The Flexible Mechanisms of the Kyoto Protocol as Business Opportunity

Aqua Vital Int. Ltd. & Co. KG, AVI Dr. Hisham Barmil

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Table of Contents
Background on Kyoto Protocol Background to Project Development Project Development vs. Equipment Sales Contact points of the two different sectors (Equipment.Sales&Project.Dev.) Feasibility Study with and without Carbon Credits Potentials Equipment Sales/ Potentials Project Development Organisation structure to exploit the potentials the Best way Financial and Personell needs Profit Analysis

Recapitulation

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Background (1): The KyotoProtocol

Reference year: 1990 1 st Budget period: 2008 - 2012
USA: -7%

- 5,2 %
Russia: 0%

I: -6,5% B: -7,5% GB: -12,5% A: -13% DK: -21% L: -28%

ANNEX-I Countries

-8%

NL: - 6% F: 0% SF: 0%

- 21%
Germany

S: +4%
IRL: +13%

E: + 15%
GR: +25% P: + 27%

EUROPEAN UNION

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Background (2): Flexible Mechanisms

Joint Implementation:
(JI) project related Reduction in Guest country will be credited to Investor country and deducted in the Guest country >> Clearing in the Budget period (Specialty: Early JI)

Business partners are both in an Industrialized Country, or in an Industrialized and in an ex socialist country.

Clean Development Mechanism:

(CDM)

>> project related >> Reduction in Guest country raises Budget of the Investor country >> immediately creditable
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Business partners are in an Industrialized country and in a Developing Country. 19.05.2013 P

Scheme: Project Mechanisms

GreenhousegasReduction

Certification
Rehabilitation

Investor

Carbon Credits EURs or CERs

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Business Profile

With Business activities and projects

Can Greenhouse gases be reduced?

Is it possible to save primary energy?

Will renewable energy sources be promoted?

Project fits in this business field

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Procedure

Execution of a CDM - Project

An intensive and complex Procedure has to be worked off in order to fulfil the needs to be called a Climate Change Project

The whole procedure includes among other subjects international contracts, Certifications and authorisations.

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Project Cycle

PIN /PCN Letter of Endorsement/of Approval of the Host Government PDD Validation by independant Entity Emission Reduction Purchase Agreement Registration and following steps

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 PIN Letter of Endorsement/of Approval of the Host Government PDD Validation by independant Entity Emission Reduction Purchase Agreement Registration and following steps

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Example of Specific CO2 Production

~ 52 % 100 % Primary Energy ~ 48 %

Condenser Plant Electrical Output

~ 19 %

0,669 kg CO2/kWh*

Boiler

Losses

~ 40 % ~ 41 %

Total 0,963 kg CO2/kWh*

0,294 kg CO2/kWh*

Thermal Output

Electrical Output DEUTZ CHP

100 % Primary Energy

~ 41,9 % ~ 13,3 % ~ 44,8 %

Losses

Total 0,5 kg CO2/kWh

Thermal Output
*Source:Ganzheitliche Bilanzierung der Energiebereitstellung FfE-Study; Energy Mix Germany 1996: 0.669 kg CO2/kWhel
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48 % (0,463 kg CO2/kWh) CO2 - Saving with CHP

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Natural Gas - the cleanest Fossil Fuel

CO2 Production of fossil primary Energy at combustion
[kg CO2/kWh Energy input]

0,45 0,4 0,35 0,3 0,25 0,2 0,15 0,1 0,05 0

0,4 0,33 0,28 0,26 0,2

lignite
Quelle:

Hard Coal

Heavy Fuel Oil

Diesel Oil

Natural Gas

Third Report of the Parliamentary Comission on Preventive Measures to Protect the Earth`s Atmosphere published in October 1990
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Project Examples >>> Gathering and Utilization of Waste gases from - Landfill sites - Sewage Plants - Coal Mines - Biogas devices >>> Change of the Fuel (for example Natural Gas instead of Coal) >>>

Cogeneration
1 ton of CH4 equals 21 tons of CO2 also in the payment!
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Cost Income Analysis: virtual Example

Income and Costs for a Climate Change Project

Cost Transactioncosts of a Climate Change project Value of a CER Certificate 40.000 t/a x 12 = annual payment equals about 10 MW Natural Gas projetct or 1,3 MW Non Natural Gas project if Methanemissions are avoided Yearly costs of Verification (starting year 2) Profit 1st. year Profit in the following years*
* Projekt running times 1 x 10 Jahre oder 3 x 7 Jahre

Revenues

60.000

480.000 10.000 420.000 470.000

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1. Background Project Development for example Biogas system

a.) Phases of Project development (major steps) 1. Offer of a raw material or gas (here Biogas, but also Coal Mine Gas, Landfill Gas, etc.) 2. Evaluation of the amount, Quality and time of use 3. Issuing an Investment Plan and Cash Flow Plan 4. Diskussion with Investor about the total situation and Investment frame green Light 5. Contracts about securing the raw material, Permits, Procurement (Tender procedure for equipment Service and operation) 6. Contracts for the Sales of Energy, Certificates and Fertilizer 7. Operation

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2. Project Development Biogas device Overview

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Equipment Sales vs. Project Development

1.Equipment Sales a.) Tender procedure b.) Contact with specialized technical personell in that specific technical field c.) not complex (only supply against money) d.) specific customer segment

e.) specific profit for specific supply

2. Project Development a.) complex various specialists in different fields required b.) many segments, many fields possible c.) companies like more selling, me with project development like more buying d.) with (good contracts), (good profit) possible
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2. What is needed?
a.) Personell
1.Specialists in the use of Biogas, Coal Mine Gas etc.

(somebody who understands the technical issues of Biogas devices, Coal Mine use, Landfills etc., somebody who knows the technical criteria of equipment and use of the gas)

2.Specialists in Financing (somebody who knows how to model the financing of such systems, including the financing with Carbon Credits, somebody who knows about international subsidies and help of international banks 3.Specialists in CDM and JI (somebody who knows about the whole project cycle, to achieve the most credits possile but also where to sell or how to use the Credits the best way) 4.Specialists in Marketing and Distribution (somebody who knows international trade, establishes contacts in many countries, establishes subsidiaries, finds the distribution channels to many raw materials and gases, contractual expert (a tough fighter) 5. Operation supervisors (somebody who is responsible to supervise and has an overview over the projects) This person has to manage the projects the others have aquired. Installation and operation is subcontracted, but sales contracts have to be made up, then there has to be a responsible in the company, who knows about execution of the project.
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b.) Value Chain and where are the values

(where can you earn money)

-Raw material -Service and Engineering of the whole project -Equipment (Foreign- and own systems) -Service of devices -Energy Sales -Generation of Certificates -Trade of Certificates a. Sales of the generated Certificates of own projects

b. Brokerage
-Trading of Coproducts (for example Water, Fertilizer, CO2)

-Sale of the whole project

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3.) Connection Equipment Sales and Project Development

a.) Equipment Sales (when company just sells equipment) Company

Client

b.) Project Development

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Feasibility Study with and without Cabon Credits (Example study to show what IRRs can be achieved, to be discussed in person)

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Registered Climate Change projects

(01) Energy industries (renewable - / non-renewable sources) (02) Energy distribution (03) Energy demand
82 1

(04) Manufacturing industries (05) Chemical industries

228

(06) Construction (07) Transport

584

(08) Mining/mineral production (09) Metal production

0 16 86 1 6 1 0 16 66 14 0

(10) Fugitive emissions from fuels (solid, oil and gas) (11) Fugitive emissions from production and consumption of halocarbons and sulphur hexafluoride (12) Solvent use (13) Waste handling and disposal (14) Afforestation and reforestation (15) Agriculture

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Potential

Out of that potential we can do most of the segments shown before

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Involved Experts:
-Dr. Gnther Herdin (International Gas engine Expert)
-Dr. Tamer Turna (International Engineering Expert) -Knowledge of Government officials worldwide . -Mr. Franzjosef Schafhausen, Germany Dr. Drr Vienna etc. due to the fact of participation in working groups in Austrian and German Governments and the COPs/MOPs.

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