Kyoto Protocol

Post 2012
Project Specific Opportunities

CDM Workshop October 29th, 2009

Mag. Ferdinand Heilig Tripoli (Libya)

 Table of Content

Global Warming in absolute figures

CARBON’s position in JI/CDM-Market

CDM and its interaction with other GHG reduction instruments

CDM/project specific offset instruments Post 2012

The Carbon Market Post Kyoto/ Post 2012 October 29th, 2009 in Tripoli 2
 Development of global
CO2 Emissions since 1971

40.000
Scenario w ithout
further measures
35.000
current
economic crisis

30.000
M t CO2

25.000 IEA-Scenario w ith

additional climate
2nd oil crisis
protection measures
1st oil crisis
20.000

15.000

10.000
1971 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

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Global CO2 Emissions share per country in 2006

World Carbon Dioxide Emissions, 2006 [MtCO2e]

China; 6,103

Rest of the world; 10,489

United States; 5,975

United Kingdom; 558

Canada; 560
Germany; 880
Japan; 1,274 Russia; 1,578
India; 1,510
The Carbon Market Post Kyoto/ Post 2012 October 29th, 2009 in Tripoli 5
 CARBON‘s position in JI/CDM-Market

CARBON is among leading project developers in international JI/CDM-Market;

Africa’s biggest CDM-Project has been developed, financed and is operated by

CARBON (N2O-Reduction Project at Abu Qir Fertilizer Project in Alexandria, Egypt);

CARBON invests its own funds in identified JI/CDM-Projects and will reduce more
than 4,5 Mio. CERs in 2009 (in 2012 reduction volume is expected 6 Mio. CERs);

Total amount of CERs issued is sold at fix prices produced until 31st of December
2012 mainly to the Government of Austria and Europe’s biggest compliance buyer in
EU ETS - RWE of Germany;

In 2007 a minor stake in CARBON has been sold to RWE Power AG of Germany with
the aim that furthermore both companies develop JI/CDM-Projects together;

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CARBON’s N2O CDM-Project
Abu Qir Fertilizer Co., Egypt

Company: Abu Qir Fertilizers Co.

Location: Alexandria, Egypt

Process: Dual Pressure

Capacity: 1,830 t/d HNO3

Tail gas: 230,000 Nm3/h

Tail gas Temp.: 418°C

Start-up on
1st of October 2006

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 CARBON‘s CER production
from N2O abatement projects

1,200,000

1,000,000
Certified Emission Reductions

800,000

600,000 ENAEX
HU CHEMS
ABU QIR
400,000

200,000

0
Q4 / Q1 / Q2 / Q3 / Q4 / Q1 / Q2 / Q3 / Q4 / Q1 / Q2 /
2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009

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The Flexible Instruments
of the Kyoto Protocol

JI CDM ET ETS
Joint Implementation Clean Development Emissions Trading Emissions Trading
Mechanism System (e.g. EU ETS)
Annex I – Annex I – Annex I –
Partner Energy Utilities and
Industry
Annex I Non Annex I Annex I
Emission ERU – Emission CER – Certified AAU – Assigned EUA - EU
Reduction Reduction Units Emission Reduction Amount Units Allowances
Units

Framework von 2008 bis 2012 ab 2000 from 2008 till Periods
2012

Supervisory Executive Board

Committee (SC) (EB)
Institutions UNFCCC EU Commission
Designated DG Environment
Independent Entities Operational Entities
(IEs) (DOE)

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 UNFCCC CDM Statistics

Annual Average Expected CERs

CERs *) until end of 2012 **)
CDM project pipeline: > 4,200
N/A > 2,900 m
of which:
1,839 are registered ~ 319 m > 1,660 m
75 are requesting registration ~8m > 20 m
*) Assumption: All activities deliver simultaneously their expected annual average emission reductions
**) Assumption: No renewal of crediting periods

Until 6th of October 2009 approx. ~ 333 m CERs have been issued;
CARBON’s share is >2%.
Source: UNFCCC

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 Emissions Trading Systems

WCI
planed for 2012
EU ETS
MGGA since 2005
planed for …?
USA Keidanren
CH Japan since 1997
California RGGI 2008 2012
planed for 2012 since 2009
J-VETS
since 2005

Australia
planed for 2011

NZ
Already implemented national emission trading
since
Already implemented voluntary emission trading 2009
Planed national emission trade

Planed voluntary emission trading WCI: Western Climate Initiative J-VETS= Japan Voluntary Emissions Trading Scheme

MGGA: Midwestern Greenhouse Gas Reduction Accord Keidanren= Voluntary Action Plan of the Japanese Business

RGGI: Regional Greenhouse Gas Initiative Federation

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 Trading Volumes in Mt
in various ER markets in 2008
AAU, 18 JI, 20
Carbon
Markets
2008 CDM
secondary,
in Mt 1072

CDM
primary, 389

New-South
EU ETS, 3093 Wales, AU, 31
Chicago Climate
Exchange, 69
RGGI, 65

Volunatry
Markets, 54

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 Volume of Carbon Market

Carbon market size 2004-2009

140

120 3
16
100 6
Forecast
80 Other
94
$ bn

2ndary CDM
60 5 primary CDM
7
95 EUETS
40
6 50 1
1
20
24 24
1
8
0 1
2004 2005 2006 2007 2008 2009

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 Scenarios Post 2012

1. Kyoto Protocol expires without new agreement

This scenario is unrealistic due to

Findings of IPCC regarding climate change;

Global political acceptance that climate change is a threat to

mankind (nowadays also in US);

Increasing economic interests in “green technologies and

economy”;

2. Kyoto Protocol is prolonged

This scenario is unrealistic, as US stated several times not

to ratify KP any more and wish a new form of agreement.

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 Scenarios Post 2012 – New Agreement

3. New Agreement

Most realistic scenario due to

General acceptance in the EU and Japan to enter into new agreement;

General positioning of developing countries to assist in climate mitigation

activities;

Positioning of US (see previous slide);

Main critical points to new agreement:

Interests between OECD countries and developing countries are diverse;

Many big developing countries (China, Mexico, South Africa, Brazil and India)
are not ready to accept binding measures (and in no case caps);

Industrial Nations are not ready to provide financial means requested by

developing countries;

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 Scenarios Post 2012 – New Agreement
Details to be discussed:
Compliance Periods (2x5 or 8 years);

Compliance Rules for carbon sinks;

Improvements in CDM (e.g. Standardised baselines);

Tropical Deforestation (REDD);

Integration of Air and Sea Transporation;

Legal Status of Agreement;

Sanctions;

Shared vision: Accepted Goals/Caps for 2050

Carbon Leakage (e.g. CO2 tax for imported products from

countries with no CO2 caps);

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 Development in the EU ETS III

Two scenarios are considered in the directive 2009/29/EC:

No new agreement being concluded by 31st December 2009:

CO2 reduction target: minus 20 % (basis year: 2005);

Prolongation of CERs usage, but no increase of amount;

New projects in Least Developed Countries only (with limitation to 3 % of

Redemption Capacity);

New agreement being concluded by 31st December 2009:

CO2 reduction target: minus 30 % (basis year: 2005);

Additional types of project credits or other mechanisms;

New projects only in 3rd countries that have ratified new agreement;

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 Banking of CERs / ERUs

Banking of CERs and ERUs possible from EU ETS II period (2008-12)

to EU ETS III period (2013-20) in case JI/CDM projects are:

„eligible for use“ 2008-12

„registered before 2013“

„new projects […] in Least Developed Countries“ (limited to

3% of RC);

Total CER/ERU usage is in general limited to “redemption

capacity” of compliance buyer in EU ETS II but min. 11%;

= approx. 6% of total caps in EU ETS II and III (1,600 to

1,700 Mt CO2e).

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 Forecast on EU ETS III ER demand

Short-term decline of the emissions, afterwards (depending on economic development) increase expected

Phase II likely also without CER/ERU-Imports long

CER-Import are necessary to cover shortage of Phase III

If an international treaty will not be developed in Copenhagen, CERs are applicable till 31st March of 2015.

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Expected Shortage on ERs in EU ETS III

Phase III is short

Sends price-raising signals for Phase II Æ Banking of Phase II to Phase III

Electric Power Companies will begin with CO2 complaints' purchases in 2010 for electricity sales ex 2013.

Increasing prices very probably in the long term

This scenario incl. CER-Imports generates an accumulated shortage of approximately 2 billion EUAs

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 Linkages of AAU, ETS and Offsets Post 2012

Countries and Corporations

AAU Units International AAU Market

ETS Units EU ETS US ETS Other ETS

Offset Units
Offsets

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 Development of Carbon Market *)

Volume of global carbon market in 2012 is expected to reach € 295 billion;

Considering increased efforts for a global climate change policy further

market growth is expected;

Price expectations are down for 2010, but remain strong for 2020;

Less companies need to buy EUAs in addition to their EU ETS cap until
2012;

The economic downturn is still hitting carbon project investments;

Rising post-2012 activity in the CDM market seen (increasing volume in

traded CER forwards for post-2012 delivery);

It is expected that US will introduce federal mandatory cap-and-trade by

2015.

*) Sources: New Carbon Finance and Point Carbon

The Carbon Market Post Kyoto/ Post 2012 October 29th, 2009 in Tripoli 22
 Thank you for
your attention!

CARBON Climate Protection GmbH

Email: office@carbon-austria.com
Am Südblick 5
A-3550 Langenlois
Austria

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