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CDM –Functional Overview

CDM –Functional Overview. Senergy Global Pvt. Ltd. About Senergy Global. Provide end-to-end solutions in the CDM space. Right from PIN to end transactions. SGPL has got experience in developing renewables, energy efficiency and fuel switching CDM projects.

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CDM –Functional Overview

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  1. CDM –Functional Overview Senergy Global Pvt. Ltd.

  2. About Senergy Global • Provide end-to-end solutions in the CDM space. Right from PIN to end transactions. • SGPL has got experience in developing renewables, energy efficiency and fuel switching CDM projects. • Has registered 14 projects with the UNFCCC. • Has a pipeline of more than 70 projects. • Successfully traded & transacted more than 2million CERs/VERs/Off-Sets till date. • Provides renewable energy related policy & regulatory advisory services.

  3. What We Do? • Develop project ideas and carries out feasibility studies • Prepare the Project Design Document (PDD) and the project Methodology, including baseline studies and monitoring plans • Guidance (presentations and documentation) for Host country approval. • Facilitate quicker and smoother approval by DOE in validation stage. • Registration of the project with the CDM Executive Board • Prepare monitoring reports for timely verification • Issuance of the CERs • Organise transaction of CERs

  4. Credibility • An associate of Suzlon, the largest Wind Mill manufacturer in India. • Commitment of service and delivery. • Reputed Clientele. • Transparency is ensured in client dealings. • Adherence to market responsiveness to chart favorable growth path for clients. • Proven track record in registering projects

  5. CDM : The genesis • United Nations Framework Convention on Climate Change (UNFCCC) • Ultimate objective of stabilizing global greenhouse gas concentrations in the atmosphere • CDM one of the flexibility mechanism defined under Art 12 • The Kyoto Protocol • agreed to reduce greenhouse gases by 5.2 % below 1990 levels (2.8 to 4.8 billion TCO2e) in the commitment period 2008-2012 • Required ratification of 55 Parties representing 55 % of industrialized countries’ emissions (US constitutes 36 %, while Russia is 17.4%) for its entry into force • Protocol is in force, since 16th Feb, 2005 (ratification by Russia to cross the magical 55%)

  6. What is Carbon Credits or Finance ? • Carbon finance, is nothing but an additional revenue stream emerging from a project based activity • Passes the various additionality tests • Meet all necessary compliances (viz. Kyoto Protocol) • Has a positive sustainable development impacts for the host country

  7. CDM & India • More than 600 projects approved by MoEF • Total registered project globally:844 • India: 289(34%) • 32 MN CERs issued to Indian projects, out of about 94 MN total issued CERs

  8. Percent of CDM Projects by Country

  9. Costs involved in CDM Project • Cost Related to the development of the conventional project • Transaction Cost related to the registration of project with the CDM EB

  10. Means of Finance • Equity Financing • Long Term Lending • Venture Capital Scheme • Lease Financing • Project Financing

  11. Transaction Costs • Project Proponent’s additional investment to monetize the CDM Revenues • It Includes • Costs towards consultants for developing CDM project (PDD) • Costs towards validation of the CDM project • Costs towards registration of the CDM project with EB • Costs towards monitoring of emission reductions • Costs towards verification of CERs and transaction costs

  12. Transaction Costs • CDM EB deducts 2% of the CDM revenues to Adaptation fund • Transaction costs varies between 5% to 25% of the total revenues depending on the type and size of the project

  13. CER Prices • Carbon market is expanding and volume of CERs expected to be transacted by 2012 is about 1.5 billion • Market Mechanism has kept the volatility of CER Prices • Most of the CER transactions happen in the secondary market where the price range of 12 – 15 Euros are in vogue.

  14. Taxation Issues • CERs may be accounted as an intangible asset • CERs may be treated as the exported commodity and thus the various sops available for the exported products can be availed • CDM revenue may be accounted as “Other Income” and hence normative tax can be applied • India is probably waiting for some accounting model to be formulated by the Annex-I countries

  15. CDM Risks • Risks related to the registration of the project • Upfront Payment of transaction costs • Risks related to existence of market beyond 2012

  16. Thank you Thank you Naveen S Sr. Manager Senergy Global Pvt. Ltd. 9th Floor, EROS Corporate Tower Nehru Place, New Delhi – 110019 ns@senergyglobal.com

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