Access to Energy for the Base of the - Ashoka

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Carbon credits is a challenging but significant funding opportunity
Clean energy finance offers great possibilities …
� Clean Development Mechanisms (CDM) credits –
called “Certified Emission Reduction” credits, can be
sold in global markets
� This provides a clean energy project with an
additional source of revenue
� The revenue might be significant – incremental IRR
of biogas projects is 25 - 60%
Typical IRR increase on CDM financed projects
%
IRR with
CDM revenue
IRR without
CDM revenue
* Experts interviews, various projects
Source: Hystra analysis; Alexandre Kossoy, World Bank Carbon Finance Unit, 2006; Quotes from Glenn S. Hodes , November 2007
CDM has also been credited with making viable
entire new classes of projects, such as Waste
Concern’s urban composting plant in Dhaka, which
will reduce 89,000 tCO2e. 20
-15
Carbon finance value chain
Revenue from
sales of carbon
credits
Source: Hystra analysis; interviews
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Figure 20 Explanation of carbon credits market
Global carbon markets
EcoSecurities aggregates credits
and sells on carbon markets
MicroEnergy Credits helps MFIs
start and certify clean energy
program
Microfinance Institution finances
customer purchase
Clean energy customers
…but implementation is a challenge
� Largest challenge is political uncertainty:
Copenhagen negotiations are one year away, and
current protocol expires in 2012
� High transaction cost: $70k - $110k upfront, not
smaller for smaller projects
� Time consuming process
� Hard to model: volatile prices over time, different
prices based on technology, type of contract, etc.
Figure 21 EcoSecurities / MicroEnergy Credits example
Carbon markets are still under construction, and have
been criticized for being difficult to access. Transaction
costs are high, it is a time consuming process, and the
price per ton fluctuates on the global markets, making it
Reduced
emissions due to
clean energy
purchase