Practical examples of international CDM projects lessons for vietnam

UNIDO Vietnam Support for CDM projects in the Industrial sector: Pilot Project in Co-operation with the Austrian Industry Training Sessions on the Kyoto CDM Practical examples of International CDM Projects & Lessons for Vietnam Mike Bess Hanoi, Vietnam 26th and 27th June 2006 © ESD 2006 Summary • • • • Current Vietnam Project Current Vietnam PDDs Status of Vietnam CDM development Key issues in Vietnam CDM development © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field • • Project 0152 : Rang Dong Oil Field Associated Gas Recovery and Utilization Project Participants: – – – – • • Petrovietnam (Vietnam) PVEP (Vietnam) JVPC (Japan) ConocoPhillips (UK) Rang Dong Oil Field (off SE coast Vietnam) Vung Tau City (Raria-Vung Tau Province) gas processing plant © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field - Location © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field - Description • • Associated gas from oil production captured on oil platforms Compressed at sea, then, piped to Vung Tau City where processed to: – – – • ‘Dry gas’ (CH4-methane) for electricity generation (substitutes for oil & gas) LPG (propane & butane) for domestic cooking use Some dry gas for fertilizer, some condensate for other industry Emission reductions occur on electricity production © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field- Schematic © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field- Schematic © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field – CO2e Reductions © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field – CO2e Reductions • AM009 Methodology chosen: ‘Recovery and utilization of gas from oil wells that would otherwise be flared, V2’ • AM009 was developed specifically for the Rang Dong Oil Field CDM Project • Rang Dong CDM registered with CDM EB on February 2006 • See UNFCCC web site: http://cdm.unfccc.int /Projects/DB/DNV-CUK1133472308.56/view.ht ml © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field – CO2e Reductions • Methodology only counts reduction in CO2 relative to avoided gas flaring – very conservative, but easy to prove • Does not calculate efficiency gains (emission reductions) for natural gas for oil in electricity generation – again, easier to make case • Does not calculate substitution of LPG for current LPG (imports) © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field – Baseline • Baseline is simple: – Base case is ‘business as usual’, i.e gas flaring – Project is alternative, i.e gas recovery instead of flaring (reduction in CO2) – Key lesson from Rang Dong PDD baseline is: KEEP IT AS SIMPLE AS POSSIBLE!!! © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field – Assumptions PDD makes assumptions very clear: © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field – Compare options PDD makes assumptions very clear: © ESD 2006 Current Vietnam CDM: Song Muc Hydropower Description • Project is a retrofit of earlier (1980) hydropower station that operated for very short time • Project aims to install new state-of-art turbines, penstock, governors, etc • Will have capacity of 2MW, power generation of 200 MWh pa • Cost US$2 mi • Will replace fossil fuels on grid (reduce GHG emissions) © ESD 2006 Current Vietnam CDM: Song Muc Hydropower PDD • AMS-I.9 Small scale methodology fro grid-connected renewable electricity generation sought • http://cdm.unfccc.int /Projects/request_reg.html (registration request on UNFCCC site) © ESD 2006 Current Vietnam CDM: Tra Linh Hydropower PDD - Description • • • • • • • • PIN & first version PDD prepared units small hydro 2.4MW (x3 = 7.4MW) Qualifies as ‘small scale’ under Marrakech Accords to KP (2001) Type CDM – small scale renewable energy for a grid (EVN – Vietnam Electricity) Anticipated annual reductions – 18 000 tCO2e pa, 75 000 tCO2e from 2008 to 2012 (CP) PDD clearly states the ‘sustainable development benefits’ under the CDM PDD states avoided 170 000 tCO2e on national grid for ten years, but, needs to set out reductions during CP Participants are: – 699 Construction Joint Stock Company – RCEE © ESD 2006 Current Vietnam CDM: Tra Linh Hydro PDD - Location Location of the project Quang Nam © ESD 2006 Current Vietnam CDM: Tra Linh Hydro PDD – Project Boundary © ESD 2006 Current Vietnam CDM: Tra Linh Hydro PDD - Design Fore bay 7.2 MW © ESD 2006 Current Vietnam CDM: Tra Linh Hydro PDD - CERs Year July 2008 – June 2009 16,984.6 July 2009 – June 2010 16,984.6 July 2010 – June 2011 16,984.6 July 2011 – June 2012 16,984.6 July 2012 – June 2013 16,984.6 July 2013 – June 2014 16,984.6 July 2014 – June 2015 16,984.6 July 2015 – June 2016 16,984.6 July 2016 – June 2017 16,984.6 July 2017 – June 2018 16,984.6 Total emission reduction during the crediting period of 10 years 169,846 Total number of crediting years © ESD 2006 Annual estimation of emission reductions, tCO2 eq 10 Current Vietnam CDM: Tra Linh Hydro PDD - Additionality • Clearly sets out barriers: – Investment – Vietnam investors can make more money in other sectors – Policy – lack of renewable energy policy; – EVN has monopoly – so, PPA (including economic price) difficult to negotiate – Competition for funds with state-owned companies, © ESD 2006 Current Vietnam CDM: Tra Linh Hydro PDD – Case for CDM • • • • • • Increases IRR of project Increases access to international funding Reduces risks of project Incentivises investors to come into sector Results in local development Results in reduced GHG emissions © ESD 2006 Current Vietnam CDM: Sector/project ideas • • • • • • • • Pulp & paper boiler replacement Energy efficiency in steel Waste heat recovery from cement Improve energy efficiency at rubber plant Biomass waste for cogeneration (CHP) Fuel switch natural gas for HFO Landfill Cogen & EE in beer factory © ESD 2006 Current Vietnam CDM: Sector/project ideas • Pulp & paper boiler replacement: • Energy efficiency in steel • Waste heat recovery from cement: AM 0024 Methodology for greenhouse gas reductions through waste heat recover y and utilization for power generation at cement plants ACM 0003: Emissions reduction through partial substitution of fossil fuels with alternative fuels in cement manufacture - Version • Improve energy efficiency at rubber plant AM0007 Analysis of the least-cost fuel option for seasonally-operating biomas s cogeneration plants Biomass waste for cogeneration (CHP) • Fuel switch natural gas for HFO • Landfill • Cogen & EE in beer factory © ESD 2006 Thank you! Mike Bess Director, International Division Energy for Sustainable Development Ltd +44 1225 816 808 mike@esd.co.uk www.esd.co.uk © ESD 2006 [...]... Participants are: – 699 Construction Joint Stock Company – RCEE © ESD 2006 Current Vietnam CDM: Tra Linh 3 Hydro PDD - Location Location of the project Quang Nam © ESD 2006 Current Vietnam CDM: Tra Linh 3 Hydro PDD – Project Boundary © ESD 2006 Current Vietnam CDM: Tra Linh 3 Hydro PDD - Design Fore bay 7.2 MW © ESD 2006 Current Vietnam CDM: Tra Linh 3 Hydro PDD - CERs Year July 2008 – June 2009 16,984.6 July... difficult to negotiate – Competition for funds with state-owned companies, © ESD 2006 Current Vietnam CDM: Tra Linh 3 Hydro PDD – Case for CDM • • • • • • Increases IRR of project Increases access to international funding Reduces risks of project Incentivises investors to come into sector Results in local development Results in reduced GHG emissions © ESD 2006 Current Vietnam CDM: Sector/project ideas • •... 2006 Current Vietnam CDM: Rang Dong Oil Field – Compare options PDD makes assumptions very clear: © ESD 2006 Current Vietnam CDM: Song Muc Hydropower Description • Project is a retrofit of earlier (1980) hydropower station that operated for very short time • Project aims to install new state -of- art turbines, penstock, governors, etc • Will have capacity of 2MW, power generation of 7 200 MWh pa • Cost... 16,984.6 Total emission reduction during the crediting period of 10 years 169,846 Total number of crediting years © ESD 2006 Annual estimation of emission reductions, tCO2 eq 10 Current Vietnam CDM: Tra Linh 3 Hydro PDD - Additionality • Clearly sets out barriers: – Investment – Vietnam investors can make more money in other sectors – Policy – lack of renewable energy policy; – EVN has monopoly – so, PPA... • Will replace fossil fuels on grid (reduce GHG emissions) © ESD 2006 Current Vietnam CDM: Song Muc Hydropower PDD • AMS-I.9 Small scale methodology fro grid-connected renewable electricity generation sought • http:/ /cdm. unfccc.int /Projects/ request_reg.html (registration request on UNFCCC site) © ESD 2006 Current Vietnam CDM: Tra Linh 3 Hydropower PDD - Description • • • • • • • • PIN & first version...Current Vietnam CDM: Rang Dong Oil Field – Baseline • Baseline is simple: – Base case is ‘business as usual’, i.e gas flaring – Project is alternative, i.e gas recovery instead of flaring (reduction in CO2) – Key lesson from Rang Dong PDD baseline is: KEEP IT AS SIMPLE AS POSSIBLE!!! © ESD 2006 Current Vietnam CDM: Rang Dong Oil Field – Assumptions PDD makes assumptions very clear: © ESD 2006 Current Vietnam. .. efficiency at rubber plant Biomass waste for cogeneration (CHP) Fuel switch natural gas for HFO Landfill Cogen & EE in beer factory © ESD 2006 Current Vietnam CDM: Sector/project ideas • Pulp & paper boiler replacement: • Energy efficiency in steel • Waste heat recovery from cement: AM 0024 Methodology for greenhouse gas reductions through waste heat recover y and utilization for power generation at cement plants... partial substitution of fossil fuels with alternative fuels in cement manufacture - Version 3 • Improve energy efficiency at rubber plant AM0007 Analysis of the least-cost fuel option for seasonally-operating biomas s cogeneration plants Biomass waste for cogeneration (CHP) • Fuel switch natural gas for HFO • Landfill • Cogen & EE in beer factory © ESD 2006 Thank you! Mike Bess Director, International Division... as ‘small scale’ under Marrakech Accords to KP (2001) Type 1 CDM – small scale renewable energy for a grid (EVN – Vietnam Electricity) Anticipated annual reductions – 18 000 tCO2e pa, 75 000 tCO2e from 2008 to 2012 (CP) PDD clearly states the ‘sustainable development benefits’ under the CDM PDD states avoided 170 000 tCO2e on national grid for ten years, but, needs to set out reductions during CP Participants... cogeneration plants Biomass waste for cogeneration (CHP) • Fuel switch natural gas for HFO • Landfill • Cogen & EE in beer factory © ESD 2006 Thank you! Mike Bess Director, International Division Energy for Sustainable Development Ltd +44 1225 816 808 mike@esd.co.uk www.esd.co.uk © ESD 2006