Financing Final Disposal of ODS

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Financing Final Disposal of ODS
Opportunities and Challenges
Presented by Paul Ashford, Consultant Thursday
19th June 2008 Refrigerator De-manufacturing
Seminar - São Paulo, Brazil
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There are five major ways of financing
refrigerator de-manufacture

• - The purchaser pays
• - The taxpayer pays
• The market pays
• The energy user pays
• - The international community pays

• Producer Responsibility
• Governmental responsibility
• Market mechanisms
• Utilities (Energy Efficiency)?
• International Funding

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Primary motivations for de-manufacturing
refrigerators are

• Recycling of key resources (steel, copper and
  plastics)
• Management of hazardous materials (e.g. ODS, PCBs
  etc.)?
• Ozone motivations (significant ODP banks)?
• Climate motivations (high GWP ODSs)?
• Local environmental motivations
• Energy demand gains through early retirement
• Upgrade the appliances available to low-income
  families

The primary motivation of a programme will
influence who should pay and how much
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Typical sources of funding
.result greater coverage, less cost
for the EU
Driver
Energy
Social
Hazardous Materials
Recycling/ Waste
Funding Source
Early Retirement
Other
ODS
HFC
Low-Income
Waste Regulation (e.g. WEEE Japan)?
Producer Responsibility
Government action to stimulate market
Government action to stimulate market
No regrets (2037/2000 in EU)?
Government Responsibility
Minimum Financial Commitment From Profits
Utilities (Energy Efficiency)?
CDM/ Voluntary Carbon Market
CDM/ Voluntary Carbon Market
Market Mechanisms
Voluntary Carbon Market
Support on energy standards etc.
International Funding
MLF?
GEF
Various
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Typical sources of funding
for Japan
Energy
Social
Hazardous Materials
Recycling/ Waste
Early Retirement
Other
ODS
HFC
Low-Income
Waste Regulation (e.g. WEEE Japan)?
Producer Responsibility
Government action to stimulate market
Government action to stimulate market
Government Responsibility
Law
Minimum Financial Commitment From Profits
Utilities (Energy Efficiency)?
CDM/ Voluntary Carbon Market
CDM/ Voluntary Carbon Market
Market Mechanisms
Voluntary Carbon Market
Support on energy standards etc.
Support on energy standards etc.
International Funding
MLF?
GEF
MLF?
GEF
Various
Various
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Typical sources of funding
for the United States
Energy
Social
Hazardous Materials
Recycling/ Waste
Early Retirement
Other
ODS
HFC
Low-Income
Waste Regulation (e.g. WEEE Japan)?
Producer Responsibility
Government action to stimulate market
Government action to stimulate market
Law (Refrigerant Only)?
Government Responsibility
Minimum Financial Commitment from Profits
Utilities (Energy Efficiency)?
CDM/ Voluntary Carbon Market
CDM/ Voluntary Carbon Market
Market Mechanisms
Voluntary Carbon Market
Support on energy standards etc.
Support on energy standards etc.
International Funding
MLF?
GEF
MLF?
GEF
Various
Various
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Potential sources of funding
for Brasil other Latin American countries?
Energy
Social
Hazardous Materials
Recycling/ Waste
Early Retirement
Other
ODS
HFC
Low-Income
Waste Regulation (e.g. WEEE Japan)?
Producer Responsibility
Government action to stimulate market
Government action to stimulate market
Government Responsibility
Possible Regulation
Minimum Financial Commitment from Profits
Utilities (Energy Efficiency)?
CDM/ Voluntary Carbon Market
CDM/ Voluntary Carbon Market
Market Mechanisms
Voluntary Carbon Market
Support on energy standards etc.
Support on energy standards etc.
International Funding
MLF?
GEF
MLF?
GEF
Various
Various
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Potential sources of funding
for Brasil other Latin American countries?
Energy
Social
Hazardous Materials
Recycling/ Waste
Early Retirement
Other
ODS
HFC
Low-Income
Waste Regulation (e.g. WEEE Japan)?
Producer Responsibility
Government action to stimulate market
Government action to stimulate market
Government Responsibility
Possible Regulation
Minimum Financial Commitment from Profits
Utilities (Energy Efficiency)?
CDM/ Voluntary Carbon Market
CDM/ Voluntary Carbon Market
Market Mechanisms
Voluntary Carbon Market
Support on energy standards etc.
Support on energy standards etc.
International Funding
MLF?
GEF
MLF?
GEF
Various
Various
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Potential sources of funding
for Brasil other Latin American countries?
Energy
Social
Hazardous Materials
Recycling/ Waste
Early Retirement
Other
ODS
HFC
Low-Income
Waste Regulation (e.g. WEEE Japan)?
Producer Responsibility
Government action to stimulate market
Government action to stimulate market
Government Responsibility
Possible Regulation
Minimum Financial Commitment from Profits
Utilities (Energy Efficiency)?
CDM/ Voluntary Carbon Market
CDM/ Voluntary Carbon Market
Market Mechanisms
Voluntary Carbon Market
Support on energy standards etc.
Support on energy standards etc.
International Funding
MLF?
GEF
MLF?
GEF
Various
Various
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Main conclusions from this analysis

• Countries in Latin America have additional
  funding options than countries where activities
  are already well-developed (EU, Japan etc.)
• Early regulation would eliminate some of these
  funding options most notably carbon finance
  (additionality)?
• Linkages with energy-driven early retirement
  programmes can be important
• Utilities can provide seed finance with producer
  responsibility being a further driver
• International funding may have a role,
  particularly in ODS destruction
• Leverage of carbon finance may be a stronger
  driver for the process in the medium term
• A regulatory framework is required for standards
  of recovery, recycling and destruction

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Challenges with carbon finance energy
efficiency projects difficult
Geographical Imbalance (CDM Project Locations)?
Sectoral Imbalance (Anticipated 2012 Cumulative
CERs)?
Mostly through HFC-23
Energy Efficiency also low
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One of UNDPs core objectives in carbon finance

• Improve access to carbon finance for a broader
  range of developing countries and project types
  through creating effective carbon markets
  (capacity development and one-stop shop service
  in carbon project development in pre-market
  situations)?

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One of UNDPs core objectives in carbon finance

• Improve access to carbon finance for a broader
  range of developing countries and project types
  through creating effective carbon markets
  (capacity development and one-stop shop service
  in carbon project development in pre-market
  situations)?

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Overview of the MDG Carbon Facility Partnership
with Fortis
.initial focus on CDM projects with voluntary
projects considered subsequently
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Lifecycle carbon opportunities in the domestic
refrigeration sector
KYOTO CDM Eligible
Better appliance efficiency
HFC elimination as refrigerant
Early retirement of old stock
Manufacture
Use Phase
End-of-Life
HCFC elimination as blowing agent
ODS recovery from old refrigerators
NON- KYOTO CDM Ineligible (Voluntary option)?
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Initial conclusions on carbon finance

• Lifecycle carbon funds1 per refrigerator
  45-50/unit
• Likely costs of projects 20-30/unit
• Supply-chain co-operation is important to make
  all refrigerator lifecycle steps sustainable in
  order to minimise total lifecycle impacts
• Further development of methodologies will be
  necessary both in CDM and Voluntary markets
• Credibility with standards organisations will be
  important (e.g. Gold Standard, VCS etc.)

1Based on a CO2 price of 20/te discounted to
5/te for Voluntary Projects
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Final conclusions

• It is clear that there is a growing global
  momentum towards refrigerator de-manufacturing
  
• Some schemes have already started in Latin
  America
• The most pragmatic starting point is to utilise
  existing financing and drivers (e.g. producer
  responsibility) without limiting future
  options
• Longer-term sustainability of programmes may rest
  on stronger sources of finance (e.g. carbon)?
• Work is still required to optimise potential
  financial models