Carbon funds receive good response to the second call for proposals
NEFCO has been assigned by the Government of Norway to manage a global carbon procurement facility to procure Certified Emission Reductions (CERs) from the Clean Development Mechanism (CDM). The principal objective of the Norwegian Carbon Procurement Facility (NorCaP) is to prevent the reversal of emission reduction activities by procuring credits from CDM projects whose survival or continued emission reductions depend on a higher carbon price than achievable under current market conditions (vulnerable projects).
Following the successful conclusion of the first call for proposal for NorCaP, where a total of 18.9 Mt CERs were contracted , results are now in from a second joint call for proposals (CfP2) under NorCaP and the NEFCO Carbon Fund (NeCF).
Whereas the first call for proposals (CfP1) only targeted vulnerable projects, the CfP2 also included projects in Least Developed Countries (LDCs) that had not yet been commissioned.
NorCaP - Vulnerable Projects
The CfP2 has received 112 project proposals that have passed the automatic pre-screening for compliance with eligibility criteria from 27 countries, in total accounting for 99.2 million CERs offered. Of this, 18 project proposals (16%) were Programmes of Activity (PoA), with the remainder being stand-alone CDM projects and bundles thereof.
Most project proposals were submitted from China with 24% of the project proposals, followed by Malaysia, India and Brazil.
The CfP2 had a set aside of up to 5 million CERs from projects in LDCs. A total of 9% of the project proposals originated from LDCs, which is disproportionately higher than their global 1% representation. The majority of the LDC project proposals were PoAs.
The predominant project type by number of project proposals was methane avoidance, principally from animal waste management systems. In total, including landfill gas, coal mine and fugitive emissions, methane related mitigation projects accounted for 56% of all relevant submitted projects.
Distribution of project proposals for NorCaP by price range
Cost effectiveness is a key criterion for the selection of projects under NorCaP. The CfP2 has returned a lower average price than CfP1. The simple price proposed across all relevant project proposal categories was € 2.85 per CER, compared to €3.92 in CfP1.
Proposed prices ranged from €1.00 – 20.00 per CER. The distribution of proposals is given in Table 1 (please see the link beneath Press release with graphs and tables).
While the number of proposals fell significantly compared to the first call, the table shows that there was a significant improvement in the number of bids in the competitive price bands.
NEFCO Carbon Fund – New Projects in LDCs
The CfP2 included a joint call for project proposals for NeCF for new projects, i.e. CDM projects or PoAs that had not yet been fully implemented, located in LDCs. 44 complete project proposals were received, accounting for 15 million CERs offered. The CERs were offered to NeCF at a straight average of €3.68 per CER.
The majority of project proposals (68%) was related to renewable energy technologies, primarily solar, biomass and hydro (ref Figure 4) and the projects submitted were located in 18 countries (ref Figure 5).
Information for editors:
NEFCO is an international financial institution owned by the five Nordic countries who mainly finances environmental-related projects and investments, in order to generate positive environmental effects for the Nordic region. NEFCO’s Carbon Finance and Funds department (NEFCO CFF) operates globally, and has assets under management, including carbon finance facilities and technical assistance products. NEFCO CFF is also active in the development of new market mechanisms and climate financing for the post Kyoto policy environment.
Read more about NEFCO Carbon Finance and Funds at www.nefco.org/cff and about NorCaP at http://www.nefco.org/financing/nefco_norwegian_carbon_procurement_facility
Notes to the data:
Please note that the data presented above related to CfP2 is aggregated for public information, and there has been no assessment at this stage of the vulnerability of the project proposals as relevant under NorCaP. This detailed evaluation, shortlisting and subsequent contracting of project proposals will take place in the coming months.
The data presented above are therefore presented for information only, and cannot be relied upon for any other purpose. NEFCO will aim to revert to project proponents within four months, and before that, if successfully shortlisted for signing of a Letter of Intent and subsequent due diligence. NEFCO reserves the right, at its sole discretion, not to start negotiations with any of the project proposals submitted under CfP2 .
For further information:
Ash Sharma, Manager, NorCaP, NEFCO ash.sharma [at] nefco.fi +358 400 811 327
Lia Oker-Blom, Communications Officer, NEFCO, lia.oker-blom [at] nefco.fi +358 50 3256610