promoting the development benefits of the cdm: an african ... · • the solarnet and treadle pump...
TRANSCRIPT
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Promoting the Development Benefits of the CDM: An African
Case Study
By Tom Owino Oduol
The Environmental Cost Management (ECM) Centre Limited,
Nairobi, Kenya e-mail: [email protected],
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Presentation ³ Introduction
§ The Kenyan overview….development indictors § Potential CDM renewable energy areas
³ The PIAD/ECM Centre Small CDM Projects Facility….Using CDM to bring sustainable energy to rural communities § Successful capacity building models § Increased “development dividends” of marketable projects § Leveraging CDM financing for local benefits and national development
objectives ³ Results
§ Sustainable development benefits § Investor interests § Current status of project & challenges in moving forward § Level of GHG emission reductions for each project § High cost of participation (transaction & administration fees) & impact on
IRR § Next steps for the project in Kenya & the East African Region
³ The Way Forward-Required Changes to the CDM § Required changes to the CDM § Additional capacity building § Participation cost (transaction and administration)
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Location
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Statistics § Area: 593,000 km2
§ Population: 33.6 million § GDP growth: 4.3% (2004) § Per capita income : US$ 360 (2003) § Poverty level: 56% (2003) § Life expectancy: 47years § Infant mortality rate: 78 per 1,000
§ 80% of Kenya’s population live in the rural areas § More than 40% live below the poverty line § More than 80% are off-grid
Priority: Sustainable Development
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Kenyan Energy Scenario ² High dependence on
imported petroleum products: Represents 30% of Kenya’s total import bill.
² Shortfall in hydro electricity generation resulting in increased thermal generation-Large commercial & industrial consumption (60% of electricity generated)
² 68% of the national energy used is from biomass-80% of Kenya’s population live in rural areas where there is no electricity; firewood is main source of energy
Source of Energy
% age Comments
Wood fuel 68 Mainly rural communities Fossil fuel based
20 Transportation, industrial, electricity generation
Electricity 10 Others 2 Includes most renewable energy
Total 100
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Kenyan Energy Scenario ² Petroleum 2.5 million
tonnes, annual consumption § Represents about 30% of
Kenya’s total import bill. ² Industrial & commercial
sector consumes 19% of oil imports § The manufacturing sector
accounts for 13% of GDP ² National electricity
demand is 831 MW, effective capacity is 1,123 MW § Large commercial &
industrial consume 60%. ² Total electric energy
consumption in 2002 was 4,700GWh
Source of Power
MW % age
Comments
Hydro-based 707 57.3 Includes 30 MW from Uganda
Geothermal 121 9.8
Fossil fuel 398 32.2 173 MW of this total is from Independent Power Producers (IPPs)
Others 9 0.7 Total 1,235 100
Table 1: Commercial Power Generation in Kenya in 2003
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Kenyan Energy Scenario ² Wastage of energy ranges between
10-30% of primary energy input
² Savings of up to 40% energy bills have been registered by industries
² Green House Gas emissions cause of Global Warming and Climate Change
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Potential Contributions by CDM ² Solar energy: thermal & electric ² Wind energy: mechanical &
electric ² Geothermal: Kenya can meet
100% of its energy demand from geothermal power; thermal & electric
² Hydro power: mechanical & electric
² Energy efficiency improvement: Commercial, industrial & domestic
² Cogeneration by sugar companies: potential for thermal & electric power. Electric energy potential up to 150 MW
² Biodiesel ² Power alcohol
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Potential Contributions by CDM ² Kenya is among the
countries with vast geothermal resources
² Most of the hot springs are located within the rift valley in the rural areas without electricity
The Rift Valley
A Wellhead at Oserian
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Potential Contributions by CDM A Green House in Naivasha Heated by Geothermal Steam
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Potential Contributions by CDM
The Rift Valley
Pipeline from OrrPOwer to Oserian Flower Farm: Brings Both CO2 and Steam
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Potential Contributions by CDM
The Rift Valley
Pipeline from OrrPOwer to Oserian Flower Farm: Brings Both CO2 and Steam
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Potential Contributions by CDM
The Rift Valley
Oserian Flower Farm Geothermal Power Plant Generates 2.5 MW for Own Use
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Potential Contributions by CDM
The Rift Valley
Technicians Installing a Domestic Solar System in Rural Kenya Training on Choice of
Domestic Solar System
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Potential Contributions by CDM
The Rift Valley
Training on Choice of Domestic Solar System
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Potential Contributions by CDM
The Rift Valley
Introducing Domestic Solar Systems in Rural Kenya
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Potential Contributions by CDM The Rift Valley
Introducing a Solar Cooker
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Potential Contributions by CDM The Rift Valley
A Dormitory Lit by Solar Power-Olololunga School
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Potential Contributions by CDM The Rift Valley
Classrooms Lit by Solar Power-Ngoto School
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Potential Contributions by CDM The Rift Valley
Community Hall Lit by Solar Power-Lemek
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Potential Contributions by CDM The Rift Valley A School Lit by Solar Power-Lemek
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Potential Contributions by CDM
Combined Wind Mill & Solar Cells
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The PIAD/ECM Centre Small CDM Facility Project
• The PIAD introduced the concept of CDM Small Projects Facility in Kenya in June 2004 • A similar project had been successfully piloted in India by PIAD and SRA
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The Purpose of the PIAD Project To provide assistance to communities, NGOs and
SMEs in developing small CDM projects
• Develop up to six small scale CDM projects in Kenya • Building the capacity of the ECM Centre Limited • Training 6 local graduate interns on CDM projects development • Facility focused on assisting project developers with:
• The development of baseline and monitoring plans • Financial analysis of the projects with CDM financing • Preparation of the Business Plans, CDM Project Design Document (PDD) & Project Identification Note (PIN’s)
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Project Description q Capacity building for the ECM Centre & the internship program to assist
project developers with: – The development of baseline and monitoring plans. – Financial analysis of the project with CDM financing – Preparation of the CDM Project Design Document (PDD).
q Recent business graduates (interns) were backstopped by CDM experts q One-on-one assistance provided to the project developers by interns q Hosting a National CDM information session in Nairobi with funding from
Pembina Institute, the CDM/JI Office (on March 22, 2005) – Inform local stakeholders of the programming by the CDM Small Projects
Facility-Kenya; – Present details of the project opportunities identified by the Facility and the
completed CDM Project Design Documents (PDD); – Showcase the CDM PDDs – Initiate discussions between local stakeholders, CDM experts, and project
developers on future CDM activities in Kenya. q The university information sessions presented by each of the interns to
students and faculty of three Kenyan universities
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Project Development
² Estimate real emission reductions
² Develop emissions monitoring & verification protocol
² Prepare investment plan & undertake financial analysis
² Draft BPs, PINs & PDDs
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Outputs • Five PDD’s, PIN’s and Business plans
– Only 4 technologies profiled but with different learning points (methodologies and procedures)
• Financial analysis with different CER prices (US $ 5-7 per ton CER)
• Demonstrated interest of Japan Carbon Fund and Pact International
• We have since developed 3 additional PINs for other project developers, including one LULUCF for a Tanzanian Developer (from 1st principles)
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Sustainable Development Benefits
• Alleviation of poverty through increase in disposable income
• Increase in forest cover • Reduction of GHG emissions • Breakthrough in new renewable source of energy • Forex saving on fossil fuel importation • Improved health; Malaria control & reduced
bronchial problems • Secure domestic source of energy • Technology transfer • Use of marginal land
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Levels of GHG Reductions Project GHG Emission
Reductions (Tons)
CER Value US $
IRR Without
CERs (%)
IRR With CERs (%)
Jatropha/Vanilla 931,913 4,609,566 (10 years)
27.2 30.9
Chemelil Sugar 525,200 3,676,400 (20 years)
14.1 15.2
ApproTec…. Treadle Pumps
80,268 401,340 (20 years)
10 14
Biodiesel 359,100 1,745,500 (21 years)
5 7
Solarnet… STEP Project
8,094 40,469 (10 years)
12.3 16.6
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Current Status of Projects • The Solarnet and Treadle pump projects have
progressed and under full implemented….no one so far interested in the CERs which are small
• Jatropha Vanilla project is progressing slowly due to lack of funds to develop seed nursery & buy seedlings…revolving fund missing. JCF interested if implementation speeded up.
• Chemelil Sugar Company cogen project…looking for capital but JCF interested.
• Other projects we are working on for JCF include geothermal, Mumias Sugar cogen, biogass from slaughter house and charcoal briquetting projects
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Acknowledgements
Project Developers
² ApproTEC ² Chemelil Sugar Company ² High Value Crops (K) Ltd
& Victoria Vanilla (K) Ltd ² Solar Energy Network
(SolarNet) ² BioFuel Company of
Kenya
Graduate Interns
² Joseph Kilongosi Mutei ² Nobert Ochieng Owino ² Wilson Kyalo Mbola ² Joash Masira Obare ² Kenneth Mwangi Kamau
² John Mutua Muinde
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Acknowledgements
² Canadian Government / CIDA ² Pembina Institute for Appropriate Development
(Carol Brunt & Roger Peters)
² Symbiotec Research Associates (S. K. Rajshekar & Abhijit Chatterjee)
² ECM Centre Ltd (Anjali Saini, paul Kirai & Julie Mundia)
² BEA International (Patrick Karani & Staff)
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Next Steps • ECM Centre to develop a permanent CDM secretariat
– To concretise the learning – Move Kenya into a lead position in East Africa on CDM
• ECM Centre has vigorously marketed CDM – One half day open presentation on CDM in Nairobi – Several private visits as follow up to identify more potential
projects – One workshop proposed in February/March 06 with GTZ agro-
based industries project…sectoral approach • ECM Centre has vigorously marketed CDM
– A contract with Japan Carbon Bank to provide 5 PINs by end 2006 (above 30,000 tonnes CERs per year)
– Pact International expressed Interest on some PINs & in working with ECM Centre….negotiations on
• ECM Centre recognised nationally & internationally – Invited to join the National Action Committee on Climate Change – Invited to the membership of Development Dividends Task Force
(IISD)
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Lessons Learnt • There are several potential CDM projects in Kenya, and
the whole East African region • Barriers to their development include
– Capital investment, most buyers have so far expressed interest on not less than 30,000 tons CERs per year (commercial decision, transaction costs), no upfront funds
– Awareness among stakeholders – Most community based CDM projects require seed capital which
can usually be traced to ODA…acrobatics required – Most community sustainable development projects have low
CERs but high social value – Most buyers consider community projects high risk – Transaction costs cannot be met by most small CDM projects
with high social & development value….simplify process, more DOEs
– Potential investors on CDM projects are apprehensive…an abstract concept, ”selling air & who has earned from CERs so far in Kenya”
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Presenter: Tom Owino Oduol
Environmental Cost Management (ECM) Centre
Five Pilot CDM Projects
ECM Centre Limited Productivity, Quality, Environment_________________________________
Jatropha Vanilla Cogeneration at Chemelil Sugar Company Biodiesel Production in Kwale Treadle Pump Promotion Solar Technology for Electricity Provision (STEP)
Simplified small scale CDM methodologies used for the projects
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Small Scale CDM Project:
Jatropha Vanilla project
ECM Centre Productivity, Quality, Environment_________________________________
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Location: Malindi and Migori Districts in Coast and Nyanza
Provinces Respectively
Project Proponent:
High Value Crops (K) Limited, Victoria Vanilla (K) Limited & The Poverty Eradication Commission (PEC)
Contact Person:
Mr. Pierre van Engelen and Alnoor Amlani
ECM Centre Limited Productivity, Quality, Environment_________________________________
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ECM Centre Limited Productivity, Quality, Environment_________________________________
Migori District • High Value Crops (K) Limited • 100 acres nucleus plantation
Malindi District • Victoria Vanilla (K) Limited • 100 acres nucleus plantation
Total Farmers • 4,000 in 2005 • 100,000 in 2014
Project Location
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Project Purpose Replacement of: § Kerosene with Jatropha oil for lighting and
some cooking § Diesel with bio-diesel for transport & power
generation in stationery engines
ECM Centre Limited Productivity, Quality, Environment_________________________________
Nationally, • 93% of the poor use Kerosene for lighting & some cooking…... the mean monthly expenditure on Kerosene is US$. 0.9 per poor family
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Project Description § Growing Jatropha trees as:
§ Shade and tutors for Vanilla vines § Fencing for Vanilla farms
§ Jatropha seeds from farmers & nucleus plantation pressed for oil extracted
§ Oil sold to farmers at subsidized prices, cake used as fertilizer in the nucleus plantation
§ Surplus oil converted to biodiesel (trans-esterification) & sold to local diesel users
ECM Centre Limited Productivity, Quality, Environment_________________________________
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ECM Centre Limited Productivity, Quality, Environment_________________________________
Why CDM ? • Investment barrier • Social barriers • Prevailing practices • Technological barrier
Baseline Methodology
• Type III. B: Fuel Switching
Additionalities
“Business not as usual”
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Project Benefits • Alleviation of poverty through increase of disposable income • Increase in forest cover • Reduction of greenhouse gas emissions • Source of renewable energy • Forex saving on fossil fuel importation • Improved health…malaria & bronchial problems • Organic manure with pesticide properties for high quality vanilla • Raw materials (glycerol) for soap production
ECM Centre Limited Productivity, Quality, Environment_________________________________
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Financial Viability
Without CDM With CDM
IRR = 27.22%
IRR =30.85%
ECM Centre Limited Productivity, Quality, Environment_________________________________
Total Carbon Emissions Reductions (CERs)-10 years: 931,913 tons Total value of CERs (@ 5 US $ per CER, net transaction costs: US $ 4,609,566
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Small Scale CDM Project:
Solar Technology for Electricity Provision
ECM Centre Limited Productivity, Quality, Environment_________________________________
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Location: Eastern, Western, Nyanza & Rift Valley Provinces
Project Proponent:
Solar Energy Network [Solarnet]
Contact person: Mr. Daniel M. Mututa
ECM Centre Limited Productivity, Quality, Environment_________________________________
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Project Purpose The STEP programme encompasses two projects:
• The Energy for Schools Project, and • Rural Community Solar Home Systems Finance
Project
The programme will mobilize financial assistance for the acquisition of Solar lighting Photovoltaic Systems for targeted beneficiaries.
ECM Centre Limited Productivity, Quality, Environment_________________________________
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ECM Centre Limited Productivity, Quality, Environment_________________________________
Why CDM ?
Baseline Methodology
• Type I. A: Electricity Generation for the User
Additionalities
“Business not as usual”
• Investment Barrier Solar PV systems require a high upfront investment
• Technological Barrier Solar PV systems are more technologically advanced
• Barrier due to prevailing practices
• Other barriers
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Project Benefits § Contribution to Sustainable Development § Economic sustainability § Ecological sustainability § Social justice and equity § Improved health…less respiratory problems § Facilitated learning & education
ECM Centre Limited Productivity, Quality, Environment_________________________________
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Solar Module ECM Centre Limited
Productivity, Quality, Environment_________________________________
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ECM Centre Productivity, Quality, Environment_________________________________
A Rural Solar System Installation
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Local Technician Have Been Trained
ECM Centre Limited Productivity, Quality, Environment_________________________________
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Financial Viability
ECM Centre Limited Productivity, Quality, Environment_________________________________
US $ 40,469 @ US 5 =
8,093.80 tonnes CO2equ
in 10 Years =
Carbon Emissions Reductions Generated 4.23% 12.32% 16.56% IRR =
Variance Without
CDM With CDM Ratio Analysis
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Conclusion
ECM Centre Productivity, Quality, Environment_________________________________
Let us fix the sustainable
development component of the
CDM
We owe it to the future generations
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Thank you
End of presentation.
ECM Centre Productivity, Quality, Environment_________________________________