blake lapthorn green breakfast with edward hanrahan of climatecare
DESCRIPTION
Blake Lapthorn were pleased to welcome Edward Hanrahan as guest speaker as it's green breakfast on 2 November in Oxford.TRANSCRIPT
S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L
C L I M A T E C A R E - CLIMATE F I N A N C E A N D D E V E L O P M E N T P R O J E C T S
Investment in large scale Climate and Development finance projects
ClimateCare – Executive Summary
ClimateCare was established in 1997 and is one of the longest established and leading
environment-focused organisations in the carbon market.
We develop innovative financial models to catalyse investment in Climate and Social Development
projects in LDCs – including and beyond existing carbon market frameworks.
ClimateCare develops and consults on Emission Reduction projects in Sub-Saharan Africa and
throughout the world for both the compliance and voluntary carbon markets as well as the
newer emergent Climate and Development finance funds. Our focus is on innovation and
sustainable development. Every project we develop is designed to contribute towards
fulfilling the Millennium Development Goals. (MDGs)
ClimateCare originates and sources carbon credits on behalf of large corporates, NGOs, and
sovereigns. In addition, we manage voluntary offset schemes for organisations and sell offsets to
individuals. We exclusively market EcoSecurities’ and J.P. Morgan’s VERs as well as our own.
Corporate offsetting
programmes
Sourcing carbon credits
Project Development
Consulting
Recognition
2011 – Nominated ‘Best Offset Provider’ –TreeHugger Best of Green Awards
2010 - The ENDS Guide to Carbon Offsets – rated as top provider
2010 - Which? – rated as a top provider in all categories
2009 – Rated “Best Offset Retailer” by Environmental Finance
2009 - Top rated by DSF Pembina review of carbon providers
Recognised as a Leading Carbon Offset Provider and Project Developer
A Selection of Clients
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Corporate Objectives
We achieve multiple investment goals through ClimateCare project opportunities
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Introduction to ClimateCare
ClimateCare was sold to J.P. Morgan in 2008 and operated as part of the bank’s Environmental Markets division until
August 2011 when it was taken independent in an MBO.
Beyond ‘voluntary carbon’ - ClimateCare is developing and implementing innovative Climate and Development Finance
models to deliver projects that both reduce emissions and deliver against MDGs – providing new and additional
revenues to those who need it most in tackling the effects of climate change.
We believe that this is an exciting time for mobilising public and private investment to tackle pressing social,
climate and poverty issues. We have developed a number of models which make investment attractive to
private sector market entrants and, with over 14 years’ experience developing projects on the ground in the
LDCs, we are uniquely placed to mitigate the risk in project selection and implementation.
The business continues to follow the same stringent project procurement and risk management processes developed
whilst at J.P. Morgan together with the same robust project procedures we always have..
Our projects sit on the developing nexus between private sector finance and the development/aid sector and
we believe that they represent an opportunity to achieve both Climate and Development (MDG)
goals/outcomes at scale, whilst returning profits commensurate with normal private sector returns.
We have developed a number of models which make investment attractive to private sector market entrants with the
bulk of the upfront finance being delivered by Public or Third Sector finance (Devpt Banks, Multilateral Donors,
Foundations) on a revolving fund basis.
Our 12 years experience of delivering projects on the ground in LDCs has given us ‘best in class’ project selection,
efficiency and risk mitigation capabilities, which together with a proprietary Delivery Risk Mechanism for assessing
project viability means that we can deploy investment funds rapidly and efficiently to achieve the twin aims of social
development and ‘profit for purpose’.
The story so far…
• We have now funded over 11 million tonnes of emissions
reductions through our projects .
• Our stoves programme has distributed 1.6million stoves in developing
countries , easing pressure on deforestation, reducing indoor air pollution
and improving the health and economic circumstances of over 7.5 million people – particularly women and children – helping tackle what is now the Developing World’s
largest killer – killing more people each year than Malaria.
• Our new programme financing Clean Water has so far provided 4 million
people with a free and sustainable way to access clean water.
• With our customers, we continue to develop and fund c 4million tonnes of Emission
Reductions each year and are now at the forefront of moving the carbon market to the next
stage - developing and implementing new financial structures :such as Revolving funds
and Social Impact Bonds etc…whilst funding substantial new communications around the
way that carbon finance can be used to achieve both environment and MDG goals
How did we deliver those results?
Through Carbon Offsetting.
When we conduct business we use energy and are responsible for carbon emissions being released into the atmosphere
Carbon Offsets:
are a reduction of carbon emissions on your behalf through funding of a project, most often in the developing world, which
reduces carbon emissions by an equivalent amount to those released by your business activity
are a way to make verified emissions reductions at the lowest cost
Provide REAL reductions for your activities/ those of your products
• Measure emissions activities and buy equivalent tonnes of offsets
• Fund emissions reduction projects with the money
• Verify the project reductions to check they match the emissions from the activity
Offset Inclusive Carbon Management
Calculate
Offset Avoid
Reduce
Carbon reduction virtuous cycle –
Defra 2008
In Support of Offsetting
“it makes sense to get the biggest bang for your bucks, to
identify the most cost-effective emissions reduction options
around the world…The atmosphere doesn't care where you
reduce emissions as long as you reduce emissions.”
- Yvo De Boer, United Nations Climate Chief
“Reduce” and “Avoid” activities generally leave remaining emissions
Offsets can get your business to zero carbon quickly…they are the only
way to deal with your unavoidable emissions.
Offsets buy the environment time for your business to become low
carbon - the environment & humanity need reductions to happen now
Offsetting makes real reductions - making high volume of reductions
quickly
It is cost effective – by making a high number of reductions per £ spent
Why Offset?
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5 year target
50% reduction
Time
Tonnes
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60%
40%
20%
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80%
0 1 2 3 4 5
Offset remaining Emissions
Example best practice emissions reduction strategy – 50% ABSOLUTE reduction by 2015
Businesses are responsible for approx. 60% of total annual
global CO2 emissions and will therefore need to contribute
to the reductions necessary to avoid a catastrophic rise of
temperatures.
Leading businesses are now making significant public
commitments to reduce their impact
A leading public commitment targets an absolute reduction
in business emissions of 50% by 2020
This is currently considered beyond best practice strategy for
internal emissions reductions
How cumulative environmental impact shapes best practice carbon management strategies
Even using this strategy, total cumulative CO2 emissions can
remain very similar dependent on the timing of reductions
These cumulative emissions globally drive atmospheric CO2
levels. The most effective climate change action therefore
reduces total cumulative emissions as much as possible in the
short term by ensuring that the most cost-effective carbon
reduction investments are made
A business looking to develop a robust strategy for carbon
management should undertake assessment of all internal and
external emissions reduction options and fund those that
deliver maximum value to the company and benefit to
the environment
Addressing ‘remaining emissions’
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Total reduction compared
with constant baseline
year emissions
Reduction profile
Constant emissions
Early planning + growth
Early wins
-1%
-25%
-41%
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Fixed annual
VER vs CER pricing – Valuing
Development
Offset Standard Description of key factors affecting price
Offset Price
Range2
(£/tonne)
Gold Standard Verified
Emission Reduction (GS VER)
Rigor: Most stringent voluntary standard
Reputation: Established by leading Non-Governmental Organizations
Quality: Highest cost offsets
Liquidity: Limited
“Carbon Charisma”: High - requires broader sustainable development co-benefits
€5.00 - €11.00
Voluntary Carbon Standard
(VCS 2007)
Rigor: Stringent voluntary standard
Reputation: A leading global standard for voluntary offsets
Design: Process and procedures designed to enable large-scale projects
Project Eligibility: Prices range reflect variety of eligible project types
Liquidity: Moderate
€.5 - €6.00
Climate Action Reserve
(CAR)
Rigor: Stringent voluntary standard
Reputation: A leading standard for US based voluntary offsets
Design: Process and procedures designed to enable large-scale projects
Liquidity: Limited
€2.00- €5.00
Chicago Climate Exchange (CFI)
Rigor: Less stringent offset standards produce skepticism
Liquidity: Only exchange-traded voluntary product
Reputation: Generally represents VER “floor price”
NO BID
1 EUA and CER commodity prices based on year to date trading range
2 VER price range affected by factors including: project type, vintage, volume, sustainability benefits, and geographical preferences
Compliance Instrument Description of key factors affecting price Offset Price
Range1
European Union Allowance
(EUA)
Liquidity: Government issued allowances valid in European Union Emissions Trading
Scheme
€10.25
Certified Emission Reduction
(CER)
Rigor: Regulatory standard defining offsets valid for compliance with
requirements of Kyoto Protocol
Reputation: The benchmark against which voluntary standards are measured
€6.74
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So now what…
Given that the Voluntary Carbon Market is doing a great job – but is just too small to make the impact needed…
How do you make Compliance Carbon Markets work for the poor?
You can use a blunt instrument – like restricting supply to LDCs
Or you use a more refined financial instrument that recognises that Pro-Poor projects have two outputs - and by
placing a tangible, separate value on things other than carbon – and delivering that value for less than it currently
costs…– results only - basis.
Increases the risk weighted return for investors
Allows us to access the scale that Compliance Carbon Markets bring – whilst delivering the Sustainable Development
benefits that have been so highly prized in the Voluntary Carbon Market.
Other benefits…
Delivers on the age old problem of having public finance ‘leverage’ private finance
Highly Extendable to NAMAs and other Climate Finance elements (Green Climate Funds etc…) as the payments are project based and ‘on
delivery’ only.
Delivers access to the carbon markets for existing NGOs
ClimateCare Projects - Linking to
Millennium Development Goals
# Country Tech
1 Taiwan Wind
2 Turkey Wind
3 Uganda Energy Efficient
Stoves
4 Ghana Energy Efficient
Cookstoves
5 Argentina Biomass
6 India Composting
7 Cambodia Energy Efficient
Stoves
8 India Human power
water pumps
9 India Biomass
10 India Fuel Switch
Every one of ClimateCare’s energy related development projects has a positive impact on the host country and
community. As can be seen from the table below, all reduce poverty by creating jobs and providing additional
energy and reduce reliance on fossil fuels, however ClimateCare’s more community focused projects also meet
other goals.
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ClimateCare - Alignment with the UN’s
Millennium Development Goals
Increased income, reducing
need for children to work
Bringing light for study in
the evenings
Improved hospital facilities
Reduced smoke from
kerosene avoidance
Increased time for study
Improved medical facilities
Increased income
Replaced diesel generators
Reduce GHG emissions
Improved air quality
24 hour operation of the
local hospital
Improved post natal care
Reducing poverty
Increasing education
opportunities
Creating local jobs
Reducing energy costs
Involved local community
with partners from UK,
Germany, India
Example: Zambia hydro project
Carbon Development
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Project Development and Consultancy
14 years experience in energy and development related projects
ClimateCare has been at the forefront of energy & sustainable
development projects since 1997
ClimateCare’s world leading experts pioneered the first clean cook
stove methodology to be approved by the Gold Standard
Currently pioneering the development of water purification
methodologies/projects and programmes of activities
Expertise covers both the voluntary and compliance carbon markets
ClimateCare directly finances projects as well as facilitating both clients
and investors to become involved
We are able to assist with existing investments that require delivery or
commercialisation assistance
Consulting services
Experts in all aspects of carbon asset development for LDCs - financing, methodology, project
design, capacity building, management, monitoring
Technical expertise on all carbon project types
Strong NGO and donor experience and related project activities
S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L
PROJECT EXAMPLES
Technology: Energy Efficiency
Standard: GS VER applicant
Vintage period: 20011 - 2018
Location: Sub Saharan Africa
Project background
In Africa more than 60% of the population are exposed to disease-bearing drinking water
For the majority of people, the only option is to boil water to kill bacteria
This is often ineffective (as water is not boiled for long enough) and places increased
pressure on the wood resource. In turn increasing GHG emissions and deforestation
Project Activity
Water filter remove the need to boil water, improve quality and avoid GHG emissions
Link to the Millennium Development Goals (MDGs)
Sub Saharan Africa – Water Filters
MDG Impacts
1 Reduces illness and mortalty – thereby inreasing working days and income
2 Safe drinking water prevents children from becoming ill so they can attend school
3 Saves time for women and girls, improving school attendance and self esteem
4 Reduces infant mortality and morbidity from diarrhoea
5 Clean water and reduced illness positively impacts maternal health
6 Healthier lives for the immunocompromised and reduced mortality
8 Provides access to developed world markets and expertise
Technology: Human Power
Standard: Verified Carbon Standard (VCS)
Vintage period: 2005 - 2010
Location: India
Project background
Diesel powered pumps are used to irrigate small-holdings across India. However, the
pumps are expensive and are usually hired for short periods, meaning that the fields have
to be flooded, wasting water and washing top soil away.
Project Activity
Treadle Pumps are an alternative low-cost method of irrigation which use human power to
lift the water with a ‘stepping’ action. The pumps replace diesel driven pumps, saving CO2,
improving agricultural yields and empowering the rural poor.
Link to the Millennium Development Goals (MDGs)
India – Treadle Water Pumps
MDG Impacts
1 Increases disposable income, creates jobs, improves crop yields
2 Fathers are more present in the family relieving the pressure on children
3 Increased income helps girls education
7 Less topsoil is washed away and emissions are reduced
8 Provides access to developed world markets and expertise
Technology: Energy Efficiency
Standard: GS VER
Vintage period: 2009 - 2014
Location: Uganda
Project background
Uganda has one of the highest deforestation rates in Africa
More than 95% of Ugandans rely on fuel-wood for cooking
In rural areas wood predominates, whilst in urban areas charcoal is used
Project Activity
The project replaces rudimentary stoves or open fires with an efficient stove, known as the
Ugastove, that reduces charcoal consumption by 25% in turn reducing GHG emissions and
easing pressure on Uganda’s non-managed forests
Link to the Millennium Development Goals (MDGs)
Uganda - Efficient Cook Stoves
MDG Impacts
1 Income related to stove sales. Reduces wood fuel cost, increases disposable income
2,3 Increased income increases access to education for girls, more security for women’s
businesses
4,5 Reduces indoor smoke pollution (a killer of millions each year)
7 Reduces pressure on deforestation as less wood fuel/charcoal is required for cooking
8 Provides access to developed world markets and expertise
Technology: Energy Efficiency
Standard: GS VER
Vintage period: 2009 - 2014
Location: West Africa - Ghana
Project background
Ghana has one of the highest deforestation rates in Africa
Wood and charcoal provide more than 80% of Ghana’s domestic energy
In rural areas wood predominates, whilst in urban areas charcoal is used by as many as
1.3 million households or 31% of all Ghanaian families
Project Activity
The project replaces these coal pots with an efficient stove, known as the Gyapa, that
reduces charcoal consumption by 25% in turn reducing GHG emissions
Link to the Millennium Development Goals (MDGs)
Ghana - Efficient Cook Stoves
MDG Impacts
1 Income related to stove sales. Reduced wood fuel cost, increases disposable income
3 Increased income helps girls education, more security for women’s businesses
4,5 Reduces indoor smoke pollution (a killer of millions each year)
7 Reduces deforestation as less wood fuel/charcoal is required for cooking
8 Provides access to developed world markets and expertise
S T R I C T L Y P R I V A T E A N D C O N F I D E N T I A L
THANK YOU – ANY QUESTIONS?