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January 2010

PoA Support Center Germany

KfW launched the PoA Support Center Germany on behalf of the German Environment Ministry (BMU) in 2008. The aim is to create a portfolio of implementable Programmes of Activities (PoAs) under the CDM and JI mechanisms. The PoA Support Center Germany provides advice and support for businesses and institutions interested in implementing PoAs and with the capacity to do so.

KfW maintains close working relations with the World Bank on CDM/JI issues and is part of an international network of experts on PoA approaches (among others, the network includes the World Bank, IEA, UNEP, UNDP and UNFCCC). It can also draw on contacts in potential PoA host countries and has vast experience in evaluating the financial and certification-methodology aspects of project proposals.

CDM Expansion

Programmes designed to promote climate change mitigation or implement climate change policies in developing countries have been eligible for registration as PoAs under the programmatic CDM since mid-2007. Programmatic projects reduce greenhouse gases by fostering a large number of stand-alone activities which cannot bear the transaction costs involved in CDM/JI activities. PoAs thus allow untapped emission sources to be reached and made marketable.
The decision to expand the CDM stems from the experience that projects on energy use have only addressed the CDM in a very limited way despite energy use being responsible for some 80 percent of global emissions (without deforestation/land use). Instead, the CDM is dominated by projects involving industrial gases and methane avoidance (generating around half of the CDM certificates expected by 2012) and a few large countries (China has a 50 percent share of the carbon market).
Many small developing countries are as yet unable to participate. This is partly because no suitable process has been in place to allow consolidation of small-scale activities like energy efficiency processes in SMEs, energy-efficient vehicles, buildings, machines, lighting and household appliances to enable their implementation as CDM projects. This is where PoAs show their strength. They have been one of the most important and innovative developments in the Kyoto Protocol’s project-based mechanisms in recent years.

PoA Requirements

With PoAs, there is no limit placed on the number of individual activities that can be involved. This allows additional measures to be integrated at a later date. The implementing body is the sole owner of the emissions certificates and coordinates all small-scale activities. The programme’s reach can thus be expanded many-fold and can take on national and even (at least in theory) cross-border dimensions.
As a rule, programmatic projects should promise emission reduction potential of a minimum 100,000 t CO2 per annum to justify the preparation and implementation effort involved. However, depending on the programme-related costs of project development, implementation and operation, smaller-scale projects could also prove viable and meet PoA requirements.

PoA Support Center Germany Services

The PoA Support Center Germany aims to create a portfolio of implementable PoAs. These can be implemented under either the CDM or the JI mechanism. To support broad use of PoAs, contacts are established with potential cooperation partners (banks, microfinance institutions and energy utility companies). The PoA Support Center Germany also helps in fostering and disseminating best practice knowledge on structuring PoAs from a financial and certification-methodology standpoint.

In its capacity as the PoA Support Centre, KfW will be organising a series of national PoA development workshops in host countries. These are aimed at banks, energy utility companies and public enterprises with the institutional capacity to implement and operate CDM/JI PoAs. KfW will identify projects for eligible parties, structure programmes, evaluate proposals and support selected project proposals in the PoA development phase (programme concept, project design document and monitoring plan). The PoA Support Center will also aid marketing of expected supplies of emissions certificates to achieve an optimum market price. KfW’s PoA Blueprint Book aids the development of programmatic CDM approaches by providing practical examples from six typical sectors.