2006年-世界发展银行全球_Output-Based_Aid_and_Carbon_Finance_4页_556kb

OBA Approaches Summary

Core Content

Output-based aid (OBA) is a mechanism that uses performance-based subsidies to support the delivery of public services such as water and sanitation. It helps bridge the financial gap between the cost of providing a service and the willingness or ability of people to pay for it. OBA can also be applied to fund public goods or mitigate negative externalities, including environmental ones.

One significant application of OBA is carbon finance, which is an output-based approach to climate change mitigation. Under the Kyoto Protocol, projects in developing and transition economies that reduce greenhouse gas emissions can earn carbon credits, which are then sold to generate revenue. This revenue helps make climate-friendly projects more financially viable and reduces the cost of compliance for industrial countries.

Main Advantages of OBA Approaches

• Greater value for money:
  Carbon finance provides incremental revenues to climate-friendly projects, improving their financial viability. It encourages investment in low-cost emission reduction projects, ensuring efficient use of limited funds.

• More transparency:
  To qualify for carbon credits, projects must prove they are additional compared to a baseline scenario. This involves third-party validation, project registration, and emission verification using approved methodologies, enhancing transparency and fund targeting.

• Greater efficiency:
  Carbon finance is performance-based, meaning payments are made only after emission reductions are achieved. Sellers bear operational risks, and some contracts include delivery guarantees or penalties, incentivizing efficient project management.

• Reduced economic distortions:
  By assigning a value to the global externality of greenhouse gas emissions, carbon finance aligns the financial internal rate of return of climate-friendly projects with their economic rate of return, improving their competitiveness.

• Catalyzing investment in renewable energy:
  Although renewable technologies are becoming more cost-effective, they still face financing barriers in emerging markets due to high upfront costs, risk, and limited access to capital. Carbon finance can help, but often not enough on its own.

Key Information

• Financial barriers to renewables:

  • Renewables are often not financially viable in emerging markets due to high up-front costs and risk.
  • At a 10% discount rate, hydro and biomass are cheaper than commercial coal, but at an 18% rate (more realistic for emerging markets), their costs nearly double.
  • Conventional energy sources are more attractive due to lower initial costs, easier financing, and scalability.

• The power of carbon finance:

  • Carbon finance provides hard currency revenue from reliable buyers, helping to mobilize financing for clean energy projects.
  • Example: The Abanico hydro project in Ecuador used carbon finance to secure a loan with a reduced interest rate, saving the company $300,000 in interest payments.

• Combining OBA with carbon finance:

  • Carbon finance alone may not be enough to close the funding gap for renewables.
  • Combining it with other OBA approaches can help address both affordability and externalities.

• Addressing local externalities:

  • Carbon trading addresses global environmental externalities but not local ones, such as health issues from conventional energy sources.
  • OBA approaches can help reduce local negative impacts by promoting low-emission technologies.

• Addressing affordability and access to energy:

  • Projects that provide basic energy services can combine OBA and carbon finance to improve affordability and reduce environmental impact.
  • Examples include solar home systems in Bolivia and village hydro grids in Nicaragua, which help reduce indoor air pollution and improve public health.

Conclusion

OBA approaches, particularly through carbon finance, offer a promising way to support the delivery of basic services to the poor while addressing climate and environmental challenges. By combining carbon finance with other OBA tools, it is possible to improve the financial viability, efficiency, and impact of renewable energy and other sustainable projects in developing countries.