ROYAUME DU MAROC
Ministère de l'Aménagement du territoire, de
l’Eau et de L’Environnement
Examples on how the additionality is
addressed
in the three Projects approved by the
National CDM Council in Morocco (DNA)
Important Issues to address in CDM Projects
Tunis, August 27-29, 2004,
Hotel Africa, Tunis
Mme Samira Elkhamlichi
Permanent Secretariat of CDM DNA Morocco
Overview
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What is additionality?
Project additionality tests
Examples:
1. Wind Park Essaouira
2. Rehabilitation of the landfill in Akreuch as a
landfill gas to energy project.
3. Heat recovery enhancement for power
generation at the Maroc Phosphore’s
phosphoric acid and fertilizer production plant
of Jorf Lasfar, Morocco
What is additionality?
At the 10th meeting of the EB: for establishing additionality a two
step approach has to be followed:
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First, demonstrate-by testing for barriers- that the project
is not the baseline scenario and hence different from what
otherwise would have happened.
Second, select a baseline approach described under
paragraph 48 (a)-(c) Marrakech Accords, describe the
appropriate baseline scenario and calculate the resulting
GHG reductions.
The key idea: prove that the project is not Business as usual
BAU
Problems with additionality?
The new baseline methodologies submitted to the EB have shown a
variety of approaches to determine whether « the project activity is
additional and therefore not the baseline scenario ».
The inconsistency and incompleteness of the so far proposed
additionality tests seems to be one reason why the EB did not
immediately approve many new methodologies.
•Several possible tests have been identified,
judge on a project by project basis
Concept must be made operational
Project additionality tests
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A proposal on CDM additionality tests, developed by the
Ministry of Economic affairs/Senter (Netherlands).
Three types of additionality tests :
Test 1: A more economically attractive course of action exists;
Test 2: The project is not viable without the carbon credits
component;
Test 3 : The project must overcome several barriers.
•The project developer must use one or more of
theses tests.
•The test must be transparent and replicable:
Validator will check, public can comment.
Test 1: A more economically attractive course
of action exists;
Use economic arguments that your project is
not the most attractive course of action:
Internal Rate of Return IRR.
Step 1
Determine several plausible alternatives for the
project in the country
Step 2
Calculate the IRR of your project without carbon
credits
Step 3
Calculate the IRR of these alternatives
Step 4
Determine whether your project has a lower
IRR than the IRR of the alternative. If yes the
project is additional
Test 2: The project is not viable without the
carbon credits component
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Use economic arguments that your project is not
viable without the income from carbon credits :
Internal Rate of Return IRR
Step 1
Determine whether a law would require the
project to be carried out.
Step 2
Calculate the IRR of project with and without
the carbon credits
Step 3
Determine whether the IRR is significantly
higher with the sale of carbon credits than
without the sale. If yes, project is additional
Test 3: The project faces serious barriers
The CDM EB has identified four different
barriers:
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Investment barriers:
Technological barriers
Barriers due to prevailing practice:is the project
common practice?
Others barriers
Tanger
Rabat
Tétouan
Fès
Khénifra
Tanafnit
Casablanca
Meknès
Océan
Beni Mellal
AtlantiqueM
Safi M Marrakech
Emplacement du site
Essaouira
A
A
Essaouira
Agadir
R
R
Tarfaya
O
O
C
C
Oujda
Wind Park Essaouira 60MW
Layoune
Project developer: ONE
Type of project : Renewable Energy
production
Project Description:
The project involves the construction of the 60 MW Essaouira wind power project in Cap Sim,
Morocco.
The Cap Sim region is one of the windiest areas in Morocco.
The project will enable the use of renewable energy in Morocco and attract foreign and private
investment into the power sector in Morocco.
The project will reduce GHG emission reductions by displacing existing and to be developed
power plants connected to the grid.
Technical and financial elements:
Project development costs: 1.2 million $US
Installation costs: 88.7 million $US
Total project costs: 88.9 million $US, financed by ONE and KFW.
Estimate of GHG emission reductions: 1.62 million tonnes of CO2eq. over 10 years
Estimated carbon revenues from the project: between 8 and 13 millions $US
ADDITIONALITY TESTS FOR WIND PARK ESSAOUIRA :
Test 1:
Step1
Possible alternatives include: coal plant, fuel plant, gas-fired
combined cycle and hydro ( depends on rainfall, drought
conditions have reduced the contributions of electricity from this
source)
The current regulations and price for electricity in Morocco doesn’t
favour electricity generation by RE sources. The price of electricity
generated through a wind park is high compared to the price of
Step 2 electricity generated by fossil fuel sources.Financing wind projects is
difficult without the value of the environmental benefits.
IRR of CC is the higher
Step3
The wind park project has the lower IRR
Step 4 The project is additional
ADDITIONALITY TESTS FOR WIND PARK ESSAOUIRA :
Test 2:
Step1
Step 2
Step3
There is no legislation requiring the production
of wind energy.
The project will result in 1.531.032Tonnes CO2
over the crediting period.
IRR of project with the carbon credits is higher
than the IRR of project without
Difference in IRR is significant
Project is additional
ADDITIONALITY TESTS FOR WIND PARK ESSAOUIRA :
Test 3:
Investment barrier:
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ONE is still seeking investments partners for the Essaouira project.
The price of producing electricity by a wind park is high compared
to using fossil fuel and the project is not a commercial option
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The banks don't want to provide any guarantees for wind power
generation projects.
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The project was only included in the Moroccan power expansion
plan taking into account the benefits from the credits carbon.(The
tangier wind park project has been included in the expansion plan
since 2000, however it is still not financially closed.
Technological barrier:
There are technological concerns such estimating output and fitting
the project into the national grid.
Akreuch landfill gas project
Project developer: City Council of Rabat
Type of project : Methane recovery in the waste
sector
Project Description:
•The Akreuch landfill became operational in 1984.
•The landfill will be closed end of December 2004.
•The project involves the rehabilitation of the Akreuch landfill by collection of
the currently uncontrolled release of landfill gas into the atmosphere.
•The landfill gas will be collected through the investment in a gas collection
system, leachate drainage system and flaring equipment to be installed at the
Akreuch site.
Technical and financial elements:
•Project development costs: 0.05 million $US
•Installation costs: 0.80 million $US
•Costs of realisation of the project : 0.85 million US$, 100% self-financed
•Annual operation costs: 0.055 million $US
•Estimate of GHG emission reductions: 1.59 million tonnes of CO2eq. over 21
years
•Estimated carbon revenues from the project: 4.77 millions de $US
ADDITIONALITY TESTS FOR THE AKREUCH
Test 1:
LANDFILL GAS PROJECT
Step1
Alternative1: the community o Rabat could continue the
current BAU practice of not collecting and flaring landfill
gas from its waste operations in Akreuch. In this case, the
uncontrolled release of landfill gas would continue.
Alternative 2: The landfill operator would invest in some
LFG collection and flaring equipment but not in power
generation
Step 2
The CDM project would involve expenses without any offsetting
revenues. IRR is 0%
Step3
The CDM project has IRR lower !!!.
Step 4 The project is additional
Test 2:
Step1
The current Moroccan law and regulations with regard to
landfills and rehabilitation works include particularly that the
abandoned area should include covering of the rubbish of the
abandoned area by covering it with vegetation and trees
followed by the development of terracing in the site.
There is no obligation to capture landfill gas and to combust
the generated biogas.
Step 2
Step3
The project will result in the avoidance of 1.59 millions
Tonnes CO2 over 21 years.
IRR of project with the carbon credits is higher than the IRR
of project without
Difference in IRR is significant
Project is additional
Test 3:
Investment barrier:
Technological barrier:
Others barriers: First time implemented in Morocco
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Management lacks experience using this technology;
The project is considered “first of a kind” , that means far
from common practice;
The local community may fail to see the environmental
benefits of the project and so may oppose the project.
Heat Recovery Enhancement at the Jorf
Lasfar Phosphoric Acid Production Plant
Project developer: OCP
Type of project : Energy efficiency in
the industrial sector
Project Description:
Purpose of the project activity is to increase the amount of heat recovered from two lines of
sulphuric acid production at the Maroc Phosphore’s site of Jorf Lasfar, in order to generate
a greater amount of steam, leading to a greater on-site power generation.
The replacement of the existing intermediary absorption towers by HRS systems will result
in a significant increase of the heat recovery ratio, i.e. the ratio between the heat recovered
and the heat released by exothermic reactions in the process.
The increased emissions free power generation will displace an equivalent amount of
power from the Moroccan grid.
The project will also lead to a significant reduction of atmospheric pollutants, such as SO2,
NOx, and carbon monoxide.
Technical and financial elements:
Project development costs: 2.5 million $US
Installation costs: 17.5 million $US
Annual operation costs: 0.75 million $US
Estimate of GHG emission reductions: 888 813 tonnes of CO2eq. over 10 years
ADDITIONALITY TESTS FOR THE HRS PROJECT:
Test 1:
Step1
Alternative1: The existing plant
Alternative 2: The HRS project
Step 2
The project leads to reduce electricity costs used by the
complex
Step3
The IRR of CDM project is higher than the IRR of BAU
Step 4
The project is not additional
Test 2:
Step1
There is no legislation requiring
Step 2
The total resulting CO2 emissions reduction is calculated to be
848.895 tons of CO2Eq over 10 years crediting period.
Step3
Diffrence in IRR is significant !!!!
Project is additional
Investiment barrier:
Test 3:
The lifetime of the existing system of the Jorf Lasfar project has not yet
come to an end. The equipment has been installed in 1986 and is
expected run at least for another 10 years.
The installation of a HRS system results in extra costs, which do not
result in a return acceptable by the Investment Board of OCP. Other
investment priorities exist.
The environmental department of OCP has put the installation of a
HRS system for Jorf Lasfar on the agenda since 1994, but up to now the
project has never been approved because of other priorities. The
revenues of CERs could help in changing the equipment to an HRS
system before 2015.
The project would not occur in the absence of the CDM.
Technological barrier:
This processus use a new technology :The first application in Morocco
Need of a better knowldege of this technology
Thanks
Permanent secretariat of CDM
Climate Change Unit
www.mdpmaroc.com