The Danish JI Program

UNFCCC Workshop on the Implementation of Article 6 projects

under the Kyoto Protocol

Moscow, 26-27 May 2004

by Ulla Blatt Bendtsen, Chief Programme Co-ordinator, DEPA

Overview of Presentation

• The Danish Climate Strategy

• Memorandum of Understanding

• The Danish JI Programme

• Project examples

• Facilitating Arrangements (session 2.2)

The Danish Climate Strategy

• Reduction Commitment 2008-12: 21% compared to base year

• Excess emissions in relation to reduction commitment: 20-25 Mt CO2e/yr.

• Climate Strategy adopted March 13, 2003 by Parliament

• Two central instruments:• 1) The EU Emission Trading Scheme, incl. Linking

Directive• 2) An indicator of DKK 120 (EUR 16) per tonne CO2

for domestic measures outside the activities covered by The EU Emission Trading Scheme

Excess emissions in relation to Denmark’s reduction commitments

0

10

20

30

40

50

60

70

80

90

Energy production for exportEnergy productionCommerceHouseholdsTransportAgriculture and forestryWaste

Mill. tonnes CO2 equivalents per year

Kyotocommitments

Excessemissions

55

10

Expectedannualemissions2008-2012excl. increasein electricityexports

5 Basis yearproblem

1010Expectedincrease inelectricityexports

A lot has already been done

• 20% of electricity supply from renewables (wind, biomass, biogas)

• Danish CO2 quotas even before the EU ETS

• High fuel taxes and CO2 taxes • Support for energy efficiency

schemes• Waste incineration• HFC Phase-out plan

Using flexible mechanisms is a win-win situation

• Denmark gains economically by using a combination of domestic measures and flexible mechanisms (estimated economic gain: DKK 2-3 billion (EUR 270-400) per year in 2008-12

• The seller gains economically from the sales of AAUs/ERUs/CERs, technology transfer through FDI, reduction in local pollutants (SO2, NOx, etc.)

Prices and risks

• Prices for JI and CDM are lower than domestic abatement costs and lower than EUA, because of risks:

• Kyoto risk

• Host country risks

• Project risks

Flexible mechanisms in the Danish Climate Strategy

• The flexible mechanisms play a central role.

• State funding to facilitate the market

• DKK 130 million for Joint Implementation in 2003 and DKK 100 mill./yr. in 2004-7 for JI

• DKK 100 mill./yr. for CDM in 2004-7 (adm. By MoFA)

• The main buyer of emission credits will be the private sector

Memoranda of Understanding

Signed:• Bulgaria, Estonia, Latvia, Moldova,

Romania, Slovakia, Ukraine

In process:• Czech Republic, Hungary,

Kasakhstan, Russia, Poland

The Danish JI Program

A 3-legged strategy for purchase of carbon credits from EECCA countries:

• a pipeline of projects resulting from targeted direct project development over the last few years

• an indirect pipeline through JI/CDM funds administered by selected banks and advisors; and

• a newly created JI tender window

New JI Tender

Project hosts and developers are invited to express their interest at 2 levels:

• Level 1: Expression of Interest (limited documentation, may result in an agreement on further project development)

• Level 2: Full proposal (more extensive documentation, may result in the signing of an ERPA between the Project Host and Denmark)

Project examples

Examples of projects currently being implemented or under negotiation with Denmark are:

• Establishment of 5 biomass fired heat boilers based on waste products from wood processing in Romania (project running)

• District heating based on utilisation of geothermal energy in the cities of Oradea and Beius in Romania (ERPA signed)

• Establishment of a wind farm in Türisalu in Estonia (ERPA awaiting final approval by Estonian parliament)

• Extraction of landfill gas in Chisinau, Moldova (PDD has been validated, ERPA is being negotiated)

Indirect carbon credits

Two contracts have so far been signed with suppliers of ”indirect carbon credits”:

• NEFCO Testing Ground Facility (DKK 18 mill.)

• Eco Securities and Standard Bank ”Denmark Carbon Facility” (DKK 59 mill.) Open for private sector investments.

More information on the Danish JI program

• www.mst.dk

• www.DanishCarbon.dk