Financing Sustainable CDM Projects Emily Tyler Climate Project Transactions Specialist SouthSouthNorth Projects Africa COP11/MOP1 Montreal: IISD Development.

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Presentation transcript:

Financing Sustainable CDM Projects Emily Tyler Climate Project Transactions Specialist SouthSouthNorth Projects Africa COP11/MOP1 Montreal: IISD Development Dividend Project

The SSN Experience SSN: a network organisation formed in 2001 to build capacity in CDM through the development of projects Operating in 4 countries: Brazil, Bangladesh, Indonesia and South Africa Core values of sustainable development - SSN sustainable development matrix tool The majority of SSN projects are Gold Standard Now SSN Phase 2: Poverty Alleviation through the lens of climate change

Project Types: CDM with High SD Co-Benefits Predominant characteristics? –Low volume (<50,000t) –Public sector –High ‘financial additionality’, ie low/no revenues –Small scale Financing the Development Dividend

The Challenge 1.Risk Profile (timeframe, communities, financial backing, counterparty experience) 2.Transaction Costs 3.Co-funding

Retrofit 2309 low-cost houses in Kuyasa, Khayelitsha with: Insulated ceilings, solar water heaters and CFL’s (energy efficient lighting) Kuyasa low cost housing energy upgrade CDM project

Project Co-Benefits BENEFITS Alleviates energy poverty Saves R600/hh/annum in energy costs Creates over 100 person years employment Improves health conditions Improves local air quality Reduces peak energy demand Benchmark for replication internationally Kuyasa City of CT Western Cape South Africa

CDM Transaction Costs Transaction CostKuyasa Replication (€) Project Development and PDD design€31,585 Project Validation€12,000 Gold Standard Validation€2,000 Project Registration€4,256 Project Verification and Monitoring€6,500 per verification CDM Adaptation Levy, 2% of CERs€1,120 ERPA and legal fees€21,285 Broker commission (7%)€3,920 TOTAL CDM COSTS €83,000 Revenues: Compliance/Offset €56,000 / €84,000 Revenue / (Shortfall) (€27,000) / €1,300 Kuyasa: 5600t/a Offset Market €15t Compliance €10

VER Transaction Costs Transaction CostKuyasa Replication (€) Non-CDM Offset project costs Project Development and PDD design€31,585€15,793 Project Validation€12,000€6,000 Gold Standard Validation€2,000 Project Registration€4,256n/a Project Verification and Monitoring€6,500 per verification€3,250 per verification CDM Adaptation Levy (annual), 2% of CERs€1,120n/a ERPA and legal fees€21,285€10,643 Broker commission (7%)€3,920 TOTAL €82,666 €41,606 Revenue (Voluntary offset) €56,000 / €84,000 €67,200 Net credit revenue and value added (€26,666) / €1,334 €25,594 Discounted price as non-CDM

Kuyasa: Co- Funding Carbon Income €320,513 (at €8 per credit) Local govt research grant (PAWC) €1.95m National Govt Poverty Alleviation Grant (DEAT) €1.6m EDF Grant €57,692

To Conclude… Does the CDM process add value to typical high co-benefit mitigation projects? Is there scope to strengthen alternative mechanisms for these projects (VERs, Offsets)? What about the integrity of emission reductions? Is there scope to strengthen the CDM process for these projects?