1. Low-carbon Energy Projects for Development in Sub-Saharan Africa Unveiling the Potential, Addressing the Barriers Financed by the Norwegian Trust Fund, Supported by CF-Assist Presentation to the Reference Group of the NTF, November 13, 2008 Christophe de Gouvello The World Bank Massamba ThioyeFelix B. Dayo Senior Energy and CDM consultant Presented by : Ashok Sarkar The World Bank

2. Summary of the Presentation I. Strong development of the CDM Except in Sub Saharan Africa II. Unveil the Potential of CDM Energy Projects in SSA III. Addressing the Barriers Recommendations

3. Pace of releasing new approved Methodologies by Regulatory Bodies (EB+MethPanel) Ch. de Gouvello - WB / AFTEG - May 2006 Member of the MethPanel of the CDM Source: UNFCCC data y = 0.0435x - 1647.4 R 2 = 0.9791 0 10 20 30 40 50 60 May-03Aug-03Nov-03Feb-04May-04Aug-04Nov-04Feb-05May-05Aug-05Nov-05Feb-06May-06Aug-06Nov-06Feb-07 More than 120 CDM Methodologies Approved (August 2008) The number of CDM eligible activities has expanded quickly

4. Cumulative Number of CDM Projects per Methodology (projects that officially began validation process) - 10 20 30 40 50 12/1/03 2/1/044/1/04 6/1/048/1/04 10/1/0412/1/04 2/1/054/1/056/1/058/1/05 10/1/0512/1/05 2/1/06 4/1/06 Nb Proj under ACM0002 Nb Proj under ACM0003 Nb Proj under ACM0004 Nb Proj under ACM0005 Nb Proj under ACM0006 Nb Proj under ACM0007 Nb Proj under ACM0008 Nb Proj under AM0001 Nb Proj under AM0002 Nb Proj under AM0003 Nb Proj under AM0004 Nb Proj under AM0005 Nb Proj under AM0006 Nb Proj under AM0008 Nb Proj under AM0009 Nb Proj under AM0011 Nb Proj under AM0013 Nb Proj under AM0014 Nb Proj under AM0015 Nb Proj under AM0016 Nb Proj under AM0018 Nb Proj under AM0021 Nb Proj under AMS-I.C Nb Proj under AMS-I.D Nb Proj under AMS-II.B Nb Proj under AMS-II.C Nb Proj under AMS-II.D Nb Proj under AMS-III.B Nb Proj under AMS-III.D Nb Proj under AMS-III.E Ch. de Gouvello - WB / AFTEG - May 2006 Member of the MethPanel of the CDM Source: UNFCCC data The Y axis has been truncated at 50 Nb Proj under ACM0001 Each new approved methodology unleashes a new segment of the CDM projects potential

5. -901802703604505406307208109009901,0801,1701,2601,350 Dec. 1rst, 2003 Dec. 2004Dec. 2005Dec. 2006Dec. 2007 Number of CDM projects that have already applied for validation - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2,800 Nb of calendar days since Dec 1 rst, 2003 Nb of Projects Number of projects submitted for validation is now doubling every 8 months Ch. de Gouvello WB / LCSEG Source: UNFCCC data The number of CDM projects that have begun or completed the validation process increases as the following exponential /polynomial function of time y = 1E-06x 3 + 4E-05x 2 - 0.04x R 2 = 0.99 August 1, 2008 N= 3,900

6. Annual value of CDM/JI Emission Reductions Transactions (billion USD) (up to 2012 vintages) However still some uncertainties for post 2012 (second commitment period) Already more than 5 billion dollars of North-South Net Transfer before end of 2012 Source: State and Trends of the Carbon Market 2008. Karan Kapoor and Philippe Ambrosi, World Bank, May 2008

7. Location of approved CDM projects (source: UNFCCC) Very few CDM projects so far in Sub-Saharan Africa Share in non-Annex 1 group Number of SSA CDM projects in validation pipeline 1.4 % Foreign Direct Investment, net inflows, 2004 (US$) 5.7 % Gross domestic product, 2004 5.1 % Electricity consumption, 2004 5.1 % CO 2 emissions, 2004 (without LULUCF) 5.4 % GHG emissions, 2000 (with LULUCF) (tCO 2 e) 13 % The number of CDM projects should be greater

8. Same facilities hosting CDM projects in other regions also exist in Sub Saharan Africa FlaringPower Plants Distribution Losses Renewable Energy Incandescent lamps Motors Fossil fuel in Industry Cement IndustryTransport WoodfuelBiomassLandfill

9. II.Check the Potential : How many potential CDM projects in SSA similar to projects developed in other countries with approved methodologies ?  22 types of projects  44 countries III.Investigate the reasons why not implemented :  Recommendations

10. ACM007, ACM0013AMS-II.A, AM0045AM0020, AM0046 AM0052, AM0061AMS-II.C, AM0044 AM0062, AMS-II.BAM0058 AMS-I.B,C ACM0002, AM0019 AM0026, AM0042 AM0048, AM0015 AMS-I.A,D, AM0005 AM0032, ACM0004 ACM0012, AM0024 AMS-III.Q, AM0022 Power Generation Transport / Distribution Consumption/ Use Renewable Energy - CHP in sugar mills - Agricultural residue - Forest / wood-process residues - Typha australis - Jatropha biofuel - Hydroelectricity - Photovoltaics rural areas - Landfill gas - Switch to compact fluorescent lamps -Energy-saving household appliances -Non-lighting electricity for industry Grid loss reductions Generation from Fossil Fuels - Addition of 2 nd cycle - CHP in industry CDM Projects Power Sector Nb Proj = 204 CERs = 36 MtCO 2 /y Power = 5.9 GW Inv. Cost = $ 7.1 billion CO 2  Nb Proj = 373 CERs = 73 MtCO 2 /y Power = 17.8 GW Inv. Cost = $ 17.8 billion Nb Proj = 67 CERs = 2.4 MtCO 2 /y Power = 0.7 GW Inv. Cost = $ 1 billion Nb Proj = 553 CERs = 141 MtCO 2 /y Power = 27.5 GW Inv. Cost = $ 38.5 billion Nb Proj = 406 CERs = 20 MtCO 2 /y Power = 4 GW Inv. Cost = $ 5.7 billion Nb Proj = 40 CERs = 3 MtCO 2 /y Power = 0.6 GW Inv. Cost = $ 0.8 billion Nb Proj = 555 CERs = 177 MtCO 2 /y Power = 28 GW Inv. Cost = $ 54 billion Nb Proj = 26 CERs = 25 MtCO 2 /y Power = 6.4 GW Inv. Cost = $ 9.4 billion Nb Proj = 3 CERs = 0.9 MtCO 2 /y Power = 0.01 GW Inv. Cost = $ billion Nb Proj = 204 CERs = 36 MtCO 2 /y Power = 5.9 GW Inv. Cost = $ 7.1 billion

11. CH 4  CO 2  Fuel production CH 4  CO 2  Transport CO 2  Thermal Use/ Consumption XX CDM activities Fuel for Industry (Coal, Fuel Oil, Gas) Production - Flared gas recovery - Coal mine methane - Waste gases in crude oil refinery Thermal Use and Consumption - Improved steam system - Reduced clinker use in cement manufacturing Nb Proj = 55 CERs = 92 MtCO 2 /y Power = 45 GW Inv. Cost = $ billion Nb Proj = 18 CERs = 2.5 MtCO 2 /y Power = 0.1 GW Inv. Cost = $ 0.1 billion Nb Proj = 26 CERs = 4.3 MtCO 2 /y Power = 0.7 GW Inv. Cost = $ 0.9 billion Nb Proj = 211 CERs = 37 MtCO 2 /y Power = GW Inv. Cost = $ billion Nb Proj = 46 CERs = 2.8 MtCO 2 /y Power = GW Inv. Cost = $ 0.1 billion

12. CO 2  Fuel production CO 2  Transport / Distribution CO 2  Use/ Consumption CDM activities Fuel for vehicles Production - Biodiesel from Jatropha Consumption and Use -Shift to Bus Rapid Transit (BRT) Nb Proj = 60 CERs = 3.2 MtCO 2 /y Inv. Cost = $ billion Nb Proj = 63 CERs = 12 MtCO 2 /y Inv. Cost = $ billion

13. CO 2  Production of woodfuel Transport / Distribution Consumption CDM activities Woodfuel for households Production - Improved Charcoal Production Nb Proj = 68 (PoA) CERs = 22 MtCO 2 /y Inv. Cost = $ 0.2 billion

14. Technical Potential of Low Carbon Energy Projects in SSA (available for each of the 44 countries considered – see attached CD) $ 157,6 billionInvestment cost (only for projects for which cost data is available) 109 %Percent of the country emissions 740 MtCO2 /yearPotential GHG reductions $ 97.8 billion Value of the GHG reductions over crediting period (10 or 21 years, base 10 US$/tCO2) 380 %Percent of actual generation 1,244 TWh/yearPotential of additional electricity generation 225 %Percent of installed capacity 155 GWPotential of additional power generation capacity 361Number PoAs 3,2272,866Number of Potential Projects Many technologies could not yet be included at this stage: wind, geothermal, efficiency in building, solar water heaters, efficient cooking stoves, etc.

15. Country Projects number with PoAs tCO2 Reduction per year % of country emissions Additional power (MW) % of country power Tot. inv. cost of projects (million US$) Angola 10037,010,653181%11,1701690%6,957 Benin 505,543,315244%7881138%1,161 Guinea Biss 8660,446173%91407%152 Botswana 376,842,574175%1,032817%1,805 Burkina 274,908,108420%874610%1,497 Burundi 8620,467151%105284%138 Cameroon 6111,785,479173%2,481299%2,882 Cap-Vert 556,83220%812%7 CAR 276,424,0201902%1,0262723%1,917 Chad 287,287,7983806%1,9354804%1,415 Comores 5106,484103%253%3 Congo Dem 15442,578,9951796%7,790324%12,356 Congo Rep 357,739,633146%2,297725%1,426 E. Guinea 345,953,683122%2,50519291%383 Ethiopia 12236,907,421844%6,713996%10,174 Gabon 588,150,009165%2,352611%1,372 Gambia 184,70029%00%1 Ghana 8814,776,572222%2,465211%3,335 Guinea 266,490,115485%1,375564%1,818 Ivory Coast 9118,117,154282%3,327287%3,671 Kenya 9020,254,030205%3,172363%4,688 Liberia 71,251,645236%16918%14 1/2

16. Country Projects number with PoAs tCO2 Reduction per year % of country emissions Additional power (MW) % of country power Total inv. cost of projects (million US$) Madagascar 408,335,584328%1,269707%2,199 Malawi 377,815,080913%1,390486%1,994 Mali 285,431,353817%995245%1,889 Mauritania 171,918,76273%239130%379 Mauritius 271,093,74227%15230%126 Mozambique 7924,374,4331059%5,045239%7,455 Namibia 3710,876,649111%1,955652%3,690 Niger 182,752,417223%416365%767 Nigeria 460138,136,175131%41,221723%18,917 Rwanda 10705,29791%121445%156 Senegal 698,100,133147%1,250285%1,853 Seychelles 4321,96735%54203%87 Sierra Leone 111,892,099161%298271%465 Somalia 4113,045,6161734%2,0602598%3,830 South Africa 877203,472,23848%31,037100%35,847 Sudan 3611,805,500109%3,138413%717 Swaziland 161,161,144102%201178%259 Tanzania 11224,100,692607%4,228515%6,469 Togo 403,576,891150%426221%619 Uganda 6213,968,787865%2,536868%3,636 Zambia 6817,583,532719%3,344210%3,573 Zimbabwe 7911,930,198101%2,024126%2,657 SS AFRICA (All) 3,228740,669,229109%155,076225%154,755 2/2

17. Potential for future emissions reductions in proportion of current emissions (CO2) (100% = 1) (Note: extremely high values observed for certain countries are due to the fact that flaring emissions where not reflected in official country emissions data) Annual Emissions Reductions in tCO2 and in proportion of countries emissions

18. Investment Curves: - tCO2 Reductions Potential - Additional Power Generation Capacity USD per tC02 Million tons of CO2 avoided USD per MW Additional Power in MW During projects lifetime (10 or 21 years)

19. III. Barriers and Recommendations

20. 1. Appropriate Regulatory Framework is missing Example : Cogeneration Many cogeneration projects in UNFCCC validation/registration pipeline: Brazil, India, etc. Very few in Sub-Saharan Africa. But there are sugar factories, agro-industry, refineries, chemical industry, … Key bottleneck in Africa: No Feed-in Tariff  no possibility to sale electricity  no possibility to get credits  no CDM project Missing: Regulatory Framework for Auto-producers Biofuels: Regulatory Framework also missing

21. 1. Appropriate Regulatory Framework is missing However, support can be provided by Technical Units of International Development Agencies for developing missing regulations Carbon Finance cannot provide TA to fix it

22. 1. Complementary Regulatory Framework needs to be developed 2. Market access requires appropriate infrastructure planning and policies to overcome logistics bottlenecks 3. Technical information on mature, clean energy technologies must be appropriately disseminated 4. The local skills required to run mature, clean technologies must be developed 5. Technical Assistance and R&D are required to achieve full efficiency and sustainability of clean energy technologies 6. Develop local expertise and institutional procedures to facilitate project developers ’ access to an increasing range of financial resources earmarked for climate change 7. Post-Kyoto Carbon Funds are required 8. However, Carbon Finance alone will not solve the investment financing gap. Earmarked Climate Investment Funds (CIFs) are essential Recommendations to overcome Barriers Technical Units of Development Agencies are used to channel TA and Financing at Project Level – Integration is key

23. Thank You - Merci Le Résumé pour Décideurs est aussi disponible en Français