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Some new thinking from Natsource. More growth. Less pollution.

Technology Transfer TETRIS Work Package 2 Rob Youngman / Dirk Forrister, Natsource Amsterdam, June 21, 2006. Some new thinking from Natsource. More growth. Less pollution. Overview of Presentation. Case studies Literature review Quantitative analysis of potential for technology transfer

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Some new thinking from Natsource. More growth. Less pollution.

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  1. Technology TransferTETRIS Work Package 2Rob Youngman / Dirk Forrister, NatsourceAmsterdam, June 21, 2006 Some new thinking from Natsource. More growth. Less pollution.

  2. Overview of Presentation • Case studies • Literature review • Quantitative analysis of potential for technology transfer • For each: • Status of work • Next steps • Timetable and milestones

  3. WP2 Objectives and Components • Objectives • to learn how project-based emissions trading affects or facilitates technology transfer • to examine and describe real technology transfers associated with GHG trading • to determine the scope for technology transfer in large potential CDM host countries, and from EU technology-exporting countries

  4. Case Studies - Overview • Three case studies of CDM and JI projects implemented or planned under early greenhouse gas (GHG) trading initiatives • Describe and analyze: • the background of the project (sponsor, host country partners, history, geographic location and social conditions, etc.); • the technology that have been transferred; • the current availability of this technology in the host country; • social and environmental benefits for the host country; • critical factors related to financial viability of the project (crediting period, baseline standardisation)

  5. Case Studies – Status, Next Steps • Circulated 1st draft case study of wind project in Philippines at Bern meeting • Prepared 2nd draft case study of photovoltaic (PV) kits for rural households in Morocco • Open issues • Seeking input on draft case study • Selection of other final case studies: Any particular type of project to round out the 3 case studies? Perhaps a non-CO2 gas project, given results of quantitative analysis of TT. • Next steps, timetable and milestones • Incorporate input on draft case study • Select and draft final case study • Complete case studies and circulate by end July for comments • Finalize case studies in time for inclusion in Sept deliverable

  6. Case Study 2 - Summary • Photovoltaic kits for rural households in Morocco • Selection criteria: CDM in Africa, registered project, technology transfer involved • Participants: Office National de l’Electricity (ONE), Morocco, private companies, governments of France and Germany • Total capacity of 7.7 MW avoids 395,400 tonnes CO2e (from diesel generators off-grid) over the 10-year crediting period beginning in 2007 • Demonstration of TT • Key TT effect is in maintaining large numbers of small, decentralized power sources • PC modules imported from South Africa; production of the modules “will induce technological development in Africa” • 85% of 300-400 jobs to be created will be local technicians trained for installation and after-sales services for the equipment

  7. Case Study 1 – Summary (cont’d) • Role of carbon value • Carbon revenue critical to implementation • Cost of PV kit is EUR 900, vs. 400 to share diesel generator with neighboring households • CER revenue can reduce cost by 22%

  8. Literature Review / WP2 Paper - Overview • Analyze how CDM and JI can initiate or facilitate technology transfer for developing countries and/or economies in transition • Review existing literature on technology transfer, including literature by: • Private-sector firms • Government agencies • Multi-national organizations • Identify key determinants of technology transfer and effectiveness of CDM and JI in facilitating technology transfer • Analyze the potential and distribution of technology types which have been or will be most attractive for JI or CDM projects

  9. Literature Review – Overview (cont’d) • WP2 report incorporates literature review and other segments of WP2. The report will include: • Definition of TT, based on review of literature (UNFCCC, KP, related efforts, other sources) and the agreed criteria for quantifying TT for this project • Review of technologies in CDM and JI transactions and pipeline, and in World Bank and Netherlands purchasing programs • Quantification of TT in CDM and JI jurisdictions, and coming from EU, with discussion of methodology and findings • Implications of TT findings for EU as seller and developer of technologies • Consideration of how project-based emissions trading affects technology transfer in light of CDM/JI review, TT quantification • Role of carbon value in transactions – overcomes financing hurdles • Market pursues economically viable projects using existing technologies, given prevailing GHG prices • Barriers to transfer of clean energy technologies include the closing window for CDM projects, carbon revenue too small to push past hurdle rate, various risks, more mature, cheaper alternatives

  10. Literature Review – Overview (cont’d) • Literature review • Provide broader context for the challenges of facilitating TT in CDM and JI by briefly describing other discussions on challenges and issues relating to TT • Competitive stance of clean energy technologies – intermittency, costs, competition from fossil sources • Host country issues – technical capacity and know-how, investment environment, IPR enforcement and open trade policies to attract technology • Technology sellers’ concerns and issues (e.g. IPR, profit from innovation) • Deploy technology in developing countries to bring costs down? New or mature technologies? Or develop and deploy technology in industrialized countries for energy security, industrial development, employment, environmental objectives? • Need for/role of policies to support deployment of technologies, reduce barriers, including lack of internalization of market externalities • Provide thoughts on potential approaches for improving on CDM/JI’s ability to facilitate TT, in light of quantification results and literature review

  11. WP 2 Paper – Status and Next Steps • Status • Key components of paper are complete • Description and findings of TT quantitative analysis of CDM, JI • Definition of TT (from scoping paper submitted for Bern meeting) • Review of technologies in historic CDM/JI transactions and in pipeline (presented in Bern, and since updated – see annex) • 2 of 3 case studies • In process of putting paper together and writing the literature review sections • Next steps, timetable and milestones • Prepare full draft paper incorporating all components • Circulate for comments by end-July • Coordinate to submit to DG Competition • Finalize report in time for Sept. submission of deliverable

  12. Quantitative Analysis of Potential for Technology Transfer – Overview, Status, Next Steps • Analyse the potential for TT in several large potential CDM (ECN) host countries and JI (CCAP) host countries • Status and findings • See presentations to follow • Next steps, timetable and milestones • Apply lessons from the CDM/JI TT assessment to the estimates of CDM and JI potential to evaluate TT potential • Include findings in final draft of WP2 paper

  13. Annex

  14. Data on Technologies in Historic CDM and JI Transactions by Volume • January 2005 – March 2006 • World Bank, “State of the Carbon Market 2006,” based on WB, Natsource and Evolution Markets data

  15. Data on Technology in Historic Transactions (cont’d) • HFC23 share of volume up dramatically, from 36% in 2004 to 58% in January 2005-March 2006 • 78% of traded reductions were non-CO2 gases, vs. 55% in 2004. • Next largest after HFC: landfill gas (9%), coal mine methane (6%) • Combined share of hydro, wind, biomass, other renewables and energy efficiency projects was 12%, down from 25% in 2004. • Geographical distribution • China’s share jumped from 5% in 2004 to 66% in 2005-06 (high-volume HFC projects) • India’s share down to 3% from 43% in 2004 • Asia accounted for 73% (vs. 54% in 2004) • Latin America accounted for 17% (vs. 25% in 2004)

  16. Data on Technology % of CDM Volumes in Pipeline • UNEP Riso database (May 3, 2006), CDM projects in pipeline (projects using methodologies that have been approved by the CDM EB) • Includes 744 projects, 978 Mt by 2012 • Largest categories: HFCs (40%; avg size = 30 Mt)), N2O (12%; avg = 23 Mt)), LFG (12%), biomass energy (7%), industrial energy efficiency (6%) • Wind and hydro at 5% each, fossil fuel switch at 1%, solar at 0%

  17. Data on Technology % of CDM Projects in Pipeline • Largest categories: biomass energy (23%), hydro (17%), wind (13%), industrial energy efficiency (12%), agriculture (10%), landfill gas (8%) • Small categories include HFC (2%), N2O (3%), solar (1%)

  18. Data on Technology % of JI Volume in Pipeline • UNEP Riso database (May 3, 2006), JI projects for which PDDs are available for public comment on the websites of DOEs • Includes 110 projects, 64 Mt by 2012 • Largest categories: fossil fuel switch (19%), energy distribution (15%), N20 (14%), biomass energy (9%), hydro (8%), fugitive (8%), industrial energy efficiency (5%) • HFC at <1%, solar at <1%

  19. Data on Technology % of JI Projects in Pipeline • Largest categories: hydro (21%), wind (14%), LFG (13%), biomass energy (11%), fossil fuel switch (9%), industrial energy efficiency (8%) • HFC at <1%, N2O = 3%

  20. Some new thinking from Natsource. More growth. Less pollution. Tel + 44 (0) 20 7827 2942dforrister@natsource.com + 1 202 496 1423 x227 ryoungman@natsource.com www.natsource.com

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