Italian Policy and Plan on CDM

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Italian Policy and Plan on CDM

• Djerba CDM Investor Forum
• Claudia Croce
• September 23rd 2004

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Structure of the presentation

• The Italian context
• The National Action Plan
• The Role of the Flexible Mechanisms
• Actions of IMET
• Conclusions

3
Our context energy intensity
Energy / GNP (Toe / 1000xUS)
Note without Norway from 2002-2012 Note
1995 PPP
Source Italy 2003 Review, International Energy
Agency
4
Our context carbon intensity
Emissions /GNP (t CO2 / 1000xUS)
Note without Norway from 2002-2012 Note
1995 PPP
Source Italy 2003 Review, International Energy
Agency
5
Our context a scenario
Emissions energy use (Mt of CO2)
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Our context the whole picture
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Our context summary

• Low energy and carbon intensity of the economic
  system
• Peculiar energy mix (no nuclear energy by choice,
  importance of gas and renewable energy source)
• Ambitious reduction targets (-6,5)

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National Action Plan principles

• A climate change policy based on a few
  principles
• Maximizing economic efficiency
• Exploiting synergies between climate change
  policies and other policies
• Promoting technology innovation and diffusion
• Integrating carbon finance activities in existing
  project finance activities
• Facilitating global partnership

9
National Action Plan figures
Additional domestic reductions
Additional use of the flexible mechanisms
Italys Kyoto target
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National Action Plan role for the flexible
mechanisms

• Project-based carbon credits will add up to 10
  - 50 of the national emissions reductions during
  the first commitment period
• Flexible mechanisms will contribute to the
  overall reduction through
• Activities sponsored by public institutions
• Activities carried out by private companies
• The exact extent, to which flexible mechanisms
  will contribute, will depend on the evolution of
  both the carbon market as well as national
  abatement costs

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Actions of the IMET

• Specific actions undertaken
• Exploring institutional settings for JI/CDM
  implementation
• Experimenting with the JI/CDM project cycle
• Investing in credit-generating facilities
• Preparing for the increase in direct investments
  abroad

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Exploring institutional settings for JI/CDM
implementation

• Italy has signed Memoranda of Understanding with
  China, Serbia, Moldavia, Croatia, Romania(LoI),
  Slovenia, Poland, Bulgaria, Morocco, Egypt,
  Algeria, Cyprus, Israel, Cuba, Salvador, and
  Brazil (LoI)
• Italy has enhanced international cooperation
  programmes with the Balkans and Southern
  Mediterranean countries through the MEDREP
  initiative

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MEDREP, the Mediterranean Renewable Energy
Programme

• The Mediterranean Renewable Energy Programme
  (MEDREP) was launched as a Type II Initiative at
  the World Summit on Sustainable Development in
  Johannesburg, following the recommendations of
  the G8 Renewable Energy Task Force
• The report outlines the goal of reducing
  renewable energy technology costs by expanding
  markets and building a strong market environment
  for renewable energy
• The report recommends that countries should help
  to develop and demonstrate renewable energy
  projects where (i) renewables are a least cost
  option on a life cycle basis and/or (ii)
  renewables can achieve protection of local and/or
  global environment at reasonable costs

Source G8 Renewable Energy Task Force Report
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MEDREP Partners

• Tunisian Ministry for Industry and Energy (TMIE)
• Tunisian National Agency for Renewable Energies
  (ANER)
• The New Renewable Energy Authority of Egypt
  (NREA)
• The Centre for Renewable Energy Development
  (CDER) of Morocco
• The Environmental General Authority of Lybia
  (EGA)
• The Ministry for Resources and Infrastructure of
  Malta
• The Ministry of Water and Environment of Yemen
• The Agence de lEnvironnement et de la Maîtrise
  de lEnergie (ADEME)
• The International Energy Agency (IEA)
• The Mediterranean Association of the National
  Agencies for Energy Conservation (MEDENER)
• Observatoire Méditerranéen de lEnergie (OME)
• The International Solar Energy Society Italy
  (ISES Italy)
• The Regional Centre for Central and Eastern
  Europe (REC)
• The United Nations Environment Programme (UNEP)
• The World Bank (WB)

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Why the Mediterranean Region?

• Renewable sources can serve many of the regional
  needs
• Strong regional, historical and cultural links
  between southern and northern Mediterranean
  countries
• Numerous studies and on-going projects
• RE potential measured with common tools,
  facilitates experience exchange and result
  comparison
• Existing networks of government and renewable
  energy agencies (OME, MEDENER, etc..)
• EU and IEA Member countries interest

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MEDREP aims at developing asuitable RE market
system

• Tailoring of financial instruments and mechanisms
  to support projects
• Strengthening of policy frameworks and removing
  barriers to projects development
• Building a stronger private sector
  infrastructure, considering the positive role of
  Tradable Renewable Certificates and Certified
  Emission Reductions

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MEDREP Projects

• Training, information dissemination, networking
  and projects design (MEDREC Tunis centre)
• Delivering electricity to isolated rural
  populations, based on village-scale mini-grids
• Desalinating sea water, to increase drinking
  water
• Supply and water availability for irrigation
  agricultural water pumping by solar, wind
  biomass
• Cooling systems for the food conservation,
  powered by renewable, in farms and fisheries

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MEDREP Projects

• The projects are being developed under the
  framework of bilateral agreements between IMET,
  Algeria, Egypt, Morocco and Tunisia
• The pilot projects will represent best practices
  to be replicated
• IMET has allocated 8 million to support the
  start-up of the projects

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On-going bilateral cooperation
A new perspective for a new partnership
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MEDREP Finance

• Based on UNEP assessment of existing barriers to
  investments in Morocco, Tunisia and Egypt.
• The Solar Water Heating System Loan Facility in
  Tunisia is intended to help local FIs to build
  loan portfolios in the SWH area by subsidizing a
  percentage of the interest rate loans for SWH
  technology, which will help to partially reduce
  the equipment cost barrier. The Facility will
  phase out over 2-3 years to allow smooth
  transition with the Tunisian Government subsidy,
  leading to 20,000 to 30,000 Solar Water Heating
  (SWH) system installations.

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MEDREP Finance
Based on UNEP assessment of existing barriers to
investments in Morocco, Tunisia and Egypt. The
Loan/Leasing Facility for Solar Water Heating in
Morocco aims at installing collective SWH
installations for an initial target of 100 to 200
hotels. It is intended to help local financial
institutions build loan and leasing portfolio in
the SWH area by subsidizing a percentage of the
interest rate loans for SWH technology. The
Facility would phase out over 3-4 years to allow
smooth transition to an unsubsidized market
leading to 100 to 200 big-scale SWH systems
installations.
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MEDREP Finance
The Mezzanine Fund It is intended to spur
investment in companies and projects in the
Mediterranean region, with the objective of
long-term capital appreciation, promotion of
renewable energy, energy efficiency, sustainable
development and improvement of environmental
condition. The Fund will provide capital for
innovative projects and small and medium
enterprises that can be either on-going operating
companies or special purpose companies created to
develop, own and operate RE and EE projects.
Carbon - Green Certificates Finance Where
possible, MEDREP projects will be structured as
carbon finance or green certificate transactions
under the auspices of the Clean Development
Mechanism or Green Certificate Trading regimes.
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MEDREC Mediterranean Renewable Energy Centre

• MEDREC has been established in Tunis in January
  2004 by a MoU among IMET, TMIE and ANER. It is
  now operational.
• The Tunis Centre is included in the framework of
  the Global Network on Energy for Sustainable
  Development, a UNEP facilitated knowledge network
  of developing world Centres of Excellence and
  network partners, renowned for their activities
  on energy, development and environment issues.
• It will be the focal point for MEDREP activities
  in North Africa.

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MEDREC Tasks

• Development and strengthening of human capacities
  in the area of REs Technologies
• Identification and development of Renewable-CDM
  Pilot Projects and Technology Transfer
• Training, capacity building and dissemination of
  projects results/information
• Deployment of financing sources and mechanisms
  options for the financial support of REs

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Forthcoming event
September 27, 2004 - TUNIS Official Launch of
MEDREP and MEDREC in the occasion of the
presentation of the MEDREC activities
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Experimenting with the JI/CDM project cycles

• A number of projects opportunities are being
  explored under a variety of implementing
  conditions

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Investing in credit-generating facilities

• In order to explore the potentials of investment
  in credit-generating mechanisms, Italy has
• Signed an agreement to contribute US7.7 million
  to the World Bank's Community Development Carbon
  Fund (CDCF). The Fund supports small-scale
  projects in the least developed countries and
  poor communities in developing countries which
  generate GHG emissions reductions
• Signed an agreement to contribute US2.5 million
  to the World Bank's BioCarbon Fund. The Fund
  supports afforestation and riforestation projects
  
• Set up the Italian Carbon Fund with the World
  Bank for GHG emissions reductions

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The Italian Carbon Fund

• The fund supports projects eligible under the
  Kyoto Protocols CDM and JI mechanisms through
  the purchase of credits
• The fund is a public-private partnership
  currently endowed with US 15 million, but with a
  target size of US 80 million
• The fund will buy emissions reductions credits,
  but at the same time will assist host countries
  in achieving sustainable development by
  leveraging substantial investments in modern
  energy services and technologies, including
  investments from the private sector

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The Italian Carbon Fund

• The fund is operational since January 28th,
  2004
• The income from payments received from the
  participants in the fund will be held in a
  separate trust and used for capacity-building and
  research thus leading to the creation of
  supportive project approval systems in host
  countries
• The Funds project portfolio includes support
  for a wide range of technologies and regions,
  including China, the Mediterranean Region, as
  well as the Balkans and the Middle Eastern
  countries
• www.italiancarbonfund.org

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Conclusions

• Italy has an ambitious emission reduction
  objective which would be difficult to achieve
  solely through domestic measures
• Flexible mechanisms provide viable alternatives
  in the framework of global partnership
• Italy will be a player and a reliable partner on
  the global carbon market
• IMET has already taken some actions at
  international level, but much more is coming in
  the next future

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• Thank you for your attention!
• www.minambiente.it