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DJERBA FORUM September 2004. 500 PPM – Supporting Small Scale CDM Projects in the Offsetting Market. Overview. Who is 500 PPM GmbH? Introduction to Offsetting Who is active in the offsetting market? Types of Projects 500 PPM Invests in

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Djerba forum september 2004

DJERBA FORUM

September 2004

500 PPM – Supporting Small Scale CDM Projects in the Offsetting Market


Overview
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
Who is 500 PPM GmbH?

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

  • 500 PPM Locations - Hannover, Karlsruhe, Washington

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

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


What is offsetting 1
What is Offsetting? (1)

Framework Convention on Climate Change

Kyoto Protocol

Domestic Policy Actions

Non Annex B Countries

Annex B Countries

Emissions Trading

Binding Emission Targets for SELECTED industry sectors

Joint Implementation

CDM

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?

“500,000 ERCs were traded in offsetting/voluntary projects in 2003”. (source World Bank 2004)

(20)


Offsetting a market differentiating attribute for a travel agent
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
The business case for Offsetting Agent.

  • 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
Projects Eligible for Offsetting Agent.

Voluntary or Retail Project Market – Individual concern & Marketing

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

Verified Emission Reduction Projects

Certified Emission Reduction Projects

Small CDM projects

Demand from Private Sector interested in Offsetting.


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

Project Design Document Development

€17,000 – 40,000

€5,000 – €15,000

Government Approval

€7,000 – €30,000

Project Validation

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

Project registration

€3,000 – €15,000 per year

Implementation & Monitoring

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

Reporting & Verification

Source: Michaelowa, Discussions with DOEs & Project Developers

Certification and Issuance of Emission Reduction Credits

No costs


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

Project Design Document

€2,000 – 3,000 Using standardized procedures

€0 - €1000

Government Approval

Not with DOE but Independent experts €2-3000.

Project Validation

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

Project registration

Implementation & Monitoring

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

Reporting & Verification

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

Source:

Experience from VER projects

Certification and Issuance of Emission Reduction Credits


3 project examples
3 Project Examples for Micro CDM Project Dev.

1. Biofuel

2.Energy Efficient Housing

3. Hydro Project


500 ppm project select implementation process
500 PPM Project Select & Implementation Process for Micro CDM Project Dev.

Transaction of eERs

Payments for eERs

Monitoring

Database (VERs)

Transaction of VERs

Payments for VERs


Advantages of developing projects for offsetting
Advantages of Developing Projects for Offsetting for Micro CDM Project Dev.

  • 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
Disadvantages of Offsetting for Micro CDM Project Dev.

  • 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
For More Information for Micro CDM Project Dev.

Contact: Felicity Thomas at:

[email protected]


Back up slides
Back up for Micro CDM Project Dev. slides


Registration costs for cdm projects
Registration Costs for CDM Projects for Micro CDM Project Dev.

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 for Micro CDM Project Dev. www.klimabalance.de


Small scale cdm
Small-Scale CDM for Micro CDM Project Dev.

  • 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


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