Using a Realist Framework to Overcome Evaluation Challenges in the Uncertain Landscape of Carbon Finance

In 2013, the United Kingdom Department for International Development and the Department of Business, Energy, and Industrial Strategy published a business case for the Carbon Market Finance Programme (CMFP). The core mandate: to build capacity and develop aids for least developed countries in sub-Saharan Africa to access finance via the carbon market. The chosen strategy involved signing emission reduction purchase agreements with private sector enterprises, using the United Nations Framework Convention for Climate Change’s Clean Development Mechanism (CDM) to verify generation of tradeable certified emissions reductions. The World Bank’s Carbon Initiative for Development (Ci-Dev) would implement the 12-year program. The team for the 2019 midterm evaluation found that program uncertainty—from sociopolitical challenges in pilot markets to global indecision on the future of Article 6 and carbon markets—would complicate assessing progress toward business case objectives. The collapse and failed recovery of the carbon market impacted underlying assumptions of the CMFP’s theory of change, and uncertainty about CDM’s future complicated evaluation of program sustainability. This chapter presents a practical approach to using realist evaluation to overcome the contextual uncertainties of the carbon market landscape, providing strengths and weaknesses of the approach applied and recommending a revised approach for future evaluations.

The Use of Carbon Finance for Struggling With Climate Change

The developments in science and technology have brought a lot of problems with them. The most important of these is climate change, which appears at the global level. The effect of climate change, which comes first as an environmental problem, cannot be ignored. Management, which has had serious income and economic losses because of weather conditions, has taken several precautions in order to reduce climate change risks. One of these is weather derivations. Weather derivations are a safety type that makes the determined payments if there are defined weather events. However, the most commonly used are weather option agreements, weather swap agreements, and weather future agreements. In the chapter, climate change and the weather derivations that are a means that managements use to avoid climate change risks will be explained.

Carbon Finance and Emission Trading in Mexico: Building Lessons from the CDM Experience and FOMECAR (Mexican Carbon Fund)

A more general lesson from the past decade is that climate policy and carbon initiatives such as ETS and carbon pricing are not static concepts, but are instead constantly evolving and building upon previous experiences. The vision of a single, top-down global trading system has shifted toward the reality of various single and regional trading system programmes. Building a national emission trading system in Mexico will surely pass through processes and experiences that the country has somehow undertaken from the Kyoto Protocol (KP) in 2005, particularly with the Clean Development Mechanism (CDM), the Mexican Carbon Fund (FOMECAR) and their legacy. Additional design elements or provisions must be prepared under the new ETS in Mexico: regulation will possibly include definitions, scope, compliance obligation, legal procedures and other necessary provisions such as the allocation of permits. However, in order to start the process, important questions on financing the initiative and accompanying the development of an ETS will go through a finance support scenario. Thus, who is going to finance the starting process for allocating emissions, financing bonds and other design issues for the implementation of the Mexican ETS? Who will be financing and offering technical cooperation to follow up on eligible projects for the ETS and who will be supporting education and information activities about ETS implementation? Those and other questions will be addressed in this article, in the light of international and regional experiences.

Coco-Power: Exploring Copra-Derived Biodiesel for Grid Connected Electricity in Vanuatu

<p>This research assesses the financial feasibility of a large scale copra-based biodiesel refinery in Vanuatu and whether any carbon finance could be sought to improve the viability of the project. The research cannot be perfectly predictive of the next fifteen years of financial situation, however, the research can quite accurately replicate the feasibility assessment that potential investors would make. The research finds that the project is not financially viable under current projections without carbon finance. The research also shows that carbon finance could be sought from a number of sources in order to make the project feasible. Under current projections the research finds that utilising the clean development mechanism would add approximately 2.9 million United States Dollars (USD) to the present value of the project. The conclusion from these results is that the proposed biodiesel project is sufficiently profitable to attract investors. The primary recommendation resulting from the research is that the stakeholders to the proposed biodiesel project begin an open discourse to work through any issues in order to develop a sustainable copra-based biodiesel refinery in Vanuatu to produce a substitute for the import of fossil diesel used for electricity generation in Port Vila. The secondary recommendation is that international climate change policy negotiators should keep in mind the full set of barriers when addressing the uptake of clean technology in developing countries; often it may not only be the financial feasibility that is preventing climate change mitigation activities.</p>

Coco-Power: Exploring Copra-Derived Biodiesel for Grid Connected Electricity in Vanuatu

<p>This research assesses the financial feasibility of a large scale copra-based biodiesel refinery in Vanuatu and whether any carbon finance could be sought to improve the viability of the project. The research cannot be perfectly predictive of the next fifteen years of financial situation, however, the research can quite accurately replicate the feasibility assessment that potential investors would make. The research finds that the project is not financially viable under current projections without carbon finance. The research also shows that carbon finance could be sought from a number of sources in order to make the project feasible. Under current projections the research finds that utilising the clean development mechanism would add approximately 2.9 million United States Dollars (USD) to the present value of the project. The conclusion from these results is that the proposed biodiesel project is sufficiently profitable to attract investors. The primary recommendation resulting from the research is that the stakeholders to the proposed biodiesel project begin an open discourse to work through any issues in order to develop a sustainable copra-based biodiesel refinery in Vanuatu to produce a substitute for the import of fossil diesel used for electricity generation in Port Vila. The secondary recommendation is that international climate change policy negotiators should keep in mind the full set of barriers when addressing the uptake of clean technology in developing countries; often it may not only be the financial feasibility that is preventing climate change mitigation activities.</p>