Access to Carbon Finance

EU-EAGA BizTech Partnership

South Pole Carbon Asset Management Ltd

November 18, 2009

This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution o tside the client organi ation without prior written approval from South Pole Carbon Asset organization itho t distrib tion outside ritten appro al So th Management Ltd. This material was used by South Pole Carbon Asset Management Ltd during an oral presentation; it is not a complete record of the discussion.

Photo under the Creative Commons-license of Flickr. Photographer: Jeff Kubina.

OVERVIEW
South Pole Carbon Asset Management Ltd Ltd.
The Protocol The M h i Th Mechanism The Process The Statistics

Example of CDM projects

Who is South Pole Carbon Asset Management?

Leading developer of carbon offset projects* headquartered in Zurich, Switzerland Offices in Bangkok, Beijing, Hanoi, Istanbul, Jakarta, Johannesburg, Mexico, New Delhi,
Taichung; offices are being set up in Venezuela and other countries g g p >70 carbon professionals Projects in over 20 countries covering voluntary & certified y emission reductions Excellent regulatory insights into CDM and voluntary standards Strong sales pipeline for carbon offsets Focus on high quality emission reduction projects, where possible with Gold Standard Label

Source: ENDS Guide to Carbon Offsets 2008

Overview of South Pole Services

Carbon Asset Management

Manage regulatory process for approval of carbon offsets in line with UN or

voluntary standards Sell CERs/VERs on behalf of project developers Manage project d M j t developers price risk th l i i k through guaranteed carbon offset prices h t d b ff t i

Project finance

Asset-backed and unsecured carbon pre-payments Build-Operate-Transfer (BOT) for carbon offset projects

Selling/sourcing mandates for CERs/VERs

Buy CERs/VERs on behalf of compliance or voluntary buyers Establish and operated dedicated CER/VER purchasing vehicles

Fund Management

Will co-manage Gold Carbon Capital Fund to invest in carbon offset projects
that generate Gold Standard certificates

* Certified Emission Reductions under the Kyoto Protocol ** Voluntary Emission Reductions Source: South Pole Carbon Asset Management Ltd.

The Kyoto Protocol

Commitments of industrialized countries to reduce emissions at
average 5% below the emission level in 1990 to be achieved 1990, between 2008 2012

Undertaken through Domestic Action Or together through flexible mechanisms: Emissions Trading Scheme; Joint Implementation; Clean Development Mechanism (CDM);

The Clean Development Mechanism

The purpose of the Clean Development Mechanism is threefold: (1) to contribute to the ultimate objective of the UNFCCC; (2) to assist Annex I Parties in achieving compliance with their emission limitation and reduction commitments; ( ) (3) to assist non-Annex I Parties in achieving sustainable development ( y g p (Kyoto Protocol Art.12, 2). The CDM has been developed to create opportunities for synergies between cost-effective climate change mitigation and sustainable development. The development of CDM projects can involve various combinations of stakeholders. Both public and private entities and both host country-based and 'foreign' entities are allowed to participate.

CDM How does it work

Domestic Average emissions reduction in 2008 2012 Emission reduction Emission commitment CER reduction 1990 emissions
commitment -5 percent below 5 1990 levels (Assiged Amount)

Certified
Emission Reduction (CER)

Reduction from
CDM Project BAU j Emissions

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The Process

1 2 5

Feasibility and Due Diligence Documentation Approval by National Authority Registration by Executive Board Implementation

3 4

Public consultation Validation by Operational Entity

Methodological approval

6 7

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9 10

Verification by OE Issuance of CERs by EB Transaction of CERs

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The Statistics

AnnualAverageCERs* CDMprojectpipeline:>4200ofwhich: 1860areregistered 1860 are registered 96arerequestingregistration N/A 321,095,906 13,317,757

ExpectedCERsuntilendof2012** >2,900,000,000 >1,660,000,000 > 1,660,000,000 >40,000,000

* Assumption: All activities deliver simultaneously their expected annual average emission reductions ** Assumption: No renewal of crediting periods

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Typical projects that can qualify for voluntary or certified carbon credits

Methane capture from landfills and conversion to electricity Anaerobic digestion of wastewater coupled with electricity generation Reduction of industrial greenhouse gas emissions (nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride) Cogeneration with biomass & biofuels Hydropower Geothermal energy Wind power Solar power Methane capture from mines and conversion to electricity Forestry Energy efficiency

CDM project example: Co-Composting at Palm Oil Mill

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Case study: co-composting project at POM 30 tons/hour

Price: US$4 / CER $

Compost value: US$ 32 / ton

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CDM project example: methane capture at wastewater treatment plant

Project activity: installation of closed anaerobic digester; use of methane for electricity generation/industrial heat Project: Harapan P l Oil Mill 60 t/h P j t H Palm Capex US$ 2.8 m for 45k CER per year Replacement of diesel fuel CER from methane capture CERs f th t and fuel switching

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CDM project example: biogas production from industrial waste water

Reference case (what would happen in the absence of the project): anaerobic lagoon Project activity: installation of closed anaerobic digester; use of methane for electricity g generation/industrial heat Example project - Korat Waste to Energy: Largest starch plant in Thailand P d i 225 000 t Producing 225,000 tonnes of cassava starch f t h per year Capex 5.2m, for 1.95m CERs (325,000 p/a for 6 years) CERs from methane capture and fuel switching

CDM

CDM project example: Geothermal Power Plant

Geothermal Power Plant Cycle

CYCLONE SEPARATOR
STEAM
UP TO 4 KM
ELECTRICAL GENERATOR

CYCLONE SCRUBBER

STEAM TURBINE

C OOL ING T OW ER

CONDENSER
TURBINE STEAM EXHAUST
v
V

v
V

v
V

v
V

v
V

v
V

ST E AM

PSI

PUMP

COLD CONDENSATE CONDENSATE

PUMP

FLASHING TO STEAM-BRINE MIXTURE IN BOREHOLE RESERVOIR BRINE

CONDENSATE INJECTION WELL

BRINE INJECTION WELL

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CDM project example: Hydroelectric Power Plant

Reference case (what would happen in the absence of the project): p j ) generating electricity using fossil fuel Project activity: construction of hydro power plant Example project Parlilitan Hydro Installed capacity 7.5 MW Capex US$13.4m for 32,550 CERs/year y Electricity sales: US$ 2.2m per year (US$5 cents per kWh)

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CDM project example: Waste Heat Recovery

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Further information on CDM?

www.cdm.unfccc.int www.pointcarbon.com www.reuters.com/finance/greenBusiness g www.carbonpositive.net

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Thank you for your attention!

South Pole Carbon Asset Management Ltd. Paul Butarbutar Regional Director Phone: +62 21 726 4546 p.butarbutar@southpolecarbon.com www.southpolecarbon.com www southpolecarbon com

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