Export-Import Bank: New Requirements for High Carbon Intensity Projects

U.S. Ex-Im Bank Establishes New U.S. Ex-Im Bank Establishes New Requirements for High Carbon Requirements for High Carbon Intensity Projects Intensity Projects Stephen Parsons and James A. Mahoney IAIA Special Symposium on Climate Change and Impact AssessmentNovember 16 & 17, 2010 Washington, DCEx-Im Bank and Project GHG Emissions?Ex-Im Bank has a long record of addressing the GHG emissions from projects it finances?Over the past year, Ex-Im Bank has taken additional steps to enhance its response to energy production requirements, issues of GHG production and climate changeEx-Im Actions to Address GHG? 1999: Ex-Im began tracking the estimated amount of GHG emissions from projects it financed – also tracked renewable energy exports? 2000 - Present: Total GHG emissions from new fossil fuel projects by type are published yearly in Ex-Im Bank’s Annual Reports? February 2009: Ex-Im posts estimated GHG emissions of each pending project (>50,000 tonnes CO2 eq/year) on its web site ? November 2009: Ex-Im adopts a broad “Carbon Policy,” the first ECA to do so? March 2010: Carbon Policy Implementation Plan is approved, with guidelines defining new requirements for high carbon intensity projectsEx-Im Carbon Policy? Through its Carbon Policy, Ex-Im Bank seeks to:? Increase financing for very low to zero carbon dioxide emitting and renewable energy exports? Increase support for exports that contribute to significant increases in energy efficiency? Increase transparency in tracking and reporting of GHG emissions from Bank supported projects? http://www.exim.gov/products/policies/environment/carbon_policy.cfm? Carbon Policy Implementation Plan included provisions for additional requirements for High Carbon Intensity Fossil Fuel ProjectsEx-Im Carbon Policy Implementation? In March 2010, Annex G (Supplemental Guidelines for High Carbon Intensity Projects) was incorporated into Ex-Im Bank’s Environmental Procedures and Guidelines?Annex G defines requirements for high intensity carbon projects, including information needed for Ex-Im to conduct an early enhanced due diligence of project’s greenhouse gas production ? http://www.exim.gov/products/policies/environment/envproc.cfmEnhanced Due Diligence Process? The requirements for a fossil fuel power project is based on its gross carbon intensity, i.e., the amount of GHG emitted per unit of power generated in units of grams of CO2 eq per kWh of energy produced? Annex G established two important thresholds:?High Carbon Intensity Projects – > ~ 700 g CO2 eq / kWh ? Projects requiring carbon offsetting activities or measures - > ~ 850 g CO2eq / kWh? These thresholds were selected after reviewing representative CO2 emissions data for fossil fuel power plants from U.S. EPA and other sources (subject to revision)? Only applies to Power Sector at this time and to power projects with a generation capacity > 50 MWEnhanced Due Diligence Process?High Carbon Intensity fossil fuel power projects subject to the provisions of Annex G are required to prepare a project GHG evaluation that addresses or provides:?Detailed analysis of computation of GHG emissions and carbon intensity, including factors taken into account?Analysis of project alternatives (other options addressed)?Demonstration of the use of best appropriate technology?Demonstration of alignment of project with respect to host country’s low carbon growth strategy ?Other relevant information (e.g., C reduction measures, CCS-ready)Enhanced Due Diligence Process?This GHG review is to occur early in the application review process prior to commencement of the full financial, legal and the broader technical and environmental due diligence review?Based on information obtained and reviewed in the early GHG enhanced due diligence, staff prepares a report to the Board. The Board will decide to: ?Proceed to a full review of the project transaction, including a complete environmental and social review?Impose conditions relating to the projects GHG production and proceed, or?Not proceed with the transactionEnhanced Due Diligence Process? If the Board votes to instruct staff to proceed, the usual full due diligence review will be undertaken, in consideration of any conditions relating to GHG emissions that it may have placed on proceeding with the transaction review.? If the Board votes to instruct staff not to proceed, processing of the application is halted and financing is denied. Projects that have Undergone Annex G ProcessSasan 3,960 MW, Pulverized Supercritical Coal Fired Power Plant + Coal Mine in India?GHG Emissions: 26.4 MM tonnes /year - plant + mine?CO2 Intensity: 830 g CO2 eq / kWh (gross)?Status: Transaction approved by Ex-Im’s Board Kusile 4,800 MW, Pulverized Supercritical Coal Fired Power Plant in South Africa?GHG missions: 30.5 million tonnes /year - plant + mine?CO2 Intensity: 798 g CO2 eq / kWh (gross)?Status: Approved to proceed with full project reviewThank YouStephen Parsons+1 202 565 3576James A. Mahoney+1 202 565-3573Engineering & Environment DivisionExport-Import Bank of the U.S.www.exim.gov Slide 1 Ex-Im Bank and Project GHG Emissions Ex-Im Actions to Address GHG Ex-Im Carbon Policy Ex-Im Carbon Policy Implementation Enhanced Due Diligence Process Slide 7 Slide 8 Slide 9 Projects that have Undergone Annex G Process Thank You