1. A city-wide approach to carbon finance
Climate change mitigation in Cities:
A city-wide approach to carbon finance
Monali Ranade
Carbon Finance Unit, The World Bank
Carbon Expo, Cologne
May 27, 2010

2. Why Cities and Carbon Finance?
Fastest growing source of greenhouse gas (GHG) emissions
High level of economic growth with very large population inflow
Continuous challenge to balance development and environmental needs
Inadequate level of engagement in CDM
Potential for carbon finance to facilitate low-GHG development in cities
Urban areas are the fastest growing source of global GHG emissions
By 2030, it is estimated that 80% of global GHG emissions will occur in cities (as per C40).
Due to competing socio-economic-political demands on its financial resources, cities require carbon finance to undertake specific GHG mitigation activities
Carbon Finance transactions require detailed assessment of GHG emission reduction. CDM methodologies of the Kyoto Protocol of the UNFCCC provide such assessment tools.
Current CDM methodologies cover a limited number of opportunities to reduce GHG emission within a city. Key areas such as buildings and non-motorized transport are not adequately covered. Moreover, CDM methodologies generally do not address policy and management interventions.
Currently, the largest share of city- based GHG projects deal with solid waste management.
The World Bank’s Carbon Finance unit is exploring options for developing a new “city-wide” Carbon Finance methodology. The methodology is in the early stages of development and this presentation should be considered work in progress.

3. GHG emissions in Cities
Transportation of Waste
Waste
Transport
Urban Forestry
Water
Grey water reuse
Sludge treatment
Pedestrian comfort
Energy
Traffic management systems
Biogas-to-
energy
Efficient water pumping
Heat island effect
Sources of emissions:
1. Transport
2. Solid Waste
3. Water
4. Energy usage
Emission sink:
Urban Forestry
City authorities are responsible for urban services like transport, waste, public buildings, water services and forestry (parks, recreation areas). Authorities also influence the behavior of city residents and visitors by enforcing regulations such as building codes, vehicular emission and specific awareness campaigns. The 4 sources of emissions add carbon dioxide to the atmosphere and the sink takes carbon dioxide from the atmosphere.
Mathematically, it should be possible for a city to be carbon neutral by creating sufficient green areas

4. Types of CDM Projects Bundle of Projects Program Single Project (PoA)
Single location
Many locations
Many locations, across countries
Single project owner
(e.g., 1 hydro plant)
Many project owners
(e.g., 10 hydro plant)
1 project only
A number of activities submitted as 1 project
(e.g., 10 hydro plants)
A number of activities submitted over the duration of a program
A single crediting period (e.g., 7/10years)
Single crediting period for all activities (7/10 years)
Each project has own crediting period
Project owner is known
All project owners are known
At least one project is known, rest included as they join
There are three types of projects under the CDM. A Program is expected to enable replication of the same type of activity. It is unique in the flexibility it provides on ‘when’ and ‘how many’ projects can be implemented under a program.

5. Options for cities to access carbon finance*
Option 1: Stand-alone project in one large city (e.g., LFG project)
Waste
City A
Transport
water
Options 2:
PoA across many cities (e.g., Transport)
Waste
Transport
City B
water
Option 3: Bundled project in two or more cities (e.g., EE in water pumping)
Option 1 is the dominant activity in the CDM. Most solid waste projects fall under this category.
Option 2 is the least common at present, but has a strong potential, if a strong central/national-level agency is willing to undertake the PoA.
Option 3 is a rarely used, complex option that requires all the cities to be equally developed.
City C
Waste
Transport
* Under CDM

6. How does programmatic CDM work
One Programme of Activities (PoA) & Many CDM Project Activities (CPAs) :One coordinating agency and type of intervention
PoA
Implements any
policy/measure
or stated goal
CPA..n
CPA1
CPA2
CPA4
CPA3
Achieve
GHG reductions
or removals by sinks
C.Figueres & M.Philips, 2007

7. Enabling cities to improve urban services while reducing GHG emissions
City-wide approach to carbon finance*
Enabling cities to improve urban services while reducing GHG emissions
Characteristics of an urban program
City Authority responsible for
Aggregation of GHG reductions
Implementation
Monitoring and verification
Baseline includes the urban area, current and projected growth
Technology and policy interventions identified in each sector
Strengthens on-going programs
Implementation through public-private partnerships, sub-contracts, ESCOs, etc
Water
CPA 7
CPA 8..
Energy
CPA 5
CPA 6..
Waste
CPA 3
CPA 4..
Transport
CPA 1
CPA 2..
In this approach, a program for GHG emission reductions is created at the city-level, covering all sectors in a city.
Urban Forestry
CPA 9, CPA 10
* This approach will be submitted to the CDM EB in June 2010

8. Structuring a city’s carbon program
Mayor /
City Manager
Water
Water supply
Energy
Street-light efficiency
Waste
Composting
Landfill Gas
Transport
Public transport
Low-carbon vehicles
Urban Forestry
Parks
Program Coordinator
Municipal Departments
Example of Projects
Cities work through an administrative system that involve multiple departments, each providing a specific urban service. Departments work either directly or through a sub-contractor.

9. Creating city-wide programs1
Establish a coordination office for the program 2
Establish the geographical and sector boundary for the program 3
Create an inventory of GHG emissions in the boundary 4
Identify responsible departments and agencies 5
Create appropriate incentives for relevant stakeholders 6
Identify interventions and establish program eligibility 7
Establish system for documentation and quality control 8
Implement and monitor the interventions 9
Quantify emission reductions: measure or estimate 10
Validate or verify ER benefit

10. Illustration of GHG mitigation impact
Business As Usual
GHG Emissions
GHG
Emission Reductions
Unit Tons of CO2e (Cumulative)
New Public transport
Composting
GHG Emissions with city’s carbon program
Buildings EE
Street-lights
Baseline
Energy + Waste + Transport sectors
Year 1 10
Assumptions:
10% Annual growth of emissions in the Business As Usual (BAU) scenario
Project and policy interventions included for each sector
Implementation start date and length varies for project interventions in the 10 year period
Emissions and emission reductions are cumulative

11. Visit: http://carbonfinance.org
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