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Heinz-Peter Mang – Senior Adviser for Bioenergy and Climate Change
Chinese Academy of Agricultural Engineering (CAAE) / Ministry of Agriculture (MOA)
and
Markus Schwegler - Senior Advisor Climate Protection
The Administrative Centre for China's Agenda 21 (ACCA21) / Ministry of Science and
Technology (MOST)
Promoting investments for energy efficiency and renewable energy
through carbon financing in China
“International Conference on Climate Change 2007”
Hong Kong 29 -31 May 2007
Table of Content
1. Is Climate Change real?
2. Climate Policy - Major milestones
3. Climate Change Mitigation - the Cleaner Development
Mechanism
4. Chinas CDM Potential and Opportunities
5. Climate Change Adaptation
Is Climate Change real?
The Climate Challenge - Impacts and Vulnerability
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 4
Some quotes from latest press release
China warns of disasters from warming Tibet plateau (Reuters, 01.02.2007):
...Chinese scientists have warned that rising temperatures on the Qinghai-Tibet plateau will melt glaciers, dry up major Chinese rivers and trigger more droughts, sandstorms and desertification...
Food security at risk (China Daily, 04.01.2007):
...Global warming will negatively impact China's ecological, social and economic systems, especially farming, animal husbandry and the country's water supply…
China report warns of agriculture problems from climate change (International Herald Tribune, 03.01.2007):
...Typhoons, floods and droughts killed 2,704 people and caused economic losses of 212 billion yuan (€20.65 billion) in 2006...
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 5
The Fourth Assessment Report - Summary
With "90 percent" certainty the increase of average global temperatures since the mid-20th century is linked to the increase of manmade GHG in the atmosphere.
It is "likely" - in some cases "more likely " -- that manmade greenhouse gases have contributed to hotter days and nights, more heat waves, heavier rainfall, major droughts in more regions, stronger and more frequent cyclones…
11 of the last 12 years are among the 12 warmest years on record.
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 6
Stern Review on the Economics of Climate Change
One percent of global GDP must be invested to mitigate the effects of climate change; failure could risk a recession worth up to twenty percent of global GDP.
... "our actions over the coming few decades could create risks of major disruption to economic and social activity... on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century...”
(compiled by economist Sir Nicholas Stern for the government of the United Kingdom, released on October 30, 2006)
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 7
First National Climate Change Assessment Report
The Assessment started in 2002 under the guidance of the National Climate Change Coordinating Committee and 12 Chinese ministries and organisations.
The report is the result of a 4-year government study carried out by over 80 leading Chinese experts.
The Assessment was released on October 26th 2006 by the Ministry of Science and Technology (MOST), China Meteorology Administration (CMA), and the Chinese Academy of Sciences (CAS).
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 8
Climate Changes in China (over the last 100 Years)
Average temperature increased by 0.5-0.8°C (global average 0.6°C).
Temperature rise most significant in winter and spring (global trend).
Temperature rise is most obvious in North China and Tibet.
The growing season has prolonged (Tibetan Plateau, North China)
Average precipitation is increasing (year-to-year fluctuations).
Precipitation trends show major regional differences.
In most parts of West China, the annual average precipitation increased.
in North China and Northwest precipitation declined.
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 9
Extreme weather events Average days of hot weather increased.
Average number of frost days dropped (±10 days since 1950).
Frequency of cold waves declined in the last 50 years.
Draughts are more severe (North and Northeast China).
Floods are more frequent and severe (middle and lower reaches of the Yangtze River and Southeast China).
The frequency of strong precipitation events increased in Northwest.
Storm days in summer increased (middle and lower reaches of the Yangtze River and in southeast China).
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 10
Future Climate Change Predictions for China
Surface temperatures will rise and precipitation will increase over the next 20 to 100 years (similar to the global trend).
Temperature rise will be higher in the north than in the south and bigger in winter and spring than in summer and autumn.
The days of precipitation will increase in the north and changes in the south will be less.
The daily maximum and minimum temperature will increase, but the rise of minimum temperature will be more significant.
The south will see more days of heavy rain and storms.
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 11
Major Impacts of Climate Change in China
Coastal areas are affected by extreme weather events
Decreasing glaciers in Northwest (-21%) and permafrost in Tibet.
Enlargement of draught-stricken areas in the north.
More instable agricultural production (draughts and high temp.).
Major river flows will decline (in the north seasonal drying up).
More frequent flood disasters
Forest areas are decreasing and forest belts are moving upwards.
Spreading of diseases with major impact to human health.
Climate Policy - Major milestones
Adaptation to and Mitigation of Climate Change
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 13
The path to the convention 1989 IPCC First Assessment Report - Threat of Climate Change
1992 UNFCCC opened for signature (Rio Earth Summit)
1994 UNFCCC entered into force with 166 signatures
1995 Second Assessment Report (SAR) of the IPCC
1997 December, adoption of the Kyoto Protocol
2001 Third Assessment Report (TAR)
2005 Kyoto Protocol came into force (16.02.2005)
2005 EU Emission trading scheme (01.01.05)
2007 Fourth Assessment Report (AR4) of the IPCC
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 14
The UN Framework Convention on Climate Change
... stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system...(Article 2)
Set Goals, not targets
Annex I countries (industrial countries) were to adopt policies to “aim” to reduce their emissions
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 15
The Kyoto Protocol
Defines quantified greenhouse gas (GHG) emissions reduction targets for developed countries (Annex I Parties).
Longer-term challenge: Meet the objectives of Article 2 of UNFCCC
Countries have different targets for the 5-year period of 2008-2012).
Total emission reductions for the Annex I countries amounts to 5.2 % from 1990 year's levels.
EU countries commit to reduce their emissions by 8%, Japan by 6% and Germany by 21%, from their base-year emissions.
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 16
The Protocols flexible mechanisms Clean Development Mechanism (CDM), Article 12 of the Protocol
Credit for emission reduction investments in developing countries
Emission reductions must be real and measurable (verified by third party or Operational Entities)
Joint Implementation (JI), Article 6 of the Protocol
Credit for emission reduction investments in projects in EIT countries
International Emissions Trading (IET), Article 17 of the Protocol
Trading of emission reduction credits among developed countries
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 17
The Chinese Climate Policy
1992 China approved and ratified the UNFCCC
1998 China signed the Kyoto Protocol
2002 China approved the Kyoto Protocol
2004 DNA was founded with the Interim Measures
2005 On 12 October 2005, Measures for Operation and Management of Clean Development Mechanism Projects (“CDM Measures”)
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 18
Relevant Institutions in China
National Climate Change Coordination Committee (NC4):Inter-ministerial committee established in 1990 to coordinate national activities related to climate change, CDM policy formulation, rules and standards...
National CDM Board:Main responsibilities are review and approval of CDM application submitted by the project owners.
Chinese National Authority (DNA):Focal Point is National Development and Reform Commission (NDRC)
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 19
The priority areas for CDM projects in China
Energy efficiency improvement
Development and utilization of new and renewable energy and
Methane recovery and utilization
(Measures for Operation and Management of Clean Development Mechanism Projects in China)
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 20
Points to Note under CDM Measures Resource of emission reductions owned by the PRC government
Outputs of CDM Projects are owned by PRC project owner
Proceeds from sale of outputs jointly owned by PRC government and PRC project owner
PRC government entitled to:
65% from HFC and PFC projects
30% from N2O projects
2% from energy efficiency and renewable energy projects
The Cleaner Development Mechanism (CDM)
Incentives for project developers
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 22
The CDM - a win-win mechanism
The CDM’s aims are twofold:
It supports the developed countries in reaching their emissions targets set by the Kyoto Protocol,
and the developing countries in achieving a higher level of sustainable development through technology transfer and financial assistance.
For a project to be approved as a CDM project it has to meet various obligations an go through a defined project cycle.
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 23
Ag. Waste to energy biogas project:
2 MW installed capacity
>50,000 t CO2 ER’s p.a.(10 years)
Project costs: US$3.5m
Carbon value:
$5 /t CO2 = $2.5m
$8 /t CO2 = $4.0m
Proportion of project costs:
$5/ t CO2 = 71.4%
$8/ t CO2 = 114%
The Economics of a Hydro Power and a Methane Project
Reason: Methane is 21 times more potent than CO2 on ton-to-ton basis >> Opportunity for many agricultural projects
Hydro power project:
7.5 MW installed capacity
28,448 t CO2 ER’s p.a.(10 years)
Project costs: US$ 4.5m
Carbon value:
$5/ t CO2 = $1.42m
$8/ t CO2 = $2.27m
Proportion of project costs:
$5/ t CO2 = 31.5%
$8/ t CO2 = 50.5%
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 24
What Kinds of Projects/Sectors? 1. Renewable Energy Projects:
Biomass Energy incl. for Energy Farming
2. Waste-to-energy projects:
Municipal Solid Waste clean up transforming poorly managed dumps to sanitary landfills, recycling, and landfill biogas capture and power generation
Agribusiness Waste to Energy: Rice Husk Power Plants (1-10MW); Palm Oil waste to energy projects, Farm Biogas project, Straw-to-Energy
3. Community and agro forestry
Biomass Energy
4. Large Scale Energy Efficiency
5. Coal Mine & Bed Methane
6. Transport
Bio fuel
7. Industrial Gas Incineration N20, HFC23
Chinas CDM Potential and Opportunities
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 26
Chinas CDM Potential and Opportunities
Potential
Energy demand and consumption in China ranks second in the world following the USA
Coal baseline
In 2000, China’s energy consumption per unit of eight major products was 20-40% higher compared to international level
Estimated CDM Potential: 50% of the global CDM Market (World Bank /GTZ Study)
Opportunities
Energy Efficiency
Renewable Energy
CBM/CMM
Fuel conversions and new technology for power generation
Large energy losses with much potential in re-utilization of waste heat and waste energy
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 27
Status of CDM Projects - Expected CER´s until end of 2012 *1
Number of Project
CDM project pipeline: > 1600
Registered: 655
Requesting registration: 69
CER´s issued
Expected CER´s until 2012: >1900 Million CERs
Total based on registered projects (665): > 900,000,000
Total based on projects requesting registration (69): > 700,000,000
*1) as of 8th May 2007
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 28
Registered project activities by host party
China has 76 projects up to date (09.05.2007)
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 29
Expected average annual CER´s
Average Annual Reductions in China: 61,717,664CER´s as of 09.05.2007
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 30
number of registered projects per sector
Wind49%
Hydro18%
HFCs10%
Biomass energy7%
N2O1%
Reforestation1%EE
industryCoal bed/mine methane4%
Landfill gas
Chinese registered projects per sector
As of 1 May 2007, data source http://www.cd4cdm.org/
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 31
Top sectors issued CERs (globally)
HFCs55%
N2O14%
Biomass energy13%
Hydro4%
Agriculture4%
Landfill gas4%
Wind3%
EE industry2% Cement
1%
Top sectors by issued CERs (globally)
As of 1 May 2007, data source http://www.cd4cdm.org/
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 32
Sector results and distribution for China
As of 1 May 2007, data source http://www.cd4cdm.org/
Type
no of projects (registered)
number of projects (status all)
amount of expected CER«s until 2012 (registered) total
ktCO2
amount of expected CER«s until 2012 (status all) total
ktCO2
CERs issued so far (kCERs)
Biogas 0 4Biomass energy 5; 7% (4) 19Coal bed/mine methane 3 27; 6% (4) 2,5% (4) 10,1 % (4)EE industry 3 59; 13% (3) 4% (3)EE Service 0 1Fossil fuel switch 0 18HFCs 7; 9,9% (3) 11 82% (1) 41,6 % (1) 2 projects; 4823,067Hydro 13; 18,3% (2) 191; 43% (1) 11,0 % (2)Landfill gas 4 24 1 project; 42,444N2O 1 12 10,2 % (3)Reforestation 1 2Wind 34; 47,9% (1) 86; 19% (2) 6,5% (2) 7 projects; 433,146Total result 71 454 357812,1226 942238,1217 10
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 33
Top Countries by Buyers
United K.38%
Netherlands14%
Japan14%
Switzerland6%
Italy6%
Sweden5%
Spain5%
Germany4%
Denmark3%
Canada3%
Austria2%
Top countries by Buyer (No. of CDM projects)
As of 1 May 2007, data source http://www.cd4cdm.org/
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 34
Barriers for CDM in China
Lack of knowledge and skills to identify CDM opportunities
Lack of experience to assess risks and develop projects
CDM not fully accepted and understood as financial tool
Complexity of the CDM Cycle
Legal framework
The currently low CER price in the buyer driven market
Availability of data
Confidentiality & Transparency
Transactions costs
Large number of different players
Language Barrier
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 35
Experiences with CDM in ChinaForeign CDM Participants & stakeholders
CER buyers dominate
Low interest in project development and investment
Lack of understanding of the Chinese framework and market conditions
Don't fully understand the risks and don't want to deal with it (51/49 rule)
Looking for help to find projects
Looking for help to deal with contractual and risks issues
Language problem
Chinese CDM Participants & stakeholders:
Limited knowledge of CDM
Misunderstanding of the financial mechanism
Up front payment
Transaction costs
Project Complexity
Language problem
Limited understanding of the operational aspects of CDM (PIN, PDD)
Difficulties to access foreign project partners and buyers
Climate Change Adaption
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 37
Adaptation versus Mitigation
Adaptation and mitigation are two options to respond to climate change.
Mitigation
Refers to an anthropogenic intervention to reduce the sources or enhance the sinks of GHGs.
Adaptation
Refers to adjustments in natural or human systems in response to actual or expected climatic stimuli or their effects, which moderate harm or exploit beneficial opportunities (IPCC, 2001a).
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 38
Linkages between Mitigation and Adaptation
Mitigation policies can complement adaptation and development.
Planting forests to sequester carbon can also stabilise soils and avoid floods,
rural electrification can support sustainable development.
Planting trees can reduce urban heat-island effects.
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 39
Adaptation in the Chinese Assessment Report
Area StrategyAgriculture and Food Security Changing crop/livestock mixWater resources and Quality Improvement of water conservation
measuresForestry Afforestation and reforestation,
Management of natural resourcesLivestock Adoption of new livestock more
suited to anticipated climatic conditions
Costal defence Improved flood management systems
Human health Establishment of forecast, monitoring, and surveillance networks
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 40
Existing Local and Sectoral Coping Strategies
Limited experiences available on adaptation to climate change.
Asian experience at local level on coping with climatic variability and extreme weather events:
Large scale irrigation for agriculture,
intercropping, mixed cropping, agro-forestry and animal husbandry.
Coastal defence and flood protection and cyclone warning systems.
2007 Mang & Schwegler, Chinese Academy of Agricultural Engineering (CAAE) & The Administrative Centre for China's Agenda 21 (ACCA21) 41
Climate Change Mitigation China has a huge energy demand due to the high economic
growth
High demand for renewable energy and energy efficiency
High demand for advanced technology
CDM Projects can deliver significant local economic and sustainable development co-benefits
China needs technology transfer and financial support
There is now time for discussion…
Thank you for your attention