CDM FOR RENEWABLE ENERGY DEVELOPMENT BHUTAN S EXPERIENCE

Transcription

1 CDM FOR RENEWABLE ENERGY DEVELOPMENT BHUTAN S EXPERIENCE BHUTAN Located between India(in the south) and China(in the north) Area: 38,394 sq km Elevation ranges from 100m to more than 7500m above the sea level Population approximately :700,000 Economy: Mainly an agrarian society; 69% of the population dependent on agriculture Training Workshop on Seasonal Weather Forecasts Linked Pre-harvest estimates of Crop Production: Methodological approaches April 2012

2 72% of the country covered by forests 60% forest coverage at all times to come: constitution of Bhutan Climate: Subtropical in the south, temperate in the inner mountains and severely cold climate in the northern areas. Main revenue: generated from hydropower and tourism Government System: Constitutional Monarchy (since 2008) Training Workshop on Seasonal Weather Forecasts Linked Pre-harvest estimates of Crop Production: Methodological approaches April 2012 BACKGROUND ON CC Bhutan s significant steps to address Climate Change Issues: Signed UNFCCC at Rio de Janeiro in 1992 Ratified UNFCCC during the 73 rd Session of National Assembly in 1995 Signatory to Kyoto Protocol/ratified Kyoto Protocol in 2002 NEC designated to host the National Climate Change Committee NEC Designated Authority (DNA) for Bhutan for CDM Till date, DNA Bhutan has not issued Letter of No Objection

3 BACKGROUND CONT. Completed first and second National Inventory on Greenhouse Gas Emission Commissioned first CDM project (pilot in Bhutan) Revision of National Adaptation Plans of Action (NAPA) completed MULTI-SECTORAL TECHNICAL COMMITTEE ON CDM Executive order from Hon ble PM in Committee will: (a) review the PDD (b) Determine if the LoA should be granted

4 TASK FORCE OF CDM COMMITTEE 1. Hon ble Secretary, NEC as Chairman 2. Member, DoE, MoEA 3. Member, DoI, MoEA 4. Member, MoAF 5. Member, MoWHS 6. Member, MoF 7. Member NEC as Member Secretary PILOT CDM PROJECTS AWARDED LOA Micro Hydro Project in Chendebji (70 kw) registered in May 2005 Dagachhu Hydropower Project (126 MW) registered in 26 th February 2010

5 PILOT CDM PROJECT IN MICRO HYDRO CHENDEBJI (70 KW) Funded by: e7 Fund for sustainable energy development Implementing Agency: Department of Energy, Royal Government of Bhutan. Power Plant -Installed capacity: 70 kw -Designed annual electricity generation: 582,540 kwh -Expected Annual CERs generation: 500t- CO2/year, 21 years -50 households OBJECTIVES OF THE PROJECT To demonstrate the CDM under the Kyoto Protocol of the UNFCCC on the model of a micro hydropower plant. Improve living conditions (reducing indoor smoke from firewood and kerosene use and provide lighting) To construct a micro hydropower plant for Rural Electrification of Chendebji village To pilot CDM project that has direct benefit to the local community for poverty reduction.

6 HISTORY OF CHENDEBJI CDM PROJECT The project was funded by e7 (group of leading 9 electric utility companies (now 10) from G8 countries. 2001/11: Pre-feasibility study conducted 2002/11: Feasibility study was conducted. The e7 Fund and the RGoB conducted with a MoU 2003/6: Govt. of Japan approved the project as CDM on behalf of Annex I country. 2004/2: RGoB approved the project as host (non Annex I country) for the CDM project 2005/5: The project was registered as a CDM project under the UNFCCC 2005/8: The project commissioned PRESENT STATUS Commissioned the CDM Chendebji hydropower plant on Estimated cost of the project (as per PFS) is US$ 280,000 +/- 25% variation Total reduction in CO2 emission by this project estimated at 524 ton CO2 (~ valued at US$ 5,931 17, 793) replacing kerosene, firewood and diesel. Expected total CERs 11,004 (tco2 eq) CER issued as of 2010: 474 Credit so far nil: (financially not viable)

7 DAGACHHU HYDROPOWER AS A CDM PROJECT PDD Consultant : Poyry Energy GmBH, Austria PDD validator: DNV AS, Norway Project No.: 2746 Registration Date: February 26, 2010 Methodology: ACM 0002 Version: 07 GHG reducing measure: Grid connected renewable energy based power generation ER estimate: 498,998 tco2 per year Host parties: Bhutan and India (First cross border CDM project of UNFCCC) Reservoir power density: 3257W/m2 Crediting system: 7 years (renewable) SUSTAINABLE PROJECT BENEFITS BHUTAN Benefit to national economy an environmental sustainability Socio-economic development at regional level INDIA o Socio-economic well being: supply power to Eastern Indian grid reducing chronic deficit o Environmental well being : displacing fossil fuel

8 SALIENT FEATURES OF THE PROJECT Installed Capacity: 126 MW Mean annual Energy prod.: 500 GWh Type of Development: Rub-of-the- River Type of Turbine: Catchment area: Design Flow (max.): Gross Head: Pelton 676 square km 50 cumecs 304 m Project completion date: March 2013 (estimate) Electricity to the regional grid consisting of Bhutan and the Eastern region of India. CONTRACTUAL ISSUES/COST DAGACHHU Contract was signed with Poyry Energy GmbH on 31 st March 2005 at contract amount of 190,000 EUR (plus an optional installation of 20,000 EUR) Total cost: 229,000 EUR Registration fee was exempted since host country was LDC Project status: under construction and Bhutan not receiving any credits as yet

9 CHALLENGES Lack of in-house CDM expertise for handling such issues No Bhutanese baseline, had to use Indian baseline thereby necessitating two host countries First transfer border export of power using such baselines, requiring revision and deviation of approved methodology of UNFCCC incurring delays The change in the composition of members in DNA (new members have less CDM idea) The future of small scale CDM is not certain, since the operational cost is higher than the generated income and credit earned. Bhutan aims to connect the whole country by grid power by 2015 SOME OF THE WAY-FORWARD ARE: To strengthen CDM Unit to look into all these issues Bilateral Agreement signed between Bhutan and India Bhutan to use Indian baseline for CDM cases Need expertise from outside for developing the PDD document for other upcoming projects.. Feasibility studies are now being undertaken, host country approval Owing to small and negligible credit, all new small scale CDM projects in future will be bundled together for processing the credits.

10 RENEWABLE ENERGY CDM POTENTIALS IN BHUTAN(SOURCE:DGPC) Sl.No Projects Capacity (MW) Start year COD Year Mode 1 Punatshangchhu -I Bilateral 2 Mangdechhu Bilateral 3 Punatshnagchhu - II Bilateral 4 Sankosh reservior Bilateral 5 Kuri-Gongri Bilateral 6 Amochhu Reservior Bilateral 7 Kholongchhu JV 8 Chamkharchhu -I JV 9 Wangchhu JV 10 Bunakha Reservior JV 11 Nikachhu DGPC PPP 12 Khomachhu DGPC PPP 13 Rotpashong DGPC PPP 14 Gamri DGPC PPP 15 Dagachhu DGPC PPP Total 13,259 EXPERIENCES FROM CHENDEBJI CDM PROJECT 1. Demonstration as the first CDM project in Bhutan 2. Long duration from the concept stage to implementation stage 3. CDM administrative cost are expensive and modalities complex 4. Electrification of 50 households,5 institutional buildings and 1 tourist resort at Chendebji village 5. Improvement in education and living standards by utilizing electricity 6. Providing a clean form of renewable energy resulting in better health and reduction of firewood use 7. Reduced deforestation and soil erosion 8. Contribute to socio-economic development of the community 9. Emission reductions from Rural Electrification projects are too small to cover CDM related costs: Not attractive for investors.

11 RECOMMENDATIONS 1. Carbon trading has potential to compliment value adding. 2. Potential for Bhutan not yet clear. It may be modest. More research is needed. 3. Carbon trading is more than CDM (Kyoto Protocol) so look at other possibilities such as niche markets 4. NEC to continue as focal agency and coordinate with stakeholders 5. Close cooperation and proper technology transfers to local counterparts is essential for long term sustainability RECOMMENDATIONS 6. To fully benefit from carbon trading, more human resources and capacity building along with public awareness. 7. Pilot projects should be implemented (learning by doing) to provide guidance in evaluating cost/benefits of carbon projects. 8. National strategy for CDM to be developed 9. Bundling of CDM projects to reduce transaction cost. 10. For successful implementation of CDM project, friendly and long term relationship required between host country and Annex I party

12 RECOMMENDATIONS CONT. 11. To encourage Micro Hydro scale CDM projects, Monitoring, verification and Certification procedures needs to be simplified and skipped. FURTHER SUPPORT NEEDED IN AREAS OF: 1. Capacity development of DNA 2. Awareness and education on CDM for relevant stakeholders 3. Formulation of national CDM strategy 4. National capacity building for CDM Projects

13 THANK YOU