EcoSecurities Group, India

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EcoSecurities Group, India Hydro and Biomass
Power Projects under the CDM
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Flow

• EcoSecurities Group
• CDM and the Carbon Market
• Rules for participation
• Hydropower and Biomass
• Project examples

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What is EcoSecurities Ltd.

• EcoSecurities Ltd. is a leading environmental
  finance company
• which develops and consults on GHG emission
  reduction projects
• The largest company solely dedicated to
• carbon trading and climate change mitigation in
  the world.

• Founded in 1996, offices in 17 Countries
• Worked on CDM projects in 80 countries
• EcoSecurities Consult is the worlds leading
  greenhouse gas advisory firm,
• Environmental Finance Magazine survey,
  2001/02/03/04/05

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What is the Kyoto protocol?

• Binding emission targets for industrialised
  countries (called Annex I)
• Voluntary participation of developing countries
  (called Non-Annex I countries, e.g. India)
• Flexible mechanisms to allow countries to achieve
  their emission targets cost effectively
• Emission trading (trading of allowances between
  Annex I governments)
• Clean Development Mechanism (projects in
  Non-Annex I countries with participation of Annex
  I countries)
• Joint Implementation (projects between Annex I
  countries)

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Clean Development Mechanism

• Twin objectives of CDM
• Help Annex 1 countries meet their GHG emission
  reduction targets and contribute to sustainable
  development in developing countries like India.
• Projects that are eligible for CDM will produce
  Certified Emission Reductions, CERs that can be
  bought by Annex 1 countries to reach their
  emission targets
• The CDM procedures are laid down by UN Framework
  Convention on Climate Change (UNFCCC) and the CDM
  Executive Board

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Sector wise distribution of Projects under CDM/JI
.
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How does CDM work, and what are the requirements?

• Long registration process under the UN 6-10
  Months.
• CERs are issued only after registration and
  monitoring.
• Project eligibility
• Additionality
• The concept of baselines
• Host country approval Sustainable development
  benefits
• Methodology

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Additionality
CDM/JI revenue
The gap between the project return and the
required return on investment threshold
CDM/JI cash flow
Required return on investment threshold
Project return excluding CDM/JI revenue
Project return including CDM/JI revenue
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Host country approval Sustainable Development
Benefits

• All CDM projects must gain approval of the host
  country governments Designated National
  Authority, DNA
• Sustainable development benefits from projects in
  the hydropower sector can include
• Transfer of technology and expertise
• Employment
• Reduced energy use and/or reliance on fossil-fuel
  based energy
• Reduction in GHG emissions

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How is CDM relevant for renewable energy
Businesses?
Hydropower CDM/JI project
Annex I Country
Carbon Credits
The CDM project reduces the carbon emissions in
the host country
Actual emissions
Emission cap
Carbon value ()
Buyer
By selling the carbon credits from a GHG
reduction project to a buyer additional cash flow
can be realised for investment projects.
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Hydropower projects

• One of the most successful project types in the
  carbon market to date, e.g. La Esperanza
  (12.73MW) was the first to be issues CERs ever
  (EcoSecurities)
• Approved CDM methodologies exist for three
  project categories
• 1) Newly built run-of-river hydro projects (any
  size)
• 2) Hydro projects that utilise existing
  dams/reservoirs (any size)
• 3) Small scale hydro projects (under 15MW)
• New criteria for man-made dams based on power
  density recently introduced.

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Example of eligible hydro project

• A Small scale (10MW) Project in Kolhapur district
  of Maharashtra State
• Built on an existing dam
• Expected CER generation 148,211t over 7 years
• Baseline would be continued growth of fossil fuel
  based electricity
• Additional because Replaces fossil fuel based
  supply to the grid and financially dependent on
  the CER revenue, also technical risks.
• Fulfils host country sustainability criteria.
  Existing methodology

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Case Study La Esperanza
Location Intibuca region, Honduras Project
type Small containment run-of-river hydroelectr
ic project Project cost Up to 8 million
Capacity 12.73 MW Credits 40,000 tCO2/ year
CER revenue up to 220,000/ year Worlds
first issued CERs
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Biomass Power Projects
Project Activities
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Anaerobic Digestion

• Avoidance of uncontrolled CH4 release
• Anaerobic treatment of organic waste
• Production of Methane (CH 4)
• Energy generation through combustion
• Applications Industrial and Agricultural waste
  management

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Fuel Switch

• Switching from fossil fuels to Renewable Energy
• - Substitution / Co-firing of Biomass in existing
  plants
• - Diesel to Biodiesel / Biogas
• - Bagasse Co-generation
• Applications Power Supply / Industry

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Energy Generation

• Biomass Combustion
• Biomass Gasification
• - Using Biomass residues
• - Avoidance of uncontrolled burning or decay
• - Electricity or Thermal Energy generation
• Applications Captive / Grid Power, Supply for
  Industry or Households

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Example Biomass Power

• 7.8 MW generation for Grid and Industry supply
• Fuel mainly Mustard Crop residues
• Avoidance of uncontrolled combustion
• Additionaliy
• - low IRR
• - sensitive to PLF variations / fuel supply
  risk
• - new technology
• CER 31,000 p.a.
  180,000 p.a.

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Conclusion

• Hydro and Biomass are very successful CDM
  activities
• Window of opportunity for CDM is limited
• Projects developed in next 18 months will gain
  the greatest rewards
• Issues with large scale built dams remain but are
  being solved
• Biomass wide range of possible applications
  large agricultural sector

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Contact
Ellen Mob [phone] ellen_at_ecosecurities.com

EcoSecurities UK Ltd, India 76, Nariman Bhavan,
Nariman Point Tel [phone] 021
Mumbai india_at_ecosecurities.com www.ecosecurities.c
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