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Expert Meeting on Trade and Climate Change: Trade and Investment Opportunities and Challenges under the
Clean Development Mechanism (CDM)
27-29 April 2009
CDM experiences in Peru
byEco. Julia Justo Soto
Executive DirectorNational Environmental Fund
FONAM PERU
"The views expressed are those of the author and do not necessarily reflect the views of UNCTAD"
CDM experiences in Peru
Eco. Julia Justo SotoExecutive Director
National Environmental FundFONAM PERU
•PERU is located in the South American Pacific.•PERU has an area of 1,285,216 km2 and a total population of 28,220,764.•PERU is the third largest country in South America.•PERU is a mega-diverse country and strategically located in the center of South America on the planet's largest ocean.•PERU has the highest richness and biological variety.•PERU is the second country in area of natural forests.•PERU is a country with high potential of clean energy resources.
PERU
•The National Environmental Fund - PERU (FONAM - PERU) was created by Congress Bill, but ruled under private law. FONAM is a non profit institution of public and social interests and belongs to the Ministry of the Environment sector.
•FONAM has the objective of promote and support the financing of public and private investment associated to the Peruvian Environmental Policy.
National Environmental Fund –FONAM PERU
Market trends & capacity development needs
Sustainable Transport
Environmental Services, Forest and Ecobusiness
Mining Environmental Liabilities
Sustainable Development
Carbon Business
Clean Energies:Energy Efficiency and Clean Production
Water and Solid Waste Management
FONAM – Work Areas
Market trends & capacity development needs
Multilaterals:WB, IADB, CAD, EIB, UNDP, UNEP RISOE.
Bilaterals:With different countries: GTZ, BMZ, KFW, JICA, Governments of France, Netherlands, Finland, Spain, USAID, Scotiabank, Santander Bank, Private enterprises, Mining companies and NGOs
FINANCIAL RESOURCES & TECHNICAL
ASSISTANCEAPPLICATIONS
•Support the process of fundraising and financing for environmental projects
•Advice in the elaboration of environmental proposals.
•Execute projects, promoting environmental and financial investments in: Climate change and CDM, Combat Desertification, Remediation of Mining Liabilities, Ecobusiness and Biodiversity.
Climate Change topics, specifically CDM are manage by two institutions:
Ministry of Environment – MINAM
National Environmental Fund - FONAM
PERUVIAN CDM FRAMEWORK
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
• Ministry of Environment (MINAM) is the Designated National Authority (DNA) to approve and issue the Approval Letter of the Country.
• There is a ISO P-34 procedure for approval of CDM projects which deadline is 45 days.
• This procedure evaluates whether the CDM project contributes to “sustainable development of the country”.
• Until March 2009, 35 CDM projects have been approved by the Designated National Authority, MINAM:
21 Hydroelectric1 Transmission Line4 Biomass3 Waste4 Fuel Switching1 Energy Efficiency1 Afforestation
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
Nº Project Type Approval Date
TCO2e/year
Emission Period Current Status Location
1 Huanza Hydro Hydro Dec 01 210,629 10 years Studies Lima
2 Tarucani Hydro Hydro Jun-02 153,958 10 years Studies Arequipa
3Poechos I, II Hydro Hydro 37681 54,933 10 years / 7
years
Poechos I in Operation, Poechos 2 in Construction Piura
4 Tunel Graton Hydropower Plant Hydro Jan 05 20,272 10 years Studies Lima
5 Quitaracsa Hydropower Plant Hydro Jan 05 318,389 10 years Construction Ancash
6 Callahuanca Hydropower Plant Hydro Jan 05 18,213 10 years Operation Lima
7 Paramonga Biomass Biomasa Jan 05 85,300 10 years Operation Lima
8 Santa Rosa I, II, III Hydro Hydro Apr 05 17,393 7 years
SR I in Operation, SR II in Contructionand SR III in
Studies
Lima
9 Huaycoloro Landfill Project Solid Waste Jun-05 151,646 7 years Operation Lima
10 Cementos Lima Fuel Switching Project
Fuel Switching May-06 226,609
7 years Operation
Lima
11 La Virgen Hydropower Plant Hydro Jun-06 220,194 10 years Construction Junín
12 Santa Rita Hydropower Plant Hydro Aug 06 626,197 7 years Construction Ancash
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
Nº Project Type Approval Date
TCO2e/year
Emission Period Current Status Location
13 La Joya Hydropower Plant Hydro Feb-07 41,282 7 years Construction Arequipa
14 Ancón Landfill Project Solid Waste Mar-07 69,012 10 years Operation Lima
15 Fuel switching in Sudamericana de Fibras
Fuel Switching Mar-07 25,577
10 years Operation
Lima
16 Fuel switching in Rex
Fuel Switching Mar-07 32,000
10 years Operation
Lima
17 Cogeneration with Biogas in Cartavio S.A.A. Biomass Mar-07 32,887 7 years Operation La Libertad
18 Caña Brava Hydropower Plant Hydro Apr 07 21,632 7 years Construction Cajamarca
19 Carhuaquero IV Hydropower Plant Hydro Apr 07 23,909 7 years Operation Cajamarca
20 Rehabilitation of Machupicchu Hydro Hydro Apr 07 294,881 7 years Construction Cusco
21Electricity grid interconnection San Gabán –
Mazuko – Puerto MaldonadoTransmissio
n Line 39234 14,346 10 years Construction Madre de Dios
22Substitution of fuel by hydroelectric
generation in Pasto Bueno Hydro Jun-07 5,3267 years Operation
Ancash
23
Palmas del Espino – Biogas recovery and heat generation from Palm Oil Mill Effluent (POME) ponds
Biomass 39264 26,719 7 years Operation San Martín
24Fuel oil to Natural Gas Switching at TASA
Callao Sur Plant
Fuel Switching
Aug 07 2,016 10 years Operation Lima
NATIONAL APPROVAL OF CDM PROJECTS IN PERU
Nº Project Type Approval Date
TCO2e/year
Emission Period Current Status Location
25 Santa Cruz I Hydroelectric Power Plant Hydro Jan 08 20,602 7 years Construction Ancash
26 Cheves Hydropower Plant Hydro Jun-08 400,857 7 years Construction Lima
27
Reforestation, sustainable production and carbon sequestration project in Ignacio Tavara´s dry forest, Piura, Peru
Afforestation Jun-08 24,969 40 years Studies Piura
28 Rurichinchay Hydropower Plant Hydro Jul-08 28,089 7 years Studies Ancash
29 Pucara Hydropower Plant Hydro Jul-08 696,150 7 years Construction Cusco
30Ventanilla Conversion from Single-cycle to Combined-cycle Power Generation Project
Energy Efficiency Nov-08 375,051 7 years Operation Lima
31Triplay Amazonico Methane Avoidance Project Biomass Dec 08 4,393 7 years Studies
Pucallpa
32 Yanapampa Hydroelectric Power Plant Hydro Jan 09 30,760 7 years Construction Ancash
33 Bionersis Project Perú 1 Solid Waste Feb-09 23,175 7 years Studies Iquitos
34 El Platanal Hydropower Plant Hydro Mar-09 501,814 7 years Construction Lima
35Rehabilitation of Mancahuara Hydropower Plant Hydro Mar-09 8,547 7 years Construction
Apurimac
TOTAL 4,807,727
THE NATIONAL ENVIRONMENTAL FUND – FONAM
CDM PROMOTIONAL ENTITY IN PERU
THE NATIONAL ENVIRONMENTAL FUND – FONAMCDM PROMOTIONAL ENTITY IN PERU
• 17 projects registered at the Executive Board.
• 1 Peruvian projects requesting registration.
• 12 Projects under Validation (1 forest).
• 3 projects and CER's issued.
• In 2009, at least 4 new projects will receive CERs and VERs.
• 3 new projects in verification.
• 1 Project Approved on methodology level.
• 2 Peruvian methodologies elaborated.
REGISTERED PERUVIAN PROJECTS AT THE CDM EXECUTIVE BOARD
Nº Project Name tCO2/year Status Buyer
1 “Santa Rosa” Hydropower Plant 17,393 Selling of CERs World Bank -Netherlands
2 “Poechos” Hydropower Plant 31,878 Selling of CERs World Bank -Italy
3 "Tarucani I" Hydropower Plant in Arequipa 153,958 Pre-investment TBC
4 Huaycoloro landfill gas capture and combustion 151,646 Verification World Bank -United Kingdom
5 Quitaracsa I 318,389 Financing Closed TBC
6 Peruvian Fuel-Switching Project 25,577 Selling of CERs TBC
7 Palmas del Espino – Biogas recovery and heat generationfrom Palm Oil Mill Effluent (POME) ponds, 26,719 Verification Belgium
8 Ancon – EcoMethane Landfill Gas Project 69,012 Verification United Kingdom
The 17 projects represents 1, 812, 286 tCO2e/year and Investments for more than US$ 420 millions.
REGISTERED PERUVIAN PROJECTS AT THE CDM EXECUTIVE BOARD
Nº Project Name tCO2/year Status Buyer
9 Rehabilitation of the Callahuanca hydroelectric powerstation 18,213 Selling of CERs Spain
10 Caña Brava Hydropower Plant 21,632 Verification Spain
11 La Virgen Hydropower Plant 220,194 Financing Closed TBC
12 Carhuaquero IV hydropower Plant 23,909 Selling of VERs Spain
15 Fuel Switching at Atocongo Cement Plant and Natural Gas Pipeline Extension, Cementos Lima 269,851 Financing Closed TBC
13 La Joya Hydropower Plant 41,987 Financing Closed Switzerland
14 Poechos II Hydropower Plant 22,771 Financing Closed TBC
16 Fuel Substitution by Hydro Generation in Pasto Bueno 5,326 Selling of CERs TBC
17 Cheves Hydro Power Project, Peru 393,831 Financing Closed TBC
CDM PERUVIAN PROJECTS THAN HAVE RECEIVED CERTIFICATES (CERs)
The projects represents 159,161 tCO2e issued, 130,894 tCO2e in issuance request and 6,626 tCO2eunder review. Total of 296,681 tCO2e.
Nº Project NameIssuance request
stateCERs
request Period
1 Santa Rosa Issued 22,801 01 Aug 2004 - 31 May 2007
2 Poechos I Project Issued 81,892 01 Apr 2004 - 31 Mar 2007
3Huaycoloro landfill gas capture andcombustion
Awaiting issuancerequest 83,018 05 Mar 2007 - 04 Mar 2008
4 Peruvian Fuel-Switching Project Issued 54,468 01 Jan 2005 - 31 Dec 2007
5
Palmas del Espino – Biogasrecovery and heat generation fromPalm Oil Mill Effluent (POME) ponds, Peru
Under review 6,626 23 Sep 2007 - 31 Dec 2007
Awaiting issuancerequest 27,518 01 Jan 2008 - 31 Dec 2008
6Ancon – EcoMethane Landfill Gas Project
Awaiting issuancerequest 20,358 30 Nov 2007 - 31 Jan 2009
TOTAL 296,681
THE NATIONAL ENVIRONMENTAL FUND – FONAMCDM PROMOTIONAL ENTITY IN PERU
FONAM identifies eligible projects under the CDM.FONAM trains and assist in the preparation of CDM projects, throughout the project cycle:
Prepares the initial document: Project Idea Note (PIN) and performs the analysis of eligibility of the project.Assist in developing the Project Design Document (PDD), which includes the baseline study and monitoring plan.Elaborates the file for the submission of the Project to the Designated National Authority (MINAM) to obtain the approval letter of the Host Country.Informs the CDM project to the communities - stakeholders in the area of influence of the CDM project.Advices the project developer in the Validation and Registration process at the CDM Executive Board.Advices in the monitoring of emission reductions and verification process.
THE NATIONAL ENVIRONMENTAL FUND – FONAMCDM PROMOTIONAL ENTITY IN PERU
• FONAM is in charge of the promotion of CDM in Peru.
• FONAM prepares the National CDM Portfolio to promote Peruvian Projects in International Carbon Fairs.
• FONAM prepares the National Carbon Portfolio that includes CDM and REDD projects that can apply to the Voluntary Market.
• FONAM is the Focal Point in Peru of the Carbon Finance of the World Bank.
• FONAM is part of the steering committee of Host Countries of the Carbon Finance, and is observer of the Spain Carbon Fund – World Bank.
• FONAM support to remove barriers and elaborate proposal for develop a adequate legal framework for promotion and implementation of CDM projects.
• FONAM support projects which promotes synergies between the three United Nations environmental conventions: UNFCC, UNCCD and CBD.
• FONAM has developed capacities in the country, business groups of private - public sector and national financial system
CDM PROJECT PORTFOLIO – ENERGY SECTOR
Type of Activity Emissions Reductions (tCO2e/year)
Investment (US$ millions) Nº Projects
Hydroelectrics 8,167,853 2,590 43
Transmission Lines 38,330 37 4
Wind Power 388,128 416 3
Solid Waste 945,687 534 7
Waste Water 78,840 2 1
Transport 1,435,434 1,006 4
Biomass 1,296,829 166 13
Fuel Switching 518,202 32 6
Cogeneration 24,686 6 4
Energy Efficiency 2,612,321 1,202 7
Geothermal 448,812 280 2
TOTAL 15,955,122 6,271 94
CDM PROJECT PORTFOLIO – ENERGY SECTOR
It is estimated that 94 energy projects will generate about 24,000 direct and indirect jobs.
29 projects in 15 regions of the country : 123,939 Has
Estimated Emissions Reductions (TCO2e):
Until 2012: 883,161
20 years – 54,659,756
30 years – 66,720,401
Investment: US$ 100.6 millions
CDM PROJECT PORTFOLIO – FORESTRY SECTOR
3 projects in many regions of the country : 288,180 Has
GEI Reductions (TCO2e):
Until 2012: 3,750,000
20 years – 7,500,000
30 years – 40,000,000
Investment: US$ 1 million
CARBON PROJECT PORTFOLIO – REDD SECTOR
CDM PROMOTION ACTIVITIES
With the Support of Carbon Finance Assits Peru will participate in Carbon Expo 2009, with an updated CDM Project Portfolio, a Booth and a National Delegation of peruvian enterprises to keep the status of one of the most importants CDM Host Countries .2004:18 projects, US$ 700 millions of Investment
2005: 39 projects, US$ 1,200 millions of Investment
2006: 50 projects, US$ 1,441 millions of Investment
2007: 71 projects, US$ 2,890 millions of Investment
2008: 126 projects, US$ 6,300 millions of Investment
2009: around 140 projects
Evolución en los últimos años…
(*)
(*) Abril del 2009
RANKING OF CDM HOSTING COUNTRIES
According to PointCarbon until January 2009, Peru is in sixth place in the ranking of most attractive countries in the World for CDM.
Rank(previous
rank)Country Rating (Previous
rating)Climate
institutionsInvestment
climate
1 (1) India A- (A-) AA- B-2 (2) China BBB+ (BBB+) BBB- BB3 (3) Chile BBB (BBB) A- BBB+4 (4) Mexico BBB (BBB) A- BB-
5 (7) Brazil BBB- (BB+) BBB- BB-6 (8) Peru BB+ (BB+) A BB-7 (11) Indonesia BB (BB) BBB- BB8 (9) Malaysia BB+ (BB) A B9 (5) South Africa BB (BBB-) A CCC-10 (6) Korea BB (BBB-) BB BB+
FONAM AND CDM ACHIEVEMENTS IN PERU
More than 10,000 stakeholders from private and public sector was inform and trained about CDM continuously, not only from Peru but also from other Latin-American and Caribbean countries.As a result from the training and workshops until 2008, 130 CDM projects was identified with 15 MM tons of CO2 and US$ 6,300 MM on investments and also a network of private and public stakeholders were identified nation wide: developers, enterprises, consultants, banks and universities, consolidating the carbon market in Peru.Government sectors are aware of the importance of CDM
Facilitating the information process, with statistics, specific studies, for the required information to indentified and develop CDM documents;Develop the CDM framework as a promoting tool for new investments and include climate change into national policies.Develop incentives for make peruvian investment opportunities more attractive.
LESSONS LEARNED
There is an attractive potential of CDM projects in Perú need to continue building capacities at the Public Institutions, Regional Governments, Local Governments. It has identified a large potential.
Synergies working with international cooperation for the same purpose (JICA - CF Assist WB, UNEP, GTZ).
The signing of Memorandums of Understanding (MoU) with several countries and international financial banks as KFW and Deutsche Bank (in process) is fostering closer relations among buyers of CERs with the project developers.
There are experiences of the National Bank financing CDM and environmental projects. New interested entities: Signing of Agreement with COFIDE and others national banks.
Barriers still exist for public projects involving state institutions for accessing carbon benefits.
The CDM is an opportunity for investments in Perú. The National portfolio represents new investments US$ 6,200 millions, 30,000 new jobs , more income taxes paid by enterprises, development of communities, and the multiplier effect that generated the investment projects.
PENDING ACTIONS
To explore new project areas with potential to the Carbon Market: CDM, Voluntary, REDD.
Forestry projects, deforestation means 10 MM ha with positive impacts on communities
New Programmatic and Sectoral CDM projects at local national and regional level
Information and Knowledge spread for specific groups as: communities, small and middle-sized businesses, potential sectoral and programmatic stakeholders and incorporate more knowledge about climate change/CDM on graduate and undergraduate level, decision makers special workshops, Banks among others.
PENDING OPPORTUNITIES
Renewable Energy
Waste and fugitive
emissions
Fuel Switching
Energy Efficiency
LULUCF
Hidro, Wind, Geothermal, Tide power,Transmission
lines,Biofuels
Process reengineering and measures, cogeneration
Aforestation, Reforestation
and REDD
More carbon intensive fuels
to Natural Gas
Methane, Wastewater treatment,
Manure Management
PROJECT TYPE POTENTIAL EnterprisesSmall
BusinessesCommunities Government
Universities
BanksMicro finance institutions
Program
Wind 5000 MW X X X X X X x
Solar tbd X X X X X X x
PCH tbd X X X X X X X x
Geothermal tbd X X X X x
Tide tbd X X X X x
Waste residues 15,000 ton/day X X X X X X x
Waste water tbd X X X X X X x
Transport tbd X X X X X X X x
Energy Efficiency 500 MW X X X X X X X x
NEW CDM OPPORTUNITIES
