FOCUS: MITIGATION
A glance at post-kyoto
Louis Perroy, ClimatEkos
1 September 2011, Vientiane, Lao PDR
MITIGATION
A glance at post-kyoto
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Programmatic CDM (Programme Of Activities-POA)
Nationally Appropriate Mitigation Actions (NAMAs)
Programmatic CDM to NAMAs
Green Fund
Programmatic CDM
What is pCDM?
•Traditional CDM:
A project by project approach
Many sectors + countries have
significant potential untapped
•Emission reductions
– from single project activities
– in single locations
– in certain sectors
– in star countries
Little or no effect on the carbon
intensity of the economy
Little or no sustainable benefits
for many projects
How to make the CDM incentivise GHG emissions reductions
throughout entire sectors or large areas?
Programmatic CDM
What is pCDM?
Traditional CDM: One CDM project activity
pCDM: One programme + numerous project activities
GHG reducing
actions
Framework/
programme
Programmatic CDM
pCDM examples
PoA
CPA
>voluntary coordinated action by a private or public entity
which coordinates and implements any policy/measure or
stated goal (i.e. incentive schemes and voluntary
programmes)
> unlimited number of CDM Programme Activities
Obvious and typical examples:
Installation of (compact fluorescent light)
CFLs in a group of households
Efficient lighting programme
EB47 An 29 (version 3)
Fuel switching programme in industrial
facilities
Fuel switch in one facility
Solar water heaters in businesses /
households
Installation of a group of solar water heaters
Landfill programme
Landfill gas flaring in one landfill
Greenfield electrification programme
New biomass generator
And a lot more…
Programmatic CDM
pCDM terminology
pCDM = Programmatic CDM
PoA = Programme of Activities (most commonly used term for the whole
concept)
CPA = CDM Programme Activity (a project activities implemented under the
Programme)
CDM-PoA-DD = Programme of Activities Design Document
CDM-CPA-DD = CDM Programme Activity Design Document
Programmatic CDM
Single Project
Bundle of Projects
Programmatic
Single location
Multiple locations
Multiple locations, across
countries
Single project participant
(PP)
Multiple PPs possible
Multiple PPs possible
1 project activity (PA) at a
time
A number of activities
submitted as 1 PA at a time
A number of activities
(CDM PA = CPA) submitted
as a coherent groups
Project does not change
over time
Composition does not
change over time
An unlimited number of
CPAs can be added to the
PoA within 28 years
PP known prior to
registration of project
PP known prior to
registration of project
At least one PP is known
prior to registration, rest
join later
1 crediting period
Uniform crediting period for
all activities
Each CPA has its own
crediting period
Programmatic CDM
Why is pCDM so exciting?
Flexibility
– Validation + registration of the PoA, along with one sample CPA
– Addition of CPAs over time, without validation or new LoAs (“consistency
check”)
 No need to know the composition + magnitude of the project ex-ante
 Decreased registration time + transaction costs – see next slides
New opportunities
– In underrepresented sectors (esp. where ERs are dispersed in space and
time + low ERs/unit  small projects can make big PoAs) – see next
slides
– In underrepresented countries – see next slides
Allows for replication of successful projects
Step towards NAMAs and sectoral mechanisms
Programmatic CDM
Opportunity 1:
Extend CDM to micro-activities
• PoAs are ideal for CFLs, solar water heaters, cook
stoves, household biogas, distributed energy, etc.
• Registered PoAs can generate recurring revenues to
reduce need for working capital
 Over 50% of PoAs in validation cover household
sector (<<1% for stand-alone CDM projects)
 To date only modest private sector activity in this
segment
??Programmatic CDM
Opportunity 2: Bankable CERs under a PoA
Under registered RE PoA
• ~15 months until CDM revenues
• Low inclusion risk
 CERs become bankable at financial closure
Cash inflow
Cash inflow
Stand-alone RE projects
• >2.5 ys until CDM revenues
• Perceived high registration risk
 CERs are not bankable at financial closure
Debt
Carbon
finance
Debt
??? CER revenues ???
Operating revenues
Debt servicing
Operating expenditure
Investment &
construction
expenditure
Year
-2
-1
Equity
1
2
3
4
5
Cash outflow
Cash outflow
Equity
CER revenues
Operating revenues
Debt servicing
Operating expenditure
Investment &
construction
expenditure
Year
-2
-1
1
2
3
4
Project Developer Forum | UNFCCC Technical
5
Programmatic CDM
in the region
Project name
Location
Status
Installing Solar Water Heating Systems
Southern Vietnam
At Validation
Small Scale Livestock Waste
Management Program
Thailand
At Validation
Sustainable Small Hydropower
Vietnam
At Validation
Renewable Energy Development Program Vietnam
(REDP), hydro, wind, biomass
At Validation
National Biogas Programme
Vietnam
At Validation
Green Brick Development INTRACO
Vietnam
At Validation
Biomass Power Development Programme Thailand
At Validation
small scale biomass power generation at
Mae Lee Forest Plantation
Thailand
At Validation
energy efficiency improvement for street
lightings
Thailand
At Validation
REDUCING EMISSIONS - VER TRANSACTION
Nationally Appropriate
Mitigation Actions (NAMAs)
• Voluntary activities for emission mitigation in countries
not subject to reduction commitments and another step
towards increased mitigation efforts from the developing
nations. Twofold objective:
– Developed countries promise technical and financial support for
related programmes, whereas
– developing countries are requested to develop and implement
mitigation actions, usually for a whole sector. This can also be
seen as.
• NAMAs can supplement or incorporate carbon finance activities
such as CDM projects, with the practical implications of how to do
monitoring, reporting and verification (MRV).)
Nationally Appropriate
Mitigation Actions (NAMAs)
• NAMAs distinguish between three different types:
1Unilateral NAMAs: mitigation actions independently funded
and carried out by developing countries.
2Supported NAMAs: climate protection measures in
developing countries are supported by technical assistance and / or
direct funding from Annex I countries.
3Credited NAMAs: climate protection measures in developing
countries that generate certified emission reduction credits to be
sold on the international market. This type is similar to sectoral
mechanism.
• There is a need to consider which category would suit a given
country, and whether a gradual and stepwise approach could be
applied progressing from supported to credited to unilateral NAMAs.
Advanced developing countries or economies in transition could
potentially directly start with credited NAMAs.
Programmatic CDM to NAMAs
Step towards NAMAs & sect. mechanisms
PoAs establish operational features of NAMA, e.g.
– Project identification & inclusion
– Program finance
– Carbon incentives for individual sites
– Monitoring, reporting verification (MRV)
Implications for Governments:
 Identify national development / GHG mitigation priorities that can be
implemented through PoAs
 Promote PoAs to learn how to address NAMA challenges
 Experiment with implementation models (public, private or PPPs)
Thank You!
Louis Perroy
Senior Partner and CFO
ClimatEkos
Louis.perroy@climatekos.com