Global Carbon Market and CDM Potential in Cement Production Industry

1
Global Carbon Market and CDM Potential in Cement
Production Industry
Syed Amjad HussainActing Head CDM Cell
2
Outlines of Presentation

• STATUS OF CLEAN DEVELOPING MECHANISM (CDM)
  PROJECTS UNDER KYOTO PROTOCOL
• Global Carbon Market Sellers
• Global Carbon Market Buyers
• Sector Wise Global Carbon Market
• Roles of Service Providers
• CDM Opportunities in Cement Production
• GHGs Reduction Target Areas in Cement Production
  Industry for CDM Project Activities
• Reasons for Low Carbon Market size in CDM
  Projects Activities
• in Cement Production Sector
• Costs of CDM Projects
• ACCESS TO GLOBAL CARBON MARKET
• Current Financial Source Available for CDM
  Projects Activities

3
Status of CDM Projects

• To date 904 Registered CDM
  Projects 105.17 million CERs expected
• In Pipeline 2800 CDM Projects
• 1.15 billion CERs expected to the end of
  2012.

4
Global Carbon Sellers

2006
5
Global Carbon Buyers
Overall volume 466 million tCO2e 2006
Overall volume 352 million tCO2e 2005
6
Sector Wise Global Carbon Market
2006
2002-2006
7
Roles of Service Providers

• Carbon Brokers
• - Buying and selling of CERs in the emerging
  carbon market,
• - Educating potential market participants about
  the costs, benefits, and mechanics of carbon
  trading etc.
• - Brokers help counterparties by developing
  unique transaction structures that meet the
  individual needs of buyer and sellers.
• Project Development Consultants
• CDM Consultants assist CDM project proponents
  for
• - Development of CDM Project Design Documents
  (PDDs)
• - Quantification and monitoring of CDM Project
  that may lead to a successful GHGs
  reductions.
• - Help to market for sale of CERs

8
Cement Production Process

• Following three steps are involved in cement
  production
• Preparing Raw Materials
• Mixing/Homogenizing
• Grinding and Preheating (drying) produces the raw
  meal.
• Burning of Raw Meal to form Cement Clinker in the
  Kiln
• The components of the raw meal react at high
  temperatures (900-1500 C) in the precalciner and
  in the rotary kiln to give cement clinker.
• Finish Grinding of Clinker and Mixing with
  Additives
• After cooling the clinker is ground together with
  additives.

9
CDM Opportunities in Cement Production

• Carbon Dioxide Emissions from Fuel Use
• Type of production process (efficiency of the
  process and sub-processes)
• Fuel used (coal, fuel oil, natural gas, petroleum
  coke, alternative fuels)
• Clinker/cement ratio (percentage of additives)
• The specific process CO2 emission for cement
  production depends on the ratio clinker/cement.
  This ratio varies normally from 0.5 to 0.95

10

• Target Areas for Carbon Dioxide Emission
  Reduction in Cement Industry
• By improving the energy efficiency of the process
• Shifting to a more energy efficient process (e.g.
  from (semi)
• wet to (semi) dry process)
• Replacing high carbon fuels by low carbon fuels
• Applying lower clinker/cement ratio (increasing
  the ratio
• additives/cement) blended cements.
• Application of alternative cements (mineral
  polymers)
• Removal of CO2 from the flue gases

11
Reasons for Low Carbon Market Size of CDM
Projects Activities in Cement Industry

• Lack of awareness amongst Project Sponsors and
  Investors/Banks on the projects CERs generation
  and sales potential
• Host country CDM procedures not established or
  not sufficiently communicated with the Project
  Sponsors
• Limited local consultancy capacity to assist
  Project Sponsors in developing the CDM
  component, especially concerning validation
  services
• Lack of Project Sponsors money to bridge finance
  the CDM related costs

12
Costs of CDM Projects
Cost Estimated financial Requirement
Project Development and Establishment 25,00075,000 US
Validation 10,00015,000 US
CDM Registration US 0.10/CER for the first 15,000 t CO2-e/year, US 0.20/CER for above 15000 t CO2-e/year A project expecting an average of 50,000 CERs per annum would pay an upfront registration fee of US 8,500.
Adaptation Fund 2 of CERs issued under CDM project levied for fund to help vulnerable countries adapt to climate change (not for small-scale projects)
Host Country Approval Fee No Fee in case of Pakistan
13
Access to Global Carbon Markets for CDM Projects
Current Sources Available for CDM Projects

• Prototype Carbon Fund (PCF)
  www.prototypecarbonfund.org
• Italian Carbon Fund (ICF)
  www.carbonfinance.org
• Netherlands Clean Development Mechanism Facility
  (NCDMF) www.carbonfinance.org
• Community Development Carbon Fund (CDCF)
  www.communitycarbonfund.org
• Spanish Carbon Fund (SCF)
  www.carbonfinance.org
• Danish Carbon Fund (DCF)
  www.carbonfinance.org
• These funds provide cash flow to host countries
  and communities to develop CDM projects and
  produce carbon credits.
• Pre-financing also available for project
  activities like project identification
  preparation, capacity building, outreach and
  research which lead to create CDM Projects
• Most of the part of these funding serving as a
  loan and are repaid only once the projects are
  matured to produce carbon credits on annually
  basis.

14

Prototype Carbon Fund (PCF)

• Total Capital US180 million
• Operated By World Bank with partnership
  between seventeen companies and Six
  Governments
• From April 2000.
• Purpose of PCF
• PCF is pioneer carbon market for project-based
  on greenhouse gas emission reductions while
  promoting sustainable development.

15
Italian Carbon Fund (ICF)

• Total Capital US 155.6 million.
• Operated By World Bank and Ministry
  of Environment and Territory,
  Italy
• From 2003
• Purpose OF ICF
• Purchase GHGs emission reduction credits from
  projects in developing countries under Kyoto
  Protocol's mechanisms such as CDM and in
  Developed Countries as a JI.

16
Netherlands Clean Development Mechanism Facility
(NCDMF)

• Total Capital US 264.7 million.
• Operational By World Bank
• Supported by Netherlands Government
• From May 2002
• Purpose of NCDMF
• Purchase of CERs from the developing countries
  under the Clean Development Mechanism (CDM)
  established under the Kyoto Protocol.

17
Community Development Carbon Fund (CDCF)

• Total Capital US 128.6 million
• Operational By World Bank
• Supported by Nine Governments and
• 15 corporations/organizations
• From March 2003.
• Purpose of CDCF
• Supports projects that combine community
  development attributes with emission reductions
  to create "development plus carbon" credits, and
  will significantly improve the lives of the poor
  and their local environment in Developing
  Countries.

18
Spanish Carbon Fund (SCF)

• Total Capital US 278.6 million.
• Operated By Ministries of Environment and
  Economy of Spain and the World Bank
• From 2004
• Purpose of SCF
• Purchase greenhouse gas emission reductions from
  projects developed under the Kyoto Protocol to
  mitigate climate change while promoting the use
  of cleaner technologies and sustainable
  development in developing countries and countries
  with economies in transition.

19
Danish Carbon Fund (DCF)

• Total Capital US 68.5 million.
• Funded By Ministry of Foreign Affairs of
  Denmark,
• Ministry of the Environment of Denmark
• and private sector participant
• From January 2005
• Purpose of DCF
• The purpose of this fund purchase carbon credits
  from developing countries under the Kyoto
  Protocol.

20

• THANK YOU