Transcript Document 7140391

CLEAN DEVELOPMENT
MECHANISM: OPPORTUNITIES
FOR THE PHILIPPINES
Climate Change Information Center
Manila Observatory
Ateneo de Manila University
Clean Development Mechanism
•
•
•
•
Enables developed countries (known as
Annex I countries) to meet their emission
reduction commitments in a flexible and costeffective manner
Assists developing countries (non-Annex I
countries) in meeting their sustainable
development objectives
Investors benefit by obtaining Certificates of
Emissions Reductions (CERs)
Host countries benefit in the form of
investment, access to better technology, and
local sustainable development
Value & Benefits of CDM:
From a developing country perspective
• Attract capital for less-carbon intensive
projects
• Encourage active participation of private
and public sectors
• Technology transfer – environmentally
friendly sustainable technologies
• Investment priorities in sustainable
development projects
CDM contributions to Sustainable
Development objectives
• Transfer of technology and financial
resources
• Sustainable ways of energy production
• Increasing energy efficiency &
conservation
• Poverty alleviation through income and
employment generation
• Local environmental side benefits
Simplistic numerical example
Provide electricity for a barangay
• “Business-as-usual” (baseline): Diesel
generator sets
– Cost of project $10
– Emissions 1 tC
• Cleaner project (CDM-eligible): Microhydro
– Cost of project $13
– Zero Emissions
Simplistic numerical example
• CDM Investor (e.g. Japan)
– Invests $3 ($13-$10, difference between
cleaner and business-as-usual project)
– Gains Certificate of Emissions Reduction of 1
tC, which it can meet some of its Kyoto
Protocol commitments to reduce emissions
Simplistic numerical example
WIN – WIN – WIN
• WIN for the host country
– Sustainable development benefit: Cleaner
energy production technology
• WIN for the Annex I country
– Credits for emissions reduction
• WIN for the Global Environment
– Emissions reduction
CDM Project
• Achieves Sustainable Development
objectives for the host developing country
• Reduces GHG Emissions
Baseline and CERs
Business as usual:
baseline
CO2
emission
Reduced emissions
Project
implemented
year
CDM: A special product
• CER is a payment for the Project
Developer not to produce
• To reduce GHG emissions
• Thus, the importance of special
requirements
– Definition of baselines
– Calculation of GHG emission reductions
How CDM can matter
FIRR
Without CERs
implemented
With CERs
not
implemented
Without CERs not implemented;
with CERs implemented
CER income
No CDM
CDM
CDM Eligible Projects
•
•
•
•
•
Renewable energy
Fuel switching
End-use energy efficiency improvements
Supply-side energy efficiency improvement
Agriculture (reduction of CH4 & NO2
emissions)
• Industrial processes (CO2 from cement,
HFCs, etc)
• Sink projects (only afforestation &
reforestation)
Clean Development Mechanism
Types of small-scale projects
that could qualify for fasttrack approval procedures
•
•
•
Renewable energy projects up to
15 megawatts (MW) of output
capacity
Energy efficiency improvements
that reduce energy consumption
on the supply and/or demand side
by up to 15 gigawatt-hours
(GWh)/year
Other project activities that both
reduce emissions at source and
directly emit less than 15 kilotons
(kt) of CO2 equivalent annually
Projected Philippine CO2 Emissions:
Potential of CDM Emissions
Reductions Supply
Projected CO2 Emissions 1999-2008
CO2 emissions (Gg)
150,000
natural gas
120,000
oil
coal
90,000
60,000
30,000
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Projected Philippine CO2 Emissions:
Potential of CDM Emissions
Reductions Supply
Year
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Estimated CO2
Coal
17,988
18,843
19,720
15,890
17,530
20,750
22,854
26,897
28,281
31,055
Emissions (in Gg )
Oil
N. Gas
Total
47,324
7
65,319
50,766
10
69,619
55,653
13
75,386
53,591
5,879
75,360
56,472
6,645
80,647
59,974
7,239
87,963
64,825
7,232
94,911
70,471
7,232
104,600
76,183
8,464
112,928
80,840
9,699
121,594
Abatement Cost (US $/ton CO2)
5
0
-5
0
3
6
9
12
15
Philippine
GHG Abatement Cost
and Potential
-10
-15
-20
-25
-30
Annual CO2 Reduction Potential (mill t CO2)
Source: ALGAS
Abatement Option
CFL
Industrial Boilers
System Loss Reduction
Industrial Motors
Eff Air Conditioning
Eff Refrigerators
Heat Rate Improvement
Eff Transport
Wind Power
Biomass Power
Solar Power
CC Natural Gas
Abatement Potential
(mill t CO2/year)
Abatement Cost
(US $ / ton CO2)
1.10
0.37
2.32
0.24
1.47
0.37
5.26
1.34
0.24
0.12
0.12
1.83
-26.3
-26.0
-17.2
-13.7
-6.1
-5.4
-5.1
-2.9
-1.6
0.3
1.4
2.4
BATANES
1,100 KW
NORTHERN LUZON
120 MW
MARINDUQUE ISLAND
3,000 kW
LUBANG ISLAND
330 kW
MINDORO ISLAND-ORIENTAL
13,500 kW
BUSUANGA ISLAND
330 kW
CUYO ISLAND
330 kW
CASIGURAN
500 kW
POLILLO ISLAND
500 kW
CATANDUANES
2,250 kW
TABLAS ISLAND
1,500 kW
ROMBLON ISLAND
1,000 kW
MASBATE ISLAND
3,000 kW
DINAGAT ISLAND
3,000 kW
PALAWAN ISLAND
9,000 kW
SIQUIJOR ISLAND
1,000 kW
POTENTIAL
CAPACITY:
160,340 kW
SPECIFIC WIND POTENTIAL POWER SITES
Solar Energy
Resource
Potential
 Average insolation of
5- 6 kWh/sq. m/day all
throughout the country
1990-2025 Equivalent CO2 Emissions from
Municipal Solid Waste Generation (million tons)
35
30.78
30
24.15
25
20.01
18.97
20
15.04
15
10
constant
generation
rates
5.86
7.33 7.33
5.45
9.19
12.11
12.12
9.87 10.49
16.86
14.23
5
0
1990
1995
2000
2005
2010
Year
2015
2020
2025
changing
generation
rates
Requirements for the Philippines to
Participate in CDM
• Ratify the Kyoto Protocol
• Designate the CDM National Authority
Requirements for the Philippines to
Participate in CDM
• Status of Philippine ratification of the
Kyoto Protocol
• Senate Committee on Foreign Affairs has
sponsored the ratification on the floor of the
Senate, 2nd June 2003
• Interpellation and voting during the next session of
the Senate, August 2003
• Need 2/3 majority of the Senate to concur in the
ratification of the Kyoto Protocol
Requirements for the Philippines to
Participate in CDM
• Status of efforts to establish CDM
Designated National Authority (DNA)
• Proposal to make the Inter-Agency Committee on
Climate Change (IACCC) as the DNA
• IACCC is composed of: DENR, DOST, DOE, DFA,
DTI-BOI, DOTC, NEDA, DPWH, PAGASA, FMB,
EMB, Philippine Network on Climate Change
(NGO)
PCF/CDM Project Cycle – The Manufacturing
Process for CDM Emissions Reductions
Project completion
Preparation and review of the Project
• Project Idea Note
• Project Concept Note
• Project Concept Document (or equivalent)
Baseline Study and Monitoring
Plan (MP)
Periodic verification &
certification
• Verification report
• Supervision report
• Project Design Document
• Baseline study and ER projections
• Monitoring Plan
Validation process
• Validation protocol and report
Construction and start up
• Initial verification report
Negotiation of Project Agreements
• Project Appraisal and related documentation
• Term sheet
• Emission Reduction Purchase Agreement
Carbon Asset Creation and Maintenance Costs
The PCF Experience
Project completion
Preparation and review of the Project
• Upstream Due Diligence, carbon risk
assessment and documentation: $ 50K
Baseline Study and Monitoring
Plan (MP)
Periodic verification &
certification
• Verification: $10-25 K
• Supervision: $10-20K
• Baseline: $30 K
• Monitoring Plan: $25K
Validation process
• External consultant: $25K
• Processing and documentation: $30k
Construction and start up
• Initial verification at start-up: $25K
Negotiation of Project Agreements
• Consultation and Appraisal: $75K
• Negotiations and Legal documentation: $30K
Total through Negotiations
• All expenses: $265 K
Demand for CDM Projects
Example:
• The Netherlands will reduce 100Mt CO2eq
through CDM/JI (tender, CDM facilities etc) at
average costs of ca 4 US$/ton CO2eq
• This means 400 M US$ for CERs/ERUs.
Contribution to the capital costs may by be 515% (at least for CERs). Consequently an
investment of 4,000 M US$ is needed to
generate the credits for the Netherlands.
• Note: Should be new and additional
Total GHG emissions in 1990 and 2010, and reduction commitments according to
the Kyoto Protocol based on national communications
Demand Scenario
TotalGHG
Emissions
in 1990
(mtc)
EU
Total GHG
Emissions
in 2010
(mtc)
Kyoto
Reduction
Commitment
s (mtc)
Excess
Emissions
(mtc)
Kyoto
Commitments
minus Excess
Emissions
Projected
Demand (at
$4 per tC) in
$M
12.7
27.9
111.60
1,159.50
1095.9
40.6
113.3
144.1
21.7
86.80
Canada
153
182.4
29.2
116.80
Iceland
0.8
1
0.1
0.40
337.2
388.2
71.2
284.80
19.8
22.9
3.1
12.40
15
17.3
2.1
8.40
14.6
14.5
1.1
4.40
1634.4
1943.9
423.9
1,695.60
368.4
358.3
26.7
11
15.7
62.80
1,113.50
1032.2
0.9
81.4
-80.5
(322.00)
Australia
Japan
New Zealand
Norway
Switzerland
United States
Eastern Europe
Former USSR
CDM Funding as Additional
• Public funding for CDM Projects be
additional to Official Development
Assistance (ODA), Global Environment
Facility (GEF) provided by Annex I Parties
• Public funding for CDM projects must not
result in the diversion of ODA
• Funding may involve private and/or public
entities
Current ‘State of Play’
• Although numerically dominant,
renewables account for only 9.4
million tons of the 42 MT of CO2
equivalent being claimed (just over
20%)
• Single greatest source of carbon
credits being claimed is hydroelectric
projects
Project Type
No. of Projects
Tons of CO2
1 (component)
4,299,951
14
9,430,973
1
319,392
1 (component)
7,741,405
Gas Capture
1
700,000
Waste
Incineration
Hydro
1
2,800,000
7
17,150,767
25
42,442,488
Mono-culture
Plantation (sinks)
Renewables*
Energy Efficiency
Fuel Switching
TOTAL
*Hydro projects <10 MW are counted as renewable.
CDM Project Cycle
Design
Validation/
registration
Project
Participants
Designated Operational
Entity
CDM Executive Board
Monitoring
Verification/
certification
Project
Participants
Designated Operational
Entity
CDM Executive Board
Issuance
Certified Emission Reductions
Applicant Entity
Executive Board and
COP/MOP
Designated
Operational
Entity
Designated National
Authority (DNA) for CDM
Accreditation/
designation
Contents of CDM-PDD
A. General description of project
activity
B. Baseline methodology
C. Duration of the project activity/
Crediting period
D. Monitoring methodology and plan
E. Calculations of GHG emissions
by sources
F. Environmental impacts
G. Stakeholders comments
Roberto C. Yap, S.J., Ph.D.
Environmental Economist
Climate Change Information Center
Manila Observatory
Ateneo de Manila University
Tel +63 2 426-6144
Fax +63 2 426-6070
[email protected]