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70745REVIEW OF ECA PROJECT PIPELINE FOR

CARBON FINANCING OPPORTUNITIES

Final ReportMay 4, 2007

Prepared by: Stratos Tavoulareas, Energy Consultant

Europe & Central Asia RegionWorld Bank

ABBREVIATIONS

CCGT: Combined Cycle Gas TurbineCDM: Clean Development MechanismCHP: Combined Heat and PowerDPL: Development Policy LendingDSM: Demand Side ManagementER: Emission Reductions ESCO: Energy Service Company GEF: Global Environment FacilityJI: Joint ImplementationLULUCF: Land Use, Land Use Change and ForestryPAD: Project Appraisal DocumentPID: Project Information DocumentPIN: Project Idea NoteSCADA: Supervisory Control and Data AcquisitionTTL: Task Team LeaderUNFCCC: United Nations Framework Convention on Climate Change

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Table of Contents

Page #

Introduction………………………………………… 5

Methodology……………………………………….. 5

Selection Criteria…………………………………… 5

Key Findings……………………………………….. 7

Early Project Screening…………………………….. 11

Annex A. List of projects reviewed ………………... 12

Annex B. Projects Suitable for Carbon Finance……. 16

Annex C: Guidelines for Early Project Screening…. 41

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ACKNOWLEDGEMENTS

The author would like to acknowledge the significant contribution and guidance of Jane Ebinger (TTL) and Antonio Lim for this survey. Also, Emine Kildirgici who assisted in the collection of all relevant World Bank documents and Jari Vayrynen of the Carbon Finance Unit of the World Bank who provided useful insight on the suitability of projects. Finally, many TTLs were consulted and provided useful input on the specific projects they are working on and the countries they operate:

A. Amar V. Atur J. Bure A. Capcelea S. Haitov P. Johansen O. Leber V. Loksha J. Melitauri N. Nikolov K. Nyman K. Oppermann D. Ostojic D. Papathanasiou P. Salminen G. Sargsyan S. Sarkar H. Schreiber R. Sharma

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1. Introduction

The purpose of this report is to provide the results of a review of the ECA project pipeline (active projects including those under supervision) and identify carbon overlay opportunities. To accomplish this, the Consultant reviewed the projects in ECA’s (ECSIE, ECSSD, ECSHD) lending pipeline and loans under supervision and the projects that are expected to be presented to the Board of Executive Directors of the World Bank and IDA in FY07 and FY08, or that have been approved by the Board in FY06 and the first half of FY07. Sectors in this review include infrastructure (transport, urban, health and education projects), energy, rural development, and environment. The industrial/mining restructuring projects (coal, steel, aluminum, fertilizer, cement, petroleum refining, gas flaring) under Development Policy Lending (DPL) operations are also included. The projects which are already funded by carbon funds are not included in this report.The key findings of the review and the recommendations are provided as a guideline for future project screening.

The review includes 3 Annex:Annex A: It shows all of the 123 projects which were reviewed.Annex B: It includes descriptions of the ECA projects with high relevance to carbon finance. Annex C: It provides the Guidelines for early project screening

2. Methodology

The following steps were followed for the review: Identification of all the projects which may result in emission reductions directly or

indirectly, and obtain the Project Information Document (PID). Review of the PIDs based on which the projects with higher probability for generating

emission reductions were screened (see criteria below). For most projects this was adequate to determine the potential for emission reduction and suitability to carbon finance requirements.

For some projects, it was also necessary to review the Project Appraisal Document (PAD).

Finally, meetings were held with Task Team Leaders and the Carbon Finance Unit to clarify outstanding questions.

3. Selection Criteria

In order to identify the most suitable projects for carbon financing, following criteria were applied:

I. Country Eligibility: It is mainly linked to Kyoto Protocol ratification. The ECA countries fall into one of the following four categories:

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a) Eligible Joint Implementation (JI) Countries: Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovak Republic, Slovenia, Russia and Ukraine.

b) Prospective JI Countries: Belarus and Croatia.c) Eligible Clean Development Mechanism (CDM ) Countries : Albania, Armenia,

Azerbaijan, Georgia, Kyrgyz Republic, Macedonia, Moldova, Turkmenistan, and Uzbekistan.

d) Prospective CDM Countries: Bosnia-Herzegovina, Kazakhstan, Serbia & Montenegro and Tajikistan.

II. Suitability of Projects for Carbon Finance Fund Requirements:

The following funds are available within the World Bank and will be considered for eligible projects:

a) Netherlands CDM Fund (CDM Countries Eligible Only) – CDM energy, infrastructure and industry projects

b) Community Development Carbon Fund (CDM Countries Eligible Only) – small scale CDM energy projects

c) BioCarbon Fund (JI and CDM Countries Eligible) – LULUCF projects1

d) Italian Carbon Fund (JI and CDM Countries Eligible) – multi purpose funde) Netherlands European Carbon Facility (JI Countries Eligible Only)f) Spanish Carbon Fund (JI and CDM countries eligible) – multi purposeg) Danish Carbon Fund (JI and CDM countries eligible) – multi purposeh) Umbrella Carbon Facility (JI and CDM countries eligible)

III. Risk Level:This will involve a preliminary risk assessment considering factors such as: the likelihood that the projected emission reductions will be delivered, baseline risks, additionality issues, etc. New methodologies should be avoided unless there is a high potential for ERs (>1 million tons) and replication. Projects which have already commenced are likely to be more difficult to prove additionality than projects which have not been approved yet or have not started specific project activities.

IV. Project Size:All project opportunities must meet the minimum size of 50,000 tCO2e per year. Projects that annually reduce emissions at volumes lower than 50,000 tCO2e may be suitable, if such smaller projects can be bundled into a minimum 50,000 ton/yr. Identification of larger scale projects is preferable.

The expected amount of ERs is characterized as “low” (less than 200,000 tons of CO2 over a 10-yr period), “medium” (200-500,000 tons of CO2 over a 10-yr period) and “High” (above 500,000 tons of CO2 over a 10-yr period). These ranges are arbitrary, but the requirements for contracted amounts by the various funds were taken into account. Also, the estimates of the emission reduction potential are based on the type of technology utilized and previous

1 Tranche 1 of the BIOCF fund is closed to further proposals. Tranche 2 is now open to a call for projects.

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experience from similar projects. More detail assessment of the emission reductions is required considering project-specific factors for both the baseline and “with the project” scenarios.

Hydropower projects must have a maximum installed capacity threshold of 20MW. Bundles of mini-hydros, which in aggregate exceed the 20MW threshold, are also acceptable as long as each single plant in the bundle is within the 20MW limit.

4. Key Findings

The following tables shows the projects identified as most suitable candidates for carbon financing. Table I shows the counties which have ratified the Kyoto Protocol and are eligible, while the second the counties which have not, but are expected to do so. For the latter, project preparation may commence if agreed by the World Bank Carbon Finance Unit.

Table I. Suitable Projects in Eligible ECA CountriesCountry Project

ID Sector Potential ER

Suitable Funds

Board Approval

Task Team Leader

Albania P090656 ECSEE APL2 Energy Medium CDM 6/28/2005 Papathanasiou

Albania P101806 ECSEE APL5 Energy High CDM 1/28/2008 Papathanasiou

Armenia P083352 RENEW ENERGY Energy Medium CDM 1/30/2006 SARGSYAN

Armenia P057880 URBAN HEAT Energy MediumCDM

Small 7/7/2005 SARGSYAN

Azerbaijan P083341 ENERGY Energy High CDM 2/2005 HAMSO

Bulgaria P084831 Energy Efficiency (GEF) Energy High JI 12/21/2004 DOBOZI

Macedonia P089656 Sustainable Energy (GEF) Energy High CDM 5/11/2006 JOHANSEN

Poland P078170 Road Maintenance Transport Medium JI 3/30/2004 Audige

Poland P088824 2nd Road Maintenance Transport Medium JI 3/31/2005 Dumitrescu

Poland P102731 Transport Rehab Transport Medium JI 4/25/2007 Czapski

Poland P096214 Road Maintenance 3 Transport Medium JI 3/23/2006 Queiroz

Romania P068062 ENERGY EFF Energy High JI 9/19/2002 ATUR

Russia P079033 Renewables Energy High JI 5/2007 Schreiber

Ukraine P083702ENERGY SECTOR REFORM

(APL) Energy High JI 9/15/2005 OSTOJIC

Ukraine P096207 Power Transmission Energy Medium JI 5/15/2005 OSTOJIC

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Comments on the Projects in Table I:

a) The APL Projects in Albania: They have good potential to generate ERs. Examples include: 1) Rehabilitation of existing hydro projects; 2) Loss reduction in transmission and distribution system; and 3) Energy efficiency in schools. The possibility of CDCF/CDM project associated with energy efficiency in schools has been discussed already between the Bank and the Ministry of Education. While most of electricity is produced by hydro, smaller facilities (commercial, industrial and residential) use oil (often heavy oil with high concentration of sulfur). Also, imported electricity is generated mostly by lignite-fired plants. For this reasons, emission reduction projects in Albania could be still attractive and deserve a more detailed assessment.

b) The Armenia Renewable Project: It is in the process of preparing PINs. An assessment should be made (in consultation with the TTL) whether the Urban Heat project has components which can be bundled together with the Renewable. By itself, the Urban Heat project is not expected to generate enough ERs to justify the preparation costs for carbon

c) Azerbaijan Energy: It is already in the Bank’s Carbon Finance pipeline; two new methodologies are being considered. The railway project in Azerbaijan (P083108) deserves a more detailed assessment in terms of their ER potential.

d) Bulgaria Energy Efficiency Fund: It is likely that the fund will support projects which are suitable for carbon finance. However, an issue which needs to be addressed is the impact of the recent (Jan 1, 2007) accession of the country into the EU which implies that all energy facilities will be part of the European Trading System (ETS) unless of course they decide to opt-out.

e) Macedonia Sustainable Energy: It is recommended that PINs are prepared after consultation with TTL on some outstanding issues (e.g., ownership of land related to small hydro projects and concession-related issues).

f) Moldova: Three projects (which are also under Energy II and SIF II projects of the World Bank) are supported by CDCF. Also, there is a carbon sequestration project supported by PCF and Biocarbon Fund. As second carbon sequestration project is being promoted; a PIN has been submitted and accepted by BioCarbon Fund (second tranche). Finally, Moldova succeeded in getting a PHRD Climate Change grant to create a Carbon Finance Unit to assist in preparing carbon finance projects.

g) Poland Transport Sector Projects: If the on-going and planned projects of the transport sector (P078170, P088824, P102731 and P096214) are bundle together, the ER potential seems substantial, but more detailed assessment is recommended. Preliminary assessment suggests that these projects taken together are above the threshold of about 400 km and should generate adequate ERs.

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h) Romania Energy Efficiency Fund: It is likely that the fund will support projects which are suitable for carbon finance; it is expected to become more active this year. However, the same issue with Bulgaria needs to be addressed relating to the impact of the recent (Jan 1, 2007) accession of the country into the EU which implies that all energy facilities will be part of the European Trading System (ETS) unless of course they decide to opt-out.

i) Russia Renewables: A number of projects have been already identified and they are in the pre-investment stage. The TTL is aware of and is looking to take advantage of carbon finance opportunities.

j) Ukraine: The APL project (P089244) is being implemented and includes rehabilitation of a hydro project which has already developed a PIN. The transmission project (P096207) includes some energy loss reduction, but it is not substantial and its additionality is questionable. However, the pipeline portfolio is expected to have numerous project which could generate emission reductions including:

Two pumped storage projects (one with relatively small secondary storage area)

Coal bed methane projects Thermal power plant rehabilitation Replacement of natural gas pipeline compressors; etc.

Table II. Projects in Countries which have not ratified the Kyoto Protocol yet

Country Project ID

Sector Potential ER Suitabl

e FundsDate, Board

ApprovalTask Team

Leader

Bosnia-Herz P090666 ECSEE APL3 Energ

y High CDM 6/23/2006 Armar

Belarus P095115 Post-Chernobyl Recovery Energ

y Medium JI 12/20/2005 Armaly

Croatia P079978 ENRGY EFF (GEF) Energ

y Medium JI 6/24/2003 Johansen

Croatia P071464 RENEW ENERGY (GEF) Energ

y High JI 4/28/2005 Johansen

Croatia P095389 District Heating Energ

y High JI 5/25/2006 Sarkar

Kazakhstan P095155 N-S Transmission Energ

y Medium-High CDM 10/27/2005 Dobozi

Serbia & Montenegro

P075343 Energy Efficiency Energ

y High CDM 9/18/2003 Atur

Comments on the Projects in Table II:

k) Bosnia APL3: There is high potential for emission reductions in rehabilitation of hydro (Rama, Trebinje II, Visegrad, Grabovica and Salakovac) and thermal (Ugljevic) projects. Feasibility studies are expected to commence later on in 2007 which will assist in determining more accurately the ER potential.

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l) Belarus: The Post-Chernobyl Recovery project includes activities (energy efficiency and coal-to-natural gas conversion/switching) with high potential to generate emission reductions. A more detailed assessment is need to identify the project activities which have yet to be implemented and estimate their emission reduction potential. A Carbon Finance outreach workshop is planned for the end of March (2007) which provides an opportunity to follow-up on project opportunities in Belarus.

m) Croatia: It is recommended that the District Heating project is reviewed in more detail to develop a preliminary estimate of the ERs and a PIN be prepared. In parallel, the implementing agencies of the energy efficiency and renewable projects should be consulted about opportunities for carbon finance.

n) Kazakhstan: The project may provide opportunities for carbon finance; more detail assessment in needed and consultation with the TTL.

o) Serbia/Energy Efficiency: The project is expected to include carbon finance opportunities which will be pursued. The TTL is aware and will take action.

General Comments and Recommendations:

a) Funds which have been established to finance energy efficiency and renewable projects provide an excellent vehicle to bundle smaller projects, standardize emission reduction purchase agreements and make it more cost-effective to prepare such projects. These funds could be used as intermediaries for carbon finance. Countries with such funds are: Armenia, Bulgaria, Croatia, Macedonia and Romania.

b) The recent accession of Bulgaria and Romania into the EU may impact carbon finance projects in these two countries as all facilities are subject to ETS rules unless they opt-out. In consultation with the World Bank Carbon Finance Unit a decision should be made regarding what type of carbon finance projects (if any) should be pursued by the World Bank in these two countries.

c) Periodic review of the project pipeline is clearly useful, but if it is not done frequently enough (e.g., annually) it may miss projects which start and then it is more difficult to prove additionality. The most effective approach would be to build into the project cycle the required assessment, so a decision can be made whether each project provides carbon finance opportunities or not. This way, periodic review of the project pipeline will not be necessary. For this reason, a brief Guideline is proposed (see below) to screen projects early in the project cycle.

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5. Guidelines for Early Project Screening

In this section of the report is simple checklist is provided to determine if the project meets the basic criteria for carbon financing.

Project Check List:

1. Is the country eligible for carbon finance? Yes Noa. Eligible JI:____[ Eligible JI, which includes Bulgaria, Czech Republic, Estonia, Hungary, Latvia,

Lithuania, Poland, Romania, Slovak Republic, Slovenia, Russia and Ukraine]b. Prospective JI:____[Prospective JI: Belarus and Croatia]c. Eligible CDM:____[ Eligible CDM: Albania, Armenia, Azerbaijan, Georgia, Kyrgyz Republic,

Macedonia, Moldova, Turkmenistan, and Uzbekistan]d. Prospective CDM:____[Prospective CDM: Bosnia-Herzegovina, Kazakhstan, Serbia &

Montenegro and Tajikistan]

2. Does the Project reduce fossil fuel (coal, oil or natural gas) consumption directly or indirectly? Yes NoProposed sector/subsectors for carbon finance transaction that applies:

a. Power sector (specify)______b. Oil extraction, production and refiningc. Natural gas production, storage, transportation and distributiond. Coal mininge. Manufacturing industry (specify)____f. Municipal services (specify)g. Transport (specify)______h. Social sector (specify i.e., education, health)_____i. Agriculture (specify)_____j. Others: specify________

If the answers to the above questions are affirmative, more detail assessment is needed including:

Determination of project additionality. Whether the applicable methodology is approved, which makes planning of the project,

as a carbon finance candidate, easier. Estimation of emission reductions.

The Task Team Leader may obtain support from the World Bank Carbon Finance Unit or the designated carbon finance support staff within ECA.

More detailed guidelines are provided in Annex C.

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ANNEX A. LIST OF PROJECTS REVIEWEDCountry Proj ID Sector Potential ER Suitable Funds Board

Approval Task Team Leader

Albania P090656 ECSEE APL2 Energy Medium CDM 6/28/2005 Papathanasiou

Albania P101806 ECSEE APL5 Energy ?? CDM 1/28/2008 Papathanasiou

Albania P077526 Power gen and restructuring Energy High CDM 3/16/2004 Papathanasiou

Albania P075156Integrated water

and Ecosystems (GEF)

Water None 12/2/2003 Rohde

Albania P041442 Muni water and wastewater Water None 1/28/2003 Rohde

Albania ?? Transport Transport Low CDM Small 12/1/2006 Humphreys

Albania P066260 Road Maintenance Transport Low CDM Small 6/27/2002 Le Ber

Albania P078933 Education Excellence Education None 5/3/2006 Miwa

Armenia AMPE8276 T&D Energy None 1/1998 SARGSYAN

Armenia P083352 RENEW ENERGY Energy Medium CDM 1/30/2006 SARGSYAN

Armenia P057880 URBAN HEAT Energy Medium CDM Small 7/7/2005 SARGSYANArmenia P094207 Geothermal Energy High CDM 1/16/2007 Schreiber

Armenia P087641YEREVAN

WATER/WW SERVS

Water Low CDM Small 2/17/2005 SMITH

Armenia P063398 Muni water and wastewater Water Low CDM Small 5/4/2004 SMITH

Armenia P073974 Health Modernization Health None 5/13/2004 Dowsett-Coirolo

Armenia P094225 Social Investment III Social None 9/27/2006 Mascarell

Armenia P057847 NAT RES MGMT Environment Low BioCarbon 6/4/2002 DAMIANOVA

Armenia ?? Traffic Management Urban Low 7/2007 Lawrence

Azerbaijan P089751 IDP Economic Dev Social None 2/15/2005 Ellen Hamilton

Azerbaijan P083341 ENERGY Energy High CDM 2/2005 HAMSOAzerbaijan P083108 Rail Trade Transport Low CDM Small 12/15/2006 Le BerAzerbaijan P094488 Highway2 Transport Low CDM Small 1/17/2006 Le BerAzerbaijan AZPE40716 Highway Transport Low CDM Small 6/14/2001 KrissAzerbaijan P094220 Health Reform Health None 6/5/2006 Baris

Country Proj ID Sector Potential ER Suitable Funds Board Approval Task Team Leader

Azerbaijan P096213 Water Supply Water Low 9/14/2006 Kriss

Azerbaijan P077031

SHAKH-DAG RURAL ENVIRONMENT (GEF)

Rural Medium-Low CDCF 3/15/2005 KISS

Belarus P095115 Post-Chernobyl Recovery Energy Medium-High JI 12/20/2005 Armaly

Belarus BYPE44748 Social Infrastructure

Social/Energy Medium JI 6/5/2001 Peterson

Bosnia-Herz P085112 Water Quality Protection (GEF) Environment None 6/21/2005 Manghee

Bosnia-Herz P083353 Urban Infrastructure Urban Very low 8/13/2004 Manghee

Bosnia-Herz BAPE57950 Solid Waste Management

Urban, Environment Very low 6/20/2002 Manghee

Bosnia-Herz P090666 ECSEE APL3 Energy High CDM 6/23/2006 Papathanasiou

Bosnia-Herz BAPE585213rd Electric

Power Reconstruction

Energy Medium CDM 5/20/2000 Khalil

Bosnia-Herz BAPE71347 Road Management Transport Low CDCF 3/2002 Queiroz

Bosnia-Herz P100792 Road infr and safety Transport Medium CDCF 7/2007 Humphreys

Bulgaria P094018 2nd Trade & Transport Transport Very low 11/30/2006 Kerali

Bulgaria P099894 Road infrastructure Transport Very low Medium? 1/23/2007 Kerali

Bulgaria BGPA8314 District Heating Energy High JI 2003 SarkarBulgaria P100657 Social Inclusion Social None 3/29/2007

Bulgaria P084831 ENRGY EFF (GEF) Energy High JI 12/21/2004 DOBOZI

Croatia P079978 ENRGY EFF (GEF) Energy Medium JI 6/24/2003 JOHANSEN

Croatia P071464 RENEW ENERGY (GEF) Energy High JI 4/28/2005 JOHANSEN

Croatia P098948 Inland Waters Water Very low JI 12/7/2006 Sarkar

Croatia P065416 Coastal Cities Pollution Urban None 5/1/2004 Marino

Croatia HRPA43444 Muni Environmental Urban Very low JI 6/18/1998 Nadkarni

Croatia P093767 Trade & Transport Very low JI 7/30/2006 Ollivier

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TransportCroatia P095389 District Heating Energy High JI 5/25/2006 SarkarCroatia P043195 Rijeka Gateway Transport Very low JI 6/24/2003 AudigeCroatia P086671 Education Sector Education None JI 8/17/2005 van MeelCroatia P069937 Social Welfare Social None JI 5/5/2005 Dobraja

Croatia P086669 Sustainable Health Health None JI 12/5/2006 Chao

Georgia P044800 FOREST DEVELOPMENT Environment Low BioCarbon 8/1/2002 KUSHLIN

Georgia P048791 PROT AREAS DEV (GEF) Environment Low BioCarbon 5/24/2001 FAIEZ

Georgia P094044 2nd E-W Highway Transport Low CDCF 2008 Le Ber

Georgia P083110 E-W Highway Transport Low CDCF 11/30/2006 Le Ber

Georgia GEPE54886 Electricity Market Energy Low CDCF 5/3/2001 Vucetic

Georgia P098217 Education Sector APL2 Education 10/24/2006 van Meel

Georgia GEPE72394Energy Transit

Institutional Building

Energy None 2/6/2001 Walters

Hungary HUPA8497 Muni Wastewater Water Low BioCarbon 5/15/1997 MacEwen

Hungary P074971 Nutrient Reduction (GEF) Urban Low BioCarbon 12/8/2005 de Beauchene

Kazakhstan P102772 Territorial Development ?? 2008 Katakura

Kazakhstan KZPE65414 Transmission Rehab Energy Medium-High CDM 10/26/1999 Dobozi

Kazakhstan P095155 N-S Transmission Energy Medium-High CDM 10/27/2005 Dobozi

Kosovo P097635 Lignite Power TA Energy Medium CDM? 4/27/2006 Atur

Kosovo P088865 Energy Sector TA Energy Medium CDM? 3/29/2005 Gulati

Kyrgyz P083410 Energy Energy ? 2008 Sharma

Kyrgyz P083377 Small Towns Infrastr. Urban Very low CDCF 12/14/2004 Draugelis

Kyrgyz KGPE36977 Rural Water/Sanitation Rural Very low CDCF 12/2000 Konishi

Kyrgyz KGPA5573 Power & DH Rehab Energy High CDM 10/1/1998 R. Sharma

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Kyrgyz P084977 Health and Social Protection

Health & Social None 11/23/2005 Khaleghian

Kyrgyz KGPE69814 TA Credit Energy None 5/15/2000 Ghasimi

Lithuania P063656/P073242

VILNIUS HEAT DEMAND MANGMNT

Energy Medium JI 6/10/2003 JOHANSEN

Macedonia P089656 Sustainable Energy (GEF) Energy High CDM 5/11/2006 JOHANSEN

Macedonia P082337 TSO Energy Low CDM 11/11/2006 Kennedy

Moldova P100929 Road Network Transport None 5/16/2007 SchliesslerMoldova MDPA35771 1st Cadastre Privatization None 7/1997 Andersson

Moldova P074469 Pilot Water Supply Water Low CDCF 5/20/2003 Manghee

Moldova P074139 Env. Infrastructure Urban Low BioCarbon 11/20/2004 Manghee

Moldova P095250 Primary Health Care Health None 9/14/2006

Moldova P079314 Social Investment Social Low-Medium CDCF 5/18/2004 Bezhanyan

Moldova P040558+B102 ENERGY 2 Energy Medium CDM Small 11/25/2003 OSTOJIC

Poland PLPE8615 Szczecin-Swinoujscie Transport None 7/2000 Juhel

Poland P078170 Road Maintenance Transport Medium JI 3/30/2004 Audige

Poland P088824 2nd Road Maintenance Transport Medium JI 3/31/2005 Dumitrescu

Poland P102731 Transport Rehab Transport Medium JI 4/25/2007 Czapski

Poland P096214 Road Maintenance 3 Transport Medium JI 3/23/2006 Queiroz

Poland P070246 Energy Efficiency (GEF) Energy Medium JI 2/3/2004 JOHANSEN

Poland P065059/P070246

KRAKOW ENRGY EFF Energy High JI 6/7/2001;

5/29/2003 JOHANSEN

Romania P068062 ENERGY EFF Energy High JI 9/19/2002 ATUR

Romania P067367 FOREST DEVT Environment Low BioCarbon 12/19/2002 DEWEES

Romania P100957 Energy1 Energy ??? 1/31/2008 NYMANRomania P083622 PAL 2 Energy low 7/20/2005 NYMAN

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Romania P093812 Trasport support Transport Low JI 7/15/2006 KeraliRomania P081406 Electricity Market Energy Low JI 6/12/2003 NYMANRomania P073967 Rural Education Education None 4/4/2003 Sandi

Romania Rpr 36181-RO Social Inclusion Social None 5/15/2006 Sandi

Romania P078971 Health Sector Reform Health None 11/17/2004 Haazen

Romania P088252 Muni Services Water Low JI 6/22/2006 SarkarRussia P079033 Renewables Energy High JI 5/2007 SchreiberRussia RUPE38551 Muni Heating Energy High JI 3/1/2001 HAMSO

Russia RUPE8832 Muni water and wastewater Urban Very low JI 12/21/2000 Homanen

Russia RUPE50891 Electricity Reform Energy High JI 6/5/1997 Stuggins

Serbia & Montenegro P075343 Energy

Efficiency Energy High CDM 9/18/2003 Atur

Serbia & Montenegro P079116

Montenegro Env-Sensitive Tourist Areas

Urban Medium-High CDM 9/11/2003 Marino

Serbia & Montenegro P088867 ECSEE APL3 Energy Low CDM 6/16/2005 Atur

Serbia & Montenegro P096598 ECSEE APL3 -

Montenegro Energy Medium-High CDM 4/10/2006 Beides

Serbia & Montenegro P096823 Local Socia

Service Social/Health None 2/20/2007

Serbia P096592 Railway Reform Transport Low-Medium CDM 12/15/2007 Humphreys

Tajikistan P079027 Muni Infrastructure Urban Low CDM 10/19/2005 Kamkwalala

Tajikistan TJPE57883 Dushanbe Water Urban Low CDM 9/12/2000 Jakob

Tajikistan P101592 Dushanbe Water Urban Low CDM 12/19/2006 Kamkwalala

Tajikistan P069055 Education Modernization Education None 4/17/2003 Roberts-Schweitzer

Tajikistan P089244 Energy Loss Reduction Energy High CDM 3/2005 Nikolov

Ukraine P083702 Energy sector reform (apl) Energy High JI 9/15/2005 OSTOJIC

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Ukraine P096207 Power Transmission Energy Medium JI 5/15/2005 OSTOJIC

Ukraine UAPA44832 District Heating Energy High JI 5/21/1998 Gochenour

Ukraine P095337 Urban Infrastructure Urban None 3/16/2006 Manghee

Ukraine UAPE35786 Muni water and wastewater Urban None 11/5/1997 Stotttmann

Ukraine ?? Roads & Safety Urban Low-Medium JI 9/2007 Audige

Uzbekistan UZPE49621 Bukhara Water Supply Urban Low CDM 10/15/2001 Ijjasz-Vasquez

Uzbekistan P095263Bukhara Solid

Waste Management

Urban Low CDM 9/28/2006 Bernstein

SEE Regional P086694 APL1 Energy High CDM/JI 12/21/2004 Nyman

SEE Regional P075046 GeoFund Energy High CDM/JI 9/5/2006 Schreiber

Notes: Bold indicates projects of higher interest for carbon financeThree categories are identified regarding Suitable Funds: JI, CDM and CDM Small (the latter suitable mainly for CDCF)

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ANNEX B: PROJECTS POTENTIALLY SUITABLE FOR CARBON FINANCE (Selected projects are organized in an alphabetical order by the country name)

1) COUNTRY: ALBANIA

Project name: ECSEE APL2 and APL5

Location of project: Albania

Project ID: P090656 and P101806

Task Team Leader: D. Papathanasiou

Project scope (brief description): Provides investment and technical assistance to extend the life and improve the efficiency and reliability of bulk power transmission system, among others by replacing aging and inefficient facilities with modern efficient ones. Specific components which should improve efficiency include: 1) Rehabilitation of existing hydro projects; 2) Loss reduction in transmission and distribution system; and 3) Energy efficiency in schools.

Technology to be employed: Rehabilitation of hydro, transmission and distribution, as well as energy efficiency.

GHGs targeted: CO2

Project type (e.g. FI): Loan

Board Approval Date: June 28, 2005; APL5 expected: January 28, 2008

Implementation timeframe: 5 years

IBRD/IDA Commitment ($ millions): APL2 includes $27 million from IDA; $20 million from EBRD; $5.14 million from borrower; total project: $52.14 million. APL 5 is not known yet.

Potential ERs/Potential CF opportunity: High.

Suitable Funds: All CDM funds.

Status/Issues/Remarks: The possibility of CDCF/CDM project associated with energy efficiency in schools has been discussed already between the Bank and the Ministry of

Education. Task Team Leader is aware of carbon finance options and will pursue opportunities.

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Country: Albania

Project name: Power Sector Generation and Restructuring

Location of project: Albania

Project ID: P077526


Project scope (brief description): Investment for a combined cycle burning distillate oil and technical assistance to strengthen the management of the power sector and introduce power sector reforms.

Technology to be employed: Combined cycle gas turbine (CCGT).

GHGs targeted: CO2


Board Approval Date: March 16, 2004


IBRD/IDA Commitment ($ millions): $25 million from IDA; $37.50 million from EBRD; $37.50 million from EIB; $12.66 million from borrower; total project: $112.66 million.

Potential ERs/Potential CF opportunity: ER amount could be high depending on the power generation alternatives (e.g., coal-fired or oil-fired steam cycle). If the CCGT is gas-capable, it may generate additional ERs when natural gas becomes available in Albania.


Status/Issues/Remarks: The fact that the project is already being implemented may make additionality difficult to prove.

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2) COUNTRY: ARMENIA

Project name: Renewable Energy

Location of project: Armenia

Project ID: P083352

Task Team Leader: Gevorg Sargsyan

Project scope (brief description): Develop a sustainable, market-based financial mechanism, a Renewable Energy Fund (REF), and provide technical assistance to build the capacity of project investors, local financial institutions and state agencies to reduce barriers, and create the enabling regulatory and market environment for developing renewable energy projects.

Technology to be employed: Promotion of renewables, especially small hydro and wind projects.

GHGs targeted: CO2

Project type (e.g. FI): Loan; GEF to provide grant for overcoming market barriers.

Board Approval Date: January 30, 2006


IBRD/IDA Commitment ($ millions): $5 (IDA, out of a total project of $28)

Potential ERs/Potential CF opportunity: Medium ER amount expected (300,000 for the period 2006-2012); projects with a cumulative capacity of 80 MWs are projected to be bundled


Status/Issues/Remarks: The renewable fund provides an excellent vehicle for bundling smaller projects for carbon finance; hence reducing the project preparation costs. The REF targets small hydro projects for which a standardized emission reduction purchase agreement can be developed to apply to similar projects.

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Country: Armenia

Project name: Urban Heating

Location of project: Armenia

Project ID: P057880

Task Team Leader: Gevorg Sargsyan

Project scope (brief description): 1. Community mobilization and development; 2. Supplier and financing institution development; 3. Improvement of heating and related building infrastructure; and 4. Support of project preparation.

Technology to be employed: Promotion of energy efficiency and switching from electricity heating to gas-based heating.

GHGs targeted: CO2


Board Approval Date: July 7, 2005


IBRD/IDA Commitment ($ millions): $10 (IDA, out of a total project of $23)

Potential ERs/Potential CF opportunity: Medium ER amount expected

Suitable Funds: All CDM funds

Status/Issues/Remarks: Project schedule overlaps with first compliance period (2008-12) and provides an opportunity for generating and selling ERs. ER estimation and monitoring system design could be challenging (considering that it involves predicting what it will happen without the project (establishing baseline scenario)), but similar assessments and monitoring systems have been implemented in other projects (e.g., Bulgaria/Sofia District Heating Rehabilitation). It is recommended to be included only if another project such as the Renewable Energy Fund is pursued in Armenia.

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Country: Armenia

Project name: Geothermal Energy

Location of project: Jermakhpyur, Armenia

Project ID: P094207

Task Team Leader: Helmut Schreiber

Project scope (brief description): Develop a 25 MW geothermal project in Jermakhpyur.

Technology to be employed: Geothermal, a renewable technology.

GHGs targeted: CO2

Project type (e.g. FI): GEF grant.

Board Approval Date: January 16, 2007


IBRD/IDA Commitment ($ millions): $3.2 million from GEF/GEOFUND; $1.4 million from recipient of the grant; total $4.60 million.

Potential ERs/Potential CF opportunity: High ER amount expected


Status/Issues/Remarks: The World Bank is not participating any more in the project. Should the project be pursued by the World Bank Carbon Unit?

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3) COUNTRY: AZERBAIJAN

Project name: Power Transmission Project

Location of project: Azerbaijan

Project ID: P083341

Task Team Leader: Bjorn Hamso

Project scope (brief description): 1. Improve power system dispatch; and 2. Transmission rehabilitation and energy loss reduction.

Technology to be employed: Modern power dispatching SCADA/Energy Management System, and transmission rehabilitation.

GHGs targeted: CO2

Project type (e.g. FI): IBRD loan

Board Approval Date: February, 2005

Implementation timeframe: 4 years, but emission reductions will continue to be generated after the project completion.

IBRD/IDA Commitment ($ millions): $40 from IBRD (total project: $47.4 million)

Potential ERs/Potential CF opportunity: High; approximately 2% fuel savings corresponds to 1.5-2.0 million tons for 10 years.

Suitable Funds: All CDM Funds

Status/Issues/Remarks: PINs are being prepared.

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4) COUNTRY: BELARUS

Project name: Post-Chernobyl Recovery Project

Location of project: Belarus

Project ID: P095115

Task Team Leader: M. Armaly

Project scope (brief description): Includes energy efficiency investments (such as replacement of old boilers with new, some cogeneration; replacement of heat distribution pipes; addition of pipe insulation; heat regulators and heat meters) and replacement of coal with natural gas.

Technology to be employed: Modern and most efficient boilers and cogeneration facilities. Pipe insulation and new heat distribution pipes. Conversion from coal to natural gas.

GHGs targeted: CO2


Board Approval Date: Sept 15, 2005

Implementation timeframe: 6 years (up to 2011)

IBRD/IDA Commitment ($ millions): $50 million by IBRD (total: $62.36 million; borrower: $12.36 million)

Potential ERs/Potential CF opportunity: High.

Suitable Funds: All JI Funds

Status/Issues/Remarks: Need more detail assessment, especially considering the status of the project; while some activities may be already implemented and may be difficult to prove additionality, it is likely that many more are yet to be finalized.

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5) COUNTRY: BOSNIA AND HERZEGOVINA

Project name: ECSEE/APL3 (Energy Community of South East Europe)

Location of project: Bosnia and Herzegovina

Project ID: P090666


Project scope (brief description): Investments to maintain domestic generation, improve safety and environmental compliance and upgrade capabilities of ISO. Also, rehabilitation of hydro plants (Rama, Trebinje II, Visegrad, Grabovica and Salakovac) and the Ugljevic thermal plant.

Technology to be employed: Hydro rehabilitation; thermal plant rehabilitation; and distribution system rehabilitation.

GHGs targeted: CO2


Board Approval Date: June 23, 2006


IBRD/IDA Commitment ($ millions): $36 million by IDA (total: $271.6 million; EBRD: $67 million; EIB: $104.5 million; KfW: $44.9 million; Financing GAP: $14.1 million; borrower: $5.1 million)

Potential ERs/Potential CF opportunity: High due to rehabilitation of hydro and thermal power plants; also, the distribution system.


Status/Issues/Remarks: Project just starting; good timing to assess specific ER potential. Feasibility studies are expected to commence later on in 2007 which will assist in determining more accurately the ER potential.

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6) COUNTRY: BULGARIA

Project name: Energy Efficiency Project

Location of project: Bulgaria

Project ID: P084831

Task Team Leader: Istvan Dobozi

Project scope (brief description): Support the establishment of the Bulgaria Energy Efficiency Fund (BEEF), a sustainable, market-based mechanism, to finance energy efficiency projects.

Technology to be employed: Energy efficiency

GHGs targeted: CO2

Project type (e.g. FI): Loan plus GEF support for barrier removal and partial risk guarantee

Board Approval Date: December 21, 2004


IBRD/IDA Commitment ($ millions): IBRD loan not determined yet (total project: $17.85 million; GEF: $10 million)

Potential ERs/Potential CF opportunity: High potential; multiple projects; preliminary estimates: 2 million tCO2 for the period 2005-12

Suitable Funds: All JI funds

Status/Issues/Remarks: BEEF could be an efficient intermediary in accessing and preparing many smaller projects, which are not practical to prepare one at a time. A potential issue is the fact that Bulgaria is part of the EU (as of January 1 2007) and would have to be part of ETS; facilities may opt-out of ETS, but it is not likely that they will do so.

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7) COUNTRY: CROATIA

Project name: Energy Efficiency Project

Location of project: Croatia

Project ID: P079978

Task Team Leader: Peter Johansen

Project scope (brief description): Support the establishment of a utility-based Energy Efficiency Service Company (ESCo) to finance energy efficiency projects.


GHGs targeted: CO2

Project type (e.g. FI): Loan plus GEF support for barrier removal and partial risk guarantee

Board Approval Date: June 24, 2003


IBRD/IDA Commitment ($ millions): $5 million IBRD loan (total project: $30.40 million; GEF: $7 million)

Potential ERs/Potential CF opportunity: High potential; multiple projects


Status/Issues/Remarks: The ESCo could be an efficient intermediary in accessing and preparing many smaller projects, which are not practical to prepare one at a time. Recommended to approach ESCo to develop PIN.

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Country: Croatia

Project name: Renewables Project


Project ID: P071464


Project scope (brief description): Support the development of renewable projects so Croatia can increase the contribution of renewables to potentially 11% of the total generation by 2010.

Technology to be employed: Renewables

GHGs targeted: CO2

Project type (e.g. FI): GEF support for barrier removal and contingent loan for project preparation

Board Approval Date: April 28, 2005


IBRD/IDA Commitment ($ millions): GEF: $5.5 million (total project: $30.40 million; Borrower: $60.9 million; Commercial/Private: $60.0 million)

Potential ERs/Potential CF opportunity: High potential; multiple projects


Status/Issues/Remarks: Presently, only pre-investment work is going on, but soon projects will be identified to be implemented. Timing good for ER assessment and PIN preparation.

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Country: Croatia

Project name: District Heating


Project ID: P095389

Task Team Leader: Sudipto Sarkar

Project scope (brief description): Promote energy efficiency operations in HEP T.

Technology to be employed: District Heating rehabilitation and DSM/energy efficiency options

GHGs targeted: CO2


Board Approval Date: May 25, 2006


IBRD/IDA Commitment ($ millions): IBRD: $28.8 million (total project: $42.85 million; Borrower: $14.05 million)

Potential ERs/Potential CF opportunity: High potential


Status/Issues/Remarks: Timing good for ER assessment and PIN preparation.

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8) COUNTRY: KAZAKHSTAN

Project name: North-South Electricity Transmission

Location of project: Kazakhstan

Project ID: P095155

Task Team Leader: Istvan Dobozi

Project scope (brief description): Upgrade transmission system

Technology to be employed: High voltage transmission technologies

GHGs targeted: CO2


Board Approval Date: October 27, 2005


IBRD/IDA Commitment ($ millions): IBRD: $100 million loan (total project: $161.09 million; Borrower: $4.55 million; EBRD: $13.14 million; Financial Intermediaries: $43.4 million)

Potential ERs/Potential CF opportunity: Medium-High potential depending on the projects implemented and the avoid emissions.


Status/Issues/Remarks: Requires more specific assessment to estimate the emission reduction.

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9) COUNTRY: LITHUANIA

Project name: Vilnius District Heating Project

Location of project: Vilnius, Lithuania

Project ID: P063656/P073242


Project scope (brief description): Energy efficiency measures such as demand side management (DSM), replacement of substations, rehabilitation of CHPs, upgrading of heat-only boilers, interconnection of CHPs to improve efficiency through optimum operation (dispatching) and creation of energy conservation program.

Technology to be employed: DSM, rehabilitation of existing plants and operating improvements

GHGs targeted: CO2

Project type (e.g. FI): IBRD loan along with GEF grant, borrower financing and bilateral (EU, Finland and Sweden) support.

Board Approval Date: August 23, 2001/June 10, 2003

Implementation timeframe: June 30, 2008, but the project would continue generating ERs beyond 2008

IBRD/IDA Commitment ($ millions): $17.1 IBRD out of a total of $64.52 million; GEF provides $16.5 million

Potential ERs/Potential CF opportunity: High


Status/Issues/Remarks: Significant ERs could be generated. An issue which needs to be addressed is proving additionality, considering that the project has been already approved, financed and mostly implemented. Also, emission reductions linked to the GEF-funded component may need to be excluded.

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10) COUNTRY: MACEDONIA

Project name: District Heating and Energy Efficiency

Location of project: Macedonia

Project ID: P089656

Task Team Leader: P. Johansen

Project scope (brief description): GEF grant to support market transformation activities, establish utility-based ESCO and invest in energy efficiency and renewable projects through a Sustainable Energy Financing Facility.

Technology to be employed: Energy efficiency and renewable technologies.

GHGs targeted: CO2

Project type (e.g. FI): GEF grant

Board Approval Date: May 11, 2006

Implementation timeframe: 5 Years

IBRD/IDA Commitment ($ millions): $5.8 million from GEF out of a total of $34.6 million (the remaining provided by the borrower and local sources including financial intermediaries)



Status/Issues/Remarks: Assess Emission Reduction and prepare PINs. Timing should be coordinated with TTL because some issues still remain (e.g., ownership of land and rights for hydro projects; also, concession terms).

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11) COUNTRY: MOLDOVA

Project name: Energy II Project

Location of project: Moldova

Project ID: P040558

Task Team Leader: Dejan Ostojic

Project scope (brief description): A component of the project is efficiency improvement of the heating supply system in selected public and residential apartment buildings.

Technology to be employed: DSM, rehabilitation and efficiency improvements

GHGs targeted: CO2

Project type (e.g. FI): IDA loan

Board Approval Date: Nov 25, 2003

Implementation timeframe: 4 years, but it will continue generating ERs beyond 2008

IBRD/IDA Commitment ($ millions): $35 million from IDA out of a total of $39.93 million

Potential ERs/Potential CF opportunity: Medium


Status/Issues/Remarks: Three projects (which are under Energy II and SIF II projects) are supported by CDCF.

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12) COUNTRY: POLAND

Project name: Krakow Energy Efficiency Project

Location of project: Krakow Region



Project scope (brief description): 1. Modernization of district heating system; 2. End use (DSM) measures; 3. Financing DSM. GEF is supporting a risk guarantee mechanism and providing technical assistance.

Technology to be employed: Energy efficiency and DSM.

GHGs targeted: CO2

Project type (e.g. FI): IBRD loan plus GEF risk guarantee and grant.

Board Approval Date: June 7, 2001 for P065059 and May 29, 2003 for P070246

Implementation timeframe: Closing on Dec 31, 2007, but it will continue generating ERs.

IBRD/IDA Commitment ($ millions): $15 million loan from IBRD, $11 million grant from GEF, $47 million from the borrower and $31 million from commercial banks (total project investment: $104 million)



Status/Issues/Remarks: Significant ERs could be generated. An issue which needs to be addressed is proving additionality, considering that the project has been already approved, financed and mostly implemented. Also, potential emission reductions due to GEF funding need to be taken into account and separated from other investments.

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Country: Poland

Project name: Transport projects

Location of project: Poland

Project ID: P078170/P088824/P096214/P102731/

Task Team Leaders: Audige, Dumitrescu, Czapski and Queiroz

Project scope (brief description): Four separate loans for road maintenance and rehabilitation.

Technology to be employed: Road maintenance and rehabilitation.

GHGs targeted: CO2

Project type (e.g. FI): IBRD loans.

Board Approval Date: March 30, 2004/March 31, 2005/ March 23, 2006/April 25, 2007

Implementation timeframe: ??

IBRD/IDA Commitment ($ millions): $601 million (total project investment: $995 million)



Status/Issues/Remarks: Bundling of the four projects may make it cost-effective to prepare for assessing and selling emission reductions. However, it is difficult to estimate ER potential with the available information. Klaus Oppermann reviewed this (as well as similar projects in other ECA countries) and recommended a more detailed assessment of the transport projects in Poland.

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13) COUNTRY: ROMANIA

Project name: Energy Efficiency

Location of project: Romania

Project ID: P068062

Task Team Leader: Varadarajan Atur

Project scope (brief description): Establish self-sustaining Energy Efficiency Financing Facility (EEFF) to support energy efficiency projects.


GHGs targeted: CO2

Project type (e.g. FI): GEF grant provides seed capital for establishing the EEFF, as well as technical assistance.

Board Approval Date: July 2001

Implementation timeframe: Up to December 31, 2007

IBRD/IDA Commitment ($ millions): $10 million from GEF and $40 million from private sources.



Status/Issues/Remarks: Potential emission reductions due to GEF funding need to be taken into account and separated from other investments. However, most projects funded by EEFF are expected to generate ERs, which can be traded. A potential issue is the fact that Romania is part of the EU (as of January 1 2007) and would have to be part of ETS; facilities may opt-out of ETS, but it is not likely that they will do so.

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Country: Romania

Project name: Energy I and PAL 2

Location of project: Romania


Task Team Leader: K. Nyman

Project scope (brief description): Market reforms, upgrading of transmission system and pumped storage hydro plant

Technology to be employed: Transmission upgrading and hydro rehabilitation

GHGs targeted: CO2


Board Approval Date: July 20, 2005 and January 31, 2008


IBRD/IDA Commitment ($ millions): 150

Potential ERs/Potential CF opportunity: Potentially high depending on specific investments


Status/Issues/Remarks: Rehabilitation upgrading is difficult to prove additionality; hydro rehab is suitable, but Romania is part of the EU (as of January 1 2007) and projects have to be part of ETS; facilities may opt-out of ETS, but it is not likely that they will do so.

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14) COUNTRY: RUSSIA

Project name: Renewable Energy

Location of project: Russia

Project ID: P079033

Task Team Leader: Helmut Schreiber

Project scope (brief description): Increase the utilization of renewable energy resources.

Technology to be employed: Small hydro; reconstruction of biomass boilers; biomass fuel production; switching from fossil fuel to biomass; landfill gas; wind; and solar heating.

GHGs targeted: CO2

Project type (e.g. FI): GEF grant

Board Approval Date: May, 2007


IBRD/IDA Commitment ($ millions): GEF: $20 million; total project: $112.2 million



Status/Issues/Remarks: Preliminary list of projects has been identified; TTL aware of carbon finance opportunities which will be pursued.

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15) COUNTRY: SERBIA/MONTENEGRO

Project name: Energy Efficiency

Location of project: Serbia

Project ID: P075343

Task Team Leader: Varadan Atur

Project scope (brief description): Reduce the environmental impact from heating of building in Serbia and improve energy efficiency.

Technology to be employed: Rehabilitation of heating systems, in most cases replacement with natural gas-fired systems.

GHGs targeted: CO2

Project type (e.g. FI): Loan and GEF grant



IBRD/IDA Commitment ($ millions): IDA: $10 million; GEF: $4 million (total project: $20 million; Italy MOFA: $1.5 million; other bilaterals: $0.5 million; borrower: $4 million).



Status/Issues/Remarks: Project identification should commence.

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COUNTRY: SERBIA & MONTENEGRO

Project name: ECSEE APL3

Location of project: Montenegro


Task Team Leader: Husam Beides

Project scope (brief description): Strengthen power system to participate in the regional energy market. Specific activities which may result in CO2 emission reductions include: 1. Optimization of transmission system operation through integration and modern operating systems; 2. Upgrading of transmission; 3. Restoration of critical generation (Zvornik and Perucica hydros) and transmission facilities; 4. Metering devices

Technology to be employed: Rehabilitation of hydro and transmission facilities. Also, modern power system operation and telecom systems.

GHGs targeted: CO2

Project type (e.g. FI): Loans

Board Approval Date: June 16, 2006/April 10, 2006


IBRD/IDA Commitment ($ millions): IDA: $30 million (total project: $41 million; borrower: $11 million).



Status/Issues/Remarks: Present scope does not seem to result in significant ERs, but future projects in Montenegro have high potential.

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16) COUNTRY: TAJIKISTAN

Project name: Energy Loss Reduction

Location of project: Tajikistan

Project ID: P089244

Task Team Leader: Nikolay Nikolov

Project scope (brief description): Consumer meters for electricity and gas

Technology to be employed: Gas and electricity metering devices.

GHGs targeted: CO2

Project type (e.g. FI): Loans

Board Approval Date: March, 2005


IBRD/IDA Commitment ($ millions): IDA: $15 million (total project: $26.63 million; Swiss Secretariat for Economic Coop: $8 million; borrower: $3.63 million).

Potential ERs/Potential CF opportunity: Low


Status/Issues/Remarks: Even though metering could increase energy conservation, the project is likely to increase energy consumption and it is unlikely that emission reductions can be estimated. A relevant project, Pamir Hydro, may result in emission reductions.

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17) COUNTRY: UKRAINE

Project name: Energy Sector Reform

Location of project: Ukraine

Project ID: P083702

Task Team Leader: Dejan Ostojic

Project scope (brief description): Increase security and reliability of energy supply. Among others, it includes reduction in thermal power plant operation by increasing production of hydroelectric power plants

Technology to be employed: Replacement of thermal power plants with hydro.

GHGs targeted: CO2




IBRD/IDA Commitment ($ millions): $250 million



Status/Issues/Remarks: PIN has been developed and carbon finance is already been pursued.

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ANNEX C: GUIDELINES FOR EARLY PROJECT SCREENING

The purpose of these guidelines is to identify the key factors which should be considered in initial screening of projects and identify the most likely to be suitable for carbon finance.

Early Screening for Carbon Finance Transaction

Date Prepared:

Basic InformationCountry: Project ID: Additional Project ID (if any): Project Name: Task Team Leader: Estimated Appraisal Date: Estimated Board Date: Managing Unit: ECSSD Lending Instrument: Sector: (Theme:)IBRD Amount (US$m.): IDA Amount (US$m.): GEF Amount (US$m.): PCF Amount (US$m.): Other financing amounts by source: Environmental Category:

3. Is the country eligible for carbon finance? Yes Noa. Eligible JI:____[ Eligible JI, which includes Bulgaria, Czech Republic, Estonia, Hungary,

Latvia, Lithuania, Poland, Romania, Slovak Republic, Slovenia, Russia and Ukraine]b. Prospective JI:____[Prospective JI: Belarus and Croatia]c. Eligible CDM:____[ Eligible CDM: Albania, Armenia, Azerbaijan, Georgia, Kyrgyz

Republic, Macedonia, Moldova, Turkmenistan, and Uzbekistan]d. Prospective CDM:____[Prospective CDM: Bosnia-Herzegovina, Kazakhstan, Serbia

& Montenegro and Tajikistan]

4. Does the Project reduce fossil fuel (coal, oil or natural gas) consumption directly or indirectly? Yes NoProposed sector/subsectors for carbon finance transaction that applies:

a. Power sector (specify)______b. Oil extraction, production and refiningc. Natural gas production, storage, transportation and distributiond. Coal mininge. Manufacturing industry (specify)____f. Municipal services (specify)

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g. Transport (specify)______h. Social sector (specify i.e., education, health)_____i. Agriculture (specify)_____j. Others: specify________

More specifically: Fossil fuel reduction could be achieved through improvement of the energy efficiency of a system or substitution of fossil fuel with another energy resource which does not release as much carbon dioxide or methane emissions; for example, replacement of fossil fuel with a renewable energy resource or replacement of coal or oil with natural gas.

For the power sector: Projects which qualify include: Energy efficiency improvements in generation, transmission, distribution

and end use applications; Rehabilitation of existing power plants of all types (thermal, hydro, etc.)

provided that the efficiency is improved and the additional energy generated replaces a more polluting source or reduces consumption of fossil fuel by the plant itself.

Use of cleaner fuels such as natural gas Renewable projects including hydro plants, biomass, wind etc.

Projects requiring further consultation: Cases where the storage of hydro projects is increasing due to the project;

under certain circumstances, increasing of hydro storage is not affecting adversely the ER potential, but if new storage is developed, more detail assessment is needed taking into account the potential for methane release from the flora being covered with water.

Project types that are ineligible: Nuclear power

For oil extraction, production and refining: Projects which qualify include: Introduction of more efficient technologies Reduction of gas flaring and use of associated gas Energy efficiency (demand-side management)/conservation.

For gas production, storage, transportation and distribution: Projects which qualify include:

Reduction of leaks in pipelines and compressor stations Reduction in energy used for transporting the gas (e.g., efficiency improvements and loss reduction) Energy efficiency (demand-side management)/conservation.

For mining: Projects which qualify include: Reduction and/or utilization of methane emissions (Coal-Mine Methane) Introduction of energy efficient technologies.

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For Municipal Services: Projects which qualify include: Improvement of efficiency of heat generation, transmission and use of heating Reduction or capture of methane from landfills, composting and wastewater treatment Improvement of energy efficiency of water supply and municipal services

Promotion of energy efficiency in public sector buildings, as well as the residential and commercial sectors.

For industry: Projects which qualify include: Improvement of the efficiency in chemical, petrochemical, metallurgical, cement, and pulp and paper plants Reduction in energy demand/conservation Elimination of N2O gas emissions.

For Transport Sector: Fuel savings could result from introduction of more efficient transport fleets (public transport, truck fleets) and/or traffic management;; rules of thumb to be used for CO2 emissions per road-kilometer:

750 tCO2 p.a. for a frequency of 5,000 car trips per day 3,000 tCO2 p.a. for 5,000 truck trips per day

If the answers to the above questions are affirmative, more detail assessment is needed including:

Determination of project additionality. Whether the applicable methodology is approved, which makes planning of the

project, as a carbon finance candidate, easier. Estimation of emission reductions.

The TTL may obtain support from the World Bank Carbon Finance Unit or the designated carbon finance support staff within ECA. A few general guidelines on the additionality and methodology follow:

Is the project additional (i.e. does it result in real emission reductions)?Additionality requires a detailed assessment but the following simple rules should be kept in mind:

The project could be economically and financially viable, but it should not be the least cost option or faces significant barriers to investment;

It is much easier to prove additionality before the project is approved than after. In case the project components which may generate emission reductions has commenced, carbon finance may be considered for enhancing the project or ensuring the implementation or sustainability of certain components.

Is the methodology used to determine the emission reductions approved?

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This is not an essential requirement, but if the methodology which applies to the project is already approved by the international body regulating the use of the CDM (i.e. the Executive Board) or if the method has been successfully used in a JI project (i.e. the project has been determined/validated), it is much easier to get verification and certification of the emission reductions; hence, it is easier to sign an agreement to sell the emission reductions. Approved CDM methodologies and progress on methodologies under review can be found on the UNFCCC website2. Additional information on the methodology itself is also provided on the World Bank’s methodology website: http://carbonfinance.org/Router.cfm?Page=Methodology&mt=List

2 http://cdm.unfccc.int/methodologies

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