enda tm / cdm-pdd1 analysis of a cdm-pdd illustrated by the el gallo project second regional...
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ENDA TM / CDM-PDD 1
Analysis of a CDM-PDDillustrated by the El Gallo project
Second Regional Workshop on CD4CDM
16-18 August 2004
Maputo, Mozambique
Dr. Jean-Philippe Thomas
ENDA TM - Dakar
ENDA TM / CDM-PDD 2
Objective of the presentation
• To present the contents of a CDM-PDD
• To understand its connections
• To show a CDM-PDD demonstrative approach
• To develop its various steps with the
illustration of the El Gallo hydroelectric project
ENDA TM / CDM-PDD 3
CDM-PDD CONTENTS
• A. General description of project activity• B. Baseline methodology• C. Duration of the project activity/crediting
period• D. Monitoring methodology and plan• E. Calculations of GHG emissions by
sources• F. Environmental impacts• G. Stakeholders comments• Annexes
In bold : specific to « CDM » PDD
ENDA TM / CDM-PDD 4
A. General description of project activity
• A. 1,2,3 Title, description, participants,Technical Description, location
…• A.4.2 Category (ies) of project activity
UNFCCC CDM list• A.4.4 Brief explanation on how GHGs
by sources will be reduced by CDM
• A.4.5 Public funding
(no diversion of ODA)
In bold : specific to « CDM » PDD
ENDA TM / CDM-PDD 5
El Gallo Project
A 2. To generate renewable electricity using hydroelectric resources and to sell it the to Mexican consumer partners (industrial users and municipalities) on the basis of power purchase agreements (PPAs) using ‘Comision federal de Electricidad transmission system’ to wheel the energy.
30 MW power plant at the existing dam of El Gallo
ENDA TM / CDM-PDD 6
El Gallo project
A.4.2 Category (ies) of project activity :
No listed under UNFCCC CDMNew category : « Renewable electric generation in grid connected applications
A.4.4 Brief explanation of how GHGs by sources are to be reduced by this CDM activity
Summary of of methodology in section B.2
ENDA TM / CDM-PDD 7
El Gallo project
• A.4.5 Public funding
No public funding no diversion of ODA
ENDA TM / CDM-PDD 8
Reminder : Contents of PDD
• A. General description of project activity B. Baseline methodology• C. Duration of the project activity/crediting
period• D. Monitoring methodology and plan• E. Calculations of GHG emissions by
sources• F. Environmental impacts• G. Stakeholders comments• Annex
In bold : specific to « CDM » PDD
ENDA TM / CDM-PDD 9
B. CDM-PPD BASELINE METHODOLOGY
• B.1 Title and reference of the methodology applied
- UNFCCC reference list
- New baseline methodology Annex Variety of approaches to determine whether
« the project activity is additional and therefore not the baseline scenario»
ENDA TM / CDM-PDD 10
CDM Project Proponent
Potential Options for the Society
Intention to do the CDM project activity
(wind farm, bagasse fueled cogeneration, …)
Effective implementation and viable operation of the
CDM activity
Demonstration that the project will not be implemented spontaneously by the proponent (barriers, IRR not attractive, cannot be competitive,…)and needs CDM to happen
Comparative analysis of different options/scenarios in absence of
CDM (IRR, barriers, etc.),
including the proposed CDM activity
The proposed CDM activity is not rated first, other option(s)/scenario
will credibly be preferred / be most
probable
Nobody is likely to undertake a project similar to the proposed CDM activity in the absence of CDM, and proposed activity emits less than Baseline
Additionality of proposed CDM project clearly established
Supply Side Analysis Demand Side AnalysisAND
Most probable = Baseline Baseline emissions calculation
ENDA TM / CDM-PDD 11
El Gallo :a new baseline methodology
• B.1 Baseline methodology: ‘’Barriers analysis, baseline scenario development and baseline emission rate, using combined margin- for small grid-connected zero emission renewable electricity’’
• Two elements:1. Additionality 2. Baseline scenario/baseline emission rate
ENDA TM / CDM-PDD 12
M1. El Gallo (a) argument (b)overcome barrier
P1 Additionality (financing)
(barrier analysis)
M2. General context : argument / overcome barrier
M3 (a) definite and calculate : BER ex ante
P2 Baseline scenario
/ Baseline Emis. Rate
M3 (b) justify conservatism : ex post monitoring to update BER
Methodology application : various steps
ENDA TM / CDM-PDD 13
B.2 Justification of the baseline methodology & its application to the p.a.
• B.2 Renewable is disadvantged
• Prohibitive barrier to secure financing
Applicable method:- Sufficient informations to demonstrate
prohibitive barriers; not a common practice!- El Gallo will displace electricity
ENDA TM / CDM-PDD 14
B.3 Description of how the methodology is applied in the context of p.a.
• Part 1. Additionality is based on a barrier analysis, relevant arguments :- M1. In the specific El Gallo context- M2. In the general context of the Mexican
Electricity Sector
• Part 2. A justification of the baseline scenario with a transparent and conservative emission rate is carried out
ENDA TM / CDM-PDD 15
Part. 1 M1 Relevant barriers in the context of El Gallo
(a) Difficulty in procuring financing :- Access to financing : high interest rates, short
loan terms, difficulty to access to international financial markets
- Perceived technological risks : large amount of large scale hydro and conventional fossil techno. Increase risks for sma\ll-scale/RE
- Transaction costs : are high for low capacity renewables opportunities
ENDA TM / CDM-PDD 16
(b) How a CDM activity would enable to overcome the identified barriers ?
• Involvement of WB (PCF) as purchaser of e.r. to overcome the financing barrier
• Sale of CO2 emissions generates a more secure revenue (hard currency) than electricity sales (local currency)
ENDA TM / CDM-PDD 17
M.2 Additionality : arguments in the context of the Mexican Electric Sector
• Since 10 years, independant production is streamlined
• 200 permits were granted
• 15 permits small hydro financing barrier
• 7 are in operation industrial firms (for internal consumption)
• El Gallo = 7 projects (45millions$)
ENDA TM / CDM-PDD 18
Part 2. Baseline Emission Rate - BERStep M3 (a) Define and calculate
• Operating margin : affecting the operation of power plants on the grid (0,764)
• Build margin : avoiding the construction of future power plants (0,404)
• BER (tCO2/MWh) = average (oper. margin and build margin) = 0,584
• See table
ENDA TM / CDM-PDD 19
Part 2. Step M3 (b) : Justification of the conservatism of the baseline methodology
It provides a transparent and conservative estimate for the base emission rate =>
Ex ante value for the emissions baseline
Ex post monitoring to update BER (yearly)
ENDA TM / CDM-PDD 20
B.4 How and why this project is additional, not the baseline scenario
• B.4 :
- Part 1. Project would not occur without CDM funding
- Part 2. Shows emission rate of the displaced electricity is higher than emissions of the p.a.
ENDA TM / CDM-PDD 21
B.5 Description of how the definition of the project boundary related to the baseline is
applied to project activity
• EL GALLO : PROJECT BOUNDARY
Geographic and sytem boundary of electric grid : Mexico’s national borders
ENDA TM / CDM-PDD 22
Project Boundary:
Emissions under control of project developer
Alternative options/scenarios
ex: new grid connected thermal plants
Frequently :Spatial Scope for the Analysis of alternative Options/Scenariosis wider than Project Boundary:
Ex: National Grid, …
Sometimes :Alternative options are purely internal to the project: Ex: low pressure OR high pressure boilers, flaring OR not flaring landfill gas,…
Project Boundary: Emissions under control of
project developer
Spatial Scope for the Analysis of Alternative Options/Scenarios is equal to Project Boundary
Project
ENDA TM / CDM-PDD 23
B.6 Details on baseline developments
• B.6- Date of completing the final draft of this
baseline section
7 Septembre 2003- Name of person/entity determining the
baseline
….Tellus Insitute…….
…..Prototype Carbon Fund, ….
ENDA TM / CDM-PDD 24
Reminder : PDD contents
• A. General description of project activity• B. Baseline methodology C. Duration of the project activity/crediting
period• D. Monitoring methodology and plan• E. Calculations of GHG emissions by
sources• F. Environmental impacts• G. Stakeholders comments• Annex
In bold : specific « CDM » PDD
ENDA TM / CDM-PDD 25
C. Duration of the project activity /Crediting period
• C.1 Duration of project activity :
- starting date, (01/05/05)
- operational lifetime, (25 y.)
• C.2 crediting period :
- starting date of the first crediting period,
(01/05/05)
- lenght (7 y.)
ENDA TM / CDM-PDD 26
Reminder : PDD contents
• A. General description of project activity• B. Baseline methodology• C. Duration of the project activity/crediting
period D. Monitoring methodology and plan• E. Calculations of GHG emissions by
sources• F. Environmental impacts• G. Stakeholders comments• Annex
In bold : specific to « CDM » PDD
ENDA TM / CDM-PDD 27
D. Monitoring Methodology and Plan
• CDM-PPD: Detailed information related to the collection and archiving all relevant data with:
• D1 Name and reference of approved methodology applied to the project activity
D.1 « Methodology for ex post monitoring of
electricity generation and its impacts on
emissions… »
ENDA TM / CDM-PDD 28
D.2 Justification of the methodology and why it is applicable to the p.a.
• D.2 : Appropriate because it is used in conjunction with the baseline scenario
ENDA TM / CDM-PDD 29
D. CDM-PPD : Monitoring• D.3 data to be collected and archived• D.4 Potential sources of emissions attributed to
the p.a., collected and archived• D.5 relevant data necessary for determining the
baseline• D.6 Quality control and quality assurance for
data monitored• D.7 Name…determining the monitoring
methodology
ENDA TM / CDM-PDD 30
D. El Gallo
• D.3 No emissions
• D.4 No sources of emissions were identified
• D.5 Data type / unit / measured / frequency/How archived / for how long
• D.6 For auditing and verificationData type / uncertainty / QA/QC procedures ? / Why plan
or not
• D.7 Name person/entity
ENDA TM / CDM-PDD 31
Reminder : PDD contents
• A. General description of project activity• B. Baseline methodology• C. Duration of the project activity/crediting
period• D. Monitoring methodology and plan E. Calculations of GHG emissions by
sources• F. Environmental impacts• G. Stakeholders comments• Annex
In bold : specific « CDM » PDD
ENDA TM / CDM-PDD 32
E. Calculation of GHG emissions by sources
• E.1 Description of formulae used to estimate emissions (project activity)
• E.2 Description of formulae used to estimate leakage
• E.3 : E1 + E2 = p.a. emissions• E.4 Description of formulae used to
estimate emissions of baseline• E.5: E4 – E3 = emission reductions p.a.• E.6 : table
ENDA TM / CDM-PDD 33
E. El Gallo project• E.1 No formulae for calculations of direct emissions• E.2 No formulae for estimating leakage• E.3 Sum is zero• E.4 Baseline emissions :
• E.5 Idem E4• E.6 See table
Monitoring generation output (MWh) X baseline emission rate (tCO2)120,668 MWh X 0,584 tCO2/MWHNet annual reductions = 70,484 tCO2 21 year crediting period : 1, 480, 157 tCO2
ENDA TM / CDM-PDD 34
Reminder : PDD contents
• A. General description of project activity• B. Baseline methodology• C. Duration of the project activity/crediting
period• D. Monitoring methodology and plan• E. Calculations of GHG emissions by sources F. Environmental impacts G. Stakeholders comments• Annex
In bold : specific to « CDM » PDD
ENDA TM / CDM-PDD 35
F. EL Gallo Environmental impacts
,
Exhibit A of CDM-PPD- Areas of potential impacts : Flora and fauna, hydrology
- Impacts : water quality and quantity, biodiversity, construction, cultural heritage
- Environmental management plan proposed
ENDA TM / CDM-PDD 36
El Gallo: Stakeholders comments
• G.1 Brief description of the process on how stakeholders have been invited and comments compiled
• G.2 Summary of the commennts
• G.3 Report on how due account was taken of all comments received
ENDA TM / CDM-PDD 37
Annexes
• 1. Contact information on participants in project activity
• 2. Information regarding public funding
• 3. Baseline information
• 4. Monitoring plan
ENDA TM / CDM-PDD 38
PDD contents
• A. General description of project activity• B. Baseline methodology• C. Duration of the project activity/crediting
period• D. Monitoring methodology and plan• E. Calculations of GHG emissions by sources• F. Environmental impacts• G. Stakeholders comments• Annexes
In bold : specific to « CDM » PDD
ENDA TM / CDM-PDD 39
ENDA TM Environnement et Développement du Tiers Monde
[email protected]://www.enda.sn