Download Role of CDM in the UK - Capacity Development for the CDM

The Role of the CDM in the UK
An Active Market
Jonathan Thomas
The UK Climate Change Projects Office
Djerba, Tunisia, September 2004
www.dti.gov.uk/ccpo
The Climate Change Projects Office
Climate Change is a high political
priority in the UK
“Urgent action is
needed now to
combat the worlds
greatest
environmental
challenge – global
warming”
Tony Blair
14th September 2004
The Climate Change Projects Office
The UK Position
• The UK Kyoto target is 12.5% reduction in GHGs (20%
domestic CO2 reduction target)
• To achieve this, the Government has in place a Climate
Change Programme
• Responsibility for meeting the target partly resides with
UK companies
• The Government expects to meet its Kyoto target without
the need for importing CDM/JI credits, but companies may
want to use them to meet their own targets and for onward
trading
The Climate Change Projects Office
Emissions Trading in the UK
•
The UK Government launched the world’s first all sector
voluntary emissions trading scheme (the UK ETS) in April
2002, as part of the Climate Change Programme
•
Rules were devised in conjunction with business
•
UK companies, consultants and brokers are now
experienced in the way the market works, and carrying
out emissions trades
The Climate Change Projects Office
The EU Emissions Trading
Scheme
•
Allocation based on “National Allocation Plan”
•
Up to 5-10% of Allowances can be Auctioned
•
“Linking Directive” covers CDM & JI entry
•
Not Dependent on Kyoto Ratification !
The Climate Change Projects Office
Linking the EU-ETS and JI & CDM?
• CDM (from 2005) and JI (from 2008) ‘credits’ (=1 tCO2e) can
be used by over-emitters in the ETS
• JI and CDM credits may be cheaper than EU allowances
– Reduce compliance costs
– CDM could be in short-supply in the early years
• JI and CDM credits need not be converted into EU
allowances (more flexibility in market response)
The Climate Change Projects Office
Demand for CDM & JI Credits
• JI and CDM demand is not solely dependent on
“toughness” of EU state NAPs
• The key demand drivers for JI & CDM are the Kyoto targets
for the EU states
• A weak NAP plan will require states to meet Kyoto
commitments by reducing emissions in non-ETS sectors
(very difficult!) or by buying CDM & JI at a the national level
The Climate Change Projects Office
What UK business has to offer
• Experience from the UK and EU Emission Trading Scheme
• A wide range of brokerage, consultancy and legal skills is
readily available
• CERs from CDM project are available and ERUs from JI
projects are in the pipeline. There is a large demand for
good projects
• The City of London is a world centre for emissions trading
The Climate Change Projects Office
Recent UK CDM Market Activity - 1
• The world’s first CDM project submitted for CDM-EB
Registration has UK involvement
• The project is based in India and uses HFC-23 destruction
technology supplied by Ineos Fluor UK
• The project is very significant and is expected to generate
several tens of millions of tonnes of CO2e over its lifetime
• Ineos are providing 2 million tonnes of CERs under the first
private deal in Europe – Facilitated by Natsource
www.ineosfluor.com
The Climate Change Projects Office
Recent UK CDM Market Activity - 2
• CO2e.com, a prominent UK-based carbon broker, has
recently facilitated two of the largest CDM project
transactions to date and has an ongoing demand for CERs
• This multi-million dollar deal is based on methane
production from the waste of 100,000 pigs at an Agrosuper
plant in Chile (~ 0.5 mtonnes of CO2e/yr)
• The CERs are being purchased by buyers in Japan and
Canada
• CO2e.com has transacted tens of millions of tonnes of
emission reductions to-date
www.co2e.com
The Climate Change Projects Office
Recent UK CDM Market Activity - 3
• The ICECAP fund has been set up in the UK to acquire a
portfolio of ~ 40 million tonnes of CERs
• The founders of ICECAP participants are LessCarbon,
Cumbria Energy and Investec Bank
• ICECAP is acquiring CERs to sell to buyers in the EU-ETS,
Japan and Canada amongst others
• They are keen to source further good quality projects!
www.lesscarbon.com/icecap.asp
The Climate Change Projects Office
Recent UK CDM Market Activity - 4
• Natsource Europe (based in London) have helped create the
GG-CAP carbon asset management tool
• GG-CAP is the world's first large-scale privately
run "buyers pool" designed for companies to purchase
compliance-ready reductions of greenhouse gas (GHG)
emissions.
• Targeted for launch later this year, it will begin purchasing
10 - 20 million tonnes of CERs and JI credits early in 2005
and for several years to come.
www.natsource.com
The Climate Change Projects Office
Recent UK CDM Market Activity - 5
• IT Power, a leading energy & climate change consultancy
are Carbon Finance Advisors for China's first CDM project Huitengxile Wind Farm
• 3 further CDM projects in China in development
• Developing 3 small-scale CDM "bundles" in India & working
with IREDA to develop a strategic business unit offering
bundling services to small-scale developers
www.itpower.co.uk
The Climate Change Projects Office
Recent UK CDM Market Activity - 6
•
EcoSecurities is the largest company solely dedicated to
carbon trading and climate change mitigation in the world
•
EcoSecurities-Standard Bank Carbon Facility has been set
up to purpose to purchase €8 million of emission
reductions from JI and CDM credits
•
2E Carbon Access Programme – Joint venture with E&Co
concentrating on funding and facilitating small-scale
renewable energy CDM
•
EcoSecurities has advised more than 60 JI/CDM projects
around the world
www.ecosecurities.com
The Climate Change Projects Office
Recent UK CDM Market Activity - 7
• The CCPO is running a major trade mission to India in the
first week of October 2004
• The mission comprises 15 UK companies who are keen to
develop and invest in CDM projects and acquire CERs
• The mission will be led by the Rt Hon Margaret Beckett,
Secretary of State for Environment, Food and Rural Affairs
(Defra)
• The CCPO is keen to promote further CDM trade missions
around the world
The Climate Change Projects Office
Recent UK JI Market Activity
• The British Cabinet has recently given clearance for Defra to
negotiate with a project developer with a view to hosting the
UK’s first Joint Implementation Project
• The project removes nitric oxide emissions from a nitric
acid plant and is expected to generate over 2 million tonnes
of CO2e reductions per year
www.carbonventures.com
The Climate Change Projects Office
What can the CCPO provide?
• Basic guidance
• Assistance preparing project proposals
• Advice on potential project partners
• A route to UK Government approval of projects
• Access to UK expertise in emissions trading and climate
change project development
The Climate Change Projects Office
The Climate Change Projects Office
www.dti.gov.uk/ccpo
Manager:
Jonathan Thomas
[email protected]
Tel: +44 (0)20 7215 1608
The Climate Change Projects Office