Transfer of Environmentally Sound Technologies

7/29/2019 Transfer of Environmentally Sound Technologies

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TRANSFER OF

ENVIRONMENTALLYSOUND TEchNOLOgIESCASE STudiES FROm THE GEF ClimATE CHANGE PORTFOliO


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Foreword


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1TRANSFER OF ENVIRONMENTALLY SOUND TECHNOLOGIES

Dr. Naoko Ishii,CEO and Chairperson

Global Environment Facility

The Global Environment Facility (GEF) suppor ts technology transer to help

developing and transition countries address global environmental challenges.

The GEF is a leading public unding source or the transer o environmentally

sound technologies (ESTs) to address climate change, having supported

technology transer activities in 168 developing and transition countries. Our

current project portolio, upon completion, is expected to mitigate more than 2

billion tonnes o carbon dioxide equivalent (CO2 eq) emissions directly and about

7 billion tonnes o CO2 eq emissions indirectly. That totalabout 9 billion

tonnesequals more than twice the amount o total CO2 eq emitted annually by

the European Union in the recent years.

These GEF-supported eorts have generated a wealth o knowledge and lessons

learned on technology transer, setting the stage or these proven ideas to be

adopted on a much wider scale. The GEF is well equipped and ready to pursue this

eort in technology transer and to expand its reach. Our aim is to work with our

partners to develop innovative approaches with transormative impacts to address

climate change challenges. To inspire such innovation, it is vital to share our

experiences in supporting ESTs that have proven to be successul and sustainable.

This brochure is part o a series o products and activities developed under the

Poznan Strategic Program on Technology Transer, established in 2008 under the

guidance o the Conerence o the Parties to the United Nations Framework

Convention on Climate Change. The GEFs Poznan Program supports technology

transer through three unding windows designed to: (i) Conduct technology needs

assessments; (ii) Support pilot priority technology projects linked to technology

needs assessments; and ( iii) Disseminate GEF experience and successully

demonstrated ESTs. The objective o the Poznan Strategic Program is to scale up

investment in technology transer to help developing and transition countries

address their needs or ESTs, and to enhance technology transer activities under the

Convention. The Poznan Strategic Program was broadened by the Long-Term

Program on Technology Transer, which was submitted to the Cancun climate change

conerence in 2010 in response to the original guidance rom the 2008 Conerence.

We are pleased to share lessons learned rom key technologies and mechanisms

that the GEF has supported to date, encompassing renewable energy, energy

eciency, sustainable transport, and innovative nancing. Case studies on uel cell

buses, concentrating solar power, and wind energy are examples o how GEF

support spurs innovation in developing and transition countries. The brick-making

program highlights how energy eciency can be improved drastically, and bescaled up through South-South technology transer. The innovative nancing case

study illustrates the merits o nancial instruments in promoting investments or

technology transer.

I hope that this brochure will help to raise a deeper awareness o our eorts to

catalyze technology transer, and to inspire the readers to scale up eorts to

address climate change challenges in partnership with the GEF.


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2 The Global environmenT FaciliTy

Evolution o gEFPoliies and Approato Tenoloy Transer

Biomass is biological material, including wood, crops, as

well as wastes such as agricultural and orest residues,

that can be used to generate electricity or produce heat.

Introduction

Technology transer plays an increasingly critical role inthe global response to the challenges o climate change

and o the global environment. The transer o environ-

mentally sound technologies (ESTs) is embodied in the

very abric o the United Nations Framework Convention

on Climate Change (UNFCCC).1 This has been urther

emphasized with the establishment2 and operationaliza-

tion3 o a Technology Mechanism.

Since the First Session o the UNFCCC Conerence o

Parties (COP) Berlin, Germany, 1995, the Global

Environment Facility (GEF) has served as an operating

entity o the nancial mechanism o the Convention. It has

responded to guidance by the COP, many addressing thenancing o ESTs. To improve its eectiveness in response

to changing needs, COP guidance, and unding levels, the

GEF has regularly examined and modied its approach to

technology transer support.

The objective o this brochure is to present the lessons

learned through ESTs supported by the GEF, encompass-

ing the areas o renewable energy, energy eciency, sus-

tainable transport, and innovative nancing.

1 Article 4.5 o the Convention states: The developed country Parties

and other developed Parties included in Annex II shall take allpracticable steps to promote, acilitate and inance, as appropriate, thetranser o, or access to, ESTs and know-how to other Parties,particularly developing country Parties, to enable them to implementthe provisions o the Convention.

2 At the sixteenth session o the Conerence o the Parties (COP 16) tothe UNFCCC in December 2010, Parties agreed to establish aTechnology Mechanism, consisting o a Technology ExecutiveCommittee and a Climate Technology Centre and Network (CTCN)with their respective unctions by its decision 1/CP.16.

3 At the seventeenth COP in December 2011, Parties agreed to launchthe selection process or the host o the Climate Technology Centre, inorder to make the Technology Mechanism ully operational in 2012.


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BOX A TechnOlOgy TrAnsferDefiniTiOn

While there several many denitions o technology transer,

the GEF has adopted the concept o technology transer as

dened by the Intergovernmental Panel on Climate Change

(IPCC) and embodied in the UNFCCC technology transer rame-

work. Technology transer is dened as:

a broad set o processes covering the fows o know-

how, experience and equipment or mitigating and adapting

to climate change amongst dierent stakeholders such as

governments, private sector entities, nancial institutions,

non-governmental organization (NGOs) and research/edu-

cation institutions

the broad and inclusive term transer encompasses

diusion o technologies and technology cooperation

across and within countries. It covers technology transer

processes between developed countries, developing coun-

tries and countries with economies in transition, amongst

developed countries, amongst developing countries, and

amongst countries with economies in transition. It com-

prises the process o learning to understand, utilize and

replicate the technology, including the capacity to chooseand adapt to local conditions and integrate it with indig-

enous technologies.

This denition includes a wide range o ac tivities and

extends to a broad array o instit utions. The Expert Group on

Technology Transer (EGTT) established by the COP under t he

Subsidiary Body or Scientic and Technological Advice

(SBSTA)*, which dened the ollowing ve-part ramework or

meaningul and eective actions to enhance the implementa-

tion o technology transer: technology needs and needs

assessments; technology inormation; enabling environment;

capacity building; and mechanisms or te chnology transer.

GEF Pilot Phase (19911994)to GEF-14 (19941998)

During the GEFs pilot phase rom 1991 to 1994, projects

primarily aimed to demonstrate diverse technologies

that would be useul in stabilizing the concentrations o

greenhouse gases (GHGs) in the atmosphere. Ater the

restructuring o GEF in 1994, the GEF Council approved

a broad operational strategy and a specic climate

change strategy to support sustainable measures that

minimize climate change damage by reducing the risk, or

the adverse eects, o climate change. The strategyalso stated that the GEF will nance agreed [upon] and

eligible enabling mitigation and adaptation activities in

eligible recipient countries (GEF 1995).

The operational strategy identied three long-term oper-

ational programs to support climate change mitigation

and another program or cost-eective short-term

response measures Shor t-Term Response Measures

(STRMs).5 The long-term programs acilitated technology

transer through support or less cost-eective interven-

tions and by distinguishing among technologies on the

basis o their maturity and commercial availability. All o

the programmatic long-term approaches and short-termprojects promoted mitigation through the use o com-

mercialized or nearly commercialized technologies that

were not yet widely disseminated in developing coun-

tries and transition economies.

GEF-2 (19982002)to GEF-3 (20022007)

Subsequent GEF operational programs addressed tech-

nology transer through energy eciency and renewable

energy technologies that were mature, available in inter-

national markets, and protable, yet aced human, insti-tutional, technological, policy, or nancial barriers to

dissemination. These projects were termed barrier

4 GEF-1 is the irst replenishment period o the GEF ollowing its PilotPhase. The subsequent replenishment periods o our years eachare GEF-2 to GEF-5.

5 Short-term projects are considered extremely cost-eective, with aunit abatement cost o less than US$10/tonne o carbon avoided, orroughly $2.7/tonne o carbon dioxide equivalent (CO2 eq) avoided.

* See http://unfccc.int/essential_background/convention/convention_bodies/constituted_bodies/items/2581.php.


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removal projects, as they sought to remove such barriers

to accelerate adoption o new technologies

and practices.

Another operational program ocused on reducing the

long-term costs o low GHGs emitting electricity gener-

ating technologies. The technologies included in this

program (e.g., concentrating solar power (CSP) plants,

biomass-integrated combined-cycle generation, station-

ary uel cells, and microturbines) were not yet commer-

cially available at the time and were very expensive

relative to the baseline or conventional alternatives. In

these cases, signicant incremental costs remained. Thetechnology costs themselves ormed the barrier to

greater dissemination and transer.

In 2004, with the benet o several years o implementa-

tion and monitoring experience, the GEFs operational

strategy or removing barriers to renewable energy and

energy eciency technologies was judged successul

but in need o codication. Accordingly, ve key poten-

tial barriers to more ecient, market-driven

dissemination o technologies in developing countries

and transition economies were identied as ollows:

n Policy rameworks:Governments should osterpolicies avorable to ESTs adoption;

n Technology: Options should be robust andoperational;

n Awareness and inormation: National stakehold-ers, especially market participants, must be aware o

the technology and have inormation on its costs,

uses, and markets;

n Business and delivery models: Market-basedapproaches are preerred; businesses and institu-

tions must be in place that can deliver to and servicethose markets; and

n Availability o fnancing: Financing mustbe available or technology dissemination, though

it is insucient in itsel to ensure uptake o ESTs.

GEF-4 (20072010) and PoznanStrategic Program onTechnology Transer

As part o the GEF-4 replenishment process, the climate

change mitigation strategy was revised to ocus primarily

on six strategic objectives, each with important technol-

ogy transer elements:

n Energy eciency in buildings and appliances

n Industrial energy eciency

n Market-based approaches or renewable energy

n Sustainable energy production rom biomass

n Sustainable innovative systems or urban transport

n Management o land use, land use, land-use change,

and orestry (LULUCF) as a means to protect carbon

stocks and reduce GHG emissions.

The GEF experiences leading up to GEF-4 had gener-

ated the ollowing observations about technology trans-

er to inorm subsequent programming:

n Technology is transerred primarily through markets,

and barriers to the ecient operation o those mar-

kets must be removed systematically;

n Technology transer is not a single event or activity

but a long-term engagement, during which partner-

ships and cooperation, oten requiring time to

develop and mature, are mandatory or the success-

ul development, transer, and dissemination o tech-

nologies; and

n Technology transer requires a comprehensiveapproach, incorporating capacity building at all rel-

evant levels.


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These observations provided important insights or the

Poznan Strategic Program on Technology Transfer, which

was developed in response to the 13th COP to the

UNFCCC (Decision 4/CP.13), which requested the GEF to

elaborate a strategic program or scaling up investment

in technology transer to help developing countries

address their needs or ESTs. The 14th COP welcomed

the GEFs program in its Decision 2/CP.14. The PoznanStrategic Program on Technology Transer established

the ollowing three windows within the GEF in support o

technology transer:

n Conduct Technology Needs Assessments (TNAs)

n Pilot priority technology projects linked to TNAs

n Disseminate GEF experience and successully dem-

onstrated ESTs

During GEF-4, the Poznan Strategic Program was pro-vided US$50 million, including $35 million rom the GEF

Trust Fund, and $15 million rom the GEF Special Climate

Change Fund (SCCF).

Sae maintenance o hydrou-

orocarbon-ree energy efcient

cooling system in the Russian

Federation as part o the Poznan

Strategic Program on Technology

Transferpilot project, imple-

mented by the United NationsIndustrial Development Organia-

tion (UNIDO).


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GEF-5 (20102014)

Under GEF-5, the unding pledge or climate change miti-

gation expanded to approximately $1.4 billion, and the

climate change strategy increases the priority o technol-

ogy transer in all elements o the portolio.

Development o the climate change ocal area strategy

or GEF-5 drew on past experience and was guided by

three principles:

n Responsiveness to Convention guidance;

n Consideration o national circumstances o recipientcountries; and

n Cost-eectiveness in achieving global

environmental benets.

The GEF-5 endeavors to make a transormative impact in

helping GEF-recipient countries move to a low-carbon devel-

opment path through market transormation and investment

in environmentally sound climate-riendly technologies.

The climate change portolio in GEF-5 will continue to

support the technology transer ramework outlined by

the COP through six key objectives:

n Promote the demonstration, deployment, and trans-

er o innovative low-carbon technologies;

n Promote market transormation or energy eciency

in the industrial and building sectors;

n Promote investment in renewable energy

technologies;

n Promote energy-ecient low-carbon transport and

urban systems

n Promote conservation and enhancement o carbon

stocks through sustainable management o LULUCF;

and

n Support enabling activities and capacity building.

The rst objective ocuses on innovative technologies at

the stage o market demonstration or commercialization

where technology push is still critical. The second to th

objectives ocus on technologies that are commercially

available in the country but ace barriers and require

market pull to achieve widespread adoption and diu-

sion. The last objective supports enabling activities and

capacity building under the UNFCCC that can be critical

to successul technology transer.

The GEF submitted in December 2010 a Long-Term

Program on Technology Transer to the COP 16 Cancun,

Mexico, in response to COP decision 2/CP.14. The GEF

submission included the ollowing elements to urtherscale up investment in ESTs in developing countries in

accordance with the GEF-5 climate change strategy, and

to enhance technology transer activities under the

Convention:

n Support or Climate Technology Centers and a

Climate Technology Network;

n Piloting Priority Technology Projects to Foster

Innovation and Investments;

n Public-Private Partnerships (PPPs) or Technology

Transer;

n Technology Needs Assessments (TNA); and

n GEF as a Catalytic Supporting Institution or

Technology Transer.

The GEF embedded these elements in its GEF-5 strategy.

In summary, the GEF climate change investments have

promoted technology transer at all stages o the tech-

nology development cycle, rom demonstration o inno-

vative emerging low-carbon technologies to diusion o

commercially proven ESTs and practices. The GEF-5investments will continue this comprehensive approach.


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CFEs (Comison Federal de Electricidad) La Venta II Wind Farm in

Oaxaca, Mexico.

Featured EST Case Studies

The GEF technology transer investments have gener-

ated not only signicant emissions reductions, but a

body o knowledge and lessons learned that are inorm-

ing todays technology transer activities. This publica-

tion eatures some o the key EST supported by the GEF

to date, encompassing the areas o renewable energy,

energy eciency, sustainable transport, and innovative

nancing. The case studies include the ollowing:

n Concentrating solar power (CSP)

n Energy ecient kilns or brick making

n Wind power

n Fuel cell bus (FCB)

n Innovative nancing or energy eciency

The case studies provide background inormation,

project description, technology description, as well as

results and outcomes. The common eatures o success-

ul EST transer projects are identied to inorm uture

projects in the last section o the publication.


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conentratin Solar Powerin Eypt

Parabolic troughs consist o a reector that ollows the sun along a

single axis and concentrates light onto a tube flled with a working

uid, which is chosen or its thermal management properties. The

uid is heated to 150400C and ows to a heat exchanger where it

is used to make steam and drive a power generation cycle.

Introduction

The CSP technologies use renewable solar resources to

generate electricity. In locations with abundant solarenergy, generally clear skies, and access to high voltage

transmission lines, CSP, with their capacity or heat stor-

age, can provide reliable electricity that can be dis-

patched when needed.

These technologies are proven and commercially avail-

able in advanced economies such as the United States

and Spain. The GEF CSP projects have played an impor-

tant role in demonstrating the viability o CSP technolo-

gies in developing countries and supporting better

understanding o costs, benets, and riskskey ele-

ments or successul technology transer.

In 1996, the GEFs Scientic and Technical Advisory Panel

recommended CSP projects due to the technologys readi-

ness, potential or continuing cost reductions, and possibili-

ties or large-scale and cost eective baseload power

applications in countries with high levels o solar radiation

and growing demand or electricity. Since then, the GEF

has supported CSP projects in our countries:


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n Integrated Solar Combined Cycle System Project in

Al Kuraymat, Egypt, with the World Bank;

n Hybrid Solar Power Plant in Agua Prieta, Mexico, with

the World Bank;

n Integrated Solar Combined Cycle System Project in

Ain Beni Matar, Morocco, with the World Bank; and

n Concentrating Solar Power or Electricity Generation

in Namibia, with the United Nations Development

Programme (UNDP).

The GEF investment in these projects totals about$144 million and they involve approximately $314 million

in co-nancing. These projects were an important com-

ponent o the GEFs portolio o renewable energy proj-

ects and when completed will deliver substantial carbon

ree electric capacity in the host countries.

The technology transer aspects o the GEFs CSP projects

have each ollowed a deliberative path as developers, sup-

pliers, power companies, lenders, and government agen-

cies have learned about the costs, benets, and risks o CSP

technology. The projects also addressed key technology,

market, and policy barriers to greater CSP use. The projects

are supporting hybrid or integrated systems approacheswhich combine solar technologies with conventional ossil

uel power generation, although the technology or the

Namibia CSP project has not yet been selected.

Technology Description

The CSP plants produce electricity by using the solar

radiation to heat a working fuid to make steam that then

drive engines or turbines or electric power generation.

The CSP currently uses our dierent types o solar tech-

nologies or making heat: parabolic troughs (as at AlKuraymat), Stirling engine dishes, linear Fresnel refec-

tors, and power towers. Each o these approaches can

produce high temperature thermal energy.

Parabolic troughs consist o a refector that ollows the

sun along a single axis and concentrates light onto a

tube lled with a working fuid, which is chosen or its

thermal management properties. The fuid is heated to

150400C and fows to a heat exchanger where it is

used to make steam and drive a power generation cycle.

The integrated solar combined cycleblending CSP

with conventional power generation technologiesis

one o the most cost eective CSP designs and is condu-

cive to technology transer. This approach oers the abil-

ity to dispatch power even when the sun is not available

and without need o thermal storage, thus enabling

operation as baseload power generation.

Integrated solar combined cycle power plants using par-

abolic troughs have reached commercial readiness and

can produce electricity at costs o $ 0.20/kilowatt hour

(kWh) or less, depending on the size and location o the

project, and the availability o nancial incentives.

According to the United States National Renewable

Energy Laboratory, there are 53 CSP power plant proj-

ects worldwide at various stages o construction that

use parabolic trough technologies.5 Most o these

involve Steam Rankine Cycle systems. Only a ew involve

integrated solar combined cycle systems, which havenot been demonstrated to the same extent as other

CSP plants (World Bank 2006) . This lack o experience

with integrated solar combined cycle systems poses

risks or potential users in selecting among design

options or both the solar and ossil energy contribu-

tions, and or the role o thermal storage in the opera-

tion, cost, and overall energy eciency o the projects.

There are also questions about business models or

project development and about the relative merits o

having a turnkey supplier or the whole project versus

separate suppliers or the solar and ossil energy sys-

tems, subsystems, and components.

5 A list o these projects can be ound at http://www.nrel.gov/csp/solarpaces/parabolic_trough.cm.


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Project Description

Initial planning and easibility studies or the application

o CSP in Egypt began more than ten years ago and led

to the eventual selection o the Al Kuraymat site or the

ollowing reasons:

n Proximity to a major load center (about 90 km south

o Cairo);

n High level o solar radiation and a fat terrain;

n Nearby availability o water and natural gas; and

n Access to the electric transmission system at 550,

200, and 66 kilovolts (kV).

The Al Kuraymat project was carried out by the New and

Renewable Energy Authority (NREA) in Egypt and

includes conancing rom the Japan Bank or

International Cooperation.

The project includes two parts: a combined cycle island

(natural gas turbines) and a solar island. Contractors were

competitively selected through a request or proposals.

The contract or the combined cycle island went to

Iberdrola Ingeniera y Construccin; the solar island con-tract went to ORASCOM Construction Industries.

Construction began in 2008 and was completed in 2011.

The project has reached its objective and the power plant

is now operational. The project has an overall capacity o

about 126 megawatt (MW), with a solar contribution o

about 20 MW. In this project, the solar energy partially

substitutes or ossil uels, thus reducing GHG emissions. 6

The solar island at Al Kuraymat consists o a parabolic

trough solar eld with a total area o about 130,800 m2 that

is expected to deliver thermal energy at a temperature o

about 390oc. The combined cycle island consists o a 74

MW gas turbine, a 59 MW electric heat recovery steamgenerator, and a solar heat exchanger. The Al Kuraymat

project does not use thermal storage and has separate

suppliers or the solar and ossil portions o the project.

The objectives o the project are to:

n Demonstrate the cost eective generation o

at least 20 MW o CSP generation rom the inte-

grated solar combined cycle plant and realize associ-

ated reductions in GHG emissions;

n Demonstrate the successul integration o

a CSP plant in the Egyptian electric grid and the

delivery o the power to Egyptian load centers;

n Demonstrate successul project management and

engineering process or replication in other locationsin Egypt and elsewhere; and

n Develop CSP expertise and position Egypt as a solar

energy developer or technology transer projects

internationally (GEF 2012c).

Results and Outcomes

The expected benets o the Al Kuraymat project over a

conventional natural gas combined cycle system include

increased renewable electricity production o about

80-85 gigawatt hours (GWh) per year and reducedcarbon emissions o about 149,975 tonnes over the lie o

the project (GEF 2012c).

The technology transer challenge or integrated solar

combined cycle systems depends on a variety o actors,

including suitable locations with access to water and nat-

ural gas, avorable government policies, proper project

nance, and cost eective access to electric transmission

or delivering the power to market. The Al Kuraymat proj-

ect developer, NREA, has indicated long-term plans or

the deployment o integrated solar combined cycle sys-

tems elsewhere in Egypt and in other countries and

regions. Those plans call or developing about 750 MWo CSP capacity by 2020 in locations worldwide based on

experiences rom Al Kuraymat.7 However, or these plans

6 See http://www.menarec.org/resources/Kuraymat-E-+Nov.2007-CU.pd7 For urther inormation, see http://www.menarec.org/resources/Kuraymat-E-+Nov.2007-CU.pd


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The solar island at Al Kuraymat

consists o a parabolic trough

solar feld with a total area o about

130,800 m2 that is expected to deliver

thermal energy at a temperature o

about 390oc.

to be realized, new locations need to be identied, and

projects need to be designed, sited, and nanced prop-

erly and supported locally with appropriate policies, reg-

ulations, and incentives. Access to the electric grid and

the availability o long-term power purchase agreements

will be important ingredients or projects successully

moving orward.

The Al Kuraymat project is providing valuable inorma-

tion on costs, risks, technical perormance, and the

necessary ingredients or successul business cases or

integrated solar combined cycle systems. This inor-

mation is essential or government agencies, suppliers,developers, nanciers, and power companies to imple-

ment new projects, assuming appropriate locations

and grid access can be ound. The Al Kuraymat project

is conrming several key hypotheses about integrated

solar combined cycle technologies or successul tech-

nology transer:

n They are relatively mature and that no urther break-

throughs in science and engineering are needed or

cost reductions to continue;

n They can provide power even when the sun is

unavailable and thus do not require energy storage,

or special grid integration strategies, both o which

can add cost and complexity to a project;

n They can be operated as baseload power plants in

large arrays or bulk power markets or in smaller units

or distributed energy applications; and


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n There are many potential sites in developing coun-

tries and regions around the world that provide

avorable conditions such as high levels o solar radi-

ation, relatively fat terrain, and access to water and

natural gas supplies.

In pursuing technology transer opportunities several key

lessons should be addressed to ensure best practicesare replicated properly. For example:

n Projects business model should be clear rom the

outset to avoid delay. Specically, i the projects are

not government-led and involve primarily private

nancing, then national and local government partic-

ipation and support must be included rom the

outset o the projects.

n The competitive bidding process or design and con-

struction contractors should be designed to ensure

that there will be quality oers rom reputable rms

and also allow or fexible exit strategies should mile-stones not be met.

n Projects should be located in countries with support-

ive national policies such as purchase requirements

or renewable power generation, renewable portolio

standards, investment tax and production credits, or

other orms o incentives to enhance nancial attrac-

tiveness o the project.

n It is important to involve local or national powercompanies to lower the technical risk, boost nancial

attractiveness, ensure grid access and integration

and or there to be a long-term power purchase

agreement in place.

Going orward, the GEF will continue to be interested in

supporting cost eective projects that build on the les-

sons learned rom Al Kuraymat and the other CSP proj-

ects. The GEF assistance will be particularly important in

those countries that are experiencing growth in electric-

ity demand and are interested in adding new power

supply technologies that have lower GHG emissions than

conventional ossil energy plants.


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Brick making is a common sight in rural areas in Asia as the raw

materials are readily available and the demand or building materials

continues to grow. Ater mixing with water, the clay is shaped into

bricks, dried and fred.

Enery Efient KilnsBrik Makin in Banlades

Introduction

The GEF has become one o the worlds largest public

sector unders o energy eciency, having invested$1.22 billion in 230 projects in over 130 countries. These

investments have attracted an additional $10.9 billion in

co-nancing. The GEF has ocused its investments on

projects that tackle technology, policy, and market barri-

ers, including more avorable policies and regulations

such as appliance labeling and standards, market condi-

tioning such as nancial instruments, and technology

transer such as demonstration o appliances and equip-

ment. Table 1 summarizes the history o GEF investments

in energy eciency and a project portolio that has

increased steadily over each GEF replenishment phase.

Energy eciency projects are a signicant part o the

GEF-5 replenishment phase (20102014).


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TABLE 1 GEF FINANCING OF ENERGY EFFICIENCY PROJECTS*

Phase Number o Projects GEF Financing($million)

Co-fnancing($million)

GEF Pilot (19911994) 7 33.3 341.2

GEF-1 (19941998) 18 139.8 640.3

GEF-2 (19982002) 36 196.7 1,473.1

GEF-3 (20022006) 42 265.1 1,745.4

GEF-4 (20062010) 99 421.9 3,211.3

GEF-5 (20102012)a

28 159.5 3462.8Total 230 1,216.5 10,874.0

The GEFs investments in energy eciency projects

include both urban and rural areas. As a result, the GEF

has been able to address urbanization pressures by

investing in local projects which provide both energy

savings and incomes or rural populations. One impor-tant target or rural energy eciency improvements is

brick making. The economies o many developing coun-

tries have growing building construction sectors so the

demand or bricks and other building materials is on the

rise. Traditional brick making industries may have trouble

keeping pace with the demand. For example, some o

the key technical perormance issues or rural brick

makers include:

n Product quality. Improving thermal and moisture

properties so that products can satisy building

codes and standards that are being improved world-

wide or energy eciency, re, food, and earth-quake protection; and

n Energy and costs. Traditional brick making consumes

at least three to ve times more energy than

advanced industrial brick makingimproving energy

eciency is critical to cost-competitiveness.

To address these needs, the GEF has spearheaded a

global eort to improve the energy eciency o kilns or

brick making and has invested in projects in China, India,

Vietnam, and Bangladesh. These projects have been

mutually supportivesharing lessons learned on tech-nologies, capacity building, and commercialization strat-

egies. The project in Bangladesh is the most recent

example o this successul South-South eort in tech-

nology transer. Going orward, the GEF is working with

partner agencies to promote urther energy eciency

improvements in building construction. For example, the

GEF is promoting technology transer or non-red

bricks, which can be stronger and more energy-ecient

than traditional bricks.

a For GEF-5, figures account for half of the replenishment period (20102014).* The figures presented here show all projects which have energy efficiency components. This includes 178 stand-alone energy efficiency projects

using $1.1 billion and leveraging $8.5 billion in co-financing, and 52 additional projects using an additional $144.9 million of GEF funding for energyefficiency and leveraging an additional $2.3 billion in co-financing.


17/48


Project Description

The period o perormance o the GEF project in

Bangladesh is 20092014. The GEF is investing $3 million

and is leveraging $11.1 million in conancing. In par tner-

ship with UNDP, the project aims to remove barriers to

the widespread adoption o energy ecient kilns and

energy ecient practices by the brick making industry,

lower consumption o ossil and biomass uels in

Bangladesh, and reduce GHG emissions and local air

pollution. The project will use the results o the pilot

phase, during which a demonstration energy ecient

kiln will be installed, and apply these to implement

another 15 demonstrations over a ve-year period.

The project is supporting an integrated set o components:

n Re-conrmation o all technology options;

n Establishing demonstration projects;

n Technical and managerial capacity development;

n Communications and awareness;

n Financing support;

n Policy and institutional support; and

n Project management support.

The project aims to transorm the brick kiln industry by

demonstrating the superior perormance o the more

energy-ecient Hybrid Homan Kiln (HHK)

technologythe same technology demonstrated

in China by a GEF-supported project. Removal o

barriers and successul adoption o the HHK technology

will lead to a decline in the emissions o not only GHGs

but also other pollutants and at the same time markedly

improve the protability o the small and medium

enterprises (SMEs) that comprise Bangladeshs brick

making industry.

In 2005, a team rom the Bangladesh University o

Engineering and Technology (BUET) and the Bangladesh

Brick Manuacturers and Owners Association visited

with the Research and Design Institute o Wall and

Roo Materials in Xian, China. The purpose o the

trip was to evaluate Chinese brick making technologies

and make site visits to operating brick elds. This

mission determined that Chinese techniques and HHK

designs could be adapted and deployed in Bangladesh.

Bricks brought back rom China were tested at BUET

and were ound to be o superior quality than those

produced in Bangladesh rom higher quality clay.

With GEF support. Liucun Hollow Brick Plant in Shanxi Province,

China, as shown here and in the next page, constructed this energy-

efcient brick kiln. This technology has been diused to many vil-

lages in Shanxi, and is being adopted by brick plants in Bangladesh.


18/48



Total brick production in Bangladesh is estimated to be

over 12 billion bricks annually with an estimated sales

value o around $450 million, almost one percent o

Bangladeshs gross domestic product. In the last

decade, demand has risen steadily and annual growth

rates have ranged rom 8.1 to 8.9 percent. Brick making is

the largest stationary source o local air pollution and

GHG emissions because brick kilns ineciently burn

large quantities o coal and biomass. According to a

BUET study, the brick making industry is the largest con-

sumer o coal in the country, using about 2.2 million

tonnes (Mt) every year, along with about 1.2 Mt o bio-mass. Carbon emissions are estimated to be about 3 Mt

annually. Brick making in Bangladesh is locally described

as a seasonal industry with old technologies, low labor

productivity, non-existent capitalization, and with inormal

management.

In Bangladesh SMEs dominate brick making and there

are ew, i any, cooperative or large-scale operations.

Most brickelds are on leased land and have no perma-

nent acilities. This, along with the seasonal nature o

production, contributes to the itinerant nature o the

industry. The average brickeld employs about 120

skilled and unskilled workers. Apart rom six to ten per-

manent employees, most are employed or only six

months during the production season.

The basic ingredient o bricks is clay. Ater mixing with

water, the clay is shaped into bricks, dried, and red. The

ring uses the clay particles to orm a ceramic bond.

Depending on the type o clay, bonding happens at tem-

peratures between 900 and 1,200C. The bond gives

bricks strength and resistance to erosion by water. The

temperature at which bricks are red is critical. I it is toolow, the bond is poor, resulting in a weak product. I it is

too high, the brick slumps or melts. As uel is a major

cost, using it eciently is essential.

Three types o brick making technologies dominate the

traditional Bangladeshi brick making industry. O these,

the Fixed Chimney Kiln (FCK) is the most common, ol-

lowed by the Bulls Trench Kiln (BTK), the Zigzag Kiln and

the Gas Homan Kiln (GHK). A 2006 study by BUET or

UNDP ound that there were approximately 4,140

licensed kilns in the country with FCKs (actually modied


19/48


Bangladeshi researchers and industry representatives visited

Chinese brickfelds to evaluate Chinese brick making technologies.

BTKs, as discussed below) holding the largest market

share at 76 percent.

Brick making in Bangladesh is a highly energy intensive

and carbon emitting activity. Prior to 2004, about 95 per-cent o kilns in Bangladesh were based on the 150 year-

old BTK technology. As the name implies, the kiln is

essentially a trench in the ground with a crude structure

built over it that serves as an enclosure in which the

bricks are red. Heat loss to the surrounding air through

the kiln walls is excessive and the uncontrolled burning o

coal in the kiln creates a high level o local emissions. In

2004, ollowing a government order to raise smokestacks

to approximately 36.6 meters, BTKs were modied to

accommodate taller chimneys and underground piping

necessary to divert the fue gas to the xed chimney. This

required extending the width o the base. The taller

chimney creates a stronger drat, which improves com-bustion to some extent and enables fue gas to be

released at a higher elevation, dispersing the pollution

over a wider area. This new kiln was the FCK, which is

essentially a BTK with a xed chimney superimposed on

it and slightly improved energy eciency.

The HHK involves a permanent structure and is a hybrid

version o the less-used GHK. Structurally, it is built like

the GHK except that the uel used is coal. The inner kiln

lining is made rom reractory bricks and then plastered

over by reractory cement. The ring chamber can belled manually or automatically with green bricks, usually

about ve to six thousand bricks at a time, in line stacks

o around one thousand each. The ring time or each

line stack is about hal an hour. The uel, granulated coal,

is ed into the ring zone in the kiln through stoke holes

on the roo. Air required or the combustion process is

orced rom behind. As it reaches the line to be red, the

air is already preheated rom the previous ring zone

thus reducing ring time and energy usage. The temper-

ature in the ring zone can reach as high as 1,800oC.

In addition to improved kiln eciency, a technique com-

monly used in the HHK model in China is to inject coalinto the green bricks. This technique enables better ther-

mal bonding and reduces uel usage, and hence carbon

dioxide and other emissions. Clay is premixed with gran-

ulated coal and then extruded to produce the green

bricks. This is a unique process and is undamental to the


20/48


energy eciency achieved in brick making in China.

Almost 80 percent o the total energy required is

injected into the bricks and only about 20 percent is ed

externally into the ring chamber. Over 95 percent o the

uel mixed into the brick undergoes combustion during

ring. This technique, which has not been used in

Bangladesh, will be implemented as part o the demon-

stration project.

Each HHK acility involves a kiln that is approximately 18

meters long, 15 meters wide and 4 meters high, 18 doors,

and no chimney. It is built on our to ve acres o land,

requires 88 workers, and can produce about 15 millionbricks annually.


Successul implementation o the 16 demonstration kilns

in Bangladesh is expected to result in energy savings o

about 15,415 terajoules o energy, which is the equivalent

o about 525 kilotonnes o coal. This reduction in energy

use will result in reductions o about 1.32 Mt CO2 eq

emissions during the 15-year expected service lie o

the kilns.

The GEF project is expected to strengthen manage-

ment and technical capacity o SMEs in Bangladesh to

manage energy ecient kiln operations, and to pro-

vide or a pool o technical support consultants and

services companies, as well as technical institutes and

local equipment suppliers o aordable technologies.

This will be accomplished through enhanced training

programs, application o standardized and compre-

hensive training materials, mobilization o local manu-

acturing investment to produce higher energy

eciency equipment, and creation o new and stron-

ger industry support groups. Considering that one

HHK is roughly equivalent to 7.5 FCKs based on theannual brick production o each kiln type (15 million or

HHKs versus two million or FCKs), the 16 demonstra-

tion HHKs would be the equivalent o 120 FCKs, which

represents a 2.1 percent market share o the orecasted

installations o 5,454 FCKs in Bangladesh by year 2014.

The key technology transerred, HHKs, oers a number

o measurable benets. Each HHK is more energy e-

cient through better kiln insulation that reduce heat

losses, use o waste heat or drying green bricks, and

the improved controls o air fows in the kiln. This results

in several environmental advantages including reduc-

tions in smoke, soot, and other orms o air pollution,

reduced land degradation by enabling use o river and

lower quality clay, lower water use, reduced use o

wood and other orms o biomass or uel, and lower

GHG emissions. Reductions in the use o energy and

coal also mean reductions in brick production costs. In

addition, the improvements in mechanization in theenergy ecient kilns also mean higher labor productiv-

ity, which enables business operators to a ord higher

wage levels. Mechanization also improves working con-

ditions and improves worker saety through reductions

in amount o manual labor where worker saety is at risk.

Other labor benets include more opportunities or

year round employment, which contributes to amily

stability and improved standards o living. Another

important result is the production o stronger and

higher quality bricks, including improvements in

strength and consistency in shape and size.

These advantages present opportunities or expansiono market share over time as experience is gained with

the HHK technology. There are common problems

with brick making across South and Southeast Asia

or which HHK and other energy ecient kilns oer

signicant advantages. However, HHKs and other

energy ecient models are relatively more expensive

to construct and operate than traditional kilns. Like

Bangladesh, India, Vietnam, and China, other countries

in these regions need to address the energy and

environmental problems rom inecient and polluting

brick kilns. Continued technology transer o ecient

brick making technologies, such as HHK, is likely with

continued lowering o market and non-market barriers,increased awareness o local brick makers, and recog-

nition by local and national governments on the ull

range o societal benets.


21/48


A brickyard in Bangladesh


22/48


Wind PowerDevelopmentand Deployment in Mexio

Introduction

Wind turbines are the astest growing orm o electric gen-

eration in the world. By the end o 2011, worldwide capacityreached 197 gigawatt (GW), with 3.6 GW added in 2010

alone. Wind power showed a growth rate o 23.6 percent in

2010, the lowest growth since 2004. All wind turbines

installed by the end o 2010 worldwide can generate more

than the total electricity demand o the United Kingdom,

equaling 2.5 percent o global electricity consumption. One

reason or this growth has been steady improvements in

technology leading to decreases in wind power costs.

However, technical and institutional barriers remain with

integrating wind, and its intermittent output, into traditional

practices or electric grid system planning and operations.

In parts o the world where wind power adoption has been

relatively strong, it has been demonstrated that solutions tothese barriers can be ound, and that grid integration o

wind power becomes easier and less costly as the level o

experience with this renewable resource increases.

A key ocus o the GEFs wind power investments is to

help countries understand the planning and operational

requirements o wind power, gain experience with

installation and grid integration issues, and employ policy

options that promote wind energy development. Policy

options can include incentives or electric transmission

lines to acilitate delivery o electricity rom wind acilities,

renewable energy portolio standards, capital subsidies,

tax incentives, tradable energy certicates, eed-in taris,grid access guarantees, and mandatory standards.

As o July 2012, the GEF has nanced 14 stand-alone

wind power projects in 14 countries8. The GEF unds and

8 The igures presented here do not take into account mixed projects,where wind power was inanced along with other objectives. Onlystand-alone projects with wind power as the sole objective aretaken into account here.


23/48


co-nancing in these projects were $50 million and $262

million, respectively. These investments have led to the

installation o almost 221 MW o electric power.

Project Description

The GEF investments in wind power in Mexico involve a

number o projects including the construction o a 103

MW wind arm at La Venta III on the Isthmus o

Tehuantepec in Oaxaca. This region possesses some o

the best wind energy resources in Mexico. Average

annual wind speeds range rom seven meters per secondto ten meters per second, measured 30 meters above

the ground. Overall, Mexico is one o the most promising

areas or wind energy development in Latin America and

possesses an estimated 40 GW in untapped potential.

Approximately 10 percent o this potential comes rom

the Isthmus o Tehuantepec, where the quality o the

renewable resource is expected to result in capacity ac-

tors o at least 40 percent or wind power acilities. Such

actors are 10 to 20 percent higher than typical values

rom other acilities.

Despite the signicant potential or wind power devel-

opment, progress has been slow in Mexico by globalstandards. This is due both to lack o adequate nan-

cial incentives or private development and invest-

ment, as well as issues with the existing policies and

regulations aecting wind power. The GEF wind proj-

ects in Mexico have been successul in stimulating

development and showing consistent progress start-

ing with policies or capacity building and creation o a

more avorable climate or development, continuing

with innovative initiatives or local manuacturing o

wind turbines, systems, and components, and result-

ing in the construction o wind power acilities. This

progress provides lessons learned about best prac-

tices that can be replicated elsewhere in Mexico andother countries in the developing world.

The GEF eorts began in 2004 to 2009 when Mexicos

Electrical Research Institute and UNDP applied $4.7

million in GEF unds and $7.1 million conancing to

accelerate the depreciation o investments in renewable

energy; assess wind resources; initiate proposals on

more avorable legal, regulatory, and institutional rame-

works; and establish a green development und. These

initiatives were the result o the countrys Action Plan or

Removing Barriers to the Full-Scale Implementation o

Wind Power in Mexico.

Also launched ollowing the Action Plan was the Regional

Wind Technology Centre (Centro Regional de Tecnologa

Elica) which was created to support wind turbine manu-

acturers, train local technicians, and acilitate cooperation

between wind turbine manuacturers and other Mexican

industries. The reduction o barriers and creation o incen-tives rom the Action Plan led to the construction o the La

Venta II wind project which became operational in 2007

with an installed capacity o 83.5 MW.

In 2007, a second GEF wind power project got underway.

The World Bank used $24.4 million in GEF unding and

leveraged $247.5 million rom the Government o Mexico

to support a tari structure or a major new wind installa-

tion, La Venta III. Construction on La Venta III began in

2009 and will have an installed capacity o about 103 MW

when completed. This project will generate local exper-

tise in commercially-based, grid-connected renewable

energy applications, enhance experience with indepen-dent power production, and build institutional capacity

to value, acquire, and manage such resources on a repli-

cable basis.

A third GEF wind power project got underway in 2011 to

build on previous experiences and provide support or

expanded wind power development in Mexico. This

technology transer project seeks to support the produc-

tion o wind power goods and services at the national

level, and build human and technical capabilities or the

manuacturing, testing and certication o wind turbines.

This project is implemented by the Inter-American

Development Bank and includes $5.5 million o GEFnancing leveraged with $33.6 million in co-nancing.

This project is expected to run until 2015.


24/48


Russia

Nepal

TurkeyArmenia

Georgia

MexicoBahamas

Barbados

Cuba

Panama

El Salvador Nicaragua

Costa Rica

Haiti

Dom. Rep.

Argentina

Bolivia

Colombia

Peru Brazil

Chile

Ecuador

Kenya

Ethiopia

Sudan

EgyptJordan

Lebanon

Niger

MauritaniaCape Verde Mali

Nigeria

Seychelles

Chad

Algeria

Zambia

TunisiaMorocco

Lesotho

Sierra LeoneGuinea

Burkina FasoGambia

Senegal YemenEritrea

Uganda

Burundi

RwandaTanzania

Cameroon

Iran

Pakistan

Kazakhstan

UzbekistanKyrgyzstan

Tajikistan

Vietnam

Cambodia

Thailand

Bangladesh

Bhutan

Sri Lanka

Papua

New Guinea

Brunei

Philippines

Malaysia

Indonesia

Mongolia

Democratic PeoplesRepublic of Korea

Palau

Marshall Islands

Fiji

East TimorSoloman Islands

Zimbabwe

Malawi

South Africa

Vanuatu

Uruguay

Suriname

NamibiaBotswana Mozambique

India

Lao PDR

Honduras

Guyana

Guatemala

KiribatiMaldives

Mauritius

Ghana

Cote d'Ivoire

China

Belize

Liberia

Hydro-Electricity

Montenegro

Slovak Republic

Slovenia

Latvia

Moldova

PolandRomania

Solar Thermal Heating Solar Thermal PowerMixed and Others Photovoltaic Wind

one project in a given category

more than one project in a given category

Combined Technologies

Hungary

CroatiaMacedonia

Ukraine

Geothermal-Electricity

Lithuania

Biomass-ThermalBiomass-Electricity

Global projects

Abbreviations

ECA Europe and Central Asia

AFR Africa

EAP East Asia and the Pacific

LAC Latin America and the Caribbean

AFR

Region

LACRegion

Belarus

ECA Region

Bosnia-Herzegovina

Serbia

Geothermal-Thermal

R

FIGURE 1 GEF RENEWABLE ENERGY PROJECTS, INCLUDING WINDENERGY, AROUND THE WORLD SINCE 1991

Combined Technologies: Projects combining several renewable energy technolMixed and Others: Projects combining renewable energy with other GEF5 climate change mitigation objectives (e.g. energy efficie


La Venta III involves the rst independent power produc-

tion contract or wind power in Mexico. To deliver power

rom La Venta III to market, the Mexican Federal

Electricity Commission (CFE) is constructing a 400 kV,

300 kilometer (km) electrical transmission line.

The CFE issued a competitive request-or-proposals to

supply the wind turbines or the La Venta III project.Iberdrola Renovables was awarded a 20-year power

supply contract. La Venta III plans to use 121 wind turbines

manuactured by Gamesa Elica, each measuring about

44 meters high and 0.85 MW in nameplate capacity. The

capacity actors or these turbines are expected to be

about 42 percent on average over the 20-year contract.

The estimated installed costs or wind power projects on

the Isthmus o Tehuantepec is estimated to be about

$2,000 per kW and the levelized cost o electricity over a

20-year period is estimated to be about $0.065 per kWh.

Wind power is market ready or application in other loca-

tions in Mexico. The successul perormance o the La

Venta III project will reduce technical and nancial risksor project developers and enable other independent

power production projects or wind power to move or-

ward in Mexico and in other countries around the world.


25/48



The GEF wind power projects in Mexico have produced

substantial results. The projects have ollowed a logical

progression rom support or building avorable poli-

cies and market environments to construction and

operation o major acilities. While getting underway

now, the independent power contract or La Venta III

with Iberdrola Renovables will soon provide 103 MW o

wind power capacity, generate up to 370 GWh o elec-

tricity annually, and result in GHG reductions o about

247,000 tonnes o CO2 eq annually, which equates to

about ve Mt CO2 eq over the 20-year term length o

the contract.

The GEF projects have contributed to building con-

dence in wind power in Mexicoresulting in other wind

project development. A total o 64 wind turbines were

commissioned in 2010, providing about 520 MW o

capacity, including locations in Baja Caliornia and

Tamaulipas. In addition, another ve wind projects

totaling about 500 MW are expected to begin construc-

tion in 2011. When complete, these projects along with

the GEF and non-GEF projects at La Venta will bring

Mexicos total wind power capacity to more than one

GW. A 2 GW, 400 kV, 300 km transmission line is under

construction by CFE in the Isthmus o Tehuantepec tobring the wind power to market. There are other projects

planned which could bring Mexicos total wind power

capacity to about 2.5 GW by the end o 2012.

I these plans come to ruition, the GEF support will have

made a signicant contribution in the 25-old increase in

wind power in Mexico over the last ten years. This level o

technology transer can be replicated in other countries

i similar projects can be identied and nanced. Key ac-

tors or replicating the Mexican success include availabil-

ity o high quality wind resources, and the commitment

o the local or national power company to the construc-

tion o high voltage power transmission lines to deliverelectricity rom where the wind power projects are

located to the load centers where the power is needed.

It is expected that continuing experience with wind

power systems can reduce barriers to grid integration

and that manuacturing scale up will continue to result in

reductions in installed costs o wind power plants and in

the cost o electricity rom those plants, depending on

the quality o the wind resources and resulting capacity

actors. Coupled with policies avorable to wind under

consideration in many countries, wind projects are

expected to become more nancially attractive to the

nancial community and continue rapid growth.

A key ocus o the GEFs wind power

investments is to help countries understand

the planning and operational requirements

o wind power, gain experience with

installation and grid integration issues, and

employ policy options that promote wind

energy development.


26/48


Fuel cell buses provided services in the 2008 Beijing Olympics as

part o the GEF technology demonstration project.


27/48


Fuel cell Buses in cina

Introduction

Urbanization is an important global trend with signicant

implications or energy and GHG emissions. Accordingto the IPCC Fourth Assessment Report, about 75 per-

cent o people in the industrialized world and about 40

percent o the people in the developing world now live

in cities. In addition, the cities themselves are growing

larger with at least 19 having more than ten million

people (IPCC 2007).

Urbanization trends typically hit developing countries

hardest and exacerbate on-going problems with air pol-

lution, oil consumption and reliance on imports, and

GHG emissions. In addition, urbanization will continue to

be a primary driver or local investment in mass trans-

portation and other inrastructure projects includingroads, bridges, tunnels, garages, and pollution abate-

ment equipment.

The GEF has supported sustainable urban transport

projects since 1999, including investments in 46 projects

over the world by the middle o GEF-5 in June 2012.

These projects received $280 million rom the GEF and

approximately $2.9 billion in co-nancing. The GEF

eorts currently reach over 70 cities with a combined

population o more than 250 million people. The project

portolio includes both technology development and

transportation strategies such as stand alone invest-

ments in public transportation inrastructures, or com-prehensive urban transportation plans. For example, in

technology development, the GEF has invested in FCB

projects in China and Brazil and hybrid bus and three-

wheeler projects in India and Egypt (GEF 2012d).


28/48


FIGURE 2 GEF SUSTAINABLEURBAN TRANSPORTINVESTMENTS BY PHASE

Millions$

0

20

40

60

80

100

120

GEF-5(20102012)

GEF-4(20062010)

GEF-3(20022006)

GEF-2(19982002)

30.4

88.9

111.3

40.7

The GEFs urban transport project portolio grew

rom $30 million in GEF-2 to almost $120 million in

GEF-4, constituting the worlds largest investment in

environmentally sound urban transportation. While sig-nicant, these unds represent a relatively small down

payment on the global investment that is needed or

cleaner and more modern and sustainable urban trans-

portation systems. As a result, urban transport is

expected to play an important role in the GEF-5 porto-

lio o climate change projects.

To leverage the GEF investments eectively, technology

transer eorts need to encompass projects that lead to

stronger urban transport plans as well as projects that

involve new technologies that may not be market-ready

but need to be demonstrated to veriy perormance and

attract private investment.

Project Description

The FCBs are important clean energy technologies that

are nearing commercial readiness but that need demon-

stration projects to veriy perormance, assess potential,

and determine needs or co-located hydrogen supplies

and ueling inrastructure. The FCBs are considered to

be more easible near term than other types o uel cell

vehicles because buses normally operate on xed routes

with xed schedules, and rely on centralized inrastruc-

ture, including the provision o training or engineering,

maintenance, and support personnel.

With a national vision and roadmap or hydrogen energydevelopment, and major problems in urbanization and

mass transportation, China provides an important

opportunity or demonstrating FCBs. The FCB projects

in Beijing and Shanghai aim to provide early adopters o

FCBs with important inormation on technology peror-

mance and costs, as well as maintenance issues and con-

sumer acceptance. The projects involve $11.6 million o

GEF unds and $23 million in conancing. The UNDP is

assisting with the implementation o the projects.

Chinas commitment to these projects stems rom the

growing sustainability challenges aced by the country.

For example, Chinas economic growth has sparked anincrease in automotive feets. Vehicle sales in China grew

rom 2.1 million units in 2000 to 5.8 million in 2005 and

13.6 million in 2009 (Sullivan 2010). In Beijing and

Shanghai, public buses are major contributors to air pol-

lution due to the large feets, high engine power, large

uel consumption, long daily running distances, and con-

gested roads. For example, in Beijing in 2005 there were

more than 18,000 buses in service, o which 8,026 were

diesel-ueled. In Shanghai in 2005 there were also more

than 18,000 buses in service, o which more than 10,000

operated on diesel (Ministry o Finance 2010).


29/48


Since the projects inception, Chinese ocials rom the

Ministry o Science and Technology (MOST), Beijing and

Shanghai local governments, Tsinghua University, and

domestic and international private companies partici-

pated as key stakeholders in the projects. The overall

objectives o the project are to:

n Begin the process o demonstrating the easibility

and eectiveness o FCBs in urban transport applica-

tions in China;

n Veriy reductions in air pollution and GHG emissions

that result rom the operation o the FCBs;

n Demonstrate the operational perormance o FCBs

and their reueling inrastructure under Chinese con-

ditions; and

n Stimulate manuacturers to scale-up production and

bring down costs

Planning was conducted prior to project inception and

identied our phases:

n Feasibility Studies,

n Demonstrations,

n Expanded Demonstrations, and

n Mass-production.

The rst phase, which took place rom 1998 to 2001,

involved research, data collection, and analysis by

Chinese experts to provide a basis or the design o the

overall project. The easibility studies showed that since

the 1990s signicant progress had been made in hydro-

gen energy production and storage and uel cell vehicle

technologies in many countries including China. The

second phase began in 2002 and is expected to be com-pleted in 2011. As part o this phase, the public transport

companies o Beijing and Shanghai each obtained and

put into operation six FCBs. This phase also includes

capacity building activities to strengthen the basis or

proceeding to the third phase, which is expected to take

place rom 2012 to 2020 and involve a larger FCB demon-

stration eort in other Chinese cities.9


The technologies or the projects include both the FCB

and the hydrogen ueling inrastructure. These systems

are not generally commercially available except or lim-

ited deployment in demonstration projects. There is still

a high level o risk related to the costs and perormance

o uel cell vehicles particularly under the rigorous condi-

tions presented by large buses serving urban mass trans-

portation markets. While a proven technology, uel cell

costs are still prohibitive compared to other vehicle pro-

pulsion systems, including non-traditional alternatives

such as compressed natural gas and hybrid electric

buses. In addition, the ueling inrastructure or supply-ing hydrogen requires its own production, storage, and

dispensing acilities and these costs need to be actored

into the overall eort.

The manuacturers, demonstration schedules, and loca-

tions or the FCBs projects are shown in the table on the

next page.

The Citaro, manuactured by Daimler-Chrysler uses a

proton-exchange-membrane uel cell involving a 205 kW

uel cell stack manuactured by Ballard Power Systems,

Inc., and an alternative current induction motor. The

Citaro uses nine hydrogen storage tanks manuacturedby Dynetek Industries, Ltd. Each tank can hold up to 40

kilograms (kg) o hydrogen at a storage pressure o

350 bars.

The next batch o three FCBs was manuactured by

Chinas Beiqi Foton Motor Company with unding rom

MOST and technical assistance provided by the GEF.

During this part o the projects, these FCBs provided

service in the 2008 Beijing Olympic Games as one o the

technology showcase projects. The nal six FCBs used

hybrid uel cell systems, manuactured by Shanghai

Automotive Industry Corporation (SAIC). They have been

purchased or demonstration and operation at the WorldExpo in Shanghai in 2010. These six FCBs provided true

zero-emission service or visitors shuttled along the main

bus route at the World Expo.

9 The third and ourth phases have not begun and are not expected to involve GEF.


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Hydrogen ueling inrastructure is a key aspect o this

project, resulting in construction and operation o

Chinas rst hydrogen ueling station. With the cooper-

ation o SinoHytec, BP, and Tsinghua Tong Fang

Corporation, the Beijing hydrogen ueling station was

built inside Beijing New Energy Vehicle Demonstration

Park, located in Yongeng High Technology Economic

Development Zone approximately 10 km west

o the Olympic Stadium. The station began service in

November 2006 with hydrogen supplies rom an exter-

nal natural gas reormer.

The acility has the capacity to uel eight to ten buses

with hydrogen at a time, three to our times per week.

This ueling station served the three Citaro FCBs demon-

strated in the Beijing project and provided valuable data

or the construction and operation o a ueling station in

Shanghai.


Data collected to date demonstrates that the FCBs and

ueling inrastructure have perormed successully. Forexample, the three Citaro FCBs operated in Beijing rom

June 2006 to October 2007 as public buses running stan-

dard routes with zero emissions and low levels o noise.

The FCBs traveled a total o 92,116 km with an 88 percent

operation rate, operated or 5,699 hours, and carried

56,973 passengers. The FCBs were not involved in any

accidents or emergencies, and received avorable

reviews rom passengers and operators.

The Foton FCBs operated in Beijing rom August 2008 to

July 2009, traveled 75,460 km, and carried 60,198 passen-

gers. These FCBs operated or 3,646 hours and con-

sumed 5,753 kg o hydrogen at a consumption rate o

about 9.56 kg per 100 km traveled. The SAIC FCBs oper-

ated in Shanghai 2010 and 2011, traveled 3,312 km, and

carried 106,040 passengers. These FCBs consumed

37,812 kg o hydrogen at a consumption rate o about11.51 kg per 100 km traveled.

Operation o all 12 FCBs is expected to avoid about 1,010

tonnes o CO2 eq emissions. I the FCBs are adopted by

30 percent o Chinas municipal bus feet by 2030, then

9.3 Mt o CO2 eq emissions can be avoided annually.

Going orward, the GEF will continue to look or opportuni-

ties to support cost eective FCB projects that build on the

lessons learned rom Beijing and Shanghai, and other uel

cell and hydrogen demonstrations worldwide. Research

and development remains an important part o the strategy

or driving down costs and improving perormance or uelcells, and hydrogen production, storage, delivery, and uel-

ing inrastructure. Demonstration projects are also impor-

tant to provide technology developers with inormation on

technology deployment problems and to inorm research

and development directions and priorities.

TABLE 2 SUMMARY OF FCB PRODUCTION WITH GEF SUPPORT

Manuacturer Number o FCBs Schedule Location

DaimlerChrysler-Citaro 3 June 2006October 2007 Beijing

Beiqi Foton Motor Company 3 August 2008July 2009 Beijing

Shanghai Automotive Industry Corporation(SAIC)

6 February 2010present Shanghai


31/48


A Hydrogen Fuel Cell

shown here. Hydrogen

ueling inrastructure

is a key aspect o

this project, resulting

in construction and

operation o Chinas frst

hydrogen ueling station.

The GEF FCB projects have contributed useul inorma-tion about the costs and perormance o hydrogen uel

cells and ueling inrastructure in urban mass transporta-

tion applications. Through these demonstrations hun-

dreds o thousands o passengers have traveled on uel

cell buses, thus introducing the technologies to the

public and raising awareness. The projects have also

supported Chinas commitment to the development o

hydrogen and uel cell vehicles and their program to

expand deployment o FCBs.

In pursuing technology transer opportunities or FCBs,

several key lessons have emerged to inorm uture

eorts. For example:

n Understand investment needs: The amount oinvestment needed to purchase FCBs, and to con-

struct and operate the supporting hydrogen ueling

inrastructure is substantial and a primary element to

tale into account to replicate what was achieved in

Beijing and Shanghai.

n Assess alternatives: Many types o clean energysystems are being demonstrated or sustainable

urban transport. The relative merits o FCBs and

these other systems need to be ully assessed so

that sustainable urban transport projects meet the

ull needs o the urban community and the host

country.

n Secure commitment: The level o commitment bythe Chinese government to hydrogen energy devel-

opment has been a key actor. The level o national

commitment will be an important consideration in

identiying additional FCB projects in other

countries.


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Innovative Finaninhunary Enery Efienycofnanin Proram

Budapest, Hungary

Introduction

Energy eciency is among the lowest cost approaches

or saving energy and reducing GHG emissions. The

widespread adoption o nancial instruments or energy

eciency is essential or expanding the adoption o

energy ecient technologies, tools, and techniques. The

GEF projects to develop and transer nancial instru-

ments or energy eciency have been successully

implemented in many countries worldwide including

Hungary, Bulgaria, Slovakia, Thailand, and China. These

projects have resulted in signicant reductions in energy

consumption and GHG emissions.

There are several general types o nancial instruments

that the GEF and others have used worldwide or energy

eciency investments. As was the case in Hungary, it is

common to combine these instruments in various ways

to suit local conditions and needs. The types include:

n Loans or loan guarantees through commercial banks,

special development agencies, or government

unds;

n Energy savings perormance contracts through third

party businesses known as energy services compa-

nies (ESCOs); and

n Demand-side management programs through

energy distribution companies that provide nanc-

ing, incentives, and technical assistance.

The GEF has been at the oreront o eorts to advance

innovative nancial instruments that promote energy

eciency in developing countries and transition

economies. Development, implementation, and

evaluation o these instruments address a major

global need to stimulate their replication and sharing

lessons learned.

Financial instrument projects and market-based

approaches supporting Energy Service Companies

accounted or 31 percent o GEF energy eciency proj-

ects, and consumed 50 percent o GEF unding orenergy eciency through the scal year 2012 o GEF-5.

Through these projects the GEF provides essential nan-

cial assistance, nancial tools and techniques, technical

assistance and training or expanding nancing options

or deployment o energy ecient appliances and equip-

ment in residential and commercial buildings and manu-

acturing and process industries worldwide.

The GEF eorts with nancial instrument projects are

part o a portolio that includes technology demonstra-

tions and diusion, standards and labeling, market-

based approaches, and policy and regulatory

development.


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GEF has supported small and

medium-sied enterprises in China

and other developing countries to

improve their energy efciency and

reduce GHG emissions.

Project Description

The Hungarian Energy Eciency Conancing Project

(HEECP) built a sustainable commercial lending sector

in Hungaryin partnership with local nancial

institutionsor energy eciency investments across

a range o technologies, applications, and sectors. The

project is a useul example o GEF eorts to develop

and transorm project nancing and markets or

energy eciency investments in countries and

economies in transition. Like other countries in Eastern

Europe, and the newly independent states o the

ormer Soviet Union, Hungary operated under a

centrally planned economy that was shielded or

decades rom market orces and thus developedinstitutions and inrastructure that were based on

relatively low and subsidized energy prices. Without

adequate market signals, there were no economic

incentives or energy eciency and Hungarian lenders

had no experience oering and servicing energy

eciency loans.

This project started in 1997 when Hungarys nancial

sector was beginning to change, operate on a commercial

basis, and able to begin nancing energy eciency proj-

ects, particularly in the SME sector. However, there were

signicant hurdles and the GEF project was essential or

building basic capabilities, knowledge, and know-how.

The GEF provided $5.7 million or this project with

$113.2 million in conancing. Project implementation was

supported by the International Finance Corporation (IFC).

The HEECP was designed in two phases:

n HEECP I: A $5 million pilot project that generatedconsiderable interest among Hungarian nancial

institutions in this market; and

n HEECP II: Expansion o guarantees and technical

assistance to support the nancing o energy e-

ciency-related projects.


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Financed projects included investments in energy e-

cient lighting, district heating, boiler and building control

systems, motors, and industrial process improvements.

The program continues today in a third phase, which

started in 2005, which is now merged with the

Commercializing Energy Eciency Finance Program.

The nancial mechanism developed or HEECP involved

two strategies or strengthening Hungarian commercial

lending or energy eciency:

n Oering and servicing specialized nancial products,

and

n Building local expertise in energy eciency technol-

ogies, tools, and techniques.

The main nancial product included a partial loan guar-

antee provided by the IFC to participating Hungarian

nancial institutions. Capacity building included techni-

cal assistance and training. HEECP marked the rst time

that a partial loan guarantee nancial instrument was

used to acilitate commercial energy eciency lending, a

strategy that has since been rened and applied in other

GEF and IFC projects worldwide (Taylor et al. 2008).

Implementation o the nancial instrument involved

development o specialized institutions, contract mecha-

nisms, and agreements in a unique conguration. Under

HEECP, the GEF and IFC issued Guarantee Facility

Agreements (GFAs) or energy eciency investments

with Hungarian lenders. As each investment transaction

was initiated by the lender with a loan recipient, the GEF

and IFC issued a Transaction Guarantee Agreement

(TGA) or each eligible transaction undertaken whether

the recipient was an end user, vendor, ESCO, or teams

involving all three.

Under the GFAs, the lenders are responsible or originat-

ing and structuring all o the transactions as well as per-

orming the appropriate due diligence and credit

analysis. They are also responsible or managing the

loans rom start to nish and or pursuing collection rem-

edies in the event o deault. As the nancial instrument

provides or only partial guarantees, there was an incen-tive or the lenders to identiy and originate nancially

sound loans and pursue the most cost eective energy

eciency project investments (Taylor et al. 2008). Figure

3 provides a diagram which shows how the GFAs and

TGAs were organized through the lenders to loan recipi-

ents, and how the nancing was complemented by

appropriate technical assistance and training.

Initially, when the Hungarian energy eciency nanc-

ing market was in its early stages, the HEECP partial

loan guarantees were open to many dierent compa-

nies and organizations that might be able to use them

to implement energy eciency projects. However, asexperience was gained, the preerred loan recipients

were project developers (e.g., vendors, leasing compa-

nies, ESCOs, and SMEs) as these were the entities in

the best position to aggregate small projects into

larger ones, and most able to use the technical assis-

tance and training that was provided.


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FIGURE 3 HUNGARIAN ENERGY EFFICIENCY CO-FINANCING PROJECTPROGRAM STRUCTURE

GuaranteeFacilityAgreement

TransactionGuarantees

IFC/GEF GEFIFCIFC IFC/GEF GEF

Investment $ Grant $

LOCALFINANCIAL

INSTITUTION

Vendor

End User

ESCO

End User

End User

TechnicalAssistance

EE ProjectLoans

Energy ServiceAgreements

Lease

Source: Taylor et al. 2008

Experts meet to discuss innovative carbon

fnancing options with the GEF.


36/48


FIGURE 4 HEECP RESULTS FROM 1997 TO 2006

0

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

10,000

20,000

$

Thousands

30,000

40,000

50,000

60,000

EE investment triggered

Loans with IFC guarantees

IFC guarantees committed


The expected outcomes o HEECP included:

n Reductions in capit

Transfer of Environmentally Sound Technologies

Documents