Center for Clean Air Policy-Europe
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Email: ccapeurope@interel.eu
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Climate Finance Works
Whether the initiatives are large scale, like Kenya's plans to secure a quarter of its energy from geothermal sources, or more locally-based, like a project in India to replace kerosene lamps with off-grid solar lighting, all are indicative of the power of climate finance.
In a report carried out by the Center for Clean Air Policy-Europe, under a grant agreement of the European Climate Foundation, "Climate Finance Works" showcases 40 of these climate finance success stories and demonstrates that low-carbon development activities are possible with outside financing support.
India
Letting a Little Light Shine in
Over 60 percent of Indian households do not have electricity. Instead, they rely largely on kerosene for their lighting, which leads to indoor air pollution, GHG emissions and high fuel costs. To help address these problems, the social enterprise D. Light produced a solar-powered light-emitting diode (LED) lamp which could be distributed to the poorest households in countries like India.
Private investors expressed some interest in supporting the project but doubted whether it would be economically viable without additional funds from the potential carbon offsets the program would create. In order to secure that carbon finance, the project was developed into a CDM project by the Dutch firm OneCarbon and was certified as a premium offset by the Gold Standard Foundation, whose major donors include Germany and other EU countries. Due to the necessity of carbon credits in getting the project off the ground, then, EU financial and technical support has proven central to the project's success.
The project, which will last from 2009 through 2014, will save 30,052 to 53,123 tonnes of CO2e per year, equal to at least 1.9 million Euros over the six-year lifespan of the project assuming a price of 11 Euros per tonne. The project has since been expanded to Tanzania.
Bangladesh
Seeing The Light
Bangladesh aspires to deliver electricity to all of its citizens by 2020. This goal will be impossible to meet with traditional power generation because most people live out of reach of power lines. Even within the grid, the system suffers. Power plants now operating produce only about 4,700 megawatts of power to meet the country's current demand of about 6,000 megawatts, and frequent power outages interrupt industries. The struggle to meet demand on the current electrical grid means that about 60 percent of the country's 150 million people do not have access to electricity.
Electric wires will not reach these rural areas anytime soon. But because of an initiative to install solar photovoltaic systems, the way of life of rural Bangladesh is evolving quickly. Nine years ago, only 7,000 solar systems made electricity in Bangladesh. By June 2011, 1 million systems were running.
Where kerosene lanterns illuminated the nights, now compact fluorescent lights do the job. Mussarat Farida Begum makes tea and serves local snacks to her patrons at the tea-cum-small restaurant she runs with her husband. With electricity generated by the solar panels, she can keep her small restaurant open even during the evenings and till late at night. Her business is booming, and her family lives much more comfortably with their increased income, she said. Begum also has electricity, generated by solar panels, at her home. Her children can now study at night and are doing much better at school.
The World Bank (Europe is a major funder) invested US$136 million (96 million Euros) over a six-year period in these off-grid solar systems, through the country's Rural Electrification and Renewable Energy Development Credit (RERED). In October 2011 the World Bank provided another US$172 million (121 million Euros), bringing the total the bank funded to US$308 million (217 million Euros).
Since 2003, the RERED has done much to advance electricity in Bangladesh: it has established grid connections and built new electric lines, but the most transforming of its efforts is the installation of small rooftop solar photovoltaic systems in areas where no electricity has ever been produced. The solar systems are small; in addition to running lights, they operate water pumps and power minimal refrigeration for medicine. The World Bank's loan funded about 300,000 of the solar systems, and homeowners pay the loans back to partner organisation intermediaries through installments.
The solar project is expected to displace 260,000 tonnes of CO2 emissions over the next 15 years based on reduced kerosene use.
Sri Lanka
Three-Wheeled Reform
Over half of Sri Lanka's motor vehicles – and a quarter of its population – are in the capital of Colombo, leading to air pollution problems and a high concentration of greenhouse gas emissions. But this concentration also presents an opportunity, as the city's compact boundaries and population density– along with relatively inexpensive electricity, a significant proportion of which is from non-emitting hydropower– make it an ideal place for zero-emission electric vehicles to flourish.
Recognising this opportunity, the Global Environment Facility's Small Grants Programme (SGP), to which the EU contributes 33 percent of overall funding, granted US$28,946 to the local non-profit Lanka Electric Vehicle Association (LEVA) for 2003 through 2005. This project had a simple goal: to demonstrate that electric three-wheel rickshaws were a viable alternative for public-transport taxis in Colombo and to build local capacity for the vehicles' assembly and maintenance. The main impacts would be reduced GHG emissions and improved air quality.
But this simple plan was derailed almost immediately. No customs code allowed the prototype vehicle parts into the country. No provision in the traffic laws allowed electric vehicles to be registered to be driven in Colombo. At both roadblocks, LEVA switched its focus from demos and capacity-building to becoming a catalyst for policy change within the country. In both instances, their lobbying resulted in policy changes that have made it much easier for future electric vehicles to be constructed and driven in Sri Lanka. Eventually, LEVA was able to return to the original focus, and began training unemployed youth to maintain the demonstration vehicle as well as to build parts so that the vehicles could be assembled locally.
Electric vehicles are especially appropriate for urban centers, and Colombo is no exception since its density eliminates the need to travel long distances and it has plentiful electricity.
Three Sri Lankan companies are now importing and assembling electric motorcycles, small cars, and rickshaws. Hotels and resorts are increasingly using electric golf carts and three-wheelers on their grounds. The grant provided a catalyst for investors, who have spotted a business opportunity and are now funding various schemes.
"The companies are investing as the policy environment surrounding electric vehicles continues to improve and business is promising," said Shireen Samarasuriya, SGP's national coordinator for Sri Lanka.
"The project took the initial risk to demonstrate a prototype and pave the way for EV implementation in the country," said Samarasuriya. "The private sector is therefore investing in EV technology across the island. Upscaling is happening organically by the private sector, supported by the state." She says that there has been a proliferation of electric cars since 2009 and that there are currently approximately 15,000 electric motorcycles in the country.
In less than a decade, a small pilot project introduced a previously little-known technology to a country, changed the policy landscape, laid the groundwork for a new industry, reduced fuel emissions, improved local air quality, and contributed to global climate change mitigation.