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Examples on how the additionality is addressed in the three Projects approved by the National CDM Council in Morocco (DNA)
Important Issues to address in CDM Projects Tunis, August 27-29, 2004, Hotel Africa, Tunis Mme Samira Elkhamlichi Permanent Secretariat of CDM DNA Morocco
Overview
What is additionality? Project additionality tests Examples: 1. Wind Park Essaouira 2. Rehabilitation of the landfill in Akreuch as a landfill gas to energy project. 3. Heat recovery enhancement for power generation at the Maroc Phosphores phosphoric acid and fertilizer production plant of Jorf Lasfar, Morocco
What is additionality?
At the 10th meeting of the EB: for establishing additionality a two step approach has to be followed:
First, demonstrate-by testing for barriers- that the project is not the baseline scenario and hence different from what otherwise would have happened. Second, select a baseline approach described under paragraph 48 (a)-(c) Marrakech Accords, describe the appropriate baseline scenario and calculate the resulting GHG reductions.
The key idea: prove that the project is not Business as usual BAU
Several possible tests have been identified, judge on a project by project basis Concept must be made operational
A proposal on CDM additionality tests, developed by the Ministry of Economic affairs/Senter (Netherlands).
The project developer must use one or more of theses tests. The test must be transparent and replicable: Validator will check, public can comment.
Use economic arguments that your project is not the most attractive course of action: Internal Rate of Return IRR.
Step 1
Step 2 Step 3 Step 4
Calculate the IRR of your project without carbon credits Calculate the IRR of these alternatives Determine whether your project has a lower IRR than the IRR of the alternative. If yes the project is additional
Test 2: The project is not viable without the carbon credits component
Use economic arguments that your project is not viable without the income from carbon credits : Internal Rate of Return IRR
Step 1
Step 2
Step 3
Test 3: The project faces serious barriers The CDM EB has identified four different barriers:
Investment barriers: Technological barriers Barriers due to prevailing practice:is the project common practice? Others barriers
Tanger
Ttouan
Oujda
Rabat
Tanafnit Casablanca Mekns Ocan Beni Mellal M Atlantique Safi M Marrakech Emplacement du site Essaouira A A Essaouira Agadir R R Tarfaya O O C C
Layoune
Fs Khnifra
Project Description:
The project involves the construction of the 60 MW Essaouira wind power project in Cap Sim, Morocco. The Cap Sim region is one of the windiest areas in Morocco. The project will enable the use of renewable energy in Morocco and attract foreign and private investment into the power sector in Morocco. The project will reduce GHG emission reductions by displacing existing and to be developed power plants connected to the grid.
Test 1:
Step1
Possible alternatives include: coal plant, fuel plant, gas-fired combined cycle and hydro ( depends on rainfall, drought
conditions have reduced the contributions of electricity from this source)
The current regulations and price for electricity in Morocco doesnt favour electricity generation by RE sources. The price of electricity generated through a wind park is high compared to the price of Step 2 electricity generated by fossil fuel sources.Financing wind projects is difficult without the value of the environmental benefits. IRR of CC is the higher
Step3
Test 2:
There is no legislation requiring the production of wind energy.
The project will result in 1.531.032Tonnes CO2 over the crediting period.
Step1
Step 2
IRR of project with the carbon credits is higher than the IRR of project without
Step3
Project is additional
Test 3:
Investment barrier: ONE is still seeking investments partners for the Essaouira project. The price of producing electricity by a wind park is high compared to using fossil fuel and the project is not a commercial option The banks don't want to provide any guarantees for wind power generation projects. The project was only included in the Moroccan power expansion plan taking into account the benefits from the credits carbon.(The tangier wind park project has been included in the expansion plan since 2000, however it is still not financially closed. Technological barrier: There are technological concerns such estimating output and fitting the project into the national grid.
Test 1:
Step1
Alternative1: the community o Rabat could continue the current BAU practice of not collecting and flaring landfill gas from its waste operations in Akreuch. In this case, the uncontrolled release of landfill gas would continue. Alternative 2: The landfill operator would invest in some LFG collection and flaring equipment but not in power generation
The CDM project would involve expenses without any offsetting revenues. IRR is 0%
Step 2
Step3
Test 2:
The current Moroccan law and regulations with regard to landfills and rehabilitation works include particularly that the abandoned area should include covering of the rubbish of the abandoned area by covering it with vegetation and trees followed by the development of terracing in the site. There is no obligation to capture landfill gas and to combust the generated biogas. Step 2
Step1
The project will result in the avoidance of 1.59 millions Tonnes CO2 over 21 years.
IRR of project with the carbon credits is higher than the IRR of project without Difference in IRR is significant
Step3
Project is additional
Test 3:
Investment barrier:
Technological barrier:
Others barriers: First time implemented in Morocco
Management lacks experience using this technology; The project is considered first of a kind , that means far from common practice; The local community may fail to see the environmental benefits of the project and so may oppose the project.
Heat Recovery Enhancement at the Jorf Lasfar Phosphoric Acid Production Plant
Project developer: OCP
Test 1:
Step1
Alternative1: The existing plant Alternative 2: The HRS project
The project leads to reduce electricity costs used by the complex
Step 2
Step3 Step 4
Test 2:
Step1
Step 2
The total resulting CO2 emissions reduction is calculated to be 848.895 tons of CO2Eq over 10 years crediting period.
Diffrence in IRR is significant !!!!
Step3
Project is additional
Investiment barrier:
Test 3:
The lifetime of the existing system of the Jorf Lasfar project has not yet come to an end. The equipment has been installed in 1986 and is expected run at least for another 10 years. The installation of a HRS system results in extra costs, which do not result in a return acceptable by the Investment Board of OCP. Other investment priorities exist. The environmental department of OCP has put the installation of a HRS system for Jorf Lasfar on the agenda since 1994, but up to now the project has never been approved because of other priorities. The revenues of CERs could help in changing the equipment to an HRS system before 2015. The project would not occur in the absence of the CDM. Technological barrier: This processus use a new technology :The first application in Morocco Need of a better knowldege of this technology
Thanks
Permanent secretariat of CDM Climate Change Unit www.mdpmaroc.com