PowerPointPrsentation

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Climate Protection as Development
Opportunity Supply Side Large-Scale-Project
s Success Factors for the Gold
Standard Hamburg, June 7th, 2004 Sonja
Butzengeiger Perspectives Climate Change Hamburg
Institute of International Economics
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Contents of Presentation

• Large-scale CDM-Projects
• definition
• arguments for large-scale projects
• project types
• potential supply
• Demands of the Gold Standard
• project type
• additionality
• environmental impacts
• Chances for large-scale Gold Standard CDM?

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Definitions

• What is a large-scale project?
• All projects larger than small-scale projects as
  defined by the UNFCCC?
• Large projects within one project type?
• types renewable energies, landfill gas
  capture, etc.
• All projects passing a certain threshold
• in financial terms, or
• in terms of emission reductions
• CERs gt 100.000 CO2-eq/a
• CERs gt 500.000 t CO2-eq/a
• CERs gt 1.000.000 t CO2-eq/a

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Trends in submitted project methodologies
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Arguments for large scale projects

• Environmental benefit
• Same as for small projects, if conducted properly
• Single project can lead to larger benefits
• also larger negative impact, if not done
  properly
• Reduction of relative transaction costs
• Search costs
• Negotiation costs
• Baseline determination costs
• Approval costs
• Validation costs
• Review costs
• Registration costs

• Monitoring costs
• Verification costs
• Review costs
• Certification costs
• Enforcement costs

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Transaction costs CDM
Source Michaelowa et al (2003)
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Large scale project types

• CERs gt 1.000.000 t per annum
• HFC-23 destruction (HCFC-22 production)
• Landfill gas collection / utilisation
• N2O destruction (adipic acid production)
• Gas flaring reduction (oil exploitation)

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Requirements of the Gold Standard

• Project eligibility
• Objective
• paradigm shift in energy technologies
• additionality and sustainability attributes
• Project types
• Renewable Energy (incl. Biomass/-gas/-fuels)
• End Use Energy Efficiency Improvement
• Additionality and Baselines screens
• Environmental additionality
• ODA-additionality
• Would the project activity have occurred in the
  absence of the CDM?
• Contribution to sustainable development

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Large Scale as Gold Standard?

• HFC-23 destruction
• by-product of HCFC-22 production
• there is no market for HFC-23, there are costs
  for destruction ? economically additional
• But HCFC-22 is subject to Montreal Protocol
• abatement costs below 1.5 / t CO2-eq
• approved methodology exists
• already two projects submitted (Korea, India)
• N2O destruction (adipic acid production)
• abatement costs about 1 /t CO2-eq
• widely used by European chemical companies
• investment additionality easy to prove
• So far not undertaken in a CDM context but planned

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Large Scale as Gold Standard?

• Gas flaring reduction
• highest potential in OPEC not supporting KP
  actively
• approved methodology exists (Rang Dong, Vietnam)
• additionality can be difficult to prove as gas
  has an economic value
• Landfill gas collection and destruction
• normally at medium scale - only megacities might
  reach more than 1 million CERs/year
• Additionality easy to prove for pure destruction
  but then sustainability benefit is low
• CDM classic - 5 approved methodologies

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Points for discussion

• Can above listed project types fulfil the
  sustainability requirements of the Gold Standard?
• Will cheap CERs from large scale projects replace
  small and medium sized projects, eventually REs?
• But general question of supply and demand