Baseline setting and monitoring under Joint Implementation UNFCCC Technical Workshop on JI Bonn, 13-14 February 2007 Lennard de Klerk Global Carbon BV

Global Carbon B.V. Global Carbon B.V. is an international consultant with an exclusive focus on JI projects Areas of operation are Bulgaria, Ukraine, and the Russian Federation. Enthusiastic team based in The Hague, Berlin, Sofia, and Kyiv. Expanding with currently 10 experts active in all different JI project types.

Outline Experience in baseline setting: “Introduction of energy efficiency measures at ISTIL mini steel mill” Experience in standardizing baselines: “Standardized electricity baseline of Ukraine” Experience in monitoring: “Utilization of CMM at the Coal Mine named after A.F. Zasyadko” Experience in determination: “Switch from wet-to-dry process at Podilsky Cement”

Baseline setting Example JI project №0018: “Introduction of energy efficiency measures at ISTIL mini steel mill” A total of four investments are being made to improve efficiency: Reducing losses in transformer for Electric Arc Furnace Improving efficiency of steam generation Reducing electricity consumption at oxygen unit Increasing natural gas efficiency at soaking pits Project has been determined. The buyer is the Netherlands’ Carbon Fund under the EBRD. Total reductions 400,000 tCO2 in 2006 – 2012.

Baseline setting (cont’d) No CDM methodology was available for this type of project. The following approach was taken: Baseline scenario is continuation of the existing situation Specific baseline consumption factors were fixed ex-ante based on average of past five years Technical lifetime of existing equipment did not expire before 2012 and was able to produce projected production volumes Subproject Baseline (fixed ex-ante) Project (expected) Electrical arc furnace 472 kWh/ton steel 370 kWh/ton steel Steam generation 21% 89% Oxygen production 1.25 kWh/m3 O2 0.895 kWh/m3 O2 Soaking pits 53.8 m3 NG/ton steel 40.5 m3 NG/ton steel

Monitoring plan Example JI project №0035: “Utilization of Coal Mine Methane at the Coal Mine named after A.F. Zasyadko” Characteristics: The project will utilize CMM for the production of electricity and heat using mini-CHPs and for vehicle fuel Reductions of 12.3 million tCO2 in period 2004 – 2012 CDM methodology ACM0008 was applied Verification of the emission reductions over 2004, 2005 and 2006 is in progress Specific issue: The project takes place at four different sites making the monitoring plan complex

Monitoring plan methane

Monitoring plan electricity

Monitoring plan heat

Standardized electricity baseline On request of the Ukrainian Ministry of Environment and the Ministry of Energy a standardized electricity baseline has been developed. This baseline will replace the standardized baseline of the ERUPT programme which was used so far. The baseline was calculated for the whole of Ukraine. Basis for the baseline was ACM0002. A separate emission factor for demand-side projects was developed to include grid losses. Specific issues: Difficulty to obtain complete data of all Ukrainian power plants; ACM0002 had to be modified for grids with a large overcapacity (e.g. mothballed power plants)

Determination JI project №0001: “Switch from wet-to-dry at Podilsky Cement” Reduction of energy consumption of 50% by implementing a different production technology; Replacement of 4 wet kilns with 1 dry kiln; Reductions are estimated 3 million ERU in 2009-2012; Investment of 140 million Euro will be the largest investment in the cement industry since Ukrainian independence.

Determination (cont’d) TÜV SÜD determined the project in the period June – September 2006 The project was approved by Ukraine on the 29th of December 2006 and by Ireland on the 19th of January 2007 The project has been submitted for final determination under the JISC on the 27th of January 2007 If no review is requested before the end of March 2007, this will be the first JI project receiving final determination.

Conclusions “Guidelines on criteria of baseline setting and monitoring” are practical: They encourage to use CDM methodologies, but provide the necessary flexibility when no methodology is available. Most projects use CDM additionality tool. No experience in projects not using the CDM tool. Other issues: Necessity for unilateral JI Appraisal procedure too complex Requirement of MoU in some Host Countries ‘Modalities of communication’ is missing

Contacts Global Carbon Berlin Lennard de Klerk Tel.: +49 30 40056286 deklerk@global-carbon.com Offices in The Hague, Berlin, Sofia, and Kyiv For more information see: www.global-carbon.com