London Market InitiativeLondon Market InitiativeProgress on Company led facility Progress on Company led facility to support project identification to support project identification

and preparation in Africa and preparation in Africa Martin Hession UK DNA Martin Hession UK DNA

• Requires a Focus on OpportunitiesRequires a Focus on Opportunities

• It is driven by competition and least costIt is driven by competition and least cost

• CDM dependant on identification of potential CDM dependant on identification of potential - emissions and emission growth- emissions and emission growth

• Significant Investment Barriers in AfricaSignificant Investment Barriers in Africa

• Need to focus on commercial opportunities Need to focus on commercial opportunities and viable project opportunities and viable project opportunities

CDM is a MarketCDM is a Market

• Worth $30 billion in 2006Worth $30 billion in 2006– EU ETS = $24 billionEU ETS = $24 billion– CDM = $5 billionCDM = $5 billion

• London Accounts for 50% of TradeLondon Accounts for 50% of Trade– Several Funds with capitalisation in the hundreds of Several Funds with capitalisation in the hundreds of

millions – (Total £3 - 4billion)millions – (Total £3 - 4billion)– Small niche fundsSmall niche funds

• Carbon Market Big Business motivated by profit – Carbon Market Big Business motivated by profit – but Corporate Social Responsibilitybut Corporate Social Responsibility

• CERS used for compliance across the EU ETSCERS used for compliance across the EU ETS– Use of Credits Traceable to ProjectsUse of Credits Traceable to Projects– Evidence that some companies will pay a premium for Evidence that some companies will pay a premium for

some classes of projectsome classes of project

London and the Carbon London and the Carbon Market Market

Government Response to Government Response to Framework Framework

• Secretary of State statements calling on Secretary of State statements calling on industry to respond to Nairobi frameworkindustry to respond to Nairobi framework

• Statements of Major industry associationsStatements of Major industry associations• Repeat call in AutumnRepeat call in Autumn• Industry lead – with government supportIndustry lead – with government support• Support includes trade networksSupport includes trade networks

– CCPOCCPO– UKTIUKTI

Vision: Vision: • To boost Africa’s sustainable development To boost Africa’s sustainable development

and share in the CDMand share in the CDMFocus Focus • Commercial focusCommercial focus• Projects that suit local conditionsProjects that suit local conditions• Maximise value for the host country and Maximise value for the host country and

communitycommunity• Fair and transparent allocation to buyersFair and transparent allocation to buyers

City Initiative - Vision City Initiative - Vision

• The Springboard will be a for-profit sub-Saharan African CDM The Springboard will be a for-profit sub-Saharan African CDM Project Development company.Project Development company. It will initially focus on It will initially focus on developing CDM projects in sub-Saharan African countries where:developing CDM projects in sub-Saharan African countries where:– There is no DNA; orThere is no DNA; or– There is a DNA but there are no projectsThere is a DNA but there are no projects

• The Springboard organization will assist CDM development The Springboard organization will assist CDM development in these countries by establishing CDM projectsin these countries by establishing CDM projects and, if and, if necessary:necessary:– Working alongside Government agencies and Multilaterals to establish Working alongside Government agencies and Multilaterals to establish

and resource a DNAand resource a DNA– Working to establish locally applicable MethodologiesWorking to establish locally applicable Methodologies– Completing PDDs and working them through the registration processCompleting PDDs and working them through the registration process

• Allocating the projects to end buyers through a fair and Allocating the projects to end buyers through a fair and transparent allocation processtransparent allocation process that maximizes returns to the that maximizes returns to the community that the project is incommunity that the project is in

• Because of the difficulty and additional cost of developing projects Because of the difficulty and additional cost of developing projects under these conditions, the under these conditions, the Springboard will initially be Springboard will initially be subsidized but expected to reach breakeven within [3] years.subsidized but expected to reach breakeven within [3] years.

““Africa Springboard Africa Springboard Proposal”Proposal”

• Secretariat and Network of Offices Secretariat and Network of Offices

• Project Identification per quarterProject Identification per quarter

• To the greatest extent possible, To the greatest extent possible, offices will be borrowed from the offices will be borrowed from the Springboard’s funding partners at Springboard’s funding partners at least until the enterprise becomes least until the enterprise becomes cashflow positive.cashflow positive.

Africa Springboard Africa Springboard Implementation Implementation

• Core Movers Core Movers – Standard Bank, Climate Change Capital, Shell Trading so Standard Bank, Climate Change Capital, Shell Trading so

farfar– Business Plan DevelopedBusiness Plan Developed– Support of several others Support of several others – Interest of major foundationsInterest of major foundations

• Looking for £1 million kick offLooking for £1 million kick off– Financial ContributionsFinancial Contributions– Secondments/Project PreparationSecondments/Project Preparation– In-kind Offices and NetworksIn-kind Offices and Networks

• Look forward to reporting back at BaliLook forward to reporting back at Bali

Progress so farProgress so far

Review of Government Review of Government ActivitiesActivities

• General General – Investment Climate FacilityInvestment Climate Facility - £30million – dedicated to - £30million – dedicated to

improving investment conditions in Africa improving investment conditions in Africa • PurchasingPurchasing• Government Offsetting FundGovernment Offsetting Fund - Offset Travel Emissions via CDM – - Offset Travel Emissions via CDM –

Contract Awarded to EEA/TEPContract Awarded to EEA/TEP• Government Offsetting Standard Government Offsetting Standard – Proposing use of CDM Credits – Proposing use of CDM Credits

for Voluntary Offsetting – Controversial as many would prefer to pursue for Voluntary Offsetting – Controversial as many would prefer to pursue voluntary quantificationvoluntary quantification

• Climate and Energy FocusClimate and Energy Focus– Environmental Transformation Environmental Transformation

FundFund £800 million, Initial £50m to £800 million, Initial £50m to Forestry Congo Basin – Details Forestry Congo Basin – Details under development and under development and negotiation.negotiation.

– Support to Support to Clean Energy Clean Energy Investment FrameworksInvestment Frameworks of WB of WB and AFDBand AFDB• Access to EnergyAccess to Energy• Carbon FinanceCarbon Finance• AdaptationAdaptation

•NetworksNetworks•REEEP REEEP Network – Network – Renewable Energy and Renewable Energy and Energy Efficiency Policy Energy Efficiency Policy Network. 11% of Projects in Network. 11% of Projects in AfricaAfrica•Biofuels PartnershipBiofuels Partnership – – Brazil- SADC (Mozambique-Brazil- SADC (Mozambique-South Africa) – Exploring South Africa) – Exploring MethodologiesMethodologies•Global Opportunities Global Opportunities Fund FCOFund FCO – Support to – Support to Methodological Development Methodological Development ––