Raju Laudari Assistant Director, AEPC

2/6/2013

Carbon finance is one of the most effective policies for tackling climate change. it inspires operational excellence and incentivises business investments in low-carbon technologies Compliance Market: Emission reduction accounted to meet the objective of UNFCCC & target of Kyoto Protocol Voluntary Market: Outside Kyoto Protocol and voluntary action by environmentally conscious individuals and organizations continues to send an important message on the need for action.

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Emission Reduction

Policy/program Finance Technology

Time

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Remarkable Experiences-Global

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Remarkable Experience-Global

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RE carbon financing experience- Nepal

Name of Projects No. of systems bundled 9,708 Expected ER/year Project Participants Status

Biogas Support Program Nepal Activity-1 Biogas Support Program Nepal Activity-2

30,203tCO2 AEPC e 31, 875tCO2e AEPC

Registered

9,688

Registered

Micro-hydro Promotion
Biogas Support Program - Nepal Activity-3 Biogas Support Program - Nepal Activity-4 Nepal Biogas Support Program-PoA

About 650 40,535tCO2 AEPC e

20,254 56,919 CO2e AEPC

Registered
Registered

20,348

56,487tCO2 AEPC e AEPC

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Registered

Annual 20,000

2.5tCO2e/p lant

Requesting for 7 Registration

RE carbon financing experience - Nepal

Name of Projects
8

No. of systems bundled Annual 38,000 8,000

Expected ER/year 113,128 tCO2e 38,699 tCO2e 19,899 tCO2e

Project Participant AEPC

Status

Promotion of the Improved Cooking Stove (ICS) - Nepal Promotion of the Improved Water Mills (IWM) - Nepal Improved Cooking Stove project

Under Validation

AEPC

Under Validation

26,000

CRT/N WWF-Nepal SDC

Registered Registered under voluntary market Under validation

Biogas Gold Standard 7,500 Project Efficient Cooking stove Projects 3*22000 =66000

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A case of Guizhou Weining County Mawoshan Wind Power Project-49.5MW

CDM Revenue CDM revenue Project IRR (benchmark is 8%) 6.52% Item s Unit Without income from CERs 6.82 Ben With income ch from CERs ma rk 8 8.82

IRR Without CDM

IRR With CDM revenue

9.13%

IRR (afte r tax)

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10

CDM Revenue

IRR (benchmark is 8%)

IRR without CDM

6.35%

IRR with CDM revenue

10.17%

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11

IRR without CER IRR with CER

2.49% 11.05%

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Cost Items

Cost (USD)

% of Total Cost

Technical support
Subsidy to the users Users' contribution

550,776
3,343,809 3,678,190

6
36 40

Repair & maintenance 1,724,138

Total Carbon Revenue 9,296,914 4,374,000
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19
100 47
13

Cost Items Program Cost Users'contribution Management & Monitoring Cost Subsidy Total

Cost (USD)

% of Total Cost

195,402

35

227,586
45,977 91,954 560,920

41
8 16 100

Carbon revenue

486,000 2/6/2013

87

14

Cost Items Government support including donors fund Users contribution Local government contribution Funding Gap Total Cost

Cost % of ($millio Total n) Cost 29.7 25.1 1.9 2.7 59.3 49.9 42.2 3 5 100

Carbon Financing

2.6

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1. Project

mechanism 2. Baseline is what types of natural resources available in the boundary of the country e.g. hydro 3. Baseline is not always current practice of energy use e.g. imported fossil fuel

based

Energy Mix in Grid: Hydro Project in Himalayan Countries are not eligible/viable of carbon financing

Fossil fuel users are enjoying with carbon financing

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The PoA under the CDM is regarded a precedor of a future NAMA mechanism and already operational NAMA is often sector specific as it is a targeted action. Sectoral approach as domestic mitigation actions in a MRV manner Voluntary mitigation action by developing countries: domestically implemented or internationally supported

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Further: NAMA for boosting RE investment

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Further: NAMA for boosting RE investment

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Carbon financing is proved as instrumental to increase financial viability in RE investment A key difference between NAMAs and the CDM is that NAMAs encompass a wider range of activities with broader time horizons which provide more opportunities for large-scale reductions than the project/activity-based approach under the CDM. Hydro power in Himalayan countries can get more benefit from NAMA than carbon financing
Therefore both carbon financing & NAMA can be instrumental to further scale up renewable energy access

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