Click to edit Master title style Climate Change and the Carbon Market October 2010 Ciska Terblanche TAPPSA 2010 Conference Durban, South Africa TAPPSA – October 2010 Climate Change and Carbon Trading – an update

Content 1 International status of Climate Change Description of Incentive schemes to reduce Carbon Footprint – South Africa REFIT TREC Tax CDM 1

Climate Change Status 2 EU Phase III of the Trading system runs from 2013 to 2020 Commit to a 20% or 30% reduction in GHG emissions below 1990 levels China January 2010 announced they will reduce their economy’s carbon intensity by 40-45% South Africa Indicates a reduction objective at COP 15 Commitment made on condition that appropriate funding is provided to South Africa Green Paper to be published after the World Cup Soccer White Paper to be communicated to stakeholders by end % by 2020

Typical Incentive Schemes for GHG reduction and the promotion of RE 3 *ETS – Emissions Trading Scheme **CDM – Clean Development Mechanism 3

Tradable Renewable Energy Certificates (TREC) 4 TREC = Tradable Renewable Energy Certificate Sell kWh generated from a renewable energy source (sell electricity) Host: Department of Energy Model: REC system implemented in EU Initially a Voluntary system, but legislation provides the framework to switch to a mandatory system, i.e. industry will have a RE electricity use target 4

Department launches refit programme for renewable energy September 30, 2010 Department launches refit programme for renewable energy September 30, 2010 REFIT 5 SA Target announced 2009: GWh will be generated by renewable energy sources by the year 2013 – comprising approximately 4% (1667 MW) of the country's energy supply REFIT = Renewable Energy Feed-in Tariff Hosted by the Department of Energy, input from NERSA, Eskom Under REFIT the power producer is paid for each kWh produced from a RE 5

CDM Background 6 CDM = Clean Development Mechanism One of three cap and trade mechanisms under Kyoto - developing countries Emission reductions are traded (carbon credit): 1 ton CO 2 = 1 CER Project based mechanism 6

> 2,400 registered projects in 51 countries > 900 projects in China > 500 projects in India > 170 projects in Brazil Retistered projects expected to generate > 374 million CERS p.a. and > 1.8 billion CERs by end ,900 CDM projects in the project pipeline, 31 awaiting registration 7 Registered Projects 7 CDM Statistics

8 CDM Trades : US$144 billion traded globally under the Kyoto mechanisms CDM: US$2.7 billion with slightly more than 200 million tons of CO 2 e transacted at an average price of US$12.7

9 CDM Trades 9 Forward sales Spot market

10 CDM Supply and Demand 10

11 CDM Process Flow 11

CDM Projects in the Pulp and Paper Industry Demand side energy efficiency programmes for specific technologies at ITC Bhadrachalam pulp and paper making facility in India Rice Husk based Cogeneration project at Shree Bhawani Paper Mills Limited (SBPML), India Methane recovery from wastewater generated at Paper manufacturing unit of Sree Sakthi Paper Mills Ltd., Kerala American Israel Paper Mill (AIPM) Natural Gas Fuel Switch Steam Optimization in Cooking Process in Paper Plant Optimization of steam consumption in the process by installation of free flow falling film finisher evaporator and retrofit to the chemical recovery boiler in Cachar Paper Mill of Hindustan Paper Corporation Limited Energy Efficiency Measures At Paper Production Plant 12 13

CDM Africa Climate Solutions 13 Thank You for your attention