cleaner utilisation of fossil fuels Increased used of renewablesAttention to increasing access to energy
Adaptation to climate changeClimate proofing of investments Integration of adaptation into project cycle
Slide 16
4. Clean Energy Investment Framework
Major energy challenges : strengthening energy security for
macroeconomic stability, improving energy services for economic
growth and better quality of life, andreducing environmental and human health
threats from energy production and use.Low carbon drive must not have additional
cost on the poor“Shared but differentiated responsibilities”
Slide 17
4. Clean Energy Investment Framework
Strategies clean energy Clean energy for economic growth and
sustainable development Low-cost and high-impact solutions Project Development Fund to assist the
development of clean energy projects Changes in national energy fiscal and regulatory
policies
Slide 18
4. Clean Energy Investment Framework
Adaptation challenges: Human-induced change: combustion of fossil
fuels & land management practices Major challenges to Africa The poor are most vulnerable, having the least
means to adapt Ensure long-term adaptation strategies
compatible with short term impacts
Slide 19
4. Clean Energy Investment Framework
Adaptation strategies: Integrating adaptation in PRSPs, Country
Strategy Papers and project cycle Disaster preparedness improvement through
proactive actions – early warning systems Development of tools and checklists Research and Development
Slide 20
4. Clean Energy Investment Framework
Investment needs are huge $ 300 billion per year to meet rising energy
demands in developing countries $ 60 billion / year additionally for a low-carbon
option $ 40 billion / year as cost of adaptation
Public and private resources need to be mobilised
New financial instruments needed
Slide 21
Pillar 1: Energy Access - AfDB Priorities
Enabling environment for maximising private participation
Mobilisation of financing and private participation
Electricity for the MDGsEnergy access for rural developmentEnergy for urban developmentRenewable energy and energy efficiencyTransportation sector fuel efficiency and
emissions; andFacilitating countries’ access to CDM
Slide 22
Pillar 2: Clean Energy and RE/EE, AfDB Priorities
>50MW: Hydropower, Geothermal power, Co-generation, Windpower; Biofuel production.
<50MW: Promote renewables aimed at income generating activities in the agro/forest industrial sector such as co-generation and small hydro.
<5MW: Solar water heaters, windpumps and solar PVs use in remote rural dispensaries, schools, commercial wildlife and coastal tourism-linked enterprises.
< 1kW (household level):Improved biofuel cookstoves in countries where charcoal is a major fuel and indoor air pollution benefits.
Slide 23
The Private Sector Department of the AfDB focuses mainly to develop (a) the wind energy area (b) the small size hydropower (c) bio-fuel, (d) Geothermal, and (e) Co-generation
The Middelgrund wind farm – Copenhagen - Denmark
30 MW hydropower - Tunisia
Slide 24
The Current ADB Interventions in promoting the use of Renewable Energy
Morocco: Solar/Gas Thermal Power Station (250 MW, 30 MW Solar)
(EUR 200 Mio)
Egypt: Solar/Gas Thermal Power Station (120 to 150 MW)
Slide 25
The Current ADB Investments in of Renewable Energy Madagascar: Small Hydro 15 MW – Euro14 M
Uganda: Bujagali Hydro 250 MW – Euro120 M
Cogeneration and Small-hydro Projects in the Sugar and Tea Industry in East and Southern Africa
Slide 27
Small Hydro for Tea Industry in East Africa
UNEP/GEF/AFDB small hydropower initiative for the tea industry in Eastern and Southern Africa countries (Kenya, Uganda, Tanzania, Rwanda, Burundi, Malawi, Mozambique and Zambia). East African Tea Trade Association (EATTA) is the executing agency.
Key objectives:- Reduce energy cost in the tea industry- Increase reliability of power supply- Increase power supply for rural electrification- Encourage development of self sustaining small hydro industry in the region- Reduce greenhouse gas emission by replacing use of diesel run backup generators in the tea factories
Project expected to install 10 MW of small hydropower within 4 years and leverage over 82 MW in the long-term
For more information, visit - http://greeningtea.unep.org
Slide 28
Small Hydro in Tea Industry project - Planned installations
4 year project period Beyond 4 years
10 MW additional installed capacity of
small hydro promotion projects
82+ MW additional small hydro capacity
capacity
Slide 29
Cogen for Africa Project Project funded by GEF, UNEP and AfDB
are co-implementing agencies, AFREPREN/FWD is executing agency.
Covers 7 countries: Kenya, Uganda, Tanzania, Ethiopia, Malawi, Swaziland and Sudan.
Modeled on success of Mauritius cogen program which now accounts for close to 40% of national power supply.
Objectives Promote increased investment in efficient
cogeneration systems in eastern and southern Africa.
For more information, visit - http://cogen.unep.org
Slide 30
Cogen for Africa project - Planned installations
6 year project period Beyond 6 years
40 MW additional installed
capacity of cogeneration
promotion projects
20 MW pipeline projects
200+ MW additional cogeneration
capacity
Slide 31
COFAMOSA Ethanol Project Under the proposed COFAMOSA Irrigation Project, the Government
of Mozambique intends to develop an area of 29,000 ha for irrigated land under sugar cane for sugar and ethanol production.
The goal of the project is to reduce poverty levels through increased exports of sugar and ethanol from Mozambique to the region and beyond.
Based on the preliminary studies, the project aims to: develop 29,000 ha of irrigated land in possibly 3 phases, over a period of ten
years (first and second phase 10,000 ha each and the third phase of 9,000 ha)
re-settle over 500 farmers in the project area make use of already existing investment in Corumana Dam and available
good irrigation soils; create 18,000 jobs (70%) of economically active people in the area); and make permanent impact in districts of Moamba and Magude and the overall
Mozambican national economy. Currently the Bank is funding, through the African Water Facility a
consultancy srevice to undertake an integrated feasibility study for the envisaged project. The Study will commence early next year
Slide 32
Slide 33
Slide 34
Types of Carbon Project Eligible for CDM
Hydroelectric power offsetting the need for coal- or gas-fired generation
Extending grid to reach customers currently using diesel or kerosene
Reducing CO2 and possibly methane by generating energy and bio-fuels from sugar industry by-products -- bagasse and molasses
Replacing firewood/kerosene/cowdung with biogas from livestock and human wastes
Extracting methane from landfills or avoiding its generation trough composting organic waste in urban dumpsites
Extracting methane from disposal of sewage sludge Capturing No2, a powerful greenhouse gas, from fertilizer
production Sequestering CO2 by tree planting, small plantations, land
restoration (limited capacity to buy though)
Slide 35
ADB CDM Facility (1)
ADB intends to establish a CDM facility Objectives:
Integrate climate change in Bank operations Help remove reg. bottlenecks to clean energy and
scale up investment in modern technologies: Suppressed grid energy demand and Off-grid energy access Modern waste management Afforestation and reforestation projects
Build carbon capacities in public and private sectors Pioneer innovative approaches that combine multiple
stream of revenues from carbon offsets, micro credit, weather insurance, etc
Slide 36
ADB CDM Activities
technical assistance for identification and design of CDM-eligible projects,
preparation of PDD;development of new methodologies for
programmatic or bundling of CDM opportunities for small-scale regional projects;
technical studies to identify interested countries’ range of prospective projects and programs eligible
Slide 37
ADB CDM Activities (cont)
policy assistance to address regulatory barriers to the development and execution of CDM projects;
capacity-building and awareness raising by organising training programs and information dissemination; and
strengthening national designated authorities (DNA).
AfDB Carbon facility would be announced formally at the 13th UNFCCC CC in Bali, Dec 2007
Slide 38
Pillar 3: Adaptation: AfDB Priorities
Promote development and use of climate risk assessment and management methods to minimize climate change and variability risks
Application of climate risk screening tools to development programs and investment projects
Support mainstreaming of climate issues into key regional, national, local and sectoral planning, policies and decision making processes,(e.g PRSPs, etc)
Plan to introduce AfDB Policy on Climate Risk Management & Adaptation
Slide 39
Climate Information for Development in Africa
Objective: Improve the availability and use of climate information and services in support of sustainable development and achievement of the MDGs.
Raising Policy awareness of politicians, planners and the public for broad ownership, support and commitment to adaptation to climate variability and change.
Climate Risk Management for strategic MDGs development planning, sectoral management, livelihood strategies and disaster risk reduction.
Climate Services for the use of MDGs decision-makers in government, the private sector and civil society.
Observations, data management and infrastructure upgrading to provide essential data for climate services, risk management and policy development.
The results are to be achieved in part by drawing on, and strengthening the capacity of existing climate institutions in Africa.
Slide 40
Examples of climate risk management operations (3)
African Development Bank: Malawi, agriculture
Climate Adaptation for Rural Livelihoods and Agriculture (CARLA)
US$ 3.3 million added to US$ 24 million baseline
Slide 41
CARLA: Managing climate risk to sectoral investments in Malawi
ADB Smallholder Crop Production and Marketing Project
(SCPMP) Irrigation development Farmer support programme
Recurrent floods and droughts
are affecting investments, and
reducing development
outcomes.
Slide 42
CARLA objectives
strengthen the climate resilience of baseline
investments and their outcomes
while at the same time enhancing broader climate
risk management in relation to agriculture and food
security in Malawi, including integration in strategic
and operational planning in the agriculture sector.
Slide 43
CARLA components
COMPONENT 1 – INVESTMENTS, e.g.:• Crop diversification, • Adjusting timing of farm operations• Changes in tillage practices• Food reserves and storage• Irrigation and efficient water use
COMPONENT 2 – EARLY WARNING SYSTEMS
COMPONENT 3 – ENABLING ENVIRONMENT• Policy, legislative, and institutional frameworks• Capacity building of key institutions • Targeted knowledge and monitoring systems • Multi-stakeholder dialogues
Slide 44
Thank you for your attentionYogesh Vyas
African Development [email protected](216) 71 10 21 78