Sascha lafeld

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1 Public Private Partnership “Water Benefit Partners“ Introduction to Water Benefit Certificates (WBCs) Dr. Sascha Lafeld | CEO, First Climate Markets AG | 14/11/2013 | Zurich, Switzerland

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Measuring the impact of investments remains a main challenge for sustainable finance professionals and, together with Climate Change, an overarching theme at TBLI. Sixteen related workshops offer debate on ESG and Impact Investing trends, private equity, portfolio strategy, food production, emerging markets, sustainable energy or philanthropy investing.

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Public Private Partnership “Water Benefit Partners“ Introduction to Water Benefit Certificates (WBCs)

Dr. Sascha Lafeld | CEO, First Climate Markets AG | 14/11/2013 | Zurich, Switzerland

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Corporates/Individuals

Water Benefit Certificates – How and Why?

Water Benefit Certificates

Revenue fromWBC sales

Water Benefit Certificates (WBCs)

Each credit certifies that specific volume of clean

freshwater has been supplied, purified or saved by

the project activity during a specific period of time.

Water Benefit Partners (WBP) is a Public Private

Partnership (PPP) that aims to develop an innovative

financing mechanism to support additional water

projects in regions particularly affected by water

related problems.

Market development

We create a market place for companies and

individuals to allow for credible and transparent water

stewardship engagement beyond public regulation.

(Voluntary carbon market is comparable)

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PPP Structure & Partners

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Review Manage, Reduce, EngageWater Stewardship/

Replenishment Investments

Positioning the WBP PPP

Corporate Water Management Core

Benefits: Improved efficiency, improved quality, improved community relations, reduced corporate risk

Benefits: Improved CSR management, improved supply chain management,

improved water-related know how

Not necessarily directly related to own

water use and locationsBased on own water use and sites

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WBC Certification Process

3.3.

1.1.

2.2.

4.4.

7.7.

Verification(by Independent Auditor (e.g. TÜV, SGS, DNV))

A monitoring report is submitted to the independent entity that verifies whether the project‘s benefits are real and measurable.

WBC Issuance(byWBC Certification Body)

Upon successful verification and submission of the verification report, the WBC certification body

issues an amount of WBCsequal to the benefits generated by the project.

Monitoring(byProject Participants)

Project participants set up a monitoring system to provide reliable data about the water benefits

generated by the project.

Registration(bythe WBC Certification Body)

Upon successful validation and submission of the validation report, the WBC certification body registers the project as an official WBC project

Methodology Development(byProject Owner/Developer/Consultant)

The methodology needed for the calculation of water benefits in litres of water supplied, purified or saved.

Project Document Development(byProject Owner/Developer/Consultant)

Project participants plan the project activity in a project design document (PDD)

Validation(byIndependent Auditor (e.g. TÜV, SGS, DNV))

The project gets validated by an accredited, independent auditor against criteria and guidelines set out in the WBC standard and WBC methodology5.5.

6.6.

8.8.

AnnualVerification Cycle

Sale of WBCs(to Corporations and Other Organizations)

WBCsare either directly or indirectly (via intermediaries) sold by the project owner to corporations that are interested in

supporting water projects.

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3.3.

1.1.

2.2.

4.4.

7.7.WBC Issuance

5.5.

6.6.

8.8.

AnnualVerification Cycle

Sale of WBCs

Long-Term Financing with WBCs

Learning from carbon markets: often long-term off-take agreements with retailers/end-clients

WBCs are issued and sold on a yearly basis providing a regular revenue stream

Annual verification requirement provides incentives for sustainable project operation

Usually many WBC buyers per project reduces risk of income loss

Multiple year crediting period issuance and sale of credits over a long period of time

Clear difference to ODA: WBC mechanism is designed to provide recurring payments over a long period of time instead of one-off donations

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Water Efficient Shower Heads

Alternate Wetting and Drying (AWD)

Construction of covers for water reservoirs/canals

...

Four Basic WBS Project Type Categories

Water Efficiency Water Supply Water Treatment

Rainwater Harvesting

Construction of Freshwater Wells

Construction of Water Supply Infrastructure

Fog Harvesting

...

Industrial Wastewater Treatment

Municipal Wastewater Treatment

Distribution of End User Water Purification Devices

...

Water Productivity

Drip irrigation

Direct Rice Seeding

...

The WBC mechanism is open to any kind of technology or project type as long as it addresses one or more water related issues!

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WBC Technical Advisory Committee at GSF

The Gold Standard Foundation‘s Water Technical Advisory Committee

(Water TAC) started its monthly meetings in August 2013

* The TAC needs to

review and approve

the Standard and

WBC methodologies

Anna Forslund Stockholm Water Institute

James Dalton IUCN

Jamie Pittock Australian National University, Water Stewardship Australia

Todd Gartner World Resources Institute

Scott Harder Environmental Financial Group

Biksham Gujja AgSri Agricultural Services

Samuel Bryan Nexus

Sascha Lafeld First Climate

Members include:

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Forecasting the Market for WBCs

• A functioning market for WBCs

does not yet exist, however the

voluntary carbon market gives

us a strong corollary

• Characterized by steady growth

since 2006

• 101 million tons of carbon offsets

contracted in 2012 – 4% more

than in 2011

• Market value of $523 million

• 90% of offset volumes were

contracted by the private sector

• Natural market for buyers with a

high exposure to water risk!

Historical Offset Demand by Transacted Volume, All Voluntary Carbon Markets

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Motivations of Potential WBC Buyers

1. Buyers facing indirect water risks through their business operations

Service providers, e.g. financial institutions, that do not have a large direct water

footprint, but that still have a business interest in addressing water risk

E.g. MunichRe, HSBC, Google

2. Buyers for whom water becomes a limiting factor in their production

processes and supply chains

Buyers that already do a great deal to address their direct water footprint, and

need/want to demonstrate their commitment to water stewardship

E.g. Coca Cola, Olam, Nestle, Carlsberg, Danone, SAB Miller

„The scarcity of clean drinking water has become one of the most pressing problems faced

by societies worldwide. With the WBC mechanism, we can attach a value to the provision

of quality drinking water in order to avoid wasteful distribution practices and direct it where it

is most urgently needed.”

Dr. Astrid Zwick, Head of Corporate Social Responsibility, Munich RE

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Dr. Sascha LafeldCEO

First Climate Marktets AG Email: [email protected] 10 Phone: +49 (0)6101 55658-1161118 Bad Vilbel/Frankfurt Fax: +49 (0)6101 55658-77Germany www.firstclimate.com