Implementing CDM in China GCCI3 E Tsinghua University

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 CDM management in China Lu Xuedu (� 学都) Ministry of Science and Technology of China December 8, 2003 Milan, Italy GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 CDM Management in China • National CDM Board (NCB): A Decision-making body • CDM Management Center GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 CDM Management in China Board Members: National Development and Reform Commission (NDRC) , Ministry of Science and Technology (MOST), Ministry of Foreign Affairs (MOFA), Ministry of Finance, Ministry of Agriculture, State Environment Protection Administration and China Meteorological Administration. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 CDM Management in China National CDM Board: • Co-chaired by NDRC and MOST GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Domestic Approval Process 1. Domestic project developer, in cooperation with foreign partners, sends CDM project application to any member of NCB or CDM Management Center; 2. NCB approves the project if it meets requirements. NCB hosts its meeting to consider projects as often as needed; GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Domestic Approval Process 3. Approved project by NCB will be submitted for final approval to Ministers or Vice-Ministers of NDRC, MOST and MOFA; 4. NDRC issues the approval letter after Ministers approve it. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 CDM Policies CDM Project requirements: • Shall bring about GHG Emission Reductions; • Shall bring additional Financial Resources; • Should bring Technology transfer. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University CDM Policies Side Event At COP 9 Priority: Energy Efficiency, New & renewable Energy, energy switch, CH 4 Capture GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Future Actions Side Event At COP 9 Next Steps: Do demonstration CDM projects The cases with PDD form from the CDM study projects would be the good projects as starting point. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Future Actions Next Steps: Build up CDM “infrastructure” Build Local CDM Capacity Network technical support units Network business entities Further make clear policies Publish CDM implementation Handbook GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Further Actions Side Event At COP 9 Next Steps: Bridge foreign investors and local partners: Workshops: ADB project final workshop: Dec. 18, 2003 WB/G/S/I project Workshop: May 2004 Web site: ccchina. gov. cn GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Contact Information LU Xuedu (吕学都) Division of Resources and Environment Ministry of Science and Technology of China (MOST) 15 B Fuxing Road, Beijing, 100862, China FAX : 86 -10 -6851 -2163 TEL: 86 -10 -6851 -4054 Email: lvxd@mail. most. gov. cn GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Side Event At COP 9 Implementing CDM in China GCCI/3 E Tsinghua University Achievements of GCCI/3 E of Tsinghua University in promoting CDM in China Dec, 2003 Liu Deshun Professor, Deputy Director, GCCI/3 E Tsinghua University (86)10 6277 2752, liuds@tsinghua. edu. cn Milan, Italy

Implementing CDM in China, GCCI/3 E, Tsinghua University Outline Side Event At COP 9 • GCCI/Tsinghua is a leading research center in China, addressing – challenging policy issues on climate change, especially CDM policy and implementation issues, and – the sustainable development strategies in China, integrated with energy, environment and economy. • A key decision supporting and policy advising institution to China’s government on the climate change and long term energy development strategies. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Outline Side Event At COP 9 • Closely involved in international climate change negotiation process under UNFCCC and in CDM methodology application activities under the Methodology Panel of CDM EB (in personal capacity). • Often acting as a leading technical unit and project coordinator in association with other Chinese partners responsible for implementing key study projects on climate change policy, especially CDM in China, in cooperation with international partners. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 On-going study projects on CDM The on going study projects on CDM: 1. 2. 3. 4. 5. 6. Tsinghua Keio 3 E CDM Study mainly in electric power sector of North China, funded by NEDO/Japan, CDM Methodology Study and Application in China, jointly funded by WB/Switzerland, GTZ/Germany, MET/Italy and MOST/China Opportunity of CDM in Energy Sector of China: funded by ADB. C 5 on CDM: China Canada Climate Change Cooperation, funded by CIDA/ Canada, CDM Case Study on Zhuhai CCGT Power Project (Phase II), funded by BP Co. and jointly implemented by ERI and GCCI. CDM project option survey and selection, funded by Toyota Tsusho Co. , implemented by Tsinghua CDM Promotion Center. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Key issues addressed • Basic Facts: • China: a large and fast developing country, consuming huge amount of coal dominated primary energy resources with low conversion efficiency; • Large potentials of GHG emission reductions; • Provide significant CDM opportunities in the world carbon market. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Key issues addressed • Strategic views by stakeholders: i) China’s CDM emission reduction potentials at what Marginal Abatement Cost (MAC)? ii) Which priority sectors and technology areas for CDM in China? Especially in the electric power sector, taking into account the domestic sustainable development strategy; iii) What is China’s future market share of CDM/CERs under the projected carbon market prices? Which impacts have the CERs revenue on the socio economy in China? iv) How to establish an institutional framework and enabling environment for CDM implementation in China to serve the KP demand for the first commitment period? GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Key issues to be addressed • Views by CDM project proponents v) How to understand demonstrate the applicability of the CDM methodology in the CDM projects in China: especially the baseline methodology and additionality, in order to develop high quality PDDs in line with new decisions and guidance adopted by CDM EB? vi) How to establish a workable institutional and regulatory arrangement for CDM project approval and implementation, in line with the CDM M & P under the Marrakech Accords. vii) How to identify and select promising CDM projects by creating networking pipeline with industrial sectors and financial investors effectively and efficiently. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Key issues to be addressed • From views by CDM policy makers: viii) The major barriers and obstacles hindering the CDM implementation in China – Public awareness, lack information and knowledge on CDM – Uncertainty of the KP’s enter into force, – Institutional and regulatory regime aspects, – Legal framework on CDM implementation, such as CDM/CER ownership, taxation, CDM investment, private sector involvement, etc. – Personnel capacity building and training – Financing of CDM project, – Technology transferring. ix) Policy recommendation to remove these barriers identified. x) Further capacity building needs to promote CDM implementation in China. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Objectives of the side event • Based on the CDM study exercises, the objectives of the side event are aimed at: – Expressing the institutional and regulatory arrangement, policies and proce dures for implementation of CDM projects in China; – Showing major findings and experiences gained by Tsinghua University and its association from CDM studies funded internationally by WB/Swiss/GTZ/Italy, ADB, 3 E/Keio/ NEDO, CIDA/Canada, BP, etc. ; and – Priority areas and potential project options to promote CDM in China. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Major findings and achievements i) In the future world carbon market, the CDM/CERs supply from China would be 105 MT CO 2/a in 2010, share 15% of the total carbon trade at the estimated carbon prices of 6 US$/T CO 2. ii) Most promising CDM potentials exist in the electric power sector and energy intensive industrial sectors, and renewable energy fields. iii) Through case studies, the applicability of the current CDM methodology can be demonstrated to fit with the real circumstances in China, especially in baseline and additionality aspects. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Major findings and achievements iv) Capacity building for Chinese experts in identifying, selecting and developing CDM project has been enhanced through “learning by doing” exercises. v) Institutional and regulatory arrangement is essential for CDM implementation in China, considering the short remaining time before the 1 st commitment period. vi) It is desirable to establish the CDM development centers under a networking framework, providing professional service for the CDM project development, and pipeline with the project stakeholders. vii) Comprehensive needs for capacity building and policy initiatives are proposed, covering institutional, legal framework, financial, technological and human resources aspects. GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Overview Side Event At COP 9 • Thank you very much for your patient GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Side Event At COP 9 Implementing CDM in China GCCI/3 E Tsinghua University Potential CDM Projects in China Zhao Yong Dec, 2003 Milan, Italy Ph. D, Associate Professor, GCCI/3 E Tsinghua University

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 • • • Topics Sectors reviewed General findings Large or small scaled? Common concerns Barriers and uncertainties Opportunities for cooperation GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Sectors Reviewed • Power sector – Technical upgrade – Technological renovation – Fuel switching • Renewable energy – Solar, wind power, small hydro, landfill gas, biogas • • • Waste treatment Cement Iron/steel Chemical refinery Transportation GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 • • • General Findings Public awareness Technical capacity Involvement of industries Methodologies implementations Market potentials Information sharing GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Large or Small scaled? • Large scale CDM – Huge GHG reduction – Lower marginal abatement cost – NOT attracting the industry • Small scale CDM – Substantial GHG reduction – Substantial socio economic and local environmental benefits, esp. in the west – Attracting the owners GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 Common Concerns • Who will pay? • How much? • Upfront investment or annual revenues on CERs? • What if KP not enforced? GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 • • • Barriers and Uncertainties Prospect of KP Rules and procedures not finalized Resources in preparing CDM projects Transaction costs Fast growth of the economy GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 • • • Opportunities for Cooperation Institutional frameworkable Solid basis of methodological study Broad view via cases Pipelines established Ready to go GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn

Implementing CDM in China, GCCI/3 E, Tsinghua University Side Event At COP 9 • • Thanks Contact: Tel: +86 10 62772753 Fax: +86 10 62771150 Email: zhaoyong@tsinghua. edu. cn GCCI/3 E Tsinghua University Zhao Yong +86 10 6277 2753 zhaoyong@mail. tsinghua. edu. cn