Transcript Document

Global Carbon Market and CDM
Potential in Cement Production
Industry
Syed Amjad Hussain
CDM Expert (Forestry/Agriculture)
January 30th 2008
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Outlines of Presentation

STATUS OF CLEAN DEVELOPING MECHANISM (CDM) PROJECTS UNDER KYOTO
PROTOCOL




Global Carbon Market Sellers
Global Carbon Market Buyers
Sector Wise Global Carbon Market
Roles of Service Providers


CDM Opportunities in Cement Production
GHG’s Reduction Target Areas in Cement Production Industry for CDM Project
Activities
 Reasons for Low Carbon Market size in CDM Projects Activities
in Cement Production Sector
 Costs of CDM Projects

ACCESS TO GLOBAL CARBON MARKET
 Current Financial Source Available for CDM Projects Activities
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Status of CDM Projects

To date

In Pipeline:
904 Registered CDM Projects
105.17 million CERs expected
2800 CDM Projects
1.15 billion CERs expected to the end of 2012.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Global Carbon Sellers
Brazial
4%
R. of Latin
America
6%
India
12%
R. of Asia
7%
Aferica
3%
Other &
Unsp.
7%
China
61%
2006
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Global Carbon Buyers
Netherlands
8%
Europe-Baltic
Sea
9%
Austrilia
3%
Netherlands
4%
Europe-Baltic
Sea
3%
Italy
10%
Spain
7%
Japan
46%
Japan
7%
Spain
6%
UK
15%
Other Unsp.
7%
Other Unsp.
3%
UK
50%
Other Europe
12%
Other Europe
10%
Overall volume: 352 million tCO2e
2005
Overall volume: 466 million tCO2e
2006
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Sector Wise Global Carbon Market
2002-2006
2006
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Roles of Service Providers
Carbon Brokers
- Buying and selling of CERs in the emerging carbon market,
- Educating potential market participants about the costs,
benefits, and mechanics of carbon trading etc.
- Brokers help counterparties by developing unique transaction
structures that meet the individual needs of buyer and
sellers.
Project Development Consultants
CDM Consultants assist CDM project proponents for:
- Development of CDM Project Design Documents (PDDs)
- Quantification and monitoring of CDM Project that may lead to a
successful GHGs reductions.
- Help to market for sale of CERs
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Cement Production Process
• Following three steps are involved in cement production
– Preparing Raw Materials:
• Mixing/Homogenizing
• Grinding and Preheating (drying) produces the raw meal.
– Burning of Raw Meal to form Cement Clinker in the Kiln:
• The components of the raw meal react at high temperatures (900-1500 °C)
in the precalciner and in the rotary kiln to give cement clinker.
– Finish Grinding of Clinker and Mixing with Additives:
• After cooling the clinker is ground together with additives.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
CDM Opportunities in Cement Production
Carbon Dioxide Emissions from Fuel Use
– Type of production process (efficiency of the process and subprocesses)
– Fuel used (coal, fuel oil, natural gas, petroleum coke, alternative
fuels)
– Clinker/cement ratio (percentage of additives)
{The specific process CO2 emission for cement production depends
on the ratio clinker/cement. This ratio varies normally from 0.5 to
0.95}
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Target Areas for Carbon Dioxide Emission Reduction in
Cement Industry
–
By improving the energy efficiency of the process
–
Shifting to a more energy efficient process (e.g. from (semi)
wet to (semi) dry process)
–
Replacing high carbon fuels by low carbon fuels
–
Applying lower clinker/cement ratio (increasing the ratio
additives/cement): blended cements.
–
Application of alternative cements (mineral polymers)
–
Removal of CO2 from the flue gases
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Reasons for Low Carbon Market Size of CDM Projects Activities
in Cement Industry
• Lack of awareness amongst Project Sponsors and Investors/Banks on the
projects’ CERs generation and sales potential
• Host country CDM procedures not established or not sufficiently
communicated with the Project Sponsors
• Limited local consultancy capacity to assist Project Sponsors in
developing the CDM component, especially concerning
validation
services
• Lack of Project Sponsors’ money to bridge finance the CDM related costs
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Costs of CDM Projects
Cost
Estimated financial Requirement
Project Development
and Establishment
25,000–75,000 US$
Validation
10,000–15,000 US$
CDM Registration
US$ 0.10/CER for the first 15,000 t CO2-e/year,
US$ 0.20/CER for above 15000 t CO2-e/year
A project expecting an average of 50,000 CERs per
annum
would pay an upfront registration fee of
US$ 8,500.
Adaptation Fund
2% of CERs issued under CDM project levied for
fund to help vulnerable countries adapt to
climate change (not for small-scale projects)
Host Country Approval Fee
No Fee in case of Pakistan
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Access to Global Carbon Markets for CDM Projects
Current Sources Available for CDM Projects
1.
2.
3.
4.
5.
6.
Prototype Carbon Fund (PCF)
Italian Carbon Fund (ICF)
Netherlands Clean Development Mechanism Facility (NCDMF)
Community Development Carbon Fund (CDCF)
Spanish Carbon Fund (SCF)
Danish Carbon Fund (DCF)
www.prototypecarbonfund.org
www.carbonfinance.org
www.carbonfinance.org
www.communitycarbonfund.org
www.carbonfinance.org
www.carbonfinance.org
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These funds provide cash flow to host countries and communities to develop CDM
projects and produce carbon credits.

Pre-financing also available for project activities like project identification
preparation, capacity building, outreach and research which lead to create CDM
Projects
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Most of the part of these funding serving as a loan and are repaid only once the
projects are matured to produce carbon credits on annually basis.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Prototype Carbon Fund (PCF)
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Total Capital
US$180 million
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Operated By
World Bank with partnership
between seventeen companies and
Six Governments

From
April 2000.
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Purpose of PCF:
 PCF is pioneer carbon market for project-based on greenhouse gas
emission reductions while promoting sustainable development.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Italian Carbon Fund (ICF)
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
Total Capital
Operated
By

From
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Purpose OF ICF:

US$ 155.6 million.
World Bank and
Ministry of Environment and
Territory, Italy
2003
Purchase GHGs emission reduction credits from
projects in developing countries under Kyoto Protocol's
mechanisms such as CDM and in Developed Countries
as a JI.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Netherlands Clean Development Mechanism Facility
(NCDMF)

Total Capital
US$ 264.7 million.

Operational By
World Bank

Supported by
Netherlands Government

From
May 2002

Purpose of NCDMF:
 Purchase of CERs from the developing countries under the
Clean Development Mechanism (CDM) established under the
Kyoto Protocol.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Community Development Carbon Fund (CDCF)

Total Capital

Operational By

Supported by

From
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Purpose of CDCF:
US$ 128.6 million
World Bank
Nine Governments and
15 corporations/organizations
March 2003.
 Supports projects that combine community development attributes
with emission reductions to create "development plus carbon" credits,
and will significantly improve the lives of the poor and their local
environment in Developing Countries.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Spanish Carbon Fund (SCF)

Total Capital
US$ 278.6 million.

Operated By
Ministries of Environment
and Economy of Spain and
the World Bank

From
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Purpose of SCF

2004
Purchase greenhouse gas emission reductions from projects
developed under the Kyoto Protocol to mitigate climate change
while promoting the use of cleaner technologies and sustainable
development in developing countries and countries with economies
in transition.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
Danish Carbon Fund (DCF)
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Total Capital
US$ 68.5 million.
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Funded By
Ministry of Foreign Affairs of Denmark,
Ministry of the Environment of Denmark
and private sector participant

From
January 2005
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Purpose of DCF:
 The purpose of this fund purchase carbon credits from
developing countries under the Kyoto Protocol.
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan
THANK YOU
Clean Development Mechanism Cell, Ministry of Environment, Government of Pakistan