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UNDP- Energy and Environment Practice Area Workshop Nov 20th 2002: 

UNDP- Energy and Environment Practice Area Workshop Nov 20th 2002 Marc Stuart Marc@ecosecurities.com San Jose, Costa Rica EcoSecurities Project Pipeline & Status

Slide2: 

Engaging the CDM: Examples from ESL’s Project Pipeline

EcoSecurities Role in the CDM : 

EcoSecurities Role in the CDM Policy Advisor Brazil, Costa Rica, Denmark, UK, California, Australia, Netherlands, international Institutions Capacity Building – Retained by governments and institutions around the world to develop local understanding of the CDM process Project Development Advisor Project Identification, Baselines, Monitoring and Verification Protocols, Assistance with 3rd Party Validators, Stakeholder Consultations, Project Design Documents Transaction Placements Institutional Buyers, Private Parties Emissions, Project Debt and Equity Project Principals Joint Ventures with certain developers

Types and Locations of ESLTransaction Pipeline: 

Types and Locations of ESLTransaction Pipeline Total CDM Transaction Portfolio with Letters of Intent signed (or further) is approximately 22M tonnes Biomass Energy – Brazil, El Salvador, Malaysia, Thailand Anaerobic Digestion – Thailand, Philippines, Nicaragua Landfill Gas – Brazil (5 Locations) Hydro – Peru, Romania, Guatemala, Brazil Wind Power - Jamaica Geothermal – Kenya Municipal Waste Management – Argentina, Philippines Biodiesel – Argentina, Malaysia?? Coal Mine Methane – China Generation Efficiency – Colombia Gas Pipelines - Fugitive methane from compressor stations (US, obviously not a CDM project, but replicable in the region)

The Economic Impact Varies Considerably: 

The Economic Impact Varies Considerably Caribbean wind farm project: -20 MW electricity output -50,000 t CO2 emission reductions per year (for 10 years) -Project costs: US$20m (+) -Carbon value -@$3 US/tonne CO2e = $1.72m US -@$5 US/tonne CO2e = $2.87m US Proportion of project costs: @ $3/tonne - 8.6% @ $5/tonne - 14.35% SE Asia waste to energy project: -2 MW electricity output -50,000 t CO2e (+) emissions reductions (for 10 years) -Project costs: US$3.5m -Carbon value -@$3 US/tonne CO2e = $1.72m US -@$5 US/tonne CO2e = $2.87m US -Proportion of project costs: @ $3/tonne - 49.1% @ $5/tonne - 82.0%

Anaerobic Digestion of Waste Streams from Agriculture in Thailand: 

Anaerobic Digestion of Waste Streams from Agriculture in Thailand Development Situation: Large cassava processing plant in Thailand using a lagoon system for disposing of concentrated organic waste Project emission Flows: Estimated that 250,000 to 300,000 tonnes per year will be claimable following the implementation of gas gathering and energy utilization system. Approximately 90% of CERs come from methane destructions, 10% from energy offsets Financial Structure: Direct Transaction on behalf of the Developer and its investor base. Pay on Delivery Regulatory Status: Full baseline established, 3rd Party Validation completred, stakeholder consultation finished, attempting to be the first project approved out of Thailand (which looks problematic this month) Transaction Status: String Indicative Offer received for 90% of production for 10 years – negotiations held up due to recent Thai announcements regarding CDM skepticism

Jamaica Wind Energy Plant: 

Jamaica Wind Energy Plant Development Situation: Country with substantial forthcoming electricity growth expects the use of coal to increase substantially in coming years Project CER flows: Avoidance of coal creates an emissions savings of the emissions of 1M tonnes of CO2 over a 20 year life time. Financial Structure: Direct Sale by Owner Operator on a pay on Delivery basis Regulatory status: Approved by host country Transaction Status: Accepted in Current CERUPT tender and documentation is currently up for public review. Expect accepted transaction by early 2003

Renewable Energy: Waste to CombustionLandfill Methane Projects in South America: 

Renewable Energy: Waste to Combustion Landfill Methane Projects in South America Development Situation: A series of large urban landfills is currently a environmental hazard, due to uncontrolled leakages of methane, and groundwater leachate Project emission Flows: A gas recovery plant will capture sufficient methane to power an 12 MW electricity generation facility for 20 years and achieve 8M tonnes of CO2 reductions via methane to CO2 conversion in first 10 years Financial Structure: Pay on Delivery. Structure: A partnership between the landfill operator, EcoSecurites and an LFG engineering firm The carbon transaction will pay for the gas recovery system and the initial MWs of production Regulatory Status: Accepted by Brazilian government Transaction Status – Substantial Percentage of the production is committed to a transaction with the Prototype Carbon Fund which is doing DD right now. 3rd Party validators are providing quotes

Wood Waste Biomass Energy Plant: 

Wood Waste Biomass Energy Plant Development Situation: Wood processor currently has uses bunker for energy, while disposing of mill waste via burning/dumping Project CER Flows: A wood waste biomass electricity plant will displace fossil, avoiding the emissions of up to 2MT CO2 between now and end of 2020 Financial Structure: Upfront Pay for a commitment of CER delivery for 10 years, enabling required investments to be made. Substantial series of interlocking guarantees using secondary forestry project controlled by the same owner as a partial backstop Regulatory status: Accepted by the Host Government Transaction Status – Private Sector Buyer - As close as one can be

Dedicated Charcoal production for Steel Pipes: 

Dedicated Charcoal production for Steel Pipes Situation: Vallourec & Mannesmann (major international steel producer) is opting to continue and expand its eucalyptus based charcoal production to power its steel making facilities in Brazil Project CER Flows: 37M tonnes over 20 years, based on combination of avoided use of coal, reduced methane from kiln conversions and more aggressive plantation reforestation Financial Structure: Combination of forward contracts and spot market sales Regulatory status: Accepted by the Brazilian Government Transaction Status – 5M tonne commitment over 10 years received from major international institution. Private sector buyers being filled in for other components of the transaction syndication (which we believe to be among the largest in the market right now)

Empty Fruit Bunch Biomass Energy Plant: 

Empty Fruit Bunch Biomass Energy Plant Development Situation: Palm Oil Group seeks to decrease reliance on the grid and also has substantial issues in regards to disposal methods of EFB Project CER Flows: Estimated between 50,000 and 80,000 tonnes per year, depending on the potential for avoiding methane releases from claimed landfilling of EFB Development Status –Baseline and MVP completed and being adjusted with Client. 3rd party audit and stakeholder consultation to commence November 2002 Regulatory status: To formally go to the Malaysian government Q4, 2002 Transaction Status – Preliminary talks with several parties indicate interest

Anaerobic Digestion in the Phillipines: 

Anaerobic Digestion in the Phillipines Development Situation – A major molasses production and rum distillery complex has major energy needs (currently met by the grid) and and major liquid waste management issues Project::Using anaerobic digestion, capture the waste methane that is currently outgassing from a series of aerobic ponds and use the resultant energy as the energy requirements for the plant, with the remainder being sold to the grid. Also potential for sale of liquid fertilizer to local farmers Project CER Flows: 50,000 tonnes per year Regulatory Status: Baseline completed, validation quotes underway, in discussions with the Philippine Government (not yet Kyoto Ratifier, but reportedly close) Transaction Status: Option 1 – Forward Sale of Emission Reductions in Conventional fashion Option 2 – Direct Equity Investment from a Concern interested in Securing Both Carbon and EPC contracts

88 MW Biomass Facility in Thailand: 

88 MW Biomass Facility in Thailand Development Situation: Developer is putting together a series of 22 MW, Rice Husk fired generation stations in the middle of the major rice processing region of Thailand Project CER Flows: Baseline and 3rd Party Validation complete and Project Design Document. Estimated at 275,000 tonnes of CO2 per year, beginning in 2004 Financial Structure: Likely to be a simple forward contract for sale, as equity, debt and EPC is already arranged Regulatory Status: Thailand position on CDM- once thought to be eventually positive- is now questionable Transaction Status – See above

Conclusions: 

Conclusions There are a huge variety of project types and transactions for hundreds of millions of dollars are already in execution Best Projects are Commercial Projects which have Conventional Outputs!! CERs rarely drive a project Exception is fugitive methane projects Developing a project requires commitment and expertise – money does not just fall out of the sky!! Government has a key role – no transactions without government approval, which means governments have to be engaged In Latin America and elsewhere, governments support these projects and the investment flows associated In Asia (notably Thailand today) there are questions