The Danish CDM Project Development Facility Financing CDM in Indonesia

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The Danish CDM Project Development
FacilityFinancing CDM in Indonesia

• Erik Dugstad,
• Sr. Economist, ECON Analysis
• Agus Sari,
• Climate change specialist, Pelangi

Contact erik.dugstad_at_econ.no Phone [phone]
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Danish Climate Strategy

• Published by Danish Government in February 2003
• Key issue Introducing Kyoto Mechanisms to
  achieve cost efficiency
• Balance between domestic action and buying of
  credits defined in economic terms.
• Maximum cost of domestic measures set at 120 DKK
  or approximately 20 USD pr ton of CO2-eq

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Uncoupling of economic growth and CO2-emissions
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Share of Renewable Energy in Denmark
Red Share of electricity Blue Share of total
energy
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Danish demand for Carbon Credits

• Danish EU-burden sharing target is reduction of
  21 in 2008-2012 compared to 1990-level
• Three sources of deficit compared to target
• 10 mill. Tons CO2/year from lack of success in
  achieving reductions i.e. in the transport sector
• 10 mill. Tons CO2/year from expected electricity
  export
• 5 mill. Tons CO2/year from (lack of) base year
  adjustment
• Projected total demand 25 mill tons CO2/year for
  5 years or a total of 125 mill tons
• Government expected to buy 20 - The rest by
  private sector (mainly electricity sector)

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Bilateral collaboration in focus

• Government purchases through pipelines of
• Ministry of Foreign Affairs Bilateral
  collaboration on CDM in Malaysia, Thailand,
  Indonesia, China and South Africa
• Environmental Protection Agency JI-projects in
  Eastern Europe
• Multilateral Carbon Funds A Danish Fund in the
  World Bank
• Incentives for private sector
• EU Emissions trading scheme started 1. January
  2005
• Directive implemented that links emission trading
  and JI/CDM
• A Memorandum of Understanding between Denmark and
  Indonesia has been signed between Ambassador
  Andersen and Minister Witoelar on July 27, 2005

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Huge CDM potential in Indonesia

• 125 - 300 million ton CERs in the period
  2008-2012
• Could create a value of 625 -1200 million USD via
  sales large local benefits for sustainable
  development
• Opportunities in many sectors
• Cement
• Oil and gas
• Landfill and waste
• Pulp and paper
• Steel
• Palm Oil
• Electricity
• Energy saving
• Etc

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Impact of CDM for landfill to energy projects

• Threshold for producing power from landfill gas
  is 150 tonnes of waste per day
• Emission reductions generated by avoiding methane
  emissions from deposited waste and displacement
  of grid connected fossil fuel plants
• Contribution from CDM is more than half of the
  electricity tariff
• The table below indicates impact CDM on IRR for
  different sizes of landfills

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Impact of CDM for Palm Oil Mill Effluent

• Mill with capacity of 40 ton of Fresh Fruit
  Bunches per hour
• Power generated will be connected to the grid
• Contribution from CDM is more than half of the
  electricity tariff
• Impact of CDM is different per technology used

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How to develop a CDM project?
Danida buys CERs
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Transaction costs of CDM Project
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Benefits of participating

• You get a new income stream for your project
  with no risk for you
• Danida takes all the CDM related risk
• Danida takes all the trouble getting the paper
  work done
• Preparing a Project Design Document
• Getting the PDD validated
• Getting an Indonesian National Approval
• Getting the registration at the CDM Executive
  Board
• Danida buys the CERs when they are delivered

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Criteria for participating

• The underlying project must be technically and
  financially viable
• The technical design
• Financial viability/project financing
• Legal and commercial status of the project
• The project should be likely to be approved as
  CDM project
• Contribution to sustainable development
• Likelihood of being additional
• Existence of baseline methodology
• The project proponent is capable to implement the
  project
• Technical and management capability
• Financial solidity of the company

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The formalities
Second call with tentative closing date 1
February 2006
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Possible next step in the waste-management sector

• A number of workshops will be organised giving
  more information on the Project Development
  Facility
• A follow-up workshop to develop Project Idea
  Notes (PINs) in the waste-management sector.
• If you have a project already then contact the
  project secretariat to get a template for a PIN.
• A one-on-one consultation on project development
  and writing of PIN is possible.

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Contact

• Secretariat of Danish CDM Project Facility
• c/o Royal Danish Embassy
• Menara Rajawali 25th Floor
• Jl. Mega Kuningan
• Jakarta 12590
• Telephone [phone] ext 114
• Fax [phone]
• E-mail jktamb_at_um.dk
• Website www.emb-denmark.or.id
• Or
• ECON (in Jakarta) emd_at_econ.no Hp 0815
  8155048
• Pelangi - rde_at_pelangi.or.id Phone 021 -
  72801172