Developing greenhouse gas mitigation

1
A Carbon Financing Guide for South Africa

• Geoff Stiles
• Project Manager
• Presented to
• Carbon Emissions
• a Financial Markets Perspective
• 8 February 2005

2
Topics Covered.

• About CBLA
• State of carbon financing in SA
• Informational and capacity needs
• The Carbon Financing Guide

3
About CBLA.

• Capacity Building, Leadership Action
• Focus on GHG mitigation opportunities in industry
• Objectives
• To help build capacity to mitigate industrial
  greenhouse gas emissions through energy
  efficiency
• To help establish voluntary initiatives or
  mechanisms for GHG mitigation through industry
  associations
• To identify, develop, and facilitate
  implementation of specific GHG mitigation
  projects
• Operates in South Africa and Mozambique
• Funded by CIDA (CCCDF)
• Implemented by Marbek Resource Consultants AMEC

4
Industry Projects

• Working with 6 industry groups
• Sectoral associations chemicals, mining,
  textiles
• Sectoral direct food/beverage
• Geographic associations Durban, Mozambique
• Process
• Screening audits (33 completed)
• Feasibility studies (4 completed, 5 in progress)
• Facilitation of project implementation (incl. CDM
  design and financing)
• Monitoring

5
CBLA Information and Capacity-Building Activities

• Energy Auditor training programme (w/DME)
• E.E. Charter development (w/DME NBI)
• Intro Climate Change course (w/MEETI)
• CDM Project Development course (w/UNIDO)
• Web-based Project Clearinghouse (CBLA)
• Carbon Financing Guide (CBLA)

6
Current State of Carbon Financing in South Africa

• Significant price increases in CDM market
• Maturation of international markets
• Increasingly a sellers market
• Huge technology transfer low-cost financing
  opportunities
• Knowledge base available already
• Approval process transparent

7
Kyotos GHG Market Is Evolving
European Union Ratified Kyoto Protocol EU
Compliance Starts Jan 2005
Canada Ratified Kyoto Protocol Trading system
under development Provincial GHG requirements
implemented
Japan Ratified Kyoto Protocol Largest Volume
Buyer in Carbon Market
United Kingdom 500 trades under UK Emissions
Trading Scheme involving 1.6 to 1.7 million
allowances
Sweden and Norway Issued tenders for CDM and JI
projects
Netherlands Purchased 25.2 million GHG
reductions for 138 million from ERUPT and
CERUPT 1 more ERUPT issued Transactions outside
tender process executed
Austria Plans to issue tender worth 36 million
EUR for CDM and JI projects
Denmark GHG cap in power sector, 2001-2003
Purchased ERUs from Romania in March 2003,
Further Purchases Planned
Finland Tender for small-scale CDM project
issued Expected to yield 500,000 Mt CO2e
New Zealand 2nd Round of Project Mechanism
Announced by Government
8
Implications for South African Project
Developers

• Buyers of carbon getting more sophisticated
• Lowering risk is as crucial as finding optimal
  price
• Buyers looking for larger projects over longer
  periods of time
• Implications for project developers
• Sellers need to understand buyers needs
• Project design becomes crucial (e.g. bundling of
  small projects, choice of proven technologies,
  achieving host country approvals)
• Evidence of project financing and solid balance
  sheet
• Bottom line 1. Think RISK
• 2. Learn more about sellers

9
CDM Advantage South Africa

• Favored supply Currently under represented in
  all major public sector and private sector
  portfolios
• Location diversity is stressed to mitigate risk
• High carbon intensity of SA grid rewards action
  on electrical as well as thermal opportunities
• Will be focus of much needed capacity building
  funding
• CBLA/CIDA, CF Assist, UNF, WBCSD, DANIDA
• English the main language of business no
  translation of PDD etc.
• Financial infrastructure in place
• DNA now in place
• Africas strong sustainable development factors

10
Information and Capacity NeedsSouth Africa

• Industry understanding of CDM extremely variable
• Most larger SA companies instituting programmes
  to identify CDM opportunities
• SASOL
• ESKOM
• SAB
• BHP-Billiton
• SAPPI
• Need for capacity to undertake
• Feasibility assessments
• PDD development
• Marketing of projects to potential buyers/brokers
• Forum for financing people involved in CDM

11
The Carbon Financing Guide Purpose and Scope

• To provide South African financial/other managers
  with a practical, simplified guide to carbon
  financing.
• To provide insight into topics such as
• Understanding carbon markets
• Understanding various carbon pricing scenarios
• Accessing various sources of carbon finance
• Placing carbon assets on your balance sheet

12
Target Users

• Financial managers of
• Private corporations (industry, buildings)
• Municipalities and other government
• Chief executives wishing to familiarise
  themselves with the opportunities for carbon
  financing
• Project developers

13
Topical Coverage

• CEO briefing 2 pages front-end
• Strategies for Climate Change
• Adapting to the Impacts
• Understanding Response Measures
• Capitalising Your Carbon Assets
• Management Toolkit
• Adaptation and Response
• Mitigation Opportunities
• Selling Carbon Credits
• The Clean Development Mechanism in South Africa
• List of links and further reading

14
Launch Details

• Guide in draft stage
• Official launch late February
• Launch on website same time
• Publication March
• Availability
• On the web (PDF files)
• In print format through CBLA etc.
• By email request

15
Contact DetailsCBLA ProjectPO Box
898Parklands RSA 2121Phone [phone]Fax
011-447-7885Email geoff_at_cbla.org.zawww.ghgclear
inghouse.org.za

• Questions?