1 / 16

Practical issues in identification and development of CDM projects

Practical issues in identification and development of CDM projects. AIT, Bangkok, October 20, 2005 Soeren Varming Senior Consultant, Climate Change sva@econdenmark.dk. ”Arch type” CDM versus reality.

david-manning
Download Presentation

Practical issues in identification and development of CDM projects

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Practical issues in identification and development of CDM projects AIT, Bangkok, October 20, 2005 Soeren Varming Senior Consultant, Climate Change sva@econdenmark.dk

  2. ”Arch type” CDM versus reality • “Arch type – CDM”: A collaboration between two private entities sharing technology and financial risk • “Reality”: Governments or carbon funds with no other involvement in the underlying project - only buying CERs • Why this change in concept?

  3. Private sector IS active! • FDI in Malaysia in 2003 was 15 billion RM (4 billion USD) • Annual income from sale of CERs in 2010 could amount to 190 million RM (50 million USD) or 1,3% of annual FDI • The private sector IS active • But can private sector take interest in CDM?

  4. Case study 1 – Impact of CDM for biogas from Palm Oil Mill Effluent • Mill with capacity of 40 ton of Fresh Fruit Bunches per hour • Power generated will be connected to the grid • Contribution CDM is 6-10 sen/ KWh • Impact of CDM is different per technology used

  5. Case study 2 – Impact CDM on CHP project • CHP technology used at a palm oil mill • Power generated will be connected to the grid and partly used for on site consumption • Project displaces power from grid connected fuel plants and biomass used for heat generation (e.g. no CERs related to heat) • Contribution CDM is 1.1 sen/ KWh

  6. CDM changes the investment priorities

  7. Issues for private sector in Annex B countries • Companies covered by EU’s Emission Trading Scheme tend to focus on core business • Utility companies tend to focus on regional markets • Costs of carbon credits not enough to invest outside core business • Tendency to ”sit on the fence” – or go for a fund • Technology providers are getting alert • But are (most often) neither investors nor CER buyers • Multi national companies within high emission industries and with emission reduction commitments pioneers • Cement

  8. Issues in host countries – CDM related • CDM is still a new concept • Will anybody really pay for CERs? • Bad experiences with national and international approval processes • Complicated and long procedures • This IS changing! • Timing in project cycle • CDM does solve all problems for all projects • Lack of clear government policies on CDM

  9. Issues in host countries – non-CDM related • Still a lot of barriers for CDM project implementation • Power purchase agreements for small RE projects • General grid connection conditions • Subsidies for fossil fuels • Financing • Inertia in decision processes in large companies

  10. CDM – increasing security • 46 methods approved by CDM EB • 25 large scale methods • 15 small scale methods • 6 consolidated methodologies • Increasing number of projects registered • First CERs due soon • National approval processed being streamlined

  11. CDM: From buyers to seller market? • Lack of projects to meet Annex B demands for credits • More buyers engaging…. • In the early phases: WB and CERUPT • Now many governments and funds • … lead to competition in terms • Covering upfront cost • Providing technology - good or bad? • Price - increasing

  12. Host country governments:Don’t kill the baby by too much attention • Host country approval: Be aware of the roles • Confirmation of Sustainable Development • OE will handle additionality • Private investor will handle technical and financial feasibility • Approval procedures must become simpler and faster • Coordination with other policy instruments • Ambivalence towards multinational companies limiting partnerships

  13. Annex B governments:Integration with other development activities • CDM is run within special routines and with focus on low prices • CDM is a necessary element in a post-2012 climate - regime • CDM could be seen as final stage of ODA • Market penetration of technologies • Provide funds and incentive for O&M • Controversial – ODA diversion • Facilitation of private partnerships

  14. Private companies in Annex B countries:Plan for the future • CERs prices will most likely be determining for compliance costs • And projects does not come by them selves – There is no domestic market in host countries • Develop internal tools for carbon assets and liabilities • Consider CDM in relation to foreign investments • CDM as part of Corporate Social Responsibility ?!

  15. Project developers in developing countries:Seize the opportunities • Be aware of opportunities • Methane reductions • Direct saving/replacement of coal • Industrial gasses (HFC, N2O, SF6) • Screen project portfolio • Include CDM early in project cycle • Get help for the paper work • Royal Danish Embassy in Bangkok, Jakarta, Kuala Lumpur • Private consultants

  16. Thank you ! Soeren Varming Senior Consultant, Climate Change sva@econdenmark.dk + 601 9256 7970

More Related