Transcript Slide 1

Lehman Lee & Xu’s Beijing office
June 23th 2008
Clean Development Mechanism
DOING BUSINESS IN CHINA
[email protected]
[email protected]
Aldo Settimio Boni de Nobili
Associate - China desk - Beijing
DOING BUSINESS IN CHINA
Clean Development Mechanism
FACING GLOBAL WARMING
GLOBAL
WARMING
EFFECTS
IPCC
Increase in the temperature of Earth’s surface and oceans
Established in 1998 by WMO and UNEP
Sea level
1990-2100 = 1.4° C – 5.8° C
TASK:
Precipitations and extreme weather events
evaluate the risk of climate change
Agriculture
ACTIVITY:
Glaciers
reports about UNFCCC implementation
Species extinctions
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DOING BUSINESS IN CHINA
Clean Development Mechanism
UNFCCC
•UNCED Rio de Janeiro 1992
•Signed in 1992 by 154 nations
•Parties = 192 countries
•1994 entered into force
•COP
•Aim: stabilizing GHG to prevent dangerous
interference with the climate system
•“Common but differentiated responsibilities”
•Non-binding
Annex 1
NO RESTRICTIONS
Developed
countries
Non-annex 1
Annex
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Developing
countries
OECD
Provide financial resources to Non-annex 1
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•report annual emissions and
sinks
•submit annual inventories
DOING BUSINESS IN CHINA
Clean Development Mechanism
KYOTO PROTOCOL
•COP3 Kyoto 11 Dec 1993
•In force 16 Feb 2005
•June 2008: 182 parties
•36 Annex 1 + EU = reduce GHG (61.6%)
•Cyprus, Malta and Kazakhstan intend to
participate
•137 Non-annex 1 ratified: no obligation
•US not ratified
1° committment period = 2008-12
•1.3 emission allowances
2nd commitment
period for every ton of GHG exceeding
GAINING in
CREDITS
BY UNDER-POLLUTING
•suspension from transfers of credits
Industrial
entities
Emissions cap
reduce national emissions
5.2% below 1990 baseline
Governments
Credits
other parties
brokers
Buy credits
carbon projects
developers
exchanges
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Actual emissions
Buy credits
DOING BUSINESS IN CHINA
Clean Development Mechanism
EMISSIONS OFFSET
Emissions
exceeding
OFFSET
CO2 emissions cap
Carbon credits
Emissions
allowed
JI
CDM
ET
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DOING BUSINESS IN CHINA
Clean Development Mechanism
KYOTO PROTOCOL’S FLEXIBLE MECHANISMS
Emissions Trading (ET)
• Article 17 Kyoto Protocol
• Annex 1 – Annex 1
Joint Implementation (JI)
• Article 6 Kyoto Protocol
• Annex 1 – Annex 1
Clean Development Mechanism (CDM)
• Article 12 Kyoto Protocol
• Annex 1 – Non Annex 1
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DOING BUSINESS IN CHINA
Clean Development Mechanism
CDM MARKET IN CHINA
INTENDED
WHY
CERs
BUYERS
PROJECT TYPES
Competitive
labour and facilities costs
WORLD BANK SAYS:
France, Spain,
Luxemburg,
Canada
Switzerland
12%
50% of CERsEnergy
POTENTIALITIES
Germany
7%
efficiency
2-8 bln US$ per year
14%
4%
U.K
Italy
7%
Biomass
4%
Waste heat – Gas
utilization
38%
Hydro
53%
1197 projects nationally 14%
approved (April 2008): +400% 2006
Sweden
CURRENT
STATUS
9%
Netherlands
11%
210 projects internationally registered: + 500% 2006
Japan1449
12%625
Wind
15%
projects are being nationally approved
approved hydro projects: 50% of the total approved projects
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DOING BUSINESS IN CHINA
Clean Development Mechanism
LAWS
The United
Nation
Framework
on Climate
Change
(UNFCCC)
•United Nation Conference
on Environment and
Development (UNCED)
Rio de Janeiro 1992
•China ratified 1993
The Kyoto
Protocol
•COP3 11 December 1997
•China ratified 2002
The
Marrakech
Accords
CDM Measures
•12 October 2005
•NDRC + MOST + MFA +
MF
Promoting
Clean
Production Law
•19 June 2002 – 1 January
2003
Energy
Conservation
Law
•COP7 November 2001
•way to ratify the Kyoto
Protocol
•CDM issues
Others
INTERNATIONAL LEVEL
•November 1997 – 1
January 1998
•PRC Environmental Law
•Environmental Impact
Assessment Law
•Renewable Energy Law
•financing, foreign
investment, taxation
NATIONAL LEVEL
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DOING BUSINESS IN CHINA
Clean Development Mechanism
AUTHORITIES
National Coordination Committee on
Climate Change•(NCCCC)
Host governments + Designated
national approval
National
Authorities
(DNA)
Chair
NDRC
Designated Operational
Co-Chairs
Vice Chair
•reviewing national CDM
policies, rules and standard
•approving Board’s
members
•validation (outset)
•examination
•making publicly available
the PDDand approval
National CDM Project
Board
•receiving
public comments and stakeholders’
Entities (DOE)
•reporting to NCCCC on
comments
progress in CDM activities
•verification
and
certification
of CERs
NDRC - MOST
(operation)
•making reccomendations
MOFA
Board
SEPA – CMA –
CDM Executive Board (EB)
DNA
NDRC
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on the amendments of the
CDM Measures
•recommendations to the COP/MOP
•approve new methodologies
MF
- MA
•DOEs accrediting and suspending
•reviewing accreditation procedures
•make publicly available CDM activities and
procedures
•accepting applications
•CDM project registry •final approval
•reviewing CR and VR
•issuing CERs.
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DOING BUSINESS IN CHINA
Clean Development Mechanism
CDM REQUIREMENTS
•China’s legal system, sustainable development strategies and policies
•not introduce new obligations
•promote the transfer of environmentally sound technology
PROJECT
Funding for CDM projects from the developed countries shall be
additional to their current official development assistance and
their financial obligations under the Convention.
Additionality
(Marrakech Accords)
“Chinese funded or Chinese-holding enterprises
within the territory of China are eligible to conduct
CDM projects with foreign partners” (art. 11 CDM
Measures)
•100%
Chinese
•51%
Chinese (at
least)
PROJECT OWNER
•FIEs?
•Hong Kong / Macau?
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Clean Development Mechanism
TYPICAL INVESTMENT STRUCTURE
2%
(Priority
areas)
65%
(HFC – PFC)
Other chinese
taxes
Government
30%
(N2O)
TAXES
CERs
Broker
RMB/tCO2
Company
CERs purchaser
RMB/tCO2
CDM Project
Private company
100% Chinese
FIE 51%
Chinese
(at least)
Domestic
company
Foreign
investor
Governmental body
Financial institution
NGO
Project owner
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DOING BUSINESS IN CHINA
Clean Development Mechanism
CDM PROJECTS TYPES
Energy efficiency
Industrial process
changes
Renewable energy
Methane recovery
Cogeneration
Afforestation and
reforestation
Agriculture
Transports
priority
areas PRC
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Clean Development Mechanism
PROCEDURES
Project owner
Project owner
DNA + N Board
DOE
NDRC
PIN
Documents:
--application form
PDD
--PDD
--enterprise status
--general information
Approval
--project
financing
Validation
Expert review procedure (30 days)
EB
Project owner
DOE’s designation
DOE
EB
National level
Registration
Implementation and monitoring
Decision from National CDM Board
Project review
Verification
Certification
and
issuance
LOA (20-30
days)
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•stakeholders
•LOA
•DOE ‘s designation
•consultation
•validation report
•filing of VR and LOA
•8 weeks (potential review)
•EB files decision to PO
•PO files decision to NDRC
•object
•modality: monitoring plan PDD
•submitting reports to NDRC and DOE
Validation Report
•DOE’s
to designation
the EB
•Verification Report
•Certification Report
•CERs: 15 days after reports
•send to participants’
accounts at request International
level
Lehman Lee & Xu’s Beijing office
June 23th 2008
THANK YOU FOR YOUR ATTENTION
DOING BUSINESS IN CHINA
Clean Development Mechanism
[email protected]
[email protected]
Aldo Settimio Boni de Nobili
Associate - China desk - Beijing
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