WRI Publications Feed: Low-Carbon Development in Emerging Economies

Communicating the "Financeability" of Energy Efficiency Projects (EEPs): Guide to Data Needs for Financing EEPs in China

Sarah Parsons — Tue, 08 Jan 2013 12:12:48 -0500

Executive Summary

The purpose of this guide (Guide) is to help industrial companies (Hosts) finance energy efficiency projects (EEPs) at their facilities as defined in Annex C of this document. The Guide is designed to help Hosts know what information is required of them by financing entities (Financiers) to streamline the evaluation and financing process. This Guide can also help financial institutions, energy services companies (ESCOs), vendors, and other project developers better understand the information required to finance EEPs. The Guide draws from the authors’ experiences and insights gained through extensive work with Hosts, Financiers, ESCOs, prestigious universities such as Shanghai Jiaotong University (SJTU), and other stakeholders in the financing of EEPs. It was developed in partnership with Chinese and global Financiers and energy efficiency experts.

Findings indicate that Hosts can accelerate and enhance the financing process and likelihood of success in three ways:

Communicating with Financiers as early as possible to understand their informational or structural needs, their financing decision-making criteria and processes, as well as any special services that the Financiers provide (i.e., technical assistance in designing EEPs).
Performing a “self-screening” assessment of any proposed EEPs that many Financiers would evaluate, such as type of Host or technology, size of project, and so on.
Providing as much detailed and accurate information as possible at the beginning of the financing process since plentiful data will increase credibility with Financiers.

Hosts often experience delays and rejection of EEP financing because Financiers were not provided critical Host and project data in a timely and accurate manner. This has prevented Financiers from receiving a compelling picture of the benefits and (limited) risks of a promising EEP. Being prepared to present the correct data to Financiers results in a smoother financing process and a much higher probability of success.

This Guide is designed to:

familiarize Hosts with the type of data most Financiers use to evaluate EEPs, as set forth in Annex A: EEP Assessment Indicators, and explain why the data are important;
explain the general indicators used by Financiers to evaluate Host and project attractiveness and why these indicators are used;
explain what information is important during the different stages of the financing process;
help a Host conduct its own assessment of its EEP prior to submitting an application to prospective Financiers, to help improve the quality of the financing application and likelihood of success;
highlight common mistakes Hosts make when seeking energy efficiency financing, and illustrate the impact different financing mechanisms have on a Financier’s evaluation and requirements of the Host and the EEP.

By using this Guide to become more familiar with the financing process for EEPs, Hosts can improve their success rate in securing attractive external financing to increase their facilities’ energy efficiency.

Global Coal Risk Assessment: Data Analysis and Market Research

Sarah Parsons — Mon, 19 Nov 2012 11:42:09 -0500

Key Findings

According to IEA estimates, global coal consumption reached 7,238 million tonnes in 2010. China accounted for 46 percent of consumption, followed by the United States (13 percent), and India (9 percent).
According to WRI’s estimates, 1,199 new coal-fired plants, with a total installed capacity of 1,401,278 megawatts (MW), are being proposed globally. These projects are spread across 59 countries. China and India together account for 76 percent of the proposed new coal power capacities.
New coal-fired plants have been proposed in 10 developing countries: Cambodia, Dominican Republic, Guatemala, Laos, Morocco, Namibia, Oman, Senegal, Sri Lanka, and Uzbekistan. Currently, there is limited or no capacity for domestic coal production in any of these countries.
Our analysis found that 483 power companies have proposed new coal-fired plants. With 66 proposed projects, Huaneng (Chinese) has proposed the most, followed by Guodian (Chinese), and NTPC (Indian).
The “Big Five” Chinese power companies (Datang, Huaneng, Guodian, Huadian, and China Power Investment) are the world’s biggest coal-fired power producers, and are among the top developers of proposed new coal-fired plants.
State-owned power companies play a dominant role in proposing new coal-fired plant projects in China, Turkey, Indonesia, Vietnam, South Africa, Czech Republic and many other countries.
Chinese, German, and Indian power companies are notably increasingly active in transnational coal-fired project development.
According to IEA estimates, the global coal trade rose by 13.4 percent in 2010, reaching 1,083 million tonnes.
The demands of the global coal trade have shifted from the Atlantic market (driven by Germany, the United Kingdom, France and the United States) to the Pacific market (driven by Japan, China, South Korea, India and Taiwan). In response to this trend, many new infrastructure development projects have been proposed.
Motivated by the growing Pacific market, Australia is proposing to increase new mine and new port capacity up to 900 million tonnes per annum (Mtpa) — three times its current coal export capacity.

Sustainable Urban Transport in India: Role of the Auto-rickshaw Sector

Kevin Lustig — Wed, 08 Feb 2012 09:50:16 -0500

Demand for the Auto-rickshaw

Study Objective and Approach

As the demand for urban transport increases in India, so too does the popularity of the autorickshaw. Production of this type of motorized three-wheeler has doubled between 2003 and 2010. In major Indian cities, it is responsible for a significant share of motorized trips. Strategies to improve urban transport must include a policy vision for this increasingly important sector. To that end, this paper examines the role the auto-rickshaw sector can play in promoting sustainable urban transport in India. It develops a policy vision for this sector and presents recommendations on reforms to address sustainability challenges.

The Avoid-Shift-Improve (ASI) framework, one of the key approaches to promote sustainable urban transport, is the basis of this study. The ASI framework is based on three key strategies: (1) avoid unnecessary trips, (2) shift to more sustainable transport modes, and (3) improve performance in all modes (Dalkmann and Brannigan 2007). In assessing the role of the auto-rickshaw sector in promoting sustainable urban transport, this paper looks specifically at how auto-rickshaws can contribute to Shift and Improve strategies, using a two-pronged approach:

Examination of the role of the type of service (contract carriage) provided by auto-rickshaws in promoting sustainable urban transport, as part of the Shift strategy;
Assessment of the need for improvements in the type of vehicle (motorized three-wheeler) in the auto-rickshaw sector to promote sustainable urban transport, as part of the Improve strategy.

Role of Auto-rickshaw Sector in Promoting Sustainable Urban Transport

Role of the Type of Service (Contract Carriage)

The findings from this study indicate that auto-rickshaw services in cities can help meet the objectives of the Shift strategy—of promoting public transport and reducing private motorization—based on the following aspects:

First and last mile connectivity to public transport: Auto-rickshaw services, integrated as a feeder mode providing such connectivity, can complement public transport systems by ensuring that all parts of the city have easy access to public transport stations.
Door-to-door transport alternative to private motor vehicles: The door-to-door on-demand service provided by auto-rickshaws will ensure that transport needs requiring door-to-door connectivity, such as occasional trips to the airport or emergency trips for health care, can be met in cities without having to rely on private motor vehicles.

Vehicle Performance and Need for Improvements

This paper assesses the performance of the motorized three-wheeler (auto-rickshaw) in Indian cities with respect to two important sustainability parameters—emissions and road safety—to identify current challenges and areas for vehicle-related reforms that can improve performance:

Emissions: A key challenge in the autorickshaw sector is its emissions of particulate matter of aerodynamic diameter of less than 10 microns (PM10). PM10 are known to have adverse impacts on health, and the conventional two-stroke engine auto-rickshaws prevalent in many cities are major sources of these emissions (Shah and Iyer 2004).
Road Safety: The paper looks at the impact of the auto-rickshaw sector on the safety of both city pedestrians and the rickshaws’ occupants (driver and passengers). Research conducted by EMBARQ India using pedestrian fatality data for Mumbai and Bangalore shows that autorickshaws lead to fewer fatal pedestrian accidents than do motorized two-wheelers and cars. This is likely a result of their lower speeds and lighter weights (Mohan and Roy 2003). There are concerns for the safety of auto-rickshaw occupants, however, particularly in multivehicle collisions (ones between auto-rickshaws and other motor vehicles). A study of auto-rickshaw injury patterns in Hyderabad revealed that multivehicle collisions were the leading cause of injury for auto-rickshaw occupants (Schmucker et al. 2009).

The Way Forward for the Autorickshaw Sector in Indian Cities

Policy Vision

The National Urban Transport Policy (NUTP) of the Ministry of Urban Development, Government of India, is the key guiding policy at the national level focusing on urban transport in India (MoUD 2006). With the underlying rationale of people-based transport planning, the NUTP framework focuses on planning and investments in public transport and nonmotorized transport (NMT) systems in cities.

To meet the objectives of the NUTP, the findings from this study highlight the need for an overarching policy vision for the auto-rickshaw sector in urban transport (Figure E.1) based on the Shift and Improve strategies of the ASI framework to promote sustainable urban transport.

Reform Needs and Next Steps

In accordance with the policy vision, the following regulatory and vehicle-related reforms will help ensure that the auto-rickshaw sector supports public transport and provides alternatives to private vehicles, while addressing the sustainability challenges of emissions and road safety:

Ensure Availability of Dispatch Services: Auto-rickshaw services in the majority of Indian cities are provided by individual owner-operators rather than by fleet companies. The lack of organization makes it difficult to provide dispatch (dial-a-rickshaw) services. This needs to be addressed through regulatory reforms that enable fleet-based operations with dispatch services to enter the auto-rickshaw sector.
- These regulatory reforms should be pursued by State transport departments, which are the nodal regulatory agencies for the auto-rickshaw sector.
Reduce Emissions: Findings from this study highlight that improvements in engine technology (moving from two-stroke to four-stroke engines) is potentially the best approach to reduce PM10 emissions from the auto-rickshaw sector. Four-stroke engines have lower PM10, hydrocarbon (HC), and carbon dioxide (CO2) emissions than two-stroke engines (Shah and Iyer 2004). Further, four-stroke engines can reduce PM10 emissions by running on compressed natural gas (CNG) and other alternatives to gasoline (Reynolds, Grieshop and Kandlikar, 2011). However, higher oxides of nitrogen (NOx) emissions from four-stroke engines need to be addressed through reforms in current emission standards.
- The engine and fuel-related reforms should be pursued by State transport departments as the nodal regulatory agencies.
- The needed reforms in emission standards are the adoption of separate emission standards for HC and NOx emissions, instead of the current combined (HC + NOx) standard. These reforms should be pursued by the Standing Committee on Implementation of Emissions Legislation set up by the Ministry of Road Transport and Highways (MoRTH) for emissions legislation (SIAM 2011b).
Improve Road Safety: Vehicle design improvements such as seat belts and padding on stiff surfaces (Schmucker et al. 2009) have been noted as key reform needs to improve occupant safety in multivehicle collisions. Further, infrastructure interventions such as dedicated lanes for auto-rickshaws, narrow lanes, and speed tables on urban roads to reduce average speeds will reduce the risk of occurrence of multivehicle collisions.
- Vehicle design improvements, through reforms in current motor vehicle safety regulations, should be pursued by the Automotive Industry Standards Committee (AISC) (SIAM 2011b) set up by MoRTH for motor vehicle safety regulations.
- Infrastructure interventions to improve autorickshaw occupant safety should be pursued by City governments as part of their citywide road safety enhancement strategies.

Testimony: China's Prospects for Shale Gas and Implications for the U.S.

Maggie Barron — Thu, 26 Jan 2012 09:51:49 -0500

Testimony Of Sarah M. Forbes
Senior Associate, Climate and Energy Program
World Resources Institute

HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

CHINA’S GLOBAL QUEST FOR RESOURCES AND IMPLICATIONS FOR THE UNITED STATES; CHINA’S PROSPECTS FOR SHALE GAS AND IMPLICATIONS FOR THE U.S.

Introduction

Good morning and thank you for the opportunity to contribute to the deliberations of this Commission. My name is Sarah Forbes, and I am a Senior Associate for the Climate and Energy Program at the World Resources Institute. I am also manager of the World Resources Institute’s Shale Gas Initiative.

I am delighted to speak with you today about China’s prospects for shale gas and the implications for the United States. The United States and China share an interest in the domestic and international development of shale gas resources. In this testimony I will describe the state of China’s shale gas industry as well as the governmental policies that will drive its future development in China. I will discuss the implications of U.S.-China business-to-business partnerships as well as government-to-government cooperation―including the risks and opportunities such cooperation could yield. I will also describe how shale gas development in China and the United States changes the global dynamics of energy security. In conclusion, I will provide recommendations for future actions Congress and this Commission can take. In the interest of time, I have limited the scope of my testimony to a discussion of the implications of shale gas development in China on the U.S. and China.

Considering the speed with which shale gas has shifted the U.S. energy outlook1, this is an important moment to consider the implications of the development of China’s shale gas resources. Development of shale gas in China will shift future global energy dynamics. How it is done will affect the environment and global climate picture. As I describe in this testimony, shale gas can help improve international energy security by providing an abundant domestic energy resource and reducing the need for natural gas imports. What role it plays in addressing climate change will depend in large part on the degree to which shale gas displaces inefficient coal plants and supplements continued improvements in energy efficiency and renewable energy.

As I start, I would like to emphasize the following key points, which I will describe in detail in the sections that follow.

1. Current state and future direction of China’s shale gas industry: The shale gas industry in China is in early development, but the topic has already garnered significant interest from the national government. The Chinese government is implementing new policies that support the future development of China’s gas industry broadly, as well as supporting shale gas research. State-owned and provincial-owned enterprises are conducting exploration and pilot demonstrations on shale gas in China. Through its state-owned enterprises, China2 is also investing in shale gas development in the United States.

2. U.S.-China cooperation on shale gas: The global oil and gas industry operates joint ventures (JVs) to sustain growth and defuse financial risk. The emerging international shale gas industry will rely on the same tactics, particularly given the current state of the global economy. In recent years, major investments or partnerships between U.S. and Chinese companies in the shale gas sector have been used to the near-term economic benefit of both countries and provide potential for U.S. companies to benefit domestically and abroad.

3. Impacts on the energy situation in China: Shale gas development in China will reduce natural gas imports, thus improving China’s energy security. Because total natural gas demand will continue to far outstrip all domestic production for the foreseeable future, any natural gas from shale in China is expected to be consumed domestically. From an environmental perspective, the more China can develop energy alternatives to imported oil and domestic coal, the less pressure it exerts on global energy markets and the global environment. China’s domestic use of its own natural gas resources would be unlikely to have an effect on net U.S. energy imports, as the U.S. is projected to domestically produce sufficient quantities of natural gas to meet its own demand for at least the next 25 years.

Throughout my testimony, I will also emphasize a fourth point that cross-cuts these three themes.

4. Ensuring responsible operations and creating a “level playing field”: Shale gas development should proceed in China (or any country) with environmentally and socially responsible operations which are (1) enforced by appropriate laws, regulations, and standards, (2) realized through implementation of international best practices, and (3) based on an understanding of the real risks and benefits of responsible deployment (both to industry and the public). Such approaches drive demand for U.S. products and ensure a “level playing field” between companies operating in the United States and those in China. More importantly, they help ensure that any negative environmental impacts associated with shale gas development in the United States are not repeated elsewhere.

Read the full testimony here >>> (PDF, 454 Kb)

Inside Stories on Climate Compatible Development: China

Kevin Lustig — Tue, 13 Dec 2011 09:48:27 -0500

Key messages

A clear expression of political will, backed by a set of effective policy measures, has been key to China’s success in building the world’s largest wind power market.
The establishment of a stable and favorable pricing mechanism is crucial for the development of wind power, because it increases the chances for profitability and growth.
A strong domestic market contributes to the growth of local wind power equipment manufacturing.

Inside Stories on Climate Compatible Development: Niger

Kevin Lustig — Tue, 13 Dec 2011 09:42:26 -0500

Key messages

Farmer Managed Natural Regeneration brings increased crop yields, income and food security to impoverished rural communities in Niger. It also holds climate change mitigation potential.
Honouring local wisdom is key to the success of Farmer Managed Natural Regeneration – farmers can play a central role in experimenting, innovating, communicating potential benefits, and advocating behaviour change.
Winning the support of opinion leaders and authorities is important in tackling farmers’ initial resistance

Inside Stories on Climate Compatible Development: Zambia

Kevin Lustig — Tue, 13 Dec 2011 09:26:40 -0500

Key messages

Production of staple crops, such as maize, is under increasing risk in Africa because of climate change and depleting soil fertility. The potential consequences for food security are dire. Climate change and food security must be tackled together.
Modern methods of agroforestry and “conservation agriculture with trees” are employing age-old indigenous practices of natural fertilisation with dramatic effects. Field studies show that growing maize under “fertiliser trees” can more than triple the yields.
“Evergreen agriculture” practices (where trees are intercropped in annual food crop and livestock systems) help retain water in soils during droughts and prevent landslides and erosion during heavy rain, so reduce vulnerability to climate extremes.
The capacity for these practices to also retain and store carbon in soils means that the potential climate change mitigation benefits of wide-scale evergreen agriculture in Africa are large and globally significant – potentially up to 50 billion tonnes of carbon dioxide over 50 years.
The challenge of spreading the knowledge and uptake of evergreen agriculture and other “climate-smart” agriculture practices is being taken on as a priority by regional governance bodies in Africa.
Payments for ecosystem and social impact services may be one means to fund the practical on-farm research, testing and knowledge transfer needed for adoption on a wide scale. Carbon funds, from biocarbon projects, are one possible source of finance, but uptake is still at very low levels.
The costs of measurement, reporting and verification can be prohibitive and new methods are needed.
Supported NAMAs (nationally appropriate mitigation actions) programs of evergreen agriculture could be a new approach and play a key role in Africa low carbon development strategies.

Inside Stories on Climate Compatible Development

Kevin Lustig — Tue, 13 Dec 2011 09:11:27 -0500

Briefs in this series:

Inside Stories on Climate Compatible Development: Bangladesh

Kevin Lustig — Tue, 13 Dec 2011 08:49:28 -0500

Key messages

Bangladesh’s Comprehensive Disaster Management Programme (CDMP) is one of the most ambitious of its kind in a developing country.
Collaborative networks have enabled the CDMP to expand its operations.
Support from government leaders ensured that challenges to implementing the CDMP were overcome.
The institutionalisation of disaster risk reduction and climate change adaptation beyond the Ministry of Food and Disaster Management has proved slow and challenging.
Challenges to CDMP implementation included natural disasters, political unrest and turnover of high-level officials.

GHG-Framed Mitigation Actions by Developing Countries

Maggie Barron — Tue, 14 Jun 2011 09:37:05 -0400

International negotiations on climate change have recognized the importance of enhanced national action on mitigation, and of finance, technology, and capacity-building support to developing countries. Since 2009, a growing number of developed and developing countries have pledged mitigation targets and actions, and developed countries have committed to provide financing to developing countries, including US$30 billion in “fast-start” finance during 2010 – 2012.

WRI has tracked these targets, actions, and pledges since 2009 in an effort to shed light on their implications for greenhouse gas (GHG) emissions and for finance, respectively, and to call attention to data gaps.

This paper summarizes a subset of the mitigation actions announced by developing country parties and submitted to the UNFCCC, focusing on those actions that are framed in GHG terms. While 41 developing countries have put forward actions that take a variety of forms, this summary includes only those 16 countries that have framed their actions in terms of their expected GHG impact, i.e. “GHG-framed mitigation actions.” The types of GHG-framed mitigation actions examined in this paper are illustrated in Box 1.

Ultimately, it will be important to understand the GHG impact of all targets and actions that have been pledged internationally. In light of the diversity of forms that developing country actions take, however, we focus first on those that are framed in GHG terms. This approach allows us to identify the accounting and performance-tracking issues common to this form. Additionally, the developing countries that have framed their actions in GHG terms contributed approximately 60 percent of all developing country GHG emissions in the year 2000.

The purpose of this paper is to identify (a) the GHG impacts that could result from the mitigation actions assessed and (b) the accounting questions that would need to be clarified in order to better understand the magnitude of those impacts. It does not attempt to compare the actions to one another or to assess their ambition, adequacy or appropriateness.

This paper builds on a previous summary, released in 2010, that presented actions articulated in the Copenhagen Accord and in other country announcements.