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Publication The Cost Structure of the Clean Development Mechanism(World Bank, Washington, DC, 2012-11) Rahman, Shaikh M.; Larson, Donald F.; Dinar, ArielThis paper examines the cost of producing emission reduction credits under the Clean Development Mechanism. Using project-specific data, cost functions are estimated using alternative functional forms. The results show that, in general, the distribution of projects in the pipeline does not correspond exclusively to the cost of generating anticipated credits. Rather, investment choices appear to be influenced by location and project type considerations in a way that is consistent with variable transaction costs and investor preferences among hosts and classes of projects. This implies that comparative advantage based on the marginal cost of abatement is only one of several factors driving Clean Development Mechanism investments. This is significant since much of the conceptual and applied numerical literature concerning greenhouse gas mitigation policies relies on presumptions about relative abatement costs. The authors also find that Clean Development Mechanism projects generally exhibit constant or increasing returns to scale. In contrast, they find variations among classes of projects concerning economies of time.Publication Planning for a Low Carbon Future(Washington, DC, 2012-11-01) World BankDeveloping countries are faced with the dual challenge of reducing poverty while improving management of natural capital and mitigating the emission of greenhouse gases (GHGs) and local pollutants. The challenge is particularly acute for large, rapidly growing economies, such as India, China, and Brazil. In response to this challenge, Energy Sector Management assistance Program (ESMAP) and the World Bank began in 2007 to provide support to countries to develop long term frameworks for reducing GHG emissions in a way that is compatible with economic growth objectives and tied to national and sectoral plans. In total, seven studies were conducted between 2007 and 2010, for the following countries: Brazil, China, India, Indonesia, Mexico, Poland, and South Africa. This report collates the lessons learned from these studies and is intended as a practical guide for government officials, practitioners, and development agencies involved in low carbon development planning. The low carbon studies were tailored to the individual needs of each country involved. In Brazil, India, Indonesia, Mexico, and Poland the studies took the form of an economy-wide analysis of low carbon growth potential, employing a range of data and modeling tools. The governments of China and South Africa conducted their own analyses, but requested the assistance of ESMAP and the World Bank for peer review and to get international expertise on specific focus areas, such as energy efficiency and renewable energy. The combined outputs, and the modeling tools developed as part of the program, represent a significant contribution to international efforts on climate change mitigation and low carbon development.Publication Green Industrial Policy : Trade and Theory(World Bank, Washington, DC, 2012-10) Karp, Larry; Stevenson, MeganThis paper studies the reality and the potential for green industrial policy. It provides a summary of the green industrial policies, broadly understood, for five countries. It then considers the relation between green industrial policies and trade disputes, emphasizing the Brazil-United States dispute involving ethanol and the broader United States-China dispute. The theory of public policy provides many lessons for green industrial policy. The authors highlight four of these lessons, involving the Green Paradox, the choice of quantities versus prices with endogenous investment, the coordination issues arising from emissions control, and the ability of green industrial policies to promote cooperation in reducing a global public bad like carbon emissions.Publication Development of Biofuels in China : Technologies, Economics and Policies(World Bank, Washington, DC, 2012-10) Shiyan, Chang; Lili, Zhao; Timilsina, Govinda R.; Xiliang, ZhangChina promulgated the Medium and Long-Term Development Plan for Renewable Energy in 2007, which included targets of 2010 and 2020 for various renewable energy technologies including biofuels. The 2010 biofuel targets were met and even surpassed except for non-grain fuel ethanol; however, there is debate on whether and how the country will be able to meet the 2020 biofuels target. This paper provides a resource and technological assessment of biofuel feedstocks, compares biofuel production costs from various feddstocks and technologies, and evaluates policies introduced in the country for the development of biofuels. The paper also presents the projections on the production of biofuels under various policy scenarios. The study shows that China can potentially satisfy its non-grain fuel ethanol target by 2020 from the technology perspective. But it will probably fall far short of this target without additional fiscal incentives as production costs of non-grain feedstock based biofuels are expected to remain relatively high. By contrast, the 2020 target of biodiesel production has a high probability of being achieved because the target itself is relatively small. With additional support policies, it could develop even further.Publication Republic of Azerbaijan: Climate Change and Agriculture Country Note(World Bank, Washington, DC, 2012-06-01) World BankThis country note for Azerbaijan is part of a series of country briefs that summarize information relevant to climate change and agriculture for three countries in the Southern Caucasus Region, with a particular focus on climate and crop projections, adaptation and mitigation options, policy development and institutional involvement. The note series has been developed to provide a baseline of knowledge on climate change and agriculture for the countries participating in the regional program on reducing vulnerability to climate change in Southern Caucasus agricultural systems. This note for Azerbaijan was shared with the Government and other agricultural sector stakeholders and used as an engagement tool for a National Awareness Raising and Consultation Workshop, held in Baku in March 2012. Feedback and comments on the note from this consultation process have been incorporated into this updated version in collaboration with the Azerbaijan Ministry of Agriculture.Publication Enhancing Carbon Stocks and Reducing CO2 Emissions in Agriculture and Natural Resource Management Projects: Toolkit(Washington, DC, 2012-02) World BankThere is global interest in promoting mitigation and adaptation in agriculture, forest, and other land-use (AFOLU) sectors to address the twin goals of climate change and sustainable development. This guideline deals with how to enhance carbon stocks in general in all land-based projects and its specific relationship with agriculture productivity. It outlines specific steps and procedures that need to be followed by project proponents and managers of land-based projects to enhance carbon stocks synergistically with increasing crop productivity. This guideline for carbon stock enhancement or CO2 emission reduction in agriculture and natural resource management (NRM) projects covering all land-use sectors presents two approaches. The first approach is a generic one covering all the land categories and interventions aimed at promoting the economic benefits (crop, timber, and non-timber wood product production, and employment or livelihood generation) and environmental benefits (soil and water conservation, land reclamation, and biodiversity protection) of a project, synergistically optimizing carbon stock enhancement as a co-benefit. The second approach provides guidelines for project developers to maximize project C-benefits along with promoting high-value cropping systems and production practices appropriate for a given agro-ecological region as well as to meet the needs of the local stakeholders, such as farmers or landless laborers. An illustration of the two approaches is presented at the end of the executive summary. The guidelines provide methods for selection and incorporation of carbon stock enhancement modules and practices along with methods for estimation and monitoring of carbon stock changes as well as assessment of social and economic implications of carbon enhancement (C-enhancement) interventions.Publication CDM Reform: Improving the Efficiency and Outreach of the Clean Development Mechanism through Standardization(World Bank, Washington, DC, 2012) Platonova-Oquab, Alexandrina; Spors, Felicity; Gadde, Harikumar; Godin, Julie; Oppermann, Klaus; Bosi, MartinaThe scope of the present study focuses on the assessment of opportunities to improve the effectiveness of the clean development mechanism (CDM) through the enhanced use of standardization. The study argues that the introduction of the concept of standardized baselines to the CDM can substantially change the way the CDM develops. The goal of the present study is to discuss what the options are for driving the idea of standardization further. The working hypothesis is that baseline standardization alone may not be sufficient in that regard but can be seen as a starting point for improving the CDM through the enhanced use of standardization at other levels of CDM procedures. The study examines how standardization can be used to simplify CDM procedures throughout the project cycle and to extend the scope of the CDM in a way that improves access of underrepresented sectors and regions. The paper is divided into three chapters. The first chapter sets the scene by analyzing in detail procedural imperfections of the CDM that can be addressed through extending standardization to project cycle procedures. The second chapter discusses new opportunities that standardization could provide to the CDM reform. The third chapter of the study analyzes if and how standardization can enable policy-driven actions to generate carbon credits under the CDM. The chapter also assesses the ways standardization can help overcome the remaining barriers to better incorporate the CDM in host countries low carbon development policies, and to inform the development of new market mechanisms.Publication Black Carbon and Climate Change : Considerations for International Development Agencies(World Bank, Washington, DC, 2011-12) Levitsky, MichaelThis report is intended to inform the international development community about the links between black (BC) carbon and climate change. With growing scientific clarity on the contribution of black carbon to climate change, the benefits of limiting its emissions are becoming more evident. This report reviews the existing knowledge on the subject and identifies relevant considerations for development organizations. Climate modeling shows that a large reduction in the global amounts of BC emissions, without changes in emissions of organic carbon, will lead to a sharp onetime decrease in the warming influence of human activities. A rapid reduction in BC emissions has thus been proposed as a way to partially offset the projected increase in temperatures in coming decades. This will not solve the long-term problem of climate change, which is caused by the greenhouse gas (GHGs), but it could extend the limited time that is available to reduce emissions of GHGs aggressively, before global temperatures reach dangerous levels. Proposals to reduce BC emissions also often address the need to reduce emissions of several other short-lived gases (such as ozone) that are mostly not covered by the Kyoto Protocol. This paper is designed to inform development agencies, in a brief, simplified, and non-technical manner, about the links between BC and climate change, and how these could relate to development policy. The paper describes: (a) what is known about the impact of BC and related aerosols on climate, (b) the sources and importance of BC emissions, (c) possible actions and policies to mitigate emissions, and (d) considerations for agencies in light of these issues.Publication How to Keep Momentum Up in Carbon Markets?(World Bank, Washington, DC, 2011-10-31) Ambrosi, PhilippeThis note examines how to maximize the benefits from the use of market instruments in support of developing countries' low-emission development priorities. First, it briefly surveys the current state and trends of the carbon market, highlighting the main achievements of carbon finance over its decade-long history. Second, it reviews updated scenarios of the scale of future carbon markets and associated financial flows, in light of developments in climate negotiations and domestic markets. Finally, it identifies the necessary steps to scale up carbon market flows in future, on both the demand and supply sides, including the reform of existing mechanisms, and innovation to broaden the scope, scale and reach of carbon markets. The most important determinant of carbon offset market flows to developing countries is clearly the level of international mitigation targets: the more ambitious the targets the greater the scope for such flows. Developed countries can also encourage flows by increasing supplementary limits, which are the proportion of mitigation targets that can be met by purchases from developing countries. Finally, there remains a considerable need for innovation, awareness-raising and capacity building in public and private institutions in developing countries, to increase their participation in the carbon market and build and enabling environment for low-emission development.Publication A Review of Solar Energy : Markets, Economics and Policies(2011-10-01) Timilsina, Govinda R.; Kurdgelashvili, Lado; Narbel, Patrick A.Solar energy has experienced phenomenal growth in recent years due to both technological improvements resulting in cost reductions and government policies supportive of renewable energy development and utilization. This study analyzes the technical, economic and policy aspects of solar energy development and deployment. While the cost of solar energy has declined rapidly in the recent past, it still remains much higher than the cost of conventional energy technologies. Like other renewable energy technologies, solar energy benefits from fiscal and regulatory incentives and mandates, including tax credits and exemptions, feed-in-tariff, preferential interest rates, renewable portfolio standards and voluntary green power programs in many countries. Potential expansion of carbon credit markets also would provide additional incentives to solar energy deployment; however, the scale of incentives provided by the existing carbon market instruments, such as the Clean Development Mechanism of the Kyoto Protocol, is limited. Despite the huge technical potential, development and large-scale, market-driven deployment of solar energy technologies world-wide still has to overcome a number of technical and financial barriers. Unless these barriers are overcome, maintaining and increasing electricity supplies from solar energy will require continuation of potentially costly policy supports.