H OST C OUNTRY C OMMITTEE M EETING I NNOVATIVE APPROACHES TO CARBON FINANCE

H OST C OUNTRY C OMMITTEE M EETING 2 Carbon Finance can lower barriers to low-carbon investments but… Carbon credits contribute to cash flows… when the key challenge is to raise capital for up-front investments Finding a way to bridge this gap should boost the impact of carbon finance

H OST C OUNTRY C OMMITTEE M EETING 3 Case Study: Tanzania Renewable Energy Program Typical Small-Scale Renewable Energy Project Funding Plan Funding Source% Debt Financing70% Equity Contribution by Promoters15-20% Connection Grant from REA5% Equity Gap5-10% PoA under consideration for support by the World Bank Carbon Partnership Facility. C/ME: Tanzania’s Renewable Energy Agency (REA)  CPF to provide advance payment on CER delivery  Required risk-mitigation measures set-up by REA with support from donors:  Carbon Advance Revolving Account – assumes risk before commissioning  CER Guarantee account – mitigates CER under-delivery risk CPF Donors (through REA) REA Carbon Advance (equiv. 5% investment) CERs CER Guarantee Account Emission Reduction Purchase Agreement Carbon Advance Revolving Account Renewable Energy Project

H OST C OUNTRY C OMMITTEE M EETING A proposal for low-income countries: the Revolving Grant Facility Facility CDM Market Donors Projects $ CERs $ $ $ Upfront grant against right for a share of future emission reductions