Second Regional Workshop on Capacity Development for the

Second Regional Workshop on Capacity Development for the Clean Development Mechanism 23 March 2004 Siem Reap, Cambodia GHG Mitigation and CDM Project Pipeline in Cambodia Presented by Thy SUM, Climate Change Office Ministry of Environment, Cambodia 1

Outline 1. Cambodia’s National GHG Inventory 2. GHG Mitigation Analysis 3. PIN Angkor Prosperous Rice Mill 4. PIN Koh Kong Mini-Hydro Bundling 5. Summary 2

I. Cambodia’s National GHG Inventory (1) n n n Base year (1994) Based on the Revised 1996 IPCC Guidelines Activity Data: some are available from concerned ministries/agencies Emission Factors: default data presented in the IPCC Guidelines were used mainly Greenhouse gases (GHGs): carbon dioxide (CO 2), methane (CH 4) and nitrous oxide (N 2 O) Major sectors: Energy, Industrial Processes, Agriculture, Waste, and LUCF. 3

I. Cmbodia’s National GHG Inventory (2) Summary of 1994 GHG inventory 4

I. Cambodia’s National GHG Inventory (3) Figure 1: Share of the Three Main GHGs; (b) Total CO 2 Equivalent Emissions by Sectors (a) (b) 5

I. Cambodia’s National GHG Inventory (4) Cambodia’s GHG key source categories (excluding LULUCF) 6

II. GHG Mitigation Analysis (1) Energy Sector Option studied*: § Combined cycle gas turbine § Hydropower § Phnom Penh city shuttles § Improve cook stove § Compact fluorescent § Mass transit for rural areas *These options were assessed by government staff conducting the National Communication and not by project developers. 7

II. GHG Mitigation Analysis (2) Summary of GHG reduction (based on LEAP modeling) Mitigation Option CO 2 -Eqv. Reduction (Gg) % Reduction (CO 2 Eqv. ) Combined Cycle Gas Turbine 19980 33. 5 Improved Cook Stove 13060 21. 9 Hydropower 12390 20. 8 Compact Fluorescent Lamp 7320 12. 3 Phnom Penh City Shutles 2300 3. 8 Mass Transit (Rural) 4600 7. 7 Total GHG Reduction 59650 100 8

II. GHG Mitigation Analysis (3) Forestry Sector o In this study, mitigation options being evaluated were § Forest protection (FP) § Reforestation with sort rotation (RSR) § Reforestation long rotation (RLR) § Reforestation without rotation using fast (RFG) species, and § Reforestation without rotation slow growing species (RLG) 9

II. GHG Mitigation Analysis (4) Comparison of the five mitigation options 10

II. GHG Mitigation Analysis (5) Agriculture Sector The mitigation options evaluated for the agriculture sector only covered rice paddies: Ø Intermittent irrigation applied to dry season rice Ø Direct seeded applied in both dry and wet seasons Ø Organic matter management applied for both seasons; and Ø Zero tillage applied in both seasons. 11

III. PIN Angkor Prosperous Rice Mill (1)

III. PIN Angkor Prosperous Rice Mill (2) Project Description Objectives of the project Production of electricity and heat using rice husk for internal consumption by the mill n Project n 1. 5 MWe rice husk fired cogeneration plant description and n Replacement of currently used diesel proposed generators activities Technologies to be employed n n Traveling grate boiler with 75% rated efficiency Steam impulse turbines 13

III. PIN Angkor Prosperous Rice Mill (3) Project Developer Angkor Prosperous Rice Mill Project Sponsors EC-Cogen 3 (15% discount from EC suppliers of equipment) Searching for other sponsors Greenhouse gases targeted CO 2 only. CH 4 from burning of rice husk is not claimed. Location of the projects Kandal Province, 23 km south of Phnom Penh Expected Schedule Project start date Project lifetime ? 20 years 14

III. PIN Angkor Prosperous Rice Mill(4) Social and Environmental Benefits Estimate of Greenhouse Gases abated (tons of CO 2 equivalent) Baseline scenario Annual: 10. 8 k. T CO 2 e §Over crediting period of 21 years: 226 k. T CO 2 e §Calculations based on: § CO 2 from biomass residues considered carbon neutral (IPCC) § 12 GWh annual electric output of project § 0. 9 kg CO 2 e/k. Wh emission rate (diesel generation units displaced by project) § (12 x 1000) MWh x 0. 9 t CO 2 e/MWh = 10. 8 k. T CO 2 e § Replacement of in-house diesel generation units § Difficulties in securing financing § 15

III. PIN Angkor Prosperous Rice Mill (5) Specific global & local environmental benefits Socio-economic aspects § § greenhouse gas emission reductions sale of ashes as natural fertiliser Angkor Prosperous specialises in high quality organic rice varieties. § The use of ashes as fertilisers within its network of organic farmers will contribute to increasing their productivity. § Rice husk may be used as cooking fuel by rural people and cottage industries. There may be negative social impacts. § 16

III. PIN Angkor Prosperous Rice Mill (6) Finance Total project cost estimates US$ 4. 1 million Sources of financing n EC rebate on European equipment (about US $300, 000) n some 90% not yet secured Revenues from Certified Emission Reductions Annual Over 10 years Over 21 years Forecasted Financial Internal Rate of Return* (without CER revenues – Discount rate 15%) *Analysis undertaken by EC Cogen 3 US $54, 000 (at US $5 per t CO 2) US $540, 000 US $1, 134, 000 21. 46 % 17

IV. PIN Koh Kong Mini-Hydro Bundling (1) Based on Projects identified in Mini-Hydropower Study by Meritech Ltd

IV. PIN Koh Kong Mini-Hydro Bundling (2) Project Description Objectives of the project Project description and proposed activities Technologies to be employed Production of electricity from hydro resources in SW Cambodia to feed Phnom Penh electricity grid. n Bundling 4 mini-hydro projects n 12. 3 MW total installed capacity 4. 2 MW - P. Batau; 3. 1 MW - O Sla 3 MW P. Tunsang upstream; 2 MW downstream n Generating 61. 7 GWh/an n Located within 20 km radius, feeding into existing 115 k. V transmission line n Displacement of currently used oil and diesel electricity generation in Phnom Penh n n Francis turbine generating units 19

IV. PIN Koh Kong Mini-Hydro Bundling (3) Project Developer Searching for Project Developer Pre-feasibility/investment study completed Project Sponsors Searching for Project Sponsors Greenhouse gases targeted CO 2 only Location of the projects Koh Kong Province (~140 KM SW Phnom Penh) Expected Schedule Project start date Devel/Const Project lifetime ? 3 years 30 years 20

IV. PIN Koh Kong Mini-Hydro Bundling (4) Social and Environmental Benefits Estimate of Greenhouse Gases abated (tons of CO 2 equivalent) Annual: 47. 8 k. T CO 2 e Over crediting period of 10 years: 478 k. T CO 2 e Over crediting period of 21 years: 1, 004 k. T CO 2 e Calculations based on: 61. 7 GWh annual electric output of project n. 775 kg CO 2 e/k. Wh emission rate (weighted average emission factor of Phnom Penh electricity grid) n (61. 7 x 1000) MWh x. 78 t CO 2 e/MWh =47. 8 k. TCO 2 e n Baseline scenario Small Scale Methodology – weighted average emissions of Phnom Penh electricity grid. n Barrier - Difficulties in attracting developers and financing n 21

IV. PIN Koh Kong Mini-Hydro Bundling (5) Specific global & local n greenhouse gas emission reductions environmental benefits n reduction in air pollution from old fossil & impacts fuel generation units n reduction in transportation fossil fuels n small diversion of river changing flow regime n located in areas of secondary forests within protected area Socio-economic aspects reduction of fossil fuel imports n provision electricity increase reliability and decrease cost (can improve health facilities, education, potential for improved industry development) n 22

IV. PIN Koh Kong Mini-Hydro Bundling (6) Finance Total project cost estimates Sources of financing Total US$18. 1 m US$6. 0 m – P. Batau* US$3. 4 m – O Sla* US$4. 3 m P. Tunsang upstream+ US$4. 4 m P. Tunsang dnstream+ n Not yet secured Revenues from CERs Annual Over 10 years Over 21 years Forecasted Financial Internal Rate of Return* Discount rate 10%; *Analysis by Meritech Ltd US $239 k (at US $5 per t CO 2 e) US $2. 39 m US $5 m 32. 4% - P. Batau 27. 7% - O Sla +assumption based on MW cost for P. Batau 23

V. Summary n n n Cambodia’s GHG Inventory identified that LULUCF is the greatest contributor to the total GHG emission/uptake Of non-LULUCF sectors; the main sources of GHGs are from agriculture, energy and waste activities Eligible CDM agriculture activities are difficult and not yet assessed for CDM potential Energy and waste projects more focus for CDM in Cambodia Limited investors and project developers for CDM; limited identification of potential CDM projects Plenty of ‘barriers’ to verify additionality! 24