Small Scale Projects

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Small Scale Projects Learning from the CDM
Paul Soffe
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Small-scale Facility Concept

• A dedicated facility providing buyers with CERs
  from small-scale projects
• Facility participants structure their
  requirements, specifying
• Project type / Countries / Fixed price
• Current buy orders from Government of Austria and
  Japan Carbon Finance
• EcoSecurities sources all projects
• Direct sourcing global network
• eg. ECo joint venture (2E Carbon Access)
• EcoSecurities prepares all project documentation
• PDD, MV plan etc.
• Arranges validation with a DOE
• Coordinates and oversees monitoring, verification
  and issuance
• All project developer costs are covered by the
  facility
• PDD, Validation, Registration
• Only cost to developer is verification and annual
  Share of Proceeds after CERs are produced
• Track-record Small-scale Facility has
  registered 5 projects under CDM. One has issued
  CERs.

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Facility Structure
Project 1
Master ERPA
Buyer Govt of Austria and JCF
EcoSecurities
Project 2
Project 3
Project 4
Individual ERPAs
Project 5
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Key issues for SSc Project Success under carbon
mechanisms

• Minimise costs all costs related with CDM
  project development, including third party costs
  for validation and registration have to be
  minimised
• Simplicity - all documentation standardized
• Speed entire process process cannot be too
  long, SSc developers have limited budgets (time
  and cost)
• Expertise SSc need access to assistance with
  process
• Financial value-added prices for ERUs (CERs)
  for smallest project may need to be higher
• Track-record Demonstrating that JI SSc can work
  with the rapid approval and development of the
  first projects is very important

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Advantages for Buyers

• Small-scale projects with high sustainable
  development benefits
• High-quality projects that have received business
  development services, thorough due diligence and
  assistance reaching financial closure more
  likely to reach CER delivery targets
• Projects that have advanced through the CDM
  Development Process PDD completed, validated,
  or registered
• Low transaction costs and high efficiency and
• Optimum equilibrium between high quality project
  assessment and low transaction costs.
• Track-record Small-scale Facility has registered
  5 projects and 2 pending. One has received CERs.

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Case Study La Esperanza Hydroelectric Project

• Location Western Honduras
  
• Project type Hydroelectric
• Installed Capacity 12.73 MW
• CO2e per year 37,031 tons
• CER buyer World Bank
• Current Status Issued CERs
• Lessons learned
• Partnerships
• Engage with DNA early in the process
• Additionality include early
• Start Early

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Case Study Pig projects in the Philippines

• Case Study Small-scale pig projects
• Location Philippines
• Project type Anaerobic
  Digestion
• Installed Capacity 150 kW each
• CO2e per year 1,500 to 10,000 tons
• CER buyer Austria, JCF, and
  EcoSecurities
• Current Status Final validation
• Lessons learned
• Difficult to keep transaction costs low
• Economies of scale possible over time
• Methodologies data availability
• Validation costs high

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Case Study Hydro in Honduras

• Case Study Cuyamapa Hydroelectric Project
• Location Western
  Honduras
• Project type Hydroelectric
• Installed Capacity 12.20 MW
• CO2e per year 38,552 tons
• CER buyer EcoSecurities through
  Austrian Facility
• Current Status 1st Registered Unilateral
  Project
• Lessons learned
• Engage with DNA early in the process
• Unilateral Project

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Lessons Learned

• Bundles of SSc projects an attractive option for
  buyers to secure a number of projects
• Under CDM rules it was possible to develop a
  large pipeline of projects for the Facilities
• Uncertain what problems may be encountered during
  moniotirng, certification, and issuance stages
• Other problems unrelated to CDM Executive Board
• price expectations and forecast for CERs
• host country approval can take a long time

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Conclusions

• Make system for SSc projects as simple as
  possible to reduce transaction costs associated
  with carbon related aspects of project
  development
• Any charges for by JISC must be kept low
• Specify as much of JI cycle in detail ASAP.
  Clarity is important in building confidence that
  JI is workable
• Do not re-invent the wheel
• Utilise CDM baseline meths additionality tools
  of SSc
• Are any specific meths needed for JI SSc in
  addition to CDM meths (I do not know). If so
  develop them SSc developers will not and cannot
  (they are by default relatively poor)