Click to edit Master title style Forest Industry: Opportunities and Incentives Climate Change and the Carbon Market Focus on Forest Engineering November 2010 TAPPSA 2010 Conference Durban, South Africa Ciska Terblanche
1 Content International status of Climate Change Four Incentive mechanisms to boost the biomass use in SA 1
2 Climate Change Status EU Commit to a 20% or 30% reduction in GHG emissions below 1990 levels Phase III of the EU Trading system runs from 2013 to 2020 China January 2010 announced they will reduce their economy s carbon intensity by 40-45% South Africa Biomass Market is created Copenhagen Dec 2009 DEAT indicates a reduction in GHG emissions target of 34% by 2020 Commitment made on condition that appropriate funding is provided to South Africa DME commitment 2003: 10 000 GWh will be generated by renewable energy sources by the year 2013 - Approximately 4% (1667 MW) of the country's energy supply Climate Change White Paper to be communicated to stakeholders by end 2010 2
3 Incentive Schemes to increase the use of biomass as fuel Feed-in tariff Tradable Green Certificates Fiscal and Financial Incentives Cap and Trade REFIT (Renewable Energy Feed-in Tariff TREC in South Africa - under development Tax incentives VAT, import taxes EU Emission Trading System, CDM (Clean Development Mechanism) 3
4 Tradable Renewable Energy Certificates (TREC) TREC = Tradable Renewable Energy Certificate Certificate issued to a power producer for each kwh electricity generated from renewable energy Power producer sells kwh generated from a renewable energy source (sell electricity) Host: Department of Energy Model: REC system implemented in EU Initially a Voluntary system, but legislation provides the framework to switch to a mandatory system, i.e. industry will have a RE electricity use target Under development 4
5 Tradable Renewable Energy Certificates (TREC) RE Electricity consumption Target Eg 15% of consumption Renewable Energy Power producer Consumer Electricity export to grid Consumer kwh Consumer $ 5
6 REFIT REFIT = Renewable Energy Feed-in Tariff Under REFIT the power producer is paid a fixed feed-in tariff for each kwh produced from a Renewable Energy Source Biomass: R1.18 per kwh Department launches refit programme for renewable energy September 30, 2010 Hosted by the Department of Energy, input from NERSA, Eskom 6
7 REFIT for Biomass in principle R1180 per MWh Electricity Export to the Grid MWh 7
8 CDM Background CDM = Clean Development Mechanism One of three cap and trade mechanisms under Kyoto Applies to only developing countries Emission reductions are traded (carbon credit): 1 ton CO 2 = 1 credit Company A -8% CO 2 Target 50% purchased Company B 8
9 Generating a credit Real, measurable and long term CO2 Emissions CO2 Reductions Now 10 Years
10 CDM Statistics Registered Projects > 2,400 registered projects in 51 countries with another 1,900 in the pipeline > 900 projects in China > 500 projects in India > 170 projects in Brazil Registered projects expected to generate > 374 million CERS p.a. and > 1.8 billion CERs by end 2010 10
11 CDM Trades 2009: Over US$20 billion traded under CDM 200 million tons of CO 2 e traded Average price of US$12.7 11
12 CDM Trades Who are the buyers? Forward sales Spot market 12
13 CDM Supply and Demand 13
14 Summary Financial Mechanisms available in South Africa to boost biomass use REFIT: Sell electricity from renewable energy to Eskom R1.18 per kwh TREC: Sell electricity from renewable energy to a electricity consumer CDM: Sell CO 2 reductions to developed countries 12 per ton CO 2 14
15 Potential income for Fuel Switch from coal to biomass Fuel switch from coal to biomass in principle: 1t Coal = 2.5t CO 2 1t Coal = 3-3.5t Biomass wet 1t CO 2 = 12 = R108 income REFIT in principle: 1 MWh produced = R1180 1MWh = 1.8t wet Biomass (conventional fluidized bed boiler, condensing turbine) 1t Coal = 3t Biomass = 2.5t CO 2 = 30 = R270 income Fuel switch from coal to biomass to produce electricity (condensing turbine): 1 ton Biomass (wet) = 0.56 MWh = R80 (CDM) + R660 (REFIT) 1 ton Biomass wet = R740 15
Thank You for your attention Ciska Terblanche +27(0)828985750 ciska@cdmafrica.com 16