Fuel switch from coal to biomass residues

Transcription

1 Fuel switch from coal to biomass residues Fuel switch from coal to biomass residues in boilers for heat generation project The project will install 16 gasification stoves and transform 3 existing coal fired boilers into gas fired boilers. The project will utilize the xylose residues to produce combustible gas by gasification stoves and combust the gas into the gas boilers to meet the heat need of xylose production line. The expected annual heat generation is TJ. By replacing the heat generated by the fossil fuel, this project can significant reduce the Green House Gas (GHG) emission and mitigate other pollutions which generated from fossil fuel-fired boiler. The average annual emission reduction is about tCO2 AMS-I.C.(version 16)

2 Biogas & CDM Hans Joachim Motzfeldt Greenstream Network AS

3 GreenStream in Brief GreenStream is a leading Northern European company in the carbon and renewable energy markets focusing on: - Renewable energy projects - Greenhouse gas offset projects - Trading of carbon units and renewable energy certificates GreenStream's clients are energy and industrial companies, financial institutions and governments 40 professionals working in Helsinki, Hamburg, Oslo, Vilnius, Kiev and Beijing Chosen as the Best Broker in green certificate markets in EU five years in a row by the readers of Environmental Finance Active in several international associations like INCIS, IETA, EFET and RECS

4 Core Competencies of GreenStream Core competence Green Investment Services offered Fund management (carbon and renewable energy); current investment vehicles include - Multilateral Carbon Credit Fund (EBRD and EIB) - Fine Carbon Fund - Nordic Carbon Fund - Fine Post Kyoto Fund - Carbon Opportunity Fund - Biogas Fund Europe - Blåfall Equity Fund Own direct investments Intermediary Advisory Green Certificates, Broker of the Year 2004, , 2008 Brokerage of carbon credits and green certificates Portfolio management services Strategies, market analysis Project financing services CDM/JI/GIS project services

5 Geographical presence of GreenStream Strong presence in Nordic and Baltic countries 40 professionals working for GreenStream in offices in Helsinki, Oslo, Hamburg, Berlin, Kiev, Moscow, Gothenburg, Vilnius and Beijing GreenStream offices GreenStream active through MCCF GreenStream investment 5 5

6 What is CDM in practice? Art. 12 Kyoto Protocol => Clean Development Mechanism; emission reduction projects in developing countries Purchase of x tons of CO 2 (CERs) provides project financing to project owner Sales of X tons of CO2 Credits (CERs) to Buyer/ Greenhouse gas mitigation Annex 1 Country - Buyer (e.g. Compliance Investor; Financial Investor; government) Global GHG emissions are reduced Non-Annex 1 Country Seller (e.g. Wind power project in a developing country) 6

7 UNDERLYING PROJECT FINANCE Funding for detailed studies DEVELOPMENT Feasibility and business plan IDEA 1-3 months CARBON COMPONENT DEVELOPMENT CDM pre evaluation Screening and PIN FINANCE NCF funding for carbon studies Equity and/or debt for project implementation Detailed design and construction studies Project permits and licences Construction DESIGN 4-8 months IMPLEMENTATION 6+ months PDD Host country approval Validation Registration CDM registration fee NCF carbon financing NCF negotiates a Emission Reductions Purchase Agreement (ERPA) Commissioning (Initial verification) Revenue and/or Efficiency gains from project Operation OPERATION, GENERATION & TRANSFER OF CREDITS Crediting period 10y 3 * 7 years Monitoring incl. Report /a Verification /a SOP Admin Forward and spot sale of CERs (payment usually upon transfer)

8 CDM and Bioenergy in general Opportunities Lower additionality concerns than the two other large CDM technologies in China, Hydro and Wind Important difference between bioenergy projects reducing CH4 (e.g. landfill gas, biogas etc) and those reducing CO2 (e.g. biomass power) -CH4 has a 21 times higher warming potential than CO2 CDM can represent the major share of the investment in projects mitigating CH4 (biogas projects), but biomass power often need additional investments to become profitable. Sources: WWF, UNEP Risø

9 Reduction from manure management systems ACM 0010 X.X.XXXX N.N. (c) GreenStream Network Plc 9

10 Biogas References 07/08 (GSN Germany) Brokenlande, Germany 1 MW el Biogas plant 500 m³/h Gas purification Heat supply of greenhouse Biomass: - Maize silage Realization Cattle manure Service: Project Development, Management EPC, Operation

11 Biogas References 07/08 (GSN Germany) Großkayna, Germany 2 MW el Biogas plant Digester: m 3 Heat supply of pig farm Biomass: - Maize silage - Pig manure Emission reduction: ca tco 2 per annum Realization early 2009

12 Manure management systems pro & cons CDM can represent the major share of the investment in projects mitigating CH4, like Landfill A typical CDM eligible project Low additionality concerns Project baseline could be difficult to estimate how many cows? Farm structure in China small; collection of manure from several farms needed Normal size for a CDM project in China from tons of manure/yearly Incentives to farmers are needed Sources: WWF, UNEP Risø

13 Landfill gas projects ACM 0001 X.X.XXXX N.N. (c) GreenStream Network Plc 13

14 Koedoeskloof LFG site in South Africa -one of two LFG sites in Port Elizabeth where Methane is to be captured and flared in first round, then later used to generate electricity

15 Zámbiza Landfill Gas Project, Ecuador Project Baseline 5 million tons wild landfill in Quito (Ecuador) With m3 one of the biggest landfills in Ecuador About tons methane (CH 4 ) emissions 50 wells in operation, extracting landfill gases Project Activity Expected Reduction of tons CO 2 -equivalent in 10 years Power generation under development Long term Power Purchase Agreement is needed to finance the CHP Green benefit has less value in Ecuador Origination Services Partnership with local project developer Execution of Project Design Document incl. Monitoring Plan Co-ordination of Validation and Registration of the Project Structuring project financing via forward sale of Certified Emission Reduction with upfront payment 15

16 Landfill gas projects pro & cons when considering CDM CDM can represent the major share of the investment in projects mitigating CH4, like Landfill Low additionality concerns Low issuance rates has been a consistent problem for bioenergy technologies, especially problematic for landfill gas Leakage of CH4 sufficient control of leakage No private investors in LFG in China, but several private and public CO2 buyers. Good connections with SOEs / Local government/ Government related agency involved in LFG, not private sector driven. 27 LFG projects from China already registered in UN 27 registered LFG projects from China not much potential Sources: WWF, UNEP Risø

17 Alternative waste treatment process for «WWTP sludge» (not industrial) AM0025

18 Alternative waste treatment process pro & cons when considering CDM CDM can represent the major share of the investment in projects mitigating CH4 In the category of typical CDM eligibility A growing market in China; opportunities High competition in the market for technology suppliers Already suppliers High R&D in China activity related alternative WWTP Sources: WWF, UNEP Risø

19 Treatment of Industrial Water; «WWTP sludge» ACM 0014 X.X.XXXX N.N. (c) GreenStream Network Plc 19

20 Biogas Utilization Project in China Project business activities: alcohol production, ethanol production, with total annual production over 1 million tons The project activity aims to recover and utilize the methane generated from anaerobic wastewater treatment facility and utilize the captured methane for thermal or electricity energy generation. The captured biogas will be injected into civil natural gas distribution grid through pipeline and transported to local residents. The project will reduce greenhouse gas emissions by utilizing the methane from wastewater treatment system that otherwise would be vented to the atmosphere and by displacing the use of natural gas in the natural gas distribution system. The project activity is expected to reduce greenhouse gas emissions by an estimated 350,000 tco2e per year during the first crediting period. The total project cost is around 400 million RMB, and the project is financed by mixture of debt and equity. ACM0014

21 Treatment of Industrial Water pro & cons Projects under CDM development in China No registered projects from China yet using ACM0014 Treatment of Industrial Water ACM0014 is rare in China Project baseline selection and common practice analysis are difficult to justify Sources: WWF, UNEP Risø

22 CDM and Bioenergy in general Challenges Certain Bioenergy technologies require high initial investment costs (e.g. biomass power) Source supply challenges (biomass power) and strict system boundaries requirements (biodiesel) Delays in the UNFCCC system and uncertainties related to the post-2012 framework

23 Carbon Management References 07/08 Landfill Gas Projects Landfill Gas Project Quito, Ecuador (Closed) Entire CDM management including PDD management, Project Capitalization exclusively via CDM, Financial Advisory, Negotiations and Contract Establishing, commercialization of CERs Landfill Gas Projects Medellin, Colombia (Closed) Entire CDM Management including PDD establishing and assistance of Validation Landfill Gas Projects Bordo Neza, Mexico (Ongoing) Entire CDM Management including PDD establishing and assistance of Validation Mechanical Biological Treatment (MBT) Project Gaobeidian, China (Ongoing) CDM Consultancy and New Methodology Landfill Gas Projects, Switzerland (Ongoing) CDM Consultancy and Feasibility Study

24 Fuel switch from coal to biomass residues Fuel switch from coal to biomass residues in boilers for heat generation project The project will install 16 gasification stoves and transform 3 existing coal fired boilers into gas fired boilers. The project will utilize the xylose residues to produce combustible gas by gasification stoves and combust the gas into the gas boilers to meet the heat need of xylose production line. The expected annual heat generation is TJ. By replacing the heat generated by the fossil fuel, this project can significant reduce the Green House Gas (GHG) emission and mitigate other pollutions which generated from fossil fuel-fired boiler. The average annual emission reduction is about tCO2 AMS-I.C.(version 16)

25 The CDM cycle 25

26 The rise of the global carbon market Global carbon market value 1) Announced EU reduction targets 2) EUR billion ,0 94,0 42,7 24,0 8,8 0, MtCO2e Target 1) Source: State and Trends of the Carbon Market 2006, 2007, 2008 and 2009, The World Bank (Point Carbon s estimate for year 2009) EU 15 New EU member countries 2) Sources: Communication "Limiting Global Climate Change to 2 Celsius: The way ahead for 2020 and beyond, EU and Annual European Community greenhouse gas inventory and inventory report 2007, EEA

27 Signatory status of the Kyoto Protocol and Regional Emissions Trading Schemes Canada Turning the Corner" plan Start after % by 2020 (2006) USA Cap-and-trade law treated in Senate Planned start % by 2020 (2005) USA, RGGI Cap-and-trade Start 2009 EU ETS Cap-and-trade Started % GHG -21% 2020 Japan Voluntary scheme JVETS, trialing mandatory 2008 Start % by 2020 New Zealand Cap-and-trade Start % GHG 2013 KYOTO PROTOCOL Start 2005 Mandatory for 37 countries -5% Emissions Trading CDM/JI Signed and ratified The voluntary carbon market Strong growth Signed, ratification declined No position Australia Cap-and-trade, carbon pollution reduction scheme approved June 2009 Planned start % GHG First cap suggested at -5-25% by 2020 (2000)

28 About CDM - Statistics CDM projects registered by country Total: 2171 projects CDM projects in validation by country Total: 2772 projects Indonesia 2 % Mexico 5 % Other 14 % Malaysia 4 % China 38 % Malaysia Thailand 2 % Other 3 % 14 % Mexico 2 % China 40 % Philippines 2 % India 23 % South Korea 2 % Brazil 8 % Chile 2 % India 27 % Indonesia 2 % Vietnam 3 % South Korea Brazil 1 % 6 % Source: UNEP Risø Centre May 2010

29 China and CDM CDM projects by technology in China - registered projects Total: 820 projects Bioenergy 7 % CMM 3 % Others 5 % Wind 25 % Fuel switch 2 % EE own generation 9 % Hydro 49 % Others: Cement (0,6%) HFCs (1%) N2O (3%) Reforestation (0,2%) Source: UNEP Risø Centre May 2010

30 CDM and Bioenergy Bioenergy in the general pipeline - registered projects Total: 2171 projects Bioenergy includes: Landfill Gas Biomass Methane avoidance Methane avoidance 15 % Fossil fuel switch 2 % EE 10 % N2O 3 % Other 6 % Wind 16 % Biomass 13 % Source: UNEP Risø Centre May 2010 Landfill gas 7 % Hydro 28 %

31 China and Bioenergy Bioenergy in China - registered projects Total: 72 projects Fossil Fuel Switch 26 % Biomass 24 % Methane avoidance 10 % Landfill Gas 40 % Source: UNEP Risø Centre May 2010