[email protected]www.perspectives.cc [email protected]www.perspectives.cc Southeast Asia: Lessons learnt from CDM experience in the region South East Asian Regional ECBI Workshop Dhaka, 8. August 2006 Matthias Krey, Perspectives GmbH [email protected]
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[email protected] Southeast Asia: Lessons learnt from CDM experience in the region South East Asian Regional ECBI Workshop Dhaka,
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Cambodia and Lao: • Potential for small scale CDM projects like mini- and micro hydro, small municipal and agricultural waste, as well as energy efficient appliances
Vietnam:• Only limited number of projects with high quality and quantity CERs (EE in industry, power and households as well as RE)
Indonesia, Malaysia, The Philippines, Singapore and Thailand
• High potential in energy and energy efficiency sector
• Indonesia ranking first before Malaysia and Thailand
• All countries except for Singapore are developing countries and are still distant to sustainable development practices
FDI Inflows• Cambodia: heavily reliant on foreign assistance, troubles attracting FDI (unreliabel local government)
• Lao: totally dependent on foreign aid, extremely difficult to attract FDI (poor investment climate, primitive infrastrucutre), but FDI in sector for hydropower schemes likely
• Vietnam: high ability to attract and utilise relatively large amounts of FDI and ODA, but obstacles remain (inadequate infrastructure, slow privatisation process, lack of administrative capactiy...)
Analogy FDI inflows – CDM investment?Prerequisites that drive the flows of tranditional FDI to destinations are likely to be dynamic driving factors for distribution of CDM
Unfavourable outlook for Cambodia and Lao, difficult for Vietnam
Country CDM institutions and CDM project experience (I)
Host country CDM institutions• Cambodia, Vietnam, Indonesia, Malaysia and Philipines: Institutions meet necessary conditions to enter carbon market, not yet assessable how efficient systems work
• Lao: Main functions and set-up of institutions are still under discussion (DNA not operating yet)
• Thailand: Strong bureaucracy, decisions on a case-by-case basis at the cabinet level prohibit efficient approval
• Mandatory function: Assessing CDM projects at national level
• Authority: Issuing Letter of Approval stating that the project
assists the country in “achieving sustainable development” • Non-mandatory functions: Assessing technical aspects of projects, promotional activities (capacity building, marketing)...
DNA assessment: Implementation and external affairs
Approval Process• Not specified in CDM rules, each country decides on its own set-up of process
• Transparent & simple rules attract more investors
Criteria for Sustainable Development• Each country has total freedom of decision on how to appraise a project’s contribution to sustainable development
• No standardised criteria or indicators
Other criteria• Include the DNA‘s activities in improving the competitiveness of the host country and mobilising CDM capital flow into the country
• Avoid replicates in scope and content already addressed
• Link sufficiently with results of previous projects• Define specific target groups, focus on previously poorly involved
groups like private and financial sector• Start programme with general information on climate change• Cut down on workshops aiming at general public awareness rising,
but focus on on-the-job/sectoral trainings to transfer skills • Concentrate research on secoral level for information on CDM
potential and „state of the art“ technologies for project developers
• Investors look for low marginal incremental costs, low project risk, creation of a good image
• Investors search for short-term rapid generation of CERs, but project types in LICs are mainly in renewables and A/R (lower emission reduction over a long time period)
• Small projects imply higher transaction costs
Projects are distributed through market mechanisms, which are
not about fulfilling sustainable development criteria, nor about
achieving a fair distribution of the projects and investments involved
• Establish transparent, quick approval processes, mainstreaming of CDM into other policies• Have a realistic view of abatement potential and costs in LICs (avoid concentration on non-attractive areas, address additionality issues proactively)• Support reliable local consultants (reduces the transaction costs, minimises consulting fee runs into the pocket of the international consultants)• Promote proactive industrial associations and private sectors to find viable CDM ideas• Long term, foster existence of competent domestic OEs (reduce transaction costs for developing CDM projects)
LICs‘ opportunity: Expeditious registration of small-scale projects
and support for bundled projects with high sustainability value