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Climate Change and the Carbon Market

October 2010 Ciska Terblanche

TAPPSA 2010 Conference

Durban, South Africa

TAPPSA – October 2010Climate Change and Carbon Trading – an update

Content

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•International status of Climate Change

•Description of Incentive schemes to reduce Carbon Footprint – South Africa

•REFIT

•TREC

•Tax

•CDM

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Climate Change Status

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EU

•Phase III of the Trading system runs from 2013 to 2020

•Commit to a 20% or 30% reduction in GHG emissions below 1990 levels

China

•January 2010 announced they will reduce their economy’s carbon intensity by 40-45%

South Africa

•Indicates a reduction objective at COP 15

•Commitment made on condition that appropriate funding is provided to South Africa

•Green Paper to be published after the World Cup Soccer

•White Paper to be communicated to stakeholders by end 2010

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34% by 2020

Typical Incentive Schemes for GHG reduction and the promotion of RE

Cap and Trade • EU *ETS, **CDM

Feed-in tariff regimes • REFIT (Renewable Energy Feed-in Tariff

Fiscal and Financial Incentives

• Tax incentives (vehicles)• Positive incentives – VAT, import taxes

Tradable Green Certificates

• TREC in South Africa - under development

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*ETS – Emissions Trading Scheme**CDM – Clean Development Mechanism

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Tradable Renewable Energy Certificates (TREC)

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• TREC = Tradable Renewable Energy Certificate

• Sell kWh generated from a renewable energy source (sell electricity)

• Host: Department of Energy

• Model: REC system implemented in EU

• Initially a Voluntary system, but legislation provides the framework to switch to a mandatory system, i.e. industry will have a RE electricity use target

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Department launches refit programme for renewable energySeptember 30, 2010

REFIT

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• SA Target announced 2009: 10 000GWh will be generated by renewable energy sources by the year 2013 – comprising approximately 4% (1667 MW) of the country's energy supply

• REFIT = Renewable Energy Feed-in Tariff

• Hosted by the Department of Energy, input from NERSA, Eskom

• Under REFIT the power producer is paid for each kWh produced from a RE

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CDM Background

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•CDM = Clean Development Mechanism

•One of three cap and trade mechanisms under Kyoto - developing countries

•Emission reductions are traded (carbon credit): 1 ton CO2 = 1 CER

•Project based mechanism

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•> 2,400 registered projects in 51 countries

•> 900 projects in China

•> 500 projects in India

•> 170 projects in Brazil

•Retistered projects expected to generate > 374 million CERS p.a. and > 1.8 billion CERs by end 2010

•1,900 CDM projects in the project pipeline, 31 awaiting registration

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Registered Projects

7 CDM Statistics

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CDM Trades8

2009: US$144 billion traded globally under the Kyoto mechanisms

CDM: US$2.7 billion with slightly more than 200 million tons of CO2e transacted at an average price of US$12.7

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CDM Trades9

• Forward sales

• Spot market

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CDM Supply and Demand10

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CDM Process Flow11

CDM Projects in the Pulp and Paper Industry

• Demand side energy efficiency programmes for specific technologies at ITC Bhadrachalam pulp and paper making facility in India

• Rice Husk based Cogeneration project at Shree Bhawani Paper Mills Limited (SBPML), India

• Methane recovery from wastewater generated at Paper manufacturing unit of Sree Sakthi Paper Mills Ltd., Kerala

• American Israel Paper Mill (AIPM) Natural Gas Fuel Switch• Steam Optimization in Cooking Process in Paper Plant • Optimization of steam consumption in the process by installation of free flow falling

film finisher evaporator and retrofit to the chemical recovery boiler in Cachar Paper Mill of Hindustan Paper Corporation Limited

• Energy Efficiency Measures At Paper Production Plant

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CDM Africa Climate Solutions

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Thank You for your attention