Carbon Market Opportunities
in Peru
Eco. Julia Justo Soto
Executive Director
National Environmental Fund
FONAM PERU
PERU
•PERU is located in the South American
Pacific.
•PERU has an area of 1,285,216 km2 and
a total population of 28,220,764.
•PERU is the third largest country in
South America.
•PERU is a mega-diverse country and
strategically located in the center of South
America on the planet's largest ocean.
•PERU has the highest richness and
biological variety.
•PERU is the second country in area of
natural forests.
•PERU is a country with high potential of
clean energy resources.
Market trends & capacity development needs
PERU - INVESTMENT OPORTUNITY
Decrease of the Country
Risk
Increase of the GDP
Gross Dom estic Product (var%)
12
9.8
10
8.9
8
6.7
5.1
5
6
7.6
4
4
2
0.2
0
2001
2002
2003
2004
2005
2006
2007
Source: Instituto Nacional de Estadística e Informática
2008
Source: JP Morgan EMBI
PERU - INVESTMENT OPORTUNITY
Exports Growing
Investment Grade
Countries
Exports Growing (US $ million)
23729
25000
20000
22191 (*)
17336
12809
15000
10000
Chile
27955
30000
6955 7026 7714
9090
5000
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: Instituto Nacional de Estadística e Informática
(*) Until August 2008.
Fitch
A
México
BBB+
PERÚ
BBB-
Brasil
BBB-
Colombia
BB+
Venezuela
BB-
Argentina
RD
Bolivia
B-
Ecuador
Source: Fitch Ratings
CCC
National Environmental Fund –
FONAM PERU
•The National Environmental Fund
- PERU (FONAM - PERU) was
created by Congress Bill, but ruled
under private law. FONAM is a non
profit institution of public and social
interests and belongs to the Ministry
of the Environment sector.
•FONAM has the objective of
promote and support the financing of
public and private investment
associated
to
the
Peruvian
Environmental Policy.
Market trends & capacity development needs
FONAM – Work Areas
Sustainable Transport
Carbon Business
Environmental
Services, Forest and
Ecobusiness
Clean Energies:
Energy Efficiency and
Clean Production
Water and Solid Waste
Management
Mining Environmental
Liabilities
Sustainable
Development
Market trends & capacity development needs
FINANCIAL
RESOURCES & TECHNICAL
ASSISTANCE
Multilaterals:
WB, IADB, CAD, EIB,
UNDP, UNEP RISOE.
Bilaterals:
With different countries:
GTZ, BMZ, KFW, JICA,
Governments of
France, Netherlands,
Finland, Spain, USAID,
Scotiabank, Santander
Bank, Private
enterprises, Mining
companies and NGOs
APPLICATIONS
•Support the process of
fundraising and financing for
environmental projects
•Advice in the elaboration of
environmental proposals.
•Execute projects, promoting
environmental and financial
investments in: Climate
change and CDM, Combat
Desertification, Remediation
of Mining Liabilities,
Ecobusiness and
Biodiversity.
Market trends & capacity development needs
PERUVIAN CDM FRAMEWORK
Climate Change topics, specifically CDM are manage by two
institutions:
 Ministry of Environment – MINAM
 National Environmental Fund - FONAM
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
•
•
•
•
Ministry of Environment is the Designated National Authority (DNA) to approve and
issue the Approval Letter of the Country.
There is a ISO P-34 procedure for approval of CDM projects which deadline is 45 days.
This procedure evaluates whether the CDM project contributes to “sustainable
development of the country”.
Until November 2008, 33 CDM projects have been approved by the Designated
National Authority, MINAM:
19 Hydroelectric
1 Transmission Line
4 Biomass
3 Waste
4 Fuel Switching
1 Energy Efficiency
1 Afforestation
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
Nº
Project
Type
Approval
Date
TCO2e/ye
ar
Emission
Period
Current Status
Location
1
Huanza Hydro
Hydro
Dec 01
210,629
10 years
Studies
Lima
2
Tarucani Hydro
Hydro
Jun-02
153,958
10 years
Studies
Arequipa
Poechos I, II Hydro
Hydro
37681
54,933
Poechos I in Operation,
Poechos 2 in
Construction
Piura
3
10 years / 7
years
4
Tunel Graton Hydropower Plant
Hydro
Jan 05
20,272
10 years
Studies
Lima
5
Quitaracsa Hydropower Plant
Hydro
Jan 05
318,389
10 years
Construction
Ancash
6
Callahuanca Hydropower Plant
Hydro
Jan 05
18,213
10 years
Operation
Lima
7
Paramonga Biomass
Biomasa
Jan 05
85,300
10 years
Operation
Lima
Lima
Lima
8
Santa Rosa I, II, III Hydro
9
Huaycoloro Landfill Project
10
Cementos Lima Fuel Switching Project
11
La Virgen Hydropower Plant
12
Santa Rita Hydropower Plant
Hydro
Apr 05
17,393
7 years
SR I in Operation, SR II
in Contruction
and SR III in
Studies
Solid Waste
Jun-05
151,646
7 years
Operation
7 years
Operation
Fuel
Switc
hing
May-06
226,609
Lima
Hydro
Jun-06
220,194
10 years
Construction
Junín
Hydro
Aug 06
626,197
7 years
Construction
Ancash
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
Nº
Project
Type
Approval
Date
13
La Joya Hydropower Plant
Hydro
Feb-07
41,282
14
Ancón Landfill Project
Solid Waste
Mar-07
69,012
Fuel switching in Sudamericana de Fibras
Fuel
Switc
hing
16
Fuel switching in Rex
Fuel
Switc
hing
17
Cogeneration with Biogas in Cartavio S.A.A.
18
15
Mar-07
TCO2e/ye
ar
Emission
Period
Current Status
Location
7 years
Construction
Arequipa
10 years
Operation
Lima
10 years
Operation
25,577
Lima
10 years
Operation
Mar-07
32,000
Biomass
Mar-07
32,887
7 years
Operation
La Libertad
Caña Brava Hydropower Plant
Hydro
Apr 07
21,632
7 years
Construction
Cajamarca
19
Carhuaquero IV Hydropower Plant
Hydro
Apr 07
23,909
7 years
Operation
Cajamarca
20
Rehabilitation of Machupicchu Hydro
Hydro
Apr 07
294,881
7 years
Construction
Cusco
21
Electricity grid interconnection San Gabán –
Mazuko – Puerto Maldonado
Transmissio
n Line
39234
14,346
10 years
Construction
Madre de
Dios
Substitution of fuel by hydroelectric
generation in Pasto Bueno
7 years
Operation
22
Hydro
Jun-07
5,326
Biomass
39264
26,719
7 years
Operation
San Martín
23
Palmas del Espino – Biogas recovery and
heat generation from Palm Oil Mill
Effluent (POME) ponds
Aug 07
2,016
10 years
Operation
Lima
24
Fuel oil to Natural Gas Switching at TASA
Callao Sur Plant
Fuel
Switc
hing
Lima
Ancash
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
Nº
Project
Type
Approval
Date
TCO2e/ye
ar
Emission
Period
Current Status
Location
25
Santa Cruz I Hydroelectric Power Plant
Hydro
Jan 08
20,602
7 years
Construction
Ancash
26
Cheves Hydropower Plant
Hydro
Jun-08
400,857
7 years
Construction
Lima
Forest
39600
24,969
40 years
Studies
Piura
27
Reforestation, sustainable production and
carbon sequestration project in Ignacio
Tavara´s dry forest, Piura, Peru
28
Rurichinchay Hydropower Plant
Hydro
Jul-08
28,089
7 years
Studies
Ancash
29
Pucara Hydropower Plant
Hydro
Jul-08
696,150
7 years
Construction
Cusco
Energy
Efficie
ncy
39753
375,051
7 years
Operation
Lima
30
Ventanilla Conversion from Single-cycle to
Combined-cycle Power Generation
Project
31
Triplay Amazonico Methane Avoidance
Project
Biomass
Dec 08
4,393
32
Yanapampa Hydroelectric Power Plant
Hydro
Jan 09
30,760
7 years
Construction
Ancash
33
Bionersis Project Perú 1
Solid Waste
Feb-09
23,175
7 years
Studies
Iquitos
TOTAL
4,297,366
7 years
Studies
Pucallpa
THE NATIONAL ENVIRONMENTAL FUND – FONAM
CDM PROMOTIONAL ENTITY IN PERU
•
16 projects registered at the Executive Board.
•
2 Peruvian projects requesting registration.
•
10 Projects under Validation (1 forest).
•
3 projects and CER's issued.
•
In 2008, at least 4 new projects will receive CERs and VERs.
•
3 new projects in verification.
•
1 Project Approved on methodology level.
•
2 Peruvian methodologies elaborated.
•
Projects Peruvians must express interest in applying to the CDM at Executive Board,
MINAM and FONAM before the start of the Project.
Market trends & capacity development needs
REGISTERED PERUVIAN PROJECTS AT THE CDM EXECUTIVE
BOARD
Nº
Project
TCO2e/
year
CERs Status
Buyer
1
“Santa Rosa” Hydropower Plant
17,393
Selling of CERs
World Bank Netherlands
2
“Poechos” Hydropower Plant
31,878
Selling of CERs
World Bank - Italy
3
Hydropower Plant in Arequipa
153,958
Pre-investment
TBC
4
Huaycoloro landfill gas capture and
combustion
151,646
Verification
World Bank / United
Kingdom
5
Quitaracsa I
318,389
Financing Closed
TBC
6
Peruvian Fuel-Switching Project
25,577
Verification
TBC
7
Palmas del Espino – Biogas recovery
and heat generation from Palm Oil Mill
Effluent (POME) ponds,
26,719
Selling of VERs
Bélgica
8
Ancon – EcoMethane Landfill Gas
Project
69,012
Verification
United Kingdom
REGISTERED PERUVIAN PROJECTS AT THE CDM EXECUTIVE
BOARD
Nº
Project
TCO2e/
year
CERs Status
18,213 Selling of VERs
Buyer
9
Rehabilitation of the Callahuanca
hydroelectric power station
10
La Virgen Hydropower Plant
11
Caña Brava Hydropower Plant
21,632 Verification
Spain
12
Carhuaquero IV hydropower Plant
23,909 Selling of VERs
Spain
13
La Joya Hydropower Plant
41,987
14
Poechos II Hydropower Plant
22,771 Financing Closed
TBC.
15
Fuel Switching at Atocongo Cement
Plant and Natural Gas Pipeline
Extension, Cementos Lima
269,851
Selling of CERs
TBC
16
Fuel Substitution by Hydro
Generation in Pasto Bueno
5,326
Selling of CERs
TBC
220,194 Financing Closed
Financing Closed
Spain (ENDESA)
TBC
Switzerland
The 16 projects represents 1, 418, 455 tCO2e/year and Investments for more than US$ 400 millions.
THE NATIONAL ENVIRONMENTAL FUND – FONAM
CDM PROMOTIONAL ENTITY IN PERU


FONAM identifies eligible projects under the CDM.
FONAM trains and assist in the preparation of CDM projects, throughout the
project cycle:
 Prepares the initial document: Project Idea Note (PIN) and performs the
analysis of eligibility of the project.
 Assist in developing the Project Design Document (PDD), which includes the
baseline study and monitoring plan.
 Elaborates the file for the submission of the Project to the Designated
National Authority (MINAM) to obtain the approval letter of the Host Country.
 Informs the CDM project to the communities - stakeholders in the area of
influence of the CDM project.
 Advices the project developer in the Validation and Registration process at
the CDM Executive Board.
 Advices in the monitoring of emission reductions and verification process.
Market trends & capacity development needs
THE NATIONAL ENVIRONMENTAL FUND – FONAM
CDM PROMOTIONAL ENTITY IN PERU
•
FONAM is in charge of the promotion of CDM in Peru.
•
FONAM prepares the National CDM Portfolio to promote Peruvian Projects in
International Carbon Fairs.
•
FONAM prepares the National Carbon Portfolio that includes CDM and REDD projects
that can apply to the Voluntary Market.
•
FONAM is the Focal Point in Peru of the Carbon Finance of the World Bank.
•
FONAM is part of the steering committee of Host Countries of the Carbon Finance, and
is observer of the Spain Carbon Fund – World Bank.
•
FONAM support to remove barriers and elaborate proposal for develop a adequate legal
framework for promotion and implementation of CDM projects.
•
FONAM support projects which promotes synergies between the three United Nations
environmental conventions: UNFCC, UNCCD and CBD.
Market trends & capacity development needs
FONAM AND PROGRESS OF CDM IN PERU
 FONAM has developed capacities in the country, business
groups of private - public sector and national financial system,
capacities in the country through national and international
seminars, where more than 10,000 participants in the carbon
market were trained, not only from Peru but also from other
Latin-American and Caribbean countries.
 For the year 2008 have been identified a total of 126 projects:
94 projects in the energy sector, 29 Forest Sector Projects and
3 REDD. This 126 CDM projects represent 15 MM tons of CO2
and US$ 6300 MM on investments.
 Also a network of private and public stakeholders were
identified nation wide: developers, enterprises, consultants,
banks and universities, consolidating the carbon market in
Peru.
CDM PROJECT PORTFOLIO – ENERGY SECTOR
Type of Activity
Hydroelectrics
Emissions Reductions
(tCO2e/year)
Investment
(US$ millions)
Nº Projects
8,167,853
2,590
43
38,330
37
4
Wind Power
388,128
416
3
Solid Waste
945,687
534
7
Waste Water
78,840
2
1
Transport
1,435,434
1,006
4
Biomass
1,296,829
166
13
Fuel Switching
518,202
32
6
Cogeneration
24,686
6
4
2,612,321
1,202
7
448,812
280
2
15,955,122
6,271
Transmission Lines
Energy Efficiency
Geothermal
TOTAL
94
CDM PROJECT PORTFOLIO – ENERGY SECTOR
Hydropower Plants
43 Projects
US$ 2,590 millions
8.2 millions tCO2e per year
Geothermal Plants
2 Projects
US$ 280 millions
448,812 tCO2e per year
CDM PROJECT PORTFOLIO – ENERGY SECTOR
Transmission Lines
4 projects
US$ 37 millions
38,330 tCO2e per year
Wind Power
3 Projects
US$ 416 millions
388,128 tCO2e per year
CDM PROJECT PORTFOLIO – ENERGY SECTOR
Transport
4 Projects
US$ 1006 millions
1,435,434 tCO2e per year
Solid Waste
7 Projects
US$ 534 millions
945,6897 tCO2e per year
CDM PROJECT PORTFOLIO – ENERGY SECTOR
Biomass
13 Projects
US$ 166 millions
1,296,829 tCO2e per year
Fuel Switching
6 Projects
US$ 32 millions
518,202 tCO2e per year
CDM PROJECT PORTFOLIO – ENERGY SECTOR
Cogeneration
4 Projects
US$ 6 millions
24,686 tCO2e per year
Energy Efficiency
7 Projects
US$ 1,202 millions
2,612,321 tCO2e per year
CDM PROJECT PORTFOLIO – FORESTRY SECTOR
29 projects in 15 regions of
the country : 123,939 Has
Estimated Emissions Reductions
(TCO2e):
Until 2012: 883,161
20 years – 54,659,756
30 years – 66,720,401
Investment: US$ 100.6 millions
CARBON PROJECT PORTFOLIO – REDD SECTOR
3 projects in many regions of
the country : 288,180 Has
GEI Reductions (TCO2e):
Until 2012: 3,750,000
20 years – 7,500,000
30 years – 40,000,000
Investment: US$ 1 million
CDM PROMOTION ACTIVITIES
With the Support of Carbon Finance Assits Peru
will participate in Carbon Expo 2009, with an
updated CDM Project Portfolio, a Booth and a
National Delegation of peruvian enterprises to keep
the status of one of the most importants CDM Host
Countries .
2004:18 projects, US$
700 millions of Investment
2005: 39 projects, US$ 1,200 millions of Investment
2006: 50 projects, US$ 1,441 millions of Investment
2007: 71 projects, US$ 2,890 millions of Investment
2008: 126 projects, US$ 6,300 millions of Investment
2009: around 140 projects
CDM IN PERU: PROMOTING CDM
• Organization of Second Latin American Carbon Forum
"Latin Carbon" September 2007, in Lima, with more than
600 participants from the Latin American Region and
more than 150 bilateral meetings between buyers and
developers of CDM projects.
• Participation in Third Latin American Carbon Forum
"Latin Carbon" October 28, 29 and 30, 2008 in Santiago,
Chile.
• In July 2008, Peru was considered “Country of the
Month” by the GTZ CDM Highlights Magazine.
• Peru remains in the 6th Place in the host countries Magazine Carbon Point (Feb 2009).
MARKETING PERU
FONAM identifies potential new projects to update the Portfolio of CDM Projects
of Peru and present it in the Carbon events annually.
RANKING OF CDM HOSTING COUNTRIES
Rank
(previous
rank)
Country
Rating
(Previous
rating)
Climate
institutions
Investment
climate
1 (1)
India
A-
(A-)
AA-
B-
2 (2)
China
BBB+
(BBB+)
BBB-
BB
3 (3)
Chile
BBB
(BBB)
A-
BBB+
4 (4)
Mexico
BBB
(BBB)
A-
BB-
5 (7)
Brazil
BBB-
(BB+)
BBB-
BB-
6 (8)
Peru
BB+
(BB+)
A
BB-
7 (11)
Indonesia
BB
(BB)
BBB-
BB
8 (9)
Malaysia
BB+
(BB)
A
B
9 (5)
South Africa
BB
(BBB-)
A
CCC-
10 (6)
Korea
BB
(BBB-)
BB
BB+
According to PointCarbon until January 2009, Peru is in eighth place in the ranking of most
attractive countries in the World for CDM.
MARKETING PERU
Peruvian CDM
Project Portfolio
CDM IN PERU PROGRESS:
PoA-CDM
Promotion of Programmes of Activities and Bundling Projects:
At least 5 P-CDM where identified, and are under revision:
•
•
•
•
•
Promotion of Lighting Efficiency in Public Buildings, with the support of the
Ministry of Energy and Mines
Promotion of rural electrification using solar panels in isolated areas of
Peru, with the support of the Ministry of Energy and Mines.
Promotion of Fuel Switching from Diesel to Natural Gas in Transportation
Sector, sponsored by Ministry of Transport
Energy efficiency and fuel switching in Boilers, promoted by Ministry of
Production
Small Landfill in Local governments, promoted by FONAM and DIGESA.
CDM IN PERU PROGRESS
• Training for Financial sector, the most important national
banks were trained about CDM financing: Scotiabank,
Credit Bank and Continental Bank (BBVA).
• FONAM made strategic agreements with National and
International Actors, as well as Public and Private sector
in Peru to sponsor and facilitate the activities of
CD4CDM Project (JICA, World Bank,UNDP,MoUs) .
• These synergies can be useful in the development of
workshops and training activities to identify relevant
stakeholders interested in develop CDM projects and
programmes.
CDM IN PERU PROGRESS
• Government sectors are aware of the importance of CDM
– Facilitating the information process, with statistics, specific
studies, for the required information to indentify and
develop CDM documents;
– Develop the CDM framework as a promoting tool for new
investments and include climate change into national
policies.
– Develop incentives for make peruvian investment
opportunities more attractive.
FONAM’S COOPERANTS
FONAM made agreements with :
• 2001 – 2002
World Bank / Switzerland
• 2003 – 2005
Netherlands
• 2006
Andean Development
Corporation (CAF)
• 2007 – 2008
UNEP- RISOE
• 2007 – 2008
JICA
• 2008 – 2011
IADB
• 2008 – 2010
World Bank
PENDING OPPORTUNITIES
Renewable
Energy
Hidro, Wind,
Geothermal,
Tide power,
Transmission
lines,
Biofuels
Waste and
fugitive
emissions
Methane,
Wastewater
treatment,
Manure
Management
Fuel
Switching
Energy
Efficiency
More carbon
intensive fuels
to Natural
Gas
Process
reengineering
and measures,
cogeneratio
n
LULUCF
Aforestation,
Reforestation
and REDD
NEW CDM OPPORTUNITIES
PROJECT TYPE
POTENTIAL
Enterprises
Small
Businesses
Communities
Government
Universitie
s
Banks
Micro finance
institutions
X
X
X
X
X
X
X
X
X
X
X
X
x
X
X
X
X
X
X
x
Program
Wind
5000 MW
x
Solar
tbd
PCH
tbd
X
Geothermal
tbd
X
X
X
X
x
Tide
tbd
X
X
X
X
x
Waste
residues
15,000 ton/day
X
X
X
X
X
X
x
Waste water
tbd
X
X
X
X
X
X
x
Transport
tbd
X
X
X
X
X
X
X
x
Energy
Efficiency
500 MW
X
X
X
X
X
X
X
x
Thank you!
Julia Justo
jjusto@fonamperu.org
www.fonamperu.org