Japan’s Financial Schemes for Promoting CDM Projects - Landfill Gas Utilization and the Clean Development Workshop- 6 September 2005 Bali Hilton International Nusa Dua, Bali Presented by Ms. Yamada Fumiko Expert Staff New Energy and Industrial Technology Development Organization (NEDO) Jakarta Office

Contents 1. Japan Kyoto Mechanisms Acceleration Programme (JKAP): A Facilitator for CDM Project Development 2. Feasibility Studies 3. Upfront Payment * Cont. by Mr. Matsushita’s presentation

Japan Kyoto Mechanisms Acceleration Programme (JKAP) Objective: Facilitating cooperative CDM/JI projects between Japan and host countries. MOFA, METI, MOE JETRO Business Matching Support GEC/NEDO CDM/JI Project F/S JBIC SAPROF PDD Assistance, etc. JCF Development of CDM/JI Procurement of Credits MOE/NEDO Uprfront Payment Programme for CDM/JI Projects NEXI Export Insurance JBIC Financing

Feasibility Studies Project Development Assistance Organization: NEDO & GEC Requirement: Any International consortium must include a Japanese partner to be eligible Financial assistance for a Feasibility Study (F/S) covers: PDD development and Study Implementation Cost up to JPY25M Budget： JFY 2004: 1.7 Billion yen (US$16M) JFY 2005: 1.8 Billion yen (US$17M) JAPAN Financial assistance for F/S costs Project Developers Incl. Japanese partner Potential Project In host country

Up to 50 % up-front payment Financial assistance for project development with up-front payment covers either one of the following: Program Administrators: METI, NEDO, MOE Requirements: A portion of credits generated from emission reduction project that is proportional to the amount of the financial assistance should be transferred to Japan. Any international consortium must include a Japanese partner to be eligible. Type A: Preliminary costs (PDD development, validation and registration costs, etc.) Type B: Project expenses (equipment costs, etc.) Type C: Post project review costs (monitoring, verification and certification costs, etc.) JAPANESE GOV. Budget for FY 2005: 5.7-8.0 Billion yen (US$54-76M) CER Up to 50 % up-front payment of total project cost CDM EB Credit price: Certification Report Fair price to be determined on a project-by-project basis according to project risk, delivery risk, market price trends, etc. Project Developer Incl. Japanese partner CER CDM/JI project in host country

& Upfront Payment (Supplementary Explanation) Feasibility Studies & Upfront Payment (Supplementary Explanation) Project Type: Energy Efficiency, Renewable Energy, GHG Reduction, incl. Methane Capture and Utilization, HFC decomposition, N2O reduction, etc. (Sink projects are excluded.) Acceptance of Applications in 2005: Feasibility Studies: (1) May (Closed) (2) September Upfront Payment: (1) April-May (Closed) (2) July-August (3) November (4) TBA (Additional program details are available upon request.)

Scenario I: Energy Efficiency Project Upfront Payment- Scenario I: Energy Efficiency Project 　　　・ Equipment and construction costs ＝ US$30M 　　　　→Maximum amount of upfront payment: US$30M×50% ＝ US$15M 　　　・ERs = 0.4 Mt-CO2/Year 　・Starting year of the crediting period: 2007 　　　・Estimate of credits for the 1st commitment period: 0.4 Mt-CO2×6 years＝2.4 Mt-CO2 If an applicant requests the maximum upfront payment (50%): ① If credit price ＝US$4／t-CO2 → Available “Upfront payment” = US$4×2.4 Mt-CO2 = US$9.6M (32%) ② If credit price ＝US$７／t-CO2 → Available “Upfront payment” = US$7×2.14 Mt-CO2 ＝US$15M (50%)

Manufacturing and installation completed Upfront Payment- Energy Efficiency Project (cont.) Order Equipment Manufacturing and installation completed SCENARIO 1-②: 2005　　　 2006　　 2007 2008～2012 The 1st commitment period Design and partial manufacturing of equipment US$10M Manufacturing and installation of equipment US$20M Issuance of credits 　　　　　　　　Applicants Upfront payments: 　US$5M US$10M Japanese Government

Scenario II: Decomposition of N2O Project Upfront Payment- Scenario II: Decomposition of N2O Project 　　　・ Equipment and construction costs ＝ US$12M 　　　　→ Maximum amount of upfront payment: US$12M×50% ＝ US$6M 　　　・ERs 1.5 Mt-CO2/Year 　　　・Starting year of the crediting period: 2007 　　　・Estimate of credits for the 1st commitment period: 1.5Mt-CO2×6 years ＝ 9 Mt-CO2 If an applicant requests the maximum upfront payment (50%): ① If credit price ＝US$4／t-CO2 　　→Available “Upfront payment” = US$4×1.5 Mt-CO2 ＝ US$6M (50%) ② If credit price ＝US$7／t-CO2 　　→ Available “Upfront payment” = US$7×0.86Mt-CO2 ＝ US$6M (50%)

Manufacturing and installation completed Upfront Payment: Decomposition of N2O Project (cont.) Order Equipment Manufacturing and installation completed SCENARIO 2-②: 2005　　　 2006　　 2007 2008～2012 Design and partial manufacturing of equipment US$6M The 1st commitment period Manufacturing and installation of equipment US$6M Issuance of credits 　　　　　　　Applicants Upfront payments: US$3M US$3M Japanese Government

Thank you http://www.kyomecha.org/e/index.html Comments and inquiries should be forwarded to: cdmji@nedo.go.jp in Energy & Environment Policy Department, NEDO Japan or kobayashi@nedo.or.id, yamada@nedojakarta.org in NEDO Jakarta