Tools for Greenhouse Gas Analysis: Exploring Methodologies for Development Finance. July 14, 2009

Transcription

1 Tools for Greenhouse Gas Analysis: Exploring Methodologies for Development Finance July 14, 2009

2 OVERSEAS PRIVATE INVESTMENT CORPORATION (OPIC) An Agency of the United States Government

3 History of Carbon Accounting at OPIC Address by President Clinton at the UN Special Session on Environment & Development June Track and report, on an aggregate basis, the annual greenhouse gas emissions from OPICsupported power sector projects. FY1998 and FY1999 aggregate reporting of 100% of emissions calculated using mass balance methodology which assumed an installed capacity factor of 100%. CO 2 emissions in (U.S. short) tons.

4 History of Carbon Accounting at OPIC Climate Change: Assessing Our Actions (2000) A review of the cumulative annual greenhouse gas emissions and climate implications of all OPIC finance and political risk insurance projects supported since Calculated cumulative emissions for power sector projects as of 2000 and projected cumulative emissions in Assumed all power plants operate for 25 years. Assumed that direct emissions from oil, gas and industrial projects were de minimis when compared to the power sector emissions. In % of OPICs portfolio exposure was in the power sector.

5 History of Carbon Accounting at OPIC Climate Change: Assessing Our Actions (2000) In 2000 the cumulative emissions from 52 power plants (16,775 MW) represented 0.24% of global emissions. In 2015 the cumulative emissions were projected to represent 0.43% of global emissions. Based on 25 year life-of-plant and 85% operating capacity factor (hours). Did not disaggregate calculations just generic mass balance algorithm and default values for certain parameters (heat rates by generating technology, emission factors by fuel types). Conclusion: Cumulative annual GHG emissions from OPICsupported projects do not substantially contribute to global GHG emissions and associated climate change impacts.

6 History of Carbon Accounting at OPIC Friends of the Earth, Inc., Greenpeace, Inc. and the City of Boulder, Colorado v. Overseas Private Investment Corporation and the Export-Import Bank of the United States providing loans, insurance and other assistance for fossil fuel projects including extraction projects (oil and gas fields) and transportation projects (pipelines), processing and refining facilities and power plants. will result in the annual emissions of billions of tons of greenhouse gases (primarily carbon dioxide) emissions equivalent to almost two-thirds of U.S. annual domestic carbon dioxide emissions.

7 Percentage of Portfolio History of Carbon Accounting at OPIC OPIC Fuel Mix vs US Domestic Fuel Mix for Electric Generation US, Coal Oil Fuel Type Gas 0 Nuclear Renew able US,

8 History of Carbon Accounting at OPIC Difference in Accounting Methods Comparison of annual U.S. emissions to OPIC s 25 year cumulative emissions. Count the emissions from the combustion of all the petroleum, natural gas and coal produced by extractive industry projects and fuel transported via pipeline referred to as indirect emissions. Count all lifetime emissions for privatizations. Count emissions from committed projects that never move to financial close.

9 History of Carbon Accounting at OPIC Lessons Learned Annual emissions reporting is less problematic than cumulative emissions reporting. The term indirect emissions can mean different things to different people. A clear distinction must be drawn between committed and active projects. Proof-read settlement agreements carefully with respect to the use of U.S. short tons and metric tonnes.

10 OPIC Climate Change Policy Goal: reduce the direct greenhouse gas emissions associated with projects in OPIC s active portfolio by 30% over a ten-year period ( ). Baseline Inventory Operational Boundary is defined as 100% of the direct, on-site emissions from all projects in OPIC s active portfolio as of June 30, Baseline inventory includes all projects in the energy, oil and gas, transportation, mining, manufacturing and construction sectors that are of sufficient size to potentially emit more than 100,000 U.S. short tons/year. Projects in the finance/banking, insurance, and service sectors were not included in baseline because the majority of emissions from these sectors are attributed to electricity use, which was defined as outside of the scope of the baseline.

11 OPIC Climate Change Policy Used independent auditor (Pace Global Energy Services LLC) to develop the baseline inventory. Used 2007 operating data to calculate baseline. Power plant accounting estimates based on operating capacity of 8000 hours/year, fuel consumption data (if available), facility operating capacity and/or more specific data provided by investors. Where fuel consumption data was not available used IFC s conversion efficiency factor and other standard assumptions sourced from the Climate Registry s General Reporting Protocol. Non-power accounting estimates based on operating capacity of 8000 hours/year and throughput and fuel consumption data. Where estimates from similar facilities were relied on data was obtained from credible, public information sources such as API, USEPA or the Energy Information Administration. Standard assumptions were sourced from the General Reporting Protocol.

12 OPIC Climate Change Policy Final Baseline Number 50,452,986 US short tons which equals the 48,050,463 tons auditor estimate plus 5% to account for active projects that emit less than 100,000 tons/year. Now quantifying emission estimates from all projects with the potential to emit greater than 25,000 tons year to be consistent with the recent draft GHG reporting rule proposed by USEPA. Baseline and disaggregated accounting calculations published in OPIC s Annual Policy Report to the U.S. Congress (April 2009).

13 OPIC Climate Change Policy Constraining New Carbon Annual Cap 3 million tons/year, although OPIC may further reduce this. Allocation based on strategic importance in foreign policy and developmental benefit context. Extension of insurance or finance term treated at new commitment. Projects involving renewable energy and clean technology assigned a value of zero. Since July 2007 have added 787,000 tons to the portfolio. 32 projects have not moved forward in part because of the cap constraint.

14 OPIC Climate Change Policy Other Elements Consider only those coal-fired power plants that capture and sequester 85 % of greenhouse gas emissions. All projects estimated to emit greater than 100,000 tons/year automatically Category A. Decline support for projects that cannot meet energy efficiency benchmarks.