Progress Report onPhase I of the UNEP Project in Egypt

“Capacity Building DevelopmentFor

The Clean Development Mechanism”

Progress Report onPhase I of the UNEP Project in Egypt

“Capacity Building DevelopmentFor

The Clean Development Mechanism”

Phase I Country Report OutlineI. Introduction I.1. Project background I.2. Capacity development needsII. Country Circumstances Relating to Cc and CDM II.1. Institutional arrangement in the context of climate change Country-specific institutional arrangement and its potential linkage with this project II.2. Prior & on-going activities related to CC II.3. Prior & on-going activities related to the CDM and perspectives for CDMIII. Country Specific Issues in Relation With The UCCEE/UNEP Project III.1. Institutional arrangement for the implementation of the project III 1. 1. Focal point III 1. 2. National institution (Technical Support Entities) III 1. 3. participants III.2. Status of the contractual arrangements with national institution (Technical Support Entity) and MOU with government III.3. Evaluation of institutional and overall capacity in relation with the CD for CDM project III 3. 1. Focal point III 3. 2. National institution (Technical Support Entity, TSE) III 3. 3. National institutionIv. Status OF Objectives, Outputs & Activities In Phase I IV.1.Tasks in Phase I: completion of a work plan for phase II presentation of the workplan for phase II, and description of the activities IV.2. Outputs: workshop proceedings & presentation files, work plan, etc.V. Notes From Initial Contacts With StakeholdersIv. List Of Potential Participants & Stakeholders In The Project

Annex-I: Detailed National Work PlanAnnex-II: Workshop proceedings & presentation

I. Introduction and objectives The United Nations Environment Program

(UNEP) has launched the project “Capacity Development for the Clean Development Mechanism” with financial support from the Dutch Government.

The UNEP Collaborating Center on Energy and Environment (UCCEE) is the supporting organization contracted by UNEP to implement the project.

General Objectives

• generating in participating developing countries a broad understanding of the opportunities offered by the Clean Development Mechanism, and

• developing the necessary institutional and human capabilities that allows them to formulate and implement projects under the CDM.

I.2. Capacity development for the CDM needs

The CD for CDM project objectives:1-Definition of regulatory framework that supports CDM

activities, 2- Identify prospective CDM projects, 3- Formulate investment plans, 4- Validate CDM projects, and 5- Monitor and report the results of CDM activities.

The main products of this preparatory phase are:1- Establishment of a country specific strategy approach in order

to obtain the highest degree of political support.2- Designate an appropriate focal point agency that will

coordinate national CDM activities and investments.3- Prepare terms of reference and determine the organizational

structure for the focal point agency.4- Develop a multi-year work plan for promoting national CDM

activities and investments.5- The phase-I progress depicts the previous products.

II. Country Circumstances Relating to CC and CDM

II.1. Institutional Arrangement in the Context of Climate Change

Governmental institutions potentially participating in the CDM.

Private Sector Institutions and NGOs in Egypt with CDM Potential.

Institutions and Authorities responsible for the foreign direct investment system of Egypt

Annex-III.( 1 ) encounters the most important current initiatives for GHG reduction in Egypt.

Existing National Governmental Institutions

Ministry of State for Environ-mental Affairs

-Egyptian Environmental Affairs Agency (EEAA) Climate Change Unit- Environmental Protection Fund (EPF)

Ministry of

Petroleum

-The Egyptian General Petroleum Corporation (EGPC)

-Egyptian Natural Gas Holding Company “EGAS”

Ministry of Electricity &

Energy

- New & Renewable Energy Authority (NREA)-Organization of Energy Planning (OEP)

Ministry of Industry &

Technological Development

- Tabbin Institute for Metallurgical Studies (TIMS)-Egyptian Accreditation Council (EGAC)

Ministry of Agri-culture

Ministry of Transport

The Central Department for Afforestation & Environment

Existing Governmental Institutions Potentially Participating in the CDM

World Energy Council

Environmental NGOs

EXISTING PRIVATE SECTOR INSTITUTIONS AND NGOs

Energy Efficiency Council (EEC)

Federation of Egyptian Industries

(FEI)

The Egyptian Energy Service Business Association

(EESBA)

Private Audit/Consulting

Firms

Private Sector Institutions and NGOs in Egypt with CDM Potential

Role and Responsibility Institution Attraction of

potential investors 1.External promotion to attract potential foreign investors and investments

Ministry of Foreign Affairs, Ministry of Information - State Information Office, Ministry of Economy -Commercial Offices in Egyptian Embassies, NGOs

2.Information on foreign investments in Egypt

Ministry of Economy, The General Authority for Industrialization (GOFI), The General Authority for Investment (GAFI), Federation of Egyptian Industries (FEI), NGOs

3.Facilitation of investments Cabinet of Ministers – Prime Minister’s Office

Approvals 4.Allocation of land GAFI, governorate or New Communities Authorities

5.Issuance of the preliminary approval for the project

The General Authority for Industrialization (GOFI) or The General Authority for Investment (GAFI)

6.EIA approval Egyptian Environmental Affairs Agency (EEAA)

7.Final approval for the project The General Authority for Industrialization (GOFI) or The general authority for investment (GAFI)

8.Acquiring a permit for construction

Municipality/governorate or New Communities Authorities

Different Authorities and Their Roles & Responsibilities in the Foreign Direct Investment System of Egypt

Role and Responsibility Institution

Organizational procedures &

Implementation

9.Issuance of an import card for the project (if necessary)

Ministry of Economy and Ministry of Finance

10.Issuance of a license for operation

Municipality/governorate or New Communities Authorities

11.Issuance of a tax card and registering in the commercial register

Ministry of Economy/ Ministry of Finance/ Ministry of Internal trade

12.Registering at the Federation of Egyptian Industries (FEI), for industrial projects under companies’ law

Federation of Egyptian Industries (FEI)

13.Insuring the workforce Social Insurance Authority – Ministry of Social Affairs

14.Acquiring a certificate of production compliance with standardized specifications

Egyptian Standardization Authority – Ministry of Industry & Technological Development

15.Verification of the share of the local component in products

The General Authority for Industrialization (GOFI)

16.Acquiring other permits for production expansions or product diversification

General Authority for Investment (GAFI)/ The General Authority for Industrialization (GOFI)

Different Authorities and Their Roles & Responsibilities in the Foreign Direct Investment System of Egypt

II.2. Prior & on-going activities related to Climate Change (CC)

The prior and on-going activities are divided into two main issues:

- Policies - Measures for reducing GHG emissions

Adopted by:• Governmental firms and;• Complementary voluntary activities by non-

governmental organizations.

II.2.1. Prior activities related to Climate Change

The following are the activities related to the climate change and prior to the CDM.

a. Egypt’s Climate Change National Action Plan (ECCNAP) • The project deals with both the assessment of Egypt’s

vulnerability to the adverse impacts of climate change as well as the assessment of the potential GHG mitigation.

• Within the assessment GHG mitigation, the project has been providing an in-depth coverage of the financial, environmental, social and economic impacts of a set of seven energy efficiency technologies.

• These technologies are fuel substitution, co-generation, combustion control, waste heat recovery, efficient lighting, use of renewable energy and steam condensate recovery.

Egypt Climate Change National Action Plan [ECCNAP] final objective:

Building capacity for Egypt to respond to UNFCCC, it was:

• Strengthening Egypt’s capacity to comply with the requirements of the UNFCCC,

• Institutionalizing the national communication to comply with the UNFCCC, and

• Contributing to the emergence of Egyptian approaches and responses to the UNFCCC.

Approaches:• Training of experts,• Setting-up of seminars, workshops and studies

related to climate change, and• Establishing close links with regional

UNEP/GEF projects in general and taking part in international training programs

C. Egypt’s Initial National Communication on Climate Change

• The Initial National Communication on Climate Change

(NCCC) was issued in the year 1998 as a necessary document for evaluation of Egypt’s inventory of green house gases.

• It is one of the main documents on which the National Strategy Study (NSS) on clean development mechanism (CDM) was based.

II.2.2. On-going activities related to Climate Change

These initiatives can be classified into:

•Institutional, (encountered in item II.1)•Technical and •Strategic initiatives.

a. Institutional Initiatives

The Institutional Initiatives are encountered in item II.1, “Institutional arrangement in the context of climate change”

b. Technology/Market Initiatives

Technology Cooperation Agreement Pilot Project (TCAPP) • Acknowledging technology transfer as one of its highest

priorities, Egypt is focusing on such initiatives as the Technology Cooperation Agreement Pilot Project (TCAPP), in cooperation with the U.S. Country Studies Program.

• The TCAPP is chartered to develop consensus among key Egyptian organizations on a set of high priority, climate-friendly, technology issues aimed at successful commercialization.

• Results are expected to produce candidate technology transfer areas for consideration under the guidance of the National Climate Change Committee. Market development plans for selected technologies are currently underway.

Promotion of Wind Energy for Electricity Generation

• This is an active program within the Ministry of Electricity and Energy, through the New and Renewable Energy Authority.

• Supported by many international donors, this project aims at installing 600 MW of wind turbine by the year 2010.

• The first 300 MW is already contracted through different donors, and most of them are scheduled to be operating by 2006.

Fuel Cell Bus Demonstration Project

• Funded by the GEF, the UNDP is currently supporting fuel cell bus projects in Cairo, The demonstration in Cairo features eight fuel cell buses with associated hydrogen production and supply facilities.

• The program will run for five years, with three years devoted to driving, monitoring and testing performance.

• Service is targeted for implementation in the year 2001.• With a focus on technology transfer, Egypt hopes to

expand the success of this demonstration in its transportation fleet.

Other Projects are:

• Hybrid-Electric Bus Technology in Egypt• Natural Gas Motorcycles• Methane Recovery from Landfills• The Integrated Solar Thermal/Natural Gas

Power Plant at Kuraymat• The Energy Efficiency Improvement and

Emissions Reduction Project• Fuel Switching

C. Other Activities in Egypt for GHG Emissions Reduction

Egyptian Energy Efficiency Council (EEC) programs

The Energy Efficiency council (EEC) is a voluntary consortium of public and private sector organizations associated with the generation, distribution, and use of energy resources in Egypt.The council currently includes 12 organizations representing seven Ministries and two organizations representing the views and interests of the private sector.

Its aim is to oversee the development of a national energy efficiency strategy that will be used as a roadmap to increase Egypt’s efficient use of its natural resources.

d. Overview on Current GHG Emissions in Egypt and Projection of Emissions Until 2017

• The latest comprehensive inventory of GHG emissions and sinks (removals) for Egypt has been compiled for the fiscal year 1990/1991 (July 1st, 1990 – June 30, 1991).

• The net GHG emissions of Egypt in 1990 were 106,608 Gg of CO2 equivalent, while the total GHG sinks in the land use sector recorded 9,900 Gg of CO2 equivalent. CO2 is the main greenhouse gas in Egypt. It represented about 72% of the total GHG emissions in 1990.

• The main emitters of GHG in Egypt are fuel combustion in the energy (22%), industry (21%), transport (18%), sectors.

• The total energy-related emissions (”All energy”) are responsible for 71% of the total GHG emissions.

• Therefore, the sectors energy production, industry and transport are the primary target for GHG emission reductions measures.

22%19% 18%

9%

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All energy emissions, % GHG

All energy emissions = 71% of total GHG

Total = 106,708Gg

Sector Percentage Share of Net GHG Emissions, 1990/1991Source: Extracted from OECP (1998)

-50.00

25.00

100.00

175.00

250.00

325.00

400.00

1990

/ 1991

1996

/ 1997

2001

/ 2002

2006

/ 2007

2011

/ 2012

2016

/ 2017

CO

2 E

qu

iv

(

1000

Gg

) Energy

Industry

Agriculture

Waste

Total

The estimation of Egypt’s GHG emission projection until 2017 for the all energy sector is based on the SNAP project at OEP. For the waste sector, the GHG emission growth rate was estimated at 1.6% annually based on the assumed annual average population growth rate.

GHG Emission Projection for all Sectors (in 1000 Gg of CO2 equivalent)

-400

-380

-360

-340

-320

-300

-280

-260

-240

-220

-200

-180

-160

-140

-120

-100

-80

-60

-40

-20

0

20

40

60

80

100

120

140

160

0 1000 2000 3000 4000 5000 6000

1000 Ton C

CS

C

- US

$ / To

n C

0

5

10

15

20

0 1000 2000 3000

CSC

US$

TonC

Marginal Abatement Cost Curve for Egypt

Area of Application Technology

CSC ($/ton C)

Ton C Saved

1. Textile Cogeneration -380 544,414 2. Fuel switching in transportation Fuel switching -300 20,640 3. Chemicals Cogeneration -260 353,869 4. Food and beverage Cogeneration -220 73,496 5. Metals Cogeneration -160 306,233 6. Building Cogeneration -90 274,929 7. Buildings Combustion Control -80 1,093 8. Hotels Combustion Control -80 6560 9. Metals Combustion Control -80 8201 10. Food & Beverage Waste Heat Recovery -80 13,649 11. Food & Beverage Combustion Control -80 37085 12. Metals Waste Heat Recovery -80 38,515 13. Textile Combustion Control -80 55309 14. Textile Waste Heat Recovery -80 58,240 15. Chemicals Waste Heat Recovery -80 101,336 16. Chemicals Combustion Control -80 103,145 17. Hotels Cogeneration -45 152,436 18. Fuel switching in industry Fuel switching -21 97,608 19. Organic waste management Waste Management 0 37,336

20. Methane recovery from Municipal solid waste

Solid Waste Management 0 310,600

21. Coastal sand dune fixation LULUCF 7.11 101,870

22. Casuarina and sissoo plantations around new cities.

LULUCF 12.29 240,000

23. Planting along irrigation and drainage canals

LULUCF 14.11 967,900

24. Planting of roads and highways LULUCF 17.71 1,123,650

25. Renewable energy for electricity generation (wind farms)

Renewable Energy 30 401,380

26. Acacia stenophylla plantations around new cities.

LULUCF 32.62 240,000

27. Integrated solar thermal Combined Cycle system

Other Renewable Energy 65 161,820

28. Waterway transportation Transportation 97 32,000 29. Railway electrification Transportation 1600 44,375 30. Solar pumps Renewable Energy 2141 48,000

31. Underground mass transit system Transportation 3169 28,948

Summary of Technologies, Saved Carbon and Cost of Saved Carbon

Main comments about:

• The Energy Efficiency technologies Previous studies (such as SNAP, 1997 and ECEP, 1998) also support the current results.

• Implementing the energy efficiency in different sectors in Egypt may result in GHG reduction between 1 to 2 million Ton C under the conservative and optimistic scenarios respectively.

• The waste management sector • Renewable energy, • The transportation projects • LULUCF activities,

1.2.2 Analysis for International Market for Certified Emission Reductions (Demand)

Expected International Price

Quantity internationally

traded

Export revenues of non Annex I countries

7.8 US$ 388 MtC 3 billion US$

Principal Results of the CERT Model in the Standard Scenario

Assumed Scenarios

International Price

Total Quantity that can be

Sold by Egypt in MtC

Egypt’s Export Revenues in Million US$

Standard scenario

7.8$ 2.6 20.28

Medium scenario

7.8$ 1.8 14.04

Low scenario 7.8$ 1.25 9.75

Egypt's Position in the International GHG Offset Market

Standard, 100%, Medium 70% and low 50% sail of GHG emissions

II.3.Prior & on-going activities related to the CDM and perspectives for CDM

The National strategy study (NSS) on CDM

Institutional Needs for the Implementation of CDM in Egypt

National CDM Committee and CDM UnitAs for the institutional framework, two levels of coordination are proposed, the first is a

national committee for CDM and the second is CDM implementation unit. The mandate of such a CDM unit will include the following:• Undertaking CDM activities as pertains to awareness and promotion; • Issuing guidelines for the proposed CDM projects as well as following up CDM project

activities initiated in Egypt; • Acquiring various approvals and permits on behalf of CDM investors without having

them go through a timely and tiresome process themselves. This will lower transaction costs considerably and thus, be instrumental in catalyzing CDM projects in Egypt; and;

• Liaise and coordinate with line ministries and governmental agencies to prepare position papers for Egypt on CDM and representing Egypt in international meetings and conferences in this field;

• Coordinating technical capacity building; • Facilitating pilot CDM projects and build relations with potential CDM investors.

Facilitating pilot CDM projects and build relations with potential CDM investors.

The proposed CDM Unit will be responsible for the day-to-day activities of CDM. It will be the executive secretariat of the National Committee on Climate Change in the area of CDM. This Committee nonetheless, will be regarded as the executive board or policy-making body for the CDM in Egypt.

As for other institutional and logistical prerequisites, Egypt has to look for international broker firms to promote for CDM projects and carry out matchmaking with Egyptian partners. Nonetheless, financial auditing firms in Egypt can play a role in various CDM related activities. They require, however, intensive capacity building in this field in terms of awareness, skills and human resources. Many of these firms can utilize the expertise and experience of their international partners and alliances in the area of CDM. This will inevitably lead to strengthening and enhancing the domestic skills and capabilities of those auditing firms in the field of CDM project related activities and services.

Egyptian non-governmental organizations can play an important and instrumental role in implementing CDM projects in Egypt. Accordingly, this role needs to be strengthened and encouraged. One general recommendation regarding institutional, legal and technical prerequisites is that there is a pressing need for capacity building for CDM related activities in Egypt. This is required for the various agencies and institutions acting as stakeholders in the investment process in Egypt. It is also urgently needed to advise the Egyptian Accreditation Council, (EGAC) to take the necessary actions for recognition of national institutions. The CDM project cycle mainly consists of project validation, monitoring, verification and may be certification on both national and regional basis. This recognition requires capacity building for the national institutions to meet the required qualifications of operational entities set forth within the CDM decision adapted at COP-7.

Tasks to be carried out prior to the initiation of the CDM projectTable ( 5 ) summarizes the tasks to be carried out prior to the initiation of the CDM project cycle activities. These tasks can be conducted by the following options:Option (1): through which government agencies play the only or main role in fulfilling such task.Option (2): whereby the private sector and NGOs play the only or main role in fulfilling such task.

Table 5: Tasks to be Carried Out Prior to the Initiation of the CDM Project Cycle Activities

Institutions Institutions Task

Option 1:“government” Option 2: “private”

Awareness raising EEAA/ CDM Unit/ CDM Committee.

NGOs

Training in GHG mitigation technologies

Governmental Institutions Private Firms

Continuous monitoring and analysis of international GHG offset market

EEAA/ CDM Unit/ CDM Committee

Supporting the Egyptian government in international negotiations

Ministry of Foreign Affairs / EEAA/ CDM Unit/ CDM Committee

Attraction of foreign investors for CDM in Egypt and facilitation of matchmaking between investors and Egyptian hosts

Ministry of Foreign Affairs / EEAA/ CDM Unit/ CDM Committee

The Federation of Egyptian Industries (FEI), NGOs, Media & Public Relation Firms

Tasks in the CDM Project Cycle

Project eligibility measures, National and international

Validation Registration is the formal acceptance of a validated project as a CDM projectMonitoring is the systematic surveillance and measurement of after being implemented aspects related to the implementation and the performance of a CDM Verification is the periodic independent review and ex-post determination by a designated international entity of the emission reductions by sources and/or enhancements of removals by sinks that have occurred because of a specific project.Certification is the written assurance by a designated international entity that during the verification period a project has achieved the stated emission reductions and/or removals by sink in compliance with all project performance criteria.A ‘Certified Emission Reduction’ (CER) unit shall be equal to one metric ton of CO2 equivalent emissions reduced or sequestered arising from a CDM project.Issuance is the formal release of CERs based on a certification by a designated international entity. International entities shall certify the emission reductions resulting from a validated project upon request from a project participant.

CDM Project Cycle Flow Chart

Key Actors Tasks/Functions Governmental Private Companies

- National CDM committee - CDM implementation unit - Project participants - Under ministerial bodies - Development Agencies

- Project participants - Engineering/ - Consulting companies - NGOs - Such as FEI, EEC

Project Identification Project Formulation

Baseline Determination

- under ministerial bodies

(other than the above bodies) acting as operational entities

- CDM implementation unit - Project participants

- Project participants - Private Consulting /Auditing Companies

acting as Operational entities

CDM Project Validation

- Project participants - Project participants

Project Implementation And Operation

- Project participants - Project participants

CER Monitoring/Reporting

- International or Domestic

Accredited body acting as Operational entities

- International or Domestic Accredited body acting as Operational entities CER Verification

- Int’l or Domestic Accredited body acting as Operational entities

- Int’l or Domestic Accredited body acting as Operational entities

CER Certification

International Body

CDM Executive Board Issuance of CER

A Note on Transaction Cost

The transaction costs and any rent seeking in CDM projects should be minimized as much as possible in order to achieve a more efficient and cost-effective CDM mechanism in Egypt. The anticipated CDM unit will, through its “one stop shop”, facilitating and coordination role be to a large degree responsible for low transaction costs in CDM projects. wherever this issue need to be addressed on more global level under UCCEE/UNEP project and on national level at the time of implementation of phase II.

Options in CDM DesignArrangements for International CDM Co-operation

Unilateral CDM

Bilateral and Multilateral CDM

Groups of Small ProjectsFast Track for Small Projects

III. Country Specific Issues In Relation With The UCCEE/UNEP Project

Objectives Assigned to the Work PlanThrough the period from 2003 to 2005, it is required to realize the

following objectives:• Establishment, development of an operational Designated

National Authority Of CDM • Awareness enhancement • Capacity development among relevant national stakeholders• Development of a pipeline of marketable CDM projects, this

‘shopping list’ includes all the necessary documentation for soliciting investments. The package will be dynamically overviewed and updated.

The Designated National Authority (DNA) is a part of a National well-planned institutional setting. The following are the suggested institutional arrangements.

III.1. Institutional Arrangement For The Implementation Of The Project

A suggested regulatory framework that supports CDM activities is defined in the following arrangements.

III.1.1. Focal point The Egyptian Environmental Affairs Agency (EEAA), through its

Climate Change Unit (CCU), is the official technical focal point for climate change activities in Egypt. In this capacity, the EEAA/CCU is also identified as the Focal Point Agency (FPA) for the duration of the present project.

At some time in the future, a CDM Unit (also referred to in UNFCCC terms as a Designated National Authority (DNA)) is expected to be established. The establishment and development of this CDM Unit or DNA is a principal objective of the project.

III.1.2. National institution (Technical Support Entity) A Technical Support Entity (TSE) will be assigned to implement

certain project tasks on behalf of the FPA, under direct contract to the UNEP Collaborating Center on Energy and Environment (UCCEE). The entity UCCEE is the supporting organization contracted by UNEP to implement the present project.

The relationship of the TSE to the FPA is specified in a Memorandum of Understanding between the FPA (EEAA/CCU) and the TSE, while the assignment for the remainder of the project will be decided towards the end of Phase 1). The MoU between FPA and TSE will also refer to the contractual relationship of the TSE to the UCCEE. The draft MoU is attached as Appendix 3.

Technical support on methodological issues related to the CDM will also be provided to the FPA and TSE by the Regional Center (APEX in the case of the region in question).

EEAA

CCU

DNA

TSE Preparation for Phase 2

UCCEE

Contractualrelationship

Memorandum ofUnderstanding

MoU

Regional centerAPEX

(EEAA/CCU)=FPA

Technical support onmethodological issues related to

CDM

Suggested relations between the main entities involved in the CDM activities

For the first year, the CDM Unit is suggested to be consist of: - A full-time executive director- A secretariat consisting of an expert for training and public relation including mass media, an economist,

preferably with technical background.

The direct human resources needed for the CDM Unit itself for the first two years are estimated within 3-5 staff. They are supposed to be assigned primarily by EEAA. After initiation of CDM projects for implementation, it is expected to be self-funded by local and foreign partners of CDM.

The technical support for CDM regulatory framework is planned to be supplied by Technical Support Entity (TSE). The following are criteria for the selection of the national institution for conducting the project activities at national level.

5 to 10 years experience in conducting Climate Change studies

A good knowledge of the CDM related issues and stakes at national and international levels

Capacity to undertake focused technical studies and researches relevant to CDM

Expertise (or capacity to mobilize expertise) in the main areas concerned by CDM (Energy, Industry, Forestry, Agriculture, waste);

Capacity to undertake capacity development programs

Capacity to undertake and handle training programs and workshops

A minimum of five years experience in conducting mitigation assessments

Capacity to liaise and coordinate between the experts involved in the activities of the project at national level;

Capacity to mobilize the stakeholders to be targeted by the project

Capacity to liaise with the national authorities in charge of the climate change and CDM activities

Suggested Role of the Designated National Authority (DNA) for CDM in the Implementation of the CDM Work Plan

The national committee for CDM is expected to recommend the policies, submit them to the EEAA committee for approval and forming the CDM implementation unit and follow up of implementation to cover the following tasks:

• Preparation of the scope of work and putting rules for current work of the CDM-Implementation Unit.

• Studying and reviewing of Egypt’s NSS for preparation of the CDM project packages.

• Approving the plans, follow up the implementation of the CDM activities broken down in the modules above, while the implementation work is expected from the CDM implementation unit.

• Suggesting the legislations required for CDM implementation facilitation.• Preparing intergovernmental agreements (memorandum of

understanding) with possible investor countries or institutions for the implementation of CDM projects.

III.1.3. Participants

Participants can be defined as the Consulting engineers, representatives from private enterprises and other stakeholders receive training in key GHG abatement technologies, CDM methodologies and project cycle.

Capacity Development Among Relevant National Stakeholders• Define steps to assist local firms in developing capacity for

project validation, verification and certification. • Develop a database for local firms having capacities for CDM

project implementation, validation and verification.• Resources are expected to be provided through the available

climate change donor funding, later fees will cover the training costs. These activates are to be carried out by existing institutions such as training university centers and CDM technology suppliers.

Awareness Enhancements ActivitiesThe following is the suggested list of activities required for awareness raising:1. Definition of the targeted groups, e.g. technology suppliers for CDM

consulting engineers and registration of interested parties in database.2. Communication with the key players through networking and publications

and seminars.3. Participation and presentations in existing conferences, industry fairs and

other suitable forums (industry associations, NGOs, etc.). Organizing between 2 to 3 workshops annually for investors and candidate project hosts for promotion of GHG reduction through CDM. Emphasis will be laid on the private sector and the use of existing structures.

The CDM unit will mandate most activities to specialized companies, governmental and non-governmental institutions, making optimal use of existing skills, manpower and networks.

Resources needed for the CDM unit staff is supposed to be allocated by governmental contribution. Funding of activities and campaign is expected to stem from governmental contributions (also in kind), foreign donations and contribution by CDM customers.

Development of A Pipeline Of Marketable CDM Development of A Pipeline Of Marketable CDM Projects Projects

1. This module consists of establishment of feasibility studies for 1-3 most promising CDM project candidates in Egypt. The studies include the assessment of the technical and financial project feasibility, the evaluation of the eligibility under CDM, the evaluation of environmental and socio-economic impacts and the assessment of the proposed financing schemes.

2. The studies should be carried out in close cooperation with potential investors and candidate project host.

Resources for project package preparation are suggested to be funded by potential investors and candidate project host while supported by governmental in kind contributions.

III.2. Status of the contractual arrangements with national institution (Technical Support Entity)

and MOU with government

Currently there is a preliminary acceptance for entities that will be sharing in the institutional setting for the second phase of the project. Official documents will be coming into force by issuance and acceptance of the present report as the coming logical step towards CDM implementation.

III.3. Evaluation of institutional and overall capacity in relation with the CD for CDM project

The Focal point capacityThe Egyptian Environmental Affairs Agency (EEAA), through its Climate Change Unit (CCU), is the official technical focal point for climate change activities in Egypt. In this capacity, the EEAA/CCU is also identified as the Focal Point Agency (FPA) for the duration of the present project. In this concern, the EEAA/CCU has the full capacity for taking the responsibility of the FPA.

National institution (Technical Support Entity)For the present phase, Tabbin Institute for Metallurgical Studies TIMS assumed the responsibilities for the phase I of the present project. Tabbin Institute, TIMS has a long experience in the energy efficiency work and environmental issues. Tabbin Institute, TIMS was contracted by EEAA for implementation of the NSS on CDM.

National institution (complementary institutions for CDM)Egypt has a lot of governmental and non-governmental entities that are eligible for sharing in the CDM activities. These entities are well defined in item (II.1)

Complementary Outputs Suggested To The Work Plan

• Implementation of the first pilot project, establishment of national criteria and baseline for CDM

• A published annual Egyptian CDM report, • An annual training package on CDM activities

Investor Relations and Monitoring of International Offset Market”

• Continuously monitoring of the size, prices and characteristics of the international GHG offset market.

• Continuously monitoring of the international and national GHG related regulations and procedures such as the UNFCCC, GHG taxes and levies, trading systems etc. to early identify demand for CERs.

• The public relation expert will handle the investor relations.

• Development and continuous update of a short list of possible foreign investors.

• Publishing flyers and articles for the promotion of CDM projects in Egypt.

• Establishment of communication channels with commercial attachee’s in the Egyptian Embassies and the Ministry of Foreign Affairs.

• Presentation of CDM projects opportunities in Egypt at international conferences e.g. by holding side events at the COPs.

• Pro-active approach to possible investor institutions, such as PCF, the Dutch Center CERUPT programme, commercial carbon funds and carbon brokers.

The investor relation activities will be carried out in close cooperation with existing investment institutions such as GAFI, FEI. Funding of activities is expected to stem from governmental contributions (also in kind) and foreign donations.

CDM Handbook for Egypt

Evaluation / Feedback / Corrections”1. All outputs of other modules are to be reported to a central

coordination office in the CDM implementation unit.2. The performance indicators of all the modules are to be

developed.3. A comparison on regular intervals of the performance

indicators will lead to a fair evaluation of the whole components of CDM system.

4. Relevant corrections have to be suggested by the coordination office and feed-backed to the National CDM committee.

For transparency and justice this module must be funded by national governmental fund.

Iv. Status of objectives, outputs & activities in phase IObjectives, outputs and activities in phase-I are realized. Tasks and outputs targeted are achieved. The present report with appendices encounters the main outputs.

IV.1.Tasks in phase I: completion of a work plan for phase II presentation of the workplan for phase II, and description of the activitiesTasks declared in the “Memorandum of understanding between the Egyptian Environmental Affairs Agency (EEAA) and the Tabbin Institute for Metallurgical Studies (TIMS) regarding Phase 1 of the UNEP project “Capacity Development for the Clean Development Mechanism”, Ref [6] are completed.Annex-I encounter the work plan. The work plan is represented in the workshop held in Dec 17-18, 2002. The concerned parties, EEAA, APEX and TIMS as well as Egyptian stakeholders were represented in the workshop. The work plan earns a preliminary concurrence between the concerned parties, EEAA, UNEP representative, APEX and the technical support entity of phase I, TIMS. The plan as observed from the concerned parties is completely in line with the recommendations and preliminary time expectations of the issued NSS on CDM.The work plan as declared in Annex-I encounter a detailed description of the activities.IV.2. Outputs: workshop proceedings & presentation files, work plan, etc.The present progress report declares the main required outputs as defined in the statement of work of phase I, the preparation phase of the project. Appendices encounter the details.Annex-I encounters the “Detailed National Work Plan” of phase II.Annex-II: encounters the “Workshop proceedings & presentation files”.

V. Notes From Initial Contacts With StakeholdersRegarding the discussions held in the workshop held in Dec 17-18, 2002, the following are the main outputs:• The First National Workshop on CD for CDM was held in the Federation of Egyptian Industries (FEI) in Cairo on 17-

18/12/2002 as a result of cooperation between EEAA & TIMS (E2RC) with the assistance of UCCEE & APEX-Regional Center for North Africa and the Middle-East (Tunisia).

• The participants declared their requirement to participate in the future discussions for determining the baseline, in receiving training on the CDM topics, in networking, …etc.

• The necessary integration & cooperation between the different International Funds in Egypt in order to avoid any contradictions between the ongoing projects.

• The participants highlighted the awareness of the donors in dealing with projects by starting with reviewing the previous works dealing with their projects. They focused on the specific nature of the CDM project, which depends upon the desire of different parties to work together in a specific project, accepted from a certain authority according to certain criteria. They clarified the definition of CDM market as a relationship between seller & buyer, who will make use of the DNA if exists in the country, otherwise this country will be unattractive as a result of high transaction cost.

• The participants requested the representation of the private sector or NGO’s in the DNA. The request earned a general acceptance.

• It is accepted to start implementation by the lowest carbon price projects with respect to the international price despite the quantity of carbon emission is low.

• The necessity of enlarging the law of investment by adding new articles regarding the investment in CDM projects. The taxes on these projects should also be considered. The growing role of commercial representatives in the Egyptian Embassies abroad in this concern (spreading the projects) has to be considered. A general stress was raised upon the importance of the participation of the Investment Authorities in the activities of the CD projects, whether by changing or renewing the existing laws or by training on the new issues to attract more and more projects.

• Small-scale projects with high emission are of big concern. They can be collected in bundles. This is suitable in Egypt for the case of foundries. But, care must be taken with regard to the transaction costs. In this concern there was a question regarding the definition limits of these projects.

• Dr. Amous clarified that there will be no project financed 100% through the CDM (about 20% from the donors and 80% from other international and/or national investors). This will be the role of bankers to get involved in the process by training them

• A declaration was raised to the stakeholders that the NSS on CDM contains the study of the carbon inventory of Egypt and the situation of Egypt in the international market of carbon abatement. Also, it contains a vision bout the organization of the DNA, the role of the TSE, capacity building, staffing of the technical secretariat, the role of EEAA & the role of other stakeholders.

Annex-I: Detailed National Work Plan

Suggested Work Plan For The Implementation Of Phase 2 Of The Project In Egypt

A period of three years is assigned for the present project phase number two for implementation. It starts from 2003 and ends at 2005. The following figure illustrates the suggested work plan.

Figure ( 1 ): Work plan for the implementation of phase 2 of the project in Egypt (ATTCHED)

Annex-II: Workshop proceedings, participants & presentation files

The “Report on the First National Workshop on Capacity Development (CD) for the Clean Development Mechanism (CDM)”, TIMS, Cairo 18/12/2002 is attached.

Presentation files are attached.A list of participants is attached.

Annex-III: Important issuesAnnex-III. 1. Current Initiatives for GHG ReductionCurrently, many donors’ initiatives are being implemented. These initiatives can be classified into institutional, technical and strategic initiatives. The coordination between these initiatives and CDM activities could support or contribute to specific needs for CDM realization in Egypt. Also, lessons learnt from donor funded projects may help in replicating these projects as CDM projects. The following are examples of these initiatives:1. Institutional Initiativesa. National Committee on Climate ChangeAn inter-ministerial committee was formed in 1997 representing a wide range of governmental and non-governmental stakeholders. b. Climate Change Capacity Building Phase IIThis initiative is a continuation of the previous GEF-assisted Capacity Building Project aimed at institutionalizing climate change issues on a national level. This second phase focuses on assessing technology needs for adaptation measures for coastal zones, agriculture, and water resources. Other activities include studying impacts on coral reefs and human health, and assessing technology needs to alleviate negative effects.2. Technology/Market Initiatives1. Technology Cooperation Agreement Pilot Project (TCAPP) b. Promotion of Wind Energy for Electricity Generationc. Fuel Cell Bus Demonstration Projectd. Hybrid-Electric Bus Technology in Egypte. Natural Gas Motorcyclesf. Methane Recovery from Landfillsg. The Integrated Solar Thermal/Natural Gas Power Plant at Kuraymath. The Energy Efficiency Improvement and Emissions Reduction Projecti. Fuel Switching

Details of technology/market initiatives are given in item (II. 2.2).

3. Other Activities in Egypt for GHG Emissions Reduction 1. Egyptian Energy Efficiency Council (EEC) programs 1. Egypt’s National strategy study on CDM Project and Ideas