1. The Danish CDM Project Development Facility Financing CDM in Indonesia
Erik Dugstad,
Sr. Economist, ECON Analysis
Agus Sari,
Climate change specialist, Pelangi
Contact: – Phone:

2. Danish Climate Strategy
Published by Danish Government in February 2003
Key issue: Introducing Kyoto Mechanisms to achieve cost efficiency
Balance between domestic action and buying of credits defined in economic terms.
Maximum cost of domestic measures set at 120 DKK or approximately 20 USD pr ton of CO2-eq

3. Uncoupling of economic growth and CO2-emissions50 75
100
125
150
1988
'89
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
GDP
CO2-emission
Primary Energy Supply

4. Share of Renewable Energy in Denmark
Red: Share of electricity
Blue: Share of total energy

5. Danish demand for Carbon Credits
Danish EU-burden sharing target is reduction of 21% in compared to 1990-level
Three sources of ”deficit” compared to target:
10 mill. Tons CO2/year from lack of success in achieving reductions i.e. in the transport sector
10 mill. Tons CO2/year from expected electricity export
5 mill. Tons CO2/year from (lack of) base year adjustment
Projected total demand 25 mill tons CO2/year for 5 years or a total of 125 mill tons
Government expected to buy 20% - The rest by private sector (mainly electricity sector)

6. Bilateral collaboration in focus
Government purchases through pipelines of
Ministry of Foreign Affairs: Bilateral collaboration on CDM in Malaysia, Thailand, Indonesia, China and South Africa
Environmental Protection Agency: JI-projects in Eastern Europe
Multilateral Carbon Funds – A Danish Fund in the World Bank
Incentives for private sector
EU Emissions trading scheme started 1. January 2005
Directive implemented that links emission trading and JI/CDM
A Memorandum of Understanding between Denmark and Indonesia has been signed between Ambassador Andersen and Minister Witoelar on July 27, 2005

7. Huge CDM potential in Indonesia
million ton CERs in the period
Could create a value of million USD via sales + large local benefits for sustainable development
Opportunities in many sectors
Cement
Oil and gas
Landfill and waste
Pulp and paper
Steel
Palm Oil
Electricity
Energy saving
Etc

8. Impact of CDM for landfill to energy projects
Threshold for producing power from landfill gas is 150 tonnes of waste per day
Emission reductions generated by avoiding methane emissions from deposited waste and displacement of grid connected fossil fuel plants
Contribution from CDM is more than half of the electricity tariff
The table below indicates impact CDM on IRR for different sizes of landfills

9. Impact of CDM for Palm Oil Mill Effluent
Mill with capacity of 40 ton of Fresh Fruit Bunches per hour
Power generated will be connected to the grid
Contribution from CDM is more than half of the electricity tariff
Impact of CDM is different per technology used

10. How to develop a CDM project?
timeline
CERs issued
Pre-feasibility
PDD Development
Implementation
Registration
Final Host Country Approval
Project Validation
PIN
Feasibility study
Conditional Host Country Approval
Financial closure
Operation
Monitoring
Danida Project Development Facility
Danida buys CERs

11. Transaction costs of CDM Project
Feasibility and Due Diligence
$5,000 - $10,000
Documentation (PDD)
US$ 20,000 – $50,000, up to $100,000 with new methodology
Public Consultation
About $2,000 – 10,000
Validation
$8,000 - $15,000
Approval by the National Authority
Currently free
Registration to the Executive Board
$5,000 - $30,000 (according to the project)
Implementation of the CDM Project
According to the project
Underlying investment
Monitoring
Verification
$5,000 – $10,000

12. Benefits of participating
You get a new income stream for your project – with no risk for you
Danida takes all the CDM related risk
Danida takes all the trouble getting the paper work done
Preparing a Project Design Document
Getting the PDD validated
Getting an Indonesian National Approval
Getting the registration at the CDM Executive Board
Danida buys the CERs when they are delivered

13. Criteria for participating
The underlying project must be technically and financially viable
The technical design
Financial viability/project financing
Legal and commercial status of the project
The project should be likely to be approved as CDM project
Contribution to sustainable development
Likelihood of being additional
Existence of baseline methodology
The project proponent is capable to implement the project
Technical and management capability
Financial solidity of the company

14. The formalities Action Date Announcement of call for proposals
27 July 2005
Closing for proposals
Pre-assessment/selection
3 October 2005
4 October - 21 November 2005
Announcement of results
22 November 2005
Signing of Letter of Intent
22 November – 29 November 2005
Second call with tentative closing date: 1 February 2006

15. Possible next step in the waste-management sector
A number of workshops will be organised giving more information on the Project Development Facility
A follow-up workshop to develop Project Idea Notes (PINs) in the waste-management sector.
If you have a project already then contact the project secretariat to get a template for a PIN.
A one-on-one consultation on project development and writing of PIN is possible.

16. Secretariat of Danish CDM Project Facility
Contact
Secretariat of Danish CDM Project Facility
c/o Royal Danish Embassy
Menara Rajawali 25th Floor
Jl. Mega Kuningan
Jakarta 12590
Telephone: ext 114
Fax:
Website: Or
ECON (in Jakarta) – – Hp:
Pelangi - – Phone: