Central American Carbon Program:

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Central American Carbon Program

• Implications for rural communities, renewable
  energy and the environment
• August, 2000

Most of the data and studies in this presentation
were collected with financial support from the
UNDP and CABEI between 1999-2000
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A REGION HISTORICALLY IMPACTED BY DISASTERS
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FACT Extreme Climate Events are increasing
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Emissions are increasing due to wrong price
signals
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One of the Kyoto Protocol Scenarios for Latin
America and the Caribbean
Ex-antelt 1
Adaptation gt(8.5) b/year
Ex-post gt 99
Climate Change Economic Impact
Biological 75-85
Mitigation gt3.5 b/year
Non-biological 25-15
Ref. Adapted from CEPAL 2000
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Why a Central American Carbon Program?

• To prioritize mitigation projects coherent with
  the Alliance for Sustainable Development signed
  in 1994.
• Coherent with the mission of CABEI, UNDP and CCAD
  to fight poverty, and promote integration.
• Part of Agenda XXI to increase competitivity.
• Requested by the Ministers of the Environment in
  November 1999 (Tegucigalpa Declaration).
• Complementary with the World Bank PCF and private
  sector initiatives (i.e BP, Shell) with a
  regional focus.

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Will Reduce Domestic Compliance Costs in
Industrialized Countries and Promote Global Trade
Fuente Tabla 1 de Richard Baron, "The Kyoto
Mechanisms How Much Flexibility do they
Provide? en Richard Baron, Martina Bosi y
Alesandro Lanza, Emissions Trading and the Clean
Development Mechanism Resource Transfers,
Project Costs and Investment Incentives, informe
para la International Energy Agency para la
Quinta Conferencia de las Partes, Bonn,
octubre-noviembre de 1999.
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Will Maximize the Central American CERs
Potential which is Substantial at a Market Price
of 28/ton
Carbon estimates comes from the
Harvard-INCAE-CABEI project, for the range
between 6.5 and 62 million tons per year cost
estimates are less than 20 per ton (Castro
Salazar, 1999 Boscolo et al., 2000)
Estimates for Panama and Belize come from a CCAD
study conducted in 1998.
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The CCP will have a Fund and Regional Projects
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Description of The Central American Carbon Fund

• Target to raise 25 millions between 2000-2001.
• A trust fund at CABEI.
• Up to 1.5 million from CABEIs environmental
  fund.
• All stakeholders will have representation at the
  executive committee of the trust.
• Coordination with the CABEI and partners
  traditional programs.(i.e.CABEI-IADB a potential
  partnership for off-grid electrification for
  rural communities).

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Examples of Mitigation Projects Renewable Energy

• Non Biological
• Wind Energy costs are competitive due to
  technology, cheaper land leasing and CO2
  emerging markets.
• Solar costs are reducing due to technology,
  scale of the off grid market and additional cash
  flow coming from the CO2 emerging markets.
• Natural gas could be competitive with
  thermal generation using fossil fuels.

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Examples of Mitigation Projects Forest Projects
for Rural Communities

• Biological
• Biomass energy suitable land and abundant
  options for reforestation projects and sugar cane
  coo-generation.
• Forest Conservation and expansion of protected
  areas.
• Greener Fossil Fuels marketing a CO2 neutralized
  fuels by planting more trees.

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Example 1 Impact of the Carbon Market on Access
to Renewable Energy Sources by the Poor...
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Example 1 Renewable energy for off-grid
communities combining traditional financing and
CO2

• On grid average cost is 9 cents/kWh.
• Solar energy costs are around 13 cents/kWh, other
  sources range between 7 and 20 cents/kWh.
• Trading Certify CO2 between 5-35/ton could
  finance the difference...
• Rural communities will pay a similar cost than
  the communities on-grid but will be using
  renewable increasingly.
• A flagship project to attend 5 of the more than
  2 million families without electricity in the
  Central America will cost 100 million.

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Example 2 Emissions Neutralized Fuels or Fuel
Switching?
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Example 3 Wind Power is Becoming Competitive

• Costs of Plantas Eólicas (20 MW) project in Costa
  Rica was 7.4 cents per Kwh in 1995.
• Costs of Tejona (20 MW) project was 3.4 cents
  per kWh and same site in 2000.
• Four main reasons
• Costs reduction due to technology improvement
• Carbon reductions sold at around 10 per ton
• Successful learning process in Costa Rica
• The Central American Banks has played a
  pioneering role financing projects.

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Example 4 Switching from traditional agriculture
to forest friendly crops and conservation
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Example 5 Carbon price scenarios and its
potential for expansion of the Mesoamerican
Biological Corridor
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SUMMARY

• What do we need?
• Expand protected areas in Mesoamerica by more
  than 5 million hectares.
• Recover degraded land and convert land to more
  forest friendly activities (3.2 million
  hectares).
• Promote the use of renewables in energy
  generation by internalizing CO2 in energy prices.

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SUMMARY

• What is next?
• Help identify, design and implement mitigation
  projects.
• Partnerships.
• Promote additional carbon funds in developing
  countries to complement the PCF.