Global Environment Facility support for modernized biomass energy: experiences from UNDP and the World Bank

To date, the Global Environment Facility (GEF) has allocated more than US$ 100 million to projects designed to increase the use of modernized biomass for energy in its program countries. As the operator of the financial mechanism for the UN Framework Convention on Climate Change, the GEF is interested in biomass as it represents a source which can supply energy (either heat or electricity) with zero net carbon emissions. Three avenues are available to support biomass projects: “barrier removal” for projects that should be profitable on paper but are not being implemented; new biomass technologies that are not yet competitive; and projects that are still expensive but reduce greenhouse gas emissions (GHGs) in an extremely cost-effective way. GEF has supported projects supporting bagasse co-generation; biomass district heating; biomass residues for power generation; methane from solid and liquid wastes; and biomass gasification for use in gas turbines. Six lessons can be drawn from this experience. First, environmental improvement from biomass energy projects is not always a foregone conclusion. Care must be exercised if one type of environmental benefit is not to be gained at the expense of another. Care must also be exercised in estimating the amount of biomass available. Second, in many cases, the biomass technology itself is no longer the challenge. Rather, the challenge lies not in technical demonstrations but rather in demonstrating the commercial and institutional framework in which the technologies can be profitably deployed and replicated. Third, the distinction between plant optimization and system optimization is a significant one. Different objectives can yield radically different designs having radically different resource implications. Fourth, as in conventional power projects, biomass fuel supplies need to be contractually committed. If they are not, supplies can be withdrawn, undermining the project's feasibility, and obtaining financing will remain virtually impossible. Fifth, the policy environment in a given context is critical to project success. The pricing policy and the concession framework for independent power producers are critical in determining project success. Finally, proven technologies differ by country. A technology that has been proven in one country may still be viewed as “too risky” in another. Thus, the technology transfer process may require additional resources for risk mitigation.