Main target group of the CDM Information Desk

• Policy makers and public authorities directly or indirectly involved in CDM in ASEAN member countries
• Staff of institutes or agencies that are/will be involved in implementation in ASEAN member countries
• ASEAN officials

• Questions on the UNFCCC requirements regarding CDM
• Information requests on sources/references of specific aspects of CDM (e.g. baselines)
• Information of the implementation of CDM in other ASEAN countries

Ask your questions on CDM in ASEAN by email: cdmasean (at) pelangi.or.id or cdmasean (at) capsd.nl
* replace (at) with @

Contents of CDM-ASEAN Q&A

1. Developments in international CDM markets and implications for ASEAN countries
2. CDM baselines in energy sector in ASEAN countries
3. CDM institutions and procedures in ASEAN countries
4. CDM capacity building projects and coordination in ASEAN

1. Developments in international CDM markets and implications for ASEAN countries

Q: Who is currently buying CERs?
A: The largest acquisition programme is the World Bank's carbon finance business that has several pathways: The Prototype Carbon Fund (180 million $, project pipeline de facto closed), the Community Development Carbon Fund (focusing on smaller projects with development benefits, about 40 million $, looking for projects) and the BioCarbon Fund (sinks projects, about 20 million $, project pipeline de facto closed) are funds that combine government and private company subscriptions. Besides these three, the World Bank administers the Italian Carbon Fund (20 million $), the IFC Netherlands Carbon Facility (100 million $). Japanese companies are strongly increasing their share in the market. Several governments have issued tenders for CER acquisition: Austria (open until September 2004), Denmark, Sweden, Finland. The latter likely have already exhausted their budget. See the report "2004 State and Trends of the Carbon Market Report", World Bank, www.prototypecarbonfund.org.

Q: What are current CER price levels?
A: As no CERs have been issued, prices depend on the quality of the seller and the project type. The World Bank and government tender programmes have consistently offered to buy at 2.5-3.5 €/t. The Dutch offer up to 5.5 €/t for renewable energy projects. On the high end of the market, the German government has recently signed a deal with a solar-thermal project developer in India at 10 €/t. See the report "2004 State and Trends of the Carbon Market Report", World Bank, www.prototypecarbonfund.org.

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Q: What is the position of ASEAN countries on CER price?
A: There is no formal position on trying to reach a minimum price. Several stakeholders in ASEAN countries (in government and among project developers) have expressed their concern with the current price level being too low (for several reasons).

Q: How competitive are ASEAN countries as a CDM host country?
A: The large ASEAN countries have a varied and considerable CDM potential, particularly regarding bioenergy and geothermal. Some countries have competitive DNA structures whereas others still have to set up their DNA. It should be stressed that the general investment conditions are key to any CDM project (cost of capital, regulatory framework for investments, economic and political stability etc.). In 2004, Asia has surpassed Latin America as the largest supplier of emission reduction. See the report "2004 State and Trends of the Carbon Market Report", World Bank, www.prototypecarbonfund.org.

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2. CDM baselines in energy sector in ASEAN countries

Q: What additionality tests are currently being used?
A: The Executive Board decided at its 10th session that: "As part of [...] determining the baseline scenario an explanation shall be made of how, through the use of the methodology, it can be demonstrated that a project activity is additional and therefore not the baseline scenario". It has suggested the following additionality tests:

• " Flow-chart / series of questions
• Why is the non-project option more likely?
• Barrier assessment
• Check that project type is not common practice and not required by legislation

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Q: Which electricity baselines have been used in ASEAN countries?
A: In Thailand, the average grid emissions intensity has been used in the approved methodology of the developers of the AT Biopower project; data availability is good there. The Bumibiopower project in Malaysia is using the same approach. In Vietnam, currently grid intensity data are collected.

Q: How do the rules on selection of specific baseline methodologies influence the competitiveness of projects in specific ASEAN countries?
A: As electricity grids have strongly different shares of hydropower, it may be necessary to apply much more data-intensive and complex methodologies for grids with a hydro/geothermal share above 50% (Vietnam, Laos) if the consolidated methodology proposals are accepted by the Executive Board. Thus competitiveness of electricity projects in those countries is likely to suffer. See the paper "Energy Baseline Issues in ASEAN - Finding a Common Approach", available on the CDM-ASEAN website cdmasean.pelangi.or.id.

Q: Should host countries adopt criteria for baseline methodologies?
A: It could reduce transaction costs if host countries develop a consistent argumentation for existence of barriers.

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Q: How to get data for electricity baselines in ASEAN countries?
A: So far, there is no centralised data collection going on. A rough idea can be got from the website of the Energy Information Administration (http://www.eia.doe.gov/emeu/international/contents.html). Some data is available at the ASEAN Centre for Energy. In Thailand, electricity grid data can be procured from EGAT.

3. CDM institutions and procedures in ASEAN countries

Q: What are the similarities and differences between the approval procedures in different ASEAN countries?
A: There is a wide range of procedures. Cambodia and Laos have not yet defined their approval structure. In Malaysia and Thailand, technical committees evaluate proposals before they are sent to the actual DNA. In Thailand, cabinet approval is necessary. The draft Indonesian structure foresees input by a stakeholder committee. Indonesia has agreed on a set of sustainable development criteria and also on a fee structure to finance DNA operations. See the paper "Lessons learned from CDM institutional capacity building in ASEAN countries - exchanging experiences in ASEAN", available on the CDM-ASEAN website: cdmasean.pelangi.or.id.

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Q: How long does the project evaluation take?
A: This has not officially been defined in most ASEAN countries. In most countries it is difficult to predict how long it will take because few projects have yet been evaluated.

Q: What are the criteria for project selection and approval?
A: Only few countries have clearly defined their criteria. For Malaysia, see http://www.ptm.org.my/CDM_website/INDEX.HTM. For Indonesia, criteria have been preliminarily approved but formal publication has not been done.

Q: How do the host countries assess the contribution to sustainable development of the CDM projects?
A: The approaches differ from country to country. Indonesia has a draft set of additional criteria, while Malaysia evaluates the compliance of the project with existing legislation. In other countries, the criteria are still in development.

4. CDM capacity building projects and coordination in ASEAN

Q: What is the potential role of the ASEAN Climate Change Initiative and the ASEAN secretariat in CDM capacity building?
A: Given the proliferation of capacity building programmes in ASEAN, the ASEAN CCI can play a decisive coordinating role. This would avoid duplication and would enhance competitiveness of ASEAN in the global CDM market. Currently, the possible activities are being discussed. A side event at COP10 in Buenos Aires will be organised.

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