By applicant By the designated national authorithy Validation by designated operational entities (third party entities or international organizations accredited by the CDM Ecexutive Board Validation = independent evaluation of the project Registration by the CDM Executive board (= formal acceptance) Monitoring by the project applicant of the actual emission reductions taking place Verification by the DOE (=independent review if project achieved the emission reduction) Certification by the DOE (= written assurance of the above) Issuance by the CDM EB
Asia & Pacific share of CDM projects: 81.2%
Criterion 5: how? In Malaysia incorporated company, minimum capital of 100,000 RM (20,000 GBP), likely sources of financing the project
llM University of Reading 2013 Carbontrading
Carbon trading Why trade with carbon?Role of developing countries?
Outline• Background of carbon trading /Clean Development Mechanism (CDM)• CDM in Malaysia• CDM in China• Conclusion
Climate Change• Predicted temperature rise by 2100: 1.1- 6.4 °C (IPCC report 2007)• Very likely that emitted GHG are responsible• Substantial effects: – rising sea levels – submerging land – reduced food security – Homelessness – Large and unpredictable economic impacts
Carbon trading under Kyoto• International Emission Trading• Joint Implementation• The Clean Development Mechanism (CDM)
The CDM – how it works Source:http://cdm.greentechmalaysia.my/what-is- cdm/intro.aspx
The CDM - objectives ThreefoldContribute to the overall goal of Support for Annex I countries tostabilizing world GHG achieve their emission reductionconcentrations targets Assist non Annex I countries in achieving sustainable development (technology transfer, finanze)
Malaysia and the CDM • Fast growing nation/ high energy demand • 2nd largest Palm oil producer – Many CDM projects: Conversion of Palm oil waste (biomass and biogas) into energy, composting – But also: EE and RE projects • Malaysian PM in Cop 2009:Number of CDM projects in Asia by country, Dec 2012 reduction of GHG emissionsby UNEP, http://www.cdmpipeline.org/cdm-projects-region.htm by 40% by 2020 with the help of developed countries
Malaysia – legal CDM criteria• Support and direct benefits for sustainable development (economic, environmental & social)• CER-buyer: party from Annex I country• Technology transfer or improvement of existing technology• Fulfilment of CDM EB criteria at international level• Applicant must show ability to implement the project
Actors involved in Chinas CDM project participant numbers of % of total countries projects projects Developers: the domestic companies that initiate and implement projects UK 191 33% The Netherland 112 19.3% Participants: sthe foreign firms involved in the projects. Japan 86 14.9%
CDM Measures in China One notable aspect of CDM projects in China is that, under Art.24 of the CDM Measures:• resource of emission reductions are owned by the Chinese Government:• CERs produced from a particular CDM project are owned by the Chinese project owner;• proceeds from sale of CERs are owned jointly by the Chinese Government and the Chinese project owner. It should also be noted that under the CDM Measures, the Chinese Government is entitled to:• 65 per cent of the sale price of CERs from hydrofluorocarbon and perfluorocarbon projects;• 30 per cent of the sale price of CERs from nitrous oxide projects;• 2 per cent of the sale price of CERs from new and renewable energy projects, or to recover and utilise coal bed methane (all of which are considered priority projects).
Benefits of CDM implemention for ChinaReduce carbon emission-environmental benefit 2012 1997
Economic benefits 1. Reduce government expenditure ● Less finance for technology and science ● Less finance to increase job opportunities China had created 28million jobs as a result and that would rise to 40million.
2. Enhance revenue●Enhance tax revenue for government 17% VAT for power sale 5% business tax for project implementation 25% income tax for employees●Many revenues from CERs
Problems of CDM implemention for China Focus on agricultural biogas projects►Long CDM registration time1. For 2 registered AWMS biogas CDM projects need to 1year.2. Shangdong Minhe biogas project is waiting for over 2 years since it started validation and it is still under correction right now.►Technical failure Mengniu Aoya biogas project stopped CDM procedure
Conlusion• Malaysia: high growth potential for CDM; government focuses on supporting RE and EE projects• China: Althought there are some problems with CDM in China, In terms of the measures, the income from CERs and tax, the government also can get lots of profit, CDM projects can bring a large amount of revenue to developing countries
References● “Global Warming & Climate Change (Doha Talks, 2012) http://topics.nytimes.com/top/news/science/topics/globalwarming /index.html#● Anon, 2008. Carbon Trading, Climate Change, and the Kyoto Protocol: New Report Discovers Carbon Trading to Be Win-Win Proposition for Poor Villagers, Big Business, and for Slowing Climate Change.● Wei, C., J. Ni, and L. Du. 2011. “Regional Allocation of Carbon Dioxide Abatement in China.” China Economic Review.● Wu, Q. 2011. “Policy and Politics of a Carbon Market in China.” In J. Peetermans, ed. Greenhouse Gas Market Report 2011: Asia and Beyond: the Roadmap to Global Carbon & Energy Markets. Yi, W.J., L.L. Zou, J. Guo, K. Wang, and Y.M. Wei. 2011. “How Can● China Reach Its CO2 Intensity Reduction Targets by 2020? A Regional Allocation Based on Equity and Development.” Energy Policy.
● Chang, Y.C., and N. Wang. 2010. “Environmental Regulations andEmissions Trading in China.” Energy Policy 38 (7): 3356–3364.● Olivier, JGJ, G. Janssens-Maenhout, J. Peters, and J. Wilson. 2011.Long-term Trend in Global CO2 Emissions: 2011 Report.● State Council. 2011. Outline of the 12th Five Year Plan for NationalEconomic and Social Development.● Zhu, C., F. Huang, and A. Jiang. 2010. “Study on Construction ofChinese Carbon Trading System in Post-CDM Era.” In IndustrialEngineering and Engineering Management (IE&EM), 2010 IEEE 17ThInternational Conference On, 1851–1855.● "CDM Benefits " http://cdm.unfccc.int/about/dev_ben/index.html
Group members:Stefanie HakeLixian FuJing GuanHaiyan Liu