Executive Summary

Context

This Handbook focuses on the role that Nationally Appropriate Mitigation Actions (NAMAs) can play in promoting Renewable Energy (RE) in developing countries. The concept of NAMAs was developed in the negotiations carried out under the United Nations Framework Convention on Climate Change (UNFCCC) to denote planned, voluntary greenhouse gas (GHG) mitigation actions in countries that do not have a legally binding emissions commitment. Notifying a NAMA thus practically means putting a UNFCCC-backed label on national development activities with mitigation effects. RE being carbon dioxide-free is a perfect candidate for a NAMA as it combines development benefits through the provision of energy with GHG reduction. A RE NAMA perfectly embodies a "green growth" path.

What are NAMAs?

NAMAs are public sector interventions to mobilise private participation in low-carbon development and can range from multi-sector strategies across specific policy instruments to single pilot projects. A wide range of policies promoting RE is conceivable as a NAMA, involving non-market-based incentives, market mechanisms or regulations. Large-scale, policy based NAMAs can easily cost tens of millions of US dollars. Industrialised countries have pledged to support NAMAs. A significant share of the USD 30 billion promised as "fast-start finance" for climate change mitigation and adaptation in developing countries and the USD 100 billion per year from 2020 onwards could flow into NAMAs.

Currently, two kinds of NAMAs have been defined under the UNFCCC: those developed with domestic means (unilateral NAMAs) and those requiring international support to cover NAMA costs (supported NAMAs). A third option discussed would credit emission reductions and make them tradable on the carbon market (credited NAMA). However, this latter alternative has not been approved by the Parties to the UNFCCC as of October 2012.

So far, over 50 countries have proposed NAMAs, and a registry has been set up under the UNFCCC to facilitate the flow of support from industrialised to developing countries and to ensure transparency.

NAMAs as a Tool to Overcome Barriers to Renewable Energy Technology Deployment

Barriers for Renewable Energy Technology (RET) deployment can be political, economic, financial, legal, regulatory, technical, institutional or even cultural in nature. Many of these barriers translate into higher costs or risk premiums compared to conventional energy technologies. Thus, economic incentives, such as tax exemptions or feed-in tariffs, are required to promote RET. Beyond those, a combination of measures will be required for a cost-effective transfer and diffusion of RETs. An internationally viable RE support mechanism may encourage policy makers to remove institutional and political barriers.

NAMAs represent a wide-ranging support vehicle. Depending on their nature, NAMAs can take various forms of instruments that support RET development. They can include broad strategies (e.g. a RE percentage target), sweeping programmes, policy measures, awareness raising campaigns for citizens' use of renewable electricity, and specific lighthouse projects financed by governments. Support can also include technical assistance or capacity building measures.

Policy-based NAMAs generally take the form of monetary and/or non-monetary incentives. The former can be broadly classified as non-market based incentives (e.g. grants, loan guarantees and tendering) and as market-based incentives (e.g. Renewable Energy Certificates, green labelling). Non-monetary NAMAs can take the form of mandatory grid access for RET operators or technical assistance to operate the technology and labelling of power produced through RETs.

How to Get a NAMA Concept off the Ground

Putting forward a certain NAMA idea is only the first in a long series of steps towards its practical implementation. Before a NAMA is implemented and emission reductions are monitored, reported and verified, NAMA-related actions need to be identified, selected, conceptualized and approved by the government and possibly submitted to the UNFCCC Secretariat to be recorded in the NAMA Registry.

Generally, the process of developing a NAMA can be divided into three phases: conception, implementation and operation.

The conception phase should describe the envisaged measures (e.g. policy instruments or technical measures) to overcome barriers to RE deployment, their financing requirements and their respective environmental benefits, as well as co-benefits. Moreover, the Measurement, Reporting and Verification (MRV) process should be identified. Finally, the stakeholders, including local institutions and project developers, should be engaged at the conception stage to provide justification to the NAMA development process.

Based on the NAMA concept study and note, the host country government can move to the implementation stage by creating a supporting legal framework, introducing capacity building initiatives and delineating the implementation strategies and time frames.

Once the NAMA activities have been rolled out (operation stage), it is important to administer the NAMA according to the management procedures defined in the conception and implementation phase. In particular, the MRV system should be used to monitor the achievements (emission reductions and co-benefits) of the NAMA while tracking its costs.

Case Studies: The Role of NAMAs for RE Development in Selected Developing Countries

Three case studies illustrate the potential role of RE NAMAs in countries of varying size and conditions, namely Peru, Kenya and Grenada. The analysis assesses the RE-specific barriers for each country and the role of NAMAs in overcoming them. The key findings are:

» NAMAs can help achieve broader strategic energy targets, e.g. reducing dependence on imported fossil fuels, enhancing security and stability in energy supply, developing human capital and improving overall environmental sustainability;

» NAMAs are seen as an important instrument that can help overcome institutional, implementation and financing barriers;

» The UN backed NAMA framework and the involvement of international and national authorities can make investments under a NAMA more attractive;

» NAMAs serve to scale up the activities of existing economic instruments (e.g. Clean Development Mechanism) and access potential new funding sources;

» NAMAs should ideally include multiple activities that, when combined, create the necessary enabling environment for RE investment. This requires a substantive understanding of current barriers;

» NAMAs can only become relevant if they are consistent with existing regulatory frameworks and are championed by an important governmental institution. Otherwise, host country ownership will be lacking; and

» Successful NAMA implementation relies on availability of reliable data for estimation of baseline scenarios and emission reduction as well as on transparent structures and procedures to evaluate achievements.

Harnessing NAMAs for RET Development

Today, setting up a NAMA is a challenge for all actors involved. There are no precedents in terms of implementation and the framework is evolving rapidly. This Handbook is among the first efforts to provide policy makers and project developers with a comprehensive set of guidelines and case studies that use NAMAs in support of RE deployment. The best practices in this report can help in designing and implementing NAMAs that efficiently achieve global benefits (i.e. GHG mitigation) while decreasing or even effectively eliminating the incremental costs of RE deployment. A creatively designed NAMA framework can also be used to gain indirect co-benefits, such as setting up a technology value chain that reduces prices locally while providing employment opportunities, or through NAMA supported capacity building and technology transfer initiatives that ensure a smoother transition towards a green development path.