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Investment Framework
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Clean Energy & Development
CDM DNA Forum
Addis Abeba; 4-6 October 2007
Dr. Yogesh Vyas
Lead Environmentalist
African Development Bank
AfDB Clean Energy For Development
Investment Framework
1.
2.
3.
4.
5.
6.
Climate Change Impacts
G8 request to MDBs
MDB Clean Energy Investment
Framework (CEIF)
Energy & Development nexus
AfDB Strategy on CEIF
AfDB CDM Facility
Slide 2
1. Climate Change effects and impacts
1990 CO2 emissions from fossil fuel combustion and land-use change
Africa is not a major contributor to GHG emissions. Largest share of Africa’s
contribution is from land use change and not from energy consumption
Slide 3
1. Climate Change effects and impacts
Slide 4
1. Climate Change effects and impacts
Slide 5
1. Climate Change effects and impacts
More severe droughts
 Desertification
 Changing eco systems
 Reduced crop yields
 Floodings and storms
 Increased vector diseases
 Rising sea level
 Etc.

Slide 6
2.
G8 request to MDBs
G8 Gleneagles Communiqué (July 2005)
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Focus on Africa and on Climate Change
Secure, reliable and affordable energy sources
are fundamental to economic stability and
development
Action has to be taken now to slow, stop and
reverse greenhouse gas emissions
 promote
energy efficiency
 conservation of energy
 improvement of policy-, regulatory- and financingframeworks
 accelerated deployment of cleaner technologies
Slide 7
2.
G8 request to MDBs
World Bank and RDBs requested to develop a
clean energy investment framework to:
 increase the volume of investments on
renewable energy and energy efficiency
 assist regional member countries to identify less
greenhouse gas intensive growth options
 support private sector to develop and finance
cost-effective projects on energy efficiency and
low-carbon energy sources
Slide 8
2.
G8 request to MDBs
Timeframe:
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July 2005: request by G8 to MDBs
November 2005: meeting with finance ministers
(London)
April 2006: World Bank to report at IMF Spring
Meeting
3rd / 4th quarter: RDBs to present IF strategies /
action plans to their Boards
G8 summit 2007 (Germany): report progress
G8 summit 2008 (Japan): report outcomes
Slide 9
3.

AfDB Clean Energy For Development
Investment Framework
3 Pillars:
 Increase
Energy
Access in SubSaharan Africa
 Transition
to Low
Carbon Economy
 Adaptation
to
Climate Change
Slide 10
Energy in Africa
Gas Flaring in Gulf of Guinea
Slide 11
Energy in Africa

Africa has 13% of global population but consumes 5% of
global energy and 3% of global electricity

Only 23% of population in SSA and 91% in North Africa
has access to electricity yet world average is 73%

Lowest energy consumption per capita of 0.7 toe
compared to world average of 1.6 toe

Traditional biomass (wood fuel and charcoal) contributes
to over 82% of energy used in SSA-less South Africa

Between 2000 and 2050, absolute number of people
depending on biomass expected to rise from 583 to 823
million
Slide 12
Energy in Africa
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Abundant resources available (hydro, oil, natural
gas, biomass) but not developed
Unevenly distributed resources yet poor
interstate energy trade. (Oil and Natural gas are
in North and West Africa and Coal in Southern
Africa)
Energy
fuel/source
reserves
Oil (in Mtoe)
9300
347
27 years
Natural Gas
(in trillion m3)
9.9
0.14
71 years
61700
231
266 years
Coal (in Mt)
consumption /
Reserves /
year
consumption
Slide 13
Energy and development nexus
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Energy is central to all developmental
interventions
Energy is a pre-requisite for poverty alleviation
and attainment of the MDGs
The poor are forced to pay a higher price for
their energy. The price is paid in form of:
 Human
time and labour
 Economic cost
 Health costs (mainly indoor air pollution), and
 Social and gender impact of energy services.
Slide 14
4. Clean Energy Investment Framework
Two pronged approach to Climate Change:
 Clean energy and low-carbon economy
 Focus
on cleaner utilisation of fossil fuels
 Increased used of renewables
 Attention to increasing access to energy

Adaptation to climate change
 Climate
proofing of investments
 Integration of adaptation into project cycle
Slide 15
4. Clean Energy Investment Framework

Major energy challenges :
 strengthening
energy security for
macroeconomic stability,
 improving energy services for economic
growth and better quality of life, and
 reducing environmental and human health
threats from energy production and use.
 Low
carbon drive must not have additional
cost on the poor
 “Shared but differentiated responsibilities”
Slide 16
4. Clean Energy Investment Framework
Strategies clean energy
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Clean energy for economic growth and
sustainable development
Low-cost and high-impact solutions
Project Development Fund to assist the
development of clean energy projects
Changes in national energy fiscal and regulatory
policies
Slide 17
4. Clean Energy Investment Framework
Adaptation challenges:
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Human-induced change: combustion of fossil
fuels & land management practices
Major challenges to Africa
The poor are most vulnerable, having the least
means to adapt
Ensure long-term adaptation strategies
compatible with short term impacts
Slide 18
4. Clean Energy Investment Framework
Adaptation strategies:
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Integrating adaptation in PRSPs, Country
Strategy Papers and project cycle
Disaster preparedness improvement through
proactive actions – early warning systems
Development of tools and checklists
Research and Development
Slide 19
4. Clean Energy Investment Framework
Investment needs are huge
 $ 300 billion per year to meet rising energy
demands in developing countries
 $ 60 billion / year additionally for a low-carbon
option
 $ 40 billion / year as cost of adaptation
Public and private resources need to be
mobilised
 New financial instruments needed

Slide 20
Pillar 1: Energy Access - AfDB Priorities
 Enabling
environment for maximising private
participation
 Mobilisation of financing and private
participation
 Electricity for the MDGs
 Energy access for rural development
 Energy for urban development
 Renewable energy and energy efficiency
 Transportation sector fuel efficiency and
emissions; and
 Facilitating countries’ access to CDM
Slide 21
Pillar 2: Clean Energy and RE/EE, AfDB Priorities
 >50MW:
Hydropower, Geothermal power, Cogeneration, Windpower; Biofuel production.
 <50MW: Promote renewables aimed at income
generating activities in the agro/forest industrial sector
such as co-generation and small hydro.
 <5MW: Solar water heaters, windpumps and solar
PVs use in remote rural dispensaries, schools,
commercial wildlife and coastal tourism-linked
enterprises.
 < 1kW (household level):Improved biofuel cookstoves
in countries where charcoal is a major fuel and indoor
air pollution benefits.
Slide 22
The Private Sector Department of the AfDB focuses mainly to
develop (a) the wind energy area (b) the small size
hydropower (c) bio-fuel, (d) Geothermal, and (e) Co-generation
The Middelgrund wind farm –
Copenhagen - Denmark
30 MW hydropower - Tunisia
Slide 23
The Current ADB Interventions in promoting the use of Renewable Energy

Morocco: Solar/Gas Thermal Power Station (250 MW, 30 MW Solar)
(EUR 200 Mio)

Egypt: Solar/Gas Thermal Power Station (120 to 150 MW)
Slide 24
The Current ADB Investments in of Renewable Energy
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Madagascar: Small Hydro 15 MW – Euro14 M
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Uganda: Bujagali Hydro 250 MW – Euro120 M
Slide 25
Cogeneration and Small-hydro
Projects in the Sugar and Tea
Industry in East and Southern
Africa
Small Hydro for Tea Industry in East Africa
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UNEP/GEF/AFDB small hydropower initiative for the tea industry in
Eastern and Southern Africa countries (Kenya, Uganda, Tanzania, Rwanda,
Burundi, Malawi, Mozambique and Zambia). East African Tea Trade
Association (EATTA) is the executing agency.
Key objectives:
- Reduce energy cost in the tea industry
- Increase reliability of power supply
- Increase power supply for rural
electrification
- Encourage development of self
sustaining small hydro industry in the region
- Reduce greenhouse gas emission by
replacing use of diesel run backup
generators in the tea factories

Project expected to install 10 MW of small hydropower within 4 years and
leverage over 82 MW in the long-term
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For more information, visit - http://greeningtea.unep.org

Slide 27
Small Hydro in Tea Industry project Planned installations
82+ MW additional
small hydro capacity
capacity
10 MW additional
installed capacity of
small hydro promotion
projects
4 year project period
Beyond 4 years
Slide 28
Cogen for Africa Project
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Project funded by GEF, UNEP and AfDB
are co-implementing agencies,
AFREPREN/FWD is executing agency.
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Covers 7 countries: Kenya, Uganda,
Tanzania, Ethiopia, Malawi, Swaziland
and Sudan.
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Modeled on success of Mauritius cogen
program which now accounts for close to
40% of national power supply.
Objectives
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Promote increased investment in efficient cogeneration
systems in eastern and southern Africa.
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For more information, visit - http://cogen.unep.org
Slide 29
Cogen for Africa project - Planned
installations
40 MW
additional
installed
capacity of
cogeneration
promotion
projects
200+ MW additional
cogeneration
capacity
20 MW
pipeline
projects
6 year project period
Beyond 6 years
Slide 30
COFAMOSA Ethanol Project
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Under the proposed COFAMOSA Irrigation Project, the Government
of Mozambique intends to develop an area of 29,000 ha for irrigated
land under sugar cane for sugar and ethanol production.
The goal of the project is to reduce poverty levels through increased
exports of sugar and ethanol from Mozambique to the region and
beyond.
Based on the preliminary studies, the project aims to:
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develop 29,000 ha of irrigated land in possibly 3 phases, over a period of ten
years (first and second phase 10,000 ha each and the third phase of 9,000
ha)
re-settle over 500 farmers in the project area
make use of already existing investment in Corumana Dam and
available good irrigation soils;
create 18,000 jobs (70%) of economically active people in the area); and
make permanent impact in districts of Moamba and Magude and the overall
Mozambican national economy.
Currently the Bank is funding, through the African Water Facility a
consultancy srevice to undertake an integrated feasibility study for
the envisaged project. The Study will commence early next year
Slide 31
Slide 32
Slide 33
Types of Carbon Project Eligible for CDM
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Hydroelectric power offsetting the need for coal- or gas-fired
generation
Extending grid to reach customers currently using diesel or
kerosene
Reducing CO2 and possibly methane by generating energy and biofuels from sugar industry by-products -- bagasse and molasses
Replacing firewood/kerosene/cowdung with biogas from livestock
and human wastes
Extracting methane from landfills or avoiding its generation
trough composting organic waste in urban dumpsites
Extracting methane from disposal of sewage sludge
Capturing No2, a powerful greenhouse gas, from fertilizer
production
Sequestering CO2 by tree planting, small plantations, land
restoration (limited capacity to buy though)
Slide 34
ADB CDM Facility (1)
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ADB intends to establish a CDM facility
Objectives:
 Integrate
climate change in Bank operations
 Help remove reg. bottlenecks to clean energy and
scale up investment in modern technologies:
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Suppressed grid energy demand and Off-grid energy access
Modern waste management
Afforestation and reforestation projects
 Build
carbon capacities in public and private sectors
 Pioneer innovative approaches that combine multiple
stream of revenues from carbon offsets, micro credit,
weather insurance, etc
Slide 35
ADB CDM Activities
 technical
assistance for identification and
design of CDM-eligible projects,
 preparation of PDD;
 development of new methodologies for
programmatic or bundling of CDM
opportunities for small-scale regional projects;
 technical studies to identify interested
countries’ range of prospective projects and
programs eligible
Slide 36
ADB CDM Activities (cont)

policy assistance to address regulatory
barriers to the development and execution
of CDM projects;
 capacity-building and awareness raising by
organising training programs and
information dissemination; and
 strengthening national designated
authorities (DNA).

AfDB Carbon facility would be announced formally
at the 13th UNFCCC CC in Bali, Dec 2007
Slide 37
Pillar 3: Adaptation: AfDB Priorities
 Promote
development and use of climate risk
assessment and management methods to minimize
climate change and variability risks
 Application of climate risk screening tools to
development programs and investment projects
 Support mainstreaming of climate issues into key
regional, national, local and sectoral planning, policies
and decision making processes,(e.g PRSPs, etc)
 Plan to introduce AfDB Policy on Climate Risk
Management & Adaptation
Slide 38
Climate Information for Development in Africa
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Objective: Improve the availability and use of climate information
and services in support of sustainable development and
achievement of the MDGs.
Raising Policy awareness of politicians, planners and the public for
broad ownership, support and commitment to adaptation to climate
variability and change.
Climate Risk Management for strategic MDGs development
planning, sectoral management, livelihood strategies and disaster
risk reduction.
Climate Services for the use of MDGs decision-makers in
government, the private sector and civil society.
Observations, data management and infrastructure upgrading to
provide essential data for climate services, risk management and
policy development.
The results are to be achieved in part by drawing on, and
strengthening the capacity of existing climate institutions in Africa.
Slide 39
Examples of climate risk
management operations (3)
African Development Bank:
Malawi, agriculture
Climate Adaptation for Rural
Livelihoods and Agriculture
(CARLA)
US$ 3.3 million added to US$ 24 million baseline
Slide 40
CARLA: Managing climate risk to
sectoral investments in Malawi
 ADB Smallholder Crop Production and Marketing Project
(SCPMP)
 Irrigation development
 Farmer support programme
Recurrent floods and droughts
are affecting investments, and
reducing development
outcomes.
Slide 41
CARLA objectives
 strengthen the climate resilience of baseline
investments and their outcomes
 while at the same time enhancing broader climate
risk management in relation to agriculture and food
security in Malawi, including integration in strategic
and operational planning in the agriculture sector.
Slide 42
CARLA components
COMPONENT 1 – INVESTMENTS, e.g.:
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•
•
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Crop diversification,
Adjusting timing of farm operations
Changes in tillage practices
Food reserves and storage
Irrigation and efficient water use
COMPONENT 2 – EARLY WARNING SYSTEMS
COMPONENT 3 – ENABLING ENVIRONMENT
•
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•
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Policy, legislative, and institutional frameworks
Capacity building of key institutions
Targeted knowledge and monitoring systems
Multi-stakeholder dialogues
Slide 43
Thank you for your attention
Yogesh Vyas
African Development Bank
[email protected]
(216) 71 10 21 78
Slide 44