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Method of Evaluating Afforestation/Reforestation CDM Project - An Indonesia Case Study -. Sumitomo Forestry Co., Ltd., Tokyo, Japan June 5, 2003 Bonn. Objectives of the study. Feasibility of CDM Afforestation/Reforestation Projects CDM Eligibility and Methods of Evaluation

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method of evaluating afforestation reforestation cdm project an indonesia case study
Method of Evaluating Afforestation/Reforestation CDM Project- An Indonesia Case Study -

Sumitomo Forestry Co., Ltd.,

Tokyo, Japan

June 5, 2003

Bonn

objectives of the study
Objectives of the study
  • Feasibility of CDM Afforestation/Reforestation Projects
  • CDM Eligibility and Methods of Evaluation
  • Estimation of the Volume of CO2 Removals by the sink project
  • Economic Effects to the Project
  • Issues to Be Discussed
cdm sink projects are possible
CDM Sink Projects are Possible.
  • Conformity with Host Countries’ Policy
  • Available Ecologically, Technologically
  • Diversified Destinations

-Environmental Projects

-Industrial Projects

-Community Forestry Projects

  • Economic Incentives are necessary.
introduction of the case study 1
Introduction of the Case Study (1)

Name:East Java CDM Reforestation Project

Location:East Java Province, the Republic of Indonesia

Period:June 2002~March 2003

Scheme: CDM Feasibility Study by the Ministry of the Environment of Japan

Surveyor:Sumitomo Forestry Co., Ltd, Tokyo, Japan

Local Partner:Local Plywood Manufacturer K Company

outline of the project
Outline of the Project
  • Boundary:more than 10 sites, 3,000ha ,measured by land survey
  • Type:A Reforestation Project using fast growing and medium&long term growing species under sustainable forest management
  • Project Period:2006-2026 ( 21 years )
  • Crediting Period:2006-2026 ( 21 years )
  • Basic year:

end of 1989 - difficult to confirm

end of 1999 - more certain to confirm

( documents, photo, land register )

comparison of a sink project with an emission reduction project
Comparison of a Sink Project with an Emission Reduction Project
  • Gross removalBaselineNet removalEmission reductionLeakageLeakage
  • BaselineEmission

Sink ProjectEmission Reduction Project

volume of co2 gross removal
Volume of CO2 Gross Removal
  • Definition:Measurement of trees → Carbon volume → CO2 Removal volume
  • Methodology:Measurement of the same species on the same conditions as the project
  • Species and Harvest years:Falcata(7-8years)、Mahogany(50years)、Agathis(30years)       → Option of longer period advisable
  • Technology:Sustainable Forest Management
baseline
Baseline(1)

・Survey Method:Estimation of growth volume of the same species on the same conditions

・Baseline Scenario

(1)Estimation of the growth based on the present situation

(2)Difficult to estimate future land use change

・Results of the project baseline:0.15CO2-ton/ha,year

2,987ha(99%) covers no trees - Baseline 0-

13ha(1%) 1.17CO2-ton/ha,year → -Baseline 0.15CO2-ton/h,y

・Additionality:

Additional CO2 removals,

Emviromnetal and Economic additionality

baseline 3 a study on baseline setting
Baseline (3)a study on baseline setting
  • 5 Carbon pools ( above-ground biomass, below-ground biomass, litter, dead wood and soil organic carbon ) are expected.
  • Some pools - if confirmed → possible to be excluded
  • Litter, dead wood, and soil organic carbon
  • Similar natural vegetation → Baseline → Simple and practical → Advisable option
leakage socio economic impacts environmental impacts risk evaluation
LeakageSocio-economic ImpactsEnvironmental ImpactsRisk Evaluation

Leakage

・Survey: Question-and-hearing survey to the local residents

・Volume of leakage (399CO2-ton/year)

・Described on PDD, Monitoring item, Pre-set check list is not necessary.

Socio-Economic Impacts

 ・Survey:Question-and-hearing survey to the local residents

・Described on PDD, Monitoring item, Pre-set check list is not necessary.

Environmental Impacts: To be implemented, Monitoring item

Risk Evaluation:

 ・finding: Little risk of pest&insects disease, some probability of forest fires - adjusting from gross removals

 ・Monitoring item

feasibility analysis on cdm sink projects 1
Feasibility Analysis on CDM Sink Projects(1)
  • Project Planning

- Planting, tending, harvesting and management

- Direct cost & management cost

- Income by timber sales

- 30 years

  • Depreciation, Capital, Industrial plantation a/c, Finance, Interest rate, Dividend, exchange rate
  • Baseline and leakage
  • Income = Timber sales + value of CO2 credits
feasibility analysis on cdm sink projects 2
Feasibility Analysis on CDM Sink Projects(2)
  • Analysis items

- the first profit year

- the last year of accumulated deficit

- loan payment period - cost per 1 CO2 removal

  • Carbon accounting method

-Actual Stock Change

-Average Storage

-Delayed Full

-Temporary CER

・ Estimation of CDM Cost ( Validation, Verification Monitoring Expenses ) & Initial CDM Cost

・ The project starts in 2006 and credits are issued or reissued every 5 years from 2011

slide15
Feasibility Analysis on CDM Sink Projects(3)Economic Viability to the Project by CO2 IncomeUS$0=Non CDM, Others:by ActualStockChange
slide16
Feasibility Analysis on CDM Sink Projects(4) Economic Viability to the Project by Accounting Methods (US$10/CO2-ton)
slide17
Feasibility Analysis on CDM Sink Projects(6) Economic Viability to the Project byTemporary CER (US$/CO2-ton)
feasibility analysis on cdm sink projects 5 this study shows
Feasibility Analysis on CDM Sink Projects(5) This Study shows:
  • CDM Projects are more profitable than non CDM projects.
  • Prominent incentive if CO2-ton ≧ US$15
  • Accounting methods:

Actual Stock Change ≧ Average Storage

≧ Delayed Full

  • Temporary CER :

if LOW PRICE → Economic viability →NG

・ Option of Insured CER → reasonable

messages from potential participants
Messages from potential participants
  • CDM sink projects are feasible from ecological and technological points.
  • CDM sink projects are feasible from economic points.
  • Modalities and procedures in order to promote early implementation !
  • Incentives are IMPORTANT for implementation !
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