Regional Cooperation in
Promotion and Sustaining CDM
Initiatives
A Case of ASEAN
WEERAWAT CHANTANAKOME, Ph. D.
Executive Director
ASEAN Centre for Energy (ACE)
Jakarta, Indonesia
* A paper presented at the Asian Regional Workshop on “Capacity Development for the Clean
Development Mechanism (CD4CDM), October 19-21, 2005, AIT, Bangkok, Thailand--- “Exploring
1
Cooperation in CDM Implementation in ASEAN”
OUTLINE OF PRESENTATION








Introduction to ASEAN and ACE
CO2 Emission & Reduction: ASEAN Profile
Status of Climate Change Treaties and CDM
PROJECTS in ASEAN countries
CDM Investment Structures
Forecast CO2 Emission and Reduction / Market
Value and Investment Opportunities
ASEAN CDM Host Country & Institutional
Arrangements:
CDM Institutional Capacity Building
Way forwards for Cooperation
2
The ASEAN
Geography
PACIFIC
OCEAN
INDIAN
OCEAN
3
INTRODUCTION



ASEAN, one of the most dynamic economic
regions of the world,
A heterogeneous mix of economies with
greatly varying energy resource endowment
and energy development situation.
In spite of these differences, the ten (10)
ASEAN countries have common aspirations
in achieving the Goals of Sustainable
Energy Development and Utilization.
4
ABOUT ACE

Established on January 1, 1999 as an intergovernmental organization that is guided by a
Governing Council composed of the Senior
Officials on Energy (SOE Leaders) of the ASEAN
countries.

Took over all the commitments, responsibilities,
liabilities, and assets of the 10-year long ASEAN-EC
Energy Management Training and Research Centre
(AEEMTRC).

Core funding is provided by an Energy Endowment
Fund established from equal contributions of the ten
Member Countries and managed by a fund manager
of the ASEAN Secretariat.
5
Charter of ACE
ACE is envisioned to be a catalyst for the economic
growth and development of the ASEAN region by
initiating, coordinating and facilitating regional as well
as joint and collective activities on energy.

To realize this vision, the Centre will accelerate the
integration of energy strategies within ASEAN by
providing
relevant
information,
state-of-the-art
technology, and expertise to ensure that over the longterm, necessary energy development policies and
programs are in harmony with the economic growth
and the environmental sustainability of the region.

6
Organizations in the ASEAN Energy
Sector
ASEAN HEADS OF
STATE/GOVERNMENT
OTHER
MINISTERIAL
MEETINGS
AM M
AS C
SOM
AMMST
ASEAN
SG
OTHER
MINISTERIAL
MEETINGS
AM E M
COST
ASEAN
CENTRE
FOR
ENERGY
(ACE)
LEGEND:
AEBF: ASEAN Energy Business Forum
AEM: ASEAN Economic Ministers
AFOC: ASEAN Forum on Coal
AMEM: ASEAN Ministers of Energy Meeting
AMM: ASEAN Ministerial Meeting
AMMST: ASEAN Ministerial Meeting
on Science & Technology
ASC: ASEAN Standing Committee
ASCOPE: ASEAN Council on Petroleum
COST: Committee on Science & Technology
EE&C SSN: Energy Efficiency and
Conservation Subsectoral Network
HAPUA: Heads of ASEAN Power
Utilities/Authorities
NRSE SSN: New & Renewable Sources of
Energy Subsectoral Network
SCNCER: Sub-Committee on Non-Conventional
Energy Research
S G: Secretary General
SOM: Senior Officials Meeting
SOME: Senior Officials Meeting on Energy
REPP-SSN: Regional Energy Policy and Planning –
Sub Sector Network
AE M
SCNCER
NRSE
SSN
ASEAN
SECRETARIAT
EE & C
SSN
SOME
HAPUA
ASCOPE
AEBF
AFOC
REPPSSN
7
ASEAN Vision 2020
…."establish interconnecting arrangements in the field of
energy utilities for electricity, natural gas and water
within ASEAN through the ASEAN Power Grid and
Trans-ASEAN Gas Pipeline, and promote cooperation in
energy efficiency and conservation, as well as the
development of new and renewable energy
resources."
5
8
Economic Profile
Selected Economic Indicators for ASEAN+3 Countries, 2002
Population, Population,
millions
Brunei
Cambodia
Indonesia
Lao, PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
ASEAN
China
Japan
Korea
Three
ASEAN+3
0.4
13.5
231.3
5.5
24.5
48.9
80.5
4.2
61.6
80.6
551.0
1,284.5
127.7
47.6
1,460
2,011
share of
ASEAN+3
0.0%
0.7%
11.5%
0.3%
1.2%
2.4%
4.0%
0.2%
3.1%
4.0%
27.4%
63.9%
6.4%
2.4%
72.6%
100.0%
GDP,
GDP,
Real GDP,
GDPPC,
GDPPC,
current,
million US$
share of
ASEAN+3
growth
US$/head
Rank of 10
4,040
3,667
185,899
1,841
94,889
8,559
78,900
87,727
122,555
34,507
622,584
1,236,690
3,997,042
472,501
5,706,232
6,328,816
0.1%
0.1%
2.9%
0.0%
1.5%
0.1%
1.2%
1.4%
1.9%
0.5%
9.8%
19.5%
63.2%
7.5%
90.2%
100.0%
3.2%
4.5%
3.7%
5.8%
4.1%
5.0%
4.4%
2.2%
5.3%
6.8%
4.1%
8.0%
0.2%
6.3%
2.4%
2.5%
11,509
272
804
333
3,868
175
980
20,887
1,990
428
1,130
963
31,300
9,918
3,909
3,147
3
12
9
11
5
13
7
2
6
10
8
1
4
9
Source: ASEAN+3 Energy Security Forum, Fereidun Fesharaki, FACTS Inc./EWCI Ltd., Cebu, Philippines, February 11, 2004
Economic Profile


ASEAN registering a 6.2 per cent GDP growth
rate in 2004.
Projections for the 2005 year-end are also
positive: ADB forecasts a 5.7 per cent GDP
growth for Southeast Asia and 6.6 per cent for
Asia in 2005-06 on the back of export growth
and FDI expansion, including continued growth
of China and India.
10
Economic Profile

An additional US$ 10 increase in oil prices
would restrain GDP growth by 0.6 per cent
on the average. In ASEAN, many
countries recently trimmed their growth,
citing rising fuel costs
11
CO2 Emission & Reduction: ASEAN
Profile
CO2 EMISSION FROM FUEL COMBUSTION 1990-2001
Country
Brunei
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
ASEAN
Total CO2
Emissions
(1990)
3.20
n.d
141.55
n.d.
47.40
3.95
36.03
34.76
80.20
17.96
365.05
Source: IEA, 2000; IEA – 2003 (IPCC)
Total CO2
Emissions
(1998)
4.91
n.d.
226.46
n.d.
92.40
7.84
61.99
43.46
148.10
32.87
618.03
Total CO2
Emissions
(2001)
5.12
n.d.
283.50
n.d.
108.77
6.74
67.62
45.93
156.40
45.75
719.56
12
ENERGY POLICY ISSUES: ENVIRONMENT
CO2 Emissions Based on Electricity Demand Forecast
2020 (BAU) vs. Kyoto Protocol (KP)
Year
2000
2005
2010
2015
2020
Business As Usual (BAU) in
million tons CO21
96.66
141.00
200.00
280.00
358.00
Kyoto Protocol (KP) in million
tons CO2
43.02
43.02
43.02
43.02
43.02
Emission Reduction from BAU to
KP in million tons CO22
53.64
98.06
157.37
236.89
308.95
Value of Emission Reduction
from BAU to KP in million US
Dollars3
295.04
539.31
865.53
1302.87
1,699.24
Conditions
1
Business As Usual (BAU) is CO2 Emission based on electricity demand forecast 2020.
2 Agreed worldwide CO reductions under Kyoto Protocol is 5.2% of 1990 CO emission levels.
2
2
3 Dollar value of CO emission reduction is 5.5 USD/MT CO as in recent transactions.
2
2
13
ENERGY POLICY ISSUES: ENVIRONMENT
Graph Showing CO2 Emission Based on
Electricity Demand Forecast 2020 (BAU vs.
Kyoto Protocol)
14
ENERGY POLICY ISSUES: ENVIRONMENT
Total CO2 Reduction from RE and EE&C
Plans in 2020 in Mil. T CO
2
Energy Efficiency &
Conservation
Renewable
Energy
Total
Brunei
0.09
0.22
0.31
Cambodia
0.09
1.94
2.03
Indonesia
4.36
12.59
16.95
Lao P.D.R
0.06
1.29
1.35
Malaysia
2.73
9.03
11.76
Myanmar
0.06
1.47
1.53
Philippines
3.53
5.80
9.33
Singapore
0.15
0.11
0.26
Thailand
3.93
14.34
18.27
Vietnam
4.24
20.72
24.96
Total
19.26
67.54
86.80
15
ENERGY POLICY ISSUES: ENVIRONMENT
CO2 Reduction from RE and EE&C Plans in 2020 of
ASEAN Countries vs. KP with BAU as Baseline
in Million Tons CO2
Total CO2
Reduction from
EE&C and RE
Plans
(a)
Kyoto Protocol
with BAU as
baseline
(b)
Difference
(b-a)
Brunei
0.31
1.00
0.69
Cambodia
2.03
0.42
-1.61
Indonesia
16.95
77.39
60.44
Lao P.D.R
1.35
-0.12
-1.47
Malaysia
11.76
60.87
49.11
Myanmar
1.53
-0.28
-1.81
Philippines
9.33
54.99
45.66
Singapore
0.26
14.70
14.44
Thailand
18.27
60.50
42.23
Vietnam
24.96
39.50
14.54
Total
86.80
308.95
222.22
Country
16
ENERGY POLICY ISSUES: ENVIRONMENT
Comparison of CO2 Emission
on Three Scenarios:
BAU, RE & EE&C Plans and KP
17
Status of Climate Change Treaties
in the ASEAN
UNFCC
Status of Ratification
As of 17 February 2003
Country
Kyoto Protocol
Status of Ratification
As of 14 August 2003
Signature
Ratification
Accession
Entry into
force
Signature
Ratification
Accession
Brunei
-
-
-
-
-
Cambodia
-
18/12/95 (Ac)
17/03/96
-
22/08/02 (Ac)
Indonesia
05/06/92
23/08/94 (R)
21/11/94
13/07/98
Lao PDR
-
04/01/95 (Ac)
04/04/95
-
06/02/03 (Ac)
Malaysia
09/06/93
13/07/94 (R)
11/10/94
12/03/99
04/09/02 (R)
Myanmar
11/06/92
25/11/94 (R)
23/02/95
12/08/03
-
Philippines
12/06/92
02/08/94 (R)
31/10/94
15/04/98
/10/03 (R)
Singapore
13/06/92
29/05/97 (R)
27/08/97
-
-
Thailand
12/06/92
28/12/94 (R)
28/03/95
02/02/99
28/08/02 (R)
Vietnam
11/06/92
16/11/94 (R)
14/02/95
02/12/98
25/09/02 (R)
(OK)
-
18
CDM PROJECTS IN ASEAN COUNTRIES
Source: www.cdmwatch.org
Country
CDM Project
Brunei
Not signatory to UNFCC and Kyoto Protocol
Cambodia
Studies by PREGA, UNEP and NEDO
Indonesia
-Micro-hydro
Lao PDR
-
Malaysia
-Biomass
Myanmar
Studies by NEDO
Philippine
PV/LPG and biomass project
Thailand
-Rice
Singapore
Not signatory to Kyoto Protocol
Vietnam
-Thongly
project
Sarulla geothermal project
-Unocal’s Wayan Windu geothermal project
-Palm oil west power plant
-Utilization of plantation waste and forest segmentation
for fuel switching project
-Indocement energy efficiency project
-Kansai wood waste recycling plant
-Yogyakarta urban bus project
-East Kalimantan plantation project
-Unocal’s
power generation project
biomass power plant
-Air Hitam landfill gas capture project
-Palm oil plant gas capture project
-Felda Lepar Hilir Palm Oil Mill biogas project
-Bumibiopower
husk power plant project
Biopower rice husk power project
-Yala rubber wood waste plant project
-Mitr Phol’s Dan Chang Cogeneration project
-Bangkok Landfill gas project
-AT
landfill gas project
Dong gas planning project
-Tree planting
-Rang
19
CDM Investment Structures

Unilateral model


Bilateral model


countries or private entities would negotiate agreements among
themselves. Together, they would set criteria and rules for
crediting.
Multilateral model


developing country would itself undertake actions to reduce emissions and
then subsequently trade the CERs (certificate of emissions reductions)
produced through such action on the international market .
countries would offer projects for emission reductions to the CDM,
to be picked up by the highest bidder in Annex 1 countries.
Interested developing countries could each present a portfolio of
projects and seek financial and technical support for their
implementation.
Hybrid model

Combines features of unilateral and multilateral models.
20
Unilateral CDM
1. Project
Development,
Design and
Financing
Ideas
Capacity
Financing
Host
2. Validation of
Project Design
3. Monitoring
by Project
Operators
Operational Entities/
Executive Board
CERs
4. Verification and
Certification
21
Unilateral CDM



Attractive to countries with sufficient capacity and
resources to select, develop, finance, and operate
sustainable development
Ensures that projects are closely knit with national
sustainable development plans
Can promote wider international CDM participation
22
Bilateral CDM
1. Project
Development,
Design and
Financing
Ideas
Capacity
Financing
ANNEX 1 Investors
Host
2. Validation of
Project Design
3. Monitoring
by Project
Operators
Operational Entities/
Executive Board
CERs
4. Verification and
Certification
23
Bilateral CDM




Consistent with conventional modes of foreign direct
investment (FDI)
Provides most flexibility to project developers
Consistent with the existing development assistance
practices
Concerns:


Large majority of FDI is concentrated in a small set of countries
(China, Mexico, Brazil – 50 %) – will not deliver a geographic
distribution of project
Bilateral approach favors large capital intensive infrastructure
project – small renewable and energy efficiency projects may be
rendered non competitive.
24
Multilateral CDM
ANNEX 1 Investors
CERs
$
1. Project
Development,
Design and
Financing
Ideas
Capacity
Financing
CDM Fund
Host
2. Validation of
Project Design
3. Monitoring
by Project
Operators
Operational Entities/
Executive Board
CERs
4. Verification and
Certification
25
Multilateral CDM



May increase bargaining power to developing
countries – dealing with fund managers whose
mandate is compatible with their interests
Help shelve investors for the risks of individual
project failures
Possible arrangements


Single supplier – give the greatest control over CDM
investment flows but could slow the market development and
create large inefficiencies
Multiple fund – variety of institutions operate, competing and
co-existing CDM funds
26
Hybrid CDM
Annex 1 Private
Investors
$
Other Multilateral
CDM Funds
CERs
CERs
1. Project
Development,
Design and
Financing
Ideas
Capacity
Financing
$
Domestic
Investment
CERs
$
National CDM Fund
2. Validation of
Project Design
3. Monitoring
by Project
Operators
Operational Entities/
Executive Board
CERs
4. Verification and
Certification
27
Forecast CO2 Emission and Emission Reduction
from Energy Sector for the ASEAN Countries
(2001-2010)
Scenario
Emission
(in million tons
CO2 )
Emission
Reduction
(in million tons
CO2 )
7,610
-
Emission reduction on fossil
fuels
-
879
Emission reduction on RE & EE
programs
-
512
2,519
5,091
Business-as-usual
Emission reduction by Kyoto
Protocol (5.2% of 1990)
* Using business-as-usual (BAU) as baseline
28
Market Value of Emission Reductions *
2001-2010 in ASEAN: Investment
Opportunities
Scenario
Emission Reduction from
Value in Mill. US Dollar
4,836
fossil fuels
Emission Reduction from
2,815
RE and EE Programs
Emission Reduction by
Kyoto Protocol Standard
28,000
* - Using business-as-usual as baseline
- Assuming USD 5.5 per ton CO2
29
Summary of Markets/ Investment Opportunities from
Clean Energy Initiatives in ASEAN
(in million US Dollars)
MARKET
INVESTMENT
OPPORTUNITIES
2001-2010
Low
High
Renewable Energy
19,476
27,467
Energy Efficiency and
Conservation
17,054
29,672
7,651
28,000
44,181
85,139
Clean Development
Mechanism (CDM)
Total
30
Conclusion

The Clean Energy Development Market
and Business Opportunities in the ASEAN
Region during 2001-2010 range between
44 Billion USD and 85 Billion USD

Taking the proper gears for the RESCOs,
the ESCOS and the CDM Promotion
Companies should be a way to prosper in
this market.
31
ASEAN CDM Host Country



The large ASEAN countries have a varied and
considerable CDM potential, particularly
regarding bio-energy and geothermal.
The most attractive ASEAN CDM host country at
the moment is likely to be Indonesia.
Vietnam and Malaysia have institutions in place
and thus fulfill the necessary conditions.
Thailand and the Philippines still have to clarify
their approval procedures, but already have a
considerable project pipeline.
32
Institutional Arrangements for CDM in
ASEAN countries




Cambodia, Laos, Malaysia, Thailand and
Vietnam have notified their DNA
Indonesia is likely to notify its DNA after the
recent ratification of the Kyoto Protocol.
The Philippines are in the process of setting up
the DNA. (?)
Brunei, Myanmar and Singapore have not yet
started preparations. (?)
33
CDM Institutional Capacity Building in
ASEAN



ASEAN have experience in developing CDM policies,
setting up institutional arrangements and implementing
CDM procedures.
Local capacity and experience is still limited in some
countries. Within the region, therefore, the exchange of
experience and co-ordination can support the
implementation of CDM.
Needs for capacity building in ASEAN are:
- Operational skills of DNA
- Technical CDM project assessment
- Establishment local Operational Entities
- Awareness raising in longer term
- Project development:
* CDM life cycle or preparing proposals
* Financing or transactions
34
Ongoing Capacity Building Projects in the
ASEAN region









CDM-ASEAN (ASEAN region)
- Energy sector, institutional
Japan IGES-MOE (Indonesia, Cambodia, Thailand, Vietnam, Philippines)
- all levels of capacity building
WB/ESCAP (Northeast, Southeast and South Asia)
- all levels of capacity building
CD4CDM/UNEP (Vietnam, Cambodia, Philippines)
- Awareness building, project development, institutional
GTZ project on CDM institution building (Indonesia / Cambodia - Vietnam)
- Procedures, DNA, project clearing house
Danish CDM capacity building (Thailand / Malaysia)
- DNA, procedures, project development, awareness
UNDP (Philippines)
- Institutional, project development, awareness
SouthSouthNorth (Indonesia)
- Project development, sustainability criteria
Asia Pro-Eco (Cambodia, Laos, Vietnam)
35
Problems & Recommendations

Most projects are successful. Some problems, however,
have been identified which limit the effectiveness of the projects:
– Some overlap exist in scope and content
– Projects do not sufficiently build on results of previous projects
– The target group is sometimes not specific enough
– Capacity building should start by raising awareness on the
general issue on climate change since most people have very
limited knowledge on the issue, then relate it to the more specific
CDM issues.
– The project activities are often limited to workshops and do not
involve (on-the-job) training.
– The role of local government in CDM is not clear and not
adequately targeted in the capacity building projects
Ref: Pelangi, 2004, Jakarta, Indonesia
36
Recommendations

Several recommendations have been made to increase the
effectiveness of capacity building:
– Improved evaluation of past projects
– Stricter assessment of proposals by the recipient country
and organisations beforehand
– Capacity building should not be limited to transfer of
knowledge but also include transfer of skills (on-the-job
training)
– Improved coordination of activities. This is mainly the
responsibility of the recipient (host) country.
– Better exchange of information or results between projects
37
ASEAN Existing Body for Cooperation:
Way Forwards…






Roles of ASEAN Secretariat, ASEAN Centre for
Energy (ACE), ASEAN CCI, complementary to the
activities on the national level.
A future ASEAN Climate Change Initiative could
facilitate the transfer of best practice and the exchange
experiences within ASEAN.
The ongoing CDM-ASEAN Project (ACE/EAEF) can be
seen as a first step (or pilot) towards establishing a
regional framework for exchange of experience.
The possibility of the establishment of an ASEAN CDM
Fund to fund CDM projects
ASEAN Senior Official Meeting on Energy (SOME)
ASEAN MINISTERS ON ENERGY MEETING (AMEM)
38
A Commitment….
“…However, the ASEAN people are
becoming aware that the climate is
actually changing…
and their awareness may be the key
to future change…”
39
THANK YOU
www.aseanenergy.org
40