D1 Maxim is Ing Carbon Asset of the Carbon Projects Through Asia Carbon
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Transcript of D1 Maxim is Ing Carbon Asset of the Carbon Projects Through Asia Carbon
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Maximizing Carbon Asset of the Green ProjectsMaximizing Carbon Asset of the Green Projects
through ACADF & ACX through ACADF & ACX --ChangeChange
Biomass & Green Technology Financing Opportunities by Government Agencies & Financial Institutions
Capacity Building Programme 1
19th – 20th April 2011, PNB Darby Park, Kuala Lumpur
ASIA CARBON GLOBAL ASIA CARBON GLOBAL Asia Carbon Holdings Asia Carbon Holdings PtePte Ltd Ltd
Irfan L.Irfan L. Pawennei Pawennei
Senior Manager Senior Manager
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Overview
• Asia Carbon Global
• Introduction of ACADF and ACX-Change
• Carbon Asset of the Green Projects
• Clean Development Mechanism
• Programme of Activities
• Carbon Price
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Asia Carbon Global
• Group’s activities conceptualized, researched and developed since 2001
• Founded February 2003, two years ahead of Kyoto coming into force
• One stop shop services : Carbon Advisory through Carbon Trading
• Headquarter in Singapore
• Centre of Excellences: Singapore, India, Indonesia
• Rep Offices: Malaysia, Thailand, Vietnam, the Philippines, UAE
• Strategic Alliances: Japan, China, Korea, Bangladesh, Pakistan & Africa
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ACG Business Model
Vertically Integrated to provide a one stop solution in
carbon advisory, carbon finance and carbon asset management
Carbon Asset Management
Carbon Advisory
Carbon & Project FinanceVertically Integrated
Business Model
AC-CE
ACADF™
ACXChange™
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System Landscape – Carbon Services
TradingPlatform
Registry
Platform
ExternalTradingSystem
ProjectParticipant
CDMRegistry
ITL
NationalRegistry
ClearingHouse
Bank
Monitoring
Platform
InventoryManagement
Monitoringdatabase
Project Site
Device
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Consultancy Services
• 110 emission reduction based projects in the pipeline
• Main type: Renewable Energy & Energy Efficiency projects
• Host Country: Singapore, India, Indonesia, Vietnam, Malaysia, China, UAE, Pakistan,
Sri Lanka
• Scope of Work
– Project Assessment on CDM/ PoA potential projects
– Development of Project Idea Note (PIN) and Project Design Document (PDD)
– Assistance on Host Country Approval, Validation, Registration, Verification, and Issuance
of the CDM/ PoA cycle
– Develop new methodology
– Climate change and energy audits
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ACG CDM Type of Projects
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ACG Registered Projects on the UNFCCC
• 21 MW RK Power Gen Biomass Project
• 7. 5 MW Chitra Biomass Project
• 8 MW VKG Steel WHR
• 4 MW Pushpit Steel Wind Project
• 7.2 MW MMCL Wind Project
• 6 MW TCP Biomass Project
• 5 MW Aarasi Biomass Project
• 2 x 2.5 MW Hydropower Project
• PoA Biomass Project
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Programmatic CDM Projects
Biomass Boiler Programme3 Yrs – ~ 60 CPA
Registered PoA
Vapor Absorption Chiller Programme3 Yrs - ~ 20 CPAUnder Validation PoA
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Capacity Building Project
10
Building cooperation channel between countries
by conducting seminar and workshop
- Energy Efficiency in Malaysia
- CDM in mining sector and biogas in Vietnam- Biomass and biogas in Thailand
Development ofDevelopment of
CDM projectsCDM projects
CDM Feasibility study
- 10 MW hydropower in Vietnam- 2MW POME project in Thailand- Biogas project in Vietnam
TechnologyTechnology
Demand SurveyDemand Survey
Infrastructure and technology demand survey
Joint technology demand survey report
- Building energy efficiency audit report in Malaysia
BuildingBuilding
CooperationCooperation
ChannelChannel
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Asia Carbon Asset Development Facility
• ACADF to support CDM Projects with Carbon/ Project Finance
• Carbon Finance
– Developer/ Project Owner cover the CDM transaction cost and
consulting fee
→ Fixed consulting fee + Success fee
– Project Owner to share the transaction cost
→ Facilitation fee + Success fee
• Project Financing + Carbon Credit revenues
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ACX-Change (carbon trading platform)
• Web-based, with built-in registry and trading facilities since 2005
• First online project based trading platform in the world to provide
a common platform for Sellers and Buyers of Carbon Assets
outside of EU Allowances
• Conducted out several online auctions and closed bid auctions
with total value of 60 million CERs transactions
• Launching ACX-Japan and ACX-Korea
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ACX Platform Objectives
Transparency
Price Discovery
Level playing field
Document Standardization
Low procurement cost for buyer and seller
Rights of both buyer and seller – options in place
Proven platform technology building trustworthy
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Carbon Trading Platform
ACX - CHANGE
ONLINE
AUCTION
CLOSED BID
AUCTION
BILATERAL/
DIRECT OTC
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Online Auction Platform
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ACX Buyer’s ProfileTotal more than 60 ACX Buyers
ACX Buyers Profile
Government
10%
Broker
9%
FI
7%
Carbon Fund
10%
Utility
26%
Trader
38%
ACX Buyers - Country
Czech Republic
2%Italy
3%
Netherlands
7%
Switzerland
5%
Austria
2%
Denmark
2%
Thailand
2%
Singapore
5%
Poland
2%
Portugal
2%
US
7%
Spain
8%
Australia
7%
Japan
12%
Germany10%
UK
22%India
3%
Finland
2%
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Carbon Assets
• What are the different market mechanisms?
• What are the carbon asset commodities available?
• Where is the Supply & Demand?
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Compliance & Voluntary based Market
Compliance Market
• Carbon transactions due to carbon
constraints on National and
International level• Carbon products:
– AAU
– CER
– ERU – EUA
Voluntary Market
• Carbon transactions due to limit
carbon footprint or CSR
commitments
• Carbon products:
– Verified Emission Reduction
– Voluntary Carbon Unit
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Kyoto Protocol Flexible Mechanism
KYOTO
PROTOCOL
PROJECT BASED ALLOWANCEBASED
CLEAN DEVELOPMENT
MECHANISM (CDM)
JOINT
IMPLEMENTATION (JI)
INTERNATIONAL
EMISSION TRADING
CERTIFIEDEMISSION
REDUCTION (CER)
EMISSIONREDUCTION UNIT
(ERU)
ASSIGNEDAMOUNT UNIT
(AAU)
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Supply & Demand
Sources: World Bank, Bloomberg New Energy Finance and Ecosystem Marketplace for data on the voluntary market
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Malaysia – registered CDM projects
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Malaysia – CER volume
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Clean Development Mechanism
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Traditional Project cycle – CDM
Feasibility Study/ Technical
Design/ Environmental Impact
Assessment/ Licenses
Construction stage
Project
Financing
CDM Documentation
(Due dilligence, PDD)
Operation stageVerification
CER Payment
Registration
Legend: : Expenses
: Income
Validation Host Country
Approval
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What is Programmatic CDM?
• Programmatic CDM = Programme of Activities = PoA
• PoA is an extended version of CDM which allows more than one Project Activity
• One PoA could have several Project Activities
• Single Project Activity (called CPA – CDM Programme of Activities) can be added to
the PoA at anytime during the lifetime of the PoA
• Example type of PoA:
– Biomass based projects
– Micro hydro projects
– CFL/ LED bulbs replacement projects
– Chiller installation projects
– Solar based installation projects
– Small MSW projects
– Biogas plants
– Building energy efficiency projects
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Why PoA?
• Some Limitations of a regular single CDM Project
– Multiple small sources
– High transaction costs
– Weak transmission of CDM incentive
• CDM not equipped to support investment programs, policies & measures
– Need for scaling up – Weak host country ownership of a single project
• Local/regional/national policy or standard cannot be considered as a CDM
project activity, but that project activities under a PoA can be registered asa single CPA
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Characteristic of PoA
• One PoA, many CPAs, different methodology/ technologies, and different locations
• PoA should be proposed by a Coordinating Entity (private or public entity)
• PoA can be implemented across International boundaries (e.g. Malaysia-Singapore)
• Additionality should be shown at both CPA and PoA levels
• Same baseline and monitoring methodology should be applicable to all the CPAs
• PoA duration
– 28 years for non-forestry sector
– 60 years for forestry sector
– Baseline and methodology reviewed/updated every 7 years
– Starting date and crediting period can be different for different CPAs
– Each CPA crediting period either 10 or 21 years but limited to remaining life of
PoA
• CPA should not be a part of any other applied/ approved CDM/ VER project
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CDM Cycle
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PoA Cycle
Project Design Document
preparation
Host Country Approval
Project Validation
Project Registration
CPA Validation &
Project Monitoring
Project Verification &
Certification
Carbon Credit (CER)
Issuance
Pre-Project Implementation
(one time process)
P r o j e c t
I m
p l e m e n t a t i o n Post-Project Implementation
(on each CPA inclusion)
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PoA in Malaysia
Programme of Activities
(PoA)
CPA
CPA
CPACPA
CPA
CPA CPA
CPA
CPA
CPA
CPACPA
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Some Points on the PoA Cycle
DOE (Validators) has a liability clause
PoA has to be revalidated every time its baseline methodology is revised.
Given the high frequency of methodology revisions for conventional CDM
projects, this could lead to a significant workload for PoA coordinators,
validators and the CDM Executive Board.
CER’s issued to the name of Managing Entity and distributed among the
participants according to contract
If methodology put on hold or withdrawn, more CPAs cannot be added
Eligibility criteria for inclusion of CPA into a registered PoA to include
criteria for demonstration of CPA’s additionality
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CDM vs PoA on the Development Cost
490,000Total Cost
€ 15,000Consultancy Verification (x5)
€ 50,000Consultancy Registration (x5)
€ 10,000CDM Verification (DOE) (x5)
€ 3,000CDM Registration (EB) (x5)
€ 20,000CDM Validation (DOE) (x5)
CostDescription
408,000Total Cost
€ 30,000Consultancy CPA (x5)
€ 80,000Consultancy PoA (x1)
€ 10,000CPA Verification (x5)
€ 15,000CPA Validation (x5)
€ 3,000PoA Registration (EB) (x1)
€ 50,000PoA Validation (DOE) (x 1)
CostDescription
5 sites of Biomass Projects in Malaysia as an example case
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CDM vs PoA Cost
CDM vs PoA Development Cost
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
No. of projects
E u r o
CDM Development PoA Development
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Key Steps to Successful PoA
• Identify Roles/ Responsibilities
• Identify Coordinating/ Managing Entity
• Agree on the Modalities of Communication (MoC)
• Unilateral PoA vs. partnering with a buyer through an ERPA• Define Project Boundary & Measurements
• Define Eligibility & Additionality criteria
• Contract with the DOE
• Find solutions on the liability issues for erroneous inclusion of CPAs
• Monitoring – Sampling of each CPA
Project Design Document
• CDM-PoA DD
• CDM-CPA-DD (generic)
• CDM-CPA-DD (specific)
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Carbon Price
• What is the price drivers?
• What is the current price trend?
• What is the CER values of the CDM Project?
b i i
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Carbon Price Driver
• Supply
– CER Volume in the market
– Additional Methodologies
– Effectiveness of the issuance bodies
– ERUs and AAUs are being traded
• Demand
– More trading schemes, competition to access carbon credits
– New Sectors. EU ETS on Aviation & Shipping industry
– Governments demand (i.e., Italy, Spain, Germany, Japan)
– Project diversification and Risk management
• Uncertainties
– International treaty Post 2012
C b P i D i ( )
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Carbon Price Driver (cont.)
• Policies
– Limits on imports of KP credits
– Free and auctioning allowances on EU ETS
– Price caps and floors on a trading scheme
– Banking possibilities
• Change in Expected Emission & Market sentiment
– Fuel price, weather, industrial production, switching and power price
– Trustworthy scheme (e.g. re-cycled CER case)
• Growth in Renewables
– 20% target at the EU members
– 15% voluntary target by year 2020 in China
– 25% voluntary target in India
d f d
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Mode of Trade
• Over the Counter (OTC)
• Exchange Market
– ECX, EEX
– CBEEX, TCX
• Auction
• Brokers
38
C b P i T d i t
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Carbon Price Trend in recent years
Source: Point Carbon
C CER P i
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Current CER Prices (1st week of April 2011)
• Spot CER : € 13.23
• ECX DEC 2011 CER : € 13.07
• Primary Kyoto CER
PIN & PDD stage : € 7.50 – 8.75
Validation : € 8.75 – 10.00
Registered (non-guaranteed) : € 10.00 – 11.30
Post Registered (guaranteed) : € 11.30 – 13.00
• Post 2012 : 70 – 80%
Revenue Optimization
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Revenue Optimization
• Emission Reduction Purchase Agreement (ERPA)
• CER Price
– Fixed CER Price for the Kyoto Period
– Floating CER Price with Floor and Cap Price for the Post Kyoto Period
– Combination for Fixed & Floating CER Price
• CDM Cycle
– Sharing the CDM Cycle cost to be borne by the Buyer at early stage
– The Seller share the costs Post Registration to be recovered from the
CER revenues
• Mixed Financing schemes
Required Project Information
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Required Project Information
Any documents related to:
• Feasibility report & Technical Design Document
• Environmental Impact Assessment
• Land & Construction permits/ licenses
• Operational permits/ licenses
• Financial of the Project including: financial calculation spreadsheet and contract
with banks/ investors
• Power Purchase Agreement/ Electricity Supply Agreement
• Equipments contracts
• Local Stakeholder consultation
• Project Owner Information (Certificate of incorporation, registration certificate,
annual report)
• Confirmed decision of the Project Owner to take into account the CDM
consideration
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THANK YOU!
Irfan L. Pawennei
Senior Manager, Business Development
ASIA CARBON GLOBAL
Asia Carbon Holdings Pte Ltd
140 Cecil Street #06-01
065940 Singapore
Tel. +65-6225 1791
www.asiacarbon.com