Strengthening the CDM capacity in Orissa

1. Climate Change and CDM Strengthening the CDM capacity in Orissa 1 CTRAN-A BASIX group company with CCX

2. Kyoto Protocol and CDM Context and Relevance

3. Climate Change & Global Warming Six Purported Culprits Carbon dioxide (C02). GWP 1 Methane (CH4). GWP 21 Nitrous oxide (N20). GWP 310 Hydro fluorocarbons (HFCs). GWP up to 9,500 Per fluorocarbons (PFCs). GWP up to 11,700 Sulphur hexafluoride (SF6). GWP 23,900

4. Climate Change Key observations Air Pollution Noise Pollution Water Pollution Global mean Temperature Increase Glacier Melting Seasonal Uncertainty Flood Drought Diseases Poverty Increase Adaptation and Mitigation CDM is a mitigation mechanism

5. Orissa getting warmer CTRAN-A BASIX group company with CCX 5

6. Kyoto protocol and CDM Kyoto-protocol basic info. Basic arrangement Kyoto protocol was signed in 1997 During the First Commitment Period (2008 � 2012) �the compliance gap is about 5 billion ton. Estimated abetment by Annex countries through domestic measures will be 2.5 billion ton (50%). To offset this: the demand from CDM and JI is about 2.5 billion ton. As of now the estimate is that: CDM and JI supply will be 0.5 - 1 billion ton. Boosting the CDM projects is the only way out to meet the CERs demand. That is the reason why international organizations are investing in CDM project development

7. Project Methodology/Sectoral Scopes CTRAN-A BASIX group company with CCX 7 UNFCCC has approved methodologies for both large scale(>15MW, 60 GWH and 60 KT of CO2e) and small scale projects (<15MW, 60 GWH and 60 KT of CO2e) and these approved methodologies are available at the website http://www.unfccc.int. Apart from that there are also new methodologies proposed from different stakeholders and feedbacks are obtained to approve/revise it in line with the Modalities and procedures in conformity with UNFCCC rules Sectoral Scopes Energy industries (renewable/non-renewable) Energy Distribution Energy demand Manufacturing industries Chemical industries Construction Transport Mining and Mineral production Metal Production Fugitive emission from fuels (Solid, liquid and gas) Fugitive emission from production and consumption of halocarbon and sulphur hexaflouride Solvent use Waste handling and disposal Afforestation and reforestation Agriculture

8. CDM and Orissa- How it fares? CTRAN-A BASIX group company with CCX 8

9. 9 How it is an Opportunity for the Business? The opportunity is for corporations in developing countries as well as developed countries Developing countries can move rapidly to clean development technology with financial assistance from developed countries Developed countries can meet their obligations by the cheapest route CDM projects in India indicates that carbon finance can provide up to 15% of new project costs at current valuation expectations Make marginal projects investment grade Leverage carbon financing for better project financing terms Carbon transactions provide possibilities of strategic alliances, access to new markets and financing sources

10. Sectoral Example - Steel Reducing waste heat energy release into the atmosphere and recovery of waste heat to generate steam Generating **MW electricity for in-house consumption and exporting surplus power to grid thereby reducing the electrical energy load on the regional grid Reducing GHG emission at the thermal power stations Conserving the non-renewable natural resource like coal Making coal available for other utilizations Reducing SPM level to the order of 50 mg/Nm3 (regulatory requirement was 150 mg/ Nm3 at the time of setting up the WHR based power plant) Contributing to a small increase in the local employment in the area of skilled jobs for Operation and maintenance of the equipment. Steel Industry: Approximately 173 Iron & steel industries are there in Orissa having 12 million tonnes of annual production. CDM scopes in Iron & Steel Industry: 1. Energy Efficiency improvement 2. Fuel switchover 3. Waste heat recovery Energy efficiency improvement through power factor improvement, steam system efficiency improvement, batch casting replaced by continuous casting, optimization of motor size, VFD installation, lighting system efficiency improvement, optimization of material handling system, cooling tower efficiency improvement etc. Waste heat recovery from kiln Fuel switchover (from fossil fuel to renewable fuel) in CPP

11. Case Study (Power Generation From Waste heat recovery in DRI Kiln) Project - Waste heat recovery power generation from DRI kiln. Details Capacity of Sponge Iron unit - 350 TPD Capacity of Power Plant - 8 MW. Electricity Generation � 49766 MWh. Carbon Credit - 51757 CER per annum. Annual CDM revenue � 3 crores INR.

12. Some sectoral examples- renewables Grid connected renewable energy projects � Hydro electric power, Wind electricity, Biomass, Co-generation etc Stand alone power generation projects � Solar Photovoltaic, stand alone hydro (for village & community service) Repowering activities � PLF & generation improvement Fossil fuel replacement � Bio-diesel production (Jatropha etc.) Energy plantation � Afforestration & Reforestration as LULUCF projects Project � Wind Power Generation Details Cumulative Capacity� 4.6MW. Electricity Generation � 10600MWh. Carbon Credit � 9158 CER per annum. Annual CDM revenue �0.66 crores INR. CTRAN-A BASIX group company with CCX 12

13. Some sectoral examples-Urban Sector CTRAN-A BASIX group company with CCX 13 Building Sector � Energy efficiency clubbed with Solar Passive Architecture. Municipal Solid Waste Management: Efficient management of MSW through available technology and avoidance of CH4 & CO2

14. CDM Project Cycle The nuts and Bolts

15. CDM project cycle CTRAN-A BASIX group company with CCX 15

16. Structure of a PIN CTRAN-A BASIX group company with CCX 16 Summarised technical information pertaining to the project activity. Information about the project proponent. Detailed analysis of emission reduction. Information on the sustainable development pertaining to the project activity. Financial assessment of the project activity and the projected revenue model. The Project Idea Note is primarily used for interface with the buyer and negotiation.

17. Structure of a PDD CTRAN-A BASIX group company with CCX 17 A CDM Project Design Document (PDD) involves the following: Project Description: Technical Project Methodology: Approved or New Project Baseline: Estimation of GHG abetment Additionality: Establishing the uniqueness Monitoring Protocol: Measuring actual GHG reduction Baseline: What would have happened (GHG emissions) in absence of the candidate CDM project activity. Additionality: What is unique about the candidate CDM project that proves that this is not a business as usual scenario.

18. Establishing a baseline CTRAN-A BASIX group company with CCX 18

19. Baseline for renewable interventions CTRAN-A BASIX group company with CCX 19 Grid connected renewable energy projects: Grid emission factors per MWh Average grid energy mix Operating Margin & Build Margin Stand alone renewable energy projects: The baseline would be estimated on the basis of fuel replaced by the proposed candidate CDM project. Kerosene Diesel Generation unit Repowering Activities: The baseline would be grid energy Average grid energy mix Operating Margin & Build Margin Fossil fuel replacement projects: The baseline would be estimated on the GHG emissions from the fossil fuel replaced. Building sector: The baseline would be based on the historical energy consumption (primary and secondary energy) Combined effect of energy efficiency & replacement of primary & secondary sources of energy by renewable fuel.

20. Baseline for Urban Interventions CTRAN-A BASIX group company with CCX 20 Municipal Solid Waste Management: The baseline of the project will be based on methane abetment potential along with CO2 abetment potential (if exists) Avoidance of Methane Production � As per MSW management rules 2000, municipal corporation have to necessarily take up management activities, still if MSW management in a particular state is less than 50%, then any conceived project for effective waste handling is eligible for getting CDM benefits till the time when compliance rate increases beyond 50%. If production of electricity is taking place, then additional emission reduction pertaining to CO2 can also be factored in while estimating the emission reductions.

21. Establishing Additionality CTRAN-A BASIX group company with CCX 21 Investment Barriers: A financially more viable alternative to the project activity would have led to higher emissions. Technological Barriers: A less technologically advanced alternative to the project activity involves lower risks due to the performance uncertainty or low market share of the new technology.

22. Establishing Additionality Barrier due to prevailing practice: Prevailing practice or existing regulatory or policy requirements would have led to implementation of a technology with higher emissions Other barriers: Institutional barriers or limited information, managerial resources, organizational capacity, financial resources, or capacity to absorb new technologies. CTRAN-A BASIX group company with CCX 22

23. Start date of project activity CTRAN-A BASIX group company with CCX 23 As per COP 9 of Marrakech Accords the CDM projects can be carried out for: Project already Implemented. Project at planning stage. CDM revenue can only be considered for projects which with a start date as at on and after January 1st, 2000.

24. Screening of the Project activity Step 1: Identification of alternatives to the project activity consistent with mandatory laws and regulations. STEP 2. Investment analysis STEP 3. Barrier analysis STEP 4. Common Practice analysis CTRAN-A BASIX group company with CCX 24

25. Step 1: Identification of Alternatives CTRAN-A BASIX group company with CCX 25 Determination of realistic and credible alternatives to the candidate CDM project for example: The investor continues to draw electricity from the grid. The investor makes an investment on captive thermal installation. The alternatives should deliver similar outputs as the proposed CDM project activity and should be permitted under law. Yes � Electricity The proposed CDM activity should not be made mandatory by law. Yes � the investor can carry on with either grid electricity as well as through captive thermal installation.

26. Step 2: Investment Analysis CTRAN-A BASIX group company with CCX 26 Establish that the candidate CDM project activity is economically or financially less attractive than other alternatives Electricity from grid: Zero investment & market based tariff (cost) Electricity from captive thermal: Approximately same investment (per MW installation) & lowest levelized generation cost and above all freedom from dealing with power utility. Electricity from grid connected renewable: Higher initial investment (per MW installation) & higher levelized generation cost (low PLF) and dealing with power utility for wheeling & banking services. The financial indicators (IRR, DSCR, CBR & unit cost of generation) � if proved to be better for alternative investments or less than the prevailing standard benchmark values in the market, then the project will pass through this test.

27. Step 3: Barrier Analysis CTRAN-A BASIX group company with CCX 27 To Establish that the barriers prevent the implementation of proposed project activity or do not prevent the implementation of at least one of the alternatives. Barriers to the proposed project activity Availability of adequate evacuation facilities in the remote area Wheeling and banking charges and permissions for same Inconsistent policies of state power utilities. Security of investment & act of god. Generation guarantee for renewable energy installation. Availability of loans and requirement of longer moratorium duration. Competition in business. If the proposed project activity can establish such relevant barriers in its propagation, then project will pass the barrier test.

28. Step 4: Common Practice CTRAN-A BASIX group company with CCX 28 This step essentially forms a basis of practical uniqueness of the proposed CDM activity which talks about non / rare existence of similar kind of projects/ technologies at a similar scale in similar kind of investment / policy environment. For new technologies / bilateral projects, it is very easy to pass the common practice test, else it is required to be established that the project development condition / Govt. policies have changed considerably for the project under consideration.

29. Potential Estimation CTRAN-A BASIX group company with CCX 29 Grid connected renewable energy projects: Northern Grid: 0.81CERs / MWh Western Grid: 0.79 CERs / MWh Southern Grid : 0.8 5CERs / MWh Eastern Grid : 1.01 CERs / MWh North-eastern Grid 0.9 CERs / 1000 kWh Stand alone electricity generation projects, Repowering Projects, Fuel switch projects Kerosene 3 CERs / 1000 Liters Diesel 2.75 CERs / 1000 Liters Coal 1.2 CERs / 1000 kg of Coal Repowering activities: Same Fossil fuel replacement: Same Energy Plantation: Temporary CERs depending upon the kind of trees Building energy efficiency: Same Municipal Solid Waste management: 0.6 CERs / tonne of MSW/Annum

30. Project Cycle Time CTRAN-A BASIX group company with CCX 30

31. Contact for Further Details Ashok Kumar Singha Managing Director-CTRAN Consulting A1/A2, Lewis Plaza, 3rd Floor Lewis Road Bhubaneswar-751014 Telefax:+91-674-2531790, Cell: +91-94370-67019 www.ctranconsulting.com ashoksingha@gmail.com