Climate finance tracking at AFD

Group

Methodology in AFD and examples of harmonization initiatives

September the 16th, 2013

23/10/2012 Project carbon footprinting at AFD Group 2

About the French Development Agency

Public financial institution,

French ODA Agency with a private

sector subsidiary Proparco

Present in 80+ countries

EUR 7 bn committed in 2012

Climate change 2.4 bn , i.e. ~ 40%

Wide range of financing tools

Equity financing

Private sector loans

Partial risk guarantees / Loan

guarantees

Guarantees on loans in local currency

Non sovereign loans / Credit lines to

intermediaries

Sovereign loans at

Project/Sector/Budget levels

Grants (projects, study funds)

Climate change Strategy (2012-2016)

Systematic measurement of projects’ carbon footprint

Selecting projects according to their climate impacts

(considering countries’ development levels)

High level of financing for climate change action

50% of AFD’s annual foreign-aid commitments

30% of Proparco’s commitments

Mitigation (emissions reduction or carbon sequestration):

« A development project contributes to GHG emissions reduction when the emissions

reductions it generates are greater than emissions produced during its lifetime ».

Tracking methodology based on a restrictive project carbon footprint calculation (should be

<0) using a transparent and simple tool to assess ex-ante the order of magnitude of

direct and indirect GHG emissions due to a project over its lifetime.” (Carbon

Footprinting Tool* developed since 2007) * available at http://climat.afd.fr

Adaptation (to climate change impacts):

« An adaptation project is a development project that reduces goods, people or ecosystems

vulnerability to climate risks ».

A comparative analysis is conducted including

(i) a study of the vulnerabilities to climate change of the project's geographical area with (ii)

an analysis of the activities planned by the project in the light of a positive list of actions

that can contribute to reducing vulnerability or to strengthening the resilience of

communities, goods or ecosystems to climate change

How does AFD track climate finance ?

3

1.2

How does AFD track climate finance ?

Support to national and territorial climate strategies and action plans

(budgetary support or technical assistance dedicated to develop national

strategies, NAMAs, local climate plans…).

Our tracking methodology is based on triggers for Development Policy Loan’s

(prorata) :

Budget support specifically for the climate (climate loans or support for national climate

plans) is 100% recognized;

For kind of budget support, the methodology aims at reflecting the content of the

political and sectorial dialogue with the counterpart (joint monitoring of indicators) and

the impacts. It is backed up by a positive list of actions

In the absence of standardized indicators shared with the counterpart to monitor its

public policy, there is the possibility to assess the financing provided at up to 40%,

provided there is a cross-cutting “climate” activity.

September the16th, 2013 AFD-climate finance tracking 4

How does AFD track climate finance? 1.3

What does AFD track climate finance for?

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1.5

Information disclosure:

annually publicly with

disaggregate information by

geography, thematic, instruments

Monitoring of our strategic

commitment (50% climate

projects, measurement of impact)

Participation in several

reporting, mapping and

disclosure processes using

those figures (OECD, IDFC,

Bilateral Financial Institutions)

2005-2012 Climate commitment

Challenges for harmonization

No common methodology, neither a unique legitimate institution to collect data

In particular, three main types of methodology for mitigation :

carbon footprint assessment (AFD) (robust but need and harmonized methodology of

assessment)

list of type of projects which are by nature considered as climate action (simple but not

very precise),

MDBs mapping

IDFC mapping

ICCF improved the methodology in giving for each type of project conditions

rio marker (expert based approach).

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2.1

IDFC – The 2011 mapping exercise of Green

finance of IDFC’s members

Two step approach to overcome the varying definitions for green finance

A global definition of mitigation and adaptation based on OECD-DAC climate markers

A core list of eligible project categories or sub-sectors that were consensually accepted by all

IDFC members as projects that typically contribute to tackling climate change.

Integrated into this approach was the option for IDFC members to add other considered climate

related investments along with an explanation on their climate accounting methodology

Collection data organized via a customized financial survey tool.

Approach based on positive list of actions with not restriction nor conditionality of

environmental footprint assessment

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2.2

IDFC – green mapping methodology

Core eligible project categories

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2.3

ICCF – methodology

Eligibility of project for financing by ICCF is defined …

…. as belonging to one of the following categories without restriction:

Generation of energy from renewable sources (Renewable Energy);

Production of long-lived products or equipment for the generation of Renewable Energy;

Sustainable sequestration of carbon or greenhouse gases.

…. as belonging to one the following categories to to the extent that the net ex-ante

carbon footprint assessment is negative

Energy Efficiency Investments, being any investments dedicated to an efficiency improvement

Alternative Energy Efficiency Investments, being any investment dedicated to the generation

of energy from a waste (-heat) stream;

Production of long-lived materials or equipment solely dedicated to generate higher

energy efficiency levels compared to a reference scenario; The carbon footprint assessment

shall take into account in as far as significant and available the lifecycle analysis);

Transport Projects that contribute to reducing road and air

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2.4

Thank you

Ophélie Risler

www.afd.fr

rislero@afd.fr

23/10/2012 Project carbon footprinting at AFD Group 12

“A transparent and simple tool to assess ex-ante the order of magnitude of

direct and indirect GHG emissions due to a project over its lifetime.”

> Assumptions,

sources of data and

calculation should be

verifiable

> Excel based, easy to

handle and ergonomic

> Has to be usable by

everyone for a

decentralised use ((by

country office and

project managers)

> “Simple" mode to assess the

footprint of a project as early

as possible in the project cycle

> “Expert" mode (for more

accurate carbon footprint)

> Allows to modify the design

of a project / influence on the

decision process

> Only the main emission

sources (1 to 5) of a

project are taken into

account

> Database of emission

factor and ratio

> Scope 1, 2 et 3

(when quantifiable

with a reasonable

effort)

> Consistent with

scientifically

validated method

> Adapted to 27 types of projects financed by AFD

> Compare gross emissions from project with

emissions from a reference situation

> All emissions from the funded activity are

considered, regardless of the pro rata share of

funds committed by the AFD in the project

> Construction and

operation phases taken into

account

Key principals of our GHG accounting tool

23/10/2012 Project carbon footprinting at AFD Group 13

Key principals of our GHG accounting

methodology

3 SCOPES:

(1) Direct emissions, (2) Electricity / heat consumption, (3) Indirect emissions

ALL KYOTO GHGs:

CO2, CH4, N2O, SF6, HFCs, PCFs (converted with Global Warming Potential)

BASELINE:

Reference situation is taken as the situation with no project (can be dynamic)

FOR RENEWABLE:

Baseline is the average grid emission factor (published by IEA)

PROJECT CARBON FOOTPRINT EXPRESSED IN tCO2 / year:

We calculate emissions over the project lifetime (including construction

emissions when not negligible) and divide it by project duration

1.2

23/10/2012 Project carbon footprinting at AFD Group 14

Type of projects included in systematic

carbon footprint assessment

ALWAYS USUALLY RARELY

Energy

(fossil fuel powerplant,

oil & gas, EE, RE, FS)

Transport

(road, rail, public transport,

port, airport)

Heavy industry & mining

Solid waste management

Water supply & wastewater

Transport & Distribution

Manufacturing industry

Urban development

Forestry

Education

Health

Telecommunication

Agriculture

Food industry

Technical assistance

Budget support

Financial intermediation

1.3

International Development Finance Club (IDFC)

15

Agence Française de Développement (AFD), France

Banco Estado (BE), Chile

Bancoldex S.A., Colombia

Banco Nacional de Desenvolvimento Econômico e

Social (BNDES), Brazil

Black Sea Trade and Development Bank (BSTDB),

Greece

Caisse de Dépôt et de Gestion (CDG), Morocco

Central American Bank for Economic Integration

(BCIE/CABEI), Honduras

China Development Bank (CDB), China

CAF-Development Bank of Latin America

Croatian Bank for Reconstruction and Development

(HBOR), Croatia

Development Bank of Southern Africa (DBSA), South

Africa

Indonesia Exim Bank, Indonesia

Industrial Development Bank of Turkey (TSKB),

Turkey

Japan International Cooperation Agency (JICA), Japan

KfW Bankengruppe, Germany

Korea Finance Corporation (KoFC), South Korea

Nacional Financiera (NAFIN), Mexico

Small Industries Development Bank of India (SIDBI),

India

Vnesheconombank (VEB), Russia

A group of nineteen development banks of national, sub-regional and international origin, who share

common objectives.

In 2011, mapping exercise of Green Finance

Delivered by IDFC Members

2.1

IDFC – green mapping methodology

Definitions of cimate change mitigation and adaptation

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