South Africa’s Designated National Authority for Clean Development Mechanism
South Africa’s Designated National Authority for Clean Development Mechanism
Designated National Authority for
Clean Development Mechanism
+27 12 317 8309
OverviewOverview
History of global efforts & response to CC
CDM basics
SA response to CC
Functions & institutional arrangement - DNA
DNA evaluation & approval procedure
Projects profile
Key role players in CDM
Conclusion
History of international efforts and response to climate change
History of international efforts and response to climate change
UNFCCC adopted in 1992 (Rio Conference/UNCED)Provide framework for mitigation & adaptationStabilization of GHG concentrationsParties meet annually - COPs
Kyoto Protocol (1997) – Update to UNFCCC & primary international agreement on combating climate change
Negotiated in Kyoto, in Dec.1997, opened for signature in Mar 16 1998, and closed in Mar 15 1999.Came into force Feb 16, 2005 following ratification by Russia on Nov 18, 2004.168 countries ratified the Protocol - to dateCommitments by Parties to reduce GHG’s (Annex 1) by 5.2% below 1990 levels and Non-Annex 1 to sustainable development (SD) goals.Mechanisms – Carbon Trading, Joint Implementation (JI) & CDMAllow Annex 1 entities to meet their GHG targets by purchasing GHG emission reductions and/or investing in projects elsewhere
The CDM BasicsThe CDM Basics
CDM – Annex1 countries with GHG reduction commitment to invest in emission reducing projects in developing countries as an alternative to what is generally considered more costly emission reductions in their own countries
Support sustainable development
Project-based; incentive-based & market-driven
Goals:
Contribute to the Convention
Assist Annex1 achieve ER targets
Assist Non-Annex1 achieve sustainable development
Characteristics:
Activities must lead to measurable reductions – tradable
Reductions must be additional (would not have occurred in absence of the project activity)
Participation is project activity voluntary
CDM Operational StructureCDM Operational Structure
CDM – the baseline conceptCDM – the baseline concept
A project’s GHG emission reductions need to be judged against some baseline
The baseline is “what would have happened in the absence of the CDM”
Additionality
Baseline
Project Emissions
CO2
Time (yrs)
CERs
SA response to climate changeSA response to climate change
SA acceded to UNFCCC in 29 August 1997Ratified the Kyoto Protocol in 31 July 2002Dept of Environmental Affairs & Tourism (DEAT) – national focal point for climate change
Coordinates CC activities – NCCC, COPs, CSDs etcNational Communications to UNFCCCDevelopment of environment legislation and regulatory frameworks - National Climate Change Response Strategy; Air Quality Act
Other instruments – DME’s policies and targets on energy renewable and energy efficiency
CDM project cycle
CDM MarketCDM Market
Project Idea Note (PIN)Project Idea Note (PIN)
ScreeningScreening
Project Development DocumentProject Development Document(PDD)(PDD)
Letter of ApprovalLetter of Approval
Project RegistrationProject Registration
Project MonitoringProject Monitoring
Verification, CertificationVerification, Certification
Letter of No ObjectionLetter of No Objection
National ReviewNational Review
DNADNAMandatoryMandatory
ResponsibilityResponsibility
Validation (OE)Validation (OE)
CDM project cycle…cont
Preparation and review of the Project
Baseline Study and Monitoring and Verification Plan (MVP)
Validation process
Negotiation of Project Agreements
Periodic monitoring, verification & certification
Construction and start up
Project completion
3 moths
2 months
2 m
onth
s
3 months
1-3 years
Up
to 2
1 ye
ars
Functions of DNA Functions of DNA
DNA establishment within DME approved by Cabinet in 2003Regulations establishing DNA gazzetted in July 2005 under Section 25 of the NEMA Act of 1998DNA established in December 2004DNA functions:
Regulation function:Project evaluation and approval in accordance with section 40(a) of the Marakech Accords.
Promotion function: To promote and facilitate the development of CDM projects in South AfricaSecure an adequate share of CDM investment in South AfricaTo promote CDM projects of a developmental natureEnsure that the mechanism is in the national interest (Gov. objectives)
Institutional Arrangement to handle CDM in SAInstitutional Arrangement to handle CDM in SA
Steering Committee
1. DTI2. DME3. DEAT4. DST5. DoT6. NT7. DoA8. DWAF9. DoH10. DFA Promotions
Sub-Committee
Designated National Authority
(Director General of DME)
1. DTI2. DME3. Parastatals4. Private Sector5. NGOs
“Oversight”
CDM Evaluation & Approval ProcedureCDM Evaluation & Approval Procedure
Evaluation & approval of submitted PDD should be read in conjunction with:
Project approval procedure of the DNA (DME, 20th
November 2004);
SD criteria for approval of CDM projects by the DNA
(DME, 14th October 2004); and,
Any regulations promulgated with regard to the DNA
(Regulation Gazette No 8275)
DNA project approval process
SD Criteria for CDM project approvalSD Criteria for CDM project approval
National Environmental Management Act (NEMA) definition of sustainable development
the integration of social, economic and environmental factors into planning, implementation and decision making so as to ensure that development serves present and future generationsThis definition of sustainable development will inform the decisions of the DNA
SD CriteriaEconomic: Does the project contribute to national economic development?Social: Does the project contribute to social development in South Africa?Environmental: Does the project conform to the National Environmental Management Act principles of sustainable development?
SD Criteria…cont.SD Criteria…cont.
Social Environment Economic
• Opportunities to facilitate gender equality,
•Stimulate Socio-economic development, job creation and poverty alleviation,
•Offers BEE investment opportunities,
•Improved health for all.
• RE helps reduce GHG emissions (climate change mitigation),
• Helps reduce environmental pollution and associated adverse health effects,
• Provides diversity of supply and thus energy security
• Job creation,
• Community & industrial economic dev.
• Off-sets energy imports (BOP),
• Contribute to new generation capacity,
•Helps with DSM
Key Role Players in CDMKey Role Players in CDM
Project Developers- Development of PIN or PDD; Request for Host Country
approval; - Project registration as CDM
Designated Operational Entities
- Validation; Verification; Certification
CDM Executive Board
- Project registration; Approval of methodologies; Issuance of CERs; Accreditation of entities
Key Role Players in CDM….cont..Key Role Players in CDM….cont..
Host Country (DNA)
- Establishment of institutional & legal frameworks; Ensures Projects contribute to SD; Promotion of CDM
Project Owners (e.g. municipality)
- Project identification, funding & implementation
Businesses
- Investment
NGOs & General Public
- Projects contribute to SD; Promotion of CDM; Watch Dogs!!!
SA emissions in international comparison
Energy industries
45%
Industrial energy14%
Transport11%
Other energy7%
Fugitive emissions2%
Industry8%
Agriculture9%
Waste4%
Share of national emissions, CO2, CH4 and N20, 1994 GHG inventory
Non-energy emissions
Total: 380 Mt CO2- equivalent
Sectors for potential projectsSectors for potential projects
Energy supply and demand – Energy efficiency (EE), renewable electricity & energy, cogeneration, cleaner coal for generation; fuel switch from coal to gas
Waste sector – composting; energy (electricity) generation
Mining – CH4 reduction from coal mines; EE
Agriculture – afforestation & reforestation; fire controls; improved management of woodlands; biofuel production
Transport and automotive sectors – Improved public transport, urban planning & traffic management; vehicle fuel switch; vehicle efficiency, road to rail transport
Manufacturing – industrial EE; structural changes to less energy & emissions-
intensive; boiler conversion to gas Residential, public & commercial buildings – fuel switch, solar heating, energy management, EE building design (thermal-efficiency), EE appliances
Overview of projects submitted for approvalOverview of projects submitted for approval
54 projects (19 PDDs and 35 PINs) received to date
10 PDDs registered with EBKuyasa Low-Cost Housing Energy Efficient Project (Cape Town) – 27/08/2005; Gold Standard Award; reduces 6,500 t eCO2 per annum
Lawley Fuel Switch Project (Lenasia) – 06/03/2006; 19,000 t eCO2/yr
PetroSA Biogas to Energy Project (Mossel Bay) – 29/09/2006;
29,000 t eCO2/yr
Rosslyn Fuel Switch Project (North Pretoria) – 29/11/2006; 107,000 t eCO2/yr
Durban Landfill Gas to Energy Project (Durban) – 15/12/2006; 60,000 t eCO2/yr
Tugela CFB10 Conversion from Coal to Bark Fired (Tugela) – 12/02/2007; 70,000 t eCO2/yr
Overview of projects submitted …contOverview of projects submitted …cont
Mondi Biomass Project (Richards Bay) – 20/05/2007; 222,474 t eCO2/yr
Omnia N2O Destruction Project (Sasolburg) – 03/05/2007; 576,000 t eCO2/yr
EnviroServ Chloorkop Landfill Gas Project (East Rand) – 27/04/2007; 188,000 t eCO2/yr
Sasol Nitrous Oxide Abatement Project (Witbank) – 25/05/2007; 610,000 t eCO2/yr
Projects cover the following types:Fuel switch; Cogeneration; Energy efficiency; Hydro power, Energy generation from renewables
Barriers to CDM developmentBarriers to CDM development
Lack of project development capacity
Lack of financing - project development & implementation
High transaction costs - CERs
Municipal Finance Management Act (MFMA)/Public Finance Management Act (PFMA)
Lack of capacity to develop methodologies/technologies
Uncertainties around post 2012 regime
Tax implications of CERs
Low electricity cost vs clean/renewable energies
ConclusionConclusion
DNA has commissioned three studies:CERs taxation implications (completion - September 2007)
Review of SD criteria (completion - August 2007)
DNA rolling out CDM awareness raising & capacity building initiatives
DNA supports establishment of functional DNAs in other African countries
Useful LinksUseful Links
www.dme.gov.za/cdmwww.info.gov.za/gazette/regulation/2005/27788a.pdf
http://cdm.unfccc.int
www.pointcarbon.com
www.ipcc.ch
www.un.org/esa/sustdev/csd/policy.htm
www.ieta.org