Electricity projects in the developing CDM portfolio Jane

Electricity projects in the developing CDM portfolio Jane Ellis, OECD 8 December 2004 OECD

CDM portfolio: 201 proposed projects* • 107 electricity projects with 3. 5 GW “CDM” capacity g n hi itc sw l ue F 13 OECD * For which detailed information is available.

CDM portfolio: expected credits 52 Mt CO 2 -eq/y in 2008 -2012 OECD

CDM market growing, but electricity projects losing market share. . . OECD

Methodology approval status • Some electricity methods approved by EB: – Grid-connected biomass (Oct 03, 6 m) – Hydro <60 MW, bagasse (Dec 03, 3 -8 m) – Consolidated methodology (Sep 04) – Replacement of single plant (Dec 04) • Variable approval time • Applicability initially limited - now quite broad OECD

Sticking points (i. e. why aren’t electricity projects more popular)? • Renewable electricity projects still in many schemes’ “wish list” • Some non-electricity projects are much larger scale (in terms of credits), lower investment and lower-cost • . . . and also lower CDM-risk: “additionality”, baseline, transaction costs • … which leads to lower delays • Project funding also an issue: CDM funds often to buy credits, not to finance projects OECD

Conclusions • To date, CDM have helped plans for 3. 7 GW in Africa, Asia, Latin America • Proposed CDM projects expect to generate at least 52 Mt CO 2 -eq credits/year during 2008 -2012 • High potential (and political desirability) for electricity CDM projects • Electricity projects a small and decreasing proportion of CDM portfolio (e. g. <3% of expected credits from wind) • Delays, uncertainties, CDM-risks/costs all important barriers to date… but diminishing • … but low C prices and low GWP reduces relative attractiveness of CO 2 -reducing projects OECD

Further information http: //www. oecd. org/env/cc/ Taking stock of progress under the CDM http: //www. oecd. org/dataoecd/58/58/32141417. pdf The CDM Portfolio: Update focusing on non-electricity projects http: //www. oecd. org/dataoecd/25/32/34008610. pdf OECD