Capacity Development for CDM

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• Capacity Development for CDM
• Second National Workshop for EgyptCairo, 12-13
  January 2004
• Financial issues in relation with CDM projects
• Samir Amous, APEX, TunisiaRegional Centre for
  North Africa and Middle-East
• Tel [phone] --- Fax [phone]
  453amous.apex_at_gnet.tn

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• Aspects to be considered
• CDM Financing issues
• Financial viability
• Funding Scheme and mobilization of resources
• Disbursement issues
• Risk Management

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CDM as a part of a broader Funding scheme
involvingother sources
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• Important to avoid confusion and frustration
• CDM is not a panacea
• CDM is not about to meet all funding needs?CERs x
  carbon rate
• Might not contribute to investment, but rather to
  increase annual cashflows?project profitability
• CDM is not about to fund all types of
  projects?CO2 reductionfit CDM criteria
• Need to involve classical funding mechanisms and
  sources

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• The CDM Carbon market will determine to which
  extent CDM investors can contribute
• CDM funding contribution likely to be an Add-on
  rather than core funding
• Needs for close linkage with WB, Regional Banks,
  UNDP, Bilaterals (linkages with ODA), etc.

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CDM as a subcomponent in a broader financial
context cogeneration development in Tunisia

• Total Investments US 50 million (transaction
  costs not included)
• Emission reductions 1.4 million T-CO2 eq. over
  the lifetime of the project (20 years)

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CDM as a subcomponent in a broader financial
context cogeneration development in Tunisia
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CDM as a subcomponent in a broader financial
context Wind power development in Tunisia

• Total Investments US 155 million (transaction
  costs not included)
• Emission reductions 8.2 million T-CO2 eq. over
  the lifetime of the project (30 years)

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CDM as a subcomponent in a broader financial
context Wind power development in Tunisia
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CDM as a subcomponent in a broader financial
context Efficient Residential Lighting (CFLs)

• Total Investments US 1.2 million (transaction
  costs not included)
• Emission reductions 0.2 million T-CO2 eq. over
  the lifetime of the project (10 years)

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CDM as a subcomponent in a broader financial
context Efficient Residential Lighting (CFLs)
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CDM as a subcomponent in a broader financial
context

• Need to develop capacities not only on CDM but
  also on financial issues
• Imagine and prepare a complete funding scheme,
  with parallel contact with various co-investor

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Lifetime implications
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CDM as a subcomponent in a broader financial
context cogeneration development in Tunisia
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CDM as a subcomponent in a broader financial
context Wind power development in Tunisia
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Financial Viability
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• CDM allows planned project to enhance their
  financial performance, depending on
• Quantity of CERs
• Price of CERs
• Transaction costs

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• Quantity of CERs generated will depend on
• Crediting period selected 10 years without
  renewal, or 7 x 3 years
• Risks associated with the project
• Volatility of the CERs
• Price of CERs generated will depend on
• Current Carbon Market (US3-5)
• Future prospects for PK and CDM implementation
• Willingness to promote a technology
• Existence of guarantees
• Other collateral impacts (positive or negative)

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• Transaction costs
• Feasibility studies (PDD)
• Preparation of Funding scheme and fund raising
• Governmental permits
• Contractual arrangements
• Operational Entity fees (Validation,
  Verification)
• Monitoring and Reporting
• Registration and Certification
• Updating the baseline
• Adaptation Levy (2)
• Share of Proceeds

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CDM as a subcomponent in a broader financial
context

• The issue of Transaction Costs
• How to reduce TC
• How to establish a balanced portfolio
  equalization system of TC ??
• Better take the development priorities into
  account

US 1.5 /TCO2
0.25 Cts/TCO2
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Fund raising for CDM projects
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• Fund raising
• Complementary funding should be estimated
• Contact with possible funders either grants,
  loans or equity funds?national, bilaterals,
  multilaterals)

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Disbursement schedulefrom CDM investor
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CDM as a subcomponent in a broader financial
context Disbursement Schedule from CDM investor
End of the FirstCommitment Period
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CDM Financial issues
End of the presentation
Thanks