Images: Araquém Alcântara

CONFESSIONS OF A CDM PROJECT DEVELOPER 

Futuro para o meio ambiente

Surrey University

16th December 2010

CDM – What and where is it?

CDM – The basic process

CDM and Brazil

Sugar Cane a Case Study

Final thoughts

CDM – What and where is it?

CDM – The basic process

CDM and Brazil

Sugar Cane Case Study

Final thoughts

The CDM allows emission-reduction projects in developing countries to earn

certified emission reduction (CER) credits, each equivalent to one tonne of CO2.

These CERs can be traded and sold, and used by industrialized countries to meet part of their emission reduction targets

under the Kyoto Protocol. The mechanism stimulates sustainable development and

emission reductions, while giving industrialized countries some flexibility in how they meet their emission reduction

limitation targets.

http://cdm.unfccc.int/about/index.html

What is the clean development mechanism?

www.elementmarkets.com

First Stage:Measure Pollutants

Calculate type and quantity of emissions

THE CAP

Establish the reduction target

PERMITS

PERMITS

THE TRADE

OFFSETS

105.000 tCO2e

2009

EMISSIONS TRADING

JOINT IMPLEMENTATION

CLEAN DEVELOPMENT MECHANISM

- 10.000 tCO2e

Emissions Trading

Kyoto Mechanisms

ANNEX 1 CER

NON ANNEX 1

Company 1

2009

100.000 tCO2e

Company

Non-Annex

Clean Development Mechanism

950.000

EUA

1,050,000 tCO2e

CDM – What and where is it?

CDM – The basic process

CDM and Brazil

Sugar Cane Case Study

Final thoughts

Greenhouse gases and Global Warming Potential

CDM Project Cycle

Repeated during the credited period

PDD - Project Design Document

Baseline, Additonality

Validation

PDD Audited

Letter of Approval

SD Contribution

CDM Registration

Operation and Monitoring

Verification

Monitered Information Audited

Emissions of CERs

Consultant/Project Developer DOE DNA UNFCCC

DOE UNFCCC

http://cdm.unfccc.int/Projects/diagram.html

Consultant/Project Developer

Baseline and Additionality

Actual Monitored Project emissions

Baseline Scenario ofCO2 Emissions

Reduction CO2 in Emissions

Years

CO2 Emissions

Additionality: Prove that the revenues from the Carbon Credits are essential to the feasibility of the project.

Barrier - Financial, Technology, Common Practice etc

CDM – What and where is it?

CDM – The basic process

CDM and Brazil

Sugar Cane Case Study

Final thoughts

Current status of the projects in the Brazilian Designated National Authority - DNA

CDM – What and where is it?

CDM – The basic process

CDM and Brazil

Sugar Cane Case Study

Final thoughts

Brazilian Sugar Cane Industry Ethanol as a Fuel:30-year-old ethanol fuel program

Since July 1, 2007 the mandatory blend is 25% of anhydrous ethanol and 75% gasoline

Flex-fuel cars- 92.3% share of all new light vehicles in 2009

50% market share of the gasoline-powered fleet by February 2008

Bagasse as an energy source:420 registered sugar and ethanol plants in Brazil - has 268 registered thermoelectric stations that utilize bagasse from sugar cane as a primary energy source, installed capacity of 3,832MW

1997 Sugar Cane processing units within Brazil were unable to export surplus energy to the grid

Over 25 CDM projects registered between April 2006 and June 2007

Baseline and Additionality

Actual Monitored Project emissions

Baseline Scenario ofCO2 Emissions

Reduction CO2 in Emissions

Years

CO2 Emissions

Agricultural Project – Collection and Transportation of the Sugar Cane

Boiler 1 Turbine 125 Mw

SteamHeader

BoilerFeed

Boiler 2 Substation NationalGrid

Sugar and Alcohol Production Unit

Bagasse from CCEAA

Industrial Project –Cane

Industrial Project –Ethanol and Sugar

Production

BiomassSteamElectricity

Turbine 245 Mw

Transmission Line

CO2 Emissions

CO2 Emissions from the National Grid

PROJECT BOUNDARY

Agricultural Project – Collection and Transportation of the Sugar Cane

Boiler 1 Turbine 125 Mw

SteamHeader

BoilerFeed

Boiler 2 Substation NationalGrid

Sugar and Alcohol Production Unit

Bagasse from CCEAA

Industrial Project –Cane

Industrial Project –Ethanol and Sugar

Production

BiomassSteamElectricity

Turbine 245 Mw

Transmission Line

CO2 Emissions

CO2 Emissions from the National Grid

PROJECT BOUNDARY

Baseline and Additionality

Actual Monitored Project emissions

Baseline Scenario ofCO2 Emissions

Reduction CO2 in Emissions

Years

CO2 Emissions

Additionality: Prove that the revenues from the Carbon Credits are essential to the feasibility of the project.

Barrier - Financial, Technology, Common Practice etc

STEP ONE - Within the Law

Vs.

STEP TWO- Barrier Analysis

INVESTMENT OF US$70million dollars- Are the CER revenues essential to the

develoment of the project?

STEP THREE – Investment Analysis

STEP THREE – Investment Analysis

Does the Company Business Plan look the same?

STEP FOUR – Common Practise

NATIONAL:

Sugar Cane processing units within Brazil were unable to export surplus energy to the grid up until 1997

Ministry of Agriculture - 420 registered sugar and ethanol plants in Brazil. ANEEL has 268 registered thermoelectric stations that utilize bagasse from sugar cane as a primary energy source, installed capacity of 3,832MW.

BUT of the units generating energy 11% only export to the grid. Potential - 75% of Brazilian bagasse (146 millions tones) for energy production in 65 bar pressure boilers, the national potential would be 8,375MW

STEP FOUR – Common Practise

LOCAL:

 

Globally?

Registration

DO YOU CONSIDER THE PROJECT ADDITIONAL?

Vs.

CDM Project Cycle

Repeated during the credited period

PDD - Project Design Document

Baseline, Additonality

Validation

PDD Audited

Letter of Approval

SD Contribution

CDM Registration

Operation and Monitoring

Verification

Monitered Information Audited

Emissions of CERs

Consultant/Project Developer DOE DNA UNFCCC

DOE UNFCCC

http://cdm.unfccc.int/Projects/diagram.html

Consultant/Project Developer

CDM – What and where is it?

CDM – The basic process

CDM and Brazil

Sugar Cane Case Study

Final Thoughts

Final Thoughts – Scaling Up

Lack of Demand and Clarity (post 2012)

Overly Bureaucratic - project based (2 years, tools etc)

Solution? - PoAs, Standardised baselines, NAMAs

Sustainable Development vs. Carbon Reductions

Delivering Solutions within the present financial systems

 

Timothy Cowman

Geoklock - Soluções em CarbonoAv. das Nações Unidas, 13.797

Bloco 2 – 21° andar04794-000 São Paulo - Brasil

0055 11 5501 3783carbono@geoklock.com.br

www.geoklock.com.br

Uma empresa do Grupo ECOGEO

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