South Africa’s Designated National Authority for Clean Development Mechanism

South Africa’s Designated National Authority for Clean Development Mechanism

Designated National Authority for

Clean Development Mechanism

+27 12 317 8309

OverviewOverview

History of global efforts & response to CC

CDM basics

SA response to CC

Functions & institutional arrangement - DNA

DNA evaluation & approval procedure

Projects profile

Key role players in CDM

Conclusion

History of international efforts and response to climate change

History of international efforts and response to climate change

UNFCCC adopted in 1992 (Rio Conference/UNCED)Provide framework for mitigation & adaptationStabilization of GHG concentrationsParties meet annually - COPs

Kyoto Protocol (1997) – Update to UNFCCC & primary international agreement on combating climate change

Negotiated in Kyoto, in Dec.1997, opened for signature in Mar 16 1998, and closed in Mar 15 1999.Came into force Feb 16, 2005 following ratification by Russia on Nov 18, 2004.168 countries ratified the Protocol - to dateCommitments by Parties to reduce GHG’s (Annex 1) by 5.2% below 1990 levels and Non-Annex 1 to sustainable development (SD) goals.Mechanisms – Carbon Trading, Joint Implementation (JI) & CDMAllow Annex 1 entities to meet their GHG targets by purchasing GHG emission reductions and/or investing in projects elsewhere

The CDM BasicsThe CDM Basics

CDM – Annex1 countries with GHG reduction commitment to invest in emission reducing projects in developing countries as an alternative to what is generally considered more costly emission reductions in their own countries

Support sustainable development

Project-based; incentive-based & market-driven

Goals:

Contribute to the Convention

Assist Annex1 achieve ER targets

Assist Non-Annex1 achieve sustainable development

Characteristics:

Activities must lead to measurable reductions – tradable

Reductions must be additional (would not have occurred in absence of the project activity)

Participation is project activity voluntary

CDM Operational StructureCDM Operational Structure

CDM – the baseline conceptCDM – the baseline concept

A project’s GHG emission reductions need to be judged against some baseline

The baseline is “what would have happened in the absence of the CDM”

Additionality

Baseline

Project Emissions

CO2

Time (yrs)

CERs

SA response to climate changeSA response to climate change

SA acceded to UNFCCC in 29 August 1997Ratified the Kyoto Protocol in 31 July 2002Dept of Environmental Affairs & Tourism (DEAT) – national focal point for climate change

Coordinates CC activities – NCCC, COPs, CSDs etcNational Communications to UNFCCCDevelopment of environment legislation and regulatory frameworks - National Climate Change Response Strategy; Air Quality Act

Other instruments – DME’s policies and targets on energy renewable and energy efficiency

CDM project cycle

CDM MarketCDM Market

Project Idea Note (PIN)Project Idea Note (PIN)

ScreeningScreening

Project Development DocumentProject Development Document(PDD)(PDD)

Letter of ApprovalLetter of Approval

Project RegistrationProject Registration

Project MonitoringProject Monitoring

Verification, CertificationVerification, Certification

Letter of No ObjectionLetter of No Objection

National ReviewNational Review

DNADNAMandatoryMandatory

ResponsibilityResponsibility

Validation (OE)Validation (OE)

CDM project cycle…cont

Preparation and review of the Project

Baseline Study and Monitoring and Verification Plan (MVP)

Validation process

Negotiation of Project Agreements

Periodic monitoring, verification & certification

Construction and start up

Project completion

3 moths

2 months

2 m

onth

s

3 months

1-3 years

Up

to 2

1 ye

ars

Functions of DNA Functions of DNA

DNA establishment within DME approved by Cabinet in 2003Regulations establishing DNA gazzetted in July 2005 under Section 25 of the NEMA Act of 1998DNA established in December 2004DNA functions:

Regulation function:Project evaluation and approval in accordance with section 40(a) of the Marakech Accords.

Promotion function: To promote and facilitate the development of CDM projects in South AfricaSecure an adequate share of CDM investment in South AfricaTo promote CDM projects of a developmental natureEnsure that the mechanism is in the national interest (Gov. objectives)

Institutional Arrangement to handle CDM in SAInstitutional Arrangement to handle CDM in SA

Steering Committee

1. DTI2. DME3. DEAT4. DST5. DoT6. NT7. DoA8. DWAF9. DoH10. DFA Promotions

Sub-Committee

Designated National Authority

(Director General of DME)

1. DTI2. DME3. Parastatals4. Private Sector5. NGOs

“Oversight”

CDM Evaluation & Approval ProcedureCDM Evaluation & Approval Procedure

Evaluation & approval of submitted PDD should be read in conjunction with:

Project approval procedure of the DNA (DME, 20th

November 2004);

SD criteria for approval of CDM projects by the DNA

(DME, 14th October 2004); and,

Any regulations promulgated with regard to the DNA

(Regulation Gazette No 8275)

DNA project approval process

SD Criteria for CDM project approvalSD Criteria for CDM project approval

National Environmental Management Act (NEMA) definition of sustainable development

the integration of social, economic and environmental factors into planning, implementation and decision making so as to ensure that development serves present and future generationsThis definition of sustainable development will inform the decisions of the DNA

SD CriteriaEconomic: Does the project contribute to national economic development?Social: Does the project contribute to social development in South Africa?Environmental: Does the project conform to the National Environmental Management Act principles of sustainable development?

SD Criteria…cont.SD Criteria…cont.

Social Environment Economic

• Opportunities to facilitate gender equality,

•Stimulate Socio-economic development, job creation and poverty alleviation,

•Offers BEE investment opportunities,

•Improved health for all.

• RE helps reduce GHG emissions (climate change mitigation),

• Helps reduce environmental pollution and associated adverse health effects,

• Provides diversity of supply and thus energy security

• Job creation,

• Community & industrial economic dev.

• Off-sets energy imports (BOP),

• Contribute to new generation capacity,

•Helps with DSM

Key Role Players in CDMKey Role Players in CDM

Project Developers- Development of PIN or PDD; Request for Host Country

approval; - Project registration as CDM

Designated Operational Entities

- Validation; Verification; Certification

CDM Executive Board

- Project registration; Approval of methodologies; Issuance of CERs; Accreditation of entities

Key Role Players in CDM….cont..Key Role Players in CDM….cont..

Host Country (DNA)

- Establishment of institutional & legal frameworks; Ensures Projects contribute to SD; Promotion of CDM

Project Owners (e.g. municipality)

- Project identification, funding & implementation

Businesses

- Investment

NGOs & General Public

- Projects contribute to SD; Promotion of CDM; Watch Dogs!!!

SA emissions in international comparison

Energy industries

45%

Industrial energy14%

Transport11%

Other energy7%

Fugitive emissions2%

Industry8%

Agriculture9%

Waste4%

Share of national emissions, CO2, CH4 and N20, 1994 GHG inventory

Non-energy emissions

Total: 380 Mt CO2- equivalent

Sectors for potential projectsSectors for potential projects

Energy supply and demand – Energy efficiency (EE), renewable electricity & energy, cogeneration, cleaner coal for generation; fuel switch from coal to gas

Waste sector – composting; energy (electricity) generation

Mining – CH4 reduction from coal mines; EE

Agriculture – afforestation & reforestation; fire controls; improved management of woodlands; biofuel production

Transport and automotive sectors – Improved public transport, urban planning & traffic management; vehicle fuel switch; vehicle efficiency, road to rail transport

Manufacturing – industrial EE; structural changes to less energy & emissions-

intensive; boiler conversion to gas Residential, public & commercial buildings – fuel switch, solar heating, energy management, EE building design (thermal-efficiency), EE appliances

Overview of projects submitted for approvalOverview of projects submitted for approval

54 projects (19 PDDs and 35 PINs) received to date

10 PDDs registered with EBKuyasa Low-Cost Housing Energy Efficient Project (Cape Town) – 27/08/2005; Gold Standard Award; reduces 6,500 t eCO2 per annum

Lawley Fuel Switch Project (Lenasia) – 06/03/2006; 19,000 t eCO2/yr

PetroSA Biogas to Energy Project (Mossel Bay) – 29/09/2006;

29,000 t eCO2/yr

Rosslyn Fuel Switch Project (North Pretoria) – 29/11/2006; 107,000 t eCO2/yr

Durban Landfill Gas to Energy Project (Durban) – 15/12/2006; 60,000 t eCO2/yr

Tugela CFB10 Conversion from Coal to Bark Fired (Tugela) – 12/02/2007; 70,000 t eCO2/yr

Overview of projects submitted …contOverview of projects submitted …cont

Mondi Biomass Project (Richards Bay) – 20/05/2007; 222,474 t eCO2/yr

Omnia N2O Destruction Project (Sasolburg) – 03/05/2007; 576,000 t eCO2/yr

EnviroServ Chloorkop Landfill Gas Project (East Rand) – 27/04/2007; 188,000 t eCO2/yr

Sasol Nitrous Oxide Abatement Project (Witbank) – 25/05/2007; 610,000 t eCO2/yr

Projects cover the following types:Fuel switch; Cogeneration; Energy efficiency; Hydro power, Energy generation from renewables

Barriers to CDM developmentBarriers to CDM development

Lack of project development capacity

Lack of financing - project development & implementation

High transaction costs - CERs

Municipal Finance Management Act (MFMA)/Public Finance Management Act (PFMA)

Lack of capacity to develop methodologies/technologies

Uncertainties around post 2012 regime

Tax implications of CERs

Low electricity cost vs clean/renewable energies

ConclusionConclusion

DNA has commissioned three studies:CERs taxation implications (completion - September 2007)

Review of SD criteria (completion - August 2007)

DNA rolling out CDM awareness raising & capacity building initiatives

DNA supports establishment of functional DNAs in other African countries

Useful LinksUseful Links

www.dme.gov.za/cdmwww.info.gov.za/gazette/regulation/2005/27788a.pdf

http://cdm.unfccc.int

www.pointcarbon.com

www.ipcc.ch

www.un.org/esa/sustdev/csd/policy.htm

www.ieta.org