CDM-Risoe

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CDM-Risoe Powered By Docstoc
					          AMCEN
Special Session on Climate Change
   Nairobi 25 – 29 May, 2009


 CDM and Africa
       John Christensen
   Director, UNEP RISOE Centre
                  Outline of presentation

• Carbon markets
• CDM projects status and perspectives
      Global overview
      African projects and regional share
•   Barriers and how to overcome them
•   UNEP activities in support of African engagement in the
    emerging carbon market – part of Nairobi Framework
•   Engaging the finance and business community
•   Analytical and information support activities
•   COP 15 and future directions for the CDM
      Examples of UNEP contributions
                                                              2
  Global Carbon Market
Fragmented market

   • Project-based (baseline and credit system)
      • Emission reductions are created and traded through a given project or
         activity (JI and CDM)
   • Allowance market (cap and trade system)
      • Emission allowances are defined by regulations at the international,
         national, regional or firm level - Kyoto-ET, EU-ETS, Domestic: UK,
         Japan, Canada, Korea. Firms: BP, Shell
      • Linkage between EU ETS and project-based mechanisms
   • Voluntary market
      • Individuals and companies account and trade their greenhouse gas
         emissions on a voluntary basis (carbon compensation and travel
         compensation schemes)
      • Several companies expressed interest in buying project-based credits
         (CERs and ERUs)

     Market structures are likely to change with a new agreement                3
Status on CDM Projects May 2009




                                  4
Share of credits from different projects




                                           5
                277 million CERs have been issued
                (at 10€/tCO2 that is 2,7 Billion €)
CDM projects in the pipeline           CDM project with CERs issued
Type                           Projects      Issued kCERs   Issuance success
Afforestation
Agriculture                            39             3782               45%
Biogas                                  7             1139               64%
Biomass energy                        106            11796               86%
Cement                                  7             1103               66%
CO2 capture                             1               43              191%
Coal bed/mine methane                   3              733               45%
Energy distribution
EE households
EE industry                            22              938               85%
EE own generation                      30            10701               90%
EE service                              1                4               61%
EE supply side                          5              345               76%
Fossil fuel switch                     18             2329               85%
Fugitive                                3             5153              112%
Geothermal                              2              318               29%
HFCs                                   17           151782              106%
Hydro                                  94             9984               91%
Landfill gas                           36             5902               34%
N2O                                    12            58952              122%
PFCs
Reforestation
Solar                                   1                 1               18%
Tidal
Transport                               2              132                47%
Wind                                   89            11647                84%
Total                                 495           276784              97,6%   6
Regional Distribution a political concern
Market dominated by +5 countries




                                            7
Cumulative number of projects


Country                 2004    2005   2006   2007   2008   2009
Egypt                      0       0      5      7     12     12
Morocco                    1       4      5      5     10     10
Tunisia                    0       0      2      2      2      2   Now more than 100
North Africa               1       4     12     14     24     24
Cameroon                   0       0      0      0      0      1   African CDM
Cape Verde                 0       0      0      0      0      1
Congo DR                   0       0      0      0      2      2   Projects
Ethiopia                   0       0      0      0      1      1
Ivory Coast                0       1      1      1      2      2
Kenya                      0       0      1      4      7      9
Liberia                    0       0      0      0      0      1   With a potential
Madagascar                 0       0      0      0      1      1
Mali                       0       0      0      1      2      2   carbon value
Mauritius                  0       0      0      1      1      1
Mozambique                 0       0      0      1      1      1   around 1 billion
Nigeria                    0       2      2      2      4      6
Rwanda                     0       0      0      0      1      1   USD by 2012
Senegal                    0       0      0      1      2      2
South Africa               1       7     16     23     27     29
                                                                   -but almost half will go to only
Swaziland                  0       0      0      0      1      1   two countries!
Tanzania                   0       0      1      2      5      6   (RSA & Nigeria)
Uganda                     0       1      1      2      8     10
Zambia                     0       0      0      0      1      1
Sub-Sahara Africa          1      11     22     38     66     78
Total Africa               2     15      34     52     90    102
Total global              60    533    1370   2779   4340   4733                                      8
                        Project types in Africa


                  Demand-side EE
                       5%
           Afforestation &
           Reforestation
                10%
       Supply-side EE
            6%                                    Renewables
HFC & N2O reduction                                  41%
        5%

         Fuel switch
            7%




                        Landfill etc
                           26%
•Even if African countries have made significant progress

•The regional share of the global market has remained constant

•Africa’s share of CDM market is low on all comparisons




                                                                 10
                               CDM Challenges
• Non Africa-specific:
   • Complex CDM Modalities & Procedures:
      • Transaction cost to hire service providers.
   • Heavy institutional requirements for project cycle.
   • Knowledge gap between ER buyers & sellers.

• Africa-specific:
   •   Limited access to finance by potential developers.
   •   Financial intermediaries lack of knowledge about CDM.
   •   Lack of trained national CDM consultants.
   •   Investment climate.
   •   Limited budgets for operations of DNAs.
   •   Majority of potential in small projects, difficult to attract financing:
         • Lack of entities capable of bundling projects for the buyers.          11
     The Nairobi Framework - catalysing the CDM in Africa

• The Nairobi Framework was initiated at COP 12 in Nairobi by UNDP,
    UNEP, World Bank, African Development Bank, and the UNFCCC
    Secretariat with the specific target of helping developing countries,
    especially those in sub-Sahara Africa, to improve their level of participation
    in the CDM.

• The NF partners work to:

• Build and enhance capacity of DNAs to become fully operational
• Build capacity in developing CDM project activities
• Promote investment opportunities for projects
• Improve information sharing/outreach / exchange of views on activities /
  education and training
• Inter-agency coordination.
                                                                                     12
             UNEP is in a unique position
• Not a buyer. Not a seller:
   • Unbiased advisory services & research products
   • Trusted by both buyers & sellers.
• In-country CDM CD activities in more than 35 developing
  countries:
   • Cross-fertilization of experiences from different regions and sectors.
   • Intimate knowledge of host countries‟ situation
   • Access to valuable field information
• Ability to invest time & effort in activities unattractive to private
  sector:
   • Research products (CDM Pipeline database).
   • Operate & pave way in high sovereignty risk countries (e.g. Sub-Saharan
       Africa).
   •   Diversified experiences (geographic & sectoral) among carbon finance team in
       UNEP.
                                                                                      13
    UNEP’s CDM support program

•   Key CDM activities                      •   Part of UNEP CC strategy
    o Structured, country-level capacity        o Supporting low carbon policy
      building programs                           development
        • Regulatory advisory, DNA/                 • Capacity building
          institutional capacity building
                                                    • Analytical support
    o Targeted, hands-on workshops &
                                                o Facilitating Finance
      training sessions
                                                   • Innovative approaches
    o Analytical work (guidebooks;
                                                   • Engaging with FI‟s
      market surveillance and analysis
      & targeted research)                      o Technology transfer and
                                                  deployment
    o Promotion Activities –
      organization/participation in                 • Supporting “New TNAs”
      regional/global carbon events                 • Regional TT networks
        • CDM Bazaar                                • Piloting EE implementation
    o Facilitation of information               o Strong basis for possible future
      management – web-based tools.               support to countries wanting
                                                  NAMAs and sector planning
                                                                                     14
      UNEP – in country activities
     Institutional Capacity                     Individual Capacity
          Development                              Development                   • National awareness
                                                                                   raising workshops
                                                                                 • Regional workshops
        Core business &
     regulatory frameworks
                                                                                 • Sector specific
                                                        Organize national          workshops (e.g RE;
      for CDM investment
                                                       CDM workshops and           landfill; EE, etc) for
                             Identify, assess and       training sessions          sector experts;
   Modalities &                implement CDM
                                   projects                                        practitioners; project
Procedures for CDM                                                                 developers
 projects approval                                       Identify, formulate
                                National CDM
                             investor guidebook
                                                        and secure financing     • Executive briefings for
                                                          for CDM projects         key officials
          Promote
       commitment of
        policy makers



                                                          project origination
 project approval

Creates a national CDM projects portfolio and the institutional capability to attract CDM investments        15
UNEPcapacity development
   activities in Africa
•   CD4CDM
•   Green Facility
•   UNDP-UNEP
•   CASCADE
•   Upcoming CB for MEAs
    (CDM) interest statements
                                  16
21 Countries + 7 to be selected
                          Regional Activities
                                                           Regional Carbon Forums
      Investment mobilization and
      engaging the finance sector                 • Africa Carbon Forum, Senegal, Sep.
                                                   2008 & 2nd Forum in Nairobi early 2010
•   African Bankers‟ Carbon Finance Investment
                                                      Knowledge and information sharing platforms
    Forum. May 2007, Johannesburg
                                                      Updates on Carbon markets; technical
•   Dakar, Senegal: Carbon finance perspectives        knowledge sharing on conferences; trade fair
    for the banking sector. Feb 12-14, 2008            and capacity-development sessions,
•   Finance guidebook                                 Organizers: IETA, UNEP, WB, UNDP, and
                                                       UNFCCC Sec.
                                                  • Latin America Carbon Forums, Quito 2006,
                                                   Lima 2007, Santiago 2008, Panama 2009




                                                                                                      17
Virtual platform for information exchange




                                            18
19
                     Measures of Results and Impacts
• Operationalizing of DNAs: business & regulatory
  frameworks for CDM investment

• Pipeline of PINs/PDDs by national CDM experts.
• Local financial institutions have good understanding of
  CDM, possibly able to provide underlying project financing.

• Organized capacity building workshops
   • Skills and Knowledge provided to local experts
   • Local experts able to deal with the complete cycle of CDM projects
   • Local relevant institutions have good understanding of CDM and Climate
     Change
   • Inter-institutional networks and coordination have been generated and
     enhanced through country team activities and the DNAs.
                                                                              20
               Implementing in Partnership
• All national activities are      • Partnership with UNDP on
  undertaken with government         CDM and adaptation
  focal points and engage            activities in Africa, currently
  local experts and institutions     supporting 7 countries on
                                     CDM
• Technical support is
  provided using regional          • Partnership with World Bank
  Centres of excellence and          on national projects and e.g.
  trained experts from other         regional finance events
  countries in the region
                                   • One UN Training Service
• Partnership with UNFCCC            Platform for CC (TSP4CC)
  Secretariat on CDM Bazaar          led by UNITAR
  and Pipeline
                                                                       21
  Some of the CDM issues on the table for COP 15
“Political” enhancing              “Normative and CB”
  regional distribution              support enhancement

 Higher threshold for small        Streamlining programmatic
  scale projects                     CDM and targeting CB
 Simpler additionality criteria     support to this area
  for small scale projects          Developing projects and
 Elements of financing for          approaches to forestry and
  validation and verification        bio energy CDM projects
 Broader inclusion of forests      Establishing targeted
 Inclusion of NAMA and              finance to further CDM
  sectoral crediting                 project development
                                                                  22
UNEP supporting new directions for the CDM to become more
effective, especially for African countries:
    •Programmatic guide and project support
    •Forestry projects and methodologies
    •African Carbon Finance Facility
    Programmatic CDM making slow progress
    - 8 projects still only at validation
• Installation of solar home systems in Bangladesh
• Methane capture and combustion from Animal Waste
    Management System (AWMS) of the 3S Program farms of the
    Sadia Institute. Brazil
•   Solar water heaters in South Africa
•   Efficient light bulbs in Households in Mexico
•   Composting of household waste in cities in Uganda
•   Efficient light bulps in rural Senegal
•   Masca Small Hydro Programme in Honduras
•   Solar water heater programme in Tunisia - PROSOL
    developed based on UNEP supported program
                                                              24
Main features of the PROSOL
programme

  1. Loans financed through local banks
       repayments made through electricity bills
       interest rates initially softened
        interest subsidy phased out after 18 months



  2. Subsidy equalized between SWH and LPG
     underwritten for a trial period by Italy
       after successful trial made permanent
         - change in Tunisian legislation
Carbon mitigation

                                                Programmatic
                                                    CDM
PROSOL Result
 113,400m2 SWH (58,000 installations)
       Equivalent to 280,000 tonnes of CO2
       Worth $4.5 million at market prices
           NB: programme cost $2.4 million



GOVERNMENT Target 2011
 540,000m2 (~180,000 installations)
       1.3 million tonnes of CO2
       market value $19 million
   CDM documentation prepared
       project being marketed to governments
CASCADe - Carbon Finance for Agriculture, Sylviculture,
Conservation and Action against Deforestation

• CASCADE – A UNEP Forestry-CDM Initiative
Objectives

• Fostering CDM capacity enhancement                           ONFi


• Evaluate applicability of existing methodologies vis-à-vis the African
  context
• Putting "theory into practice" by developing and implementing pilot
  transactions
• Contributing to a more inclusive post-2012 climate regime
• Promoting the establishment of a Francophone network of expertise for
  CDM-LULUCF in Africa


                  Results-oriented capacity development…                  27
Forest Carbon in Africa
Key Benefits of Forest Projects
 Climate benefits: Tropical deforestation and subsequent land use
   accounts for an estimated 20% of global carbon emissions.

 Economic benefits: Least cost intervention, agriculture and forest sector
   are main pillars of African economy.

 Social benefits: More that 250 million people in Africa depend on forests
   for their livelihoods.

 Environmental benefits: Rehabilitation of degraded lands, biodiversity
   conservation.

 Adaptation benefits: Enhancing economic and environmental resilience
   of rural communities to climate change.


      Forest projects as champions of sustainable development
                 and key instruments for adaptation.
                                                                              28
 CASCADe
 Target Countries and Partners
• Simultaneous implementation in 7 countries
   •   Benin
   •   Cameroon
   •   Democratic Republic of the Congo
   •   Gabon
   •   Madagascar
   •   Mali
   •   Senegal

• Implementing Partners
   •   UNEP- DTIE / UNEP-Risoe
   •   Office National des Forêts (ONF International)
   •   CIRAD
   •   ERM
   •   Winrock
   •   Local Partners
                                                        29
    Examples of Selected Projects


• Rehabilitation of degraded lands to agroforestry using Jatropha curcas, Benin
• Improved woodstoves project, Mali
• Rural electrification / fuel switch based on rice husks, Madagascar

• Reforestation of degraded lands with various species generating non-wood by-
   products for local population (fruit,Arabic gum, nuts), Senegal

• Reforestation with biodiversity / endangered species component, D R Congo



                                                                                  30
•   Sisal Biogas CDM Projects in Tanzania at two sites
    CDM projects convert sisal waste into biogas which is used in generation of electricity.
    The project claims credits from the avoided methane emissions from the disposal site and the
    replaced fossil fuel in the national grid.




•   Regional Forestry and Biocarbon Workshop, Addis Ababa (21st-24th April 2009)
     Workshop was jointly organised by UNEP RISOE, FAO, and UNDP and other organizations:
    - to raise awareness of the bio-carbon opportunities offered by the carbon market;
    - to enhance technical understanding of carbon finance;
    - to create a „carbon community of interest‟ in the region; and
    - to catalyse a bio-carbon project pipeline.




                                                                                                   31
      African Carbon Finance Facility
Working with local project developers, financial institutions, national
legislators and regulatory agencies, the ACFF will:

Facilitate the completion of costly project proposal development stages,
such as the validation of project design documents

Provide training on critical issues such as proving project additionality,
developing of financing plans or export guarantee applications, and
negotiating carbon credit sales

Shepherd carbon projects through financial closure by facilitating financial
sector intermediation and raising awareness of carbon finance among local
and regional financial institutions

Pilot phase starting 2nd half of 2009
                      Thank you!!




Upcoming – May 2009
                                 Visit us…
                             www.uneprisoe.org
                              www.cd4cdm.org
                            www.cdmbazaar.net
                            www.cdmpipeline.org   33

				
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