Experience of JCF in developing CDM projects Joichi KIMURA Deputy Director General Carbon Finance Department Japan Carbon Finance, Ltd. September 13, 2006 Your Partner for Development & Success in CDM/JI Projects & for Contribution to Sustainable Development
Company Profile of JCF (1) Main Business Objective: To purchase CERs and ERUs (ERs) issued until 2012 from CDM/JI Projects (2) Fund Pool: Called Japan GHG Reduction Fund (JGRF), all amount of which JCF can utilize to purchase ERs (3) Committed Fund Amount: Approx. US$ 140 million (4) Establishment: December 1, 2004 (5) Location: Tokyo, Japan (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 2
(6) Fund Providers: 2 Policy-lending Institutions (Governmental Banks) & 31 Major Japanese Private Enterprises Sector Policy-lending Institution Utility Japan Bank for International Cooperation (JBIC) Development Bank of Japan (DBJ) Tokyo Electric Power Co., Inc. Kansai Electric Power Co., Ltd. Chubu Electric Power Co., Inc. Tohoku Electric Power Co., Inc. Hokkaido Electric Power Co., Inc. Hokuriku Electric Company Fund Providers The Chugoku Electric Power Co., Inc. Shikoku Electric Power Co., Inc. Kyushu Electric Co., Inc. The Okinawa Electric Power Co., Inc. Electric Power Development Co., Ltd. (J-Power) Tokyo Gas Co., Ltd. 10 Major Powers & the Largest Gas Firms Oil & Manufacturing Nippon Oil Corp. Idemitsu Kosan Co. Ltd. Japan Energy Corp. Kyushu Oil Corp. Sony Corp. Toshiba Corp. Sharp Corp. Fuji Xerox Co., Ltd. The Japan Iron and Steel Federation Taiheiyo Cement Corp. Toyota Motor Corp. Terumo Corp. Major Companies in Oil, IT, Steel, Cement, Automobile & Medical Equipment fields Trading Mitsubishi Corp. Mitsui & Co., Ltd. Sumitomo Corp. Itochu Corp. Marubeni Corp. Sojitz Corp. 6 Major Investing & Trading Companies Engineering JGC Corp. (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 3
JCF s Commitment for Renewable Energy & Energy Conservation Projects (ERPAs are concluded) Wind Power Generation Project in India Enercon Wind Power Project Hydropower Project in China Run-of-river Hydroelectric Project in Gansu Province Bagasse Co-generation Project in Kenya Bagasse Co-generation Project by Mumias Sugar Co. Energy Conservation of Fertilizer Factory in India IFFCO Energy Conservation Project (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 4
Enercon Wind Power Generation Project (India) 180MW in Karnataka & Rajasthan provinces Precise data collection of wind energy in each project site is necessary. A part of the Project operation will start in 2006 Relatively short period of construction (one to two years) is the advantage of Wind Power Generation project. Capital Cost of the Project Capital cost (per power generation capacity) is smaller than hydropower projects in general. This cost is covered by Enercon s own capital and bank finance obtained from Indian local banks. (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 5
Run-of-river Hydroelectric Project (China) Coordination with government policy Hydroelectric project in Gansu province is in line with Chinese government policy to promote renewable energy and to enhance the development of remote provinces. Capital Cost with longer recovery period Capital cost is relatively higher and recovery period is longer accordingly. This cost is to be covered by JBIC s Untied Loan which has longer maturity period than commercial loan. Environmental Impact This run-of-river project doesn t cause any migration of local residents. (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 6
Bagasse Co-generation Project (Kenya) Data on Power Grid is essential In order to calculate Operating Margin and Build Margin, data from national power grid is essential. The role of experienced local consultant is also very important. Project Entity: Mumias Sugar Company Mumias Sugar Company is the largest sugar company in Kenya with high reputation. Their decision making process is very efficient. Availability of Fuel (Biomass) The amount of waste sugar cane (bagasse) in Mumias factory is enough to cover the demand for Co-generation. Risk of biomass shortage should be carefully checked. (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 7
IFFCO Energy Conservation Project (India) Methodology for Energy Conservation AM18 Steam Optimization Systems is applied to this project. So far, energy efficiency project without production capacity increase has good possibility for CDM project. Balance of Capital Cost and CER income For the explanation of Additionality, capital cost of CDM project should not be substantial compared with CER income. Potential of Energy Efficiency Projects Retro-fitting nature with shorter commissioning period has good implication for CDM project in view of running out of time up to 2012. (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 8
How to tap the potential of CDM projects in Indonesia (JCF s case) - Feasibility Study for CDM projects: Cooperation with Japanese Governmental Institutions (NEDO, IGES etc.) will enhance necessary data collection and analysis for CDM (such as study of baseline and additionality) in the early stage of project development. - Underlying Finance: Joint effort with JBIC will broaden the possibility of long-term finance for CDM projects. - Formulation of Model projects: Japanese Joint Venture companies positive involvement in CDM projects will contribute to materialize successful model projects within shorter time range. (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 9
JKAP (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 10
Example Model for Underlying Finance provided for CDM /JI Projects by JBIC JBIC Fund Provision JCF Underlying Finance (On-Lending Scheme) Intermediary Financial Institution (Direct Loan) (Japanese) Companies in Power /Energy Sector, etc. Purchase of CER (Carbon Finance) Underlying Finance Sponsorship (Equity, etc.) Cash Inflow during Crediting Period CDM/JI Projects Cash Inflow during Construction Period (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 11
For More Information, Contact Japan Carbon Finance, Ltd. (JCF) Carbon Finance Department Masato Ari, Director General m-ari@jcarbon.co.jp Joichi Kimura, Deputy Director General j-kimura@jcarbon.co.jp Yoichiro Matsushita, Deal Manager y-matsushita@jcarbon.co.jp Tel: +81-3-5212-8877 Fax: +81-3-5212-8886 1-3, Kudankita 4-chome, Chiyoda-ku, Tokyo 102-0073, JAPAN Japan Bank for International Cooperation (JBIC) Representative Office in Jakarta Mr.Yuhei Ohmi, Representative, Mr.Ichiro Hayashidani, Representative Tel: +62-21-522-0693 Fax: +62-21-520-0975 Summitmas II 7 th Floor, Jl.Jenderal.sudirman, Kav.61-62, Jakarta, Indonesia You are welcome to visit our web site. http://www.jcarbon.co.jp (C) Copyright 2006 Japan Carbon Finance, Ltd. All Rights Reserved. 12