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Regional Cooperation in Promotion and Sustaining CDM
InitiativesA Case of ASEAN
WEERAWAT CHANTANAKOME, Ph. D.Executive DirectorASEAN Centre for Energy (ACE)Jakarta, Indonesia
* A paper presented at the Asian Regional Workshop on “Capacity Development for the Clean Development Mechanism (CD4CDM), October 19-21, 2005, AIT, Bangkok, Thailand--- “Exploring Cooperation in CDM Implementation in ASEAN”
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OUTLINE OF PRESENTATION Introduction to ASEAN and ACE CO2 Emission & Reduction: ASEAN Profile Status of Climate Change Treaties and CDM PROJECTS
in ASEAN countries CDM Investment Structures Forecast CO2 Emission and Reduction / Market Value
and Investment Opportunities ASEAN CDM Host Country & Institutional Arrangements: CDM Institutional Capacity Building Way forwards for Cooperation
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INTRODUCTION ASEAN, one of the most dynamic economic regions
of the world, A heterogeneous mix of economies with greatly
varying energy resource endowment and energy development situation.
In spite of these differences, the ten (10) ASEAN countries have common aspirations in achieving the Goals of Sustainable Energy Development and Utilization.
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ABOUT ACE Established on January 1, 1999 as an inter-
governmental organization that is guided by a Governing Council composed of the Senior Officials on Energy (SOE Leaders) of the ASEAN countries.
Took over all the commitments, responsibilities, liabilities, and assets of the 10-year long ASEAN-EC Energy Management Training and Research Centre (AEEMTRC).
Core funding is provided by an Energy Endowment Fund established from equal contributions of the ten Member Countries and managed by a fund manager of the ASEAN Secretariat.
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Charter of ACE
ACE is envisioned to be a catalyst for the economic growth and development of the ASEAN region by initiating, coordinating and facilitating regional as well as joint and collective activities on energy.
To realize this vision, the Centre will accelerate the integration of energy strategies within ASEAN by providing relevant information, state‑of‑the‑art technology, and expertise to ensure that over the long-term, necessary energy development policies and programs are in harmony with the economic growth and the environmental sustainability of the region.
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Organizations in the ASEAN Energy Sector ASEAN HEADS OF
STATE/GOVERNMENT
AMMSTOTHER MINISTERIAL
MEETINGS
ASEAN CENTRE
FORENERGY
(ACE)
COST
A M M ASEANS G
A E M OTHER MINISTERIAL
MEETINGS
A S C S O MASCOPE
NRSESSN
EE & CSSN
HAPUA AEBF AFOCSCNCER
ASEANSECRETARIAT
A M E M
S O M ELEGEND:
AEBF: ASEAN Energy Business ForumAEM: ASEAN Economic MinistersAFOC: ASEAN Forum on CoalAMEM: ASEAN Ministers of Energy MeetingAMM: ASEAN Ministerial MeetingAMMST: ASEAN Ministerial Meeting on Science & Technology ASC: ASEAN Standing CommitteeASCOPE: ASEAN Council on PetroleumCOST: Committee on Science & TechnologyEE&C SSN: Energy Efficiency and Conservation Subsectoral NetworkHAPUA: Heads of ASEAN Power Utilities/AuthoritiesNRSE SSN: New & Renewable Sources of Energy Subsectoral NetworkSCNCER: Sub-Committee on Non-Conventional Energy ResearchS G: Secretary GeneralSOM: Senior Officials MeetingSOME: Senior Officials Meeting on EnergyREPP-SSN: Regional Energy Policy and Planning – Sub Sector Network
REPP-SSN
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ASEAN Vision 2020…."establish interconnecting arrangements in the field of
energy utilities for electricity, natural gas and water within ASEAN through the ASEAN Power Grid and Trans-ASEAN Gas Pipeline, and promote cooperation in energy efficiency and conservation, as well as the development of new and renewable energy resources."
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Selected Economic Indicators for ASEAN+3 Countries, 2002
Population, Population, GDP, GDP, Real GDP, GDPPC, GDPPC,
millions share of ASEAN+3
current, million US$
share of ASEAN+3 growth US$/head Rank of 10
Brunei 0.4 0.0% 4,040 0.1% 3.2% 11,509 3Cambodia 13.5 0.7% 3,667 0.1% 4.5% 272 12Indonesia 231.3 11.5% 185,899 2.9% 3.7% 804 9Lao, PDR 5.5 0.3% 1,841 0.0% 5.8% 333 11Malaysia 24.5 1.2% 94,889 1.5% 4.1% 3,868 5Myanmar 48.9 2.4% 8,559 0.1% 5.0% 175 13Philippines 80.5 4.0% 78,900 1.2% 4.4% 980 7Singapore 4.2 0.2% 87,727 1.4% 2.2% 20,887 2Thailand 61.6 3.1% 122,555 1.9% 5.3% 1,990 6Vietnam 80.6 4.0% 34,507 0.5% 6.8% 428 10ASEAN 551.0 27.4% 622,584 9.8% 4.1% 1,130China 1,284.5 63.9% 1,236,690 19.5% 8.0% 963 8Japan 127.7 6.4% 3,997,042 63.2% 0.2% 31,300 1Korea 47.6 2.4% 472,501 7.5% 6.3% 9,918 4Three 1,460 72.6% 5,706,232 90.2% 2.4% 3,909 ASEAN+3 2,011 100.0% 6,328,816 100.0% 2.5% 3,147
Source: ASEAN+3 Energy Security Forum, Fereidun Fesharaki, FACTS Inc./EWCI Ltd., Cebu, Philippines, February 11, 2004
Economic Profile
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Economic Profile ASEAN registering a 6.2 per cent GDP growth
rate in 2004. Projections for the 2005 year-end are also
positive: ADB forecasts a 5.7 per cent GDP growth for Southeast Asia and 6.6 per cent for Asia in 2005-06 on the back of export growth and FDI expansion, including continued growth of China and India.
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Economic Profile An additional US$ 10 increase in oil prices
would restrain GDP growth by 0.6 per cent on the average. In ASEAN, many countries recently trimmed their growth, citing rising fuel costs
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CO2 EMISSION FROM FUEL COMBUSTION 1990-2001
CountryTotal CO2
Emissions (1990)
Total CO2 Emissions
(1998)
Total CO2 Emissions
(2001)Brunei 3.20 4.91 5.12Cambodia n.d n.d. n.d.Indonesia 141.55 226.46 283.50Lao PDR n.d. n.d. n.d.Malaysia 47.40 92.40 108.77Myanmar 3.95 7.84 6.74Philippines 36.03 61.99 67.62Singapore 34.76 43.46 45.93Thailand 80.20 148.10 156.40Vietnam 17.96 32.87 45.75ASEAN 365.05 618.03 719.56
Source: IEA, 2000; IEA – 2003 (IPCC)
CO2 Emission & Reduction: ASEAN Profile
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CO2 Emissions Based on Electricity Demand Forecast 2020 (BAU) vs. Kyoto Protocol (KP)
2000 2005 2010 2015 2020
Business As Usual (BAU) in million tons CO2
196.66 141.00 200.00 280.00 358.00
Kyoto Protocol (KP) in million tons CO2
43.02 43.02 43.02 43.02 43.02
Emission Reduction from BAU to KP in million tons CO2
253.64 98.06 157.37 236.89 308.95
Value of Emission Reduction from BAU to KP in million US Dollars3
295.04 539.31 865.53 1302.87 1,699.24
1 Business As Usual (BAU) is CO2 Emission based on electricity demand forecast 2020.2 Agreed worldwide CO2 reductions under Kyoto Protocol is 5.2% of 1990 CO2 emission levels.3 Dollar value of CO2 emission reduction is 5.5 USD/MT CO2 as in recent transactions.
YearConditions
ENERGY POLICY ISSUES: ENVIRONMENT
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Graph Showing CO2 Emission Based on Electricity Demand Forecast 2020 (BAU vs.
Kyoto Protocol)
ENERGY POLICY ISSUES: ENVIRONMENT
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Total CO2 Reduction from RE and EE&C Plans in 2020 in Mil. T CO2
Energy Efficiency &Conservation
RenewableEnergy
Total
Brunei 0.09 0.22 0.31Cambodia 0.09 1.94 2.03Indonesia 4.36 12.59 16.95Lao P.D.R 0.06 1.29 1.35Malaysia 2.73 9.03 11.76Myanmar 0.06 1.47 1.53Philippines 3.53 5.80 9.33Singapore 0.15 0.11 0.26Thailand 3.93 14.34 18.27Vietnam 4.24 20.72 24.96
Total 19.26 67.54 86.80
ENERGY POLICY ISSUES: ENVIRONMENT
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CO2 Reduction from RE and EE&C Plans in 2020 of ASEAN Countries vs. KP with BAU as Baseline
in Million Tons CO2
Country
Total CO2 Reduction from EE&C and RE
Plans(a)
Kyoto Protocol with BAU as
baseline(b)
Difference(b-a)
Brunei 0.31 1.00 0.69Cambodia 2.03 0.42 -1.61
Indonesia 16.95 77.39 60.44
Lao P.D.R 1.35 -0.12 -1.47Malaysia 11.76 60.87 49.11Myanmar 1.53 -0.28 -1.81Philippines 9.33 54.99 45.66Singapore 0.26 14.70 14.44Thailand 18.27 60.50 42.23
Vietnam 24.96 39.50 14.54Total 86.80 308.95 222.22
ENERGY POLICY ISSUES: ENVIRONMENT
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Comparison of CO2 Emission on Three Scenarios:
BAU, RE & EE&C Plans and KP
ENERGY POLICY ISSUES: ENVIRONMENT
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Status of Climate Change Treaties in the ASEAN
Country
UNFCCStatus of Ratification
As of 17 February 2003
Kyoto ProtocolStatus of RatificationAs of 14 August 2003
Signature RatificationAccession
Entry into force
Signature RatificationAccession
Brunei - - - - -Cambodia - 18/12/95 (Ac) 17/03/96 - 22/08/02 (Ac)Indonesia 05/06/92 23/08/94 (R) 21/11/94 13/07/98 (OK) -Lao PDR - 04/01/95 (Ac) 04/04/95 - 06/02/03 (Ac)Malaysia 09/06/93 13/07/94 (R) 11/10/94 12/03/99 04/09/02 (R)
Myanmar 11/06/92 25/11/94 (R) 23/02/95 12/08/03 -Philippines 12/06/92 02/08/94 (R) 31/10/94 15/04/98 /10/03 (R)Singapore 13/06/92 29/05/97 (R) 27/08/97 - -Thailand 12/06/92 28/12/94 (R) 28/03/95 02/02/99 28/08/02 (R)Vietnam 11/06/92 16/11/94 (R) 14/02/95 02/12/98 25/09/02 (R)
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CDM PROJECTS IN ASEAN COUNTRIESSource: www.cdmwatch.org
Country CDM ProjectBrunei Not signatory to UNFCC and Kyoto ProtocolCambodia Studies by PREGA, UNEP and NEDOIndonesia -Micro-hydro project
-Unocal’s Sarulla geothermal project-Unocal’s Wayan Windu geothermal project-Palm oil west power plant-Utilization of plantation waste and forest segmentation for fuel switching project-Indocement energy efficiency project-Kansai wood waste recycling plant-Yogyakarta urban bus project-East Kalimantan plantation project
Lao PDR -Malaysia -Biomass power generation project
-Bumibiopower biomass power plant-Air Hitam landfill gas capture project-Palm oil plant gas capture project-Felda Lepar Hilir Palm Oil Mill biogas project
Myanmar Studies by NEDOPhilippine PV/LPG and biomass projectThailand -Rice husk power plant project
-AT Biopower rice husk power project-Yala rubber wood waste plant project-Mitr Phol’s Dan Chang Cogeneration project-Bangkok Landfill gas project
Singapore Not signatory to Kyoto ProtocolVietnam -Thongly landfill gas project
-Rang Dong gas planning project-Tree planting
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CDM Investment Structures Unilateral model
developing country would itself undertake actions to reduce emissions and then subsequently trade the CERs (certificate of emissions reductions) produced through such action on the international market .
Bilateral model countries or private entities would negotiate agreements among
themselves. Together, they would set criteria and rules for crediting.
Multilateral model countries would offer projects for emission reductions to the CDM,
to be picked up by the highest bidder in Annex 1 countries. Interested developing countries could each present a portfolio of projects and seek financial and technical support for their implementation.
Hybrid model Combines features of unilateral and multilateral models.
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Unilateral CDM1. Project Development, Design and Financing
2. Validation of Project Design
3. Monitoring by Project Operators
4. Verification and Certification
Operational Entities/ Executive Board
HostIdeas Capacity Financing
CERs
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Unilateral CDM
Attractive to countries with sufficient capacity and resources to select, develop, finance, and operate sustainable development
Ensures that projects are closely knit with national sustainable development plans
Can promote wider international CDM participation
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Bilateral CDM1. Project Development, Design and Financing
2. Validation of Project Design
3. Monitoring by Project Operators
4. Verification and Certification
Operational Entities/ Executive Board
ANNEX 1 Investors
Host
Ideas Capacity Financing
CERs
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Bilateral CDM
Consistent with conventional modes of foreign direct investment (FDI)
Provides most flexibility to project developers Consistent with the existing development assistance
practices Concerns:
Large majority of FDI is concentrated in a small set of countries (China, Mexico, Brazil – 50 %) – will not deliver a geographic distribution of project
Bilateral approach favors large capital intensive infrastructure project – small renewable and energy efficiency projects may be rendered non competitive.
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Multilateral CDM
1. Project Development, Design and Financing
2. Validation of Project Design
3. Monitoring by Project Operators
4. Verification and Certification
Operational Entities/ Executive Board
CDM Fund
Host
Ideas Capacity Financing
CERs
ANNEX 1 Investors
$ CERs
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Multilateral CDM May increase bargaining power to developing
countries – dealing with fund managers whose mandate is compatible with their interests
Help shelve investors for the risks of individual project failures
Possible arrangements Single supplier – give the greatest control over CDM
investment flows but could slow the market development and create large inefficiencies
Multiple fund – variety of institutions operate, competing and co-existing CDM funds
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Hybrid CDM
1. Project Development, Design and Financing
2. Validation of Project Design
3. Monitoring by Project Operators
4. Verification and Certification
Operational Entities/ Executive Board
National CDM FundIdeas Capacity Financing
CERs
Annex 1 Private Investors
Other Multilateral CDM Funds
Domestic Investment
CERsCERsCERs$
$ $
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Forecast CO2 Emission and Emission Reduction from Energy Sector for the ASEAN Countries (2001-2010)
ScenarioEmission
(in million tons CO2 )
Emission Reduction
(in million tons CO2 )
Business-as-usual 7,610 -Emission reduction on fossil fuels
- 879
Emission reduction on RE & EE programs
- 512
Emission reduction by Kyoto Protocol (5.2% of 1990)
2,519 5,091
* Using business-as-usual (BAU) as baseline
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Market Value of Emission Reductions *2001-2010 in ASEAN: Investment Opportunities
Scenario Value in Mill. US Dollar
Emission Reduction from fossil
fuels
4,836
Emission Reduction from RE
and EE Programs
2,815
Emission Reduction by Kyoto
Protocol Standard
28,000
* - Using business-as-usual as baseline - Assuming USD 5.5 per ton CO2
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Summary of Markets/ Investment Opportunities from Clean Energy Initiatives in ASEAN(in million US Dollars)
MARKET
INVESTMENT OPPORTUNITIES
2001-2010Low High
Renewable Energy 19,476 27,467Energy Efficiency and Conservation
17,054 29,672
Clean Development Mechanism (CDM)
7,651 28,000
Total 44,181 85,139
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Conclusion
The Clean Energy Development Market and Business Opportunities in the ASEAN Region during 2001-2010 range between 44 Billion USD and 85 Billion USD
Taking the proper gears for the RESCOs,
the ESCOS and the CDM Promotion Companies should be a way to prosper in this market.
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ASEAN CDM Host Country
The large ASEAN countries have a varied and considerable CDM potential, particularly regarding bio-energy and geothermal.
The most attractive ASEAN CDM host country at the moment is likely to be Indonesia. Vietnam and Malaysia have institutions in place and thus fulfill the necessary conditions.
Thailand and the Philippines still have to clarify their approval procedures, but already have a considerable project pipeline.
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Institutional Arrangements for CDM in ASEAN countries
Cambodia, Laos, Malaysia, Thailand and Vietnam have notified their DNA
Indonesia is likely to notify its DNA after the recent ratification of the Kyoto Protocol.
The Philippines are in the process of setting up the DNA. (?)
Brunei, Myanmar and Singapore have not yet started preparations. (?)
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CDM Institutional Capacity Building in ASEAN ASEAN have experience in developing CDM policies, setting up
institutional arrangements and implementing CDM procedures. Local capacity and experience is still limited in some countries.
Within the region, therefore, the exchange of experience and co-ordination can support the implementation of CDM.
Needs for capacity building in ASEAN are:- Operational skills of DNA- Technical CDM project assessment- Establishment local Operational Entities- Awareness raising in longer term- Project development:* CDM life cycle or preparing proposals* Financing or transactions
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Ongoing Capacity Building Projects in the ASEAN region CDM-ASEAN (ASEAN region)
- Energy sector, institutional Japan IGES-MOE (Indonesia, Cambodia, Thailand, Vietnam, Philippines)
- all levels of capacity building WB/ESCAP (Northeast, Southeast and South Asia)
- all levels of capacity building CD4CDM/UNEP (Vietnam, Cambodia, Philippines)
- Awareness building, project development, institutional GTZ project on CDM institution building (Indonesia / Cambodia - Vietnam)
- Procedures, DNA, project clearing house Danish CDM capacity building (Thailand / Malaysia)
- DNA, procedures, project development, awareness UNDP (Philippines)
- Institutional, project development, awareness SouthSouthNorth (Indonesia)
- Project development, sustainability criteria Asia Pro-Eco (Cambodia, Laos, Vietnam)
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Problems & Recommendations Most projects are successful. Some problems, however,
have been identified which limit the effectiveness of the projects:– Some overlap exist in scope and content– Projects do not sufficiently build on results of previous projects– The target group is sometimes not specific enough– Capacity building should start by raising awareness on thegeneral issue on climate change since most people have verylimited knowledge on the issue, then relate it to the more specificCDM issues.– The project activities are often limited to workshops and do notinvolve (on-the-job) training.– The role of local government in CDM is not clear and notadequately targeted in the capacity building projects
Ref: Pelangi, 2004, Jakarta, Indonesia
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Recommendations
Several recommendations have been made to increase the effectiveness of capacity building:
– Improved evaluation of past projects– Stricter assessment of proposals by the recipient country and organisations beforehand– Capacity building should not be limited to transfer of knowledge but also include transfer of skills (on-the-job training)– Improved coordination of activities. This is mainly theresponsibility of the recipient (host) country.– Better exchange of information or results between projects
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ASEAN Existing Body for Cooperation: Way Forwards… Roles of ASEAN Secretariat, ASEAN Centre for Energy
(ACE), ASEAN CCI, complementary to the activities on the national level.
A future ASEAN Climate Change Initiative could facilitate the transfer of best practice and the exchange experiences within ASEAN.
The ongoing CDM-ASEAN Project (ACE/EAEF) can be seen as a first step (or pilot) towards establishing a regional framework for exchange of experience.
The possibility of the establishment of an ASEAN CDM Fund to fund CDM projects
ASEAN Senior Official Meeting on Energy (SOME) ASEAN MINISTERS ON ENERGY MEETING (AMEM)
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A Commitment….
“…However, the ASEAN people are becoming aware that the climate is actually changing…
and their awareness may be the key to future change…”
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