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Sustainable bamboo management and carbon credits

Under the French Global Environment Facility (French GEF) “Rural Carbon” project, AFD organized an international seminar on carbon credits and sustainable bamboo management in Phnom Penh (Cambodia) on 26 and 27 April 2012, in partnership with the Administrative Center for China’s Agenda 21 (ACCA21), the implementing agency for international cooperation projects under the supervision of the Chinese Ministry of Science and Technology.

Experts from France, China, India, Vietnam and Cambodia

This meeting, which on the opening day was chaired by Mr. Khong Sam Nuon, Secretary of State of the Cambodian Ministry of the Environment, gathered a number of experts from several countries (China, Cambodia, France, India and Vietnam). Representatives from several international institutions, notably FAO (Food and Agriculture Organization) and INBAR (International Network for Bamboo and Rattan) also attended, along with NGOs such as WWF and GRET, representatives from the academic world and specialized consultants (NEXUS and Carbonium).

Can China’s experience be reproduced?

These technical discussions also focused on China’s experience in promoting the reduction of CO2 emissions at its bamboo plantations, as well as methodologies developed to promote carbon credits under pilot projects supported by AFD and the French GEF in partnership with ACCA21.

Indeed, an initiative to promote carbon credits in China’s rural areas has been developed under the French GEF pilot project entitled “Rural Carbon”, which was approved in July 2010.

This project has established expert centers in Yunnan Province (Yunnan Clean Development Mechanism Service Center), which implement a new accounting methodology for carbon credits generated by bamboo plantations.

This methodology has been developed with technical assistance from the NGO TNC (The Nature Conservancy) and has led to the first carbon credit transaction for bamboo plantations in China. This transaction was conducted in March 2011 and was awarded the first Panda label, a Chinese standard on the voluntary carbon credit market developed by the China Beijing Environment Exchange and the French environmental exchange, Bluenext.

This exemplary and groundbreaking Chinese initiative aroused a great deal of interest from participants from the other countries which were present due to its potential to eventually be reproduced in other Asian countries, or in Africa. 

Photos of the field visit in Cambodia on 27 April 2012

Improving energy performance and reducing polluting emissions

An energy management center, the first of its kind in China, has been set up to optimize the energy performance of the network based on the needs of the final consumers.

Substantial energy savings have already been made (10-15%) making the investment profitable in just one heating season. Three other urban heating projects are currently being implemented in Taiyuan (provincial capital of Shanxi), Tianjin and Jinan (provincial capital of Shandong).
 

Photo of a skid for the heating network financed by AFD in Jinzhong. A skid is a compact and innovative heat exchanger unit. It is unmanned during the winter heating period as it is automatically regulated by a remote control center.

The aim of these operations is to replace inefficient small boilers or old networks with new energy-efficient collective networks, which both improves heating performance and reduces polluting emissions. The adoption of innovative technologies will also reduce energy and water consumption, as well as the floor space taken up in facilities.

Substantial energy losses

In the Northern part of China, 40% of energy consumed in the building and service sector corresponds to heating (2005, World Energy Outlook). This is partly due to the inefficiency of heating methods (low power individual boilers and substantial losses on the dilapidated networks).

The Government is therefore actively promoting collective and centralized urban heating, as well as the use of cogeneration power plants, as a heat source. Coal accounts for 70% of China’s primary balance and is the country’s main source of urban heating production, particularly in Shanxi Province, a major coal producing region.  

Purpose and objectives of urban heating projects in China

1. Decouple urban growth from greenhouse gas emissions in Shanxi Province and contribute to the Franco-Chinese bilateral climate and sustainable urban development agreements.
2. Promote reflection on the sectoral reform in order to foster technological innovations and effective network management.

Content of projects

In Jinzhong:

• Decommissioning of 677 small boilers and 8 district boilers.
• Construction of the first phase of a heating network equipped with heat exchanger units (substations) and supplied by a newly-built cogeneration power plant. The project aims to serve an area of 10 million m².

In Taiyuan:

• Decommissioning of 254 small boilers.
• Construction of three levels of urban heating networks: a primary network (10 km from the power plant to a pressure isolation plant), a secondary network (44 km between this isolation plant and 75 substations) and part of the tertiary network (from these substations to users). This network will be supplied by a cogeneration power plant and will serve an area of 11 million m². The heating network is expected to operate at 50% of its capacity in 2012 and to be completed in 2013.

In Jinan:

• Replacement of steam networks (energy losses in the region of 30%) by water networks (losses in the region of 5%);
• Water pipe insulation with direct burial;
• Installation of an automated control center combined with an energy management center.

In Tianjin:

• Replacement of inefficient boilers by a large boiler plant with a yield of roughly 85%;
• Construction of compact and automated heat exchanger units, including the most efficient equipment available;
• Water pipe insulation with direct burial;
• Installation of an automated control center combined with an energy management center.

Technical assistance

In addition to the AFD loan earmarked to purchase equipment, the technical assistance provided under the projects has supported the creation of an energy management center in Jinzhong, which regulates the supply of heat on the basis of effective final consumer demand and optimizes energy and water consumption thanks to intelligent network management. In Taiyuan, the technical assistance has helped improve the project design in order to increase energy efficiency on the network. 

Main expected impacts

The replacement of small boilers in Shanxi Province (in Taiyuan and Jinzhong) is expected to annually avoid 400,000 teq CO² of emissions for each project during the lifespan of the networks, i.e. 25 to 30 years, and to substantially reduce polluting emissions (3,440 tons of SO² and 6,150 tons of soot).

These projects therefore have a positive impact on public health and make living conditions more comfortable for the local community. Their pioneering nature has raised the awareness of other sector stakeholders, such as the World Bank and Asian Development Bank, who made a field visit to observe the performance of the solutions adopted in order to replicate them in China.

In Jinan and Tianjin, the main impacts of the program stem from the energy efficiency gains due to the construction of efficient heating networks and the replacement of old obsolete boilers, leading to substantial fuel savings. The reduction of CO² emissions is estimated at 135,000 tons a year. In addition, the construction of a large boiler plant, equipped with pollution control systems for gaseous discharges, should lead to a reduction of 1,170 tons of SO² emissions and 3,600 tons of soot.  

"Loan provided by AFD". Signing ceremony for the loan allocated by AFD for the urban heating project in Jinzhong

Through this project, AFD has enabled a Sino-French partnership to come into being, involving the French companies Schneider Electric and Salmson.

All of the renewable energy produced is used by the company’s production system, reducing its CO2 emissions by 534 000 tonnes a year. The project, costing a total of 41.3 million dollars, saves the company 5.3 million dollars a year in energy bills and brings in 2.7 million dollars from carbon credit sales (CDM).

It is using a 100 million dollar line of credit (non-concessional) provided to an Indonesian public bank in 2010. This line of credit is supporting energy management investments in energy efficiency, renewable energy and fuel-switching from oil to gas and coal, and is intended for public and private companies.

The line of credit is supporting the emergence of low-carbon projects, which are an essential component in Indonesia’s efforts to reach its ambitious targets for greenhouse gas emission reductions (the government has committed to emission reductions of 26 to 41% by 2020).

What is the aim of AFD’s presence in China?
Our main aim is to support China’s transition towards an economy that saves natural resources and emits less greenhouse gas.
Since the Beijing agency opened in 2004, we have financed 17 projects that contribute to the fight against climate change and to sustainable development.
This is the main area for Franco-Chinese cooperation that was defined when President Sarkozy visited China in November 2007 and was subsequently set out in several agreements signed between the French Ministry of Ecology and its Chinese partners.
Through the projects we finance, our aim is also to promote the emergence of Franco-Chinese partnerships that highlight French expertise and stakeholders in the green sector.
Finally, we give priority to innovative operations that bring about change and use techniques and good practices that can subsequently be reproduced, not only in China, but in other countries facing similar challenges.


Can you give us a few examples of the projects that AFD supports in China?
Our cooperation for the “rural carbon” project aims to reduce greenhouse gas emissions in rural areas through carbon finance. It specifically involves projects to build biodigesters and a reforestation program in two of China’s poorest provinces, Yunnan and Sichuan.
This program has developed a methodology for bamboo replanting and for methane recovery using individual biodigesters.
One of our main common objectives is to capitalize on the experience and know-how acquired in order to study the potential of reproducing this initiative in Sub-Saharan Africa.
The project to rebuild post-earthquake Sichuan is a particularly emblematic operation. This program comes in the aftermath of the devastating earthquake measuring 8 on the Richter scale which struck China in 2008. AFD has supported the efforts made by Sichuan Province, the worst affected by the earthquake, by providing a USD200 million loan to help finance the reconstruction works, alongside the World Bank, Asian Development Bank and European Investment Bank.
Our program comprised two main components: a “biogas” component, which has now reached completion, has installed roughly 100,000 biodigester units in rural areas, with PVC covers being used for a large-scale program for the first time.
This new technique makes big improvements to biodigester efficiency and also extends their lifespan. These facilities provide families with enough gas to prepare their daily meals.
AFD’s financing has also served to rebuild basic infrastructure – water, sanitation, waste treatment, roads and bridges – and to make a practical construction guide for villagers affected by the earthquake. The guide contains energy efficiency and seismic resistance measures and was designed under a Franco-Chinese partnership between a French architecture firm and the Chinese design institute, Xinan.

Another flagship project is our cooperation for sustainable rural development, which aims to reduce greenhouse gas emissions through carbon finance. In addition to the biodigesters, a reforestation program is being conducted in two of China’s poorest provinces, Yunnan and Sichuan. This operation is supported by the French Global Environment Facility (French GEF) and is being implemented with the official agency in charge of China’s Agenda 21 (ACCA21), which reports to the Chinese Ministry of Science and Technology. It has developed a methodology for bamboo replanting and methane recovery from individual biodigesters.
One of our main objectives with ACCA21 is to capitalize on the experience and know-how acquired under this initiative in order to study its potential of being reproduced in other developing countries, Southeast Asia and Sub-Saharan Africa.
AFD also conducts cooperation activities in the sustainable urban development sector. China’s efforts in this sector will be decisive for the future of the climate. Indeed, the number of new urban dwellers in China over the next 25 years is estimated at between 200 and 300 million. And yet there is currently no model for low-carbon cities. The construction of cities at such a pace and on such a scale has never been seen before in the history of mankind. AFD is participating in this process by financing a pilot program for thermal upgrading in public buildings in the metropolis of Wuhan in central China.
This project will save energy and reduce CO2 emissions in 30 public buildings and is in line with an innovative approach in China based on the energy performance contract. The principle is as follows: by reducing the energy bill, the project beneficiary will be able to repay the AFD loan. This type of mechanism can then be reproduced in other neighborhoods and other cities where there are also major needs for renovation.


What would be your assessment of these projects and what are the prospects for AFD in China?
In a relatively short period of time, we have managed to build a quality partnership with China, both at the central level with our partners in the ministries and at the local level with the provinces and municipalities where we operate.
Our activities have highlighted French know-how and expertise, which are highly appreciated. This constructive dialogue on concrete and innovative projects has helped establish a relationship of trust with China.
It promotes the adoption in the field of technical practices and solutions that aim to reduce its energy consumption, control its urban expansion and preserve its natural resources and its biodiversity. Helping China to meet its environmental challenges and move on to a low-carbon growth path contributes to preserving global balance.
Finally, China is currently a real high-speed laboratory in the fight against climate change and in sustainable development. By supporting it in this process, we can design new clean development models from which we can learn lessons. This helps to guide our international cooperation in other geographical areas.
 

Dominica is an island with a surface area of less than 1,000 km² and 72,000 inhabitants. It is located between Guadeloupe and Martinique. Unlike most Caribbean islands, where the economy is largely based on tourism, Dominica’s economy continues to be heavily dependent on agricultural production and public expenditure, which is itself supported by donors.

Power generation in Dominica has until now, like on neighbouring islands, mainly been based on hydrocarbons.

However, Dominica benefits from sizeable geothermal potential estimated at 100 MW. This may allow it to cover its energy needs and eventually export the bulk of its power generation to Guadeloupe and Martinique. The exploitation of this potential would completely change the island’s growth model.

This is a flagship project for AFD in the West Indies, since it combines an economic interest (energy independence and export), an environmental aspect (fossil-based energy replaced by a clean and renewable energy) and a regional integration dimension (prospect of selling energy to Guadeloupe and Martinique).

For several years now, AFD has, alongside the EDF, been a key player in financing and supporting preparatory works for this large-scale project via its own resources and through the French GEF (€4.5m mobilized).

If the results of the exploratory drilling are conclusive, it should be followed by investments in power generation and exports. In the most ambitious hypothesis, they are estimated at roughly €300m, which corresponds to almost a year of Dominica’s GDP.

A strategy based on three core pillars:

1. A target for a sustainable and ambitious financial commitment to climate change, accounting for 50% of AFD’s allocations in foreign countries and 30% of PROPARCO’s allocations
2. A systematic measurement of the carbon footprint of financed projects using a robust methodology
3. A policy to select projects on the basis of their impact on the climate, taking account of the level of development of the relevant countries.

The fight against climate change and economic and social development are intrinsically linked: the acceleration of climate change will have a long-lasting negative impact on development. Conversely, development goes hand in hand with a rapid increase in the consumption of natural resources and fossil fuels.

The adoption by developing countries, notably emerging countries, of development methods with low fossil fuel consumption will contribute to more sustainable development and to the global fight against climate change. At the same time, it is vital to help the poorest and most fragile countries to adapt their economies to the impacts of this climate change which are already being felt.

International negotiations on climate change are expected to lead to shared commitments to reduce or modify emission trajectories that can provide a comprehensive structure for countries’ development policies and to the creation of major funds specifically earmarked to finance activities to combat climate change in developing countries.

For AFD, the issue of the impact of climate change financing is at the same time an opportunity of new resources and activities to support countries’ development and investment programs, a challenge that involves an integration between climate and development and also an opportunity to support France’s positions, both through the amount of financing allocated and the development of expertise at AFD.

2010 results: €2.8 billion allocated to “climate change” projects

AFD is today a major and innovative stakeholder in climate change financing at the international level in terms of both quantity, with some €2.8bn allocated in 2010 for “climate change” projects, accounting for 40% of AFD Group’s annual allocations and roughly 10% of international public climate change financing for developing countries, and in terms of quality with regard to the financing methods and tools that are used. AFD therefore enjoys significant comparative advantages thanks to the critical mass of its operations, flexible and diversified tools, field knowledge and recognized experience.

Under its 2012-2016 Action Plan, AFD is planning to pursue an ambitious positioning as a major financier of the fight against climate change at the international level.

This positioning is based on two core objectives: