KarlsruheHannover Washington, DC 500 PPM GmbH Marktlösungen für Klimaschutz 500 PPM – Supporting Small Scale CDM Projects in the Offsetting.

KarlsruheKarlsruhe

HannoverHannover

Washington, DCWashington, DC

www.500ppm.comwww.500ppm.com

500 PPM GmbH500 PPM GmbH

Marktlösungen für KlimaschutzMarktlösungen für Klimaschutz

500 PPM – Supporting Small Scale CDM Projects in the

Offsetting Market

DJERBA FORUM

September 2004

© 500 PPM Gesellschaft für Emissionshandel und Beratung mbH© 500 PPM Gesellschaft für Emissionshandel und Beratung mbH

Overview

Who is 500 PPM GmbH? Introduction to Offsetting Who is active in the offsetting market? Types of Projects 500 PPM Invests in The Advantages and Disadvantages of the

Offsetting market for a Project Developer


Who is 500 PPM GmbH?

1. Our Vision - to motivate cost effective climate change mitigation action today.

2. 500 PPM Locations - Hannover, Karlsruhe, Washington

3. Services – We provide an offsetting platform for the sale of emissions reductions from CDM and micro emission reduction projects.

4. Clients - Multilateral orgs (e.g. PCF, World Bank, UN), the private sector (with compliance targets) & the German government.


What is Offsetting? (1)

Kyoto ProtocolKyoto Protocol

Non Annex B Countries

Annex B Countries

Binding Emission Targets for SELECTED industry sectors

Domestic Policy Actions

Emissions Trading

Joint Implementation

CDM

Framework Convention on Climate Change

No Targets for sectors such as Transport - OFFSETTING


“500,000 ERCs were traded in

offsetting/voluntary projects in

2003”. (source World Bank 2004)

Who is active in the offsetting market?

(20)



Offsetting - a market differentiating attribute for a Travel Agent.

Application Travel agent offers

offsetting solution to travellers.

The Result Travel agent

differentiated in the market.

Raised awareness and interest of business clients in new environmental field.


The business case for Offsetting

Private Companies: Social responsibility positioning.

Increases emotional and rational reasons for consumers to choose a product/service

Improves marketing efficiency.

Consumer: Interest in project and feel good factor.

Preference for intelligent high quality products.

Sustainable Development: Supports community projects with +ve SD impacts.

Emission reductions = climate change mitigation.


Projects Eligible for Offsetting

Voluntary or Retail Project Market – Individual concern & Marketing

Kyoto Project Market – e.g. CDM, JI, - Compliance tools

Certified Certified Emission Emission Reduction Reduction Projects Projects

Small Small CDM CDM projects projects

Verified Verified Emission Emission Reduction Reduction Projects Projects

Demand from Private Demand from Private Sector interested in Sector interested in

Offsetting. Offsetting.

Demand from Private Demand from Private Sector interested in Sector interested in

Offsetting. Offsetting.


Project Design Document Development

Government Approval

Project Validation

Project registration

Implementation & Monitoring

Reporting & Verification

Certification and Issuance of Emission Reduction Credits

€17,000 – 40,000

€5,000 – €15,000

€7,000 – €30,000

2% of the CERs Adaptation & Admin Fee (US$ 5,000 for projects < 15,000 t CO2

€3,000 – €15,000 per year

€3,500 – €15,000 approx. 50% of validation costs

No costs

Illustrating Difference in Transaction Costs (I)– Costs for Small CDM Project Dev.

Source: Michaelowa, Discussions with DOEs & Project Developers


Project Design Document

Government Approval

Project Validation

Project registration

Implementation & Monitoring

Reporting & Verification

Certification and Issuance of Emission Reduction Credits

€2,000 – 3,000 Using standardized procedures

€0 - €1000

Follow simplified procedures €500 – €3,000 per year

Illustrating Difference in Transaction Costs (II)– Costs for Micro CDM Project Dev.

Source:

Experience from VER projects

Verification & certification are not required. Local government and UNFCCC need updated information

UNFCCC & Gov. need to be informed about the project.

Not with DOE but Independent experts €2-3000.


3 Project Examples

3. Hydro Project 1. Biofuel 2.Energy Efficient Housing

Location: India Location: S. Africa Location: Nicaragua Fuel Switch Energy Efficiency

(EE) Renewable Energy

7.5 kVa generator Install EE Technology

480 kW Pelton Turbine

Approx. 90 t CO2/yr. 2.44 tCO2/hh/yr 5,371 t CO2/yr.

Energy for 12 homes For 2,309 homes Energy for off grid area


500 PPM Project Select & Implementation Process

Transaction of eERs

Payments for eERs

Project Developer

500 PPM DOE – CDM project

Local Consultant (Non CDM)

Submit PIN Initial Screening

Letter of Intent Prepared & Signed

PDD Developed Validation & PDD

QA/QC

Validation Validation

Emission Reduction Purchase Agreement

Prepared and Signed

Verification

Receive annual

payment

Quantity sold

registered in

database.

Spot Check Audits of

monitoring.

Monitoring Monitoring


Advantages of Developing Projects for Offsetting

Transaction Price can be lower for VER projects.

Supports real sustainable development at the grassroots level

Can raise finance to support CDM project Development. E.g. VER then CDM

Current prices per credit are higher in offsetting market compared to carbon purchasers


Disadvantages of Offsetting

Unsteady income stream. The quantities of emission certificates purchased are small and not always annual.

Lack of Standard Regulations for the Projects that are not CDM projects. Preference for CDM projects rather than micro projects.

Offsetting tolerated, but not yet connected to existing UNFCCC Framework. NGOs are concerned about quality controls for non CDM projects.

Lack of awareness of market in many developing countries. i.e. local communities with small projects could benefit but do not know about offsetting markets.


For More Information

Contact: Felicity Thomas at:

[email protected]


Back up slides


Registration Costs for CDM Projects

Average tCO2 eq. US$

reductions per year over

Crediting period

<15,000 5,000

> 15,000 and <= 50,000 10,000

> 50,000 and <= 100,000 15,000

> 100,000 and <= 200,000 20,000

> 200,000 30,000


The 500 PPM Offsetting Platform at www.

klimabalance.de


Small-Scale CDM

• Expert panel proposed simplified modalities and procedures

• What is small-scale?• RES less than 15 MW capacity• Energy efficiency less than 15 GWh/year• Other projects emitting less than 15 kilotonnes CO2/year

• Proposed simplifications• Bundle project cycle stages• Simplified baseline and monitoring methodologies

• 14 small-scale project activity categories have been proposed• New categories can be proposed

• Projects developed in consecutive tranches not eligible

KarlsruheHannover Washington, DC 500 PPM GmbH Marktlösungen für Klimaschutz 500 PPM – Supporting Small Scale CDM Projects in the Offsetting.

Documents

ppm project

project developer slide

transport offsetting

micro cdm project

project developers

project examples

monitoring slide

offsetting platform