Clean Development Mechanism (CDM)

2. Clean Development Mechanism (CDM) Credits (CERs) for emissions avoided through sustainable development projects in developing countries Joint Implementation (JI) Credits (ERUs) for emissions avoided through projects in Annex I countries • Basic principles • Market mechanisms • Lowest marginal cost of abatement • Additionality to any ERs that would occur in the absence of the project • Bottom-up approach, re-use and broad application principles for standards • International supervisory and standard setting bodies (CDM EB, JISC)

3. CDM – General status • 948 projects registered to date • 49 host countries • 121,122,134 CERs issued • > 3000 projects in pipeline • 2.7 billion CERs expected to end of 2012

4. CDM – Registered projects by sectoral scope • Majority of registeredprojects (> 50%)in scope 01(energy industries – renewable/non-renewable sources) • (JI PDD pipeline:similar picture)

5. CDM – Methodologies • Energy industries- renewable/non-renewable sources(37/34%; > 50% of registered projects): • Electricity production from renewable energyUse of waste heat/gases to generate electricityCogenerationElectricity generation from captured methane from industrial,municipal and agricultural wasteIndustrial fuel switching from coal or petroleum fuels to natural gasImprovement in heat generation efficiency or switch to renewable biomass for heatingExpanding grid to isolated grids or less efficient self generating consumersIntroduction of centralized and efficient district heating systemsBetter/more efficient technologies for generating power from fossil fuelsManagement systems to optimize power generation from hydro resources • Manufacturing industries(19/17%; ca. 6% of registered projects): • Mitigation of CH4 emissions in the wood carbonization for charcoal productionUse of feed stock in pulp and paper production or in bio-oil production to avoid emissions from biomass wastesReplacement of SF6 with alternate cover gas in the magnesium industryPartial substitution of fossil fuels with alternative fuels or less carbon intensive fuels in cement manufactureIncreasing the blend in cement production or the use of alternative raw materials that do not contain carbonates for clinker manufacturing in cement kilns

6. Waste handling and disposal(12/11%; ca. 21% of registered projects): • Covering project activities that introduce technologies for better management of industrial, municipal, agricultural waste and capture of methane from waste, use of waste handling measures that avoid methane generation (composting, incineration to generate power, making fuel out of waste, using agriculture waste as raw material in production of pulp, use of aerobic treatment systems, gasification of waste, etc), methane capture from waste water, animal manure management and methane capture, use of captured methane for household/transportation use, etc. • Chemical industries(13/12%; ca. 2% of registered projects): • Covering project activities such as secondary catalytic N2O destruction in nitric acid plants, substitution of CO2 from fossil or mineral origin by CO2 from renewable sources in the production of inorganic compounds or the catalytic N2O destruction in the tail gas of nitric acid or caprolactam production plants • Energy efficiency of equipment and industry • Demand side efficiency • Transportation • Capture of CO2 • Flared/vented gas • Mine methane • Biofuels

7. ACM0013: Methodology for new grid connected fossil fuel fired power plants using a less GHG intensive technology • Supports the transformation from (e.g. overcome R&D barriers) low efficiency technologies to more efficient fossil fuel based electricity generation technologies • Eligible for: • Construction & operation of a new fossil fuel fired grid-connected generation plant • All possible fossil fuel efficiency improvement measures • Limited too: • New electricity generation plants - no retrofit or co-generation • Most plausible baseline scenario is the construction of (a) new power plant(s) using the same fossil fuel type • Baseline fuel must be used in more than 50% of total generation by utilities in the geographical area • Benchmark emission factor determined based on the performance of the top 15% power plants that use the same fuel as the project plant and any technology available in the geographical area • Baseline needs to be reassessed for each crediting period • Incentive to improve efficiency of fossil fuel based electricity generation technologies, but decreasing with overall increased efficiency

8. CDM – Technology transfer (trends) Trends of UNFCCC study to be published soon • Technology transfer (TT): import of technology or knowledge or both • Basis: Statements of project participants in PDDs of projects in pipeline • Roughly 40% of all analyzed projects (covering 64% of annual emission reductions) claim TT • Likelihood of TT increases with project size and involvement of foreign project participant • Pattern heterogeneous by project type, but figures relevant for LCGT in many cases above average

9. Conclusion CDM (and JI),as market based mechanisms using a bottom-up approach,have proven as a means toenable low carbon generation technologies, as well as corresponding technology transfer