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Clean Developmen t Mechanisms and New Market Developments

Clean Developmen t Mechanisms and New Market Developments Presentation at the Regional Conference on Gas Flare Reductions Tashkent, 15 th June 2012. Outline. The CDM and Flare Reduction – Current Status Prospects for carbon co-financing of petroleum sector investments

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Clean Developmen t Mechanisms and New Market Developments

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  1. Clean Development Mechanisms and New Market Developments Presentation at the Regional Conference on Gas Flare Reductions Tashkent, 15th June 2012

  2. Outline The CDM and Flare Reduction – Current Status Prospects for carbon co-financing of petroleum sector investments Regional initiative on flare reduction (EBRD & GGFR study) Carbon Limits AS

  3. Carbon prices have collapsed and outlook is uncertain .. • Dramatic decline since summer of 2011 • The problem is demand - market rebound not likely by market forces alone • Current price levels insufficient to justify most GHG mitigation investments Figure: EU ETS developments – CER prices Source: BlueNext

  4. .. but there is continued growth in the CDM project pipeline .. • > 4,000 registered CDM projects • «Pre-notification» for > 10,000 projects submitted to the UNFCCC • > 900 million CERs issued (CDM) Figure: Number of projects and CER issuances (cummulative) Source: UNEP Risøe/CL

  5. Gas flare projectsFew countries (and companies) have more than one CDM project .. + 8 14 1 2 + 3 2 1 1 2 1 + 3 1 1 1 1 + 1 3 3 1 1 1 1 2 + 1 1 2 CDM/JI pipeline: (validation ->) 2 ~50 mill tCO2e/yr ~26 BCM/yr = Countries with at least 1 registered gas flare recovery project = Countries with at least 1 gas flare recovery project under validation/registration = # projects under validation/registration in country = # registered projects in country x x

  6. Despite low carbon prices and uncertainty about market access for CERs from non-LDCs, new CDM projects are put forward .. Submission rate to UNFCCC («Pre-notifications» per month) 2 3 3 1 2 5 3 1 4 2 2 1 3 1 1 CDM/JI pipeline: • 112 known projects • 77 companies • 28 countries = # projects in «pre-notifications» stage in country x = Countries with projects under development (validation/registration/issuance) = Additonal countries with at least 1 project in «pre-notification» stage Source: UNEP Risøe/CL

  7. Gas flare projectsHigh failure rate for CDM project submissions .. 13 1 3 1 1 1 2 1 Only 3 CDM projects have had CER issued! = Countries with at least 1 gas flare recovery project terminated/rejected/no issuance after >2 years

  8. The Durban Platform: Towards a new broad agreement The Durban Platform: • The Ad Hoc Working Group on the Durban Platform on Enhanced Action to start its work in the first part of 2012 • Work to be completed no later than 2015 in order to adopt a protocol, legal instrument or legal outcome and for it tom come into effect in 2020 Commitments: • Not clear what the commitments will be: • Quantitative emission limitations/reductions (QELROs) • Financial • Monitoring, Reporting and Verification (MRV) • Not clear what countries/parties will have what type of commitments from 2020

  9. Scale-up from the CDM New mechanisms Existing mechanism

  10. Regional study on flare reduction Objectives SEI • Review and analyze the existing flaring situation • Identify and analyze gas utilization options • Develop bankable investment projects • Disseminate the results of the study Sustainable Energy Initiative Launched by EBRD in 2006, now at phase 3 Focus: energy efficiency and climate change SEI investments since 2006: €8 billion Tasks and timeline Review flaring situation in the four countries Establish collaboration with potential partners Economic and technical analysis of gas utilization projects Results dissemination Project Management Project Team

  11. ResultsCountry Overview Reports • Review for the 4 countries: • Flaring estimates • Flaring policies, regulation and market conditions • Ongoinggas utilisation projets and future prospect

  12. Next steps Establish cooperation with companies • Focus of the phase 2 • Based on the result of phase 1, the activities of phase 2 are focused towards: • Fields where there are currently some gas utilization challenges • Clusters solutions • Current process ongoing • Introduction letter sent • Organization of meetings with the different companies • Establishment of formal collaboration (NDA) • Technical collaboration on specific gas utilization projects Number of companiescontacted per country

  13. Thank to: Torleif Haugland, Managing Director Carbon Limits AS E-mail: th@carbonlimits.no

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