Performance Based Climate Finance Facility (PBC) Alejandro Miranda Velazquez Latin American and Caribbean Forum Carbon (LACCF) 2014 Bogotá, September 4, 2014

CAF, in cooperation with KfW, develops and implements the Initiative. Performance Based Climate Finance Facility (PBC) Background: CAF, in cooperation with KfW, develops and implements the Initiative. The development aid funds come from the Latin America Investment Facility (LAIF) of the European Union.

Prevent the emission of 1,000,000 tCO2e by December 31st, 2021 Performance Based Climate Finance Facility (PBC) Objective: Promote sustainable, low carbon development in the region, through the design and implementation of 2 sector mitigation schemes The facility has 10 million Euros for the design and implementation of the initiative, 5 million for each initiative The sectors of interest are: Renewable Power Generation - RE, Energy Efficiency, Municipal Solid Waste Management and Transportation Goal: Prevent the emission of 1,000,000 tCO2e by December 31st, 2021

Performance Based Climate Finance Facility (PBC) Description: The Program will award financial incentives (subsidies) for the implementation of pilot projects that can serve as an example to the entire sector The incentive will be delivered on an ex-post basis, based on the amount of carbon dioxide the project prevents (e.g. $/tCO2e) The amount of the incentive depends on the type of technology implemented The number of projects that receive financial incentives will depend upon their mitigation potential

SECTOR MITIGATION MECHANISM Performance Based Climate Finance Facility (PBC) Components: SECTOR MITIGATION MECHANISM Promotes sustainable and low carbon development in the region Design of sector schemes and capacity building for implementation (Technical Assistance € 2 MM) Design of Implementation Concept Elaboration of additional studies Design of MRV Mechanism Emissions Monitoring and Verification (5 years) Economic incentives for the implementation of pilot projects (€ 8 MM) Grant for X number of projects until the emissions reductions goal is achieved (1 MtCO2e) Lines of financing or refinancing granted by CAF and / or KfW

State Bank (Prosaneamiento) Technical requirements for measuring tCO2e Performance Based Climate Finance Facility (PBC) Municipal Solid Waste Sector in Ecuador Financial Mechanism : State Bank (Prosaneamiento) European Union (LAIF) 4 Million EUR Grant Projects: Technical closure of dumps Landfill construction Others Loan Incentive $/tCO2e (Ex-post) + Capture and incineration of methane in the Dumps / Landfills Mechanical / Biological treatment: Composting and Anaerobic Digestion. Capture of methane for electricity generation In the future: NAMA Facility Green Climate Fund Bilateral Agreements Other MRV Grants/ Subsidized Loans Technical requirements for measuring tCO2e

Current Status / Progress: Performance Based Climate Finance Facility (PBC) Municipal Solid Waste Sector in Ecuador Current Status / Progress: Pre-feasibility study of the mechanism (Project Idea Note, late 2012) Signing of the Memorandum of Understanding with the Ministry of Environment of Ecuador (MAE), January 2014 Awarding of the Implementation Concept (August 2014) Design of the Sector Mitigation Scheme Identification of the type of activities / technologies eligible to receive the subsidy Defining the amount of subsidy to deliver according to the type of project Identification and analysis of the pilot projects Design of the Measurement, Reporting and Verification (MRV) methods (simpler than for CDM projects)

Many thanks for your attention! Alejandro Miranda Executive, Climate Change Unit amiranda@caf.com www.caf.com