Bulgaria has the potential to generate up to $350 million in carbon revenues over the next 3 to 5 years. These opportunities can be realized through: Trading of Surplus Emission Allowances under the Kyoto Protocol - OECD countries will have to purchase around 2 billion tonnes of surplus emission allowances to meet their commitments under the Kyoto Protocol. There is likely to be significant competition in this market since transition economies together have about 6 billion tonnes of surplus allowances; about 5% are available in Bulgaria. Also, OECD buyers have indicated their interest in purchasing surplus allowances only if they are “greened”, i.e. sales are linked to investments that reduce emissions of greenhouse gases and/ or increase carbon sequestration, so called “Green Investment Schemes” (GIS). One benefit of “greening” is that Bulgaria, by selling existing surplus allowances, can invest in emission reduction projects up to and beyond 2012 and recover the allowances in the future. Bulgaria is the first country that has already prepared the design options for GIS with the World Bank support during 2004, and intends to implement the GIS with an initial transaction involving sale of about 20 million of its surplus emission allowances during 2005-06, also with the World Bank assistance.
Indications are that Bulgaria could mobilize funds in the range of US$150 to 200 million with the prospect of leveraging equal amounts from private sector to invest in the GIS. Bulgaria has the potential to expand GIS up to 75 million of its surplus emission allowances through investments in the district heating sector (65%); energy efficiency improvements across all sectors of the economy including municipal buildings, public transport and services (15%); renewable energy particularly hydro power (9%); fuel switching in the residential sector (4%); landfill gas capture (4%); and the forestry related carbon offset projects (3%).
Implementing Projects that Reduce Greenhouse Gas Emissions or Enhance Sequestration – OECD countries are expected to purchase between 0.5 and 0.8 billion tonnes of emission reductions through investments in projects that reduce emissions of greenhouse gas or enhance sequestration; the so called Joint Implementation (JI) mechanism. Bulgaria is one of the leading countries in attracting investments into JI projects and has further potential to expand JI to achieve emission reductions, thereby contributing to recovering the emission allowances sold under the GIS. JI would be complementary to GIS. Timing is Critical - The window of opportunity is rapidly closing due to uncertainty in the carbon market at the end of 2012; the first commitment period under the Kyoto Protocol. Large scale trading opportunities and the majority of project based transactions are targeted at meeting OECD compliance needs up to 2012. This emphasizes the need for quick action, also because of the likely competition for the sale of surplus allowances from other countries. The World Bank Can Help to Realize These Opportunities - The World Bank is Trustee of a number of carbon funds comprising public and private buyers. Over US$1 billion of funds are currently under management, targeted at project based transactions and the purchase of surplus allowances that have been “greened”. Through its experience in the market, the Bank brings to the table its ability to mobilize in-house and external expertise, links to sources of funding and technical support for carbon project development and supervision. The Bank supports host country capacity building through its CF-Assist (grant) program and training provided by the World Bank Institute.
Further information is available online [www.carbonfinance.org] and through:
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