1 CAPACITY DEVELOPMENT for the CLEAN DEVELOPMENT MECHANISM for CAMBODIA (CD4CDM) 2 nd National Workshop on Capacity Development for the Clean Development Mechanism Organised by the Ministry of Environment with Support from UCCEE and AIT 04 November 2003 Phnom Penh, Cambodia

2 International Status of CDM Bridget McIntosh Advisor, Climate Change Office CDM GOALS assist developing countries in achieving sustainable development assist developed countries in achieving Kyoto Protocol compliance

3 Presentation Overview Status of CDM and the Kyoto Protocol Size of the international carbon market Who are the CDM carbon buyers and prices? Who are the CDM carbon sellers? What are the main CDM project types? Approval status of CDM projects Status of forestry and agriculture in CDM CDM Case Study Summary of Carbon Market

4 Status of CDM + Kyoto Protocol Kyoto Protocol not yet in force - must be ratified by 55 countries + represent 55% total global greenhouse emissions To date, 117 countries have ratified representing 44.2% of emissions  If Russia ratifies the Kyoto Protocol, it will reach 55% and enter into force  Russia is holding out for ‘better deal’ and studying the impacts of signing the protocol  USA and Australia withdrew from the Protocol - reduces size of carbon market

5 Size of CDM Market Worldwide demand for emission reduction MtCO 2 eq/yr  Withdrawal of US at 25% emissions limited market size Estimate MTC0 2 /yr for CDM  Equates to 750,000 10MW hydro projects CDM forestry activities limited to 1% of developed countries total reductions  Limits size of CDM forestry market

6 Main CDM CER buyers to date Source PointCarbon Sept 03 CERs issued 2005 (produced -2004) Other CERUPT NCDF PCF Dutch Government CDM target 67 MtCO 2 eq

7 Who are the CDM buyers? Multilateral Funds - pool $ from different carbon buyers  Prototype Carbon Fund - WB fund (6 governments; 17 companies) $180m  CDCF - Community Development Carbon Fund. WB fund- target $100m. Focus on small scale projects. target for LDC  BioCarbon Fund - target $100m; approved last month, calling for subscription.  Netherlands CDM Facility - $35m managed by WB spread risk over projects + countries

8 Who are the CDM buyers? Cont. Dutch Government  Tender process - called CERUPT - 18 projects selected (75% renewables)  Allocate funds to other multilateral and private banks -International Finance Corporation -Latin American Bank CAF -Rabo Bank -WB CDCF, PCF Bilateral projects, private companies

9 PCF Project Types

10 Where are the projects? Eg Costa Rica, Chile No host country approval in Brazil Source PointCarbon Sept 03

11 Status of CDM Projects Currently 49 projects already contracted, in process of CDM Exec Board approval many projects in finalisation stage  Rough estimate of 600 projects at pre-PDD stage  30 Project Idea Notes submitted to CDCF  40 Project Idea Notes submitted to BioCarbon Fund  360 Project Idea Notes for PCF (only 5-10% are signed) Not all these will make it through

12 Approval status of CDM projects Baseline methodology  must be approved by the CDM executive board for projects larger than 15MW, reduce 15,000 t CO2e - 35 projects have been submitted since opening in April. 6 baselines approved  Sept Round - 14 projects  Colombia Wind 19.5MW  Oil Field Gas Recovery and Utilization  2xSugar waste co-generation  Municipal Solid Waste to Energy India

13 Success rate Source PointCarbon Sept 03

14 Bioenergy Case Study - India 18 MW Bioenergy Project Tamilnadu  Use crop, juliflora waste to create electricity Project located in remote rural indigenous area 800sq km; 93 villages  Agricultural area - 75% people involved in rice growing, cotton, ground nuts. Wood from wild juliflora for charcoal. Revenue stream to local indigenous farmers - $6/tonne biomass waste Employment - collection of biomass Improved electricity infrastructure

15 Carbon 800,000t CO 2 eq over 10 years Baseline calculation  Historical average emissions for grid  Based on coal, lignite, oil, gas  Analysis of future electricity supplies based on fossil fuels plus improved efficiency  Deduct emissions from transport of waste Monitoring and Verification Plan  Monitor electrical output, biomass used  Emissions from grid  Emissions from transport of waste Bioenergy Case Study - India cont.

16 Status of forestry + agriculture in CDM Rules for land use activities and CDM being finalised at COP-9 Dec Considerations include:  Forest definitions  Accounting methodologies  Baseline methodologies  Permanence of CERs  Simplified methodology for small scale Currently using definitions for Annex 1 countries

17 Summary of CDM carbon market Dutch and WB Multilateral Funds dominated to date. New funds entering - esp Japan. Many projects in pipeline Renewables preferred project type Investment preference: neighbouring countries; Latin America; large, well-known countries Price preference: indicatively USD/tCO 2 eq (limited data); some willing to pay more for “quality CERs”