Table of Contents. Introduction CPF Objectives Structure of the CPF Progress Report Carbon Fund... 4

Transcription

1 2016 Annual Report

2 Table of Contents Introduction... 3 CPF Objectives... 3 Structure of the CPF... 3 Progress Report... 4 Carbon Fund... 4 Carbon Asset Development Fund... 4 Carbon Fund Portfolio/ Pipeline... 4 Methodology Development/Innovation... 6 Meetings and Workshops... 9 Portfolio/Pipeline Achievements in FY Portfolio/Pipeline Plans for the Coming Year Financial Report Annex I - CPF First and Second Tranche Portfolio/Pipeline - May 2016 Report Annex II - Portfolio Overview as of May P a g e

3 Introduction CPF Objectives The Carbon Partnership Facility (CPF) is a World Bank s carbon finance instrument for the post-2012 period. The CPF utilizes scaled-up, programmatic approaches to enable carbon finance to support partner country initiatives that move toward low-carbon economies. The CPF also targets areas that were not reached effectively by the CDM in the first Kyoto period, such as energy efficiency, as well as city-wide carbon finance approaches. The longer term vision for the CPF is to innovate and scale up market mechanisms at the frontier. The lessons learned from using the CDM programme of activities approach in the First and Second Tranches of the CPF set the stage for the World Bank to make further constructive contributions to the design and implementation of future carbon market mechanisms. The CPF began work in 2014 on the next generation of crediting instruments, initially through the development of conceptual and methodological approaches. In early 2015, this work moved to the piloting phase, with preparation of the first two Program Notes that intend to test key elements of new crediting instruments. The first pilot program, the Sri Lanka Renewable Energy program, is being further developed in coordination with the Sri Lankan authorities and is expected to be considered for inclusion to the CPF Second Tranche in The second pilot program, the India Demand Side Energy Efficient Lighting program, was dropped in October 2015 due to a drop in LED lamps prices that removed the need and justification for carbon finance in the program. As a result, the Trustee prepared a Program Note for a new crediting instrument pilot in the energy efficiency sector of Vietnam and presented it for Buyer Participants consideration in February Structure of the CPF The Carbon Partnership Facility is comprised of two funds: the Carbon Fund (CF), which purchases emission reductions from CPF programs included to First and Second Tranches of the CF; and the Carbon Asset Development Fund (CADF), which funds the preparation and implementation of CPF programs. The CADF became operational in January The First Tranche of the CF was declared operational on May 15, 2010 and the Second Tranche of the CF became operational on June 3, P a g e

4 Progress Report Carbon Fund As of May 9, 2016, commitments to the CF equaled 98.8 million. The Buyer Participants in the First Tranche of the CF included the Kingdom of Spain, Norway - Ministry of Climate and Environment, the Kingdom of Sweden, Endesa and E.ON, with a 22.6 million net commitment. The Buyer Participants in the Second Tranche of the CF include the Kingdom of Spain, Norway - Ministry of Climate and Environment and the Kingdom of Sweden, with a 62.6 million net commitment. The remaining 13.6 million is comprised of Buyer Charges provided to the CADF. The CF capital and CADF resources are reflected in the Financial Report (beginning on page 13). Carbon Asset Development Fund The CADF has four donors: the Kingdom of Spain, Norway - Ministry of Climate and Environment, the European Commission and Italy - Ministry of Environment. As of May 15, 2010, the Buyer Participant contributions to the Carbon Fund became subject to the 9 percent CADF charge, payable in three annual installments of 3 percent each. The additional capital contributions of Norway - Ministry of Climate and Environment and the Kingdom of Sweden received in FY13 were subject to a 6.8 percent CADF charge, payable in three equal annual installments. All of the applicable CADF charges were received as of Carbon Fund Portfolio/ Pipeline As of May 10, 2016, there were seven active Seller Participants in the Carbon Partnership Facility: Caixa Economica Federal of Brazil, for the Brazil Solid Waste Management program. 308,259 CERs (302,094 net) were issued in FY16. A total of 526,096 CERs have been issued to date. The landfill operator of the Santa Rosa CPA has invested into expansion of the LFG system, resulting in larger ER generation in Sao Goncalo CPA was included into the PoA on March 31, Inclusion of another CPA (Ipojuca) is currently under discussion with Caixa and, if included in 2016, ER generation is expected to start in Fonds D equipement Communal of Morocco (FEC), for the Morocco Solid Waste Management program. In addition to the Oum Azza CPA (already part of the PoA) FEC is currently targeting three priority CPAs: Agadir, Moulay Abdelah and Al Hoceima for inclusion into the PoA. However, their inclusion is constrained by the extended ERPA deadline of June 30, 2016 by which all sub-erpas shall be signed. 4 P a g e

5 Ministry of Industry and Trade of Vietnam (MoIT), for the Vietnam Renewable Energy program. The second verification for the program is underway, with issuance expected at the end of June 2016 of 80,377 CERs (78,769 net). Overall 21 projects have been identified, of which 9 with 2 million CERs are already registered and their Sub-ERPAs are signed, and the remaining 12 with 1 million CERs are being or to be reviewed by participating private banks and MoIT). In order to include those additional CPAs, the deadline of signing the Sub-ERPAs with the SHP owners has been extended by one year to December 31, Provincial Electricity Authority (PEA) of Thailand, for the Thailand Energy Efficiency program. After internal discussions as well as consultations with the Bank/Trustee, the PEA Governor informed Trustee on October 20, 2015 that PEA will not be able to sign the ERPA by October 31, 2015 and to consider the extension of the SPA s exclusivity period. The Trustee responded on October 26, 2015, asking PEA to reimburse the Trustee for all costs incurred in connection with the preparation of the program in the amount of USD 745,178. The PEA is now considering how to respond to the Trustee s letter. The Rural Energy Agency of Tanzania, for the Tanzania Renewable Energy program. Two CPAs were included and seven sub-erpas were signed in FY15. Three new CPAs comprising three hydro plants (Tulia, Yovi, Andoya (Mbinga)) were included into the PoA in November A consultant is being hired to assist the program identify new CPAs. First CER delivery is expected in Ministry of Finance of Egypt, for the Egypt Vehicle Scrapping and Recycling program. The first verification for the program is about to be finalized. After revision of calculations regarding data from the Ministry of Interior, the compliance rate is now between 42-44% and therefore expected CERs from first issuance are down from 170,000 to 143,000. A PRC process was completed on February 16, Second verification is being scheduled by the Trustee for early June An ERPA extension is being proposed upon successful first issuance that is expected in June Land Bank of the Philippines, for the Animal Waste and Solid Waste Management programs. o The Philippine AWM program: over 100 potential CPAs identified, of which 26 farms started inclusion in January The remaining farms are scheduled for inclusion in two subsequent batches through First verification for the period of May June 2015 took place in September Issuance of about 28,000 CERs is expected in the second half of The 5 P a g e

6 Trustee noted that a portion of this issuance (May Dec 2013 vintage of about 6,000 CERs) will account towards delivery under the SCF ERPA. o The Philippine SWM program: the ERPA was signed in December 2015, following which inclusion process for the second CPA (Montalban) has started in January First ERs are expected to be generated from mid-2016 once the inclusion in complete. Last year, two new programs were endorsed as the CPF new crediting instrument pilots: Sri Lanka Renewable Energy program, with the Sri Lanka Climate Fund (SLCF) as the host country counterpart. A MoU with the SCLF for cooperation on preparation of the program was signed in October A Crediting Program Design Document was shared with Sri Lankan authorities in January A Carbon Finance Document draft was shared with the Buyer Participants at the Buyer Participant meeting in February India Energy Efficiency program, with the India Energy Efficiency Services Limited (EESL) as the host country counterpart, was dropped from the CPF pipeline due to no longer being viable. The Trustee presented a Program Note for the Vietnam Energy Efficiency for Industry program for Buyer Participants consideration at the Buyer Participant meeting in February The withdrawal of the Hebei Green Agriculture Company, the Seller Participant for the Hebei Regional Farm Biogas program is yet to be completed. There is one Host Country Partner in the CPF, the Government of China (NDRC), for the Hebei Regional Farm Biogas program and IGCC methodology development. Additional details on the portfolio/pipeline can be found in the Annexes. Methodology Development/Innovation In addition to CDM improvements to support the existing pipeline of CDM PoAs, substantial progress was made in 2015 in developing the methodological basis for new CPF programs to pilot scaled-up crediting mechanisms. In parallel, the conceptual work advanced on scaled-up crediting mechanisms, including work on low carbon cities and policy MRV, and related interaction with the UNFCCC. Following receipt of 6 P a g e

7 a supplemental contribution from Norway - Ministry of Climate and Environment in 2015, piloting of the policy MRV in Morocco s power generation sector has started. CDM PoAs The World Bank continued in 2015 to reach out to the UNFCCC to simplify PoA procedures, with multiple submissions on CDM reform, followed by a statement during CMP21 in Paris. The CDM decisions adopted by CMP21 reflect to a large degree the simplifications suggested by the World Bank and other stakeholders such as allowing up to 10 batches of CPAs for issuance in a year, application of thresholds for simplified methodologies at a unit level and simplified sampling procedures for CPAs within a PoA. Other simplifications, such as direct inclusion of CPAs by CMEs and further simplification of verification of CPAs, are still being discussed within the CDM Executive Board. CPF CDM PoAs can be expected to benefit from these improvements. Methodologies for new CPF programs With the origination of two pilot programs for scaled-up crediting mechanisms in 2014, the methodological work is being applied to real cases. In the context of recent INDC submissions, a methodological approach for the Sri Lanka Renewable Energy program was updated so that crediting of a sectoral program is based on the country s own ambition, as is reflected in the Sri Lanka (I)NDC. The dynamic baseline reflects an ambitious and realistic expansion plan for renewables in the Sri Lanka power sector instead of a static status quo without policy effort. Only achieved emission reductions beyond the country s own efforts, as specified in the Sri Lanka (I)NDC, are then credited over time. For the India Energy Efficiency program (dropped in 2015), the country s own effort to achieve transition from incandescent lights to CFLs was taken as the baseline scenario. Credited would have been additional emission reductions achieved by transition to a more advanced technology, i.e., LED lights. The program also intended to use a short crediting period for the country s own effort considerations. Conceptual work on scaled-up crediting mechanisms In 2015 the World Bank did further analytical work to build the conceptual basis for scaled-up crediting mechanisms. The concept of net mitigation became a key topic in 2014 s UNFCCC negotiations in all negotiation streams relevant to market mechanisms: New Market Mechanism (NMM), Framework for Various Approaches (FVA), CDM and JI reform. The World Bank analyzed the concept of net mitigation from the perspective of economic efficiency and informed the related discussion process. Findings are summarized in a World Bank analytical report that was published in March WB Policy Research Working Paper no.7594: Assessment of Net Mitigation in the Context of International Greenhouse Gas Emissions Control Mechanisms 7 P a g e

8 The World Bank will convene a series of events on scaled-up crediting approaches and Result-Based Climate Finance (RBCF) in Paris, France in May/June 2016, with more than 25 country representatives and experts in attendance. The CPF is one of the organizers along with the Partnership for Market Readiness (PMR), the Carbon Initiative for Development (Ci-Dev), the Networked Carbon Markets, and the Transformative Carbon Asset Facility (TCAF) under preparation. One of the Paris events, the technical workshop, will focus on the current interpretations of the Paris Agreement relative to the scaled-up crediting and assess its implications for the ongoing and future capacity building and piloting initiatives. During this workshop the progress and outcomes of the CPF analytical, policy and program design work on the new generation of CPF programs and on low carbon cities and policy MRV, will be presented. This technical workshop builds on the Technical Workshop on Scaled Up Crediting: Net Mitigation and carbon crediting beyond a project-by-project level held by the World Bank in Bonn, Germany in June 2015 and on the Technical Workshop exploring scaled up crediting concepts to increase the greenhouse gas mitigation impact of a market mechanism that the World Bank held in October The Bonn workshop considered options to define the concept of net mitigation and to operationalize it within existing or new international market mechanisms and the Paris workshop clarified options for scaled-up crediting. The Paris technical workshop will be followed by a dialogue on exploring RBCF role to deliver transformative low carbon and climate resilient development. The discussion will be centered on the rationale, the scope of application of RBCF, and its potential role to price the carbon and to build carbon markets. The dialogue will also focus on the potential role of RBCF to support NDC implementation and to mobilize private finance. Challenges and new innovative solutions for RBCF implementation will be discussed as well, including institutional and technical capacity, MRV methodology and infrastructure, and upfront financing. In addition, three submissions in response to UNFCCC calls for public input were made, one on NMM one on FVA and on lessons learnt from JI to inform the design of new mechanisms. In these submissions options on building blocks for modalities and procedures for these respective mechanisms were outlined and existing relevant experience provided. 8 P a g e

9 Meetings and Workshops Over the last year, there were the following CPF events: CPF Seller Participant Meeting The Seller Participants met on May 24, 2015 in Barcelona, Spain prior to the 2015 Annual Meeting. The agenda included presentations on recent carbon market and regulatory developments, and a discussion on capacity building and sharing experiences on verification. CPF Annual Meeting The CPF Annual Meeting was held on May 25, 2015 in Barcelona, Spain. The Meeting included presentations by Seller Participants on each of the programs in the portfolio and pipeline of the First and Second Tranches. The meeting also included presentations on the CPF Annual Report, a CPF/CADF financial report and the CPF new program development. Participants selected members of the Partnership Committee. CPF Buyer Participant Meeting A CPF Buyer Participant meeting was held in Paris on February 10, The meeting focused on 1) the status of the First and Second Tranche portfolio and pipeline; 2) Second Tranche capital allocations; 3) CPF delivery strategy; 4) Paris Agreement and its implications for a new generation of international market mechanisms and CPF new program development; and 5) new crediting instruments pilots; including presentation to the Buyer Participants of a Carbon Finance Document draft for the Sri Lanka Renewable Energy program and a Program Note for Vietnam Energy Efficiency for Industry program. Portfolio/Pipeline Achievements in FY16 A new ERPA for the Philippines Solid Waste Management program was signed in December 2015, as well as ERPA amendments for the Vietnam Renewable Energy Development program and Philippines Animal Waste Methane program. There were eight CPA inclusions into PoAs, of which three were for the Tanzania Renewable Energy program (Tulia, Yovi, Andoya (Mbinga), one for the Brazil Caixa program (Sao Goncalo) and four for the Vietnam Renewable Energy Development program (Trung Thu, Bao Lam 1, Ban Ang, and Bai Thuong). Inclusion processes for Montalban for the Philippines Solid Waste Management program and first batch of 26 farms for the Philippines Animal Waste Methane program started in January P a g e

10 Two CER issuances took place in FY16. The Brazil Caixa program issued a total of 308,259 (302,094 net) CERs, of which 135,406 was for Candeias and 166,687 was for Santa Rosa. There are a number of issuances in final stages of verifications, in particular 80,415 CERs for the Vietnam Renewable Energy Development program, 143,084 CERs for the Egypt Vehicle Scrapping and Recycling program and about 28,000 CERs for the Philippines Animal Waste Methane program. A MoU with Sri Lankan authorities for preparation of the Sri Lanka Renewable Energy program was signed in October A draft of Crediting Program Design Document was shared with Sri Lankan authorities in January 2016, and a Carbon Finance Document draft was shared with the Buyer Participants at the Buyer Participant meeting in February Portfolio/Pipeline Plans for the Coming Year As was the case last year, the major focus for the coming year will be achieving substantial progress on the programs in the Carbon Fund portfolio and pipeline, including further development of scaled-up crediting mechanisms, but also start to freeing up capital in cases where inclusions of CPAs have not progressed as planned, or where CPAs are projected to deliver significantly less than in the respective ERPAs. As in the previous year, inclusion of additional CPAs in these programs is proceeding and remains a priority. The CPF ERPAs provide the Seller Participants with a limited period in which to conclude sub- ERPAs to fulfill the volume target in the ERPA; after that date capital can be reallocated to other programs. Moreover, the sooner CPAs can begin to generate CERs, the greater the delivery over the ERPA contract period. As a consequence, the inclusion of CPAs into the respective PoAs and signature of sub-erpa agreements remain a high priority. The CPF Team is working closely with the Seller Participants to support this effort. Successful verifications and issuances are now a key focus. Verifications and issuances for all programs are expected in FY17, of which five programs will go through the CDM issuance process for the first time. In this context, strengthening the Seller Participants capacity for program management is also essential. The CPF Team will continue to provide support for capacity building over the course of FY17. In the light of the Paris Agreement that was adopted by the UNFCCC parties in December 2015, support for piloting the next generation of crediting instruments is now front and center on the CPF agenda. A Seller Participation Agreement with Sri Lankan authorities (Ceylon Electricity Board) is 10 P a g e

11 expected to be signed soon after the 2016 Annual Meeting, following which a final CFD will be submitted to the Buyer Participants to request inclusion of the Sri Lanka Renewable Energy program to the Second Tranche portfolio. As the India Energy Efficiency program was dropped from the pipeline in 2015, the Trustee identified a new crediting instrument program, the Vietnam Energy Efficiency for Industry program, and presented it to the Buyer Participants for their review and endorsement at the Buyer Participant meeting in February The endorsement for moving the program into a preparation stage is under consideration. Exploring the possibility of a third new crediting instruments pilot remains on-going and subject to a sufficient amount of capital being released from programs in the Second Tranche, which are not able to meet their milestones for CPA inclusion or facing a reduction in expected CER delivery. 11 P a g e

12 Financial Report The Financial Report presented below for the CPF Carbon Fund (CF) and Carbon Asset Development Fund (CADF) for the 12 months ending June 30, 2016 (FY16) reflects actual expenditures through end March and estimated expenditures for the last quarter of FY16. Carbon Fund Following the restructuring of the CF in 2013, the total pledged amount to the CF stands at 98.8 million as of May 9, Of these total commitments, 22 million from Spain and 5.1 million from Sweden have been paid into a CPF prepaid trust fund account. Table 1 CPF Carbon Fund FY16 Commitments (Amounts in EURO 000) Carbon Asset Development Fund In FY16, there was a new direct contribution of $0.6 million from Norway to CADF to finance the Morocco Policy MRV work program. Also, CADF charges of 0.57 million were transferred from the CF as the final Buyer Charges from Norway and Sweden on their additional FY13 commitments to the Second Tranche of the CF. As of May 9, 2016, CADF received $31.1 million of external funds, including $15.1 million as donor contributions and $16 million as CADF charges. The trust fund also earned investment income in amount of $3.3 million. Total expenditure for FY16 is estimated to be $2.2 million, bringing cumulative expenditures to $22.2 million and leaving estimated cash balance of $12.3 million by the end of FY16. Table 2 below summarizes the Sources and Uses of Funds. 12 P a g e

13 Table 2 CADF: Sources and Uses of Funds (Amounts in USD 000) Note: 1) FY16 financial information contains estimates for the last quarter (April to June 2016). Table 3 below shows the total expenses incurred by the CADF for FY16 and cumulative expenditures as of June 30, Of the total $2.17 million expenditures in FY16, $1.41 million (or 65%) were for specific program development costs, $0.43 million (20%) for business/methodology development and related costs, and $0.33 million (15%) for administrative expenses. 13 P a g e

14 Table 3 Uses of Funds (Amounts in USD 000) Note: 1) Philippines programs listed above are recorded as a single World Bank project but are split into the above programs for reporting purposes. 2) FY16 financial information contains estimates for the last quarter (April to June 2016). 14 P a g e

15 CADF Grants The Vietnam grant ($205k), for capacity building and some preparation expenses for the Vietnam Renewable Energy program, was fully utilized and closed in FY16. The CADF grant for the Morocco Solid Waste Management program ($520k) is for capacity building and preparatory expenses. The China CADF grant ($1.4 million), for the preparation of the Hebei Regional Biogas program and the preparation of a CDM methodology for IGCC power generation, was closed in FY14, with $81k in unused funds returned. The $410k grant to the Land Bank of Philippines for capacity building and preparatory expenses in relation to the Philippines Animal Waste Methane program and the Philippines Solid Waste Management program was signed in October Grant disbursements as of May 9, 2016 total $1,872k, of which $1,319k are for the China grant, $138k for the Morocco grant, $205k for the Vietnam grant and $210k for the Philippines grant. 15 P a g e

16 Annex I - CPF First and Second Tranche Portfolio/Pipeline - May 2016 Report CPF Carbon Fund -- First Tranche Portfolio (May 2016) BRAZIL - Solid Waste Management Program Updates and highlights: Program/ERPA status: CPA 2 (Sao Goncalo) was included on March 31, End of World Bank loan December 31, Implementation: 166,687 CERs issued on February 5, Trustee provided additional support as CAIXA took over CDM responsibilities in Candeias installed a 2 nd flare in May Santa Rosa installed 3 rd flare at end of Santa Rosa has requested for verification every 6 months. Issuance: Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total CPA , ,687 Candeias 135, ,407 Total 302,094 Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Land fill gas methane capture/flaring Objective: Reduce environmental and social impacts and GHG emissions from the solid waste management sector CDM Status: PoA Crediting Period (renewable): October 5, 2012 to October 4, 2019; Candeias Crediting Period (renewable): September 29, 2011 to September 28, Itaoca Crediting Period (fixed): August 11, 2011 to August 10, Program/ ERPA milestones: Inclusion in the First Tranche: June Contract Volume : 3 million tco2e in ERPA Volume + 2 million tco2e in Options CER issuance: - 1st issuance ( vintage) CPA #1: 121,463 CERs (net) issued in October nd verification (2014 vintage) CPA #1: issuance of 166,687 CERs (net) issued February 5, P a g e

17 PoA Coordinating/Managing Entity (C/ME): Caixa Economica Federal (Lender) Caixa signed Seller Participation Agreement with CPF Caixa signed ERPA December 5, 2011 Methodology: with CPF on ACM0001 ver Consolidated baseline and monitoring methodology for landfill gas project activities World Bank Operations/Safeguards: World Bank loan to Caixa to finance landfill upgrading Country systems to be utilized for safeguards assessment of project activities Financing: World Bank loan to Caixa to finance landfill upgrading Caixa loans to landfill operators to be closed in conjunction with sub-erpa signing Pricing agreement: August ERPA signing: December 5, Termination of senior Spanish Carbon Fund (SCF) ERPAs for Santa Rosa, Itaoca and Candeias Projects: September End of World Bank Loan: December 31, 2015 Capacity Building Activities: Several on-site CDM training activities took place during 2013 and 2014, with the participation of Caixa and the CPA implementers of Santa Rosa and São Gonçalo.. CPF Seller Participant workshop, organized in Washington in April Ongoing support during 2015 in preparation for CAIXA to take over CDM responsibilities. Implementation remarks: Candeias LFG system started operation in December The project has since overdelivered. The project installed a second flare in May 2015, increasing its capacity. As previously reported, there is no implementation expected for Itaoca. Santa Rosa LFG system became operational in November The landfill operator is investing into further expansion of the LFG system, with expectations of larger ER generation in A third flare was installed at the end of Additional CPAs: São Gonçalo started the validation audit for inclusion on January The LFG system is expected to be operational in Q1 of Ipojuca CPA is currently under discussions with Caixa and, if it materializes, is expected to start delivering ERs in Delivery and additional remarks: The Caixa PoA is expected to deliver the full ERPA volume by CERs generated in the subsequent years ( ) could be available for purchase under Tranche II. Candeias is Operational CPAs CPA #1: Name: CTR Santa Rosa CPA volume: up to 4 MtCO2e for Sub-ERPA volume: 2.36 MtCO2e for Expected CPA delivery in 2016: 410,938 CERs CPA #2: Name: CTR São Gonçalo Inclusion: Included March 31, Status: Sub-ERPA signed December 15, 2011 CPA volume: up to 0.94 MtCO2e for Sub-ERPA volume: 143,000 tco2e until 2018 Implementation: expected by Q1 of CY2016 Future CPAs CPA #3: Name: Ipojuca Inclusion: expected in 2016 Status: under discussion with Caixa CPA volume: up to 340,000 tco2e for Implementation: expected in Isolated Projects selling post-2012 CERs to Caixa: Names: Itaoca and Candeias CTR Project Volume: Candeias potential of up to 1.2 MtCO2e until 2020 if the crediting period is renewed in No volume expected for Itaoca. Project Volume: Candeias up to 1.1MtCO2e until 2018 Sub-ERPA volume: Candeias 500,000 tco2e until 2018 Expected delivery in 2016: 140,000 CERs CER issuance: - 1 st issuance ( vintage): 102,539 CERs (net) issued in September P a g e

18 expected to deliver the ERPA volume by 2017, and thus CERs generated in the period could be also purchased under Tranche II. Renewal of crediting periods for Candeias and Santa Rosa would be required. Santa Rosa has requested the Trustee to agree to verifications every 6 months. 2 nd issuance (2014 vintage): 135,407 CERs (net) issued in July P a g e

19 CPF Carbon Fund -- Second Tranche Portfolio (May 2016) MOROCCO - Municipal Solid Waste Management Program Updates and highlights: Issuance: Program/ERPA status: FEC is currently targeting three priority CPAs: Agadir, Moulay Abdelah and Al Hoceima. Akreuch has been removed from the priority list due to lack of technical potential. The feasibility studies for these three potential Sub-ERPAs indicate a potential delivery about 330,000 tco2e from July 2017) to December Implementation: CPA1 Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total CPA 1 Oum Azza: The LFG system equipment is currently installed and operated. Project was commissioned in August The project has a lower than expected volume and concentration of methane in LFG. The technical solutions deployed until now didn t allow to resolve the issue and additional comprehensive solutions have being designed and are planned for implementation, including at the new waste cells, in view of increasing the volume of collected gas and installing power generation equipment. Total Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Landfill gas (LFG) recovery, flaring and use for electrical and/or thermal energy generation Objective: To improve financial sustainability and environmental practices in the municipal solid waste management CDM Status: Registration Status: The program registration date is December 18, Program/ERPA Status : The program was included in the First Tranche of the CPF on January 24, 2012 (following concurrence from FEC to increase to 30% from 20% the contract volume from executed CPA Contract Volume: 4.5 million tco2e CPA #1: Name: Oum Azza (Greater Rabat) Inclusion: April 2, 2013 Status: The sub-erpa for Oum Azza was signed in October CPA volume: 0.4 million tco2e for (reevaluated to 0.3 million tco2e for ) 19 P a g e

20 sector. Carbon finance will support reforms implemented under two World Bank development policy loans (DPLs). PoA Coordinating/Managing Entity (C/ME): Fonds d Equipement Communal FEC (the Moroccan Municipal Development Bank) FEC signed Seller Participation Agreement with CPF in October 2009 Methodology: ACM0001 World Bank Operations/Safeguards: No World Bank lending. This program however, is linked to a WB Development Policy Loan to modernize the waste sector in Morocco. Country systems are being utilized for the safeguards assessment of project activities. Financing: The landfill operators will finance all CPAs in the program. Teodem- Pizzorno, the operator of the landfill of Greater Rabat (Oum Azza), financed the investment and operates the first CPA. The same operator is in charge of two potential CPAs for Moulay Abdelah and Al Hoceima. Techmed operates Agadir which is the third potential CPA at this stage. At this early stage, no information is available on possible sources of financing or on the possibility for Techmed to continue operating the landfill beyond the current concession sub-project agreements required for ERPA effectiveness). The program was transferred to the Second Tranche, which became operational on May 15, A final appraisal mission to confirm full compliance of the country safeguards framework with Bank requirements took place in February 2012 and the MNA Region s clearance for ERPA signing was granted. The final terms of the ERPA were agreed in July 2012, with the support of three Buyer Participants and FEC. At the time, FEC requested more time to consult with the municipalities for the first CPA and the pricing mandate for ERPA signing expired on August 22, The Buyer Participants renewed their pricing mandate in January 2013 and it was decided that the signature of the ERPA would be made after confirmation of the CDM registration of the program before the 31/12/2012 deadline. ERPA signing took place on August 1, At present, FEC is currently targeting the three priority CPAs that were considered at the CFD stage to have the highest likelihood of joining the program. These are Agadir, Moulay Abdelah and Al Hoceima. Akreuch has been removed from the priority list due to lack of technical potential. Additional CPAs (namely Al Hoceima, Moulay Adbelah and Agadir) could be added and have formally expressed interest in joining the program. The feasibility studies for these locations have been finalized (showing the potential of GHG reduction of about 330,000 tco2e up until 2020) and the negotiations have started, but did not yet reach any concluding stage. Therefore, the current ERPA constraints in terms of the deadline for securing sub-erpas are hindering that prospect and would need to be extended to allow inclusion. Given the terms of the ERPA between the CPF and FEC, the possibility of adding CPAs to the program is highly dependent on the results of Sub-ERPA volume: 651,898 tco2e (first verification scheduled in Q3 CY16) CPA #2: Name: Agadir Inclusion: expected in Q4 of CY2016 Status: Sub-ERPA to be signed in Q4 of CY2016 CPA volume: 208,300 tco2e for (based on the 2016 FS) Sub-ERPA volume: TBD Implementation: Project commissioning expected in Q3 of CY CPA #3: Name: Moulay Abdelah Inclusion: expected in Q4 of CY2016 Status: Sub-ERPA to be signed in Q4 of CY2016 CPA volume: 86,707 tco2e for Sub-ERPA volume: TBD Implementation: Project commissioning expected in Q3 of CY CPA #4: Name: Al Hoceima Inclusion: expected in Q4 of CY2016 Status: Sub-ERPA to be signed in Q4 of CY2016 CPA volume: 34,518 tco2e for (based on the 2016 FS) Sub-ERPA volume: TBD Implementation: Project commissioning expected in Q4 of P a g e

21 with the municipality (up to December 2017). FEC is not involved in the financing scheme and does not provide lending to the municipalities for these activities at the current time. However, municipalities that want to implement LFG capture and flaring/energy production are eligible for FEC financing. The recent missions in October 2015 and April 2016 confirmed a very low appetite from municipalities to use FEC financing. their respective feasibility studies, including the financial analyses. Such feasibility studies have been performed by FEC in 2016 and indicated the two projects have acceptable economics. The project at Al Hoceima has a very small potential, but the municipality confirmed their strong interest to pursue the inclusion due to other local pollution issues (smell) related to the landfill that can be eliminated due to the project implementation. It is to be noted that additional CPAs (namely Berkane, Khouribga and Safi) could be added at a later stage. However, due to the limited time remaining to ensure purchase of CERs under the ERPA, these projects have low priority at this stage and the feasibility studies are put on hold. 21 P a g e

22 CPF Carbon Fund -- Second Tranche Portfolio (May 2016) VIETNAM - Renewable Energy Development Program (REDP) Updates and highlights: Program/ERPA status: 21 projects (of which 9 with 2 million CERs are already registered and their Sub-ERPAs are signed, and the remaining 12 with 1 million CERs are being or to be reviewed by participating private banks and MOIT) have been identified. An ERPA Amendment was signed in December 2016 in order to include additional CPAs. The deadline of signing the Sub-ERPAs with the SHP owners was extended by one year to December 31, Implementation: Due to delays with the request for issuance process, the second CER issuance is expected in late June 2016 (usually in January). From the third verification, MOIT will arrange it as per the ERPA. Due to the delay in the CER payment regarding the second verification, MOIT is planning to arrange the third verification in May/June Consequently, the next verification would be delayed by at least six months. Issuance: Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total CPA ,415 80,415 Total 80,415 Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Regular scale hydropower generation (30 MW or less for each hydropower plant) Objective: CDM Status: Registration Status: The program was registered on June 7, 2013 with an effective date of registration of December 19, Program/ERPA Status: Contract Volume: 3 million tco2e CER issuance: 1st issuance (2013 vintage) CPA #1: 30,509 CERs (net) issued in January P a g e

23 Increase the supply of renewable energy to the national grid PoA Coordinating/Managing Entity (C/ME): Ministry of Industry and Trade of Socialist Republic of Vietnam (MOIT) signed Seller Participation Agreement with CPF in December 2009 Methodology: ACM0002 World Bank Operations/Safeguards: Environmental Category: FI* * A project is classified as FI if it involves investment of Bank funds through a financial intermediary, in subprojects that may result in adverse environmental impact. Financing: World Bank lending is available to CPAs through financial intermediaries. The Bank plans to provide additional US$ 200 million lending for the REDP. The timing for the Bank board approval is not decided yet. CADF Grant Agreement: The CADF Grant Agreement was signed on April 6, The program was included in the Second Tranche on April 15, The ERPA was signed on December 20, projects (of which 9 with 2 million CERs are already registered and their Sub-ERPAs are signed, and the remaining 12 with 1 million CERs are being or to be reviewed by participating private banks and MOIT) have been identified. In order to include those additional CPAs, the deadline of signing the Sub- ERPAs with the SHP owners has been extended by one year to December 31, World Bank Energy GP is providing safeguard approval for the carbon finance operation at the program level, but is requiring that safeguard compliance be approved at the CPA level before that CPA can sign a sub-project agreement with MoIT. CPA Identification: Nine projects with around 170 MW generating capacity have already been included into the POA. The other 12 projects with around 160 MW generating capacity are now being reviewed by participating private banks and MOIT. Implementation: Among the nine CPAs included into the POA, the first five CPAs have already been commissioned. Four more are expected to be commissioned in The second verification for the first five CPAs is now under progress (80,415 CERs in total). The Sung Vui CPA is expected to deliver more ERs than the CPA-DD volume by around 30%. There is a risk that it could be deemed ineligible to issue further CERs. Due to the delay at the UNFCCC s assessment process of the second CER issuance request (which was received by the UNFCCC on November 13, 2015), the CER issuance would 2nd verification (2014 vintage) CPA #1-5: issuance of 78,806 CERs (net) expected in June CPA #1: Name: Sung Vui Hydropower Project Inclusion: December 19, 2012 Status: sub-erpa signed in November 2014 CPA volume: 241,943 tco2e for Sub-ERPA volume: up to 241,944 CERs Implementation: commissioned in January 2013 CPA delivery in 2016: 38,802 CERs (2015 vintage) CPA #2: Name: Nam Tha 4 Hydropower Project Inclusion: November 26, 2014 Status: Sub-ERPA signed in November 2014 CPA volume: 164,248 tco2e for Sub-ERPA volume: up to 166,082 CERs Implementation: commissioned in November 2014 Expected CPA delivery in 2016: 1,997 CERs (2015 vintage) CPA #3: Name: Pa Chien Hydropower Project Inclusion: June 10, 2014 Status: signed in November 2014 CPA volume: 315,746 tco2e for Sub-ERPA volume: up to 316,790 CERs Implementation: commissioned in October 2014 Expected CPA delivery in 2016: 32,308 CERs (2015 vintage) CPA #4: Name: Song Rieng Hydropower Project Inclusion: November 26, 2014 Status: Sub-ERPA signed in November P a g e

24 be expected in June 2016 (usually in January). Since MOIT does not have sufficient budget to arrange the next verification and other relevant costs without the carbon revenue expected in end of July /early August 2016, the next verification would be delayed by at least six months. CPA volume: 50,172 tco2e for Sub-ERPA volume: up to 50,712 CERs Implementation: commissioned in November 2014 Expected CPA delivery in 2016: 1,438 CERs (2015 vintage) CPA #5: Name: Hoa Phu Hydropower Project Inclusion: November 26, 2014 Status: Sub-ERPA signed in November 2014 CPA volume: 469,899 tco2e for Sub-ERPA volume: up to 475,144 CERs Implementation: commissioned in November 2014 Expected CPA delivery in 2016: 4,260 CERs (2015 vintage) CPA #6: Name: Ban Ang Hydropower Project Inclusion: July 31, 2015 Status: Sub-ERPA signed in October 2015 CPA volume: 151,326 tco2e for Sub-ERPA volume: up to 154,414 CERs Implementation: Expected to be commissioned in December 2016 CPA #7: Name: Bao Lam 1 Hydropower Project Inclusion: July 31, 2015 Status: Sub-ERPA signed in October 2015 CPA volume: 264,650 tco2e for Sub-ERPA volume: up to 264,650 CERs Implementation: Expected to be commissioned in October P a g e

25 CPA #8: Name: Trung Thu Hydropower Project Inclusion: July 31, 2015 Status: Sub-ERPA signed in October 2015 CPA volume: 290,309 tco2e for Sub-ERPA volume: up to 290,309 CERs Implementation: Expected to be commissioned in September 2016 CPA #9: Name: Bai Thuong Hydropower Project Inclusion: September 11, 2015 Status: Sub-ERPA signed in October 2015 CPA volume: 53,780 tco2e for Sub-ERPA volume: up to 53,780 CERs Implementation: Expected to be commissioned in December P a g e

26 CPF Carbon Fund -- Second Tranche Portfolio (May 2016) THAILAND - Energy Efficiency Program Updates and highlights: Program/ERPA status: PEA s new Board of Directors decided on March 18, 2015 to postpone the program implementation until all the technical issues regarding the safety of the LED lamp use in the highway have been addressed. After internal discussions as well as consultations with the Bank/Trustee, the PEA Governor submitted the letter on October 20, 2015, informing that the PEA will not be able to sign the ERPA by October 31, 2015 as well as to consider the extension of the SPA s exclusivity period. In response to the letter, the Trustee sent the PEA a letter on October 26, 2015, asking the PEA to reimburse the Trustee for all costs incurred in connection with the preparation of the program in the amount of USD 745,178. The PEA is now considering how to respond to the Trustee s letter. Implementation: To be dropped. Issuance: Total Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Small Scale PoA: EE Small-scale street lighting energy efficiency programs Objective: Reduce nationwide energy consumption for highway street lighting CDM Status: Registration Status: Program was registered on November 6, Program/ERPA Status: Status of program development: The pilot program started in March The program was included in the Second Tranche on April 5, Proposed Contract Volume: 0.5 million tco2e CPA #1: Name: Thailand Energy Efficiency Improvement for Street Lightings in Central Region (Sub-Region 1: Nakhon Pathom Province) Inclusion: November 2012 CPA volume: 64 tco2e for Implementation: commissioned in January P a g e

27 PoA Coordinating/Managing Entity (C/ME): Provincial Electricity Authority of Thailand (PEA), which is one of the leading State-Owned-Enterprises in the Kingdom of Thailand, responsible for electricity distribution outside of the Bangkok Metropolitan area. PEA signed the SPA on January 31, 2013, substituting for PEA-ENCOM. The SPA was amended on January 30, 2015 to extend the Exclusivity Period till October 31, The Exclusivity Period has expired. Methodology: AMS II.L for EE PoA World Bank Operations/Safeguards: Environmental Category: C Partial Assessment (Concept Stage) Financing: Operational budget from PEA will be utilized for the EE program by providing payment from energy saving to the suppliers in five installments. PEA s new Board of Directors suddenly decided on March 18, 2015 to postpone the program implementation until all the technical issues regarding the safety of the LED lamp use in the highway have been addressed. After internal discussions as well as consultations with the Bank/Trustee, the PEA Governor submitted the letter on October 20, 2015, informing that the PEA will not be able to sign the ERPA by October 31, 2015 as well as to consider the extension of the SPA s exclusivity period. In response to the letter, the Trustee sent the PEA a letter on October 26, 2015, asking the PEA to reimburse the Trustee for all costs incurred in connection with the preparation of the program in the amount of USD 745,178. The PEA is now considering how to respond to the Trustee s letter. Implementation: The CDM Operational Manual was completed and accepted by the Trustee. 17 CPAs have been identified, of which 5 are already included in the PoA. 5 CPAs under Phase 1.1 were commissioned in January However, the PEA has decided to suspend the program in March CPA #2: Name: Thailand Energy Efficiency Improvement for Street Lightings in North Region (Sub-Region 1: Chiang Mai, Nakhon Sawan and Lampang Provinces) Inclusion: June 2014 CPA volume: 3,232 tco2e for Implementation: commissioned in January 2015 CPA #3: Name: Thailand energy efficiency improvement for street lightings in North-East region (sub region: Nakhon Ratchasima province) Inclusion: November 2014 CPA volume: 3,232 tco2e for Implementation: commissioned in January 2015 CPA #4: Name: Thailand energy efficiency improvement for street lightings in Central region (sub region: Pathum Thani province) Inclusion: November 2014 CPA volume: 3,232 tco2e for Implementation: commissioned in January 2015 CPA #5: Name: Thailand energy efficiency improvement for street lightings in South region (sub region: Phuket, Surat Thani provinces) Inclusion: November 2014 CPA volume: 3,232 tco2e for Implementation: commissioned in January P a g e

28 CPF Carbon Fund -- Second Tranche Portfolio (May 2016) TANZANIA Renewable Energy Program Updates and highlights: Program/ERPA status: 3 new CPAs comprising of 3 hydro plants (Tulila, Yovi, Andoya (Mbinga)) included into PoA in November PRC was submitted in April 2016 so that new technology (biomass) will be added to PoA DD and Ngombeni CPA could be included into PoA. Implementation: The Andoya (Mbinga) CPA operating at 0.56 MW capacity (1.12 MW total capacity expected). The Tulila CPA has been commissioned in November 2015 but operating at 5 MW capacity (7.5 MW total capacity expected). Yovi CPA has been commissioned in December 2015 but operating at 1 MW capacity (2.3 MW total capacity expected). Ngombeni CPA operating at 1.2 MW level though installed capacity is technically 2.5 MW. Darakuta CPA has been commissioned in April 2016 but operating at 0.32 MW capacity (1 MW total capacity expected). Issuance: CPA 1-5 Total Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Grid connected and off-grid renewable electricity generation Objective: Expand access to energy through increased coverage of rural CDM Status: Registration Status: Program was registered effective May 8, Request for PRC was made in April 2016 to include additional technology (biomass) so that Ngombeni CPA could be included into PoA Contract Volume: million tco2e CPA Identification: All CPAs under the PoA will be renewable energy generation projects implemented by a private developer. 28 P a g e

29 electrification in Tanzania, by promoting both off-grid and on-grid renewable energy projects PoA Coordinating/Managing Entity (C/ME): Rural Energy Agency (REA) - Government Agency that became operational in October 2007 ERPA has been signed with REA Power Supplied to National Grid = 50% Power supplied to Isolated Mini Grids = 50% Methodology: AMS I.D / AMS I.F World Bank Operations/Safeguards: Long-term debt enabled by WB Tanzania Energy Development and Access Expansion Project (TEDAP) credit line of $100 million. All the CPAs will be subject to the environmental and social framework (ESF) adopted for the WB TEDAP project. Financing: All the projects under the program are expected to be implemented by the private sector. Government of Tanzania has already put in place a strong policy foundation and several financial incentive schemes: i.e., connection grants from REA. Total investment requirement associated with the program is estimated to be US$186 million (for several projects to be implemented over a period of time). Financing plan includes advance payments under CPF ERPA to bridge the Program/ERPA Status: Program promotion: Several rounds of consultations/workshops have been conducted with the Project Developers. Standard contracts have been developed that are being signed between REA and the prospective CPAs; operational guidelines have been prepared for implementing the carbon linked equity advance scheme. REA has constituted a dedicated team to focus on the carbon finance program, and has been training its staff. WB is working with REA to hire local consultant to monitor implementation of CDM Operations Manual by CPAs and to assist with search of new CPAs. Additional Funding: Obtaining additional resources to increase the size of the Revolving Fund is not a critical issue for now. REA is working with Bank on preparation of Rural Electrification Expansion program (US$ 200 Mil.). Submission of program to CPF Buyers for inclusion in the Second Tranche portfolio took place in July 2013 and the program was included in August Pricing of the program was finalized in December ERPA Signing: April additional CPAs comprising of 3 hydro plants has already been included into PoA in November Implementation: The Ngombeni CPA has been already commissioned but operating at 1.2 MW capacity (2.5 MW total capacity expected). In addition, due to technical constrains of the mini-grid, the current capacity is not fully utilized. As a result, the contracted CERs are lower than the anticipated CPA volume potential. The Andoya (Mbinga) CPA has been commissioned in Q1 of 2015 but operating at CPA #1: Project implementation to be carried out in stages over next five to six years. Installed capacity in each CPA will range between 0.35 MW to 10 MW, while the total capacity under the program is expected to reach MW by Name: Mapembasi Hydro Power Project, Njombe District Inclusion: May 2014 Status: Sub-ERPA not signed yet CPA volume: 84,963 tco2e for Sub-ERPA volume: TBD Implementation: expected commissioning in end of 2017 CPA #2: Name: NextGen Solar Project, Kigoma Region Inclusion: August 2014 Status: Sub-ERPA not signed yet CPA volume: 33,639 tco2e for Sub-ERPA volume: TBD Implementation: expected commissioning in end of 2017 CPA #3: Name: Mbinga (Andoya) Hydroelectric Project Inclusion: November 2015 Status: Sub-ERPA signed CPA volume: 25,118 tco2e for Sub-ERPA volume: 11,424 CERs for Implementation: commissioned in February 2015 CPA #4: Name: Yovi Small Hydro Power Project Inclusion: November 2015 Status: Sub-ERPA signed CPA volume: 60,953 tco2e for Sub-ERPA volume: 12,614 CERs for Implementation: commissioned in December P a g e

30 equity gap faced by individual project developers MW capacity (1.12 MW total capacity expected). The Tulila CPA has been commissioned in November 2015 but operating at 5 MW capacity (7.5 MW total capacity expected). The Yovi CPA has been commissioned in December 2015 but operating at 1 MW capacity (2.3 MW total capacity expected). The Darakuta CPA has been commissioned in April 2016 but operating at 0.32 MW capacity (1 MW total capacity expected). The CDM Operations Manual was completed and accepted by the Trustee in April Representatives of 8 CPAs had in-class and on-site training on CDM monitoring requirements. CPA #5: Name: Tulila Hydro-electric Plant Inclusion: November 2015 Status: Sub-ERPA signed CPA volume: 122,721 tco2e for Sub-ERPA volume: 84,096 CERs for Implementation: commissioned in November 2015 CPA #6: Name: Ngombeni Biomass Power Plant Project Inclusion: expected in June 2016 Status: Sub-ERPA signed CPA volume: 56,088 tco2e for Sub-ERPA volume: 11,587 CERs for Implementation: commissioned in 2015 CPA #7: Name: Kiwira Hydro Inclusion: expected in September 2016 Status: Sub-ERPA not signed yet CPA volume: 137,376 tco2e for Sub-ERPA volume: TBD Implementation: expected commissioning in 2018 CPA #8: Name: Ikondo Hydro Inclusion: expected in June 2016 Status: Sub-ERPA signed CPA volume: 7,080 tco2e for Sub-ERPA volume: 7,658 CERs for P a g e

31 Implementation: expected commissioning in June 2016 CPA #9: Name: Darakuta Mini Hydro Project Inclusion: expected in October 2016 Status: Sub-ERPA signed CPA volume: 12,048 tco2e for Sub-ERPA volume: 2,800 CERs for Implementation: commissioned in April 2016 CPA #10: Name: Maguta Small Hydro Power Project Inclusion: expected in August 2016 Status: Sub-ERPA signed CPA volume: 26,663 tco2e for Sub-ERPA volume: 21,636 CERs for Implementation: expected commissioning in November P a g e

32 CPF Carbon Fund -- Second Tranche Portfolio (May 2016) Egypt - Vehicle Scrapping and Recycling Program Updates and highlights: Program/ERPA status: Trustee proposes to extend ERPA up to 2020 contingent to successful first issuance of CERs. Implementation: A PRC was submitted on October 26, 2015 and approved February 16, The second fuel efficiency survey is currently complete except for one manufacturer (Speranza) underway. Some vehicles are no longer manufactured and finding used vehicles for tests took more time than expected. Third project vehicle survey (2015) complete. Verification report for first periodic verification being finalized. Trustee contracting DOE for second verification. Recalculation of MOI data showed compliance rate between 42-44% (cutoff 50%). MOI data for 2015 is 38%. Issuance: Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total CPA , ,084 Total Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Emission reductions by lowgreenhouse gas emitting vehicles Objective: Reduce environmental and social impacts and GHG emissions from the transportation sector PoA Coordinating/Managing Entity (C/ME): CDM Status: Registration Status: The program was registered May 11, Program/ERPA Status: The program was included in the Second Tranche portfolio in July Pricing for the program was agreed in November CPF ERPA signing took place on December 18, 2014 for 150,000 CERs and any Option CERs generated by the program. Both the Spanish and Contract Volume: 0.15 million tco2e in ER Volume Anticipated volume during ERPA period: 0.23 million tco2e. CPA #1: 31 taxis (0 tco2e between test case) CPA #2: Name: Greater Cairo Region Taxi Scrapping and Recycling Project (22 April 2009 to 30 November 2010) Inclusion: April P a g e

33 Ministry of Finance of the Arab Republic of Egypt The ERPA with Danish Carbon Fund and Spanish Carbon Fund was terminated on December 18, 2014 and the ERPA with the Carbon Partnership Facility was also signed on December 18, Seller Participation Agreement with CFP signed May 25, SPA effectiveness confirmed by statement from Ministry of Finance, dated April 22, Methodology: AMS-III.C. ver Emission reductions by low-greenhouse gas emitting vehicles World Bank Operations/Safeguards: While this program is a stand-alone carbon finance program, it will complement the World Bank s lending program and provide incentives to address the cost of new technologies and support national scalability. Financing: Ministry of Finance of Egypt is financing the project cost. Carbon finance will go towards financing part of the running costs of the Vehicle Scrapping and Recycling program. Danish Carbon Fund ERPAs for this program were terminated in conjunction with signing of the CPF ERPA. ERPA proposed to be extended up to 2020 contingent to successful first issuance. Implementation: All of the 3 CPAs have been implemented. No CERs being claimed from CPA1. A PRC request for EB prior approval to address flex-fuel vehicles in the pool of vehicles and to address a number of editorial issues was approved on February 16, As per the validation reports of CPA 2 and CPA 3, a 1.5% reduction of CNG vehicles total distance traveled will be introduced to account for possible use of gasoline in flex-fuel vehicles. The second fuel efficiency survey is currently complete except for one manufacturer (Speranza). Third project vehicle survey complete. Some vehicles are no longer manufactured and finding used vehicles for tests took more time than expected. Verifications. First periodic verification site visit took place from March 10-12, DOE finalizing Verification Report. Trustee contracting DOE for second verification. Registered CPA volume: 96,939 tco2e for Expected CPA delivery in 2016: 101,421 CERs ( vintage) CPA #3: Name: Greater Cairo Region Taxi Scrapping and Recycling Project (01 December 2010 to 29 November 2012) Inclusion: May 2013 Registered CPA volume: 45,249 tco2e for Expected CPA delivery in 2016: 41,663 CERs ( vintage) Factors affecting the almost 50% increase in expected CERs: Actual annual distance travelled by the project vehicles is found as around 55,000 km whereas the ex-ante annual distance travelled taken as 38,000 only. The baseline fuel efficiency of gasoline vehicle has been revised from litre/100 km to 15.2 litre/100 km as per the Final baseline survey report carried out before scrapping of old vehicles. Due to 60kt tco2 annual limitation for small scale CDM rules, it is foreseen that a small amount of ERs (approx. 9,000) may not be claimed due to exceeding these limits. 33 P a g e

34 CPF Carbon Fund -- Second Tranche Portfolio (May 2016) Philippines Animal Waste Methane Program Updates and highlights: Program/ERPA status: ERPA Amendment signed in December The C/ME has obtained additional Letters of Intent from 68 proponents and project developers representing 95 prospective farms, of which 32 projects have proceeded to the signing of memorandums of agreement. CPAs will be included in three batches. The first batch started the inclusion process in January 2016 and the second batch in September Implementation: The site visits for the first verification of the first two CPAs for the period of May 2012 June 2015, took place in September An expected volume of 28,000 CERs should be issued in mid-2016, of which about 6,000 will account for delivery under the SCF ERPA. On-going validation / inclusion of 26 piggery farms with total estimated ERs per year of 122,399. Inclusion submissions to the UN to start in May 2016 Issuance: Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total CPA1-2 28,000 28,000 Total 28,000 Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Small scale methane recovery in manure management program Objective: Improve local environment and human health through upgrading of CDM Status: Registration Status: The program was registered on May 10, Revision to monitoring plan approved by UNFCCC to simplify monitoring process for farms. All changes are in accordance with current methodology Program/ERPA Status: Contract Volume (Estimated): 2.0 million tco2e CPA #1: Name: Marcela Farms Inclusion: May 10, 2012 Status: SCF sub-erpa signed for vintages up to end CPA volume: 148,352 tco2e (CPA-DD) for P a g e

35 animal manure management practices. PoA Coordinating/Managing Entity (C/ME): Land Bank of the Philippines (LBP) Seller Participation Agreement with CPF signed Contract ERs is 2.5 Million as signed in the Seller Participation Agreement in ERPA 2.0 Million and 0.5 million option CERs. Methodology: AMS-III.D. ver Methane recovery in animal manure management systems. World Bank Operations/Safeguards: Safeguards assessment undertaken as part of World Bank approval of original ERPA with Spanish Carbon Fund. C/ME has strong capacity to assess safeguards issues as it has a dedicated department that handles due diligence activities As part of the safeguards assessment, LBP shall undertake environmental and social due diligence activities on the potential projects per the approved safeguards framework, and shall require the project proponents to comply with all applicable environmental laws and to conduct the stakeholders consultation prior to its inclusion to the PoA. Financing: LBP is a government financial institution mandated to promote rural development. Under the PoA, participating farmers finance the The C/ME has obtained Letters of Intent from 68 proponents and project developers representing 95 prospective farms, of which 32 projects have proceeded to the signing of the Memorandums of Agreement. Original plan to bundle CPAs for inclusion purposes has been dropped in order to reduce verification risks in the future. Instead, the each farm will be included as an individual CPA. To reduce inclusion costs, CPAs will be included in three batches. The first batch started the inclusion process in January 2016 and the second batch is expected to be in September With significant local press about the registration of the program, LBP formally launched the program in 2013 and started a new round of marketing for the program in 2014 (e.g., provincial roadshows, participation in National Hog Convention and federation meetings etc.) A new series of marketing for third batch of inclusion is currently underway. With the view of making it a National Program for Piggery Biogas, LBP is exploring potential partnerships with various industry stakeholders such as financial institutions, technology providers and concerned government agencies to create synergy and cooperation to promote the PoA. The program was included in the Second Tranche portfolio in September ERPA Amendment was signed in December Implementation: The Marcela and Biotech CPAs have been commissioned and verified. The site visits for the first verification for the period of May 2012 June 2015 took place in September 2015 and the issuance request submitted to the UNFCCC in April An expected volume of 20,000 to 30,000 CERs should be issued in mid Although, since Expected CPA delivery in 2016: 8,900 CERs Implementation: A site review of issues related to underperformance (insufficient gas generation) of the CPA took place in March 2015 and found that ER totals are improving, but likely to remain below CPA DD targets. To improve gas production, a new biogas digester is being constructed to replace the old digester since last quarter of CPA #2: Name: Biotech Farms Inclusion: September 8, 2013 Status: SCF sub-erpa signed for vintages up to end 2013 CPA volume: 433,484 tco2e for Expected CPA delivery in 2016: 19,000 CERs Potential CPAs: There are 125 pig farms identified which vary in project implementation. The validation / inclusion for the first batch (26 farms) was conducted in late January 2016 and one more batch in calendar year Estimated Annual ERs for Batch 1 CPA DDs is 122, P a g e

36 installation of biodigesters, flares/gas engines and CDM monitoring equipment through LBP financing scheme. First two CPAs received technical assistance and provision of flares and CDM monitoring systems from US EPA through the Global Methane Initiative, thus helping reduce CDM monitoring costs. This is planned to be replicated with other CPAs. this is the first verification, there may be unforeseen delays. From the additional CPAs that have been identified, nine (9) are already operational projects should be commissioned in 2016 and the rest in P a g e

37 CPF Carbon Fund -- Second Tranche Portfolio (May 2016) Philippines- Methane Programs: Solid Waste Management Program Updates and highlights: Program/ERPA status: CPF ERPA signed in December Inclusion of Montalban CPA started in January Inclusion of Payatas 2 CPA expected to start August ERPA for the Payatas landfill subproject is expected to be signed in June-July Issuance: Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total Implementation: On-going validation / inclusion of Montalban Methane Power Corp. (MMPC) with total estimated ERs per year of 259,634. Continuing operation and generation of ERs of Payatas 1 stand-alone project with annual estimated CERs of 60,424 from 2016 to Total Description and Financing Milestones CDM and Program/ERPA Status CPA Implementation Project Activities Description: PoA Type: Land fill gas methane capture/flaring/electricity generation Objective: Reduce environmental and social impacts and GHG emissions from the solid waste management sector PoA Coordinating/Managing Entity (C/ME): Land Bank of the Philippines (LBP) CDM Status: Registration Status: The program was registered on July 20, Program/ERPA Status: The development of sanitary landfills has been slow until recently and there is a new emphasis on improving waste collection and disposal in light of persistent and ongoing flooding in urban areas. Marketing for this program has accelerated since Land Bank is planning to use Pangea s existing stand-alone CDM project as a Contract Volume (estimated): 1.75 million tco2e CPA #1: Name: Bulacan Engineered Sanitary Landfill Inclusion: July 20, 2012 Status: Ownership of the landfill has changed and the future of CDM project is not known at this time. CPA volume: N/A 37 P a g e

38 Seller Participation Agreement with CPF signed on June 3, Methodology: ACM0001 ver Consolidated baseline and monitoring methodology for landfill gas project activities WB Operations/Safeguards: Safeguards assessment undertaken as part of World Bank approval of original ERPA with Spanish Carbon Fund. C/ME has strong capacity to assess safeguards issues as it has a dedicated department that handles due diligence activities. As part of the safeguards assessment, LBP shall undertake environmental and social due diligence activities on the potential projects per the approved safeguards framework, and shall require the project proponents to comply with all applicable environmental laws and to conduct the stakeholders consultation prior to its inclusion to the PoA. Financing: LBP is one of the leading public sector lenders in the Philippines and has worked closely with the World Bank to provide municipal level financing for decades. World Bank and LBP are working in partnership with the US EPA to provide technical support and training for the development, operation, and monitoring of methane reduction at project sites. With some of the highest electricity rates in Asia, projects large enough to generate electricity, for at least on-site use, can greatly improve their financials. demonstration site to showcase the PoA s potential. CPF ERPA signed in December An ERPA for a standalone already registered CDM project (Payatas I) is under negotiations for inclusion in the second tranche portfolio of CPF. Implementation: Project site was transferred and sold to a new owner in New owner is still reviewing investment options for the site. Potential CPAs: Land Bank signed a Memorandum of Agreement (MoA) with a local landfill gas CDM operator, Pangea Green Energy Philippines. Under the terms of the MoA, Pangea will develop and operate new landfill gas CDM projects that will join Land Bank s PoA. The projects to be developed under Pangea include the following with the corresponding estimated annual CERs from 2014 to 2020 during their operational years: - Quezon City (Payatas 2) 62,667 - Davao City 29,091 - The existing Quezon City landfill (Payatas) is a registered CDM project and has an estimated annual CER of 60,424 from The CPA inclusion site visit for the landfill operated by Montalban Methane Power Corporation (MMPC), a client of Land Bank, took place in January Estimated annual CERs 253,355. Inclusion for Payatas 2 is expected to start in August Inclusion date of Davao landfill TBD this summer. A smaller potential project is the Palawan SLF managed by the City Government of Puerto Princesa. It has annual estimated ERs of 12, P a g e

39 CPF Carbon Fund -- Second Tranche Pipeline (May 2016) Sri Lanka Renewable Energy Program: New Crediting Instrument Pilot Updates and highlights: Issuance: Program/ERPA status: Draft Crediting Program Design Document was shared with Sri Lanka authorities first time in Jan 2016 and discussions are underway. The document is now under revision, taking into account feedback received from Feb 2016 Buyer meeting. Carbon Finance Document draft was presented to CPF buyers in Feb 2016 meeting. Ceylon Electricity Board (CEB) was nominated as a coordinating and managing entity for the CPF program pilot. Total Q1 Q2 FY16 Issuance in CERs Q3 Q4 (expected) Total Implementation: Feb 2016: Bank mission to Sri Lanka to discuss the key elements of the Draft Crediting Program Design Document, especially the baseline scenario and the institutional arrangement. Description and Financing Milestones Program/ERPA Status Implementation Project Activities Objectives: Develop a NMM program to support Sri Lanka to increase its electricity generation share of nonconventional renewables (NCRE) such as small hydro, wind, solar, biomass from current 9.85% to 20% (aspirational goal) by 2020 (383 MW installed capacity to 1,273 MW). Sri Lanka has identified approximately 249 NCRE projects Status: PN approved and then endorsed by CPF Buyer Participants in March Sri Lanka has requested and is receiving support from the Bank through the Public Private Infrastructure Advisory Facility for developing the Sri Lanka Carbon Fund and has advised the Green Climate Fund that the Bank will be its Delivery Partner. MOU was signed in Oct Sri Lanka has submitted its INDC with specific targets for the power sector 4% reduction in Feb 2016: Bank mission to Sri Lanka to discuss the key elements of the Draft Crediting Program Design Document, especially the baseline scenario and the institutional arrangement. June/July 2016: Sign Seller Participation Agreement. Aug/Sept 2016: Inclusion of the program to Second Tranche. June/July 2016: Finalize the C-PDD taking into feedback from stakeholders in Sri Lanka including CEB and by taking account the results of analytical and technical work committed by the World Bank to support renewable energy development in Sri Lanka. This is also subject to Sri Lanka s acceptance of the 39 P a g e

40 totaling 600 MW, plus an additional MW of new NCRE projects. Est. ER generation: The program could generate between 4 to 6 million tco2 during period (cumulative). This is subjected to an agreement on baseline scenario and own contribution volumes. Also, it depends on ER purchase period agreed by the CPF. Key NMM features: Baseline: reflecting the generation from existing renewable energy plants and future hydro developments. Setting ex ante aspirational generation targets for NCRE: to guide longer term power planning and anticipated NCRE generation share not binding for crediting to take place. To be monitored. Tradable credits: Credits generated above the baseline minus a discounted percentage for own effort, if Sri Lanka treats conditional (I)NDC target under Paris Agreement. emissions with unconditional support and additional 16% reductions with conditional support. Ceylon Electricity Board has officially included the 20% NCRE target in its Long Term Generation Plan for Draft Crediting Program Design Document was shared with Sri Lanka authorities first time in Jan The document is now under revision considering feedback received from Feb 2016 buyers meeting. Carbon Finance document is prepared and presented to CPF buyers in Feb 2016 meeting. Recent Developments: Ceylon Electricity Board (CEB) is nominated as a coordinating and managing entity for the CPF program. CEB to sign both SPA and ERPA upon cabinet approval. Draft seller participation agreement was shared with the CEB. Pricing approach note is under preparation. WB has commissioned analytical and technical work to support renewable energy development in the country. The Prime Minister office has requested the World Bank an independent third party review for the Long Term Generation Expansion Plan (LTGEP) ( ) and make recommendations for the LTGEP preparation and intended government interventions to enhance the sector planning, governance and performance. methodological approach on crediting and achieving an agreement on transfer of credits in lieu of recently announced INDC. Aug/Sep 2016: Expert review of the C-PDD as part of the validation process. Oct/Nov 2016: Start ERPA discussions. 40 P a g e

41 Annex II - Portfolio Overview as of May P a g e

42 42 P a g e