1. Egypt’s National Strategy Study (NSS) on the Clean Development Mechanism (CDM) Presented by: Dr. Attia Saad El-Din Dr. Yosry Barakat TIMS CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

2. Project Execution Energy & Environment Research Center (E2RC)/ Tabbin Institute for Metallurgical Studies (TIMS) Under Umbrella of Climate Change Unit / Egyptian Environmental Affairs Agency (EEAA) In Cooperation With The World Bank (WB) & Ernst + Partners Ltd. (EBP) Government of Switzerland CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

3. Introduction Conventional & CDM Project Inputs & Outputs CDM Strategy Objectives CDM Benefits in Egypt CDM Barriers in Egypt Institutional Setup Eligibility Criteria Ranking Criteria CDM Projects Portfolio CDM Projects Pipeline Content CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

4. Introduction One of the mechanisms for international GHG abatement is the Clean Development Mechanism (CDM), as described in Article 12 of the Kyoto Protocol: –In short, an Annex I country (or firm) pays for GHG mitigation in a developing country through CDM projects and purchases the resulting measurable reduction of GHG emission in the host country. –A CDM project has to comply with the criteria set by the Kyoto Protocol and has to be approved by the host and investor countries. –The investing paying country obtains certified emission reductions, which it can use to comply with its Kyoto commitment. CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

5. Conventional Project Equity Investment Financial Returns Conventional Project Inputs and Outputs CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

6. CDM Project Equity Investment Financial Returns CDM Project Inputs and Outputs Carbon Investment Carbon Credits Other Development Benefits CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

7. CDM Strategy Objectives Establishing a national mechanism for the selection, coordination, facilitation and implementation of CDM projects. Identifying the roles of the different Egyptian institutions within the CDM project cycle. Preparing a pipeline of CDM projects. Assessing GHG reduction potential in Egypt and the competitiveness in the international GHG market. Identifying national capacity building needs. CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

8. CDM Benefits in Egypt Financial Flow Improvement of Local Environment Technology Transfer Creation of Jobs CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

9. Examples Potential Barriers Risks for provision of the technical service for equipment Technical risks - technology performance Technology has never been demonstrated in the host country Technological Substantial obstacles to receiving direct investment Policies the subsidize fuel Organizational / Legal Lack of long-term risk capital High cost of capital Exchange rate risks Demonstration of new business model (e.g. energy service company) Financial Raw material supply risks Unpredictable price trends Market Barriers that could be addressed by CDM investment CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

10. Existing National Governmental Institutions Participating in the CDM Ministry of State for Environ- mental Affairs (MSEA) Ministry of Petroleum (MOP) Ministry of Electricity & Energy (MEE) Ministry of Industry & Technological Development (MITD) Ministry of Transport (MOT) Ministry of Agriculture and Land Reclamation (MOALR)  The Central Department for Afforestation & Environment  Tabbin Institute for Metallurgical Studies (TIMS)  Egyptian Accreditation Council (EGAC)  New & Renewable Energy Authority (NREA)  Organization of Energy Planning (OEP)  The Egyptian General Petroleum Corporation (EGPC)  Egyptian Natural Gas Holding Company (EGAS)  Egyptian Environmental Affairs Agency (EEAA), Climate Change Unit  Environmental Protection Fund (EPF) CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

11. CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX Existing Private Sector Institutions and NGOs with CDM Potential Environmental NGOs Federation of Egyptian Industries (FEI) Private Audit/ Consulting Firms World Energy Council (WEC) Energy Efficiency Council (EEC) The Egyptian Energy Service Business Association (EESBA)

12. Criteria for CDM Projects The CDM operates basically on a project level The projects meeting essential (Mandatory) criteria (ELIGIBILITY CRITERIA): –Real and measurable reduction of GHG emission compared with baseline scenario –Simple payback period ought to be more than two years –The proposed CDM project must be in areas where no national development plans have been formulated CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

13. Criteria Indicators for Ranking and Prioritising CDM Projects Point system based on allocated weight and score for each of the following indicators: –Economic benefits –Environmental benefits –Social Benefits CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

14. Economic Benefit Parameters Value added Infrastructure Export potential Import substitution Employment Salaries and taxes Foreign investment Payback period State of technology Energy savings CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

15. Environmental Parameters Overall environmental performance Environmental management systems Implementation of eco-efficiency and cleaner production techniques Self-monitoring and auditing CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

16. Social Parameters Percentage of employees covered by social insurance Percentage of female employees to total Presence of programmes for vocational training Awards bonuses and other incentives programmes Presence of programmes for summer internship & training Social & fringe benefits CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

17. CDM Pilot Projects Pipeline CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

18. Overview of the Project Portfolio CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

19. Overview of the Project Portfolio CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

20. Overview of the Project Portfolio CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

21. Overview of the Project Portfolio CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

22. Overview of the Project Portfolio CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

23. CDM Projects Pipeline Project #1Cogeneration Project of 3.5 MW Capacity at Misr Elmonifia Company (Textile) Project #2Control System and Energy Saving Equipment at Zenotex Project #3Installing Dedicated CNG Engines to Replace Low Efficiency Diesel Engines Project #4Establishment of Forest Plantations and Shelterbelts Around 10 th of Ramadan City Project #5Afforestation of a Part of Cairo-Aswan Highway Project #6CDM 60 MW Wind Farm in Comparison with BAU 45 MW Steam Turbine (Mixed Fuel) Project #7Organic Solid Waste Digestion CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

24. Conclusions from the National Strategy Study on CDM in Egypt There is a significant potential for CDM in Egypt: –Projects –People and institutions CDM opens business opportunities and benefits to Egyptian stakeholders Steps needed to make use of this potential: –Capacity building –Institutional setting –Pilot projects CDM in Egypt Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX