Prospects of Carbon Financing in

Emission Reduction Businesses in

Bangladesh



Prepared for:
Dr. Abu Yousuf Md. Abdullah
Professor
Course Instructor: International Business
Course Code: L301




Prepared by:
Tanvir Ahmed Khan Tanu (ZR06)
Sakub Amin (ZR10)
Rifat Tareq (ZR20)
Hammad bin Nur (ZR49)



Institute of Business Administration (IBA)
University of Dhaka
January 21, 2013




21 January 2010

Dr. Abu Yousuf Md. Abdullah
Professor
Institute Of Business Administration
University Of Dhaka

Dear Sir,
Here we present the report Prospects of carbon financing in emission
reduction businesses in Bangladesh.

In this report we analyzed the potential of carbon financing as a source of
raising capital for Bangladeshi enterprises. We analyzed the complex
process of availing carbon financing in a manner easily understandable. We
also covered case studies of third world entrepreneurial ventures flourishing
with the help of carbon financing.

We believe our report will facilitate local entrepreneurs in understanding the
dynamics of the global carbon market. We believe it will also facilitate
entrepreneurs in exploiting this lucrative opportunity and thereby creating
social and economic value for Bangladesh.

We hope the report meets your expectation. We will be glad to answer any
query about the report.

Sincerely yours,
Tanvir Ahmed Khan Tanu (ZR06)
Sakub Amin (ZR10)
Rifat Tareq (ZR20)
Hammad bin Nur (ZR49)



1 INTRODUCTION
1.1 ORIGIN OF THE REPORT

The report on Prospects of Carbon Financing in Emission Reduction
Businesses in Bangladesh is done as a part of the International Business
course taken in the 6
th
semester of BBA program in IBA, University of
Dhaka.

1.2 OBJECTIVES

The broad objectives of this study are:
A. To provide an overview of the global carbon market.
B. To analyze the prospects of carbon financing in Bangladesh.
C. To develop step by step framework that Bangladeshi entrepreneurs
can follow to avail carbon financing.
D. To determine upfront costs and subsequent revenues of carbon
financing.
E. To illustrate success stories of carbon-financed entrepreneurial
ventures in third world countries.
F. To come up with viable business models that can avail carbon
financing.
G. To devise policy recommendations for facilitating carbon financing in
Bangladesh

Specific objectives linked to the broad objectives are detailed in tabular form
the following page:


Broad Objective Specific Objective
A. To provide an
overview of the global
carbon market
A1. Determine the size of the global carbon market.
A2. Determine the growth rate of the global carbon market.
A3. Determine the current market price of one carbon credit.
A4. Evaluate the state and trend of the carbon market.
A5. Provide brief regional highlights of carbon financing
around the globe.
A6. Identify the big players (third party organizations,
promoters, capacity builders) in the carbon market
A7. Identify the significant funds in the carbon market.
A8. Evaluate the future outlook for carbon finance.
B. To analyze the
prospects of carbon
financing in Bangladesh
B1. Identify the strengths of carbon finance in Bangladesh.
B2. Identify the weaknesses of carbon finance in Bangladesh.
B3. Identify the opportunities of carbon finance in Bangladesh.
B4. Identify the threats of carbon finance in Bangladesh.
C. To develop a step by
step framework that
Bangladeshi
entrepreneurs can
follow to avail carbon
financing.
C1. Describe the basic steps of accessing carbon finance.
C2. Describe alternative processes to apply for carbon finance.
C3. Develop decision criteria to determine the right markets
and standards of a project.
C4. Estimate the time required.
C5. Describe the different standards existing in the market.
C6. Describe the role of government and advise on getting
government approval.
D. To determine upfront
costs and subsequent
revenues of carbon
financing.
D1. Determine the upfront costs involved in gaining access to
carbon finance.
D2. Suggest a method of determining the possible revenue
from carbon finance.
D3. Evaluate the impact of carbon finance on investment plan
of a firm.
E. To illustrate success
stories of carbon-
financed entrepreneurial
ventures in third world
countries
E1: To present case studies of successful carbon-financed
ventures in Bangladesh.
E2. To present case studies of successful carbon-financed
ventures in other developing countries that are replicable in
Bangladesh.

F. To come up with
viable business models
that can avail carbon
financing
F1. Develop Waste to compost business model
F2. Develop Biogas plant business model
F3. Develop Solar energy business model
F4. Develop PET bottle Recycling business model
F5. Develop Plantation and reforestation business model
F6. Develop Rooftop gardening and Organic farming
business model
G. To devise policy
recommendations to
facilitate carbon
financing in Bangladesh
G1. Make policy recommendations for the government to
facilitate carbon financing in Bangladesh
G2. Make recommendations for NGOs to promote carbon
financing in Bangladesh
















1.3 DEFINITIONS OF KEY TERMS

Greenhouse gases (GHGs) are gases that absorb and emit infrared radiation
causing green house effect the heartening of the atmosphere. Emissions
of GHG arise from industrial activities and from the burning of fossil fuels
and biomass. GHG emissions need to be reduced in order to limit the
negative impacts of climate change. The most important of these so-called
greenhouse gases is CO2 often just called carbon which originates in
the combustion of fossil fuels or other organic matter.
Emission Reductions refer to a measurable, reportable and verifiable
reduction in the release of greenhouse gases into the atmosphere from a
specified activity or over a specified area, and a specified period of time.
Carbon financing is a financial instrument available to projects that reduce
greenhouse gas emissions by putting a price tag on carbon emissions so
that they become valuable and can be traded. Carbon finance refers to
investments in GHG emission reduction projects and the creation of
financial instruments that are tradable on the carbon market. Through
carbon financing, projects in developing countries can be eligible to receive
funding from industrialized countries or companies if those project reduces
GHG emissions. This process is regulated through special markets where
these emission reductions are traded.
Emission Trading, or Carbon Market is a market-based approach used to
control pollution by providing economic incentives for achieving reductions
in the emissions of pollutants. Through the establishment of carbon
markets, reduction in carbon emission becomes a tradable commodity.
A central authority sets a limit or cap on the amount of a pollutant that may
be emitted. The limit or cap is allocated or sold to firms in the form of
emissions permits which represent the right to emit or discharge a specific
volume of the specified pollutant. Firms are required to hold a number of
permits equivalent to their emissions. The total number of permits cannot
exceed the cap, limiting total emissions to that level. Firms that need to
increase their volume of emissions must buy carbon credits from those who
require fewer carbon credits or those who produce negative carbon credits.
In effect, the buyer is paying a charge for polluting, while the seller is being
rewarded for having reduced emissions. Thus, those who can reduce
emissions most cheaply will do so, achieving the pollution reduction at the
lowest cost to society
Annex I countries are Industrialized countries that has signed the Kyoto
protocol and has obligations under the treaty to meet certain specified
emission reduction targets.
Clean Development Mechanism (CDM) was established under the Kyoto
Protocol to allow emission reductions in developing countries to be used by
Annex I countries to meet their targets and to make compliance financially
more efficient.
Carbon credit is a generic term for any tradable certificate or permit
representing the right to emit one ton of carbon dioxide or the mass of
another greenhouse gas with a carbon dioxide equivalent (CO2e) of one
ton. Two carbon credit units exist in two different markets. One in the
Certified Emission Reductions (CERs) and another is the Voluntary
Emission Reductions (VERs)
Certified Emission Reductions (CERs) is basically carbon credits in the
CDM. It corresponds to the reduction of 1 ton CO2 through a CDM project
and it is the unit that these reductions are traded in.
Voluntary Emission Reductions (VERs) is a unit of greenhouse gas
emission reductions that has been verified by an independent auditor, but
that has not undergone the specific procedures of the CDM and might not
qualify under it. The ultimate buyers of VERs tend to be environmentally
conscious consumers or companies who want to offset their carbon
footprint.
The transfer of carbon credits or trading in CERs is referred to as a Carbon
Trading
1.4 RATIONALE

Lack of financing and capital support has long been a barrier to the
development and progress of the SME sectors in Bangladesh, stifling
economic growth. Entrepreneurs have very limited support offered by the
financial institutions and instruments.
The banking system is not financing friendly in that it has rigid collateral
requirements, a small base for loaning and rampant malpractice in loan
sanctions.
The stock market is far from an efficient one. The trust of small scale
investors in stock market has been historically low due to fishy trading
practices, insider trading and other malpractices.
Given the scenario, carbon financing can play an important role as an
alternative source of raising capital in environmentally friendly businesses.
It can significantly increase economic efficiency of firms in terms of return
on investment and may serve as the X factor which makes unfeasible
business ideas feasible. Finally, there are also environmental positives in
terms of emission reductions and reduction of energy and resource
wastages. The indirect impact of massive carbon financed projects in
Bangladesh may be enhanced country image and boost in tourism.
In short, carbon financing can be beneficial both economically and
environmentally in Bangladesh; provided local entrepreneurs can seize the
opportunity.
However, Bangladeshi entrepreneurs are not aware of the concept of carbon
finance, the basic criteria that will allow their projects to qualify for carbon
finance, the time it will take, and who they should contact for help.
This study aims to fill the void and to empower local entrepreneurs with the
understanding, knowledge base and real world examples needed to
capitalize on carbon financing opportunities.

1.5 METHODOLOGY

The study was exploratory in nature given no such research has been
carried out linking carbon financing and entrepreneurship in Bangladesh.
Even globally, papers advising entrepreneurs in exploiting carbon financing
opportunities have been low in number.
This study mainly employed qualitative research methods. Data collection
sources were predominantly secondary.
The prospects of Carbon financing has been analyzed in this study using
SWOT analysis.
SWOT analysis is a strategic planning method used to evaluate the
Strengths, Weaknesses, Opportunities, and Threats involved in a project or
in a business venture. It involves specifying the objective of the business
venture or project and identifying the internal and external factors that are
favorable and unfavorable to achieve that objective. The technique is
credited to Albert Humphrey, who led a convention at Stanford University in
the 1960s and 1970s using data from Fortune 500 companies.
1.6 SCOPES AND LIMITATIONS

This studys main focus is in helping entrepreneurs develop an
understanding of the carbon financing process and the opportunities
involved. Considerable effort has been given in simplifying the complex and
rigorous process of getting carbon-financed and coming up with easy-to-
understand, step by step framework for entrepreneurs.
Availability and reliability of data regarding carbon finance was a limiting
factor for this study. The study faced time constraints as it was done by
students of business school.


2 GLOBAL CARBON MARKET OVERVIEW
2.1 MARKET SIZE, TRANSACTION VOLUME AND GROWTH RATE

World Carbon Market has been expanding rapidly even amidst global
financial crisis. At the end of 2011, the global carbon market cap is at
US$176 billion (126 billion) with a new high transaction volume of 10.3
billion tons of carbon dioxide equivalent (CO2e). Year on year (yoy) Market
growth was 11 percent. (World Bank 2012)
Carbon markets were not immune to the economic volatility that took the
developed world by surprise. Compounded by increasing signs of long term
oversupply in the EU Emissions Trading Scheme (EU ETS) the backbone
of the EUs climate policy and the engine of the global carbon market, carbon
credit price plummeted.
Yet amid declining prices, value of the global carbon market climbed in
2011, driven predominantly by a robust increase in transaction volumes.
Central to the rise in global transaction volumes, EU Allowance (EUA)
trading volumes increased, reaching 7.9 billion tons of CO2e, valued at
US$148 billion (106 billion). (World Bank 2012)
Supported by increased liquidity in the Certified Emission Reduction (CER)
market and in nascent secondary Emission Reduction Unit (ERU) exchange-
based activity, trading volumes for secondary Kyoto off- sets also soared in
2011, increasing by 43% year on year to 1.8 billion tons of CO2e, valued at
US$23 billion (17 billion). (World Bank 2012)





Table 1: World Carbon Market (at a glance)


Allowances market




S





Spot & Secondary offset market

sCER 1,260 20,453 1,734 22,333
sERU 6 94 76 780
Others 10 90 12 137
Subtotal 1,275 20,637 1,822 23,250

Forward (primary) project-based transactions

pCER pre-2013 124 1,458 91 990
pCER post-2012 100 1,217 173 1,990
pERU 41 530 28 339
Voluntary market 69 414 87 569
Subtotal 334 3,620 378 3,889
TOTAL 8,772 159,191 10,281 176,020

Sources: World Bank, Forest Trends-Ecosystem Marketplace for data on the voluntary market and Thomson
data on the California offsets Subtotals and totals may not add up due to rounding








2010 2011
Volume
(MtCO
2
e)
Value
(US$
million)
Volume
(MtCO
2
e)
Value (US$
million)
EUA 6,789 133,598 7,853 147,848
AAU 62 626 47 318
RMU - - 4 12
NZU 7 101 27 351
RGGI 210 458 120 249
CCA - - 4 63
Others 94 151 26 40
Subtotal 7,162 134,935 8,081 148,881

2.2 CURRENT MARKET PRICE OF CARBON CREDIT (CO2E)
[
Current Market price has declined dramatically due to oversupply and
wrong predictions of high demand which didnt took place due to stagnating
economies in EU. In 30 August 2012, carbon credit price hit an all time low
of US$3 only.

Largely driven by hedging and arbitrage, trading volumes for all assets
increased as annual greenhouse gas (GHG) emissions in Europe declined
for the second time in three years (primarily driven by weak industrial activity
in the EU) and forecasts of compliance demand were dwarfed by the
oversupply of allowances. As compliance demand and prices deteriorated, the
issue of whether current carbon prices can sufficiently spur long-term low-
carbon investments emerged in the debate, surfacing a key challenge in
this market: an oversupply created as a consequence of demand responding
to the current macro-economic scenario versus a pre-established supply
determined under very different market conditions.
The value of the pre-2013 primary CER market declined once again in 2011
as a consequence of the imminent end of the first commitment period of the
Kyoto Protocol. Market value fell by 32% yoy to US$1.0 billion (0.7 billion).
Te size of the ERU and Assigned Amount Unit (AAU) markets also decreased,
by 36% and 49% respectively. In stark contrast to this, the post-2012
primary market increased by a robust 63% yoy to US$2 billion (1.4
billion) despite depressed prices. Although China remained the largest
source of contracted CERs, African countries - largely by-passed in the pre-
2013 market - emerged stronger in 2011 and accounted for 21% of post-
2012 CERs contracted during the year. Despite the increase in post-2012
volumes, purchase agreements became less binding due to lingering
uncertainties regarding residual compliance demand and the eligibility of
international credits in existing frameworks and schemes under
development.
2.3 CURRENT TRENDS OF CARBON MARKET

At the current growth rate, many estimates the carbon market is set to be
worth a Trillion US dollars inside the next 5 years (carboncreditpricechecke
n.d.). Two Trillion US dollars worth carbon market can be created overnight
with a presidential signature if America chooses to follow the EU (Curwin
2009)
Time is running out for carbon credit project developers in richer African
countries who want to sell credits to Europe. Last year, the European Union,
currently the world's biggest buyer, ruled it would only buy carbon credits
from least developed countries (LDCs) from 2013 onwards. (The Africa
Report 2012)
Projects have to meet strict criteria in order to be registered by the United
Nations Clean Development Mechanism (CDM), which issues tradable
carbon credits. In practice, much of the benefit goes to richer and larger
developing countries. Almost 80% of CDM projects are in India, Mexico,
China and Brazil. Africa makes up just 2.9% of the total and is home to 260
out of more than 4,000 projects. (The Africa Report 2012)
At a time when uncertainties surround the existing carbon markets, it
becomes more important than ever to take stock of the cumulative impact of
carbon market mechanisms. To date, US$28 billion worth of pre-2013
CERs have been contracted forward (US$30 billion, combined with ERUs);
if all underlying projects are implemented, these contracts will have
supported additional investments of more than US$130 billion in
developing countries

and confirm that project-based mechanisms have the
capacity to mobilize capital efficiently toward cost-effective low carbon
investments. More broadly, low carbon initiatives, including market
mechanisms, have broken the inertia and significantly raised awareness of
the climate challenge.
In this context, several domestic and regional low-carbon initiatives, including
market mechanisms, gained increasing traction in both developed and
developing economies in 2011 and early 2012. The global carbon market
welcomed the news in late 2011 that the Australian Parliament had passed
the ambitious Clean Energy Act, which will bring a nationwide cap-and-
trade scheme to Australia by 2015. The scheme is expected to cover roughly
60% of the countrys 600 million tons of CO2e per year.
In 2011, Californias cap-and-trade regulation was adopted by the California
Air Resources Board. Californias plan is set to go into effect in 2013; with a
coverage expansion planned for 2015, the plan is expected to cover 85% of
Californias annual emissions. Qubec, which emits 12% of Canadas
annual GHG emissions, adopted its own cap-and-trade plan, and the
province is now working toward linking it with Californias (within the
context of the Western Climate Initiative) starting in 2013. In addition, both
Mexico and the Republic of Korea got their comprehensive climate bills
passed a few days apart in April 2012. These initiatives combined mean
five new jurisdictions are adopting economy-wide cap-and-trade schemes.
These events are particularly noteworthy in contrast to 2010, when no such
initiatives were launched. Now the world looks with particular attention to
China, which is also among the frontrunners in the race to be-come a low-
carbon economy. Its advanced plan to pilot several regional cap-and-trade
schemes is expected to provide the foundation for a nationwide scheme in the
coming years.
2.4 REGIONAL HIGHLIGHTS OF CARBON FINANCE
2.4.1 AFRICA

Africa continues to have a very strong interest in carbon finance as a tool of
sustainable development in key sectors, such as forestry, agriculture,
energy, and waste management. Nonetheless, challenges for carbon finance
across the region remain significant because of the unpredictable
investment climate present in many African countries and lack of capacity
in some African public sector institutions. Moreover, many of the Kyoto
Protocols CDM methodologies and documentation requirements are often
geared towards middle income countries, and towards countries, for
example, which do not have hydropower as a baseline energy source. The
CDM also does not adequately address the heavy use of nonrenewable
biomass for energy and lacks methodologies for regional grid integration,
which could be used for projects underway in West, Southern, and East
Africa. However, the increasing prominence of forests, as outlined under
REDD-plus at the Copenhagen Summit, may stimulate Africas demand for
carbon finance in the coming years. In 2009, the World Bank signed three
emission reduction purchase agreements in the region one in waste
management (Uganda), one in lighting efficiency (Rwanda), and one in the
forestry sector (Democratic Republic of Congo). The aggregated volume of
emission reductions of these three projects is about 445,000 tons of CO2e,
which clearly demonstrates that individual carbon transactions in Africa are
small relative to other regions, and hence often difficult to develop. The year
also saw the termination of two emission reduction purchase agreements in
the region, as the underlying projects could not be further developed
because of methodology issues. (World Bank 2009)
2.4.2 SOUTH ASIA

Carbon finance has proven to be a boon for small businesses in the South
Asia region. With nearly 3 million small and medium size enterprises
accounting for more than 80 percent of total industrial operations as well as
60 percent of gross domestic product, energy costs represent a large portion
of total production costs. The World Banks carbon finance work in the
region has covered 23 projects across 12 sectors in Bangladesh, India,
Nepal, and Pakistan. In 2009, the World Bank Carbon Finance Unit signed
eight emission reduction purchase agreements in the region, including
projects in Bangladesh, Pakistan, and India. At the end of 2009, the region
had 10 projects in the pipeline. Two projects in the SAR portfolio, both
located in Bangladesh, in particular received a lot of attention. In December,
US Senator John Kerry in an address to World Bank staff on the role of the
institution in the twenty-first century, highlighted the Bangladesh Solar
Home System Program as an excellent example of the type of project the
World Bank should support. He noted that this was a life-altering project
for many inhabitants. The program is expected to deliver over 1 million solar
home systems by 2012. The second highlight from the region is the selection
by the Danish government to purchase emission reductions from the Hybrid
Hoffman Kiln project, for the purpose of making the COP 15 conference
carbon neutral. As Denmarks Climate Change Minister, Connie Hedegaard,
said Bangladesh is one of the countries hardest hit by climate change and
theres a great need to assist the country with technology and capital
contributions. In addition, the project will result in significant
environmental improvements for the local community, where particle
pollution from the existing old brickworks is clearly visible. This
underscores the importance of ensuring that least developed countries,
especially those which may be most affected by climate change, are able to
participate in the Clean Development Mechanism. (World Bank 2009)
2.4.3 EAST ASIA AND PACIFIC

The World Banks work in carbon finance continues to grow rapidly in East
Asia and the Pacific driven largely by the regions ability to adopt new
technologies rapidly and secure project financing under the Kyoto Protocols
CDM methodology. Since its inception, the Carbon Finance Unit has played
a very active role, with 47 projects across the region. This has included work
in China, with the majority of the projects, as well as Indonesia, Malaysia,
the Philippines, Thailand, and Vietnam. In 2009, the World Bank Carbon
Finance Unit signed five emission reduction purchase agreements in the
region, with a total volume of 2.015 million tCO2e, including one
reforestation project in China and three wastewater management projects in
the Philippines and Thailand. At the close of 2009, the region had 11
projects in pipeline in the areas of renewable power generation, energy
distribution, methane avoidance, and wind. (World Bank 2009)
2.4.4 EUROPE AND CENTRAL ASIA

In 2009, the World Bank signed an amended emission reduction purchase
agreement with Alchevsk Steel Mill in the Ukraine to reduce emissions by an
additional total of 1.3 million tCO2e by replacing open hearth furnaces with
basic oxygen furnaces and using continuously casting machines, initiatives
that promote energy efficiency. The World Bank has implemented carbon
finance projects in 11 countries across the East Europe and Central Asia.
This work has focused on improving energy efficiency in district heating
steel and coke production utilization of biomass and geothermal sources for
production of heat and electricity utilization of wind, water, landfill gas and
associated petroleum gas for electricity production; and sequestration of
carbon in soil and standing trees. Moving forward, the region has seven
projects in the pipeline in the areas of energy efficiency for households,
reforestation, and reduction of fugitive gas releases. Some of the new
projects will be based on a Green Investment Scheme-approach in the area
of energy efficiency. (World Bank 2009)

2.4.5 MIDDLE EAST AND NORTH AFRICA

In the Middle East and North Africa, the World Bank currently has carbon
finance projects operating in Egypt, Tunisia, and Jordan. During 2009, the
region made significant progress on the preparation of three new projects
that will reduce greenhouse gas emissions: the Tunisia Sidi Daoud Wind
Farm Project, the Egypt Vehicle Scrapping and Recycling Program, and the
Yemen Electricity Distribution Loss Reduction Program. These pipeline
projects show an important expansion of the regions current technology
distribution into areas of energy efficiency, renewable energy, and transport.
In 2009, the Middle East and North Africa region also went beyond the
project by-project approach of the first generation of carbon funds, and
developed programmatic approaches to assist developing countries to
pursue low-carbon growth and to accelerate greenhouse gas emission
reductions. On October 4, 2009, the first Carbon Partnership Facility Seller
Participation Agreement was signed between the World Bank and Fonds
dEquipement Communal, the municipal bank of Morocco. The program is
expected to cover 11 major Moroccan cities and to reduce greenhouse gas
emissions by over 7 million tons of CO2e over a 10-year period. (World Bank
2009)
2.4.6 LATIN AMERICA AND THE CARIBBEAN

Since 1999, the World Bank has worked on the implementation of 53 carbon
finance projects in 15 countries across the region of Latin America and the
Caribbean. This work has focused on improving the efficiency of industries,
such as iron and steel, energy generation, and waste management, and
reforestation. In 2009, the World Bank signed the first emission reduction
purchase agreement with Trinidad and Tobago to reduce emissions through
the restoration of the Nariva wetlands, and the Banks new Carbon
Partnership Facility signed a Seller Participation Agreement with Caixa
Econmica Federal in Brazil to develop Programs of Activities in the area of
landfills across Brazil. By the end of 2009, the region had 18 projects in the
pipeline, in the areas of afforestation, biomass energy, household electric
efficiency, hydroelectric generation, reforestation, reduction of fugitive gas
releases, transport, and wind generation.
2.5 SIGNIFICANT FUNDS IN THE CARBON MARKET
World Bank Carbon Finance Fund is an important player in the carbon
market. World Bank started Carbon Finance Fund in 1999, with the
Prototype Carbon Fund, capitalized at $180 million of investible resources,
and it now manages a robust suite of ten carbon funds and facilities with a
total capitalization of $2.5 billion, involving 16 governments and 66 private
companies in the Kyoto Funds and 51 governments and organizations in
the Forest Carbon Partnership Facility.
The ten carbon funds are:
Fund Name Capital
Prototype Carbon Fund (PCF) 219.8 ($ Million)
Community Development Carbon Fund (CDCF) 128.6 ($ Million)
Bio Carbon Fund (BIOCF) 53.8 ($ Million)
Netherlands Clean Development
Mechanism Facility (NCDMF)
__
Netherlands European Carbon Facility (NECF) __
Italian Carbon Fund (ICF)
Danish Carbon Fund (DCF) 90 ( Million)
Spanish Carbon Fund (SCF) 220 ( Million)
Umbrella Carbon Facility (UCF) 799.1( Million)
Carbon Fund For Europe (CFE) 50 ( Million)
Forest Carbon Partnership Facility (FCPF) 168.5 ( Million)
Source: World Bank




2.6 FUTURE OUTLOOK FOR CARBON FINANCE
The first commitment period of the Kyoto Protocol, which is the international
treaty that governs the emission reduction targets of countries and also the
Clean Development Mechanism (CDM) expired in 2012 and new targets are
currently being negotiated. At present, there is significant uncertainty about
the shape of any agreement or the size of the targets that will take effect
from 2012 onwards, and whether countries will choose to reform the CDM.
However, the EU is committed to accept CDM credits at least until 2018 in
their Emissions Trading Scheme (EU ETS), whose firms are a major buyer,
but considerable uncertainty remains. Current initiatives aim to increase
the share of projects coming from Least Developed Countries. In general, the
demand for CERs or VERs is difficult to predict, which has significant
implications for a carbon project developer. Since there is uncertainty, many
sovereign buyers are now willing to make contracts for post 2012 deliveries.
Many brokers will buy credits for the period after 2012 at their own risk and
hope that they will be able to sell them. Although the Voluntary Market
provided faster approval processes, demand is hard to predict and with
aviation coming under the EU ETS, at least some demand will be transferred
into the CDM from 2012 onwards. Nevertheless, Gold Standard credits are
highly sought after and unlikely to disappear soon.
3 PROSPECT ANALYSIS OF CARBON FINANCE IN BANGLADESH
3.1 STRENGTHS
3.2 WEAKNESSES
3.3 OPPORTUNITIES
3.4 THREATS

4 FRAMEWORK FOR EXPLOITING CARBON FINANCE
OPPORTUNITIES
4.1 STEPS OF ACCESSING CARBON FINANCE
4.2 PROCESS ALTERNATIVES OF CARBON FINANCE
4.3 STANDARD ALTERNATIVES OF CARBON FINANCE
4.4 DECISION CRITERIA TO DETERMINE THE RIGHT MARKET, PROCESS
AND STANDARD
4.5 TIME ESTIMATION FOR GETTING CARBON FINANCE
4.6 ROLE OF GOVERNMENT IN CARBON FINANCE
5 UPFRONT COSTS AND SUBSEQUENT REVENUES OF CARBON
FINANCE
5.1 UPFRONT COSTS OF CARBON FINANCE
5.2 REVENUE DETERMINATION METHOD FOR CARBON FINANCE
5.3 IMPACT OF CARBON FINANCE ON BUSINESS PLAN OF A FIRM
6 SUCCESS STORY OF CARBON-FINANCED FIRMS
6.1 GRAMEENSHAKTI INSTALLS SOLAR HOME SYSTEMS IN BANGLADESH
6.2 IDCOL INSTALLS SOLAR HOME SYSTEMS IN BANGLADESH
6.3 HHK IMPROVES KILN EFFICIENCY IN BANGLADESH
6.4 ELIB PROGRAM MAKES INCANDESCENT LAMPS IN BANGLADESH
6.5 NICARAGUA PRECIOUS WOOD PROJECT IN NICARAGUA
6.6 BIOGAS PROGRAM IN NEPAL
6.7 AEL STREET LIGHTING ENERGY EFFICIENCY PROJECT IN INDIA
6.8 HIMACHAL PRADESH REFORESTATION PROJECT IN INDIA
6.9 PLANTER GROUP SEQUESTRATION & BIOMASS PROJECT IN BRAZIL
7 VIABLE CARBON PROJECT MODELS IN BANGLADESH
7.1 WASTE TO COMPOST
7.2 BIOGAS
7.3 SOLAR ENERGY
7.4 PET RECYCLING
7.5 PLANTATION
7.6 ORGANIC FARMING
8 RECOMMENDATIONS
8.1 RECOMMENDATIONS FOR GOVERNMENT
8.2 RECOMMENDATIONS FOR NGOS
9 CONCLUSION
Initiatives that attract competitive private sector participation are essential
to identifying and implementing least-cost solutions for climate change
mitigation and adaptation, and market-based mechanisms can catalyze
such participation. However, the allocation of private capital toward the
deployment of new low-carbon technologies at scale has been constrained by
the low price prevailing in the short term and the absence of a price signal
in the long term, and compounded by nervous financial markets that favor
exposure to less risky assets and markets. More
ambitious targets are needed from a larger number of countries to foster
demand that can set the groundwork for a truly transformational carbon
market - one that can emerge from fragmented but workable market
initiatives. The challenge then will be to chart a course to further evolve
these initiatives through linking and potentially reshaping the global
carbon map.
10 REFERENCES