1. T +1 (202) 466 6790 F +1 (202) 466 6797 1700 K Street NW Suite 410 WASHINGTON DC 20006 United States of America T +61 (2) 9231 6862 F +61 (2) 9231 3847 36 – 38 Young Street SYDNEY, NSW 2001 Australia T +64 (4) 913 2800 F +64 (4) 913 2808 Level 2, 88 The Terrace PO Box 10-225 WELLINGTON New Zealand T: +33 (1) 45 27 24 55 F: +33 (1) 45 20 17 69 7 Rue Claude Chahu PARIS 75116 France --- www.castalia-advisors.com Copyright Castalia Limited. All rights reserved. Castalia is not liable for any loss caused by reliance on this document. Castalia is a part of the worldwide Castalia Advisory Group. Panel 1: The Big Picture Opportunities and Who will Pay for Them October 14, 2010

2. Agenda  Barbados Carbon Abatement Curve  CDM was meant to have rich countries pay  Caribbean countries should find new ways to make rich countries pay 11

3. 2 Barbados Carbon Abatement Curve Win-win projects Save money Reduce CO 2 e Globally good projects Good for the planet But cost money Who should pay? US$26 per tCO 2 e Non-viable projects SWAC = Seawater Air Conditioning; HCPV = High Concentration PV; LCPV = Low Concentration PV

4. CDM was meant to have rich countries pay 3 The Clean Development Mechanism (CDM) allowed Certified Emission Reductions (CERs) in developing countries to be sold into developed country cap and trade systems The CDM is ceasing to function because:  CDM Compliance Mechanisms expire with Kyoto in 2012  The EU Emission Trading System (ETS) is the only significant market, but it has stopped working for post 2012-13 emissions reductions

5. Caribbean countries should find new ways to make rich countries pay 4 Run byWhat it provides Clean Technology Fund Governance structure under Multilateral Development Banks, UN, GEF, UNFCCC, and others Mostly debt, as well as equity, grants, guarantees Investment Plans cover selected climate-friendly sectors Expected 15-20 Investment Plans to be supported, 13 already endorsed—12 national, 1 regional (CSP in MENA) Post 2012 Carbon Credit Fund Governance structure under European Investment Bank and other European Public Financing Institutions Forward purchase up to 2020 of CDM-compliant carbon credits—CERs, ERUs (total €125million) In: RE, EE, fuel switch, fugitive methane, land use, forestry, CCS Out: Transport, water and wastewater Inter-American Development Bank Local fund manager (EGFL) under the Government of Barbados Funded Barbados Smart Fund (US$10million) for energy efficiency and small renewable energy projects Global Environment Facility — Per-kWh subsidy for promoting utility scale renewable energy development (for example, Jordan)