World Bank Carbon

1

• World Bank Carbon
• Finance Project Cycle
• October 13, 2005.
• Senior Environmental Specialist. Lasse Ringius.
  World Bank.

2
The first step is to submit a PIN (template on
www.carbonfinance.org)

•  
• Description of Project Proponent
• Type of Project
• Location of Project
• Expected Schedule
• Financing Sought
• Technical Summary of Project
• Expected Environmental Benefits

3
Project Proposal Review and Upstream Due
Diligence
Proposal Review and Upstream Due Diligence

• PIN reviewed by CFB
• Upstream Due Diligence
• If PIN is acceptable, sponsor notified with
  request to prepare CFD Regional/ Sectoral
  approval sought
• Host Country Endorsement/No Objection sought in
  some cases where country CDM approval process is
  not clear
• If CFD approved (approval process varies from
  fund to fund), further work is authorized
• Letter of Intent issued after PIN or CFD
  approval

Project completion
Up to 21 years
3 months
Periodic verification certification

1-3 years
2 months
3 months
Negotiation of Project Agreements
Construction and start up
4
Carbon Asset Due Diligence
Preparation and review of the Project
Project completion
Carbon Asset Due Diligence
3 months

• Project Design Document prepared (a. Determine
  whether existing methodology is applicable
• b. may require baseline study)
• 2 Monitoring Plan prepared
• 3. CFB quality control of results
• 4. Documents for Validation prepared by CFB
  and sponsor
• 5. Bank region begins technical, financial,
  environmental and social due diligence

Up to 21 years
1-3 years
Periodic verification certification
2 months
3 months
Construction and start up
5
Validation Process
Preparation and review of the Project
Project completion
3 months
Carbon Asset Due Diligence
Up to 21 years
Periodic verification certification
2 months
Validation process
1. CFB contracts the Independent Validator and
submits documents 2. Validator studies project
design document, including baseline study and
monitoring plan where applicable 3. Documents
are posted for 30-day comment period 4. Validator
issues a report and opinion 5. Registration
request is submitted (can be after the ERPA
signature)
2 months
1-3 years
3 months
Construction and start up
Negotiation of Project Agreements
6
Negotiation of Project Agreements
Preparation and review of the Project
Project completion
3 months
Carbon Asset Due Diligence
Up to 21 years
Periodic verification certification
2 months
Validation process
1-3 years
2 months
3 months
Negotiation of Project Agreements
Construction and start up
1. CFB prepares term sheets and draft ERPA and
negotiations initiated. 2. 3. Project Due
Diligence is completed and World Bank internal
approvals are secured. 4. Letter of Approval
obtained from Host Country 5. ERPA is signed
7
Start of Generation of ERs Monitoring
Preparation and review of the Project
Project completion
3 months
Carbon Asset Due Diligence
Up to 21 years
Periodic verification certification
2 months
Validation process
1-3 years
2 months
3 months
Negotiation of Project Agreements
Construction and start up
1. At construction completion, CFB contracts
Independent Verifier 2. Verifier checks that
specifications of the monitoring plan are met
(Initial Verification) 3. Project
implementation starts 4. Project entity monitors
in accordance to the monitoring plan
8
Verification and Certification
Preparation and review of the Project
Project completion
3 months
Baseline Study and Monitoring Plan (MP)
Up to 21 years
Periodic verification certification
2 months
1. Verifier issues periodic verification
report 2. CFB pays project sponsor for ERs 3.
Certified ERs are issued by the CDM Exec. Board
4. Verification undertaken annually or as deemed
appropriate
Validation process
2 months
3 months
Negotiation of Project Agreements
Construction and start up
9
Project Completion
Project completion
Preparation and review of the Project

• Crediting period either
• 10 years fixed or
• 7 year renewable (maximum 21 years)

3 months
Up to 21 years
Carbon Asset Due Diligence
Periodic verification certification
2 months
Validation process
1-3 years
2 months
3 months
Construction and start up
Negotiation of Project Agreements
10
Carbon Asset Creation and Maintenance
Manufacturing Process and Costs based on Bank
experience
Preparation and review of the Project
Project completion

• Upstream Due Diligence, carbon risk assessment
  and documentation 25K

3 months
Carbon Asset Due Diligence
Up to 21 years

• For new methodologies
• Baseline 30 K
• Monitoring Plan 25K

Periodic verification certification
2 months

• Verification 10-25 K
• Supervision 10-20K

Validation process
1-3 years
2 months

• Contract, Processing
• and documentation 25k

3 months
Project Appraisal and Negotiation
Construction and start up

• Initial verification at start-up 25K

• Consultation and Project Appraisal 60K
• Negotiations and Legal documentation 100K

Total through Negotiations
All expenses 265 K for regular size
projects 150 K for small scale projects
11
What is involved in CFD/ PCN preparation?

• Field visits for identification and preparation
• Due diligence on
• environmental and social issues,
• carbon asset,
• status of project financing,
• quality and experience of project sponsors and
  any financial intermediaries
• Consultations with Government on the proposed
  carbon financed project (including relevant
  discussions needed to obtain a letter of
  approval), and related legal services review and
  support