seminar on mobilizing funds for destruction of ozone depleting substances (geneva, 2010/06/14)

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Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14) Clemens Plöchl www.energy-changes.com

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Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14). Clemens Plöchl www.energy-changes.com. Presentation Overview. Company Profiles Commercial Incentives to collect and destroy ODS Consideration of Carbon Markets Accomplishments to date. - PowerPoint PPT Presentation

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Page 1: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Seminar on Mobilizing Funds for Destruction of Ozone Depleting

Substances(Geneva, 2010/06/14)

Clemens Plöchlwww.energy-changes.com

Page 2: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Presentation Overview

• Company Profiles

• Commercial Incentives to collect and destroy ODS

• Consideration of Carbon Markets

• Accomplishments to date

Page 3: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Company Profiles

• SEG Umweltservice GmbH http://www.seg-online.de

Over 20 years of experience in recovering, transporting and destroying ODS from domestic refrigerators. SEG annually de-manufatcures 1.5-2 Mio. domestic fridges in 15 countries on 30 sites.

• USG Umweltservice GmbH

manages and trades commodities flows generated by SEG´s de-manufatcuring activities.

• Energy Changes www.energy-changes.com

develops and operates carbon reduction activities(CDM/JI/VCS/CAR) and renewable energy projects (e.g. first Kyoto landfill gas project ever, first CDM biofuel methodology, first VCS ODS destruction submission etc…)

Page 4: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Commercial Incentives to collect and destroy ODS

Recycling (steel, copper and plastics)

Management of hazardous materials – Ozone– Climate– Local Environment

Energy Efficiency Programs

In industrialized countries regulations such as WEEE are creating markets for end of life domestic refrigerator recycling in developing countries other financing mechanism are urgently required such as the carbon market

• Producer Responsibility• Governmental responsibility • Market mechanisms• Utilities (Energy Efficiency)• International Funding

Page 5: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

GHG Markets

Carbon Market at a GlanceThe overall carbon market continued to grow in 2008, reaching a total value transacted of aboutUS$126 billion (€86 billion) at the end of the year, double its 2007 value (Table 1). ApproximatelyUS$92 billion (€63 billion) of this overall value is accounted for by transactions of allowances and derivatives under the EU Emissions Trading Scheme (EU ETS) for compliance, risk management,arbitrage, raising cash and profit-taking purposes. The second largest segment of the carbon marketwas the secondary market for Certified Emission Reductions (sCERs)

Source: World Bank

Page 6: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

VER = Voluntary Emission Reduction

BUYERS are

individuals that may wish to offset GHG emissions linked to their way of life (residential energy use, commuting, travel),

to customer-facing companies that wish to offset GHG emissions from their operations or from specific products or events (sports, concerts, conferences but also travels, mortgages, utility bills, shipping and other goods and services their customer may wish to render carbon neutral)

to high emitting companies that may wish to voluntarily offset the GHG emissions fromsome portion of their activities that they cannot immediately reduce through their operations.

Problem of non-standardization

The rising market for VERs

GHG Markets

Page 7: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

the additionality of the project (making sure the project is not claiming reductions that would already occur),

the actual existence of the emission reductions (making sure the project activity is monitoredand that emissions reduction claimed are verified),

the exclusion of double-counting (making sure the same emission reductions are not sold to several buyers at the same time),

the permanence of the reduction (making sure the emission reductions are not temporary) and the existence of community benefits.

Value Drivers for VERs

Reported Prices between USD 1-15/VER

GHG Markets

Page 8: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

www.v-c-s.org

Voluntary Carbon Standard VCS

GHG Markets

The VCS Program provides a robust, new global standard and program for approval of credible voluntary offsets

VCS offsets must be real (have happened), additional (beyond business-as-usual activities), measurable, permanent (not temporarily displace emissions), independently verified and unique (not used more than once to offset emissions).

The founding partners of the VCS are The Climate Group, the International Emissions Trading Association (IETA) and the World Business Council for Sustainable Development.

Page 9: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

ODS Destruction in the VCS

GHG Markets

On January 26th 2010 VCS has updated its scope to include Ozone Depleting Substances General rules on:

•Eligible ODS•Regulatory Surplus•Evidence of origin of ODS,•Project start Date•Destruction technology and efficiency,•Monitoring of ODS•GHG emissions from substitute Substances•Eligible Products•Imported products

Thos rules must be specified in concrete methodologies

• The first methodology to the VCS was submitted by Energy Changes and USG on May 3rd 2010 “Greenhouse Gas Emission Reductions By Recovering and Destroying Ozone Depleting Substances (ODS) from Products”

• Public stakeholder review was closed June 3rd 2010

Page 10: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

http://www.climateactionreserve.org

Climate Action Reserve CAR

GHG Markets

The Climate Action Reserve is a national offsets program working to ensure integrity, transparency and financial value in the U.S. carbon market.

Carbon offset credits known as Climate Reserve Tonnes (CRT) generated from such projects; and tracking the transaction of credits over time in a transparent, publicly-accessible system. Adherence to the Reserve’s high standards ensures that emissions reductions associated with projects are real, permanent and additional, thereby instilling confidence in the environmental benefit, credibility and efficiency of the U.S. carbon market

Page 11: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

ODS Destruction under CAR

GHG Markets

On February 3rd 2010 CAR issued two “Protocols”

Article 5 Ozone Depleting Substances Project Protocol Destruction of Article 5 Ozone Depleting Substances Banks

and

U.S. Ozone Depleting Substances Project Protocol Destruction of U.S. Ozone Depleting Substances Banks

Page 12: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Differences in Voluntary Standards

GHG Markets

To view all listed contracts click here.

                                                                       

VCS CAR CCXTrading Over the Counter

(OTC)OTC Exchange

Methodologies Project based bottom up

Top down Top down

Geographical coverage (projects)

World Wide US/Article 5 US (at least for ODS)

ODS coverage Work in progress Work in progress Yes

Current expected prices

0.5-4 EUR 3 EUR 1 EUR

Page 13: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

CFC-11 and CFC-12 NON KYOTO GASES

CFC-11 Blowing agent PU foam GWP=4750

CFC-12 Refrigerant cooling circuit GWP=10900

Accomplishments to Date

2006 Start of Methodological Development2007 Contacting VCS2008 Submitting idea to CAR2009 Finalizing standards under VCS and CAR2010 (April) First projects start in Article 5 countries based on Carbon Trading

Page 14: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Emission Reductions BrazilBaseline CFC-12

• 150.000 units/year•128g CFC-12/unit•90% technical recovery rate•0% Baseline recovery rate

Year Treated appliance/year CFC-12 bank/unit MCFC-12,y RrCFC-12Recovery_Project RrCFC-12Recovery_Baseline GWPCFC-12 BECFC-11,y

[unit] [tCFC-11/unit] [tCFC-11] [tCO2e ]A B C=AxB D E F G=Cx(D-E)xF

2009 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2010 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2011 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2012 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2013 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2014 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2015 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2016 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2017 150,000 0.000128 19.20 0.90 0 10900 188,352.00 2018 150,000 0.000128 19.20 0.90 0 10900 188,352.00

1,883,520.00

1.26 t CO2/unitBaseline emissions

Project Example 1

Page 15: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Emission Reductions ExampleBaseline CFC-11 Brazil (shreddering landfilling)

• 150.000 units/year•315g CFC-11/unit•90% technical recovery rate•0% Baseline recovery rate•AF= 1 (open burning)

Year Treated appliance/year CFC-11 bank/unit MCFC-11,y AF RrCFC-11Recovery_Project RrCFC-11Recovery_Baseline GWPCFC-11 BECFC-11,y

[unit] [tCFC-11/unit] [tCFC-11] [tCO2e ]A B C=AxB D E F G H=CXDx(E-F)xG

2009 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2010 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2011 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2012 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2013 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2014 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2015 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2016 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2017 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31 2018 150,000 0.000315 47.25 0.43 0.90 0 4750 86,857.31

868,573.13

1.35 t CO2/unitBaseline emissions

Project Example 1

Page 16: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Emission Reductions BrazilProject emissions Theory Summary

0.02 t CO2/unitProject emissions

1.35 t CO2/unitBaseline emissions

1.26 t CO2/unitBaseline emissions

CFC-11

CFC-12

2.61 t CO2/unitSum

Total 2.59 t CO2/unit

Project Example 1

Page 17: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Example Carbon Finance

Carbon Finance – Structure I

State (owned) Aid Bank

Commercial Bank

Letter of comfort + $ in case of project default

Guarantee in case of loan default

Buyers of CERs

Owner 1

Project Developer

Owner 2

Loan in case of project default

Advance payment for investment + $/CER

CERs

Guarantee in ca

se of

project default

Advance Payment by Buyer

$ for Guarantee

Page 18: Seminar on Mobilizing Funds for Destruction of Ozone Depleting Substances (Geneva, 2010/06/14)

Important (future) Issues

• Before ODS can be destroyed it has to be collected

• Specifics of the carbon markets (income vs. upfront, continuous vs. one time grant, rigorous monitoring and verification e.g RAL Standard RAL- GZ 728 )

• Methdologies around the phase out of HCFCs

• Voluntary Carbon Market alone is not enough, we need compliance markets