Projects survey

>TRADING CARboN
a Point Carbon publication

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PROJECTS SURVEY

score
T

Final

In our second annual survey, TradIng carbon dIscloses The resulTs of The leadIng greenhouse gas emIssIons reducTIon projecT acTIvITIes In 2010*
spotlight. Questions about the environmental integrity of these industrial gas projects has dogged them since methodologies to establish the projects were first proposed. And 2010s events signalled the beginning of the end of

he window of opportunity is closing is an over used phrase when it comes to describing the Kyoto protocols project-based flexible mechanisms. Throughout 2010, following the chaotic UN climate change meeting in Copenhagen in late 2009, the uncertainty over the future of the clean development mechanism (CDM) and joint implementation (JI) could well have led to that window closing. But, as Trading Carbons second annual survey of emissions reduction project activity shows, CDM and JI are still proving to be key tools to reduce greenhouse gas emissions. The uncertainty has not vanished, despite the more fruitful outcomes at the UN meeting in Cancun in November and December 2010. However, there is some cause for optimism that the CDM may have a future after 2012, when the first Kyoto commitment period ends. Whether or not after 2012 the same types of projects will be dominating the certified emissions reduction (CERs) issuance is unlikely. Last year saw HFC23 destruction and, to lesser extent, N2O destruction once again under the

For the time being, HFC23 destruction and N2O destruction projects continue to dominate the clean development mechanism
these project types as a source of carbon credits from 2013. But, for the time being, they continue to dominate the CDM. Perhaps the only surprise is that four of the top five projects are N2O destruction and only one is HFC23 destruction. In total, the top five projects were issued with almost 46 million CERs in 2010. Interestingly, no more

Top five CDM projects in 2010 by CER issuance

UNFCCC identity 1. 1,238 Project name N2O decomposition project of PetroChina Company Limited Liaoyang Petrochemical Company, China N2O emission reduction in Onsan, Korea HFC23 decomposition at Changshu 3F Zhonghao New Chemical Materials Company, Changshu, Jiangsu Province, China N2O decomposition project of Henan Shenma Nylon Chemical Company, China N2O emission reduction in Paulinia, Brazil CERs issued 12,917,786

Top five CDM projects in 2010 by CER issuance (non-HFC23/adipic acid and nitric acid)
UNFCCC identity 1. 1,416 Project name Baotou iron and steel blast furnace gas combined cycle power plant project, China Anshan Iron and Steel Group Corporation (Anshan) blast furnace gas combined cycle power plant project, China Beijing Taiyanggong CCGT Trigeneration project, China Yangquan coal-mine methane utilisation for power generation project, Shanxi Province, China Gonzalez Catan and Ensenada landfill gas project Project type Energy efficiency improvement Energy efficiency improvement CERs issued 1,923,345

2. 11,758,123 9,552,191

1,609

1,895,073

2. 3.

99 306

3. 6,003,865

1,320

4.

1,083

Energy efficiency improvement Fugitive emissions

1,233,086

4.

892

1,122,948

5.

116

5,712,686

5.

426

Waste

1,020,212

February 2011

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Top five registered CDM projects in 2010 by emission reductions to 2012

UNFCCC identity 1. 2,461 Project name Blast furnace gas-fired power generation project in Baosteel Company, China Caojie hydropower project on Jiangling river in Chongqing City, China Point of use abatement device to reduce SF6 emissions in LCD manufacturing operations in South Korea Reforestation as renewable source of wood supplies for industrial use in Brazil Sichuan Muli River Dashawan hydropower station, China Approval date 8/3/2010 Start date 8/3/2010 Technology Energy efficiency industrial generation Renewable energy Total CERs issued 3,778,458

2.

3,524

22/9/2010

22/9/2010

3,627,375

3.

3,440

10/7/2010

1/8/2010

Industrial processes

3,436,334

4.

2,569

21/7/2010

10/11/2000

LULUCF

3,153,243

5.

2,850

19/4/2010

19/4/2010

Renewable energy

3,063,434

Leading DOE by number of projects registered in 2010**

Company name 1. 2. 3. 4. 5. DNV Climate Change Services Tuev Sued Gruppe Tuev Nord Cert SGS UK Tuev Rheinland Japan Total number of projects 175 120 91 69 66

Leading DOE by number of projects validated in 2010

Company name 1. 2. 3. DNV Climate Change Services SGS United Kingdom Tuev Nord Cert Total number of projects 158 76 74 61 61

4=. Tuev Sued Gruppe 4=. Tuev Rheinland Japan

Top five project participants by validated CDM projects in 2010

Company name 1. 2. 3. 4. 5. Tricorona Ecosecurities Camco EDF Trading Carbon Resource Management Total number of projects 45 41 32 22 21

Top five project participants by registered CDM projects in 2010

Company name 1. 2. 3. 4. Vitol Tricorona EDF Trading Deutsche Bank Total number of projects 38 23 22 20 18 18

5=. Carbon Resource Management 5=. Ecosecurities

Top five validated CDM project types in 2010

10 26 68

Top five host countries for projects validated in 2010

17 19

Renewable energy Waste Energy efficiency improvement Fugitive emissions Industrial processes
584 131 29

China India Vietnam Brazil South Korea

453

78

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PROJECTS SURVEY

Top five JI projects in 2010 by ERUs issued

Project identity 1. UA1000175 (Track 1) Project name Reduction of methane leakage at flanged, threaded joints and shut-down devices of the equipment of OJSC Kyivgas, Ukraine Reduction of methane leakage at flanged, threaded joints and shut-down devices of OJSC Odesagas Equipment, Ukraine Redundant thermal decomposition of residual nitrous oxide from the Lanxess adipic acid production in KrefeldUerdingen, Germany AchemaUKL-7 plant N2O abatement project, Lithuania Nitrous oxide reduction at Agropolychim fertilizer plant, Bulgaria ERUs issued 3,087,026

Top five approved JI projects in 2010 by emissions reductions to 2012

Project identity 1. RO2000024 (Track 2) Project name N2O emissions reduction by installation of a secondary catalyst inside ammonia oxidation reactors at three nitric acid production plants NA2, NA3 and NA4 of the Azomures company, Romania Reduction of methane leakage at flanged, threaded joints and shut-down devices of the equipment of OJSC Kyivgas, Ukraine Co-destruction of HFC23 and SF6 at KCKK polimer plant, Russia Reduction of methane leakage at flanged, threaded joints and shut-down devices of OJSC Odesagas equipment, Ukraine Nitrous oxide reduction at Agropolychim fertilizer plant, Bulgaria ERUs until 2012 8,197,177

2. UA1000165 (Track 1)

2,418,898 2. UA1000175 (Track 1) 857,245

7,822,229

3. DE1000017 (Track 1)

3. RU1000201 (Track 1) 813,567 808,184 5. BG1000154 (Track 1) 4. UA1000165 (Track 1)

5,240,731 4,750,385

4. LT2000014 (Track 2) 5. BG1000154 (Track 1)

3,224,000

of these types of projects are coming online. None of the top five projects by emissions reductions to 2012 that were registered in 2010 included HFC or N2O, unlike the previous year when an HFC23 destruction project topped this table (see Trading Carbon, February 2009, pages 1925). Three of the top five project types by CER issuance in 2010, excluding HFC23/adipic and nitric acid, were energy efficiency improvements. Energy efficiency has long been seen as one of major ways to make GHG emissions reductions. None of the projects in this category were renewable energy, unlike last year when a bundled renewables project topped the list. In total, more than

India remained runner up in the CDM host country category, but was down in new project numbers to 131 in 2010 from 345 in 2009
7 million CERs were issued to these projects in 2010 more than enough proof that there is money to be made from the CDM beyond industrial gas projects. Energy efficiency was also at the summit of the top five projects by emissions reductions to 2012 that were registered in 2010. The blast furnace gas-fired power generation project at the Baosteel Company in China expects to generate 3,778,458 carbon credits by 2012. Projects in China take up two more of the top five places, with the other projects based in South Korea and Brazil. The project hosted in Brazil is perhaps most interesting. It is for land use, land-use change and forestation, a CDM project type that has not been utilised to a large degree. Questions over the permanence of credits these types of
February 2011

projects create temporary or long-term CERs that have to be replaced over time and demand, with the worlds main carbon market in Europe not accepting forestry credits for compliance, have restricted investor interest. But, having said that, the reforestation as a renewable source of wood supplies for industrial use project is expected to generate more that 3 million credits by the end of 2012, mainly thanks to its crediting period starting in 2000. Two renewables projects also make the top five in this category. Both projects hydro run-of-river in China are expected to create more than 2 million CERs each. Both China and renewables projects dominate the host country and project types validated in 2010. This is much the same result as last year. Some 584 renewables projects were validated in 2010, compared with about 600 in 2009. China hosted 453 validated projects in 2010, compared with 542 in 2009. There was an even more significant drop off in India, the second ranked country. It remained runner up in the host country category, but was down in project numbers 131 newly-validated projects in 2010, compared with 345 in 2009. Vietnam moved up to third place ahead of Brazil, but, in terms of validated project numbers, both countries were down on 2009. The south-east Asian country hosted 29 newly-validated projects in 2010. This compared with 48 in 2009. The South American country hosted 19 newlyvalidated projects last year, but 84 the previous year. When it comes to leading companies validating and verifying projects in 2010, there are few surprises. Big designated operational entity (DOE) names dominate, as they did last year. DNV tops both DOE tables projects registered and validated in 2010. Tuev Sued, Tuev Nord, Bureau Veritas Certification, SGS UK and Tuev Rheinland Japan shared the other places. Tricorona tops the project participants from validated projects in 2010 table, as it did in 2009. In fact, it was a
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Top five project participants in JI projects determined in 2010

Company name 1. 2. 3. RWE Power Mitsui & Co Vema Total number of projects 24 5 4 3 3

Leading AIEs by JI determinations in 2010 (Track 2)

Determinator 1. Bureau Veritas Certification Total number of projects 9 1 1

2=. DNV Climate Change Services 2=. Tuev Sued Gruppe

4=. Carbon Resource Management 4=. Ecocom BG

Leading AIEs by ERUs issued in 2010 (Track 2)

Determinator 1. 2. 3. Tuev Sued Gruppe DNV Climate Change Services Bureau Veritas Certification ERUs issued 1,495,665 903,524 546,201

participant in more projects last year than the previous year, 45 compared with 41. Ecosecurities moved up to second place from equal third last year; again increasing its role in the number of projects validated to 41 from 29. Both Tricorona and Ecosecurities have, in recent years, been bought by investment banks Barclays Capital and JP Morgan respectively. Continued consolidation in the market was seen in January with Switzerlandbased commodities trader Vitol buying developer Carbon Resource Management (CRM). The purchase would reinforce Vitols position as the leading project participant by registered CDM project. It topped that category with 38 projects, while CRM was equal fifth with 18 projects. New to both validation and verification categories this year was EDF Trading. Also new to this years project survey are categories for JI. The top two projects by emissions reduction units (ERUs) issued in 2010 are both based in Ukraine. They are also for similar project types: fugitive emissions from oil and gas pipelines. The reduction of methane leakage at flanged, threaded joints and shut-down devices of the equipment of OJSC Kyivgas was issued with just over

3 million ERUs, while the reduction of methane leakage at flanged, threaded joints and shut-down devices of the equipment of OJSC Odesagas received almost 2.5 million ERUs. And, like CDM projects, N2O destruction from adipic and nitric acid plants was also prominent, taking the next three places. In total, the top five JI projects in this table were issued with just under 8 million ERUs. An N2O project topped the table for ERUs to 2012 from new projects more than 8 million by the installation of a secondary catalyst inside ammonia oxidation reactors at three nitric acid production plants NA2, NA3 and NA4 of the Azomures company in Romania. Other project types in this category included methane leakage, HFC23 destruction and SF6 destruction. Germanys energy giant RWE dominated the project participants category for projects approved in 2010. It was involved in 24, according to the data. The second company

Like clean development mechanism projects, N2O destruction from adipic acid and nitric acid plants was also prominent in JI
was Japans trading house Mitsui & Co with five projects. Bureau Veritas Certification was the leading accredited independent entity (AIE) for track II JI projects approved in 2010. Track II JI follows a similar approval process to CDM, while track I JI requires only the approval of the country governments involved. Energy efficiency projects topped the list of most JI

Top five JI project types approved in 2010

6

Top five host countries for JI projects approved in 2010

8

Energy efficiency improvement Industrial processes

30

Ukraine Bulgaria Czech Republic

19

Waste Renewable energy Fuel switching

11

23

France Germany

21 25

18 21

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PROJECTS SURVEY
projects approved in 2010. They were followed by industrial processes, waste, renewables and fuel switching. Ukraine topped the country list with 23 projects, with Bulgaria close behind with 21. Interestingly, for a mechanism associated with central and eastern European countries, France came fourth with 11 projects and Germany fifth with eight projects. In the US, the failure of Congress to pass federal carbon cap-and-trade legislation had a big impact on market activity. This years survey doesnt include an aggregator category, for example. However, with California moving forward with its own cap-and-trade market and probably being part of the wider Western Climate Initiative regional system, 2011 could bring increased activity. First Environment once again topped the leading verifier category with 43 projects verified in 2010. In 2009, the company verified 28 projects. SES took second place with 13 projects. The Kansas-based company didnt make the top five last year. Californias Climate Action Reserve (CAR) once again dominated the leading voluntary standard used in North America by number of projects list. In 2010, 104 projects used CAR, down slightly on 2009s 126. But given its prominent role for offset generation in Californias planned market, numbers could be set to grow again. The Chicago Climate Exchange, which was second placed in 2009 with 54 projects, doesnt make the list in 2010. This may be a reflection of the decision by new owners Intercontinental Exchange to close down the CCXs emissions trading scheme and the ensuing uncertainty over the Chicago bourses offset market. The offset business is set to continue and so may make a return in subsequent surveys. Blue Source (19) tops the developer category, followed by Terra Pass (12), Environmental Credit Corp (10) and Finite Carbon (11). It now remains to be seen whether 2011 will see growth in the North American market and a continued drop off of CDM and JI projects? l * Several surveys and awards are conducted in the carbon market usually based on voting or other criteria determined by the organisers. Here Trading Carbon, with the help of Point Carbon Thomson Reuterss project manager databases, has compiled a set of lists based on hard facts to show the leading emissions reduction project activities in 2010. The information was taken from Point Carbons Carbon Project Manager and Carbon Project Manager North America databases. Carbon Project Manager has more than 14,000 projects listed in its database, while Carbon Project Manager North America has almost 1,200 projects listed, as Trading Carbon went to press in mid-January. See www.pointcarbon.com Trading Carbon would like to thank Arne Eik, Cecile Petit and Olga Chistyakova for their help in compiling these listings ** Uses data provided by the UN Framework Convention on Climate Change secretariat website
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Leading verifier in North America in 2010 by number of projects

Verifier 1. 2. 3. 4. First Environment SES Ruby Canyon Engineering ICF International Canada Total number of projects 43 13 9 8

Leading voluntary standard used in North America in 2010 by number of projects

Standard 1. 2. 3. 4. Climate Action Reserve Voluntary Carbon Standard Alberta Offset System Canadian Standards Association Total number of projects 104 42 40 23

Top five project developers in North America in 2010 by number of projects

Company 1. 2.
ISTOCK

Total number of projects 19 12 10 11

Blue Source Terra Pass Environmental Credit Corp Finite Carbon

3. 4.

February 2011