kim session24 acef2008

8/14/2019 Kim Session24 ACEF2008

1/9


2/9

Contents

Any problem?Any problem?

Will it last?Will it last?

Insightful InvestmentInsightful Investment

Project CaseProject Case

Offset CaseOffset Case


3/9

1. Any problem? 1/6

Is offset effective?

Most of ETS consider offset mechanism (not only EU)

RGGI / WCI / CCX /USFed / JVET / NZ / Canada, Australia Coming up

Most of ETS consider offset mechanism (not only EU)Most of ETS consider offset mechanism (not only EU)

RGGI / WCI / CCX /USFed / JVET / NZ / Canada, Australia ComingRGGI / WCI / CCX /USFed / JVET / NZ / Canada, Australia Coming upup

On the contrary,

Criticism on Additionality and Arbitrary Standards

Non CO2 and Hydro projects

Slow process and geographical distortion

Criticism on Additionality and Arbitrary StandardsCriticism on Additionality and Arbitrary Standards

Non CO2 and Hydro projectsNon CO2 and Hydro projects

Slow process and geographical distortionSlow process and geographical distortion


4/9

2. Will it last? 2/6

New ETS will include offset

- Own offset or International offset not matter

Problems are mostly procedural ones (not generic ones)

- Policy and consequent Market will value the ERs, not Mechanism

Maybe some changes, but any alternatives ?

New ETS will include offsetNew ETS will include offset

- Own offset or International offset not matter

Problems are mostly procedural ones (not generic ones)Problems are mostly procedural ones (not generic ones)

- Policy and consequent Market will value the ERs, not Mechanism Maybe some changes, but any alternatives ?Maybe some changes, but any alternatives ?

Bac k t o t he CDMs or ig in (K yot o COP3, 1997)

Dual aim of Sus. Dev.(the developing) and GHG reduction(the developed)

JI proposed by US + Penalty by Brazil CDM(from fund to investment)

Mechanism that facilitates the GHG reduction investment

Unique pathway connecting two acute parties (Donator & Beneficiary)


5/9

3. Insightful Investment 3/6

Satisfy both parties (stakeholders)Satisfy both parties (stakeholders)

My experience from both perspectives(TGIK) - Investor & host

Landfill Owner vs. Landfill Operator vs. EPC provider as an investor

Classify Offset into 3 categoriesClassify Offset into 3 categories

CO2 vs. CH4 vs. Others (SPC vs. Partnership Agreement)

Different valuation in investors mind needed for each category

Understand CDM as a guidelineUnderstand CDM as a guideline

Prepare for evolving criteria (Even during the construction, CDQ)

Methodology is just methodology (Fuel Cell)

Ahead of learning curve for other offset markets (Value ratio)


6/9

4. Project Case (CO2) 4/6

POSCO, 4th largest steel maker(30 MT-steel/yr), had invested $1.5 Bil. in the

innovative steel making process called Finex commercialized in 2007

The project activity is to recover waste gas from FINEX process for power

generation displacing electricity from the grid.

532 KT-CO2/yr expected from Combined Cycle Power Plant of 145.9MW Construction from June in 2005 to July in 2007 (to be registered in July)

Use of FINEX Off Gas for power generation in Pohang Steel Works

CEO vs. Operator

Evolving Criteria

Electricity + CER


7/9

4. Project Case (CH4 & Others) 5/6

Sudokwon (Seoul Metropolitan) Landfill Gas Electricity Generation Project

Catalytic N2O Abatement in the Tail Gas of the Nitric Acid Plant of HWC in Korea

Largest landfill in Korea (7MT-waste/yr)

Replacing existing 10MW to utilize full LFG

(1) expansion of the collection system

(2) construction of the 50MW LFG power

CO2 reduction of 1.2 MT-CO2/yr

Registered (Unilateral)

Owner vs. Investor

Modeling and Law

Electricity + CER

Undesired by-product of nitric acid (HNO3) Reduce N2O in the tail gas at nitric acid

production process by DeN2O catalyst

Nitric acid since 1991 (Cap. of 100KT/yr)

0.3 MT-CO2/yr , Not regulated in Korea Registered (Bilateral Hanwha & Mitsubishi)

First Act, then Nego

Facilitate Host

only CER


8/9

5. Offset Case (KOP) 6/6

Obj.

CDMCDM KOP (Korean Offset Program)KOP (Korean Offset Program)

Supplementary to Compliance Facilitate Voluntary Investment of GHG Red.

Implementation since October 2005

Agency EB (under UNFCCC) KEMCO (under Ministry of Industry)

Bound. Global Project Domestic Project

Val./Ver. EB Accredited DOEs Val.(KEMCO) / Ver.(ISO Certifying Org.)

Criteria Regulation + Financial + Env. Additionality Regulation + Environmental Additionality

Period 10 yrs or 7yrs 5 yrs (No extension)

Benefit Acquiring CERs Acquiring KCERs (bought by Korean Govt.)

+100

Projects

Registered

+100

Projects

Registered

$1~2 bil.

Voluntary

Investment

$1~2 bil.

Voluntary

Investment

+2 million

CO2 T/yr

Reduction

+2 million

CO2 T/yr

Reduction

KEMCO(Korea Energy Management Corp., http://co2.kemco.or.kr)


9/9

Shaping for the Future

Thank youThank you

[email protected]@posco.com

OR [email protected] [email protected]
mailto:[email protected]:[email protected]:[email protected]

kim session24 acef2008

Documents