Existing CDM Potential and Perspectives for Carbon Finance in RCREEE Member States Beyond 2012

Countries studies: Jordan, Yemen, Syria, Libya, Lebanon,

Algeria, Egypt, Tunisia and Morocco

Final report

November 2011 September 2011

Existing CDM Potential and Perspectives for Carbon Finance in RCREEE Member States Beyond 2012

Contents

1. Abbreviations ...... 2 2. Background...... 3 3. Main conclusions and recommendations ...... 4 4. Summary table of projects and programmes in the countries ...... 10 Annex 1 – Jordan country study ...... 12 Annex 2 – Yemen country study ...... 29 Annex 3 – Syria country study ...... 47 Annex 4 – Libya country study ...... 64 Annex 5 – Lebanon country study ...... 70 Annex 6 – Algeria country study ...... 96 Annex 7 – Egypt country study ...... 103 Annex 8 – Tunisia country study ...... 117 Annex 9 – Morocco country study ...... 131

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Existing CDM Potential and Perspectives for Carbon Finance in RCREEE Member States Beyond 2012

1. Abbreviations

- CDM: Clean Development Mechanism - CER: Certified Emission Reduction - CFL: Compact Fluorescent Lamp - DNA: Designated National Authority - EB:CDM Executive Board - EE: Energy Efficiency - ESCO: Energy Services Company - EU ETS: European Union Emissions Trading Scheme - GHG: Greenhouse Gas - MENA: Middle East and North Africa - MRV: Measurement, Reporting and Verification - MW: Megawatt - NAMA: Nationally Appropriate Mitigation Action - PIN: Project Idea Note - PoA: Programme of Activities - RE: Renewable energy

- tCO2e: Ton of carbon dioxide equivalent - UNFCCC: United Nations Framework Convention on Climate Change

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2. Background

The Regional Centre for Renewable Energy and Energy Efficiency (RCREEE) wants to harness the potential of the Clean Development Mechanism (CDM) to mobilize energy efficiency and renewable energy projects in its member states (Algeria, Egypt, Jordan, Lebanon, Libya, Morocco, Palestine Authorities, Syria, Tunisia, and Yemen). Given that CDM has not really taken off in the region, which currently has a share of less than 1% of the total number of CDM projects as well as the volume of certified emission reductions (CER) estimated, RCREEE wants to mobilize a maximum of CDM projects for registration before the end of 2012, because projects registered afterwards can no longer export their CERs into the European Union Emissions Trading Scheme (EU ETS).

The technical potential for CDM is quite high in the entire RCREEE region given the natural availability of renewable energy (solar energy in all member states, wind power in many of them), and the region has a strong potential for energy efficiency projects and other potential CDM sectors. This potential for energy savings is found in energy intensive industries (heavy industries, oil and gas sector) as well as in the residential sector. This includes whole series of activities in so-called Programmes of Activities (PoA). However, the revolutions, continuing unrest and civil war in some RCREEE member states make the environment for CDM implementation even more challenging than it has been in the past.

Some RCREEE members have had a national CDM authority (DNA) for several years, built capacity of local consultants and project developers and developed project pipelines with the help of international donors (Egypt, Morocco, Tunisia), whereas others have set up DNAs but otherwise only taken fledgling steps (Algeria, Lebanon, Libya, Syria and Yemen). Palestine is a special case as it is not yet a member state of the UN and thus cannot participate directly in the CDM.

The present report assesses the CDM potential in Jordan, Yemen, Syria, Libya, Lebanon, Algeria, Egypt, Tunisia and Morocco, and identifies a CDM portfolio for these countries. For projects found to be mature, a tailored implementation plan is to be developed that enables CDM registration before the end of 2012. Given the uncertainty of the international climate policy system after 2012 where the CDM may be replaced by or complemented with new market mechanisms, RCREEE wants in addition to assess the opportunities and risks of utilising these new mechanisms. Given that the EU has stated its willingness to engage in bilateral negotiations with developing countries to set up sectoral crediting, the strategic implications of doing so should be considered. Given that the Cancun Agreements have confirmed the concept of Nationally Appropriate Mitigation Actions (NAMAs), including NAMAs supported through climate finance, RCREEE countries could be pioneers in setting up NAMA pilots. A preliminary study on the strategic considerations of entering into bilateral negotiations on sectoral crediting, and the potential of NAMA opportunities for these countries is included in a separate report.

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3. Main conclusions and recommendations 2,380tCO2e per year. In addition to the 2 registered projects, 2 projects are submitted for Jordan registration (Amman Ghabawi Landfill Gas to Energy Project and Samra 300 MW combined Jordan is eligible for the CDM since it has signed cycle project) and one project under validation the UNFCCC in 1993, ratified the Kyoto Protocol (Amman East 386.96 MW Combined Cycle Power in 2003 and created the DNA in 2005. Plant). Two PoA were identified among this portfolio. The first is related to the Demand-Side Energy Efficiency for Water Pumping Stations and the second is the CDM city-wide Program of Activities of the Greater Amman Municipality including energy, transportation, waste and urban forestry. Considering, their maturity status, it seems unlikely that they could be registered before 2012. Among the CDM portfolio, 3 projects were identified as priorities to be supported in order to help them register before 2012. The selection has been done based on specific criteria, such as project maturity, quality of the implementer, scale of the project, mitigation potential, additionality criteria, chance to be registered before 2012. Source: data.un.org These 3 projects are Amman East 386.96 MW The second national communication has identified Combined Cycle Power Plant, Wind farm of Fujeij thirty eight GHG mitigation projects covering 5 and Wadi Araba (60 MW) and Al kaider landfill, areas: primary energy switch, renewable energy, gas collection for power generation. The energy efficiency, waste, and agriculture. The estimated cost of the financial requirement for the cumulated GHG mitigation of these projects over supporting activities is around 210,000 €. It is the period 2009-2033 is estimated to around 100 proposed that RCREEE and its cooperation Million tCO2e. Energy efficiency (33%), renewable partners cover about 140,000 €. energy (27%) and fuel switch (21%) are the major part of this mitigation potential. Energy efficiency Yemen and primary energy switch projects can be Despite the early notification of the DNA to implemented through a “no-regrets” approach, UNFCCC Secretariat, even before its ratification since the abatement cost of CO2 is negative, of Kyoto Protocol, the CDM in Yemen has been respectively -90 JD/ tCO2e and -14 JD/ tCO2e. progressing at a very slow pace. Despite this high mitigation potential, Jordan has not fully profited from the CDM. Up to now, only 2 projects, with a potential reduction of 434 tCO2e, were registered: The fuel Switching Project of the Aqaba Thermal Power Station and the Reduction of Methane Emissions from Ruseifeh Landfill. The CDM development in Jordan requires strengthening of the capacity of the DNA towards better responsiveness, sustainability, efficiency and transparency; to carry out the appropriate reform of the legal and institutional framework of the CDM, particularly regarding the bidding procedures of CER selling; to remove the CDM revenues tax (15%) in order to make CDM more attractive for project holders; and to promote the development of energy efficiency and renewable Source: data.un.org strategies so as to encourage CDM expansion. The identified CDM projects portfolio includes 11 projects with a total mitigation potential of

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As Yemen is classified as an LDC1 it is a special problem. The other remaining projects are either case: it is not constrained by the need to achieve at the PIN phase or at prospect stage. registration before the end of 2012 in order to From this portfolio, two CDM projects look worth supply CERs into the EU ETS. to be supported in order to be registered before Thanks to the initiatives of some international 2013: cooperation agencies (especially United Nations Development Programme, UNDP), a significant - Qatineh 50 MW wind energy project mitigation potential has been identified in Yemen, - Portland Pozzolana “Blended Cement” at particularly in the areas of industrial activity, Lafarge Cement Syria manufacturing, methane recovery, rural energy, and electricity grid expansion and efficiency. Libya Some CDM projects were already identified but Libya has ratified the United Nations Framework most of them are early stage. Indeed, the Yemeni Convention on Climate Change, signed the Kyoto CDM project portfolio includes only 10 projects of Protocol and lately created the DNA in 2010. which 2 are under validation and the remaining at the PIN or the prior notification stage. From the identified portfolio, three projects look worthwhile supporting: - Mocha 60 MW Wind Park Project - Recovery & utilization of associated gas from basement wells in the Kharir Field (Block 10), Yemen - Yemen Electricity Distribution Loss Reduction Programme (PoA)

Syria The carbon market is still in a teething phase in Syria.

Source: data.un.org There is a crucial lack of data and information on climate change in general and on mitigation in particular. However, the mitigation potential in the energy sector is rather high and can be estimated to around 35 MtCO2e by 2020. Despite Libya’s eligibility for the CDM, the initiatives in this field are very rare because of crucial lack of capacities and awareness of both in public institutions and private sector. Only 2 projects were identified in the CDM portfolio of Libya: one project, at validation stage, related to cement blending; and the other (PIN approved by the DNA) related to 60 MW wind energy farm. Considering the current political situation in the Source: data.un.org country, the chance that these 2 projects will be The CDM Portfolio includes five projects at an registered before 2012 is very slight. advanced CDM stage. Three are already In order to effectively engage with the CDM, Libya registered, while one project is under validation needs to improve its institutional capacity, and the other has a serious methodological including broad technical competences in CDM project requirements and related areas, as well as transparency and stability of governance. 1 http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_list .pdf

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With the post revolution era, Libya should become Furthermore, the energy sector measures were better integrated in the international process of not fully identified and estimated. For instance, fighting against climate change. It should also be emission reduction potential from thermal better positioned on the new carbon market insulation in existing buildings and fuel switching mechanisms currently being considered. Today, in manufacturing industries were not included in Libya needs an intensive support from the estimate. In addition, a number of energy international cooperation to catch up with efficiency measures to be implemented in the international developments and prepare itself to short and medium terms were not included in the profit from these new opportunities. mitigation assessment. Among them, some significant projects identified by the National Lebanon Energy Efficiency Action Plan for Lebanon: Lebanon became eligible for the CDM relatively - Energy efficiency for lighting: CFL late, after it ratified the Kyoto Protocol in dissemination program, banning the November 2006 and established the DNA in May Import of Incandescent Lamps, Efficient 2007. and Economic Public Street Lighting - Solar Water Heaters for Buildings and Institutions. - Promotion of Energy Efficiency in Industry (energy Auditing, ESCO Business, etc.). - Promotion of Energy Efficient Equipment (e.g. Energy labelling for electrical appliances, efficient motors for industries, etc.) When synthesizing the available information in Lebanon, covering the National Energy Efficiency Action Plan for Lebanon (NEEAP) and the projects that are identified for the CDM, the potential mitigation options that could be achieved through short term options would add-up to 2 to 2.4 million tCO2e annually by year 2015. The identified CDM projects portfolio includes 13 projects with a total mitigation potential of 975,000 The second national communication of Lebanon tCO2e per year. has estimated the overall emission reduction potential to 20 million tCO2e by year 2030, over Despite this high mitigation potential, Lebanon the five major emitting sources (Energy, Industrial has not benefited from CDM at all. Up to now, no 2 processes, Agriculture, Forestry and Waste). The projects have been registered and of the 18 energy sector is the most promising GHG identified potential CDM projects, there is only one mitigation source, as it contributes to 82% of this project under formal validation which entered in long term potential. Mitigation measures in the the stakeholder consultation process (through the energy sector combine high potentials (led by the UNFCCC website). electrical sector with 68% of the overall mitigation Without any significant additional support, potential and transportation with 11%, while the Lebanon would likely be able to register 8 to 9 potential in buildings is 2% and manufacturing CDM projects3 before the end of the Kyoto industries also 2%). The waste sector ranks Protocol period (31/12/2012), totalling almost second, contributing 15% to the mitigation 300,000 tCO2e of emission reductions annually. potential. The CDM development in Lebanon requires, in It should however be noted that the mitigation principal, enhancing awareness and carry out assessment is incomplete, as it did not estimate appropriate reforms to attract CDM project emission reduction potential resulting from industrial processes and forestry measures. 2 Considering 6 Small-scale CFL projects to be implemented Measures related to Agriculture were only partially identified and estimated. under the 3 million CFLs dissemination program. 3 Considering 6 Small-scale CFL projects to be implemented under the 3 million CFLs dissemination program.

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proponents and CERs buyers, as well as Moreover, it has set up the eligibility requirements strengthening the DNA capacities towards for national CDM projects and has defined the smoother procedures, better responsiveness, national procedures for assessment and approval sustainability, efficiency and transparency. of CDM projects in October 2006. However, the Technical capacities to translate the currently EE and RE programs into CDM projects should also CDM in Algeria has been progressing at a very be enhanced, in order to encourage the CDM slow pace. Relatively little emphasis had been expansion. given to effectively access the CDM and to realize the full potential development benefits for Algeria However, since the post-Kyoto CDM outlook is still unclear, further capacity development for as a host country. A mix of factors, including lack CDM is not a priority on the agenda. Instead, the of understanding of the requirements of the CDM, emphasis should be on supporting those mature limited national capacity to direct the CDM CDM projects that have a real chance to be process in Algeria, and an absence of technical registered on time. assistance from the donor community prevented Among the CDM portfolio, 4 projects were the development of a CDM market in Algeria. As a identified as priorities to be supported in order to result, apart about twenty projects in the PIN help them register before 2012. These 4 projects stage, there are only 2 CDM projects at an are: advanced CDM stage (under validation) that have - 60 MW Wind Power Park in Hermel region; been recently added to the Algerian portfolio. - Rehabilitation of Hydro-Power facilities of Qadicha, Safa and other hydro sites; - Fuel switching to Refuse Derived Fuel (RDF) Egypt in SEBLIN Cement Plant; and Egypt has made the initial inroads towards climate - Waste to Energy generation at SICOMO change mitigation and benefitting from the CDM. paper plant. International donor agencies and carbon advisors The estimated cost of the financial needs for the have been providing intensive assistance to Egypt supporting activities is around 245,000 €; in the field of the CDM over the past years. excluding costs for validation and registration which are assumed to be covered under the ERPAs.

Algeria Algeria fulfills the CDM eligibility criteria for host countries as it has ratified Kyoto Protocol in April 2004 and established a National Designated Authority in February 2006.

Source: data.un.org The current portfolio of CDM project activities in Egypt is extensive when compared to the other MENA countries. The areas recognized to have potential for CDM projects in Egypt include energy efficiency, fuel switching, renewable energy, utilizing biomass as an energy source and the various pollution abatement projects being Source: data.un.org proposed by the industries in Egypt. The inclusion of PoAs has opened up an opportunity for Egypt

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to explore GHG emission reductions or removals through implementation of policy measures. The first Egyptian PoA, Egypt Vehicle Scrapping and Recycling Programme, has been registered by the EB in June 30, 2011 after more than two years since the beginning of validation. This PoA is the first ever transport Program of Activities to be registered under the CDM.

On the basis of this successful initiative, Egypt is intensifying its efforts to promote other national PoAs. Indeed, 8 programmes have been identified of which 3 PoAs are at the PDD stage and two Source: data.un.org others have detailed PINs already approved by the DNA. In July 2011, the first Tunisian PoA has been registered by the EB after more than two years Of the Egyptian CDM portfolio, 2 projects and 2 since the beginning of validation. Besides this, 5 PoAs have been identified as priorities to be further PoAs were identified. 2 PINs of these supported in order to help them register before PoAs are already approved by the DNA and 1 the end 2012. These projects/programmes are the PDD is under development. following: - Abu Zabal Landfill Gas Recovery and From this portfolio, the following Flaring/Destruction Project projects/programmes were identified as priorities: - Waste Heat Recovery projects for gas turbine - Partial substitution of fossil fuels with generators biomass at «Les Ciments Artificiels - Shifting from Traditional Open-Pit Method to Tunisiens» cements plant, Tunis Mechanize. Charcoal production program in - Tunis light rail transit project Egypt (PoA) - Biomass Power Generation Project - Scrapping and Replacement program of Two- - Distribution of 1 million CFLs to STEG stroke Motorcycles in Egypt (PoA) consumers with 1 to 2 kVA capacity - Tunisian cogeneration development The two identified PoAs need particular technical programme (PoA) assistance from the CDM Awareness and - Integrated fuel switching Project at Promotion Unit (CDM APU) in all phases of the Industrial Facilities in Gafsa region CDM process while the standard projects need specific supportive actions focusing mainly on - Valorization of flared gas in "Sidi El accelerating the validation stage and later the Itayem" oil field registration. - 190 MW wind farm project in Bizerte

Tunisia Morocco The current CDM portfolio of Tunisia comprises Morocco is one of the most active countries in the sixteen projects which are in advance status in region in the fields of climate change mitigation and adaptation. In addition to submitting its 1st the CDM project pipeline (have at least initiated nd PDD development): 3 projects are registered (of and 2 National Communications, Morocco which 1 PoA), 3 projects are under validation and developed in 2009 a National Climate Plan 10 projects are in PDD stage. presenting the main national options for mitigation and adaptation in the country.

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Source: Source: data.un.org Eight CDM projects are already registered in Morocco. A PoA on household solid waste management is well advanced. The overall national CDM portfolio includes 12 projects currently under validation and a further 5 projects with PDDs already approved by the DNA. The dominant type of project is wind farms connected to the grid. A number of the well-advanced wind projects will be most probably be registered before 2012 without any support. This also potentially applies to a biogas collection and electricity generation from municipal landfill project that is likely to be included as CPA to the National Household Waste Plan PoA. The support effort should be focused on 3 remaining projects and one PoA: - Electricity generation from biogas produced by the waste water treatment station of Fes - Jbel Haouch Ben Kreaa Wind park (135 MW) - Tanger-Tetouan Wind park (200 MW) - Wind PoA (550MW) Together, these have a total potential mitigation of over 2,000 ktCO2e per year. It is recommended that RCREEE supports the project/ programme developers during the validation and registration process. In particular, the wind PoA will require full support and accelerated processes if it is to be registered before the end of 2012. The total estimated cost of the financial requirement for the supporting activities is estimated at 240,000€, of which 200,000€ is for the wind PoA. This increases to around 255,000€ if financial assistance is needed for the two single CDM wind projects (this need is to be assessed regularly in 2012).

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4. Summary table of projects and programmes in the RCREEE member countries

Countries Projects which could be registered before 2013 Projects to be considered as a PoA (Yes/No) JORDAN . Amman East 386.96 MW Combined Cycle Power Plant . No . Wind farm of Fujeij and Wadi Araba (60 MW) . No . Al kaider landfill, gas collection for power generation. . No YEMEN . Mocha 60 MW Wind Park Project . No . Recovery & utilization of associated gas from basement wells in the Kharir Field (Block 10) . No . Yemen Electricity Distribution Loss Reduction Programme . Yes SYRIA . Qatineh 50 MW wind energy project . No . Portland Pozzolana “Blended Cement” at Lafarge Cement Syria . No LIBYA(*) (*) Considering the current political situation in Libya, the prospects for project registration before 2012 are very low LEBANON . 60 MW Wind Power Park in Hermel region . No . Rehabilitation of Hydro-Power facilities of Qadicha, Safa and other hydro sites . Yes . Fuel switching to RDF in SEBLIN Cement Plant . No . Waste to Energy generation at SICOMO paper plan . No ALGERIA . N2O reduction project at Fertial’s nitric acid plant No.1 at Annaba, Algeria . N2O reduction project at Fertial’s nitric acid plant No.2 at Annaba, Algeria EGYPT . Abu Zabal Landfill Gas Recovery and Flaring/Destruction Project . No . Waste Heat Recovery projects for gas turbine generators . No . Shifting from Traditional Open-Pit Method to Mechanize. Charcoal production program . Yes . Scrapping and Replacement program of Two-stroke Motor cycle in Egypt . Yes

TUNISIA . Partial substitution of fossil fuels with biomass at "Les Ciments Artificiels Tunisiens" . No cement plant. . Tunis light rail transit project . No . Biomass Power Generation Project . No

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Existing CDM Potential and Perspectives for Carbon Finance in RCREEE Member States Beyond 2012

Countries Projects which could be registered before 2013 Projects to be considered as a PoA (Yes/No) . Distribution of 4 million CFLs to STEG consumers with 1 to 2 kVA capacity . No . Tunisian cogeneration development programme . Yes . Integrated fuel switching Project at Industrial Facilities in Gafsa region . No . Valorization of flared gas in "Sidi El Itayem" oil field . No . 190 MW wind farm project in Bizerte . No MOROCCO . Electricity generation from biogas produced by the waste water treatment station of Fes . No . Jbel Haouch Ben Kreaa Wind park (135 MW) . No . Tanger-Tetouan Wind park (200 MW) . No . Wind PoA (550MW) . Yes

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Existing CDM Potential and Perspectives for Carbon Finance in RCREEE Member States Beyond 2012

Annex 1 – Jordan country study

Contents

I. Abbreviations ...... 13 II. Background...... 14 III. The CDM in Jordan ...... 15 IV. Analysis of the current CDM status in the country ...... 18 V. Portfolio of priority projects and programs ...... 24 VI. Conclusion ...... 26 VII. Bibliography ...... 27 VIII. Contact details of the DNA ...... 28

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I. Abbreviations

- CDM: Clean Development Mechanism - CER: Certified Emission Reduction of GHG - DOE: Designated Operational Entity - DNA: Designated National Authority - GHG: Green House Gas - KP: Kyoto Protocol - MEMR: Ministry of Energy and Mineral Resources - MENA: Middle East and North Africa - MoE: Ministry of Environment - Mtoe: Million of ton Oil Equivalent - MWI: Ministry of Water and Irrigation - NAMA: Nationally Appropriate Mitigation Actions - NERC: National Energy Research Centre - NEPCO: National Electric Power Company - PoA: Programme of Activities - UNFCCC: United Nations Framework Convention on Climate Change

- tCO2e: Ton of carbon dioxide Equivalent - Toe: Ton of Oil Equivalent - WA: Water Authority

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Existing CDM Potential and Perspectives for Carbon Finance in RCREEE Member States Beyond 2012

II. Background

Stretched over an area of about 90,000 km2, Jordan is an almost land-locked country, bordered by Israel and the West Bank to the west, Syria to the north, Iraq to the east and Saudi Arabia to the southeast. The port of Aqaba in the far south is the only outlet of the country to the Red Sea.

Figure 1. Geographical location of Jordan - MENA Region. Source: unicef.org Figure 2. Map of Jordan. Source: data.un.org.

The population of Jordan in 2009 is about 5.98 million with an annual growth of about 2.26%4. The urban population account for 80% of the total population of Jordan5. The economy is based on services which represent more than 86% of GDP, against 10% for industry and 4% for agriculture. Despite the regional conflicts and the difficult geopolitical position of Jordan, the economy is growing rather well with an average growth during the last five years of around 6.8%6. However, Jordan is classified by the World Bank as a “lower middle income country”. In the year 2010, the per capita Gross Domestic Product (GDP) was around USD 4,3507. The main three sectors contributing to GDP are: (1) finance, insurance, real estate and business services; (2) transport, storage and communications; and (3) manufacturing8. The final energy consumption was around 4836 ktoe in 2009. The transport sector is the biggest consumer of energy, with 40% of consumption followed by building sector (30%), industry (23%) and agriculture sector. Primary energy demand has reached around 7,738 ktoe in 2009 against 6,490 ktoe in 2004, an average growth of about 3.6% per year. This demand is expected to reach around 16 Million toe by 2020 according to the business as usual scenario9. With very limited energy domestic resources, Jordan is highly dependent from abroad for its energy supply, which constitutes one of the main challenges of the State. The energy bill of the country reached about 12% of its GDP in 2009 and 20% in 200810. For refining the limited local production of oil (Hamzeh and Azraq fields), Jordan uses the only refinery in the country in Zarqa owned by the Jordan Petroleum Refinery Company (JPRC) with maximum output of 14,000 tonnes per day.

4Jordan Department Of Statistics, 2010 5 Worldbank.org 6 Jordan Central Bank, 2010 7 Worldbank.org 8 Worldbank.org 9 Ministry of Energy and Mineral Resources, 2010 10 Ministry of Energy and Mineral Resources, 2010

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Natural gas is mainly used for power generation. It is mainly imported from Egypt through the emerging Arab gas grid that is planned to run from Egypt through Jordan, Syria and then potentially into Turkey to reach central European markets in the future. In year 2009, the total installed capacity in Jordan is 2,750 MW and the electricity generated in Jordan is 14,272 GWh. The electricity demand has grown during the last 5 years with an average of 9.7% per year implying critical challenges for the Government to meet the electricity supply of the country11. Concerning renewable energies, efforts have been made to promote their use in Jordan; however the contribution of such resources in the national energy mix is still minor, providing approximately 1% of the total current primary energy demand in 2009 and 0.5% of the electricity generated in the same year. Solar water heating is the most developed renewable energy technology in Jordan with an installed capacity of around 1 million m² in 201012. Energy Efficiency is expected to reduce forecast demand from 16.733 Mtoe to 13.252 Mtoe by 2020, a reduction of 3.481 Mtoe or 21% of total estimated demand. The use of renewable energy measures would further reduce this demand to 12.079 Mtoe. The future energy plan is that renewable energy would contribute 7% by year 2015 and 10% by year 2020 in Jordan’s total fuel mix13.

III. The CDM in Jordan

III.1.National CDM policy and regulation

In 1993, Jordan signed the UNFCCC and confirmed the need for country actions to address climate change with “common but differentiated responsibilities” between developed and developing countries. Jordan acceded to the Kyoto Protocol in 2003 and in 2005 it came into force, setting emissions targets for the developed countries and creating flexible mechanisms that allow payments for greenhouse gas (GHG) emissions reductions to developing countries. Then, in 2005, Jordan created its Designated National Authority (DNA) for CDM project approval. Also, Jordan has achieved its commitment towards the UNFCCC by submitting the first and the second National Communications. The preparation of the third National Communication will be launched soon.

Milestones in Jordan climate change Policy Date Signature of the UNFCCC 12 November 1993 Submission of the first National Communication 1997 Ratification of the Kyoto Protocol 17 January 2003 Creation of the DNA 2005 Submission of the Second National Communication 2009 Table 1 : Milestones in Jordan climate change policy. Source: Ministry of Environment

III.2.International cooperation on Mitigation

For mitigation, 2 main cooperation projects for capacity building on CDM and NAMAs are currently under implementation in Jordan:  Korea International Cooperation Agency CDM capacity building project

Early in 2011, the Ministry of Environment and the Korea International Cooperation Agency (KOICA) signed minutes of meeting to agree on the implementation plan of "Capacity Building for Clean Development Mechanism Project", of USD 0.5 million.

11 NEPCO, annual report, 2010 12National EE and RE strategy, MEMR, 2011. 13 National EE and RE strategy, MEMR, 2011.

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The major project components comprise Capacity Building Program (CBP) in Korea and in Jordan through seminars and workshops. Sharing Korea’s experiences, the project is expected to help the participants understand about not only the global climate change issues and green growth policies, but also the techniques of how to identify and formulate the CDM Projects in Jordan.

 World Bank project for enhancing local capacity with regard to NAMAs in Jordan

The Government of Jordan had provided a list of nationally appropriate mitigation actions (NAMAs) to the UNFCCC Secretariat. Jordan expressed to the World Bank the need for elaboration of the NAMAs as an area where financial and technical support and capacity building will be required. Since the private sector is seen to have a role in developing technical solutions to the implementation of NAMAs, there is a need to identify the right incentives to engage also the private sector in this process. The overall objective of the project is to assist Jordan in the process of defining and prioritizing nationally NAMAs with a specific attention to private sector participation (PSP) while also identifying relevant climate finance instruments. The objective will be achieved by developing the relevant documentation for a pilot NAMA in infrastructure with a specific attention to PSP and climate finance.

III.3.Main Institutional Stakeholders

 The Ministry of environment

The Ministry for Environment (MoE) is the main governmental body concerned with the development and implementation of environmental policy in Jordan. The MoE was established in the year 2003 and functions within the mandate of Environmental Protection Law No: 1/2003 (MoE, 2008). The Ministry’s responsibilities include developing government guidelines and policies concerning the environment, and then managing and coordinating their implementation and enforcement. The MoE is responsible for the coordination of climate change activities through the country’s climate change unit.

 The DNA and its organisation

The Designated National Authority (DNA) should have a key role in identifying and approving CDM projects. The DNA consists of two components:

Figure 3: DNA organisation in Jordan. Source: Mohammad Alam, Ministry of Environment, 2010  DNA Technical Committee, with members from climate change unit, academics, private sector and other stakeholders. Its responsibility is to evaluate the technical aspects of the CDM project proposed and to conduct the technical evaluation for CDM project development proposals.  High Level (DNA) Committee, with members from ministries of energy, water, transportation, planning, agriculture, industry, and municipal affairs, in addition to public security and royal scientific society. Its responsibly is to provide the approval of the CDM projects on the base of the evaluation of the PINs carried out by the technical committee.

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The MoE considers itself as a partner to CDM projects, as 15% of the CERs generated from the project are directed to the Ministry’s Environment Protection Fund.

III.4.CDM national capacities

Like some other countries of the region, Jordan has benefited during the last decade from many multilateral and bilateral projects of capacity building in climate change in general and CDM in particular. However, the impacts of these programs seem to be less apparent than might be expected.

Today, it seems that there is particular need to:

 Increase CDM awareness particularly towards private sector and policy and decision makers by using all the relevant communication means (dedicated website, national workshops and conferences, contribution to the international events, etc.);  Enhance the capacities of local experts on CDM (project identification and development) in order to improve the involvement of local experts in CDM project development that help to reduce transaction costs;  Enhance the capacities and the awareness of decision makers in the public sector which can speed up CDM project development;  Develop and update the CDM project portfolio as well as PoAs to promote project replication;  Clarify the post 2012 issues and enhance the capacity of local stakeholders on the new carbon market mechanisms (NAMAs, sectoral crediting, etc.)

III.5.Legal, financial and institutional barriers preventing CDM development and recommendations

Jordan has recently started to reap the benefits of the CDM after a period of reluctance. However, its participation in this mechanism is hampered by weak understanding and information of the institutional and legal framework, technical infrastructure, enforcement capacity, and human resources needed to implement the mechanism. Major efforts in capacity development should be focused on these particular issues.

Jordan has managed to achieve just 2 registered projects (one of them has already issued CERs) and 2 projects under validation. This situation can be explained by many bottlenecks, such as:

 Insufficient awareness of CDM. For example, there is no national dedicated Website for CDM that can promote the CDM project pipeline, give information to potential project holders on the opportunities given by CDM, explain the development procedures of the CDM projects, etc.;  Lack of trust from potential project holders on CDM due to inter alia the lack of information and awareness;  Lack of capacities and financial sustainability of DNA;  Lack of adequate institutional/technical capacity for identification and development of CDM projects;  High transaction costs regarding the size of the projects;  Bureaucracy and administrative inertia of the CDM institutional framework;  No real economic incentives that promote CDM (e.g. tax exemptions, fiscal benefits, etc.). Moreover, there is a tax of 15% on CDM revenues, which limits additionally the attractively of CDM for project holders;  Bidding approaches to sell CERs (particularly in public sector) which do not meet carbon market requirements/rules; and  Uncertainties and lack of long-term visibility on the post 2012 market.

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In addition to the capacity building requirements, to overcome these barriers it is necessary to:  Strengthen the capacity of the DNA towards better responsiveness, sustainability, efficiency and transparency;  Reform of the legal and institutional framework of the CDM, particularly regarding the bidding procedures of CER sales;  Remove the CDM revenues tax (15%) to make CDM more attractive for project holders; and  Promote the development of EE and RE strategies so as to encourage CDM expansion.

IV. Analysis of the current CDM status in the country

IV.1.National CDM potential

There has been no specific work on CDM potential estimation in Jordan. However, it is possible to get a rough idea of the potential through the mitigation potential presented in the second national communication. In this document a total of thirty eight GHG mitigation projects were analysed and cover the 5 following areas:  Primary energy;  Renewable energy;  Energy efficiency;  Waste; and  Agriculture.

Yearly emission reductions from all mitigation projects over the period of 2009 to 2033 proposed in the second national mitigation are shown in the following table. The investigated mitigation projects, if executed, will lead to annual reductions of 2.8 million tCO2e in the year 2009 and are expected to increase to 12.3 million tCO2e in the year 2033, which represents a 9.7% and 17.5% increase from baseline emissions respectively.

Years 2009 2015 2020 2025 2030 2033 Baseline 28441 41788 51249 59474 65934 70377 Mitigation 25679 34451 40012 47878 53899 58031 Reductions 2761 7335 11236 11595 12034 12345 Reductions (%) 9.7 17.5 22 19.5 18.2 17.5 Table 2 : Yearly mitigation potential in Jordan (tCO2e).Source: 2ndnational communication, 2009.

The cumulated GHG migration over the period 2009-2033 is estimated to around 100 MilliontCO2e. Renewable energy and energy efficiency and fuel switch are the major part of this mitigation potential, as shown in the following table.

Sector Emission reduction Emission reduction (1000 tCO2e) (%)

Primary energy (fuel switch) 21,181 21.0% Energy efficiency 32,758 32.5% Renewable Energy 27,068 26.9% Waste water 17,862 17.7% Municipal solid waste 1,670 1.7% Agriculture 190 0.2%

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Total 100,729 100% Table 3: Cumulated emission reduction potential during the period 2009-2033 Source: Own calculation from the 2nd national communication, 2009

Additionally, although it was not mentioned in the second national communication, the industrial process sector has a considerable mitigation potential particularly in the N2O destruction sub-sector. For example KEMAPCO is producing annually thousands of tons of N2O: 150 kton/yr of NOP, 60 kton/yr of DCP and 115 kton/yr of Nitric Acid.

 Energy efficiency

Most of the proposed energy saving projects resulted from local and international field studies carried out by the Ministry of Energy and Mineral Resources (MEMR) and the National Energy Research Centre (NERC) in the energy consuming sectors. These projects cover three sectors: industrial, commercial and residential. Most of the selected energy saving projects was focused on the industrial sector due to the fact that this sector has a high degree of diversity in energy consumption modes and processes, which expands the scope of energy saving measures. The relevant industries include ceramics, food and canning, paper, steel, plastic, chemical and mining industries. For the commercial sector, the projects cover hotels and a medical facility. Most of the fuel types used locally were covered in this study; and include diesel (gas oil), heavy fuel oil, and gasoline.

The total potential of emission reduction generated by these projects is around 1.1 million tCO2e per year, ranging according to the projects from 17 k tCO2e per year to 427 k tCO2e per year, as shown by the following table.

Project name Emission reduction per Unit Cost (JD15/ 14 year (1000 tCO2e) tCO2e) Ceramic factories 17 -245 Food factory 176 -125 Insulation/food factory 31 -251 Waste heat rec./hotel 31 -251 Winter pool/hotel 16 -259 Medical factory/ballast 88 -160 Canning factory/compressed air 139 -68 Solar heating/hotel 13 -234 CF lamps/residential 427 -55 Variable speed drive in pumps/paper factory 73 -74 Steel factory/reg. burners 220 -98 Mining industry/heat recovery 408 -61 Total 1,639 -90 Table 4: Yearly emission reduction potential for EE projects. Source: Expert estimation from the 2nd national communication, 2010 It is worth also to underline that all these projects are “no-regrets” mitigation options, since all the CO2 abatement costs are negative. The average abatement cost is around (-90) JD/tCO2e.

 Renewable energy

14Average on the lifetime of the project. 15 1 € = 1.028 JD

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The investigated renewable energy projects portfolio is based on the national energy strategy of Jordan. In The National strategy it was decided to install a total capacity of 600 MW of wind energy on the basis of the build-own-operate (BOO) approach by the private sector. For solar water heaters it was decided to promote their utilization in 50% of houses in Jordan by the year 2020, while the current numbers for the year 2008 are about 14%. The following table presents the mitigation potential of these projects which is estimated to around 1.4 million tCO2eper year.

Project name Emission reduction Unit Cost 16 per year (1000 tCO2e) (JD / tCO2e) Aqaba wind farm 117 89 Kamsha wind farm 78 88 Al-Hareer wind farm 520 70 Ibrahimya wind farm 65 101 Fujaij wind farm 275 98 Ma’an wind farm 328 95 Solar water heaters 72 -189 Total 1,453 72 Table 5: Yearly emission reduction potential for RE projects Source: Expert estimation from the 2nd national communication, 2010

It seems that the quality of the sites for wind energy is not that good to allow a negative abatement cost for the wind projects. For solar water heater, the CO2 abatement cost is negative and is around (-189) JD/ tCO2e.  Mitigation in primary energy consumption

Shifting from oil to natural gas in electricity generation sector, employing efficient technologies that consume less fuel, such as combined cycle, and demand side management is one of the relevant mitigation options in Jordan. The proposed project is the use of the natural gas in a distribution networks in Amman, Zarqa, and Aqaba, as well as the conversion of Samra power plant to combined cycle17. Demand side management (DSM) includes all actions implemented to reduce the contribution to system peak load or reduce the overall energy consumption.

The following table presents the average yearly mitigation potential as well as the unitary CO2 abatement cost for each option. This cost is negative of all projects.

Project Name Emission reduction Unit Cost 18 per year (1000 tCO2e) (JD / tCO2e)

Demand side management 299 -28 Natural gas network/Aqaba 107 -6 Natural gas network/Zarqa 250 -5 Natural gas network/Amman 275 -7

16 1 € = 1.028 JD 17This project is under validation as CDM project 18 1 € = 1.028 JD

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Conversion of Samra power plant to combined cycle 128 -26 Total 706 -14 Table 6: Yearly emission reduction potential for primary energy projects. Source: Expert estimation from the 2nd national communication, 2009

However, it is worth to mention that projects of switching from fuel oil to natural gas will meet serious difficulties because of the uncertainty on the supply of the gas imported from Egypt, after the Egyptian revolution.

Below, a graph summarising the unit costs per sector (energy efficiency, primary energy consumption and renewable energy) in Jordan is provided.

80

60

40

Renewable Energy e)

2 20

0

-20 Primary Energy

-40 Consumption Energy Efficiency

-60

Unit Cost (JD/tCO Cost Unit -80

-100

0 500 1000 1500 2000 2500 3000 3500

) Emission reduction per year (1000 tCO2e

Figure 4: Units costs per sector. Source: Perspectives, based on ALCOR estimations.

IV.2.National CDM project portfolio Eleven projects were identified as mature in the CDM project pipeline in Jordan. However, one has to stress the lack of data on these projects, since there is no official publication from the DNA of the approved PIN and the projects in their early stage. The following table summarizes our finding about the pipeline status of CDM projects in Jordan, based on the documentation and the data gathered from various stakeholders19.

N° Project Project Status Expected emission reduction (1000 tCO2e/year) 1 Fuel Switching Project of the Registered on 30 Sep 2008. CERs 397 Aqaba Thermal Power Station issued. (ATPS) http://cdm.unfccc.int/Projects/DB/SGS- UKL1206977860.83/view 2 Reduction of Methane Emissions Registered on 11 Dec 2009 37

19 Ministry of Environment, NERC, MEMR, NEPCO, Water Authority, UNFCCC, among others.

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N° Project Project Status Expected emission reduction (1000 tCO2e/year) from Ruseifeh Landfill http://cdm.unfccc.int/Projects/DB/TUEV- SUED1239267670.4/view 3 Amman Ghabawi Landfill Gas to Submitted for registration (TUV Sud) 167 Energy Project 4 Samra 300 MW combined cycle Submitted for registration (DNV) 163 project 5 Amman East 386.96 MW Under validation (SGS UK) 123 Combined Cycle Power Plant 6 Rashadieh cement factory, clinker PIN approved 123 use optimization by maximizing additives use 7 Wind farm of Fujeij and Wadi PIN approved 139 Araba (60 MW) 8 Al kaider landfill, gas collection for PIN not developed yet 140 power generation. 9 Al-samra wastewater treatment PIN not developed yet 470 plant, gas collection for power generation der landfill, gas collection for power generation. 10 Demand-Side Energy Efficiency PIN approved 64 Program of Activities for Water Pumping Stations in Jordan 11 CDM city-wide Program of - Agreement signed with the Carbon 560 Activities of the Greater Amman Partnership Facility in May 2010 Municipality: Energy, - Methodology under development by transportation, waste and urban the WB forestry. Table 7: CDM project portfolio status in Jordan. Source: Ministry of Environment, NERC, MEMR, NEPCO, Water Authority, UNFCCC, among others.

As shown in the above table, only 2 projects were registered, 2 projects submitted to registration, 1 project under validation.

IV.3.Overview of current CDM projects and PoAs  CDM projects

 Amman East 386.96 MW Combined Cycle Power Plant using natural gas This project, at validation by SGS, is facing additionally demonstration difficulties. The DOE was requested from the EB in December 2010 the following clarification «Request for Clarification to confirm/ clarify that in cases where the project is implemented under a tendered Build, Own and Operate (BOO) Scheme and the tender organizer, promoter and project participant owns the CERs, the financial analysis to demonstrate additionally can be done from the perspective of the project promoter (tender organizer and sole electricity off taker) who has the discretion of tendering alternative and cheaper sources of electricity.”  Samra 300 MW combined cycle project This project was submitted for registration by DNV and it is currently under examination by the EB. It

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is foreseeable that this project will be registered soon, before the end 2012.  Amman Ghabawi Landfill Gas to Energy Project This project was submitted by the EOD (TUV Sud) to the EB for registration, but the EB has asked for some minor requests, mainly to update the methodology version. The project would be registered soon.  Rashadieh cement factory, clinker use optimization by maximizing additives use It seems that the PIN of the project was approved by the DNA, but no information whether the elaboration of the PDD has started or not. If not, it will be difficult to achieve registration by 2012, because of the complexity of such kind of projects.  Wind farm of Fujeij and Wadi Araba (60 MW) While, the PDD elaboration has not been stated yet, this project could be registered before 2012. Wind energy has in fact clear methodology and many similar projects in the region have already been registered. The grid emission factor was published and used for the two registered projects of Combined Cycle Aqaba power station and the Ruseifeh landfill.  Al kaider landfill, gas collection for power generation. Two CDM landfill projects including electricity generation were already developed in Jordan. Provided all the required data is available this project has a chance to be registered before 2012.  Al-samra wastewater treatment plant, gas collection for power generation for power generation. This project will be the first of its kind in Jordan as a CDM project, which may make the additionality assessment and demonstration easier. However, this project could face some methodological and data availability difficulties to be registered before 2012.

 Programme of Activities

At present, there is no CDM Programme of Activities in Jordan at an advanced stage. However, two programs were identified.  Demand-Side Energy Efficiency Program of Activities for Water Pumping Stations in Jordan This programme is developed by the Ministry of Water and Irrigation with Water Authority of Jordan and supported by GIZ. It aims at tackling energy inefficiencies by modernising pumping infrastructure and to support WAJ in the full cycle of pumping operations with high efficiency equipment to reduce electricity demand for water pumping throughout the Kingdom of Jordan. However, substantial investments are needed under the Program to implement retrofitting measures in existing pumping facilities. At the same time there are no legal or regulatory requirements which would enforce the activities under a business-as-usual scenario. The additional financial incentive from the income of CER sale will encourage public and private legal entities as well as institutions to participate in the Program in order to achieve GHG emission reduction. The additional income from the sale of CERs will be either used to finance the Program or will be reinvested. This Program is very interesting in that it is linking mitigation and adaptation since it is dealing with water optimisation use. There is a CDM base line methodology for this kind of project - AM0020 “Baseline methodology for water pumping efficiency improvements”. Also, the feasibility study of the program was carried out by the Ministry of Water with the support of GIZ. However, the process for CDM registration of a PoA is likely to be more than 2 years, so the chance that this PoA to be registered before 2012 is slight.  CDM city-wide Program of Activities of the Greater Amman Municipality: Energy, transportation, waste and urban forestry. In May 2010, the Carbon Partnership Facility and the Greater Amman Municipality signed a Seller Participation Agreement for the Amman Green Growth Program, representing the first city-wide PoA in the world. The PoA includes emission reduction opportunities in municipal waste, urban transport,

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sustainable energy, and urban forestry. Based on initial estimates, the Amman Green Growth Program has the potential to reduce GHG emissions by up to 560 ktCO2e per year. However, no base line methodology exists at the moment for such kind of PoA and a new methodology has been submitted by the World Bank to the UNFCCC Executive Board, but not approved yet. It is clear that this PoA has no chance to be registered before 2012.

V. Portfolio of priority projects and programs

V.1. Prioritization

For the selection of the priority CDM projects and PoAs, the following criteria have been adopted in accordance with the terms of reference:

- Project maturity (CDM status) - Quality of the project implementer - Scale of the project - Mitigation potential - Additionality criteria

The combination of these criteria provides an idea of the chance of registration of the identified projects before the end of 2012.

The process of identification of priority projects was based on the screening of the national CDM portfolio of Jordan taking into account the above mentioned criteria, particularly the possibility of registration before 2012. The following table presents the prioritization of the projects according to their probability to be registered before 2012. It gives also the kind of support to be provided to the projects to help them progressing toward carbon market realisation.

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N° Project Project Quality of the Project Mitigation Additio Probability to Kind of required support Maturity implementer scale potential nality be registered before 2012 1 Amman Ghabawi Landfill Gas to Energy +++ +++ Large High +++ +++ No need for support, will be Project registered soon 2 Samra 300 MW combined cycle project +++ +++ Large High +++ +++ No need for support, will be registered soon 3 Amman East 386.96 MW Combined +++ +++ Large High + ++ To be supported for Cycle Power Plant additionality demonstration 4 Rashadieh cement factory, clinker use + + Large + + No chance to be registered optimization by maximizing additives use before 2012 5 Wind farm of Fujeij and Wadi Araba (60 ++ ++ Large High ++ ++ To be supported for PDD MW) elaboration and validation 6 Al kaider landfill, gas collection for power + ++ Large High ++ ++ To be supported for PDD generation. elaboration and validation 7 Al-samra wastewater treatment plant, + + Large High ++ + Can be developed as NAMA gas collection for power generation der within the entire waste water landfill, gas collection for power sector generation. 8 Demand-Side Energy Efficiency ++ +++ Large Medium + + Can be developed as NAMA Program of Activities for Water Pumping Stations in Jordan 9 CDM city-wide Program of Activities of ++ Large High + + Can be developed as NAMA the Greater Amman Municipality: Energy, transportation, waste and urban forestry. +++: High, ++ Medium; + Low Table 8: Prioritization of the identified projects according to the above criteria

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V.2. Supportive actions to CDM projects and PoAs:

According to the above analysis, three projects appear to be worth supporting for achieving registration before 2012, as presented in the following table:

N° Project Emission Kind of required support Total Cost reduction (€)

(ktCO2e/y) 1 Amman East 386.96 167 Hire a senior CDM expert to assist 10,000 MW Combined Cycle NEPCO for additionally demonstration Power Plant of the project, urgently. 2 Wind farm of Fujeij and 139 - Hire a consultant for the PDD 100,000 Wadi Araba (60 MW) elaboration - Recruit an DOE for the validation - Assistance for the registration process 3 Al kaider landfill, gas 140 - Hire a consultant for the PDD 100,000 collection for power elaboration generation. - Recruit an DOE for the validation - Assistance for the registration process Total 446 210,000 Table 9: Estimation of the needed financial support to accelerate project registration in Jordan

The mitigation potential of these projects is estimated to around 446,000 tCO2e per year. The total cost increases to around 210,000 Euros to be shared between the project holders and RCREEE. It is recommended that RCREEE cover:

- The full cost of assistance to NEPCO for additionality demonstration of the Amman East Combined Cycle Power Plant; - The PDD development of the Fujeij wind farm and assistance for project registration; - The PDD development of Al kaider landfill and assistance for project registration.

The remaining activities (mainly DOE recruitment) should be paid by the project holder or other sources. Hence the total amount to be paid by RCREEE will be around 140,000 €.

VI. Conclusion

Jordan is eligible for the CDM since it has signed the UNFCCC in 1993, ratified the Kyoto Protocol in 2003 and created the DNA in 2005. The second national communication has identified thirty eight GHG mitigation projects covering 5 areas: Primary energy switch, renewable energy, energy efficiency, waste, and agriculture. The cumulated GHG mitigation of these projects over the period 2009-2033 is estimated at around 100 Million tCO2e. Energy efficiency (33%), renewable energy (27%) and fuel switch (21%) are the major part of this mitigation potential. Energy efficiency and primary energy switch projects can be implemented through a “no-regrets” approach, since the abatement cost of CO2is negative, respectively -90 JD/ tCO2e and -14 JD/ tCO2e. Despite this high mitigation potential, Jordan has not fully profited from the CDM. Up til today, only 2 projects, with a potential reduction of 434 tCO2e, were registered: The fuel Switching Project of the Aqaba Thermal Power Station and the Reduction of Methane Emissions from Ruseifeh Landfill. The CDM development in Jordan requires strengthening of the capacity of the DNA towards better responsiveness, sustainability, efficiency and transparency; to carry out the appropriate reform of the legal and institutional framework of CDM, particularly regarding the bidding procedures of CER selling; to remove

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the CDM revenues tax (15%) in order to make CDM more attractive for project holders; and to promote the development of EE and RE strategies as to encourage CDM expansion.

The identified CDM projects portfolio includes 11 projects with a total mitigation potential of 2,380tCO2e per year. In addition to the 2 registered projects, 2 projects are submitted to registration (Amman Ghabawi Landfill Gas to Energy Project and Samra 300 MW combined cycle project) and one project under validation (Amman East 386.96 MW Combined Cycle Power Plant). Two PoA were identified among this portfolio. The first is related to the Demand-Side Energy Efficiency for Water Pumping Stations and the second is the CDM city-wide Program of Activities of the Greater Amman Municipality including energy, transportation, waste and urban forestry. Considering their maturity status, it seems unlikely that they could be registered before 2012. Among the CDM portfolio, 3 projects were identified as priority to be supported in order to help them registering before 2012. The selection has been done based on specific criteria, such as project maturity, quality of the implementer, scale of the project, mitigation potential, additionality criteria, chance to be registered before 2012. These 3 projects are Amman East 386.96 MW Combined Cycle Power Plant, Wind farm of Fujeij and Wadi Araba (60 MW) and Al kaider landfill, gas collection for power generation. The estimated cost of the financial requirement for the supporting activities is around 210,000 €. It is proposed that RCREEE and its cooperation partners cover about 140,000 €.

VII. Bibliography

- Updated Master Strategy of Energy Sector in Jordan, Ministry of Energy and Mineral resources, 2009 - National Mechanism for Certifying CDM Projects, Mohammad Alam, Ministry of Environment, 2009 - Second National Communication to the UNFCCC, Ministry of Environment, 2010 - PIN for CDM PoA “Demand-Side Energy Efficiency Program for Water Pumping Stations in Jordan”, Ministry of Water and Irrigation, 2011 - Jordan’s energy efficiency policies, Muhieddin Tawalbeh, National Energy Research Centre, December 2010 - Jordan’s energy efficiency strategy, Walid Shahin, National Energy Research Centre, “Evaluation of Energy Efficiency Policies in the MENA Region”, Regional workshop WEC-ADEME, Tunis, 15-16 March 2010 - Project Document of the GEF project “Promotion of a Wind Power Market”, GEF/UNDP, 2008 - List of NAMA ideas submitted by Jordan to the UNFCCC, 2009 - EDAMA action plan establishing Jordan’s leadership in energy, water, and environmental productivity, USAID, May 2009 - PDD of project “Amman East 386.96 MW Combined Cycle Power Plant”, NEPCO March 2009 - PDD of project “Amman Ghabawi Landfill Gas to Energy Project”, Ministry of Environment, 2010 - PDD of project “Samra 300 MW combined cycle project”, NEPCO, 2009 - Carbon Finance, annual report 2010, WB, 2011 - City-Wide Approach to carbon finance, Carbon Partnership Facility Innovation Series, WB, 2011.

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VIII. Contact details of the DNA

National Focal Points

Other contact people Name Organisation Position Contact Email Tel Mohammad Alam Ministry of Head of Environment [email protected] +962(77)7675091 Environment State Section Eng. Lina Ministry of Energy Head of Puplic Services [email protected] +962 6 5803060 Mobaideen and Mineral Office for Energy & Resources Electricity

Zaidoun I. El Greater Amman Director Executive of [email protected] +962(6)4641253 Qasem Municipality Environment +962(77)9644474 Ahmed N.Aldohni National Electric Contract and [email protected] +962(6)5858615 Power Co. Agreement Section +962(79)7145212 Head Salah Azzam National Energy Acting Director [email protected] +962(6)5338042 Research Centre +962(79)9050758 Walid R. Shahin National Energy B.Sc. Elec. Eng. [email protected] +962(6)5344701 Research Centre Manager +962(79)9050085 Fawzi Kharbat Arab Union Secretary general [email protected] +962(6)5819164 Electricity +962(79)5678649 Muhieddin National Energy Acting Head of Rational [email protected] +962(6)5338042 Tawalbeh Research Centre Use of Energy et Solar +962(79)9050753 Thermal Division Ziad Jibril Sabra Ministry of Energy Director of alternative [email protected] +962(6)5863326 and Mineral Energy and Energy +962(6)4383016 Resources Efficiency Department Samer Al Jordan biogas General Manager [email protected] +962(6)4886693 Hatamleh Company Ltd Mohamed Ministry of Water Project Manager [email protected] +962(6)5652261 Hossam Sallam and Irrigation +962(77)9902743 Ronald Hagger Ministry of Water Technical Assistant [email protected] +962(6)5652261 and Irrigation / GIZ +962(77)9902743

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Annex 2 – Yemen country study

Contents

I. Abbreviations ...... 30 II. Background...... 31 III. The CDM in Yemen ...... 32 IV. Analysis of the current CDM status in the country ...... 36 V. Portfolio of priority projects and programs ...... 40 VI. Conclusion ...... 46 VII. Bibliography ...... 46 VIII. List of contacts in Yemen ...... 46

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I. Abbreviations

AFD French Development Agency CDCF Community Development Carbon Fund CDM Clean Development Mechanism CER Certified Emission Reduction CFL Compact Fluorescent Lamp CHP Combined Heat and Power CPA CDM Programme Activity Conservation and Utilisation of Agrobiodiversity for Climate Change Adaptation in CUABCCA the Rainfed Highlands DNA Designated National Authority EPA Environmental Protection Authority GDP Gross domestic product GHG greenhouse gases GNI Gross national income GOY Government of Yemen IMF International Monetary Fund IPP Independent Power Producer JSDF Japan Social Development Fund LFG Landfill Gas MEE Ministry of Electricity and Energy MENA Middle East and North Africa MMSCFD Million standard cubic feet per day MRV Measurement, Reporting and Verification NAMA Nationally Appropriate Mitigation Action NGO Non-governmental organization OPEC Organization of the Petroleum Exporting Countries PDD Project Design Document PEC Public Electricity Corporation PIN Project Idea Note PoA Porgramme of Activities PPA Power Purchase Agreement REREDP Rural Electrification and Renewable Energy Development Project SHS Solar Home System SPC Special Purpose Company

tCO2e Tons of Carbon Dioxide equivalent TEPY Total Exploration & Production Yemen ToR Terms of Reference UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change

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II. Background

The Republic of Yemen is located in the South of Arabia (The Arabian Peninsula), in the South‐West of Asia, bordered in the North by Saudi Arabia, in the South by the Arab Sea and the Gulf of Aden, in the East by the Sultanate of Oman and in the West by the Red Sea. According to the 2004 census the country encompasses a population of 19.72 million and reflects an average annual population growth rate of 3.2%, which is one of the highest birth rates in the MENA Region. The population is 26.3% urban and 73.7% rural, with a population density of 40 persons per km2. However, the rate of urbanization has been steadily increasing over the last two decades20.

Figure 5. Geographical location of Yemen - MENA Region.Source: unicef.org

Figure 6. Map of Yemen. Source: data.un.org

Since unification of the Yemen Arab Republic and the People’s Democratic Republic of Yemen in 1990, the Government has worked to integrate two relatively disparate economic and political systems. Yemen remains one of the poorest countries in the world, and ranks currently 49 on the list of the 50 Least Developed Countries. Yemen’s GNI per capita is US$ 760 compared to for example US$ 12 510 in Saudi Arabia, US$ 23 990 in the United Arab Emirates and US$ 9 070 in Oman21 .

According to the Country Social Analysis by the World Bank, the GDP growth rate has steadily been falling over the last years22. Inflation has been averaging at almost 12% since 2002 rapidly increasing the cost of living. Oil income accounts for an estimated 67% of the Government’s revenue23 . Yemen, a non‐OPEC member, is the smallest oil producer in the Middle East. Yemen has tried to counter the effects of its declining oil resources by diversifying its economy through an economic reform program initiated in 2006 that is designed to bolster non-oil sectors of the economy and foreign investment. In October 2009, Yemen exported its first liquefied natural gas as part of this diversification effort. In January 2010, the international community established the Friends of Yemen group that aims to support Yemen's efforts towards economic and political reform, and in August 2010 the IMF approved a three-year $370 million program to further this effort. Despite these ambitious endeavors, Yemen continues to face difficult long term challenges, including declining water resources and a high population growth rate.

20 Lia Carol Sieghart, 2008 : Towards an Effective Implementation of the CDM in the Middle East and North Africa Region – A Perspective from Yemen 21 World Bank, 2007 22 World Bank, 2006 23 World Bank, 2006

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Yemen’s energy use relies heavily on fossil fuels. Thus, there is e.g. potential to reduce GHG emissions in the energy sector (renewable energies, energy efficiency measures, substituting diesel power plants with natural gas‐fired plants) and in the industrial sector (fuel switch, recovery of associated gas from the oil industry).

As regards CDM and climate change, on June 12, 1992 Yemen signed the United Nations Framework Convention on Climate Change (UNFCCC). Yemen was the first of the oil exporting countries of the Arabian Peninsula to ratify the Kyoto Protocol (September 15, 2004). In accordance with the modalities and procedures of the CDM (Decision 3/CMP.1), Yemen has designated the national authority for the CDM and registered it with the UNFCCC. However, despite its early involvement on the international level, the CDM in Yemen has been progressing at a very slow pace. Relatively little emphasis has been given, to effectively access the CDM and to realize the full potential development benefits for Yemen as a host country.

III. The CDM in Yemen

III.1.National CDM policy and regulation

Despite its early involvement on the international level, the CDM in Yemen has been progressing at a very slow pace. Relatively little emphasis has been given, to effectively access the CDM and to realize the full potential development benefits for Yemen as a host country.

Milestones in Yemeni climate change Policy Date Signature of the United Nations Framework Convention on Climate 12 June 1992 Change (UNFCCC) Ratification of the UNFCCC 21 February 1996 Submission of the first National Communication24 29 October 2001 Notification of the Yemeni Designated National Authority (DNA) to the August 2003 UNFCCC Ratification of the Kyoto Protocol 15 September 2004 Prime Minister`s Resolution on the establishment of the DNA for 24 January 2007 approval of projects under the CDM Endorsement of Ministerial Decree outlining the country specific CDM 26 April 2008 approval procedures Table 10: Milestones in Yemeni climate change policy. Source: UNFCCC

In order to build an effective national institutional structure to attract investors and harness the CDM potential, the Cabinet of Ministers approved in January 2007 the Prime Minister’s Resolution No. (238) regarding the establishment of a Designated National Authority (DNA) for approval of projects under the Clean Development Mechanism (CDM) of the Kyoto Protocol. Further, on 26 April 2008 a Ministerial Decree outlining the country specific CDM approval procedures was endorsed. These legislative documents regulate the operation of the CDM in the country.

Besides, more than 25 CDM workshops aiming at improving the capacity of Government representatives, the private sector, NGOs and local experts were implemented. Potential developers were bilaterally assisted in

24http://unfccc.int/national_reports/non-annex_i_natcom/items/2979.php

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identifying CDM projects within their operational activities. This process resulted in a sound framework for Yemen to operate as a CDM host country.

III.2.International cooperation on mitigation

International cooperation agencies have been providing intensive assistance to Yemen in the field of climate change over the past 10 years. The main initiatives are illustrated hereinafter:  Institutional Capacity Development for the CDM in Yemen (UNDP, 2006-2007) This project implemented with the Environmental Protection Authority (EPA) aimed assisting Yemen in developing its institutional capacity for hosting the CDM, and to facilitate both government and private sector investment in projects that have the potential to reduce greenhouse gases (GHG) and qualify as CDM projects. The Key Achievements of the project are as follows:  Developed an institutional and organizational framework for the Designated National Authority (DNA);  Developed criteria for assessing the contribution of a CDM project to sustainable development;  Developed national rules for project eligibility, submission and approval;  Approved templates for the Yemeni Project Idea Note (PIN), plus developed project documents;  Conducted an initial assessment of Yemen’s CDM potential in the first commitment period (2008- 2012);  Identified priorities for CDM project development, and the sectors and projects that provide the most cost-effective GHG reduction measures;  Prepared PINs for the five selected eligible ideas in the form of training;  Prepared a Ministerial Decree for the evaluation and approval of CDM projects;  Enhanced the marketing of Yemen as CDM host country at national and international events;  Developed and implemented 20 national training workshops;  Developed an outreach strategy and widely distributed outreach material;  Developed Yemeni CDM webpage (DNA): see www.cdm-yemen.org;  Conducted numerous bilateral training workshops in relevant ministries, private companies etc; and  Established CDM database and library at the DNA Secretariat.

 World bank (Carbon Finance Assist program) In Yemen, the CF Assist program was completed in 2008. Several activities among others were carried out: a CDM training workshop and project clinic was organized for over thirty local consultants and potential project developers on topics covering among others CDM cycle, Project Idea Note (PIN) and Project Design Document (PDD) development, project methodologies, and additionality; and two working group sessions were held featuring interactive exercises on PIN development. Furthermore, a consultation on CDM project portfolio development was completed, and four PINs were finalized in the energy and solid waste management sectors, respectively.

III.3.Main Institutional Stakeholders

In order for Yemen to take pro-active approach to participate as a reliable partner in the CDM, the Ministry of Water and Environment and the Environment Protection Entity have been intensively working over the last 12 months to prepare the relevant legal and institutional framework. This process resulted in several tangible outputs. In January 2007 the Cabinet approved the Prime Minister’s Resolution No. (238) regarding the establishment of a Designated National Authority (DNA) for approval of projects under the clean

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development Mechanism (CDM) of the Kyoto Protocol. A ministerial Decree outlining the country specific CDM approval procedures was endorsed. More than 20 CDM workshops aiming at improving the capacity of Government representatives, the private sector, NGOs and local experts were implemented. Potential project developers were assisted in identifying CDM projects within their operational activities. This process included face-to-face discussions and technical training workshops with decision-makers of companies and public entities.

 DNA The Yemeni DNA is established since 2003 and is composed of the DNA Board, responsible for final decision making and the DNA Secretariat, the operational unit conducting day to day activities. These entities have the mandate and ability to facilitate the completion of CDM transactions in an efficient and transparent manner. The DNA is structured to act as a “one-stop shop” and has the capacity to provide timely responses to inquiries by emissions reduction buyers, by parties interested in the CDM and for stakeholders interested in Yemen as a host country. The DNA Secretariat is mandated with promotional activities such as project outreach and capacity building activities for various stakeholder groups:

 DNA Secretariat The DNA secretariat is associated with the Department of Climate Change and thereby also with the National Focal Point of the United Nations Framework Convention on Climate Change. The DNA Secretariat is the national contact point for CDM activities in Yemen. The office is located within the premises of the Environment Protection Authority (EPA), which is subordinate body to the Ministry of Water and Environment. The DNA secretariat is assigned with the following tasks:

- Day-to-day activities of the DNA including constituting committees or sub-groups to coordinate and examine the proposals or to get detailed examination of the project proposals - Coordinates the work of the DNA Board - Provides an assessment whether documentation submitted by project developer fulfils the criteria for SD as defined by the DNA Board - Liaises with stakeholders - Maintains the Yemeni CDM website: www.cdm-yemen.org

The DNA secretariat has no approval authority, as this authority is with the DNA board.

 DNA board The Yemeni DNA board is composed of the following members:

Table 11 : The Yemeni DNA board. Source: Lia Carol Sieghart, 2008: Clean Development Mechanism- an experience from Yemen

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The DNA board has within the approval process the following tasks :  Assesses proposed CDM projects for Yemen;  Issues the official approval letter, signed by the Chair, confirming voluntary participation and project’s contribution to sustainable develoàpment of the Republic.

The DNA structure and its interaction with the other actors are illustrated in the following figure :

Figure 7: The Yemeni DNA Structure. Source: Aljanad Abdussalm Mansoor, 2009: Status of CDM Yemen

III.4.CDM national capacities

The last 2 years have seen an implementation of numerous capacity building activities in Yemen. Capacity building was specifically addressed to the staff of the DNA, to potential project developers from the public and private sector, local consultants and for the CDM extension officers nominated within the entities represented in the DNA Board. Further, a Yemeni CDM website was developed and has shown to be a key outreach mechanism to market the national CDM programme as well as the country as CDM project destination.

However, there is still a strong necessity for further capacity building such as: i) capacity building in bundling of small‐scale projects (usually not taken into consideration by regular capacity building initiatives), ii) In‐house capacity building for potential project developers, iii) Improvement of effectiveness of the local project preparation market, iv) developing a local knowledge base of CDM service providers, iv) Capacity building focusing on the banking sector (private sector bank), v) Development of discussion papers, which can assist in the outreach approach of Yemen as these can be flagged at thematic conferences, vi) And further support in CDM project identification.

Companies operating in Yemen, like in the oil sector, with a strong potential for GHG reduction still lack the capacity to identify projects within their operational activities. Mainstreaming carbon finance into business operations would have a catalytic impact on facilitating CDM project development. The overall awareness on the CDM needs to be increased and a strong local market of CDM consultants established.

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III.5.Legal, financial and institutional barriers preventing CDM development and recommendations

Despite the early notification of the DNA to UNFCCC Secretariat, even before its ratification of the Kyoto Protocol, the CDM in Yemen had been progressing at a very slow pace due to a mix of factors, including lack of understanding of the requirements of the CDM, limited financial resources for training and allocating Government personnel for project review, and an absence of technical assistance from the donor community prevented the development of the institutional framework, definition of approval criteria or allocation of staff. Relatively little emphasis had been given, to effectively access the CDM and to realize the full potential development benefits for Yemen as a host country. The underlying causes can be recaptured as follows: - Lack of understanding of CDM procedures and rules; - Lack of full-time champion to govern the day-to-day activities; - Lack of financial sustainability to govern day-to-day operations; - Lack of awareness at stakeholder level; - Insufficient capacity; - Inadequate level of resources available to perform its functions efficiently and effectively. On the other hand, Yemen is actively seeking to increase foreign investment in its energy sector, but concerns about piracy in the Gulf of Aden, which it shares with Somalia, may be limiting prospects. Declining oil revenues are weakening the government's ability to provide basic services.

According to the UNDP, because Yemen is considered one of the poorest countries in the Middle East region, with approximately 45% of its population living on less than $2 per day, the high up-front costs of renewable energy technologies may prevent the nation’s poor from receiving electrical services. The study also revealed that there is lack of coordination among concerned stakeholders, such as government agencies, donors, NGOs, the private sector and the financial sector. The Energy Ministry also lacks staff to implement suggested strategies.

Furthermore, because of geopolitical reasons, Yemen has not been able to attract a large number of carbon cooperation agencies. Apart purchasing CERs from a PoA actually in validation, the few international agencies that are engaged in CDM are mostly involved with building the capacities of local CDM actors and raising awareness activities.

IV. Analysis of the current CDM status in the country

IV.1.National CDM potential

An initial assessment of the CDM potential of Republic of Yemen was conducted at the beginning of 2007 within the frame of the UNDP project “Institutional Capacity Development for the Clean Development Mechanism”. The first step of this project was to identify as many CDM projects as possible and prepare PINs for the 5 projects with the highest potential to become registered CDM project activities. PINs were prepared for the following projects:  In-House fuel switching to lower emission fuel at Hayel Saeed Anam and Company.  Sana’a Landfill Gas Recovery project  4.7 MW Biogas power generation at Sana’a Wastewater Treatment Center  50 MW Aden Wind Power project  Marib 2nd stage 400 MW gas power plant

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Some other projects were identified having also relatively high CDM potential whereas others seem unlikely to obtain registration within the CDM Executive Board. Projects were assessed based on eligibility (including additionality and baseline establishment), availability of necessary data/information and the prospect of actual project implementation.

Additionally, within the frame of this UNDP project, significant potential CDM projects have been identified in Yemen, particularly in the areas of waste management, gas sector, renewable energy and fuel switch. The following lists contain potential projects were an existing methodology can be applied (if the country wants to benefit from the pre-2012 CDM market, it is not sensible to identify projects that would require development of a new methodology).  Gas flaring reduction: The oil field managed by Total flares 30 MMSCFD gas. If recovered and used, this project could generate 0.8 million CER per year.  Landfill gas recovery  At landfills of Sanaa (360,000 t waste per year). This project is developed with Ecofys and a Dutch landfill technology provider. CER potential over21 years on average 140,000 per year ( to be launched only after 4-5 years)  At landfills of Aden (220,000 t waste per year). CER potential over 21 years on average 90,000 per year (to be launched only after 4-5 years)  At landfills of Taiz (180,000 t waste per year). CER potential over 21 years on average 70,000 per year (to be launched only after 4-5 years)

All landfill gas projects would require lining of the landfill and operation of cells that can be closed after filling. The current open dumpsites are unsuitable for LFG recovery. Integration of sanitary landfilling in a national Waste management strategy could be envisaged as done in Tunisia.  Renewable energy The technical potential for wind, concentrating solar power and geothermal energy is large (several GW/100 MW) and could provide interesting CDM opportunities. Concrete opportunities are:  Wind plant to provide electricity for 1.5 million t p.a. cement plant. A 10 MW plant at the site with a 40% capacity factor could generate 35 GWh/year. At a grid emission factor of 770 gCO2/kWh, it could generate 27,000 CERs/year.  0.3 and 0.8 MW wind turbines for captive power of industrial estate hitherto supplied by diesel generator. The wind turbine could be imported second hand form industrialized countries where currently repowering is taking place. At a 40% capacity factor the plant would generate 3.5 GWh and annual CER potential would be 2080.  Oil-gas switch for industry/power generation This would generate 300 CER/ GWh. Conversion of a 20 MW diesel generator in Aden steel plant would generate 40000 CERs.  Coal- gas switch Coal-gas switch for 105 million t/year cement plant. This would generate 190,000 CERs per year.  Solar water heating Solar energy use for hot water production could be harnessed in a bundle of small-scale projects.

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 Liquid waste management Yemen Economic Corporation is operating two dairy farms with 700 and 500 dairy cows. The CER potential would reach 1500-2000 per year if a liquid waste management system has been used in the past.  Wastewater treatment Yemeni Wastewater treatment plants treated 30 million m3 of wastewater and generated 10 kilotonnes of sludge in 2004 but detailed COD data would be required to estimate the methane generation potential. At sketchy data of 2 kg BOD/ m3 (comparable to of 4 kg COD/ m3) the annual raw methane generation potential reaches 24,000 t which would be equal to 0.5 million tCO2. However, only a limited share of this could be mobilized in form of CERs.

IV.2.National CDM project portfolio The first project identification work has been carried out by the Ministry of Water and Environment and the Environment Protection Authority/Yemeni DNA secretariat mainly from September 2006 to October 2007 in cooperation with the United Nations Development Organizations, the Centrum fur Internationale Migration und Entwicklung and the Carbon Finance Assist Programme of the World Bank.

As an output of this work, 5 PINs were prepared for the following projects:  In-House fuel switching to lower emission fuel at Hayel Saeed Anam and Company.  Sana’a Landfill Gas Recovery project  4.7 MW Biogas power generation at Sana’a Wastewater Treatment Center  50 MW Aden Wind Power project  Marib 2nd stage 400 MW gas power plant

Other projects are already in the development stage. Preliminary work has been done on the Al Mokha wind farm to register it for the CDM. Landfill gas recovery from the four large cities has been examined as an option, but is not yet approved because the finance for the development is not available. Other possibilities are a gas flaring project proposed by Total, an energy efficiency project with the cement factory and a programme to switch lighting units from magnetic to electronic ballasts. There is still scope for more project identification tasks, e.g. in the oil industry, the cement industry and for gas.

Globally, the Yemeni CDM project portfolio includes actually 10 projects: 2 projects are under validation, seven projects have already a PIN and one project has sent prior consideration notification to the UNFCCC secretariat.

CDM project status Number of projects Notification of prior consideration 1 PIN 7 Projects under validation 2 Total 10 Table 12: CDM project portfolio of Yemen. Source: UNFCCC website and Aljanad Abdussalm Mansoor, 2009: Status of CDM Yemen

The detailed CDM project list is provided in the following table: Annual Emissions Status Project title Project Developer Reductions (TCO2) 1 Prior consideration Recovery & utilization of associated gas Total Exploration & -

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(Notification from Basement wells in the Kharir Field Production received on 14 Apr (Block 10). Yemen for use in the Kharir Yemen(TEPY) 2011) Power Plant 2 PIN In-House Fuel Switching to Lower Hayel Saeed Anam and 47,000 CER Emission Fuel at Hayel Saeed Anam and Company Company 3 PIN Sana’a Landfill Gas (LFG) Collection and Cleaning Fund 114,600 Flaring Project CER (Average for 10 years) 4 PIN 50 MW Aden Wind Power Project Ministry of Electricity, 106,848 Public Power CER Corporation

5 PIN Marib 2nd Stage Gas Power Plant Ministry of Electricity, 680,000 Public Power CER Corporation

6 PIN Sanaa Wastewater biogas project Sana’a Waste and 16,725 CER Sanitation Local Corporation 7 PIN CFL Project Ministry of Electricity and 115,718 Energy (MEE) CER

8 PIN LFT +with electronic ballast Ministry of Electricity, 49,526 CER

Public Power Corporation 9 Validation Recovery & utilization of associated gas Total Exploration & 410,446 from basement wells in the Kharir Field Production Yemen CER (Block 10),Yemen (TEPY) 10 Validation Yemen Electricity Distribution Loss Public Electricity 7,794 CER Reduction Programme (PoA) Corporation

Table 13: Detailed CDM project portfolio of Yemen. Source: UNFCCC website and Aljanad Abdussalm Mansoor, 2009: Status of CDM Yemen

IV.3.Overview of current CDM projects and PoAs  Standard CDM There is only one CDM project which is at an advanced status in Yemen. This project is the “Recovery & utilization of associated gas from basement wells in the Kharir Field (Block 10), Yemen”. It is actually under validation.

The project activity consists in recovering and utilizing the associated gas from Basement oil wells in the Kharir Field (Block 10). This associated gas is a by-product of oil production activities from Basement oil wells at Block 10 only. The project activity involves the recovery of associated gas and its transportation for onsite power generation and the recovery and transport of associated gas to third party offsite power- generation facilities. The expected emissions reduction over the ten-year crediting period is expected to equal 4,109,465 tCO2e.

 PoA At present, there is only one CDM Program of Activities in Yemen, which has progressed to the PDD stage (currently in validation). This PoA is the Electricity Distribution Loss Reduction Program. It is an initiative of the Public Electricity Corporation of Yemen (PEC) operating under the Ministry of Electricity. PEC is the exclusive operator of the electricity grid in Yemen and is state owned. The PoA is a blended carbon finance operation with the Yemen Power Sector Project, financed by International Development Association (World

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Bank). The POA would generate an estimated 75,000 tCO2e per year. The Community Development Carbon Fund (CDCF) will purchase a total of 125,000 tons of CO2 equivalent by 2013. The Power Sector Project was appraised in February 2006 and approved by the World Bank’s Board on May 26, 2006, but the project implementation is still in its initial stage.

The program aims to reduce greenhouse gas emissions by improving the quality of supply and technical efficiency of the electricity sector of Yemen. All activities to be implemented under this PoA aim at reducing the technical losses to which the PEC grid is subject to, by upgrading distribution lines, redesigning the set- up of the distribution network including the construction of new lines and intermediate power substations. The PoA also includes the installation of metering equipment to improve the management system. Activities will be pursued through 7 or 8 CPAs across 18 regions of Yemen and implemented by electricity substations, stations operators and local/regional control centers over a period that runs from 2007-2016.

The program is implemented within the context of a power sector characterized by its total reliance on fossil fuel for power generation (around 49% diesel and 51% fuel oil) and; the lowest access to electricity in the region, with only 53% of the total population having access to (including self-generation) electricity. The electricity transmission and distribution network in Yemen is overstretched, resulting in high losses and frequent outages/interruptions in electricity supply with an average load shedding over 20% of the peak demand. In 2008, the Loss Reduction Department of PEC estimated the distribution losses to be 24.65% of the power produced, which includes technical and non-technical losses.

V. Portfolio of priority projects and programs

V.1.Prioritization

 Selection criteria For the selection of the prioritized CDM projects and PoAs, the following criteria have been adopted in accordance with the ToR: - Project maturity (CDM status) - Project implementer - Scale of the project - Mitigation potential - Additionality criteria

 Prioritized CDM projects and PoAs:

The process of identification of priority projects was based on the screening of the national CDM portfolio of Yemen as well as the potential mitigation opportunities taking into account the above mentioned criteria, especially project maturity and consideration of the scope of the RCREEE study. As Yemen is classified as an LDC by the UNDP25, it is not constrained by the need to achieve registration before the end of 2012.

The following table presents the prioritization of the projects:

25 http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_list.pdf

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N° Project Project Project Scale of Mitigation Additionality maturity implementer the project potential criteria

+++ : high +++: +: large +++ : high +++: easily maturity Potential - : small potential demonstrable project implementer 1 Recovery & utilization of associated gas from +++ ++ + ++ ++ basement wells in the Kharir Field (Block 10),Yemen 2 Yemen Electricity Distribution Loss Reduction +++ ++ - + + Programme (PoA) 3 Off-Grid PV for Rural - Unknown unknown + + Electrification in Yemen 4 Mocha 60 MW Wind Park + + + ++ + Project 5 Biogas Digesters: An Integrated Solution for Poverty Alleviation and - Unknown - - + Climate Change Mitigation in Yemen 6 Efficient Lighting in Public - Unknown unknown + + Buildings 7 Promotion of Cogeneration - Unknown unknown ++ + for Yemen 8 Establishment of a Programme for Energy Efficiency Labelling of - Unknown unknown ++ + Electronic Household Appliances Table 14: Prioritization of projects

 Description of supportive actions for each project/PoA : According to the above analysis, the three most attractive projects are presented in the following table:

Annual Emissions Project title Project Developer Status Reductions (tCO2e)

Ministry of Electricity Mocha 60 MW Wind Park Project Project idea - and Energy (MEE)

Recovery & utilization of associated gas from Total Exploration & Validation 410,446 basement wells in the Kharir Field (Block Production Yemen CER 10),Yemen (TEPY)

Yemen Electricity Distribution Loss Reduction Public Electricity Validation 7,794 CER Programme (PoA) Corporation

Table 15: Prioritized projects

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i. Mocha 60 MW wind park project Feasibility study as well as environment assessment of the project have been recently carried out. Supportive actions are therefore needed for the: - Development of PIN and project approval by the Yemeni DNA - Development of the PDD - Validation of the project by a DOE - Registration of the project

A coordination action should be undertaken with the project team in World Bank in order to identify which CDM activities require external need to accelerate the registration of the project.

ii. Recovery & utilization of associated gas from basement wells in the Kharir Field (Block 10),Yemen This project is currently under validation. The PDD was published on the UNFCCC website for public comments from 20 January 2010 to 18 February. The project is implemented by Total Exploration & Production Yemen (TEPY), a company organized and existing under the laws of France. No supportive actions were identified for this project but contacts should be established with project proponent in order to have further information on Project progress in the CDM process and eventual barriers to overcome. iii. Yemen Electricity Distribution Loss Reduction Programme (PoA) This programme of activities is financially and technically supported by International Development

Association (World Bank). Additionally, 125,000 tCO2e of emission reduction generated by the programme will be purchased by the Community Development Carbon Fund (CDCF) by 2013. This programme is currently under validation. Considering the World Bank involvement in the project, it seems that no supportive actions are needed for the programme for the moment.

V.2.Supportive actions to CDM projects and PoAs

 Wind farms The most advanced wind project in Yemen is the proposed development at Al Mokha; this is a promising site on the Red Sea with an average wind speed of 7.4 m/sec at a height of 40m. Preparation of the requisite feasibility studies and a model power purchase agreement was initiated under the GEF-funded Rural Electrification and Renewable Energy Development Project (REREDP).

Subsequently the World Bank agreed a sovereign loan for the implementation of a wind farm of approximately 60 MW generation capacity, to be connected to the PEC grid. The plant is to be wholly owned by a Special Purpose Company (SPC), to be created as a subsidiary of PEC. As the success of the first wind project is critical the wind turbine manufacturer will operate the wind farm, at least during the first five years, and train local engineers and technicians during this period working within the SPC.

The commercial transactions pertaining to sales of electricity would simulate an IPP; the SPC will sell electricity to PEC on a Power Purchase Agreement (PPA). Eventually the subsidiary might be sold. The overall aim is to demonstrate the sustained financial and economic viability of wind farms in the area; it is expected that successful operation of the pilot scheme will generate interest in the future development of wind energy along the Red Sea Yemeni coast. The proposed Project is expected to help in emission reduction and should also qualify for additional financing from carbon funds. Accordingly, the team has

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initiated processing of a Carbon financing operation. If successful, the carbon finance funds would be used to reduce the GOY contributions to the project, and also lessen the tariffs required for cost recovery.

 Off-Grid PV for Rural Electrification in Yemen A large rural electrification programme has now been authorized, (the Rural Energy Access Project) funded jointly by the World Bank, the AFD and the Islamic Development Bank. The creation of the new Authority and the new Electricity Law were conditions of that loan. The overall project will cost $117,million; this will be financed mostly by concessional loans, of which $37.6 million equivalent will be in, local currency, but also including $25 million as a grant from the World Bank.

Where grid access is not economically viable, the project envisages small Solar Home Systems (SHS). The cost per kWh equivalent will depend on the usage of the SHS, including the types of application and the amount of use. Levelized costs for the systems proposed were estimated at, $0.81/kWh, $0.71/kWh and $0.94/kWh for 20 Wp, 50 Wp and 100 Wp systems respectively. The levelized costs increase with system size, because the sophistication of the systems envisaged increases also. These costs suggest that the SHS’s are more expensive than a community-based diesel generator. Justification is based in the environmental benefits and the longer term sustainability of energy supply. This programme could be developed as a NAMA.

 Biogas Digesters: An Integrated Solution for Poverty Alleviation and Climate Change Mitigation in Yemen This project was submitted and approved for funding by the Japan Social Development Fund. It aims at improving energy access by the rural poor communities and increasing their incomes, particularly women and youth in Yemen, through piloting the use of rural biogas as an integral part of sustainable development to meet the challenges of poverty, food and energy production, while contributing to the mitigation of climate change impacts.

The proposed project activities are based on 4 mains components: a) Stakeholder consultations, awareness and engagement in rural biogas digester development. It includes building partnerships with local communities, local governments, and private sector to promote the biogas opportunities. The entire success and demand for biogas digesters will be fueled through this component. Key activities include: (i) identification of key stakeholders at the 8-10 selected rural communities in target governorates, including Al-Mahweet Governorate; (ii) organization of stakeholder meetings to introduce biogas; (iii) identification and agreement on biogas champions and ways of networking; (iv) agreement reached with participants on criteria to select the households who will pilot biodigesters, while considering special needs of poor and most needy families. This component will also include information for future climate change CDM opportunities, business and employment opportunities for rural women and youth. b) Targeted capacity building to help design, build, operate and maintain biogas digesters. This component will focus on building capacity at the local level in a targeted way. The selected champions and villages (8-10) will participate in detailed discussions on the potential locating and sitting of the biodigesters, features that need to inform the design of these biodigesters (in consultation with the engineers) including a discussion of pros and cons of various designs, how to operate and maintain biodigesters in the longer term. c) Pilot biogas digesters in select rural villages. This component will focus on the actual installation, utilization and maintenance of biogas digesters in selected rural villages. At least two villages among the 8-10 (from Al-Mahweet and other select Governorates) will be selected from the World Bank/GEF financed Conservation and Utilisation of Agrobiodiversity for Climate Change Adaptation in the Rainfed Highlands (CUABCCA)Project with the objective of showcasing the direct and

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ancillary results and benefits of biodigesters. Key activities include: (i) installation of 60 household biodigesters in each of the two pilot villages (total 120 biodigesters) with related operation, maintenances, and demonstration to other communities members; and (ii) establishing up to 2 small biogas technical centers to train youth and women for operation and maintenance (the centers are designed to be self-sustaining after its creation and 6 month support from the JSDF project). d) Support the national and local governments of Yemen to scale up biogas as poverty alleviation technology, and adopt the national policy by showing the potential to use the Clean Development Mechanism (CDM) under the Kyoto Protocol to support national biogas as a multi-benefit approach for Yemeni poor (in terms of rural energy access, reduced expenditure for rural households from buying kerosene, reduced work load of women collecting firewood, increased employment opportunities for rural women and youth, improved food security through use of the by-product of organic fertilizers from biodigesters, etc.). Key activities include: (i) engaging policy makers through policy dialogues, outreach and communications; (ii) engaging private sector through targeted training and capacity building of local manufacturers for the design, building, and installation of biodigesters, including development of biogas technology packages for uptake by small and medium business enterprises; (iii) monitoring and evaluation of financed activities; and (iv) grant administration.

 Efficient Lighting in Public Buildings The Yemeni market is characterized by a variety of lighting equipment. Incandescent bulbs are still common in households; some T10 fluorescent tubes are still to be found in the market. The offer of CFLs and other more efficient lighting devices is often corrupted by cheap poor quality goods that are hard for consumers to distinguish from good quality products. Fakes of major brands are also common. The more efficient tubes and electronic ballasts are generally sold into the commercial market, where electricity prices are reasonably high (10 euro cents / kWh), lighting hours are quite long, there is some basic technical competence, awareness is high and finance for investments with rapid paybacks is not generally a problem.

PEC has considered disseminating information about CFLs on the back of the bills sent to consumers, but eventually abandoned the idea because of the many poor quality goods on the market and its concerns that consumers would not necessarily benefit and would hold PEC responsible for faulty purchases. There could well be a case for a PoA that would ensure the delivery of good quality products into sensible applications.

A promising market is lighting in government buildings. There are many government offices throughout the country; PEC registers over 12,000 consumers in the government sector. If on average these offices have 25 fluorescent lamps each, then there could be some 300,000 lamps. This market is favorable, because in general it will not have the budget to make the conversion on its own account and it is subject to instruction at the political level. Penetration should therefore be 100% without free riders.

The main objective of the activity would be to promote the widespread adoption of such ballasts in all areas where they are cost-effective, notably in commercial premises. The PoA coordinator might be a Ministry or the PEC, a commercial bank, or possibly even an equipment supplier. The PEC is in any case well placed to implement and monitor the programme, especially in case of recovery of ballasts costs through the electricity bill.  Promotion of Cogeneration for Yemen The Yemeni electricity sector driven by fossil-fuelled power generation is characterized by a loss of waste heat and a deficient transmission and distribution system resulting in poor net generation. Energy use and efficiency are important factors for economic development and environmental integrity.

CHP applications could be viable and cost-effective in the Yemeni setting because they:

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 reduce energy-related carbon dioxide emissions  provide a decentralized energy source which results in reduced investment in energy system infrastructure  reduce transmission and distribution losses.

Energy-intensive industrial sites such as oil refining, heavy processing (food and textiles) and the cement industry with its simultaneous demand for heat and power could all benefit. Also the commercial and institutional/residential sectors could match their thermal and electrical needs. CHP application in the commercial/institutional sector could address light manufacturing, hotels, hospitals and large office complexes.

Despite good potential for CHP, to date no systems are operating in Yemen. The main barriers are: technical, financial, lack of maintenance capacity and awareness, the heavy subsidy of petroleum products and the absence of a domestic natural gas infrastructure – the fuel of choice for most new industrial CHP systems. However, access to reasonably priced and reliable electricity supply systems are an obvious prerequisite for economic stability and development.

Coupling GHG emissions abatement with CHP installation would help guide the country’s economic growth to a less carbon-intensive development path. The emission reduction potential makes CHP applications, in principal, eligible for the CDM. In order to qualify for Certified Emission Reductions under the CDM, one needs to address ‘additionality’, ‘permanence’, and ‘leakage’ requirements as well as satisfy sustainable development criteria defined by the country. By gaining CDM support for projects, Yemen could gain access to significant additional flows of technology and finance to assist in achieving a more sustainable, less greenhouse-intensive pathway of development. Also the National Adaptation Programme of Action is suggesting CHP systems as an efficient method of power generation and a suitable measure to reduce GHG emissions. Considering a cogeneration project as a CDM project activity would assist in generating emission credits and thereby make the project more feasible.

 Establishment of a Programme for Energy Efficiency Labelling of Electronic Household Appliances There are no performance and energy efficiency standards or labels for electrical appliances in the Yemen. The Standards Institute is responsible for setting and monitoring standards, but it appears that at present it does not have the testing facilities satisfactorily to monitor basic electrical properties and safety. It is in the process of developing such facilities. There is no domestic manufacture of appliances; most are imported from China and, in the absence of controls, importers and overseas manufacturers will be tempted to dispose of low-grade and even defective stock. The quality and performance of such appliances must be very doubtful. Many fake branded and energy-intensive goods are also imported. It is important that standards be established and monitored. The absence of local manufacture in this instance can be an advantage as it means goods can be tested at the point of entry, which is much easier than at the point of sale. Some private agents already operate an informal system for detecting and seizing fake goods at the port. Technical assistance is desirable to support a proper system of standards and it should take into account the progress that has been made elsewhere in the region. Ideally, a standard and labeling programme could be put in place within the framework of a supported NAMA through which the international community supports financially and technically the development of such programme in Yemen. Such programme will be based on two fundamental components:  Energy Labelling of household appliances: Seen that the market of household appliances such as washing machines, dishwasher, oven, air-conditioning systems etc. are highly visible to the

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consumer, the intention is to increase consumer’s awareness on the real energy use of household appliances through a liable and clear labelling in their sales points.  Minimum Efficiency Requirements: Compulsory minimum efficiency requirements will encourage producers of household appliances to improve the product design in view to lower the energy consumption at their use.

VI. Conclusion

Despite the early notification of the DNA to UNFCCC Secretariat, even before its ratification of Kyoto Protocol, the CDM in Yemen had been progressing at a very slow pace. Thanks to the initiatives of some international cooperation agencies (especially UNDP), a significant mitigation potential has been identified in Yemen, particularly in the areas of industrial activity, manufacturing, methane recovery, rural energy, and electricity grid expansion and efficiency. Some CDM projects were already identified but most of them are in early CDM stage. Indeed, the Yemeni CDM project portfolio includes only 10 projects of which 2 are under validation and the remaining at the PIN or the prior notification stage. From this portfolio, the three most attractive projects are: - Mocha 60 MW Wind Park Project - Recovery & utilization of associated gas from basement wells in the Kharir Field (Block 10),Yemen - Yemen Electricity Distribution Loss Reduction Programme (PoA)

As Yemen is classified as an LDC by the UNDP it is a special case: it is not constrained by the need to achieve registration before the end of 2012 in order to supply CERs into the EU ETS.

VII. Bibliography

- Lia Carol Sieghart, 2008 : Towards an Effective Implementation of the CDM in the Middle East and North Africa Region – A Perspective from Yemen

- Lia Carol Sieghart, 2008 : Clean Development Mechanism- An experience from Yemen

- Aljanad Abdussalm Mansoor, 2009 : Status of CDM Yemen - UNDP, 2007 : The CDM potential of Republic of Yemen - Perspectives, 2007 : Final report of the support mission for the Clean Development Mechanism in Yemen - RCREEE, 2010 : Country Report Yemen - Carbon Finance Assist website

VIII. Contact details of the DNA

National Focal Points

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Annex 3 – Syria country study

Contents I. Abbreviations 48 II. Background 49 III. The CDM in Syria 50 IV. Analysis of the current CDM status in the country 54 V. Portfolio of priority projects and programs 57 VI. Conclusion 62 VII. Bibliography 62 VIII. Contact details of the DNA 63

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I. Abbreviations

CDM Clean Development Mechanism DNA Designated National Authority EB Executive Board of the CDM EE Energy Efficiency EIA Environmental Impact Assessment ESC Environmental Studies Centre GCEA General Commission for Environmental Affairs

GDP Gross domestic product GEF Global Environment Facility GHG Greenhouse gases GNI Gross national income GTZ Gesellschaft für Technische Zusammenarbeit INC Initial National Communication INC-SY Syrian initial national communication LCS Lafarge Cement Syria MoLAE Ministry of Local Administration and Environment MRV Measurement, Reporting and Verification MS Mitigation Scenario MSEA Ministry of State for Environment Affair NAMA Nationally Appropriate Mitigation Action National Capacity Self-Assessment for Global Environmental NCSA Management NEC National Energy Committee NERC National Energy Research Centre NG Natural Gas PDD Project Design Document PIN Project Idea Note PoA Porgramme of Activities PV Photovoltaic RE Renewable Energy REMP Renewable Energy Master Plan RS Reference Scenario SAR Syrian Arab Republic SWH solar water heater

tCO2e Tons of Carbon Dioxide equivalent UNDESA United Nations Department of Economic and Social Affairs UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change VAT Value added tax

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II. Background

The Syrian Arab Republic lies in western Asia, on the eastern shores of the Mediterranean Sea between latitudes 32o 19 and 37o 25 degrees north, and longitudes 35°43 and 42°25 east. Syria is bordered in the north by Turkey, in the east by Iraq, in the south by Jordan and Palestine, and in the west by Lebanon and the Mediterranean. The Syrian Arab Republic’s total area is 18,517,971 hectares, of which 6 million hectares consist of cultivated land, the remainder being steppe and rocky mountains.

Figure 8. Geographical location of Syria - MENA Region. Source: unicef.org Figure 9. Map of Syria. Source: data.un.org

Syria is a lower middle-income country with a per capita GNI estimated at US$ 2,09026 (2008), a population of 18.727 million – plus 1.2 million Iraqi refugees and migrants - growing at about 2.5 percent per annum and a labor force growing at the rapid rate of about 3 to 4 percent per annum. Syria’s growth performance has strengthened in recent years, reflecting the country’s own reform efforts towards a social market economy as well as the hitherto favorable external environment for oil-producing countries. However, Syria’s macroeconomic performance has been affected by ongoing external and domestic shocks, particularly the impact of the global financial crisis and a prolonged drought that has been affecting agricultural output. Inflation was 2.5%28 in 2009 but is expected to increase over the next years as commodity prices recover, fuel prices rise and a VAT is introduced. Year-on-year inflation reached 3.7 percent in April 2010.

Foreign assets remain high, but their coverage of imports is declining. Although public debt remains moderate at 2229 percent of GDP, the recourse to debt to finance the budget deficit is likely to increase with the progressive decline in oil revenues. Despite the decrease in oil production, real GDP growth averaged 5.1 percent in 2004-2008. This is due to the expansion in private investments, stimulated by the recent economic reforms and to inflows from oil rich countries. Real economic growth had previously averaged 3.4 percent per annum between 1999 and 2003, only one percentage point over the current population growth. While growth slowed by more than 1 percentage point in 2009 compared to 2008, and unemployment increased to 11%, the Syrian economy did continue to grow at a rate of 4% in the midst of the global crisis. This in part reflects countercyclical fiscal measures aimed at reducing the impact of the crisis, including

26 World bank website, Syria country brief 27 World bank website, Syria country brief 28 World bank website, Syria country brief 29 World bank website, Syria country brief

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increases in public investments and the wage bill. Syria’s GDP remains dependent on the oil and agriculture sectors, both subject to uncertainties due to changes in oil prices and rain dependency respectively. The oil sector provides approximately 20 percent of the government’s revenues and about 40 percent of its export receipts. The agriculture sector contributes to about 20 percent of GDP and 20 percent of employment. Oil exports, exports of services and foreign transfers of income and remittances are the main sources of foreign earnings. Oil reserves, however, are expected to continue decreasing in the coming years and Syria has already become a net oil importer. A current account deficit of 2.4 percent of GDP is projected for 2010.

Being an arid and semi-arid country, the Syrian Arab Republic will be one of the states most affected by the potential impact of climate change. A preliminary assessment reveals nationwide changes in rainfall patterns and fluctuations in temperature during the past five decades. Average annual rainfall has fallen dramatically in the main agricultural areas over the past years. As a result, the country has suffered from a lack of rain and the prolonged effects of drought.

The recurrence of drought, coupled with its increased intensity, has reduced available water supplies and adversely affected the quality of water, thereby aggravating water resources management problems in the country. Most Syrian cities currently have a water supply deficit. Damascus, once an oasis with pure and ample hydrological resources, is today one of the thirstiest cities in the Middle East; this is especially true in the light of continuous looting by Israel of water resources from the occupied Golan heights, resources that could cover about 30% of Damascus’ annual needs. Bearing this in mind, a shortage of water supplies will undoubtedly raise concerns about food production and increase the risk of desertification in the country.

With a population of over 20 million, in addition to one million Iraqis and half a million Palestinian refugees, pressure is being exerted on the meager resources and services; economic sectors are highly affected by climate change, leading to a decrease in the ability to achieve balanced socio-economic development and to constrains in its sustainability. Based on the abovementioned facts and on preventive principles, Syria has been concerned about issues of climate change and dealing with its causes and consequences, within the framework of global equity and mutual but distinctive responsibilities.

It hence joined international efforts to combat them, ratifying the UNFCCC as early as 10 December 1995. It signed the Kyoto Protocol on 4 September 2005. Moreover, Syria has been openly realizing the importance of raising awareness on climate change, which would help the implementation of proper measures in order to reduce the possible negative impacts.

III. The CDM in Syria

III.1.National CDM policy and regulation

Syria, convinced of the importance and seriousness of climatic changes, and has ratified the United Nations Framework Convention on Climate Change (UNFCCC) in 1995; Syria has also signed the Kyoto Protocol on 4 September 2005. The Ministry of State for Environment Affair (MSEA) became the national focal point for climate change issues. The country started its efforts within the UNFCCC in 2007 with a program supported by the Global Environment Facility (GEF) and managed by the United Nations Development Programme (UNDP) for national capacity building in documenting national emissions of greenhouse gases and preparing Syrian initial national communication (INC-SY) to the UNFCCC.

The INC-SY project held various technical networking meetings and workshops on specific themes with support of (MSEA) including several training workshops for the GHG team members to provide technical support and to be trained on the GHG inventory according to the IPCC standards and methods, were held in different cities in Syria.

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In 2005, the Ministry of State for Environment Affair (MSEA) implemented another project entitled “National Capacity Self-Assessment for Global Environmental Management (NCSA)”. The NCSA was a GEF initiative aiming at assessing the capacity constraints and potentials for implementing the three international environmental conventions on biodiversity, climate change and desertification.

On the other hand the Ministry of Electricity under the guidance of the United Nations Department of Economic and Social Affairs (UNDESA) and with local coordination undertaken by the UNDP in Damascus, prepared a “Renewable Energy Master Plan” (REMP), which was completed in 2004. Successively, by mid- June 2003, and in order to implement this master plan, the Syrian Government has enacted legislation that established the National Energy Research Centre (NERC). The strategic role of the centre should involve renewable energy, energy efficiency and integrated resource planning programmes. In 2008, with support by GTZ, NERC started to prepare an energy master plan to identify and implement strategies for sustainable energy use.

Additionally, the Ministry of State for Environment Affair participated in and organized workshops related to Clean Development Mechanism (CDM) aiming at promoting this mechanism as a tool to mitigate climate change on the global level.

Milestones in Syrian climate change Policy Date Ratification of the United Nations Framework Convention on Climate 04 January 1996 Change (UNFCCC) Establishment of the National committee on Climate Change 20/03/2003 Ratification of the Kyoto Protocol 27 January 2006 Submission of the first National Communication 29 December 2010 Table 16: Milestones in Syrian climate change policy. Source: UNFCCC website.

III.2.International cooperation on Mitigation

International cooperation agencies have been providing technical and financial assistance to Syria in the field of energy, environment and climate change over the past 10 years. The main initiatives in relation with GHG mitigation and CDM are illustrated hereinafter:

 Enabling Activities for the Preparation of Syrian Initial National Communication to the UNFCCC (UNDP, 2007-2010) This project intends to enable activities related to the preparation of the Initial National Communication (INC) of Syria to present this report to the United Nations Framework Convention on Climate Change (UNFCCC). More precisely, the project aims at:  Strengthening of national capacities for meeting obligations towards ratified international environmental conventions.  Finalizing and publishing of the INC.  Enabling the Syrian Government to autonomously conduct assessment on climate change impact and to implement adaptive measures according to the INC to different areas of development policies.  Integration of environmental dimensions into national legislation and policies.  Raise awareness among stakeholders and public Within the frame of this project, the Initial National Communication of Syria was prepared and was officially submitted with the GHG inventory 1994-2005 to the UNFCCC on 29 December 2010.

 World bank (Carbon Finance- Assist program) The Carbon Finance-Assist program has focused its activities in Syria on capacity building programs during 2007-08. CF Assist has extended support to Syria’s General Commission of the Environmental Affairs

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(GCEA) to finalize the modalities and procedures to establish the DNA and to facilitate the CDM approval process as required under UNFCCC rules. A workshop was organized in collaboration with the DNA in November 2007 to familiarize the audience with carbon market concepts, project development opportunities, and regulatory requirements. More than 40 people attended the event, representing both the public and the private sector, consultants and key members of the DNA. http://web.worldbank.org/WBSITE/EXTERNAL/WBI/WBIPROGRAMS/ENRLP/EXTCARFINASS/0,,contentM DK:21868280~pagePK:64168445~piPK:64168309~theSitePK:3287761,00.html - Top

 Shimizu Corporation (Japan) Shimizu Corporation had been very active in the Syrian CDM Market. Indeed, this company has been participating in the implementation of 3 registered CDM projects through technical assistance, technology provision and funding.

III.3.Main Institutional stakeholders

 The Council for Environmental Protection and Sustainable Development

The Council for Environmental Protection and Sustainable Development is the overall environmental authority in Syria and has the responsibility of setting national policy and coordinating environmental activities and the adoption of environmental legislation, regulations and action plans. It is composed of representatives from all sectoral ministries as well as representatives from important non-governmental stakeholders.  Ministry of Local Administration and Environment (MoLAE) The Ministry of Local Administration and Environment (MoLAE) is assisted by a number of technical consultative and secondary committees, and operates through two executive agencies:  The General Commission for Environmental Affairs (GCEA), which is the technical arm of the ministry and advises the ministry on policy and technical issues at both the central and local levels. GCEA works through several central directorates, including those on biodiversity, water safety, land safety, climate change, atmospheric safety, chemical safety, Environmental Impact Assessment (EIA), public awareness, etc.  The Environmental Studies Centre (ESC), which is the scientific arm of the ministry and has the authority to conduct pollution control, monitoring and research and to coordinate with national and international research organizations. The MoLAE has established environmental directorates in all 14 governorates, as part of the local administration. They are presently being equipped with stationary and mobile laboratories as well as specialized equipment, aimed to implement the environmental policies. Furthermore, the various sectoral ministries have established environmental directorates, which are interlinked with MoLAE through a number of committees, working groups, etc.  DNA The General Commission for Environmental Affairs (GCEA), which is under the Ministry of Local Administration and Environment), is the DNA (Designated National Authority) in Syria that has oversight over approval of CDM projects and adjustments in undertaking CDM projects, and the decision on what parties are stakeholders in the project will be made by this General Commission for Environmental Affairs.

The Ministry of Local Administration and Environment set up two committees for CDM, which are Technical committee and Consultant committee. And the Ministry decided that the Technical committee shall be the

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stakeholders (only Technical committee is required for collection of the stakeholders’ comments under the decision of GCEA, public hearing is not required). The Sustainable Development Criteria for CDM projects in Syria include the following: A. Conformity to political and legal dispositions B. Contribution to:  Technology Autonomy.  Sustainable use of Natural Resources  Social Criteria (Improve Quality of Life and Equity, Alleviate Poverty).  Economic criteria (Provide Financial returns to Local Entities, Transfer of New Technology).  Environmental Criteria (Mitigation of Global Climate Change, Reduce GHG, Conserve Local Resources). The contact details of the Syrian DNA are as follows: Name: Eng. Hakima Hawash Email: [email protected], [email protected] Organization: Ministry of State for Environment Affairs Phone: (+963-11) 231 8682 / 231 8683 Fax: (+963-11) 231 2120 Organization's address: Directorate of Atmosphere Safety P.O. Box 3773,Damascus, Syria Table 17: Contact details of the Syrian DNA. Source: UNFCCC website.

 National Energy Research Center (NERC) NERC was established according to Law No.8/17-06-2003. It has a key role in creating the right framework that will allow Syria to meet climate change and energy security objectives. The main tasks of the center are as follows:  Conducting studies and scientific researches with respect to RE&EE.  Implementing experimental pilot projects with respect to RE&EE.  Developing policies and adopting suitable strategies to achieve optimum utilization of available energy sources especially Renewable Energies.  Drafting needed legislations and law related to EE&RE.  Developing and executing Energy Efficiency Projects in all sectors.  Creating needed testing facilities regarding to EE&RE applications.

III.4.CDM national capacities

Only few capacity building activities have been implemented in Syria since the ratification of Kyoto Protocol. The main trainings were undertaken within the context of the carbon Finance-Assist program during 2007- 2008. Capacity building was specifically addressed to the staff of the DNA. Further, a Syrian CDM website was developed in Arabic and is now under translation in English. The local DNA is actually undertaking some capacity building and raising awareness activities. However, there is still a strong necessity for further capacity building such as:  Capacity building on PoAs  In-house capacity building for potential project developers,  Developing a local knowledge base of CDM service providers,  Capacity building focusing on the banking sector (private sector bank),  And further support in CDM project identification. The overall awareness on the CDM needs to be increased and a strong local market of CDM consultants established.

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III.5.Legal, financial and institutional barriers preventing CDM development and recommendations

The CDM in Syria is been progressing at a very slow pace due to a mix of factors. The underlying causes can be recaptured as follows: - Lack of understanding of CDM procedures and rules; - Weak involvement of the national entities in charge of CDM in assessing the mitigation potential, identifying and promoting potential CDM projects, - Weak involvement of the national entities in charge of CDM in the follow-up of the projects throughout their cycle of life and of the evolution of the rules and procedures on the CDM on both international and national scale. - Limited technical expertise in main sectors such as transport, agriculture and others; e.g. green technology, integrated and sustainable urban planning, renewable energy and energy saving technologies. - Lack of legal and institutional framework to promote energy efficiency and renewable energy options. - Weak awareness among decision makers on climate change in general and on financial and environmental benefits of CDM. - Improper enforcement of existing laws related to energy efficiency and renewable energy.

To address these constraints, the following actions are recommended: - Develop the local capacities in specific areas such as improvement of transport efficiency, assessment of different transport modes and application of transport mitigation methodologies. - Develop the local capacities in using GHG mitigation methodologies, tools and software. - Secure and mobilize financial resources to implement GHG mitigation projects especially small scale CDM projects. - Formulate legal and institutional framework to promote energy efficiency and renewable energy options as well as enforcement of exciting laws through setting by laws and regulations. - Raise awareness of decision makers and top management of industrial organizations on the benefits of CDM projects. - Strengthen the role of the DNA and build its members capacities

If these barriers are addressed, cooperation between European Annex I countries and the MENA region could pave the way for Syria’s CDM potential to be utilised. This is all the more likely because the MENA states are a key area of focus for European Annex I countries. CDM projects involving industrial, wind and solar energy could benefit the climate and help secure Syria’s energy supply, economic development and political stability.

IV. Analysis of the current CDM status in the country

IV.1.National CDM potential

There is no specific work on CDM potential estimation in Syria. However, it is possible to get a rough idea about this potential through the mitigation potential presented in the initial national communication.

The overall mitigation potential of GHG emissions is estimated at 64 MtCO2e for the period 2010-2030. It is expected that estimated reductions of 5.4 MtCO2e in 2010 will increase following an average annual growth rate of 13% and reaching approximately 25 MtCO2e in 2020 and 42 in 2025.

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Table 18: Expected GHG emission reductions by sector for the period 2010-2030. Source: Initial National Communication of Syria.

As illustrated in the figure below, the power sector will achieve the most substantial share (about 37%) followed by the transport sector (29%) and the construction sector (12%).

Figure 10: Distribution of emission reductions by sector in 2030. Source: Initial National Communication of Syria.

IV.2.National CDM project portfolio The Syrian CDM project portfolio includes 15 projects: 3 projects are registered with the support of the Japanese Simizu Corporation. One project is under validation, while another project at the PDD stage was rejected due to the methodology refusal by the EB. Finally there are 2 projects at the PIN stage and 8 projects have submitted a prior CDM notification to the UNFCCC Secretariat.

CDM project status Number of projects Notification of prior consideration 8 PIN 2 PDD 1 Projects under validation 1 Registered 3 Total 15 Table 19: CDM project portfolio of Syria. Source: UNFCCC website

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The detailed CDM project list is provided in the following table: Annual Emissions Status Project title Project Developer Reductions 1 Prior consideration (Notification Wind power renewable electricity generation National Energy received on 24 Feb 2011) initiatives at National Energy Research Research Center - Centre (NERC) 2 Prior consideration (Notification Solar PV power renewable electricity National Energy received on 24 Feb 2011) generation at National Energy Research Research Center - Centre (NERC) 3 Prior consideration (Notification MAS Afforestation project in Syria MAS ENERGY - received on 20 Jan 2011) 4 Prior consideration (Notification MAS solar energy project in Aleppo Syria. MAS ENERGY - received on 15 Dec 2010) 5 Prior consideration (Notification MAS wind energy project in Quneitra Syria MAS ENERGY - received on 15 Dec 2010) 6 Prior consideration (Notification Energy Efficiency Improvement and Syriatel Mobile received on 28 Jun 2010) Renewable Electricity Generation initiatives at Telecom - Syriatel Mobile Telecom 7 Prior consideration (Notification Energy Efficiency Improvement and Fuel United Contracting received on 30 Mar 2010) Reduction initiatives at Garden City Resorts and Engineering - by United Contracting and Engineering Company Company 8 Prior consideration (Notification Energy Efficiency Improvement and Fuel United Contracting received on 24 Mar 2010) Reduction initiatives at Garden City Resorts and Engineering - by United Contracting and Engineering Company Company 9 PIN Banias Refinery Flaring Reduction and Gas Energy Solutions 10,000 tCO2e Utilization offshore sal 10 PIN Damascus Landfill Gas Capture and Administration of 200,000 tCO2e Utilization Damascus 11 The submitted methodology was Effective use of the waste gas emitted from General Fertilizer 85,343 tCO2e rejected by the EB ammonia production plant in Syria Company 12 Validation Portland Pozzolana “Blended Cement” at Lafarge Cement 456,296 tCO2e Lafarge Cement Syria Syria 13 Registered Dir Baalbeh Landfill Gas Capture Project in Homs Governorate 67,890 tCO2e Homs 14 Registered Tal Dman Landfill Gas Capture Project in Aleppo Governorate 65,037 tCO2e Aleppo 15 Registered Catalytic N2O abatement project in the tail General Fertilizer 187,855CER gas of the nitric acid production plant in Company

G.F.C, Syria Table 20: Detailed CDM project portfolio of Syria. Source: UNFCCC website

IV.3.Overview of current CDM projects and PoAs Apart the three registered projects, there is currently only one CDM project which is at an advanced status in Syria. This project is the “Portland Pozzolana “Blended Cement” at Lafarge Cement Syria”. It is currently under validation. The purpose of Lafarge Cement Syria’s Sustainable Cement Production Project is to reduce CO2 emissions by using technology that is not applied in the Syrian Cement sector on commercial

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scale. The project activity proposes to set up a 3.25 Mt p.a. blended cement plant in Syria where clinker would be blended with up to 35% of additives, which will include Gypsum, Pozzolana and Fly ash. The cement produced in the Syrian market generally consists of very high percentages of clinker and only some percentage of gypsum. This type of cement production is responsible for very high amount of emissions and hence such practice must be replaced with some more sustainable practice. The blended cement production leads to fewer emissions as compared to the cement produced in the above case. Since producing clinker is an energy intensive process, replacing it leads to abatement in GHG emission, reduction in the usage of limestone which is a finite resource and reduction in the combustion of non- renewable resource such as coal and petroleum coke which is used in the process soft clinkerisation. Hence, the project activity aims at producing blended cement with Pozzolana, Gypsum and Fly-ash as additives. This project is implemented by Lafarge Cement Syria (LCS), a Lafarge Group member.

There is at present no CDM Program of Activities in Syria.

V. Portfolio of priority projects and programs

V.1.Portfolio of prioritized CDM projects and PoAs

 Selection criteria For the selection of the prioritized CDM projects and PoAs, the following criteria have been adopted in accordance with the ToRs: - Project maturity (CDM status) - Possibility of registration before end of 2012 - Project implementer - Scale of the project - Mitigation potential - Additionality criteria

 Prioritized CDM projects and PoAs :

The process of identification of priority projects was based on the screening the national CDM portfolio of Syria taking into account the above mentioned criteria, especially the project maturity and possibility of registration before 2013, and with consideration of the scope of the RCREEE study. The following table presents the prioritization of the projects: N° Project Probability Project Project Scale of Mitigation Additionality to be maturity implementer the project potential criteria registered before 2013 +++ : high +++ : high +++: +: large +++ : high +++: easily probability maturity Potential - : small potential demonstrable project implementer 1 Portland Pozzolana “Blended Cement” at ++ ++ ++ + ++ ++ Lafarge Cement Syria 2 Effective use of the waste gas emitted from ammonia + + + + + - production plant in Syria

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N° Project Probability Project Project Scale of Mitigation Additionality to be maturity implementer the project potential criteria registered before 2013 3 Damascus Landfill Gas - + - + ++ + Capture and Utilization 4 Banias Refinery Flaring Reduction and Gas - + - - - + Utilization 5 Energy Efficiency Improvement and Fuel Reduction initiatives at - - + Unknown Unknown + Garden City Resorts by United Contracting and Engineering Company 6 Energy Efficiency Improvement and Renewable Electricity - - + Unknown Unknown + Generation initiatives at Syriatel Mobile Telecom 7 MAS wind energy project in - - + Unknown Unknown + Quneitra Syria 8 MAS solar energy project in - - + Unknown Unknown + Aleppo Syria 9 MAS Afforestation project in - - + Unknown Unknown + Syria 10 Solar PV power renewable electricity generation at - - ++ Unknown Unknown ++ National Energy Research Centre (NERC) 11 Wind power renewable electricity generation - - ++ Unknown Unknown ++ initiatives at National Energy Research Centre (NERC) Table 21.Prioritization of projects

 Description of supportive actions for each project/PoA : According to the above analysis, three projects look worth to be supported in order to be registered before 2013, as presented in the following table: The following was selected as prioritized CDM Project and PoA for Syria: Annual Project title Project Developer Status Emission Reductions National Energy Research - Qatineh 50 MW wind energy project Project idea Centre Portland Pozzolana “Blended Cement” at Lafarge Lafarge Cement Syria Validation 410,446 CER Cement Syria Table 22: Pprioritized CDM Project and PoA for Syria iv. Qatineh 50 MW wind energy project (Standard CDM)

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An external call for bids has been issued these months for supporting NERC staff during the execution of wind park project and during the guarantee period and final acceptance. The CDM documents should be prepared as soon as possible. Supportive actions are therefore needed for the: - Development of PIN and project approval by the Syrian DNA - Development of the PDD - Validation of the project by a DOE - Registration of the project v. Portland Pozzolana “Blended Cement” at Lafarge Cement Syria (Standard CDM) This project is currently under validation. The PDD was published on the UNFCCC website for public comments from 10 September 2010 to 30 September. The project is implemented by Lafarge Cement Syria, a Lafarge Group member.

No supportive actions were identified for this project but contacts should be established with project proponent in order to have further information on Project progress in the CDM process and eventual barriers to overcome. V.2.Identification of potential mitigation opportunities and projects

The paragraph below summarizes the various proposed mitigation measures according to sectors of emission within the Initial National Communication as well as other interesting mitigation opportunities.

 Power sector Proposed GHG reduction measures in the power sector comprise: energy saving (power plant efficiency improvements and the reduction of electric grid losses), clean generation technologies using an increased share of Natural Gas (NG) and combined cycle generation, and finally the choice of renewable and nuclear options. Proposed reduction measures were evaluated by developing two different electric expansion plans. The first is based on the Reference Scenario (RS) that reflects baseline development. The second is an alternative expansion scenario, the so-called Mitigation Scenario (MS), focusing on introducing the abovementioned policies (energy saving and clean technologies) that help in reducing GHG emissions: (1). Efficiency improvements, for instance shifting to combined cycle power plants, (2). Substituting fuel oil with natural gas, (3). Reducing illegal consumption in electricity distribution, (4). Increasing the share of renewable energy and electricity from nuclear plants.

 Production of Oil, Natural Gas and Oil Products Mitigation by energy conservation Different measures are proposed: the renewal or replacement of machinery and equipment, improvements in the management of industrial processes, such as better control of burning processes, tank insulation, and limitations on the scaling on furnace walls, boilers and heat exchanging tubes and regular programmed maintenance. Additional measures are to be introduced: the recovery of heat from flue gases, the use flue of gases in producing steam for different thermal applications. Potential annual GHG emission reductions for

2009 are estimated to around 553 ktCO2. However to plan future GHG reductions, GHG amounts are to be linked to the expected official annual growth rate of oil production (officials estimate an average annual growth rate of - 2.8% for oil production during the period 2010-2025).

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Reduction by switching to cleaner fuels (natural gas instead of oil)

Potential annual GHG emission reductions thanks to this measure are estimated in 2009 to reach 694 ktCO2. Taking into account tendencies towards saturation of this measure, expected future projections of GHG reductions are linked to the annual growth rate of natural gas production (officials predict an average annual growth rate of 11% for the period 2010-2016 and - 4% after that).

Reduction by maintenance of pipes and prevent leakage

Potential annual GHG emission reductions thanks to this measure are estimated to reach 656 ktCO2 in 2009. Future GHG reductions are dependent on the expected official average annual growth rate of oil and natural gas in Syria

Reduction by the recovery of flared gases

Potential annual GHG emission reductions thanks to this measure are estimated to 135 ktCO2 in 2009. Future GHG reductions are related to expected official annual growth rate of NG in Syria. Due to the fact that the abovementioned potential estimates of GHG reductions need a certain time to be diffused, it was assumed that initial GHG reduction in 2010 would reach only 20% of estimated annual potential (about 0.4

Mt CO2 eq). Moreover full implementation will be achieved by 2015, when GHG reductions will amount to 2

Mt CO2 eq. This amount will remain steady until 2020 and then follow proposed annual growth rates.

 Transport GHG reductions should be achieved in this sector by a set of reduction measures related to passenger and freight transport. This includes the improvement of existing engines, the shift from gasoline to diesel, the introduction of hybrid fuel cell vehicles and the use of alternative fuels, in addition to improvement in the efficiency of urban transport and the control of the technical performance of vehicles. Railways should be encouraged to constitute of 26% total road transport by 2020. Since future estimates of GHG reduction were given for the years 2020 and 2030, expected developments during the years in between were interpolated using average annual growth for the period 2020-2030, which amounted to approximately 7%. For the period 2010- 2020, an annual growth rate equal to that of energy consumption in the transport sector in the reference scenario (NECS, 2010) was adopted. Expected reductions for 2010 were assumed to be 1.4 Mt CO2 eq, equal to expected reductions resulting from the modernization of vehicles (this measure has been successfully implemented in the last 5 years).  Shifting to modern form of public transportation like the Metro,  Shifting to trains for transporting freight,  Replacing old cars by new, more efficient alternatives, including modern hybrid cars (in the distant future)

 Energy Efficiency So as to reduce GHG emissions in this sector, a set of measures were adopted and expected GHG reductions were estimated for the year 2030

Increasing the share of solar water heating: expected GHG reductions in 2030 are estimated to 2.8 MtCO2e;

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 Introducing effective thermal insulation of residential buildings. For this measure the high

scenario expects a GHG reduction of about 3.8 MtCO2e resulting from saving of diesel and electricity;

 Use of efficient lighting. This measure is expected to diminish emissions by about 0.9 MtCO2e in 2030.  Use of energy-efficient household equipments. This measure is expected to diminish emissions

by approximately 0.34 MtCO2e in 2030. In the calculations of incremental GHG reductions, expected GHG reductions in 2010 are assumed to be 5% of those of 2030

 Industry process Adopted reduction measures in this sector consist mainly in saving energy, efficiency improvements in all combustion processes, in addition to selected improvements in industrial processes. Estimated results indicate that main reductions will arise from combustion processes, whereas industrial processes will have limited potential. GHG reductions in 2030 are expected to reach 6 MtCO2, a high figure when compared to 1.6 and 3 MtCO2 in 2010 and 2020 respectively. The measures comprise: Improving the efficiency of industrial processes, mainly in the application of heat, Rehabilitating and modernizing energy consuming industries like the production of cement.

 Agriculture GHG emissions in this sector are the result of fossil fuel combustion, land use and animal breeding. Adopted GHG reduction measures in this sector show that diminutions of emissions in 2030 will amount to 5 MtCO2e:  Improvements could be made in water pumping,  Adopting innovative ways of measuring water demand management,  New machines for agriculture,  Reducing the share of water intensive agricultures like cotton cultivation (due to both, high energy and water requirements).

 Waste management GHG emissions in the waste sector arise from the accumulation of biogas (mainly methane) after fermentation of municipal and industrial waste, in addition to sewage treatment. Proposed reduction measures in the waste sector include: collecting gases from sanitary landfills where municipal solid waste is discarded; the treatment of solid organic waste and the use of methane in electricity generation; the reduction of waste production; finally incentives for the domestic production of fertilizer. Expected GHG reductions are estimated to respectively 1.3 and 2 MTCO2e in 2010 and 2030.

 Solar Water Heating Systems

The total number of houses was 3.5 million in 2005. Household energy consumption for water heating, according to the study of the National Energy Committee (NEC), was 192 kgoe/year and, according to the estimation of the National Energy Research Center, (NERC) 232 kgoe/year. The predicted total number of houses will be 7.9 million in 2030.

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If a quarter of these houses are equipped with solar water heaters (SWH), energy saved would be 379 Ktoe.

This would lead to a reduction of GHG emissions of 1137 ktCO2; these figures would be 458 ktoe and 1374 ktCO2 according to the same NERC study. Nevertheless if 50% of houses are equipped with solar water heaters, the amount of energy saved, according to the NEC study, will be 758 ktoe. This will lead to a reduction of GHG emissions of 2,274 ktCO2, while according to the NERC study the quantity of energy saved will be 916 Ktoe: this would lead to a reduction of GHG emissions of 2,748 kt CO2. Moreover if 4,000 solar water heating systems (producing 2500 liters of hot water a day each) were installed in the services sector, this would reduce energy consumption in 2030 by 12 Ktoe and GHG emissions by 36 ktCO2.

 Photovoltaic (PV) Energy In order to provide buildings in rural or remote areas with solar PV systems, 15 megawatts peak (PV) systems should be installed by 2030. Energy consumption would be therefore reduced by 2.5 Ktoe, leading to a reduction of GHG emissions by 7.5 KtCO2.

 The Thermal Insulation of Buildings The estimated number of houses built during the period 2010-2030 is 3.9 million (at a rate of 195,000 per year). Energy savings achieved in each house would be 745 liters of diesel/year for domestic heating and 2933 KWh/year for air conditioning. This would lead to an annual energy saving rate of 1375 Kgoe/year.

 Reflective Roofs for Buildings Increasing solar reflection of the building roofs reduces their solar heat gain, lowers temperatures and decreases outflow of thermal infrared radiation into the atmosphere. Most existing flat roofs are dark and reflect only 10 to 20% of sunlight. Resurfacing conventional dark roofs with a cool white material with a long- term solar reflection of 0.60 or more will increase solar reflection by at least 40%. Retrofitting 100 m2 of roof can reflect 40% of solar radiation and thus can reduce 4 tons of CO2 GHG emissions. If 1% of roofs on new buildings to be built by the year 2030 (equal to 3.9 million houses) are painted in white, this could save 8.63 Ktoe of energy consumed and reduce 25 Kt of CO2 GHG emissions.

VI. Conclusion

The carbon market is still at its teething phase in Syria. The CDM Portfolio includes five projects at an advanced CDM stage. Three are already registered, while one project is under validation and the other has serious methodology problem. The other remaining projects are either at the PIN phase or at prospect stage.

From this portfolio, two CDM projects look worth to be supported in order to be registered before 2013: - Qatineh 50 MW wind energy project - Portland Pozzolana “Blended Cement” at Lafarge Cement Syria

VII. Bibliography

- RCREEE, 2009 : Country Report Syria - Initial National Communication of Syria - Carbon Finance Assist website - UNDP in Syria website - Preparation of a regional climate change project under the regional action programme ENPI South 2011, country profile Syria

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VIII. Contact details of the DNA

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Annex 4 – Libya country study

Contents I. Abbreviations 65 II. Background 66 III. The CDM in Libya 67 IV. Analysis of the current CDM status in the country 67 V. Portfolio of priority projects and programs 68 VI. Conclusion 69 VII. Bibliography 69 VIII. Contact details of the DNA 69

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I. Abbreviations

- CDM: Clean Development Mechanism - CER: Certified Emission Reduction of GHG - DNA: Designated National Authority - EIA : Energy International Agency - DOE: Designated Operational Entity - GECOL: General Electricity Company of Libya - GHG: Green House Gas - KP: Kyoto Protocol - MENA: Middle East and North Africa - Mtoe: Million of ton Oil Equivalent - NAMA: Nationally Appropriate Mitigation Actions - PoA: Program of Activities - REAOL: Renewable Energy Authority of Libya - UNFCCC: United Nations Framework Convention on Climate Change

- tCO2e: Ton of carbon dioxide Equivalent - Toe: Ton of Oil Equivalent

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II. Background

Libya extends over 1,759,540 square kilometers, making it the 17th largest nation in the world by size. It is bound to the north by the Mediterranean Sea, the west by Tunisia and Algeria, the southwest by Niger, and the south by Chad and Sudan and to the east by Egypt. At 1,770 kilometers, Libya's coastline is the longest of any African country bordering the Mediterranean.

Figure 11. MENA Region. Source: unicef.org Figure 12. Geographical location of Libya. Source: data.un.org The population of Libya account around 6.5 million in 2010 with an annual growth of about 2%. The major part (78%) of the population is living in urban areas30. With a GDP per capita of 12,000 USD in 200931, Libya is classified as a rich country. However, the Libyan economy is mainly based on oil and gas sector, with around 3.6% of the world's oil reserves, ranging from 39 to 45 billion barrels. The country's economy is largely dependent on hydrocarbons, which generate over 95% of Libya's export income, account for a quarter of Gross Domestic Product (GDP) and provides 60% of public sector wages32. The total primary energy demand has doubled between 1990 and 2009, increasing from 9.7 Mtoe to around 20 Mtoe. Final electricity demand is about 22,023 GWh33 in 2010 with an installed generation capacity of more than 8,349 GW. Residential sector represents around 30% of the total electricity consumption followed by commercial sector with 12% and the industry 16%34. The national electric network is accessible to 99% of the population. The electric energy demand is expected to grow very rapidly, with expected needs for electricity generation of 12,740 GWh by the year 2015 and more than 89,520 GWh by the end of year 2020, according to the business as usual scenario. The maximum demand load will reach 7,470 MW by 2015 and 14,860 MW by 202035. The contribution of renewable energy to the energy mix in Libya is still insignificant. There were only some pilot experiences of solar PV for water pumping and rural electrification with a total installed capacity of 1900 kW. For solar water heaters, there are in total about 6000 units installed in the country. The use of wind energy for electricity production has not started yet in Libya, although the country has an important wind potential estimated to more than 5,000 MW36.

30un.org 31Worldbank.org 32Engaging with carbon markets: the Libya case, Sebastian Thomas and Paul Dargusch, University of Queensland, Australia, 2011 33The generated electricity is estimated at 32,500 GWh 34Arab Union of Electricity, 2011. 35Arab Union of Electricity, 2011. 36REAOL, 2009.

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According to Libya’s energy strategy, it is expected to reach a penetration rate of renewable energy in to electricity generation of 10% by the year 2020. This will be reach mainly by using wind energy, CSP and solar PV.

III. The CDM in Libya

III.1.National CDM policy and regulation

Libya ratified the United Nations Framework Convention on Climate Change in June 14th, 1999 and signed the Kyoto Protocol in 2006. Libya has also created its DNA in 2010. However, the country did not submit yet its first national communication to the UNFCCC, which explains the lack of Data on GHG emission and the mitigation potential in the country. Milestones in Libya climate change Policy Date Signature of the UNFCCC 14June 1999 Ratification of the Kyoto Protocol 2006 Creation of the DNA 2010 Table 23: Milestones in Libya climate change policy. Source: UNFCCC

III.2.Main Institutional Stakeholders

The Ministry of Health and Environment is the main governmental body concerned with the development and implementation of environmental policy in Libya. The Ministry’s responsibilities include developing government guidelines and policies concerning the environment, and then managing and coordinating their implementation and enforcement. The Climate Change activities are under the responsibility of the Environment General Authority which has been established as Libya’s DNA, in 2010

IV. Analysis of the current CDM status in the country

IV.1. National CDM potential

According to the EIA, Libya's carbon emissions increased by 24% from 1997 to 2007 and the country’s energy-related emissions were estimated to be 55 MtCO2e in 2009. The dominance of fossil fuel energy sources implies that there is room for an important mitigation potential through the development of energy efficiency and renewable energy.

There are no studies about the CDM potential estimation in Libya. However, the mitigation potential in the 37 energy sector can be estimated to around 35 MtCO2e by 2020 .There is potential for investment in large- scale projects that would provide a range of economic benefits opportunities. A quick estimation from various sources shows that the major mitigation potential is in the gas à oil sector through the flare gas recovery and in the electricity sector through the development of combined cycle power plants, fuel switch and wind energy promotion. Sector/Project type % of mitigation Flare gas recovery 24% Combined Cycle plants 16% Fuel Switching to NG 5% Wind Power 5% Cogeneration from NG 4%

37Samir Amous, Middle Eastern and North African PoA Workshop, WB, 26-27 January 2010, Tunis

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Waste to energy 4% EF in building 5% EF in Industry 2% Other measures 35% Total 100% Table 24: Mitigation potential by option. Source: Estimation of expert from Samir Amous, Middle Eastern and North African PoA Workshop, WB, 26-27 January 2010, Tunis

However, the nature of the country's political system and economic structures, uncertain governance and its reliance on the hydrocarbon sector imply that successful engagement needs a very strong political will and deep reforms.

IV.2. National CDM project portfolio

Despite Libya’s eligibility to CDM, there is a crucial lack of capacities and awareness both in public institutions and private sector. The identified CDM project portfolio contains 2 projects as following:

N° Project Project Status Expected emission reduction (1000 tCO2e/year) 38 1 LCC Cement Blending CDM Validation stage , submitted on EB 435 Project website for comments on 17 Feb 11. 2 Dernah 1 wind farm (60 MW) PIN approved by the DNA 190

Table 25: CDM project portfolio status in Libya. Source: UNFCCC, REAOL.

The first project aim at reducing the specific share of clinker per tonne of cement produced in the factory of LCC (Libyan Cement Company) in Benghazi. This will induce significant reduction of GHG emissions associated with the production of clinker. In fact, this is by far the major emission source related to production of cement. This project is under validation; the PDD was submitted for public comments on EB website on 17 February 2011.

The second project is related to the construction and the operation of 60 MW wind farm in the region of Darnah near Benghazi. This project has reached the construction stage. The project was approved by the DNA and it was expected to be developed as CDM project by CARBON projektentwicklung under a partnership agreement with REAOL.

Considering the current political situation in Libya, the probability that these 2 projects will be registered before 2012 is low.

V.Portfolio of priority projects and programs

The Environment General Authority has been established as Libya’s DNA, but the country’s UNFCCC obligations remain unfulfilled. Specifically, Libya has not yet lodged an initial National Communication on the steps it is taking to implement the UNFCCC. Libya will also need improved institutional capacity, which includes broad technical competence in CDM project requirements and related areas, as well as transparency and stability of governance. Without these, Libya is unlikely to be able to attract the interest of foreign investors seeking CDM project development opportunities, as the CDM registration process is highly regulated and complex. Investors will not participate in project activities if there is uncertainty over the host party’s ability to effectively manage the regulatory requirements. The lack of technical and institutional

38The DOE is TÜV NORD CERT GmbH and the PDD is developed by Carbon GmbH

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capacity further implies that unilateral CDM projects are unlikely to be successful. There is a clear need for international support and capacity building programs around all these issues.

VI. Conclusion

Libya has ratified the UNFCCC, signed the Kyoto Protocol and created the DNA in 2010. There is a crucial lack of data and information on climate change in general and on mitigation in particular. However, the mitigation potential in the energy sector is rather high and can be estimated to around 35 MtCO2e by 2020. Despite Libya eligibility to CDM, the initiatives in this field are very rare because of crucial lack of capacities and awareness of both in public institutions and private sector. Only 2 projects were identified in the CDM portfolio of Libya: one project, at validation stage, related to cement blending; and the other (PIN approved by the DNA) related to 60 MW wind energy farm. Considering the current political situation in the country, the chance that these 2 projects will be registered before 2012 is very slight. In order to effectively engage with the CDM, Libya need to improve its institutional capacity, including broad technical competences in CDM project requirements and related areas, as well as transparency and stability of governance.

VII. Bibliography

- Statistical Bulletin 2010, Arab Union of Electricity, 2011. - Engaging with carbon markets: the Libya case, Sebastian Thomas and Paul Dargusch, University of Queensland, Australia, 2011 - Middle Eastern and North African PoA Workshop, Samir Amous, WB, Tunis, 26-27 January 2010 - Renewable Energy in Libya: situation and Future Plans, REAOL, Conference “Solar Energy in the MENA Region” Erfurt, 2009 - Preliminary Inventory of Potential CDM Opportunities in the MENA region, Middle Eastern and North African Carbon Forum, Samir Amous and Amr Ossama, WB, Ciaro 6 & 7 may 2009. - Study on Clean Development Mechanism Project Identification in FEMIP Countries, European Investment Bank, March 2007. - Mediterranean and National Strategies for Sustainable Development, Energy and Climate Change Energy Efficiency and Renewable Energy, Libya - National study, Dr Mohamed Ekhlat, Plan Bleu - PDD of project “LCC Cement Blending CDM Project”, UNFCCC, 2011

VIII. Contact details of the DNA

National Focal Points

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Annex 5 – Lebanon country study

Contents I. Abbreviations 71 II. Background 72 III. The CDM in Lebanon 73 III.1. National CDM policy and regulation 73 III.2. International cooperation on Mitigation 74 III.3. Main Institutional Stakeholders 75 III.4. CDM national capacities 75 III.5. Legal, financial and institutional CDM capacities and barriers 75 III.6. Recommendations 76 IV. Analysis of the current CDM status in the country 76 IV.1. National Mitigation Assessment 77 IV.2. Other GHG mitigation projects 83 IV.3. National CDM Project portfolio 86 IV.4. Overview of current CDM projects 88 V. Portfolio of priority projects and programs for Lebanon 90 V.1. Prioritization 90 V.2. Supportive actions to CDM projects and PoAs: 93 VI. Conclusion 94 VII. Contact details of the DNA 95

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I. Abbreviations

- CDM: Clean Development Mechanism - CER: Certified Emission Reduction of GHG - DOE: Designated Operational Entity - DNA: Designated National Authority - ERPA: Emission Reduction Purchase Agreement - Gg: Giga grams (equivalent to 1,000 tons). - GHG: Greenhouse Gas - KP: Kyoto Protocol - LCEC : Lebanese Center for Energy Conservation - MoEW: Ministry of Energy and Water - MoE: Ministry of Environment - Mtoe: Millions of ton Oil Equivalent - NAMA: Nationally Appropriate Mitigation Actions - NEEAP: National Energy Efficiency Action Plan for Lebanon - PoA: Programme of Activities - UNFCCC: United Nations Framework Convention on Climate Change

- tCO2e.: ton of carbon dioxide equivalent - toe: ton of Oil Equivalent

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II. Background

Lebanon is located on the eastern basin of the Mediterranean, between the North Latitudes 33° 03’38’’ and 34° 41’35’’ and East Longitudes 35° 06’22’’ and 36° 37’22’’.It is bordered by the Mediterranean sea in its western part, by Syria to the north and East parts, and by Israel to the South. Lebanon covers an area of 10,452 km2, with an average width of 48 km and an average length of 220 km. Lebanon is characterized by mostly mountainous areas.

Figure 13. Geographical location of Lebanon - MENA Region. Source: unicef.org

Figure 14. Map of Lebanon.

The population of Lebanon in 2010 was about 4.26 million, with an annual growth of about 0.7%.39 The urban population account for 87% of the total population40. Lebanon is classified by the World Bank as an “upper middle income country”. In the year 2010, the per capita Gross Domestic Product (GDP) was around USD 9,20041. Despite the difficult geopolitical position, Lebanon has witnessed a steady economic growth during the recent years. The GDP has risen by 8% in average per year at constant prices over the years 2006-2010. The Lebanese economy is based on services which represent more than 78% of GDP, against 17% for Industry and only 5% for Agriculture. Primary energy consumption was around 5.2 Mtoe in 2008;42 with liquid fuels heavily contributing to this consumption (93%), while Renewable and waste play a minor role (4%). Final energy demand has reached around 3.5 Mtoe in 2008. The transport sector is the biggest consumer with 43% followed by the building sector; 30%, industry; 19%, and other sectors (mainly Agriculture); 8%. With very limited domestic resources, Lebanon is highly dependent from abroad regarding its energy supply. Energy imports represent 96% of the overall energy supply, while domestic energy supply (renewable and wastes) represents only 4%. The electrical sector plays a major role in supporting economic development in Developing countries. Lebanon is supplied with electricity by “Electricité du Liban” (EDL), a State owned utility, placed under the authority of the Ministry of Energy and Water. EDL has also the monopoly for power transmission and distribution. The Lebanese electricity sector is suffering from a serious and a deep crisis for many years. The sector is unable to supply the reliable electricity to end users. Furthermore, frequent shortages in power supply from

39 World Development Indicators database, World Bank, 2011. 40 World Development Indicators database, World Bank, 2011. 41 World Development Indicators database, World Bank, 2011. 42 International Energy Agency Statistics, 2008.

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grid have obliged users to massively invest in back-up generation, and EDL to import significant quantities of electricity from Syria and Egypt, to compensate for the deficit. This situation has resulted in significant losses for industry and commerce, and in increasing the cost of electricity for households. Overall Electricity Demand is imprecisely evaluated in Lebanon, given the difficulties to estimate the electricity generated by self-producer. Official documentation43 estimated power demand to 15,000 GWh in 2009, of which 69% are supplied by EDL grid, 7.5% are imported and the remaining (almost ¼) is likely self- supplied. Other sources estimate self-generation to 1/3rd of the total electricity demand is met through self- generation.44 In year 2009, the total installed grid-based capacity in Lebanon was 2,312 MW, of which 88% (2,038 MW) are thermal plants and 12% (274 MW) hydro plants. However 20% of this capacity is totally out of operation and the remaining theoretically operating capacity (1,875 MW)45 is operating intermittently; in such a way that the average effectively available capacity (including imports) has reached 1,500 MW to the maximum in 2009.The remaining average capacity demand (about 500-600 MW is self-supplied), while the additional capacity needed to meet the peak load (≈ 450MW) is left unmet.46 Of the electricity supplied by EDL, a significant portion (40%) is lost either through transport and distribution losses (15%) or non-technical losses (20%) and unpaid bills (5%).These losses hamper EDL financial capacities to meet the increasing demand, and inflate the consumers’ electricity bills. The modernization and development of the electrical sector in Lebanon will be a determining factor for the future economic development of Lebanon. The electrical sector is one of the most important contributors to GHG emissions in Lebanon. According to the national GHG inventory of Lebanon (year 2000), the electrical sector contributed to 31%47 of the total national GHG emissions, and to as much as 42% of the GHG emissions generated by the energy sector in Lebanon. This contribution would be even higher if the GHG emissions due to power self-generation were to be accounted for. Concerning renewable energies, efforts have been made to promote their use in Lebanon; however the contribution of such resources in the national energy mix is still minor, providing approximately 3.7% of the total current primary energy demand in 2008 and 0.6% of the electricity generated in the same year.48

III. The CDM in Lebanon

III.1.National CDM policy and regulation

Lebanon ratified the UN Framework Convention on Climate Change on 15th December 1995, confirming the Lebanese willingness to contribute to the international effort to address climate change. Lebanon has achieved its commitment towards the UNFCCC by submitting the first and the second National Communications. The preparation of the third National Communication is on-going.49 Lebanon accessed to the Kyoto Protocol in November 2006 (Law 738, dated 15 May, 2006); thus almost two years after it came into force in February 2005. Despite the benefit for any non-Annex one Party to proceed rapidly with ratification, to get access to Clean Development Mechanism and to the Adaptation Fund, this delay in ratifying the Kyoto Protocol has reflected some hesitation or at least weak political and institutional involvement/capacities to implement the relevant framework for CDM development in the country.

43 « Plan Stratégique national pour le secteur de l'électricité », Ministry of Energy and Water, June 2010. 44 « Lebanon’s Second National Communication to the UNFCCC », Ministry of Environment, 2011, quoting World Bank figures 45 1,685 MW of thermal plants and 190 MW of hydro power. 46 « Lebanon’s Second National Communication to the UNFCCC », Ministry of Environment, 2011, quoting World Bank figures. 47 « Lebanon’s Second National Communication to the UNFCCC », Ministry of Environment, 2011, quoting World Bank figures. 48 International Energy Agency Statistics, 2008. 49 UNDP Notice, May 2011.

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The Designated National Authority (DNA) is a prerequisite to access to CDM, as it is the official national vis- à-vis to the Executive Board. The Ministry of Environment (MoE) was appointed as a DNA for Lebanon in May 2007. The Lebanese political situation has directly impacted the development of CDM in the country particularly during the 2006 to 2009 period, as illustrated in the following timeline: Event/Milestone Date Ratification of the UNFCCC 15 December 1995

Submission of the first National Communication November 1999

Passing of Law 738 by Lebanese Parliament by virtue of which 15 May 2006 Lebanon submitted its accession to the Kyoto Protocol

Establishement of the CDM Committee under the Ministerial Decision 15 June 2006 22/1 Start of the Israeli aggression on Lebanon 12 July 2006

End of the Israeli aggression 14 August 2006

Accession to the Kyoto Protocol November 2006

Sit-in in downtown Beirut 1 December 2006

Establishment of the DNA May 2007

Start of the Nahr-el-Bared conflict May 2007

Conduction of a workshop by the Ministry of Environment – DNA, with 25-26 June 2007 METAP/World Bank/Ecosecurities as an outreach to project developers (both public and private) End of Nahr-El-Bared conflict September 2007

Outbreak of the internal strife 7 May 2008

End of the internal strife 13 May 2008

End of sit-in in downtown Beirut May 2008

Publication of the CDM-Project submission procedures March 2009

Organization by the DNA of a Support for Capacity Building & 7-13 May 2009 Development of CDM Activities in Lebanon for stakeholders, with World Bank Carbon Finance Assist Programme Submission of the Second National Communication March 2011

Table 26: Milestones in Lebanon climate change policy linked with the political situation of the country

III.2.International cooperation on Mitigation

Unlike some other neighbouring countries, there are no real capacity buildings or comprehensive studies targeting GHG mitigation, except those implemented as a part of the Initial or Second National Communication to the UNFCC. In the year 2006 & 2007, an internal desk study was conducted by MoE to estimate the CDM potential in Lebanon, but this study was not published.

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III.3.Main Institutional Stakeholders

 The Ministry of environment

The MoE is the main governmental body in charge of the development and implementation of environmental policy in Lebanon; including Climate change related policies. Playing the role of UNFCCC focal point, the MoE responsibilities include the coordination of climate change activities, through the country’s climate change unit.  The DNA and its organisation

The Presidency of the Council of Ministers adopted a single ministry model, by designating the MoE as the DNA for Lebanon. The prominent role of DNA in Lebanon is to approve CDM projects. However, due to the political situation of the country from 2006 till the beginning of 2009, it is only in March 2009 that submission procedure of Lebanese projects to the DNA was officially published.

Approval procedure consists of two main steps:  Conduct the technical evaluation for CDM project, based on a Project Idea Note. Approval decision of the project is made internally at the DNA level. The DNA has published a generic form of the PIN to be completed and submitted to the DNA.As the DNA doesn’t have a Web Site, project proponent has to contact directly the DNA to get a copy of the PIN Form.  Conduct the evaluation of the PDD prior to launching the validation process. Approval procedures and criteria for CDM projects were published in March 2009 in the official gazette but there are not widely communicated. III.4. CDM national capacities

Up to now and less than 18 month before the Kyoto Protocol closure (31 December 2012), Lebanon has not been able to register any CDM project. According to the DNA, there are also currently 8-9 PINs that were already approved by the DNA Lebanon. However, it was difficult to evaluate the progression of all these projects towards CDM cycle, and in particularly PDD preparation considering the confidentiality assurances given to the project developers. More precisely, when examining the UNFCCC web site, seven Lebanese projects seem to have achieved more or less advanced CDM steps:  The project “Thermal Solar Plant Project at Zeenni Trading Agency; Bsarma El Koura”, is a small scale project that is at the validation stage: This project consists of steam generation through the implementation of a solar parabolic heating system of 10.3 MW thermal. The project will generate an average 15,800 tCO2e of emission reductions annually.  Six other projects were notified for Prior CDM Consideration. All these are CFL dissemination projects, totalizing 3 million CFLs. Overall annual CERs generation for all these projects would be 200,000 tCO2e in average. More details regarding the projects that are likely able to proceed with the CDM cycle soon will be presented in section IV below.

III.5.Legal, financial and institutional CDM capacities and barriers

Unlike the other countries in the region (Jordan, Egypt, Syria, EAU, etc.), which were able to register several CDM projects, Lebanon is yet lagging behind, with no registered projects. Several factors might explain this result:  Lebanon has not really benefited from multilateral and bilateral projects of capacity building on CDM during the last decade. This resulted in weak understanding and information of the institutional and legal framework, technical infrastructure, enforcement capacity, and human resources needed to implement the mechanism.  Lack of adequate institutional/technical capacity for identification and development of CDM projects;

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 Weak promotional effort to develop CDM. For example, there is no national dedicated Website for CDM that can promote the CDM project’s pipeline, give information to potential project holders on the opportunities given by CDM, explain the development procedures of the CDM projects, etc.  Lack of trust from potential project holders on CDM cycle outcome due inter alia to the lack of information and awareness.  Generally low sizes of the projects, resulting in higher transaction costs and thus less motivation to apply for CDM.  Unclear national CDM rules regarding CERs marketing, including for public-based projects. This resulted in limited motivation to proceed with CDM.  Lack of trust from potential project holders due to the uncertainties of the post-Kyoto regime after the outcome of Copenhagen.  Unfavourable investment atmosphere in the country from 2006 till the beginning of 2009 due to the unstable political situation of Lebanon during this period.

III.6. Recommendations

Analysing the status of the CDM in Lebanon, there are obvious needs to strengthen the institutional and technical capacities to better address CDM issues in Lebanon. These would necessitate increasing CDM awareness particularly towards major involved stakeholders (private sector and policy and decision makers), and enhancing the capacities of local experts on CDM.

Developing and updating CDM projects portfolio (particularly the projects under programmatic approach) would also contribute to encourage project proponents to implement their projects, and to attract CERs buyers to Lebanon carbon market. However, initiating CDM promotion and capacitating campaign would only be relevant if the CDM would be adopted by the on-going post-Kyoto protocol.

More urgently, the sharp deadlines for the project registration under the Kyoto Protocol (31 December 2012) imply rather laying emphasis on identifying:  CDM projects that are mature enough and that have realistic chances to get registered before such deadline. To this end.  Implement support activities to develop these projects before the 31/12/2012 deadline, and to market the related CERs. The second urgent priority is to develop initiatives aimed at clarifying the post 2012 issues and enhancing the capacity of local stakeholders to understand and anticipate the new carbon market mechanisms (NAMAs, sectoral crediting, etc.).

IV. Analysis of the current CDM status in the country

Apart from the internal desk study conducted by MoE in the year 2006 & 2007 to estimate the CDM potential in Lebanon, there was no specific work undertaken to identify a CDM portfolio, or at least to estimate the CDM potential. It is however possible to get a rough idea about the carbon mitigation potential through the mitigation analysis presented in the second national communication of Lebanon. Part of this mitigation potential might be translated into CDM projects (including PoAs), provided that these would meet the CDM criteria; in particularly the additionality rules, and would be registered before the end of the Kyoto Protocol.

Most of the GHG mitigation potential might more likely get into the new processes envisaged by the post- Kyoto Protocol new mechanisms; in particularly the NAMA’s process which seems to be the most mature mechanism for the time being.

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IV.1.National Mitigation Assessment

The Government of Lebanon submitted its second National Communication in March 2011. The GHG Mitigation assessment is included in the Chapter 3 of the National Communication. This assessment used the usual overall format of the GHG inventory to address mitigation, made of five major GHG sources:  Energy  Industry  Agriculture  Forestry  Wastes

This assessment considers a baseline scenario and two mitigation scenarios. The GHG mitigation analysis used 2004 as the base year and the demographic, social, and economic assumptions available in official documentation to project emissions over 20 years (up to year 2030).

The choice of baseline scenario is achieved through a thorough consultation process with all stakeholders and sectoral decision makers. The baseline scenarios are based on long-term plans envisioned by the Government of Lebanon; which introduce major changes to the existing structure of the economy. Some of these changes may be considered as a baseline scenario (e.g. on-going energy sector activities), while some other are fully considered as a part of the mitigation scenarios (e.g. the national waste management plan).

 Energy sector

Mitigation assessment in this sector included four emission sources:  Electricity  Manufacturing industries  Transportation  Building

Electricity

Electricity generation in Lebanon shares 46% of the Primary Energy consumption in Lebanon.50 As a matter of fact, electricity production is one of the major GHG emitting sources in Lebanon. The contribution of this source to the overall GHG emissions of Lebanon is likely to increase in the future, given the necessary progression of the sector; to meet the development requirements. Given its specific situation, the electrical sector in Lebanon also contains the most obvious mitigation potential and options.

The baseline scenario shows a progression of the emissions due to electrical sector from 7,261 Gg of CO2 eq. in 2004,51 to 32,569 Gg CO2 eq. by 2030 under the baseline scenario. This translates a 6% average growth rate of the emissions per annum over the whole mitigation assessment period.

The Mitigation scenario 1 of the electrical sector considers the implementation of MoEW’s latest policy paper for the electricity sector, in addition to capacity expansion (around 3,500 MW between 2015 and 2030).This scenario also assumes 2/3 natural gas fuel mix, and 11.4% of renewable energy by 2030.

The Mitigation scenario 2 considers more ambitious cleaner-energy profile, assuming a full switch of oil-fired power plants to natural gas by 2030, and an increase in the penetration rate of renewable energy technologies (17% by 2030).

50 International Energy Agency Statistics, 2008. 51 Including self-generation.

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Electrical Sector Mitigation Scenario 1 2004 2011 2014 2015 2030 Fuel Oil 2 038,0 2 538,0 1 230,0 Self-generation (fuel oil) 1 000,0 0,0 0,0 Diesel 0,0 300,0 0,0 Natural Gas 1 617,5 4 690,0 Hydro 274,0 310,0 400,0 Wind 0,0 80,0 253,8 Solar 0,5 0,5 81,4 MSW 0,0 20,0 63,4 Imports 200,0 300,0 300,0 TOTAL 3 512,5 7 018,6

Electrical Sector Mitigation Scenario 2 2004 2011 2014 2015 2030 Fuel Oil 2 038,0 2 538,0 0,0 Self-generation (fuel oil) 1 000,0 0,0 0,0 Diesel 0,0 300,0 0,0 Natural Gas 1 617,5 5 850,0 Hydro 274,0 310,0 600,0 Wind 0,0 80,0 334,2 Solar 0,5 0,5 129,7 MSW 0,0 20,0 129,7 Imports 200,0 300,0 0,0 TOTAL 3 512,5 7 043,6 NB: Intermediary years (2011, 2014, 2015) are not summed up, as the National Communcation doesn't provide detailed figures for each technology line. Table 27: Structure of the electrical sector in Lebanon according to the mitigation scenarios (MW) Source: 2ndnational communication, 2011.

The implementation of the measures implied by the Mitigation Scenario 1 would result in almost 42% decrease in total emissions of the electrical sector by year 2030 (19 Mt CO2eq in Mitigation 1), as compared to the baseline scenario (32.6 Mt CO2eq).Total emission reductions over the whole mitigation assessment (2011-2030) would add up to 178 Mt CO2eq in Mitigation1.

The implementation of the measures implied by the Mitigation Scenario 2 would result in only slightly increase in total emission reductions of the electrical sector comparatively to Mitigation 1; i.e. almost 44% by year 2030 (18.4 Mt CO2eq in Mitigation 1), as compared to the baseline scenario. Over the whole mitigation assessment (2011-2030), the total emission reductions would however add up to 205 Mt CO2eq in Mitigation2; i.e. 15% better mitigation results as compared to Mitigation 1.

Emission Reductions as related to GHG Emissions (MtCO2 Eq.) baseline(MtCO2 Eq.) Over the period 2004 2030 By 2030 2011-2030 Baseline 7,3 32,6 Mitigation 1 7,3 19 178 13,6

Mitigation 2 7,3 18,4 205 14,2 Table 28: GHG Mitigation Assessment in the electrical sector in Lebanon (MtCO2 Eq.) Source: 2nd national communication, 2011.

As described in the National Communication, the two mitigation scenarios mainly involve two groups of mitigation measures:  An important Fuel switching programme from fuel oil/Diesel generation to natural gas-based generation in Mitigation 1 in Mitigation (4,690 MW of natural gas power plants, against only 1,230 MW to fuel oil), and a massive Fuel switching in Mitigation 2 (5,850 MW in Mitigation 2 of natural gas

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power plants, against a complete phasing out of the fuel oil use foe electrical generation).The most likely option to implement would be the LNG solution (an off-shore Floating Storage end Regasification Unit with mostly ship-to-ship LNG transfer to the power plants, mainly situated along the coastal strip.  Significant penetration of Renewable Energy; including: o Hydropower: increase of installed capacity from 274 MW in 2009, to 400 MW (Mitigation 1) and 600 MW (Mitigation 2) by year 2030.36 MW of such additional capacities are planned to get into operation by 2015. o Wind power: implementation of 254 MW and 334 of wind power capacities; in Mitigation 1 and 2 respectively, by year 2030. Short term objectives expect 80 MW by year 2015 in both scenarios. o Solar power: implementation of 81 and 130 MW of solar power capacities; in Mitigation 1 and 2 respectively, by year 2030.All these capacities will be implemented beyond 2015. o Waste to Energy: implementation of 63 and 130 MW of Waste-fuelled power capacities; in Mitigation 1 and 2 respectively, by year 2030.Short term objectives expect installing 20 MW of waste-to-energy power generation capacities by year 2015 in both scenarios.

Costing analysis presented in the National Communication, show an overall investment costs of Mitigation1 reaching US$8.1 Billion and US$11 Billion for Mitigation 2; i.e. US$3.3 Billion and US$6.1 Billion of additional investment needs respectively, as compared to the baseline scenario.

Manufacturing industries

The mitigation assessment for manufacturing industries mainly focused on two major components:  Mitigation Scenario 1: Waste heat recovery and utilization for power generation in cement plants. This scenario considered two assumptions A & B of growth rate of clinker production (2% and 4% per annum respectively). Emission reductions of these respective assumptions are presented in the following table 4.  Mitigation Scenario 2: this scenario considers a partial switching of fossil fuels to less carbon- intensive alternative fuels (e.g. natural gas), or to waste-based fuels or biomass fuels. However, this scenario was not evaluated in terms of emission reductions, translating the needs to undertake additional studies to analyse the technical and economic feasibility of potential options in Lebanon. Emission Reductions as related to baseline(GgCO2 Eq.) 2020 2030 Mitigation 1

Scenario A 189 230

Scenario B 258 381 Table 29: GHG Mitigation Assessment in the Manufacturing Industries in Lebanon through waste heat recovery for power generation in Cement sector (MtCO2 Eq.) Source: 2nd national Communication, 2011.

Transportation The transportation sector is a major energy consumer in Lebanon. It contributes to 43% of the Final Energy Consumption.52 This important share of the final energy balance is mainly due to the inexistence of rail transportation, and to the weak public transportation in general, and thus to the prominence of a relatively old fleet of private road transportation.

52 International Energy Agency Statistics, 2008.

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The projected demographic growth together with economic development in Lebanon would inevitably be translated into growing demands for transport. During the next 25 years, experts expect the average number of daily motorized trips per person to grow by 60%, leading to a proportional growth in the vehicle fleet. Given the lack of a reliable/efficient public transport system, together with a relatively affordable car prices, associated with attractive crediting mechanisms, the baseline scenario assumes that the share of passenger-trips travelled by private vehicles would keep increasing until it reaches 90% by 2030. The mitigation assessment for Transportation sector also considered two scenarios:  Mitigation Scenario 1: Revitalization of the Public Transport System. This scenario considers creating an efficient and reliable public transport system, particularly through a significant increase of the public buses fleet. As a result, the distribution of passenger-trips travelled would be reversed to the benefit of buses, with more than half of person trips to be travelled by public buses. Supporting strategic measures may include: o New management approaches for solving complex urban transport problem o Increasing partial or exclusive use of road infrastructure by public transport means. o Discouraging private car use in urban areas through a reduction of road space for private vehicle operation and parking, and the implementation of a discouraging taxation o Creation of a transport fund and foster increased public/private partnership. o Endorse road network development and apply conventional traffic flow improvements o Promote mass transit of freight through the introduction of electric rail in the long term.

 Mitigation Scenario 2: Implementation of a car scrapping program. This scenario considers developing and implementing an integrated program to reduce emissions from the existing fleet through carrying out a car scrapping program whereby old and highly emitting fleet would be retired and scrapped, and thus replaced by newer and more energy-efficient vehicles. The estimated target fleet of the scrapping program is around 30,000 to 40,000 vehicles. In parallel, strict emission standards are to be defined and enforced, and control made more stringent to ban old and high emitting cars. In a second stage, incentives would be provided to promote the renewal of the fleet throughout the years. As described in the National Communication, the mitigation scenarios are supplemented with a set of measures; among which many would target the technical specifications of vehicle fleet, and driving behaviour:  Improve specifications relating to vehicle efficiency and fuel economy at the import stage, and Issue and enforce new vehicle emission control standards for imported used vehicles  Provide incentives aimed at increasing the share of new vehicle technologies in the fleet  Amend vehicle taxation system and registration fees into a more environmentally oriented scheme  Implement a training program of drivers passing their license test so as to promote adequate driving habits  Improve fleet management including upgrading and enforcing the car inspection program requirements The National Communication of Lebanon did not mention any evaluation of the emission reductions resulting from the two mitigation scenarios. This might translate the difficulties to estimate potential emission reductions due to the lack of appropriate specific studies. However, based on some realistic assumptions, it’s possible to provide for rough estimates of emission reduction for the two major scenarios:  Mitigation Scenario 1: This is a structural scenario, which should be envisaged for longer term perspectives. Assuming a 50% public transportation share by 2030, instead of the 10% baseline expectations would lead to around 30% savings in energy consumption of the transport sector. Assuming an average 3% annual growth of the energy consumption due to transportation over the period 2011-2030, this scenario would generate more than 900 ktoe of fuel savings, leading to emission reductions conservatively estimated at 2.8 million tCO2e by year 2030.

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 Mitigation Scenario 2:Car scrapping program would generate 50,000 to 120,000 tCO2eof emission reductions annually; depending on energy saving assumptions (23% to 42% per replaced vehicle), and number of vehicles targeted (30,000 to 40,000).As for illustration, this would make 500,000 to 1,200,000 tCO2e of emission reductions over a ten-years project duration.

Buildings Mitigation measures included in the National Communication (NC) mainly focused on the thermal performance of buildings. This would address heating and cooling energy consumption. Thermal standards for buildings in Lebanon were developed in 2005, but these are not mandatory yet. The mitigation scenarios included two main projects:  Formal application of the thermal standards for new residential and office buildings. These standards address walls, roofs and windows thermal insulation.  Retrofitting existing buildings. Existing buildings represent the largest stock of buildings in Lebanon. These generally have low thermal performance. A development scheme based on financial incentives can be implemented, with the aim of retrofitting existing buildings to improve their thermal performance.

The application of the thermal standards for new residential and office buildings would result in almost around 343,000 tCO2e annually over the period 2011-2030.

Regarding the existing buildings, no evaluation of emission reductions was mentioned in the NC.

Industry The measures mentioned in the National Communication mainly focused on the GHG mitigation from cement industries, which represent almost 92% of the GHG emissions due to industrial processes. The mitigation scenario involves the increase of the additive blend in cement production. Assuming a portion of the clinker being replaced with industrial by-products, would result in reduction of CO2 associated with calcination of limestone in kilns. The future potential for application of blended cement in Lebanon was not determined yet, as it would depend on the availability of blending materials, and on new standards and legislative requirements that would be implemented. No emission reduction estimate was mentioned in the National Communication as a result of such mitigation project. Agriculture The agricultural sector contributes to less than 4% of the national emissions in Lebanon. The main GHGs are N2O and CH4, generated from agricultural soils, manure management and enteric fermentation. The 2004 GHG emissions due to agriculture activities amounted to 685 tCO2e, shared by agricultural soils (62%), enteric fermentation (19%), and manure management (19%).Thus, there are only limited possibilities for emission reduction in the agriculture sector. The National Communication identified two major mitigation scenarios:  Mitigation scenario 1 includes three major measures: o Improve manure management practices o Encourage organic farming, the use of green cover fertilization instead of chemical fertilizers, and no-till and conservative agriculture o Use efficient irrigation systems  Mitigation scenario 2 includes Research, education, assistance, infrastructure, and institutional measures, aimed at reducing emission impacts through the implementation of new environmental- friendly agricultural practices. GHG Mitigation estimates included in the National Communication addressed only emission reductions due to improved animal management practices; which are implemented both in Mitigation 1 and 2 scenarios. These would lead to almost 0.5 million tCO2e of emission reduction by year 2030; of which 16% would be

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achieved through improved Breeding and Feeding Management, and 84% through improved Nutrient Management. Impacts of other measures in terms of emission reductions were not evaluated, likely due to absence of specific studies. Forestry

The land and forestry sectors are naturally sink sources in Lebanon. In 2004, 605 Gg CO2 eq. were estimated to have been sequestered in soil and woody cover. Mitigation actions are designed to increase carbon sequestration by forests and soils by maintaining and conserving existing forests, on one side, and implementing reforestation and afforestation programs, on the other side. In the baseline scenario, the reforestation/afforestation plan aims at increasing the forest cover from 13% of Lebanon’s land surface area to 20%. This would allow for the annual carbon uptake in Lebanon to grow from 0.9 million tCO2ein 2004 to 1.3 million tCO2eby 2030. The mitigation works included three main scenarios:  Mitigation scenario 1: Maintaining and conserving existing forest carbon sinks through various measures; such as: sustainable forest management practices (grazing, land use management, rehabilitating degraded zones, etc.), prevention of forest degradation and habitat fragmentation, and rehabilitation of abandoned lands and degraded zones.  Mitigation scenario 2: Afforestation and reforestation including agroforestry and sylvo-pastoral systems  Mitigation scenario 3: Substituting fossil fuels by forest based biofuels. Although this was mentioned as a possible GHG mitigation option, the National Communication recalled that the forest growth rate is relatively low in Lebanon, and unless sustainable forestry practices are adopted and implemented, such an increase in the supply of forest-based fuels is hardly applicable and should be considered with care. The National Communication did not provide any evaluation of the annual carbon uptake potential resulting from the described mitigation options. Waste

The waste sector generated 2.2 million tCO2ein 2004, i.e. 11% of the total GHG emissions. The mitigation potential from wastes lies mainly with solid waste management which accounts for the majority of emissions in this sector. The 2006 national solid waste management plan consists of establishing regional sanitary landfills, rehabilitating the existing dumpsites, and implementing sorting and composting facilities. The waste managing infrastructure and installations are being set up to achieve this plan. Thus, the baseline scenario assumes this plan to be implemented over the next 20 years (2010-2030). The National Communication of Lebanon considered two major mitigation scenarios for wastes; both of which assume waste-to-energy systems, based on different waste management and energy generation approaches.  Mitigation scenario 1: Land filling with gas recovery for electricity generation. Under this scenario, Gas recovery projects for electricity generation are to be systematized to all current and future sanitary landfills and rehabilitated dumpsites, provided that the economic feasibility of each waste disposal site would reveal positive after an individual site assessment. According to the estimates related to this scenario, 65 MW of engine capacities would be installed by the year 2030.  Mitigation scenario 2: Waste incineration and energy production. This scenario would replace the scenario 1 by diverting the expected landfilled wastes to waste incinerators. Three waste-to-energy incinerating plants would be installed in three urban poles (Beirut, Tripoli and Saida).This scenario would also necessitate 65 MW of energy generation capacities by the year 2030

The implementation of the measures implied by the Mitigation Scenario 1 would result in almost 3 Mt CO2eq of emission reductions by the year 2030.The implementation of such mitigation option would rapidly generate significant results; i.e. as much as 1.6 Mt CO2eq of emission reductions already by the year 2015.

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The implementation of the measures implied by the Mitigation Scenario 2 would result in almost 1 Mt CO2eq of emission reductions by the year 2030. Comparatively, the first mitigation option would generate much more emission reductions; i.e. 3 versus 1 Mt CO2eq.These would make cumulated emission reductions over the period 2015-2030 standing at 34 Mt CO2eq for scenario 1 and 11 Mt CO2eq for scenario 2.The costing analysis of the two mitigation options included in the National Communication, consolidate the advantage of scenario 1 which shows a negative marginal cost (around -2 US$/tCO2 Eq.) at 0.12 US$/kWh of electricity pricing, while it shows a much higher marginal cost for option 2 (62 to 71 US$/tCO2 Eq. depending on discount rates used), at the same electricity pricing. Net emission Reductions as related to baseline(GgCO2 Eq.) Year 2015 2030 Mitigation scenario 1: Landfilling with gas 1 579 2 984 recovery for electricity generation

Mitigation scenario 2: Waste incineration 512 981 and energy production.

Table 30: GHG Mitigation Assessment in the waste sector in Lebanon (MtCO2 Eq.) Source: 2ndnational Communication, 2011.

 Synthesis of the Mitigation assessment

The GHG mitigation assessment for Lebanon shows very promising results totalizing almost 20 million tons of CO2 Eq. of emission reductions by the year 2030.Measures to be implemented in the electrical sector contribute to 2/3rd of the mitigation potential, while waste sector would totalize 15%; and transport 11%.

Emission Mitigation Mitigation Scenario's signification Adopted figures for reduction Scenario/Option 1 Scenario/Option 2 and comments curent study shares (%) ENERGY Electricity 13,6 14,2 Either/or 13,6 68% No estimates Manufacturing Industries 0,23-0,38 Either/or 0,38 2% provided Transport 2 0,12 Cumulative 2,12 11% No estimates Only regulations for new Buildings 0,3 0,3 2% provided building considered INDUSTRIAL PROCESSES Not estimates provided No estimates - AGRICULTURE 0,5 Partial estimates 0,5 3% FORESTRY Not estimates provided No estimates - WASTES 3 1 3 15% TOTAL 19,9 100% Table 31.Overall GHG Mitigation Assessment results in Lebanon for year 2030 (MtCO2 Eq.)

Although covering a long period of time (2011-2030), the mitigation assessment remains incomplete. Impacts in terms of energy savings and emission reductions of many potential mitigation options (thermal insulation in existing buildings, fuel switching in manufacturing industries, increase of additive blend in cement, forestry management and afforestation/reforestation measures, etc.) were not provided.

IV.2. Other GHG mitigation projects

A number of other energy efficiency measures to be implemented in the short and medium terms were not included in the mitigation assessment described above. The National Energy Efficiency Action Plan for Lebanon (NEEAP 2011-2015), developed by the Lebanese Center for Energy Conservation (LCEC), describes 14 initiatives to be implemented over the period 2011-2015. At least five of these initiatives were

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not included in mitigation assessment, and would deserve being included in the GHG mitigation effort of Lebanon, as they are planned for short term and are being or might be translated into CDM projects, or even be part of NAMAs. These five projects are described below:  Initiative 1: Towards Banning the Import of Incandescent Lamps to Lebanon: This initiative aims at banning the import of incandescent lamps to Lebanon by the end of the year 2012. This decision can only be reached through the application of different independent but interrelated actions, including the dissemination of 3 million CFL’s project, starting from year 2010.According to the NEEAP estimates, this project would totalize 245,000 tCO2 Eq. of emission reductions in its first year of implementation. This project was separated into 6 small-scale regional projects; all of which were notified in October 2010 to the Executive Board for prior CDM consideration: o The CFL Replacement CDM Project - North and Bekaa o The CFL Replacement CDM Project - in and around Beirut Northern and Eastern Suburbs o The CFL Replacement CDM Project - Mount Lebanon o The CFL Replacement CDM Project - Beirut o The CFL Replacement CDM Project - in and around Beirut Southern Suburbs o The CFL Replacement CDM Project - South Lebanon  Initiative 4: Solar Water Heaters for Buildings and Institutions. This initiative aims at promoting the use of solar water heaters mainly in the residential sector, with an objective to reach 190,000 m2 of solar collectors by 2014.This project would generate 337 GWh of electricity savings per year53 for the users, leading to 217,000 tCO2 Eq. of emission reductions.  Initiative 5: Design and Implementation of a National Strategy for Efficient and Economic Public Street Lighting in Lebanon. This initiative aims at the design and implementation of a national strategy for public street lighting in Lebanon. This initiative can be achieved by updating, replacing, and installing new photo sensor devices in the different street lighting sectors, and by developing technical specifications for the energy efficient street lighting lamps. This project would generate 18 GWh of electricity savings over the three year 2010-2012, i.e. 6 GWh/year; leading to 3.900 tCO2 Eq. of emission reductions.  Initiative 13: Paving the Way for Energy Audit and ESCO Business. This initiative aims at supporting the development of the Energy Service Companies (ESCOs) working in the energy audit business and provide them with financial, fiscal, and technical incentives to remove barriers and promote energy efficiency activities in the relevant sectors (industry and services). This project has started in 2005, and would save 38 GWh of electricity annually, generating about 24,500 tCO2 Eq. of emission reductions per year.  Initiative 14: Promotion of Energy Efficient Equipment. This initiative aims at promoting the use of energy efficient equipment in households and other commercial buildings. This includes focusing on electrical equipment and establishing a national energy efficiency standard. This project is to be implemented from 2009 to 2013.

53 The National Energy Efficiency Action Plan for Lebanon (NEEAP 2011-2015).

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Quantitative Implementation Emission reductions Quantitative results objectives timeline (tCO2 Eq./year)

300 GWh savings/year and Initiative 1 : Towards Banning the Import of 3 million CFLs 160 MW of "avoided" peak 2010-2012 245 000 Incandescent Lamps to Lebanon capacity demand Initiative 4: Solar Water Heaters for Buildings 190,000 m2 337 GWh savings/year 2014 217 000 and Institutions Initiative 5: Design and Implementation of a National Strategy for Efficient and Economic 6 GWh savings/year 2010-2012 3 900 Public Street Lighting Initiative 13: Paving the Way for Energy Audit 38 GWh savings/year 2005- 24 500 and ESCO Business Initiative 14: Promotion of Energy Efficient 2009-2013 Not estimated Equipment. TOTAL 681 GWh saved/year 490 400 Table 32: Description of NEEAP projects that are not included in the mitigation assessment of the National Communication of Lebanon. Source: The National Energy Efficiency Action Plan for Lebanon (NEEAP 2011-2015).

In addition, the NEEAP also provides some additional details of projects that are also included under some of the mitigation options mentioned in the table 5 above. While the mitigation assessment describes generally longer terms perspectives for these initiatives (year 2030), the NEEAP provides some short-term details that might be useful to characterize potential CDM projects or NAMAs:  Initiative 3: Promotion of Decentralized Power Generation by PV and Wind Applications in the Residential and Commercial Sectors. This initiative aims at supporting the residential and commercial uses of wind energy and solar photovoltaic systems, with a target to achieve an installed capacity of 50 to 100 MW by 2015.  Initiative 6: Electricity Generation from Wind Power: This initiative aims at promoting Wind power generation. The project expects to achieve an installed capacity of 60 to 100 MW by 2014.  Initiative 7: Electricity Generation from Solar Power: This initiative aims at promoting solar power generation: Photovoltaic (PV) and Concentrated Solar Power (CSP). The project expects to achieve an installed capacity of 100 to 200 MW over the period 2011-2015.  Initiative 8: Hydro Power for Electricity Generation: This initiative aims at promoting Hydro power generation. The project expects to achieve an additional capacity of 100 MW over the period 2010- 2015; of which 20 to 30 MW would result from the rehabilitation of some hydro power plants.  Initiative 9: Promotion of Geothermal, Waste to Energy, and Other Technologies. This initiative aims at benefiting from waste to energy conversion techniques in addition to the geothermal power to produce electricity.. The project objective is to achieve an installed capacity of 15 to 25 MW by 2014.  Initiative 10: Building Code for Lebanon. This initiative aims at setting a building energy efficiency code for new buildings and major retrofits in Lebanon. Implementation of the project has already started, and will continue until 2015.This project will lead to more than 800 GWh of energy savings annually, generating 445,000 t CO2 Eq. of emission reductions per year. This makes higher figures as compared to those included in table 5 above, confirming the higher impacts of this project in terms of emission reduction, than expected in the mitigation work undertaken as a part of the national communication of Lebanon.

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Quantitative Implementation Emission reductions Quantitative results objectives timeline (tCO2 Eq./year)

Initiative 3 : Electricity Generation from Wind 50-100 MW 131-262 GWh/year 2011-2015 85,000 - 170,000 Power:

Initiative 6 : Promotion of Decentralized Power Generation by PV and Wind Applications in the 60-100 MW 145-240 GWh/year 2011-2014 93,000-155,000 Residential and Commercial Sectors.

Initiative 7: Electricity Generation from Solar 100-200 MW 220-440 GWh/year 2011-2015 141,000-282,000 Power Initiative 8: Hydro Power for Electricity 100 MW 418 GWh/year 2010-2015 270,000 Generation Initiative 9: Promotion of Geothermal, Waste to 15-25 MW 105-175 GWh/year 2011-2014 68,000-113,000 Energy, and Other Technologies

Initiative 10: Building Code for Lebanon 800 GWh savings/year 2010-2015 445 000 1,102-1,435 TOTAL 325-525 MW 1819-2335 GWh/year ktCO2Eq. Table 33.Description of NEEAP projects included in the mitigation assessment of the National Communication of Lebanon Source: The National Energy Efficiency Action Plan for Lebanon (NEEAP 2011-2015). NB: Columns “Quantitative Results” and “Emission Reductions” were estimated as a part of the current study. Short term details and figures of initiative 3 (Wind Power), initiative 8 (Hydro Power) and initiative 9 (Geothermal and Waste to Energy) are consistent with those described in the mitigation assessment. While emission reductions were rarely provided by NEEAP, the quantitative objectives allowed to the team in charge of the current study to simulate electrical impacts (quantitative results) and GHG results of these initiatives (Emission reductions).These details will be very useful to get at least a rough assessment of the potential CDM projects or NAMAs. Unlike the initiatives 3, 8 and 9, the initiatives 6 and 7 (Solar Power) present inconsistent figures as compared with the mitigation assessment of the National Communication. Precisely, the NEEAP mention an overall capacity of 160 to 300 MW of solar power equipment to be installed over the period 2011-2030, while the mitigation assessment mentioned only 81 to 130 MW of solar power installed capacity by year 2030, to be installed beyond 2015.This might translate some uncertainties related to the development of solar power in Lebanon, most likely linked to the financial constraints and possibly to regulatory issues.

IV.3. National CDM Project portfolio Thirteen projects have been identified as potential CDM projects in Lebanon. There is no official publication from the DNA detailing the projects and providing the status of these projects in the CDM project cycle. A particular effort has been made to get information from the project proponents themselves. While some projects are already in the validation stage and others are already supported by private CDM companies, the remaining projects could face difficulties in getting them registered before the end of December 2012. The following table summarizes our findings about the pipeline status of the thirteen potential CDM projects in Lebanon, based on the documentation and the gathered data from various project proponents: N° Project Expected Project Status Estimated starting emission date54 reductions (1000 tCO2e/year) 1 “Thermal Solar Plant Project at Unknown Validation stage 15.8 Zeenni Trading Agency; Bsarma El Koura” - Steam generation through the implementation of a solar parabolic heating system of

54 Note: the expected starting date is the date provided by the project proponents themselves.

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N° Project Expected Project Status Estimated starting emission date54 reductions (1000 tCO2e/year) 10.3 MW thermal 2 Dissemination of 3 million September 2010 PDD preparation to start soon 450 CFLs in Lebanon : The project

will be split up into 6 small- scale regional projects 3 Dissemination of 50,000 First CPA to be PDD under validation SWHS in Lebanon (155,000 implemented in 75 m2) over 5 years period, by January 2012 Green Pact Company 4 60 MW Wind Power Park in January 2013 Project pending Hermel region implementation decree to

allow IPPs to produce and 102 distribute electricity PDD elaboration should start soon 5 Rehabilitation of Hydro-Power Mid-2012 No CDM procedures facilities of Qadicha, Safa and implemented up to now other hydro sites (a total of 33 13.6 MW additional capacities Rehabilitation works to be to be gained as a result of the planned soon rehabilitations) Should be processed as a PoA 6 Fuel switching to Refuse Mid-2012 PIN stage 55 Derived Fuel (RDF) in SEBLIN Cement Plant 7 Dissemination of 8 MW of First CPA No CDM procedures individual PV cells in tentatively implemented up to now residential sector, over 5 years 10 period, by Green Pact expected for Company Mid-2012 8 Waste to Energy generation at Tentatively No CDM procedures 15 SICOMO paper plan January 2012 implemented up to now (preliminary estimate) 9 Fuel switching to RDF in Tentatively No CDM procedures 85 HOLCIM Cement Plant Mid-2012 implemented up to now (rough estimate) 10 Fuel switching to RDF in Tentatively No CDM procedures 85 National Cement Plant Mid-2012 implemented up to now (rough estimate) 11 Building efficiency project by 2012 PIN submitted to DNA 0.6 Green Pact 12 Waste heat recovery at 2012 No CDM procedures 100 SEBLIN Cement Plant implemented up to now (preliminary estimate) 13 LFG project at Beirut landfill Not defined CDM procedures started, but 200 (Sukleen) stopped due to landfill (preliminary estimate) ownership issues

TOTAL 975.8

Table 34: Potential CDM project portfolio in Lebanon

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As shown in the table 8 above, no projects were registered up to now in Lebanon, and only 2 projects are under on-going validation process.

IV.4. Overview of current CDM projects  Normal CDM projects  “Thermal Solar Plant Project at Zeenni Trading Agency; Bsarma El Koura” This project is at the validation stage by AENOR since May 2010. No information was provided regarding the status of the Validation.  Dissemination of 3 million CFLs in Lebanon The project will be implemented by the Lebanese Center for Energy Conservation (LCEC). It aims at replacing 3 Million incandescent lamps with 3 Million CFLs at a rate of 3 lamps per house. Up to six small-scale CDM projects will be developed covering EDL consumers throughout Lebanon: (i) Beirut City, (ii) Beirut Northern and Eastern Suburbs, (iii) Beirut Southern Suburbs, (iv) North Lebanon and Bekaa, (v) Mount Lebanon, and (vi) South Lebanon. The six sub-projects were duly notified to the Executive Board for Prior CDM consideration. Distribution of the lamps was launched at the 2010 Beirut Energy Forum and to date two-thirds of the CFLs have been distributed. The projects are expected to generate around 450,000 CERs throughout the crediting period. This is the largest CDM initiative launched in Lebanon. EDF Trading has signed an ERPA with the Lebanese Ministry of Energy and Water for the CDM development of its successful CFL initiative. EDF Trading will purchase CERs generated from the country-wide lamp swapping campaign. It is foreseeable that this project will be registered before the end of 2012.  60 MW Wind Power Park in Hermel region The project will be implemented by Aley Electrical Utility that is already distributing electricity since 2006, under an agreement with the Ministry of Energy. In principle, a law released in 2002 has allowed any private entity to produce electricity as an IPP. However, the implementation decree was not promulgated up to now due to the political instability and the absence of a regulatory entity. Hence, no IPP entity is operating up to now in Lebanon. The implementation decree is to be published soon, allowing for private sector to implement power stations, particularly renewable energy ones. This project is technically well advanced: feasibility studies were achieved, the site is already identified, the technology was already selected, and rental contracts for lands for project implementation were signed. The starting of the project implementation is only pending the implementation decree for IPPs. As to not miss the registration of this project, it is recommended to start PDD preparation as soon as possible.  Fuel switching to RDF in SEBLIN Cement Plant The project will be implemented by SEBLIN Cement Plant, which is one of the three cement factories in Lebanon. The Project is to use RDF instead of coal and petcoke, to generate energy. The implementation of the project is pending the agreement from the Authorities to proceed with RDF- waste sorting, treatment and incineration for energy generation purposes. An agreement should also be signed with Sukleen, the company in charge of the Solid Waste collection and landfilling in Beirut, to get the necessary quantities of RDF. While the project preparation and tests are well advanced in SEBLIN, the two other cement plants (HOLCIM and NATIONALE) will certainly proceed with the same project immediately. As to not miss the registration of this project, it is recommended to start PDD preparation for SEBLIN project as soon as possible. The two other projects (listed as n°9 and 10 in the table above) will take benefit of progress that will be made by SEBLIN to get also into registration process too.  Building efficiency project This project consists of the implementation of higher insulation measures in new building. Green Pact, the project proponent has already submitted this project to the DNA to be implemented as a CDM PoA project, the number of buildings expected seems to be too limited to generate enough

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emission reductions, to compensate CDM transaction costs. Unless higher objectives are considered, one might question the cost-effectiveness of the CDM for this project.  Waste heat recovery at SEBLIN Cement Plant This is a second project planned by SEBLIN Cement plant. Although not yet advanced in the CDM cycle, this project is seriously envisaged by the company, as a contract with the technology provider to implement the project is being signed. If the implementation of this project is definitely confirmed, and in order to not miss the registration deadlines, it is recommended to validate the emission reductions estimates and to start PDD preparation as soon as possible.  LFG project at Beirut landfill This project was seriously planned to enter into the CDM cycle some years before. However, due to constraining contractual clauses with the private landfill manager (Sukleen) and to ownership issues of CERs, the CDM project could not take place. Difficulties are unlikely to be resolved soon, and it seems too late to get this project registered before end of December 2012 deadlines.

 Programme of Activities

At present, there are potentially three projects that might be developed under the Programme of Activities approach:  Dissemination of 50,000 SWHS in Lebanon Solar Water Heating Systems are already in use in Lebanon; with annual dissemination ranging between 15,000 and 30.000 over the last few years.55However, electricity remains the main source of water heating (60%-70% of the residential water heating needs); opening large windows for much wider dissemination profiles for SWHS. This project is being developed by the private company Green Pact. The Company is specialized on promoting renewable energy technologies, with a special emphasis on specific financial models, particularly based on Carbon Development Mechanism projects. This SWHS project is one of the three CDM projects that are envisaged by the company. To implement this project, Green Pact has established an alliance with Green Arms Lebanon to develop a SWH product which is durable, cheap and low maintenance, with Rational Financial Holding to undertake all CDM development costs, and with MGM Mercuria to off-takeall the CERs generated through the project.56 According to the project proponent, the PoADD of this project is under validation, and first CPA for Lebanon should come in January 2012.

 Dissemination of 8 MW of individual PV cells in residential sector This project is also being implemented by Green Pact, as a part of a similar business model as the one for SWHS project. PoA-DD preparation for this project did not start yet, but according to Green Pact, this is imminent. First CPA of this project should come by mid-2012.  Rehabilitation of Hydro-Power facilities of Qadicha and Safa In Lebanon, hydropower used to be an important contributor to the electrical supply; with load factors ranging from 40% to 50%. However, due to increasing water needs for agricultural purposes, and to stagnation of the installed capacities the share of hydropower has dropped from a maximum of 79% in 1969 to around more or less 40% in 1974, 1975, 1977 and 1978. Since then, the hydropower contribution has dropped continuously, reaching 8% in 2009, and even dropping to 3.5% in 2001.

55 Press presentation, Bernard Ammoun, GreenFurture 2010. 56 Communication GreenFurture, July 2011.

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Current hydro capacities in Lebanon total 274 MW, of which only 190 are effectively operational. The project aims at rehabilitating a number of hydro sites and generators in order to recover the existing capacities. At a first stance, the project will put emphasis on Qadicha and Safa sites, where 13.6 MW additional capacities could be gained, provided that appropriate rehabilitation works are implemented. Many other hydro plants might also be added to the project, which should start very soon. As to not miss the registration of this project, it is recommended to start urgently PoA-DD preparation.

V. Portfolio of priority projects and programs for Lebanon

V.1. Prioritization

For the selection of the priority CDM projects and PoAs, the following criteria have been adopted in accordance with the terms of reference: - Project maturity (CDM status) - Quality of the project implementer - Scale of the project - Mitigation potential - Additionality criteria

The combination of these criteria gives an idea about the chance of registration of the identified project before end of 2012.

The process of identification of priority projects was based on the screening of the CDM portfolio of Lebanon mentioned in table 8 above, taking into account the above mentioned criteria and the description of the projects above, laying a particular emphasis on the possibility of registration before 2012. The following table presents the prioritization of the projects according to their probability to be registered before 2012. It also gives the kind of support to be provided to the projects to help them progressing toward carbon valorisation.

In the following page a table with the prioritization of the CDM projects and programmes for Lebanon is presented.

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N° Project Project Quality of the Project Mitigation Additio Probability Kind of required support Maturity implementer scale potential nality to be registered before 2012 1 “Thermal Solar Plant Project at Zeenni +++ +++ Small Low +++ +++ No need for support, will be registered soon Trading Agency; Bsarma El Koura” - 2 Dissemination of 3 million CFLs in +++ +++ 6 small- High +++ +++ No need for support, will be registered soon Lebanon – to be split up into 6 separate scale regional projects projects 3 Dissemination of 50,000 SWHS in +++ +++ SSC High +++ +++ No need for support, will be registered soon Lebanon (155,000 m2) - PoA CPAs 4 60 MW Wind Power Park in Hermel ++ +++ Large High +++ ++ To be supported for PDD elaboration, validation and region registration 5 Rehabilitation of Hydro-Power facilities of ++ +++ SSC Medium +++ ++ To be supported for PDD elaboration, validation and Qadicha, Safa and other hydro sites CPAs registration 6 Fuel switching to RDF in SEBLIN ++ +++ Large High ++ ++ Might be supported for PDD elaboration, and Cement Plant probably validation and registration, provided that relevant agreements from authorities are released 7 Dissemination of 8 MW of individual PV ++ +++ SSC Low +++ ++ No need for support, Green Pact is taking the project cells in residential sector CPAs over 8 Waste to Energy generation at SICOMO ++ +++ Small Low ++ + Might supported for PDD elaboration, and probably paper plan validation and registration, provided that relevant agreements from authorities are released 9 Fuel switching to RDF in HOLCIM + ++ Large High ++ + Same as project 6, provided that HOLCIM would Cement Plant progress in the project decision. Due to time needed to progress in the project planning, it might be more relevant to integrate the project under a NAMA targeting the cement sector +++: High, ++ Medium; + Low

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N° Project Project Quality of the Project Mitigation Additio Probability to Kind of required support Maturity implementer scale potential nality be registered before 2012 9 Fuel switching to RDF in + ++ Large High ++ + Same as project 6, provided that HOLCIM HOLCIM Cement Plant would progress in the project decision. Due to time needed to progress in the project planning, it might be more relevant to integrate the project under a NAMA targeting the cement sector 10 Fuel switching to RDF in + +++ Large High ++ + Same as project 9 above. National Cement Plant

11 Building efficiency project by + +++ SSC Very low +++ + No need for support, Green Pact is taking the Green Pact project over. Due to possible difficulties to compensate the CDM transaction costs with CERs revenues, There are questions about the project being developed under CDM 12 Waste heat recovery at + +++ Large High ++ + Might be supported for PDD elaboration, and SEBLIN Cement Plant probably validation and registration, provided that the project is definitely decided. Due to time needed to progress in the project planning, it might be more relevant to integrate the project under a NAMA targeting the cement sector 13 LFG project at Beirut landfill + ++ Large High + + Due to institutional and time constraints, the (Sukleen) project might be more relevant to integrate under a NAMA targeting the waste sector +++: High, ++ Medium; + Low Table 35: Prioritization of the CDM projects and programs for Lebanon.

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V.2. Supportive actions to CDM projects and PoAs:

According to the above analysis, four projects look worth to be supported in order to be registered before 2012, as presented in the following table:

N° Project Emission reduction Kind of required support Total Cost 57 (k tCO2e/y) (€) 1 60 MW Wind 102 - Hire a senior CDM expert to assist Power Park in Electrical Utility of Aley (EUA)in PDD 60,000 Hermel region preparation - Assist in identifying CERs buyer, and supporting negotiations, including the validation-registration package 2 Rehabilitation of 33 - Hire a senior CDM expert to assist Hydro-Power project proponents (EDL, and the 70,000 facilities of public company in charge of Qadicha, Safa and other hydro sites Qadicha), to define the project and prepare CDM procedures - Hire a consultant for the PDD elaboration - Assist in identifying CERs buyer, and supporting negotiations, including the validation-registration package 3 Fuel switching to 55 - Hire a senior CDM expert to assist RDF in SEBLIN SEBLIN in PDD preparation 70,000 Cement Plant - Assist in identifying CERs buyer, and supporting negotiations, including the validation-registration package 4 Waste to Energy 15 - Hire a senior CDM expert to assist generation at SICOMO in PDD preparation 45,000 SICOMO paper - Assist in identifying CERs buyer, and plan supporting negotiations, including the validation-registration package Total 205 245,000 Table 36.Technical and financial support needed to accelerate registration of relevant CDM projects in Lebanon

The mitigation potential of these four projects is estimated to around 205,000 tCO2e per year. The total cost would totalize around 245,000€; excluding validation and registration fees which are supposed to be covered under ERPAs aimed at selling the on-going CERs. In order to reduce financial needs for urgently proceeding with the CDM project cycle, it is suggested to provide support to identify CERs buyers and negotiate ERPAs for these projects that would also cover validation58 and registration fees.

There is an urgent need for these projects to be supported, with possibly the immediate coordinating assistance from RCREEE. This assistance would first make a further screening of these four projects, as to better evaluate their maturity as well as to update the status of the regulatory constraints that they are facing, and to provide some additionality analysis, so as to evaluate their chances to get registered on time.

To proceed with the project development, the mentioned costs of the support might be shared between the project holders, RCREEE and other donors (EU, UNDP, etc.).

57 Validation services and Registration fees are excluded. They are rather expected to be included under the CERs-related ERPAs. 58 Validation services and registration fees for the 4 projects would roughly totalize 100,000 € and 30,000 € respectively.

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VI. Conclusion

Lebanon became eligible for the CDM relatively late, since it ratified the Kyoto Protocol (Nov. 2006) and established the DNA (May 2007). The second national communication of Lebanon has estimated the overall emission reduction potential to 20 million tons of CO2 Eq. by year 2030, over the five major emitting sources (Energy, industrial processes, Agriculture, Forestry and Wastes).The energy sector is the most promising GHG mitigation source, as it contributes to 82% of this long term potential. Mitigation measures in the energy sector combines high potentials, led by the electrical sector (68% of the overall mitigation potential), and the transportation (11%), with much lower potential (buildings 2%, Manufacturing industries 2%). The waste sector ranks second, contributing to 15% of the mitigation potential. It should however be noted that the mitigation assessment is incomplete, as it did not estimate emission reduction potential resulting from industrial processes and forestry measures. Measures related to Agriculture were also only partially identified and estimated. Furthermore, the energy sector measures were not fully identified and estimated. For instance, emission reduction potential from thermal insulation in existing buildings and fuel switching in manufacturing industries were not included in the estimate. In addition, a number of energy efficiency measures to be implemented in the short and medium terms were not included in the mitigation assessment. Among them, some significant projects identified by the National Energy Efficiency Action Plan for Lebanon: - Energy efficiency for lighting: CFL dissemination program, banning the Import of Incandescent Lamps, Efficient and Economic Public Street Lighting - Solar Water Heaters for Buildings and Institutions. - Promotion of Energy Efficiency in Industry (energy Auditing, ESCO Business, etc.). - Promotion of Energy Efficient Equipment (e.g. Energy labelling for electrical appliances, efficient motors for industries, etc.) When synthesizing the available information in Lebanon, covering the NEEAP and the projects that are identified as CDM ones, the potential mitigation options that could be achieved through short term options would add-up to 2 to 2.4 million tons of CO2 Eq. annually by year 2015. The identified CDM projects portfolio includes 13 projects with a total mitigation potential of 975,000 tCO2e per year. Despite this high mitigation potential, Lebanon has not benefited from CDM at all. Up to now, no project has been registered, and of the 1859 identified potential CDM projects, there is only one project under formal validation which entered in the stakeholder consultation process (through the UNFCCC website). Without any significant additional support, Lebanon would likely be able to register 8 to 9 CDM projects60 before the end of the Kyoto Protocol period (31/12/2012), totalizing almost 300,000 tCO2 Eq. of emission reductions annually. The CDM development in Lebanon requires, in principal, enhancing awareness and carry out appropriate reforms to attract CDM project proponents and CERs buyers, as well as strengthening the DNA capacities towards smoother procedures, better responsiveness, sustainability, efficiency and transparency. Technical capacities to translate the currently EE and ER programs into CDM projects should also be enhanced, in order r to feed easily the CDM expansion. However, since the post-Kyoto CDM outlook is still unclear, capacity development for CDM is not a priority on the agenda for now. More pragmatically, there is a need to put a strong emphasis in supporting those mature CDM projects that have a real chance of being registered on time. Among the CDM portfolio, 4 projects were identified as priority to be supported in order to help them registering before 2012. These 4 projects are: (i) 60 MW Wind Power Park in Hermel region; (ii)

59 Considering 6 Small-scale CFL projects to be implemented under the 3 million CFLs dissemination program. 60 Considering 6 Small-scale CFL projects to be implemented under the 3 million CFLs dissemination program.

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Rehabilitation of Hydro-Power facilities of Qadicha, Safa and other hydro sites; (iii) Fuel switching to RDF in SEBLIN Cement Plant; and (iv) Waste to Energy generation at SICOMO paper plant. The estimated cost of the financial needs for the supporting activities is around 245,000 €; excluding costs for validation and registration which are assumed to be covered under the ERPAs.

VII. Contact details of the DNA

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Annex 6 – Algeria country study

Contents I. Abbreviations 97 II. Background 98 III. The CDM in Algeria 98 IV. Analysis of the current CDM status in the country 100 V. Portfolio of priority projects and programs 101 VI. Conclusion 101 VII. Bibliography 102 VIII. Contact details of the DNA 102

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I. Abbreviations

APRUE Agency for the Promotion and Rational Use of Energy CDM Clean Development Mechanism CDER/CRED Center for Renewable Energy Development DNA Designated National Authority EB Executive Board of the CDM EE Energy Efficiency EIA Environmental Impact Assissent ESC Environmental Studios Centre EU ETS European Union Emissions Trading Scheme GDP Gross domestic product GEF Global Environnent Facilita GHG Greenhouse gases GNI Gross national income GTZ Gesellschaft für Technische Zusammenarbeit kWh Kilowatt hour LPG Liquefied Petroleum Gas MATET Algerian Ministry of Spatial Planning, Environment and Tourism MRV Measurement, Reporting and Verification MW Megawatt NAFTAL National Company of Petrol Products Distribution NAMA Nationally Appropriate Mitigation Action NEAL New Energy ALgeria NG Natural Gas PDD Project Design Document PIN Project Idea Note PoA Programme of Activities PV Photovoltaic RE Renewable Energy SCIBS Benisef Cement Company SCMI Mitidja Cement Company SPE Algerian Power Production Company SWH solar water heater

tCO2e Tons of Carbon Dioxide equivalent UNDP United Nations Development Programme UNEP United Nations Environment Programme UNFCCC United Nations Framework Convention on Climate Change

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II. Background

The present report is an update of the Algeria country study prepared in September 2009 by GIZ (ex-GTZ). It presents a detailed overview of the national pipeline and identifies a CDM portfolio for prioritized projects, for which a tailored implementation plan is to be developed that enables CDM registration before the end of 2012.

Figure 15. Geographical location of Algeria- MENA Figure 16. Map of Algeria. Region. Source: data.un.org Source: unicef.org

III.The CDM in Algeria Algeria fulfils the CDM eligibility criteria for host countries as it has ratified Kyoto Protocol in 2005 and established a National Designated Authority in 2006. Moreover, it has set up the eligibility requirements for national CDM projects and has defined the national procedures for assessment and approval of CDM projects.

However, Algeria has currently no CDM projects in the pipeline, neither in validation stage nor in registration. The main emission reduction activities in Algeria concern projects of gas flaring reduction in oil producing fields and the capture and geological storage of CO2. Algeria has the world’s largest onshore CO2 storage project, the In Salah project. The project, which is a joint venture company called In Salah Gas between

Sontrach, BP and Statoil, started in 2004 and can store up to 1.2 MtCO2 per year in a deep saline formation. In 2009, The In Salah Gas Joint Venture has submitted a CDM new methodology for the In Salah CCS project to the CDM Executive Board, which is yet to be approved. Despite the decision by the 6th Meeting of the Parties (in Cancun) to recognize that CCS is an eligible project activity under the CDM, there is significant ongoing uncertainty over the role of CCS in the CDM.

Regarding CDM, the main activities have consisted in building the stakeholders capacities and the development of CDM idea project portfolios within the framework of various initiatives launched by APRUE, national companies, UNDP, GEF and UNEP&RISOE. These efforts have led to the identification of 4 portfolios of CDM project ideas and the elaboration recently of a portfolio of CDM PINs. This portfolio was developed within the framework of the CD4CDM project which aims at generating a broad understanding of opportunities offered by the CDM and developing the necessary institutional and human capacity to formulate and implement projects under CDM.

20 PINs were developed within this portfolio pertaining mainly to energy, industry and waste sectors. The mitigation potential of the portfolio is estimated at 1 MtCO2eq. per year.

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The project list is provided in the following table:

N° Project title Project Investment Expected Type of promoter (M€) emission project reduction (tCO2/year) 1 Methane reduction in Beni-Mered station Blida city council Not identified CDM of household waste composting, Blida Valorization of biogas and installation of a General 0.5 6497 CDM Power generation system within Sedrata Directorate for station Hydraulic ,Souk Ahras province 2 Valorization of biogas and installation of a General 0.7 61400 CDM Power generation system within Annaba Directorate for station Hydraulic ,Annaba province 3 Recovery and flaring of Ouled Fayet MATET - 83000 CDM landfill gas, Algiers 4 Methane recovery in the wastewater - Not Approx. 100000 CDM treatment station of Baraki, Algiers identified 5 Distribution of low consumption lamps to APRUE 26.4 206700 pCDM households 6 Thermal insulation of housings APRUE 4 937 pCDM 7 Distribution of individual solar water APRUE 16 17802 pCDM heaters in the residential sector 8 Improving energy efficiency of MEFTAH SCMI 9 196000 CDM cement process 9 Installation of switch gear on the engine of APRUE 0.15 348 CDM the combustion fan of zincore 10 Solar Power Plant II “SPP II” and NEAL 1185 230212 CDM desalinization Brackish water 11 10 MW Wind power plant project for SPE 10 Approx. 15000 CDM electricity generation 12 Development of LPG products transport NAFTAL 260 4665 CDM by the Arzew-Blida pipeline 13 Development of LPG products transport NAFTAL 9.8 2170 CDM by storage capacity expansion 14 Programme of installation of PV pumps in CDER Not 53272 pCDM the Algerian steppe identified 15 Afforestation and reforestation Direction Not Not identified A/R générale des identified forêts 16 Réduction des émissions de la cimenterie Société des 1 24388 CDM de Hamma Bouziane, Constantine Ciments de Hamma Bouziane 17 Public street lighting by PV panels GESTIMIT 0.543 614 pCDM or connected to the grid CDM 18 Waste Heat Recovery for power SCIBS Not 67040 CDM generation in Benisaf cement plant identified 19 Fuel switching of the car fleet to LPG APRUE 20 171250 pCDM 20 Development of intermodal rail-road National Not Not identified pCDM or transport of containers in theCenter region company for rail identified CDM transport Table 37: CDM PIN portfolio of Algeria. Source: Portefeuille de PINs, Project CD4CDM Algérie, 04/05/2010

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From the above-mentioned projects, only 9 have been considered as feasible and potentially eligible to CDM in the short term during the national conference on CDM held on November 2009, taking into account the financing issues and the existence of approved CDM methodologies. The adopted projects are the following:

Project title Project promoter 1 Programme of installation of PV pumps in the Algerian steppe CDER 2 Recovery and flaring of Ouled Fayet landfill gas, Algiers MATET 3 Waste Heat Recovery for power generation in Benisaf cement SCIBS plant 4 Distribution of low consumption lamps to households APRUE 5 Distribution of individual solar water heaters in the residential APRUE sector 6 Solar Power Plant II “SPP II” and desalinization Brackish water NEAL 7 Valorization of biogas and installation of a Power generation General Directorate for system within Annaba station Hydraulic ,Annaba province 8 Methane recovery in the wastewater treatment station of Baraki, - Algiers 9 10 MW Wind power plant project for electricity generation SPE

Table 38 : Portfolio of adopted CDM projects. Source: consultant

Recently, three CDM projects were added to the Algerian portfolio: Annual Source Project title Status Emissions Reductions 1 Oued Smar LFG Project Prior consideration UNFCCC (Notification received on 07 - Sept 2011) 2 N2O reduction project at Fertial's nitiric acid plant Under validation (period of UNFCCC No.1 at Annaba, Algeria comments : 04 Nov 11 - 03 243,474 tCO2e Dec 11) 3 N2O reduction project at Fertial's nitiric acid plant Under validation (period of UNFCCC No.2 at Annaba, Algeria comments : 04 Nov 11 - 03 243,474 tCO2e Dec 11)

IV. Overview of current CDM projects The current CDM portfolio of Algeria comprises one project idea, 20 CDM projects at the PIN stage and 2 projects under validation which were recently added to the CDM project pipeline of Algeria.

 N2O reduction project at Fertial’s nitric acid plant No.1 at Annaba, Algeria The proposed project aims at significantly reducing the current levels of N2O emissions from the production of nitric acid at Fertial’s nitric acid plant (“the Plant”) at Annaba, Algeria. The project activity involves the installation of a new N2O abatement technology: a pelletized catalyst that will be installed inside the ammonia oxidation reactor, underneath the precious metal gauzes. It is expected that this catalyst will reduce approximately 85% of current N2O emissions.

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The British N. Serve and Johnson Matthey companies are supporting the development of this project throughout the CDM process.

 N2O reduction project at Fertial’s nitric acid plant No.2 at Annaba, Algeria

Similarly to the above project, the proposed project aims also at significantly reducing the current levels of N2O emissions from the production of nitric acid at Fertial’s nitric acid plant at Annaba, Algeria. The project activity involves the installation of a new N2O abatement technology: a pelletized catalyst that will be installed inside the ammonia oxidation reactor, underneath the precious metal gauzes. It is expected that this catalyst will reduce approximately 85% of current N2O emissions. The British N. Serve and Johnson Matthey companies are supporting the development of this project throughout the CDM process.

N° Project title Project CDM Emission Kind of required support developer status reduction

(k tCO2e/y) 1 N2O reduction project FERTIAL SpA Under 243 - Coordination with FERTIAL for at Fertial's nitiric acid validation any specific need of technical assistance for accelerating plant No.1 at Annaba, PDD development Algeria - Recruit a DOE for the validation - Assistance for the registration process 2 N2O reduction project FERTIAL SpA Under 243 - Coordination with FERTIAL for at Fertial's nitiric acid validation any specific need of technical assistance for accelerating plant No.2 at Annaba, PDD development Algeria - Recruit a DOE for the validation - Assistance for the registration process

V.Portfolio of priority projects and programs Considering the deployed criteria in the other country reports for the selection of the prioritized CDM projects and PoAs: - Project maturity (CDM status) - Possibility of registration before end of 2012 - Project implementer (experience and competence with CDM issues) - Scale of the project - Mitigation potential - Additionally criteria

Taking into account the above mentioned criteria, particularly the project maturity and possibility of registration before the end of 2012 and the Algerian CDM pipeline, the 2 projects at validation stage of Fetial SPA were retained as priority ones.

VI.Conclusion

Algeria fulfils the CDM eligibility criteria for host countries as it has ratified Kyoto Protocol in April 2004 and established a National Designated Authority in February 2006. Moreover, it has set up the eligibility requirements for national CDM projects and has defined the national procedures for assessment and approval of CDM projects in October 2006. However, in Algeria the CDM has been progressing at a very slow pace. Relatively little emphasis had been given to effectively access the CDM and to realize the full potential development benefits for Algeria as a host country. A mix of factors, including lack of understanding

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of the requirements of the CDM, limited national capacity to direct the CDM process and an absence of technical assistance from the donor community prevented the development of a CDM market in Algeria. As a result, apart from around twenty projects in the PIN stage, there are only 2 CDM projects at an advanced CDM stage (under validation) that have been recently added to the Algerian portfolio.

VII.Bibliography

- Preparation of a regional climate change project under the regional action programme ENPI South 2011, Algeria country report, 2011 - Portefeuille de PINs, Project CD4CDM Algérie, 04/05/2010 - Renewable Energy and Energy Efficiency Program, March 2011 - UNFCCC website

VIII. Contact details of the DNA

National Focal Points

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Annex 7 – Egypt country study

Contents I. Abbreviations 104 II. Background 105 III. The CDM in Egypt 105 IV. Analysis of the current CDM status in the country 110 V. Portfolio of priority projects and programs 113 VI. Conclusion 115 VII. Bibliography 116 VIII. Contact details of the DNA 116

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I. Abbreviations

AENOR Asociación Española de Normalización y Certificación AFD French Development Agency BMU German Environment Ministry CDM Clean Development Mechanism CDM APU CDM Awareness and Promotion Unit CER Certified Emission Reduction CFL Compact Fluorescent Lamp DNA Designated National Authority DOE Designated Operational Entity EAF Electric Arc Furnace EB Executive Board of the CDM ECF European Carbon Fund EE Energy Efficiency EEAA Egyptian Environmental Affairs Agency ECARU Egyptian Company for Solid Waste Utilization EISCO Egyptian Iron & Steel Company E.P.E.I Egyptian Plastic and Electrical Industries ERPA Emissions Reduction Purchase Agreement ESIIC Egyptian Sugar and Integrated Industries Company EU ETS European Union Emissions Trading Scheme EU European Union GDP Gross domestic product GEF Global Environment Facility GHG Greenhouse gases GTZ Gesellschaft für Technische Zusammenarbeit HPPEA Hydro-Power Plants Executive Authority KfW Kreditanstalt für Wiederaufbau KPC KHALDA Petroleum Company kWh Kilowatt hour LFG Landfill gas MRV Measurement, Reporting and Verification NREA New and Renewable Energy Authority MW Megawatt NAMA Nationally Appropriate Mitigation Action NCC National Cement Company PDD Project Design Document PIN Project Idea Note PoA Porgramme of Activities PV Photovoltaic RAKTA General Co. for Paper Industry RCREEE Regional Centre for Renewable Energies and Energy Efficiency RE Renewable Energy

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SOPC Suez Oil Processing Company SWH solar water heater

tCO2e Tons of Carbon Dioxide equivalent UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change

II. Background

The present report is an update of Egypt country study prepared in March2009 by GIZ (ex-GTZ). It presents a detailed overview of the national pipeline and identifies a CDM portfolio for prioritized projects, for which a tailored implementation plan is to be developed that enables CDM registration before the end of 2012.

Figure 17. Geographical location of Egypt - MENA Figure 18. Map of Egypt. Source: data.un.org Region.Source: unicef.org

III.The CDM in Egypt Despite a relatively slow start, Egypt has recently had intense activity in CDM market with tangible results. The establishment of the CDM APU in 2009 has strengthened the promotion and awareness activities for CDM in Egypt and has contributed to identification and promotion of new potential CDM projects. The national project portfolio currently comprises 77 CDM projects at different stages. Currently, there are 10 registered CDM projects in Egypt and 13 under validation in different sectors (Table 2).

The PoA portfolio includes one registered PoA, three programs at the PDD stage, two programmes at the PIN stage and 3 programmes in the pipeline. The following table summarizes the current pipeline of CDM projects in Egypt:

Project Project Status Expected Source emission N° reduction (1000 tCO2e/year) Catalytic N2O destruction project in the tail gas Registered on 07 Oct 06 1066 UNFCCC 1 of the Nitric Acid Plant of Abu Qir Fertilizer Co. Onyx Alexandria Landfill Gas Capture and Registered on 15 Dec 06 371 UNFCCC 2 Flaring Project 3 Zafarana Wind Power Plant Project Registered on 22 Jun 07 249 UNFCCC

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Project Project Status Expected Source emission N° reduction (1000 tCO2e/year) Waste Gas-based Cogeneration Project at Registered on 26 Jul 08 110 UNFCCC 4 Alexandria Carbon Black Co., Egypt Zafarana KfW IV Wind Farm Project, Arab Registered on 02 Mar 10 171 UNFCCC 5 Republic of Egypt 6 Egyptian Brick Factory GHG Reduction Project Registered on 14 Jul 10 430 UNFCCC Zafarana 8 - Wind Power Plant Project, Arab Registered on 23 Sep 10 210 UNFCCC 7 Republic of Egypt Emissions reduction through partial substitution Registered on 17 Jan 11 417 UNFCCC of fossil fuels with renewable plantation 8 biomass and biomass residues in CEMEX Assiut Cement Plant Fuel Switching from Mazout to Natural Gas in Registered on 19 Jan 11 45 UNFCCC 9 Misr Fine Spinning & Weaving and Misr Beida Dyers at Kafr El Dawar 10 Zafarana 85 MW Wind Power Plant Project Registered on 8 August 11 170 UNFCCC Al-Sindian 13 MW Natural Gas based Under Validation (Period 25 UNFCCC 11 Cogeneration Package Project, Egypt for comments : 29 Feb 08 - 29 Mar 08) Land Filling and Processing Services for Under Validation (Period 77 UNFCCC 12 Southern Zone in Cairo for comments : 12 Feb 08 - 12 Mar 08) Fuel Switching at the National Cement Under Validation (Period 306 UNFCCC 13 Company (NCC), Tebbin, Egypt for comments : 01 Dec 09 - 30 Dec 09) Reduce the Share of Clinker in the Production Under Validation (Period 66 UNFCCC 14 of a blended Cement type at the National for comments : 01 Dec 09 - Cement Co. (NCC) 30 Dec 09) Abu Zabal Landfill Gas Recovery and Under Validation (Period 95 UNFCCC Flaring/Destruction Project 15 for comments : 07 Apr 10 - 06 May 10) Waste heat recovery for gas turbine generators Under Validation (Period 31 UNFCCC at the Egyptian operating company for Natural 16 for comments : 27 Jul 10 - Gas Liquefaction projects (Egyptian LNG). 25 Aug 10) N2O Abatement at Semadco (Egypt) Under Validation (Period 275 UNFCCC 17 for comments : 21 May 11 - 19 Jun 11) Gas Flare Recovery at Suez oil processing Under Validation (Period 120 UNFCCC 18 company, Egypt for comments : 07 Sep 11 - 06 Oct 11) Gas Flare Recovery in Suez Oil Processing Under Validation 120 CDM APU 19 Company 20 Delta Fertilizers N2O Abatement Under Validation 176 CDM APU 21 KIMA Chemical Industries N20 Abatement Under Validation 115 CDM APU

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Project Project Status Expected Source emission N° reduction (1000 tCO2e/year) Partial Fuel Switching to Agricultural Wastes & Under Validation 19 CDM APU 22 Refuse Derived Fuel (RDF) at Kattameya Cement Plant Partial Fuel Switching to Agricultural Wastes & Under Validation 38 CDM APU 23 Refuse Derived Fuel (RDF) at Helwan Cement Plant Flare gas recovery project at the Egyptian Pipeline 60 CDM APU 24 operating company for Natural Gas Liquefaction projects (Egyptian LNG) Waste Heat Recovery projects for gas turbine Pipeline 73 CDM APU 25 generators at KHALDA Petroleum Company (KPC) 26 Waste Heat Recovery in Delta Steel Co Pipeline 35 CDM APU Power Generation by Utilizing Coke Oven Gas Pipeline 68 CDM APU 27 of Al-Nasr Co. for Coke & Chemicals Energy efficiency measures at MRI-Mansoura Pipeline 4 CDM APU 28 unit Energy Efficiency and Heat Recovery Project Pipeline 8.5 CDM APU 29 at Sinai White Cement Co. Natural Gas Leaks Reduction on Gas Pipeline 300 CDM APU Distribution Networks of the Ministry of 30 Petroleum of the Arab Republic of Egypt submitted by Oneliria Trading LTD. Co. Rehabilitation for Blast Furnace submitted by Pipeline 227 CDM APU 31 the Egyptian Iron & Steel Company (EISCO) Rehabilitation for Sinter Plant submitted by the Pipeline 196 CDM APU 32 Egyptian Iron & Steel Company (EISCO) 33 Fuel Switching at Sinai for Cement Pipeline 120 CDM APU Fuel Switching in Boilers, Dryers and Fumaces Pipeline 18 CDM APU 34 of (OASC) Fuel Switching from Heavy Oil to Natural Gas Pipeline 0.7 CDM APU 35 in Dakahlia Spinning & Weaving Co. Fuel Switching for Industrial Processes in Delta Pipeline 11 CDM APU 36 Steel Co. Fuel Switching from Light Oil and Cookoven Pipeline 2 CDM APU 37 Gas to Natural Gas in El-Nasr Forging Industry Co. Fuel Switching from Light Oil to Natural Gas in Pipeline 0.5 CDM APU 38 Damietta Spinning & Weaving Co. Equipment Replacement and Fuel Switching at Pipeline 0.4 CDM APU 39 El-Mex Salinas Co. Reduction of Sodium Carbonate Content in Pipeline 0.8 CDM APU 40 Nile Oil & Detergent Co. Carbon Dioxide Emissions Reductions in Misr Pipeline 23 CDM APU 41 Oil & Soap Co. Fuel Switching from Heavy oil to Natural Gas in Pipeline 1.7 CDM APU 42 El-Nasr Wool & Selected Textiles Co 43 Fuel Switching from Mazout to Natural Gas in Pipeline 18 CDM APU

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Project Project Status Expected Source emission N° reduction (1000 tCO2e/year) General Co. for Paper Industry (RAKTA) Fuel Switching to Cleaner Fuel in Middle East Pipeline 6.4 CDM APU 44 for Paper (SIMO) Manufacturing Co. Fuel Switching to Cleaner Fuel in the Egyptian Pipeline 11.4 CDM APU 45 Starch & Glucose Manufacturing Co. (Tourah Plant) Fuel Switching from Mazout to Natural Gas in Pipeline 57 CDM APU 46 the Egyptian Sugar and Integrated Industries Co. at Abu Kurkas Factory Fuel Switch from Natural Gas to Biomass Pipeline 2.5 CDM APU 47 Project in Pepsi Cola Egypt (6 October Factory) Fuel Switch from Natural Gas to Biomass Pipeline 1.7 CDM APU 48 Project in Pepsi Cola Egypt (Alexandria Factory) Fuel Switch from Natural Gas to Biomass Pipeline 1.6 CDM APU 49 Project in Pepsi Cola Egypt (Sohag Factory) Fuel Switch from Natural Gas to Biomass Pipeline 3.6 CDM APU 50 Project in Pepsi Cola Egypt (Port Said Factory) Fuel Switch from Natural Gas to Biomass Pipeline 3.6 CDM APU 51 Project in Pepsi Cola Egypt (Cairo Factory) Fuel Switch from Natural Gas to Biomass Pipeline 2.1 CDM APU 52 Project in Pepsi Cola Egypt (Elmenya Factory) Fuel Switch from Natural Gas to Biomass Pipeline 3.6 CDM APU 53 Project in Pepsi Cola Egypt (Tanta Factory) Fuel Switching from Mazout to Natural Gas in Pipeline 21.5 CDM APU 54 the Egyptian Sugar and Integrated Industries Company (ESIIC) / Kom Ombo Factory Project Fuel Switching from Mazout to Natural Gas in Pipeline 11.2 CDM APU 55 the Egyptian Sugar and Integrated Industries Company (ESIIC) / Guirga Factory Project Fuel Switching from Mazout to Natural Gas in Pipeline 7.3 CDM APU the Egyptian Sugar and Integrated Industries 56 Company (ESIIC) / Naga Hamady factory project Fuel Switching from Mazout to Natural Gas in Pipeline 27.5 CDM APU 57 the Egyptian Sugar and Integrated Industries Company (ESIIC) / Deshna Factory Project Fuel Switching from Mazout to Natural Gas in Pipeline 44.7 CDM APU 58 the Egyptian Sugar and Integrated Industries Company (ESIIC) / Qus Factory Project Fuel Switching from Mazout to Natural Gas in Pipeline 30.1 CDM APU 59 the Egyptian Sugar and Integrated Industries Company (ESIIC) / Armant Factory Project Fuel Switching from Mazout to Natural Gas in Pipeline 27.5 CDM APU 60 the Egyptian Sugar and Integrated Industries Company (ESIIC) / Idfu Factory Project Fuel Switching from Solar to Natural Gas at the Pipeline 10 CDM APU 61 Egyptian Plastic and Electrical Industries

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Project Project Status Expected Source emission N° reduction (1000 tCO2e/year) (E.P.E.I) Co. Project Fuel Switching from Mazout to Alternative Pipeline 57.4 CDM APU 62 Fuels (Partial) at Amreyah Cement Company Introduction of Hot Direct Reduced Iron (DRI) Pipeline 106 CDM APU 63 into Electric Arc Furnace (EAF) at Suez Steel Company. 64 Flared Gas Recovery System Pipeline 60.7 CDM APU Producing Liquefied CO2 With Production Pipeline 43.2 CDM APU 65 Capacity of 2.5 ton/hour Gulf El Zeit Wind Power Farm Project 120 MW Pipeline 250 CDM APU 66 (up to 400 MW) – Italgen Egypt 67 Demitta Barrage Small Hydropower Project Pipeline 47 CDM APU 68 Assuit Barrage Hydropower Project Pipeline 134 CDM APU Biomass Bases Steam and Power Generation Pipeline 70 CDM APU 69 by Indorama Organics (Egypt) Co.S.A.E. in Beni Suef, Egypt Biogas Generation from Waste Water Pipeline 20 CDM APU Treatment and Utilization for Heat Generation 70 by Indorama Organics (Egypt) Co.S.A.E. in Beni Suef, Egypt Electric Power Generation from Ama Arab Pipeline 70 CDM APU 71 Kattamyia Landfill 72 Methane Capture and Flaring in Belbis Landfill Pipeline 46 CDM APU Methane reduction by composting in Khatatba Pipeline 7 CDM APU 73 landfill Capture of Landfill Gas (LFG) from the Sanitary Pipeline 22 CDM APU 74 Landfill, Proposed by International City Cleaning Co. 75 Greater Cairo Ring Road Afforestation Project Pipeline 100 CDM APU Jatropha Luxor Project – submitted by Pipeline 7.8 CDM APU 76 JatroSolutions GmbH – Private sector / consulting firm Reduction of N2O Emissions from the New Pipeline 248 CDM APU 77 Nitric Acid Plant of Egypt Hydrocarbon Corporation at Ain Sokhna Table 39: CDM project portfolio in Egypt. Source: UNFCCC, CDM APU

The portfolio of CDM PoAs in Egypt is highlighted in the table below: N° Programme Project Status Expected Source emission reduction (tCO2e/year) 1 Egypt Vehicle Scrapping and Recycling Program Registered on 30 Jun 11 20 UNFCCC 2 Shifting from Traditional Open-Pit Method to PDD Stage 36,000 CDM APU Mechanize. Charcoal production program in Egypt 3 Egypt – Renewable Energy Carbon Asset PDD Stage 400000 CDM APU

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N° Programme Project Status Expected Source emission reduction (tCO2e/year) Program (E-RECAP) 4 Fuel Switch in Small and Medium Enterprises PDD Stage 150,000 CDM APU 5 Scrapping and Replacement program of Two- PIN Stage 14,400 CDM APU stroke Motor cycle in Egypt

6 Installation of Solar Water Heater Program PIN Stage 35,000 CDMAPU 7 Rehabilitation of water pumping stations, Ministry Programme idea - CDM APU of Irrigation 8 Installation of efficient lightening systems in Programme idea - CDM APU streets all over the country 9 Implementation of small stations to generate Programme idea - CDM APU electricity from agricultural waste Table 40: CDM PoA portfolio in Egypt. Source: UNFCCC, CDM APU

IV.Analysis of the current CDM status in the country  CDM projects

 Al-Sindian 13 MW Natural Gas based Cogeneration Package Project, Egypt The proposed project involves the installation of a 13 MW gas turbine associated with waste heat recovery equipment. The cogeneration system will consume natural gas and produce electricity and heat for the entire industrial site. Al-Sindian would legally own the cogeneration plant but the produced electricity will be supplied to all the other facilities of the Nuqul Group’s industrial site. By introducing the cogeneration system at Al-Sindian, the total amount of fossil fuels used to provide electricity and heat to the plant would be reduced, resulting in significant CO2 emissions reductions estimated at 24,541 tonnes CO2 equivalent/year. This project is currently under validation and was put on the UNFCCC website for public comments since more than 3 years ago (29 Feb 08 - 29 Mar 08). EcoSecurities is involved in the project as a project participant. It has been acting as carbon advisor for the project in developing key components of the Project Design Document (PDD).

 Land Filling and Processing Services for Southern Zone in Cairo : The project involves the development of a treatment, recycling and disposal facility for the purpose of processing solid waste that is collected and received on a daily basis from the Southern Zone of Cairo. Waste received includes municipal solid waste, construction and demolition waste and non hazardous industrial waste. The World Bank signed already a greenhouse gas emission reductions purchase agreement in 2008.Under the agreement, project developer Egyptian Company for Solid Waste Utilization (ECARU) will sell 325,480 tons of carbon dioxide equivalent greenhouse gas emission reductions to the Carbon Fund for Europe, which is managed by the World Bank. This project is under validation (put on the UNFCCC website for public comments during the period 12 Feb 08 - 12 Mar 08).

 Abu Zabal Landfill Gas Recovery and Flaring/Destruction Project

The Abu Zabal Landfill Gas capture and flaring project activity consists of recovery the methane emissions by using an active landfill gas (LFG) extraction and flaring system of the recovered gas that otherwise will be released into the atmosphere. The expected annual GHG emission reduction is about 95,000 tCO2e /a. This project is currently under validation and was put on the UNFCCC website for public comments during the

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period 07 Apr 10 - 06 May 10. Qaluobeya Governorate is the project participant, and the project is still seeking for finance.

 Waste Heat Recovery projects for gas turbine generators The project of waste heat recovery for GTG aims to reduce the GHG generated from the fuel gas burning in the hot oil heaters by partially stopping oil heaters (heat generators) operations and utilize the heat generated from the flue gases of GTGs to heat the hot oil instead, in order to obtain the heat duties required by heat consumers. The total CO2 emission reduction for the entire crediting period of 10 years has been calculated as 295,50 tCO2e. This project is actually under validation and was put on the UNFCCC website for public comments during the period 27 Jul 10 - 25 Aug 10.

 Fuel Switching at the National Cement Company (NCC), Tebbin, Egypt This project consists of a large investment to replace the consumption of petroleum fuel by natural gas funded via a commercial loan to be returned through the sale of carbon credits in the context of the Clean Development Mechanism (CDM) of the Kyoto Protocol.

The National Cement Company (NCC) will lead this fuel-switching project, which involves the conversion of fossil fuel type and certain equipment at three of its production plants located at Tebbin, 29 km south of Cairo. This project is currently under validation and was put on the UNFCCC website for public comments during the period 01 Dec 09 - 30 Dec 09. Mitsubishi Corporation is already a project participant in the project for which the DOE (TÜV NORD CERT GmbH) has a contractual obligation.

 Gas Flare Recovery at Suez oil processing company, Egypt The Gas Flare Recovery, developed by Suez Oil Processing Company (SOPC) in Egypt, reduces the emission of greenhouse gases (GHG) from fossil fuels used in the plant by partially replacing them with recovered flare waste gases that are normally burned in flares. The recovery and utilization of waste gases will reduce the fossil fuel consumption in the plant and save green house gas (GHG) emissions. This project is currently under validation and has been inserted in the UNFCCC website for public comments during the period 07 Sep 11 - 06 Oct 11. Abu Dhabi Future Energy Company PJSC (MASDAR) is already a project participant in the project for which the DOE (SGS United Kingdom Limited) have a contractual obligation. Masdar has signed in October 2010 an emission reductions agreement (ERPA) with Egypt’s Suez Oil Processing Company (SOPC) and is assisting in reducing its carbon emissions under the guidelines of the Kyoto Protocol’s Clean Development Mechanism (CDM).

Under this agreement, SOPC will invest an estimated US$15 million to reduce the volume of waste gas currently being fired in the flare stack at its plant in Suez. As CDM developer for the project, Masdar will provide advisory services required to register the project and will facilitate the issuance by the EB of certified emissions reduction units. Masdar will purchase the CERs from SOPC over the lifetime of the project and resell the units on the international market.

 N2O Abatement at Semadco (Egypt) The purpose of proposed project activity is the reduction of potent greenhouse gas N2O emissions at the Creusot-Loire (C.L.) Line of Semadco Fertilizer Plant located in Suez, Egypt. The technology applied by the project proponents envisages a thermal decomposition of N2O with integrated Selective non-Catalytic Reduction (SNCR) to simultaneously reduce NOx emissions. This project is currently under validation and was put on the UNFCCC website for public comments during the period 21 May 11 - 19 Jun 11. First Climate (Switzerland) AG is already a project participant in the project for which the DOE (TÜV NORD CERT GmbH) has a contractual obligation. First Climate AG is directly involved in the application of the baseline study and monitoring methodology. It has also defined task within the monitoring plan implementation.

 Program of Activities

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In 30 June 2011, the first Egyptian PoA, Egypt Vehicle Scrapping and Recycling Programme, has been registered by the EB after more than two years since the beginning of validation. This PoA is the first ever transport Program of Activities to be registered under the UNFCCC’s Clean Development Mechanism (CDM). The vehicle scrapping program by the Ministry of Finance encourages cab owners to remove voluntarily vehicles that are at least 20 years old from the roads. It gives taxi owners the financial incentives to scrap old cabs and provides them with lower prices and guaranteed financing for the purchase of new vehicles. On the basis of this successful initiative, Egypt is intensifying its efforts to promote other national PoAs. Indeed, 8 programmes have been identified of which 3 PoAs are at PDD stage and 2 others have detailed PINs, already approved by the DNA.

 Shifting from Traditional Open-Pit Method to Mechanize. Charcoal production program in Egypt The proposed CDM project aims at reducing methane emissions by controlling the gases generated during the charcoal carbonization process. This is achieved by shifting from traditional charcoal open-pits production to mechanized charcoal production by installing mechanized controlled kilns. The mechanized charcoal kilns involve refueling the carbonization gases, which includes methane, to be Combusted as a fuel in the controlled kilns. According to the applicable methodology AMS III-K, other gas utilization and/or Destruction alternatives like flaring and electricity generation are also valid options. About 942 Traditional kilns will be replaced by other mechanized ones with expected emission reduction of 400,000 tCO2eq/year.

 Egypt – Renewable Energy Carbon Asset Program (E-RECAP)

This PoA consists of a private sector wind program supporting the development of wind power plants delivering energy to the main national power grid. Wind farms will be constructed under BOO scheme where the private sector developers will take on majority of the financing, construction and operational risks of the wind farms. The PoA will be developed in phases with 3-year intervals. Each phase will comprise a CDM project activity (CPA). The first CPA with 250 MW capacity has been identified and will be located in Ras Gharib in the Gulf of Suez .Depending on the success of phase 1 and private sector interest; other phases/CPAs will be developed. It is estimated conservatively that by 2020 an additional 1000 MW will be developed in 2 batches; 500 MW each by 2015 and 2016. The World Bank, via the carbon partnership facility, is fostering the development of this programme and is providing revenues to the Egyptian Electricity Transmission Company (coordinating entity) to defray part of transmission infrastructure and encourage wind power development.  Fuel Switch in Small and Medium Enterprises This programme concerns switch of fuel oils to natural gas for combustion processes in small and medium- sized enterprises like Bakeries , brick factories , foundries ,etc all over Egypt according the availability of NG and the associated network. The CDM APU has recently published a call for proposals to assist the CDM APU in all phases of the CDM process to be able to generate CERs and thereby get additional project funding. The programme is actually at the PDD stage.

 Scrapping and Replacement program of Two-stroke Motor cycle in Egypt The program aims to get rid of licensed two-stroke motorcycle of Egypt by replacing it with Hybrid motorcycles and provide economic incentives to owners to carry out the replacement. The Pilot phase contains 1000 motorcycles which are expected to reduce emission by 14,400 tCO2eq/year.  Rehabilitation of water pumping stations, Ministry of Irrigation This project aims to reduce the CO2 emissions by rehabilitation of pumping stations for irrigation and drainage which do not perform efficiently or in poor operating conditions. Rehabilitation of pumping stations for irrigation and drainage will increase the operational efficiency of motors and pumps and reduce the required maintenance , resulting in immediate cost saving. The project now is under measurements and coordination between the CDM-APU and Energy Efficiency programme has been carried out to prepare PoA

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for which a Design Document will describe all energy efficiency measures to be implemented in specific pumping stations, which will be selected based on energy audits. The project activity will improve the energy performance of pumping stations and will save electricity, also reducing GHG emissions.

 Installation of efficient lightening systems in streets all over the country This program is a national energy efficient program over Egypt to be coordinated and developed by North Cairo Electricity Distribution Company. Over the program implementation period (2 years) the non-efficient, non-environmentally friendly mercury lamps and higher wattage sodium lamps in streets will be replaced by compact fluorescent lamps (CFLs) and lower wattage, efficient high pressure sodium lamps (HPS). In addition to the environmental benefit of reducing 75000tCO2e/year, the program will save 150 million kWh/year over the estimated technology lifetime (3 years for compact Fluorescent lamps and 6 years for lower wattage, efficient high pressure sodium lamps).

 Implementation of small stations to generate electricity from agricultural waste This programme aims at implementing the first station which produces electrical energy from Rice straw. The project is expected to produce about 1.25 MW/unit with emission reduction of 5,000 tCO2eq/unit. It should be implemented within the framework of cooperation between an Egyptian company and a Danish company.

V.Portfolio of priority projects and programs

V.1. Prioritization

For the selection of the prioritized CDM projects and PoAs, the following criteria have been adopted in accordance with the ToRs: - Project maturity (CDM status) : Only projects at the validation stage have been considered - Possibility of registration before end of 2012 - Project implementer (experience and competence with CDM issues) - Scale of the project - Mitigation potential - Additionally criteria

In view of the intensive assistance activities provided by international agencies, carbon advisors and CER buyers in Egypt compared with other MENA countries, we have added further criterion on the existence of technically and/or financially support for the project development till registration.

The process of identification of priority projects was based on the screening of the national CDM portfolio of Egypt taking into account the above mentioned criteria, particularly the possibility of registration before the end of 2012. Considering the wide portfolio of Egyptian standard CDM projects, only projects at the validation stage have been considered. On the other hand, all PoAs in the pipeline have been assessed according to the above-mentioned criteria.

The following table presents the prioritization of the projects/PoAs:

Project Probability Project Project Scale of Mitigation Additionality Existence of to be maturity implementer the project potential criteria financial registered before (+: large and/or 2013 - : small) technical support Al-Sindian 13 MW Natural ++ ++ + + + + Yes Gas based Cogeneration Package Project, Egypt Land Filling and + ++ + + ++ + Yes

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Project Probability Project Project Scale of Mitigation Additionality Existence of to be maturity implementer the project potential criteria financial registered before (+: large and/or 2013 - : small) technical support Processing Services for Southern Zone in Cairo Fuel Switching at the + ++ + + +++ + Yes National Cement Company (NCC), Tebbin, Egypt Abu Zabal Landfill Gas ++ ++ + + ++ + Yes Recovery and Flaring/Destruction Project Waste Heat Recovery ++ ++ + + ++ + No projects for gas turbine generators N2O Abatement at ++ ++ + + +++ + Yes Semadco (Egypt) Gas Flare Recovery at ++ ++ + + +++ + Yes Suez oil processing company, Egypt Shifting from Traditional + + ++ - + Unknown NA Open-Pit Method to Mechanize. Charcoal production program in Egypt (PoA) Egypt – Renewable + + ++ + ++ Unknown Yes Energy Carbon Asset Program (E-RECAP) (PoA) Fuel Switch in Small and + + + Unknown Unknown Unknown Unknown Medium Enterprises (PoA) Scrapping and + + ++ - + Unknown NA Replacement program of Two-stroke Motor cycle in Egypt (PoA) Installation of Solar - - + Unknown Unknown Unknown Unknown Water Heater Program (PoA) Rehabilitation of water - - + Unknown Unknown Unknown NA pumping stations, Ministry of Irrigation (PoA) Installation of efficient - - + Unknown ++ Unknown NA lightening systems in streets all over the country (PoA) Implementation of small - - + - - Unknown NA stations to generate electricity from agricultural waste (PoA) Table 41: Prioritization of projects

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V.2. Supportive actions to CDM projects and PoAs

According to the above analysis, five projects/PoAs look worth to be supported in order to be registered before the end of 2012, as presented in the following table: Annual Required support Project Emissions Project title Status Developer Reductions (ktCO2e) Abu Zabal Landfill Gas Recovery and Governorate In 95 - Coordinate with project Flaring/Destruction Project of Al Qalubia participants for identification validation of specific need for technical assistance to accelerate the validation stage and later the registration - Assistance for the registration process Waste Heat Recovery projects for gas Egyptian In 65 - Coordinate with project turbine generators participants for identification LNG validation of specific need for technical assistance to accelerate the validation stage and later the registration - Assistance for the registration process Shifting from Traditional Open-Pit Egyptian PIN 400 - Technical assistance to the Method to Mechanize. Charcoal Environmental developed programme design production program in Egypt (PoA) Affairs - Technical assistance to Agency programme PDD (EEAA) development documents - Assist in identifying CERs buyer, and supporting negotiations - Recruit a DOE for the validation - Assistance for the registration process Scrapping and Replacement program of Egyptian PIN 14 - Technical assistance to the Two-stroke Motor cycle in Egypt (PoA) Environmental developed programme design Affairs - Technical assistance to Agency programme PDD (EEAA) development documents - Assist in identifying CERs buyer, and supporting negotiations - Recruit a DOE for the validation - Assistance for the registration process Table 42: Prioritized projects and their specific needs

VI.Conclusion Egypt has made the initial inroads towards climate change mitigation and is benefitting from the CDM. International donor agencies and carbon advisors have been providing intensive assistance to Egypt in the field of the CDM over the past years.

The current portfolio of CDM project activities is extensive when compared to the other MENA countries. The areas recognized to have potential for CDM projects in Egypt include energy efficiency, fuel switching, renewable energy, utilizing biomass as an energy source and the various pollution abatement projects being proposed by the industries in Egypt. The inclusion of POAs has opened up an opportunity for Egypt to explore GHG emission reductions or removals through implementation of policy measures. The first Egyptian PoA, Egypt Vehicle Scrapping and Recycling Programme, has been registered by the EB in June 30, 2011

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after more than two years since the beginning of validation. This PoA is the first ever transport Program of Activities to be registered under the CDM.

On the basis of this successful initiative, Egypt is intensifying its efforts to promote other national PoAs. Indeed, 8 programmes have been identified of which 3 PoAs are at the PDD stage and 2 others have PINs already approved by the DNA.

Of the various projects in the Egyptian CDM portfolio, 2 projects and 2 PoAs have been identified as priority to be supported in order to help them achieve registration before the end of 2012: These projects/programmes are the following: - Abu Zabal Landfill Gas Recovery and Flaring/Destruction Project - Waste Heat Recovery projects for gas turbine generators - Shifting from Traditional Open-Pit Method to Mechanize. Charcoal production program in Egypt (PoA) - Scrapping and Replacement program of Two-stroke Motor cycle in Egypt (PoA)

The two identified PoAs need particularly technical assistance the CDM APU in all phases of the CDM process while the standard projects need specific supportive actions focusing mainly on accelerating the validation stage and later the registration.

VII.Bibliography

- Stock-taking report and assessment of CDM progress status in Egypt, BMU, March 2009 - CDM APU website : http://www.eeaa.gov.eg/english/main/cdmapu.asp - CDM UNFCCC website : http://cdm.unfccc.int - World bank website

VIII. Contact details of the DNA

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Annex 8 – Tunisia country study

Contents I. Abbreviations 118 II. Background 119 III. The CDM in Tunisia 119 IV. Analysis of the current CDM status in the country 122 V. Portfolio of priority projects and programs 126 VI. Conclusion 130 VII. Bibliography 130 VIII. Contact details of the DNA 130

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I. Abbreviations

AENOR Asociación Española de Normalización y Certificación AFD French Development Agency ANGed National Waste Management Agency ANME National Agency for Energy Conservation BMU German Environment Ministry CDM Clean Development Mechanism CFL Compact Fluorescent Lamp CIOK Cement plant of Oum Kélil CJO Jebel Ouest cement plant DNA Designated National Authority EB Executive Board of the CDM EE Energy Efficiency EU ETS European Union Emissions Trading Scheme EU European Union GDP Gross domestic product GEF Global Environment Facility GHG Greenhouse gases GTZ Gesellschaft für Technische Zusammenarbeit KfW Kreditanstalt für Wiederaufbau kWh Kilowatt hour MIT Tunisian Ministry of Industry and Technology MRV Measurement, Reporting and Verification MW Megawatt NAMA Nationally Appropriate Mitigation Action PDD Project Design Document PIN Project Idea Note PoA Porgramme of Activities PV Photovoltaic RCREEE Regional Centre for Renewable Energies and Energy Efficiency RE Renewable Energy SCG Gabès Cement Company STEG Tunisian Electricity and Gas Company SWH solar water heater TCO2e Tons of Carbon Dioxide equivalent UNDP United Nations Development Programme UNFCCC United Nations Framework Convention on Climate Change WWTP Waste Water Treatment Plant

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II. Background

This report is an update of a Tunisia country study prepared in December 2008 by GIZ. It presents a detailed overview of the national pipeline and identifies a CDM portfolio for prioritized projects, for which a tailored implementation plan is to be developed that enables CDM registration before the end of 2012.

Figure 19. Geographical location of Tunisia - MENA Figure 20. Map of Tunisia. Source: data.un.org Region.Source: unicef.org

III.The CDM in Tunisia

The current CDM portfolio of Tunisia comprises sixteen projects which are in advanced CDM status in the CDM project pipeline in Tunisia (have at least initiated PDD development): 3 projects are registered (of which 1 PoA), 3 projects are under validation and 10 projects are in PDD stage. The low number of registered CDM projects in Tunisia is explained by the BMU study61, as being due to the fact that public institutions or state-owned enterprises are the main project executing agencies. The private sector has hardly been engaged at all to date. Many prospective actors are still not sufficiently informed about the possibilities afforded by CDM. An added factor is that a large portion of the potential savings is located in the small and medium-sized enterprise sector in Tunisia. Small-scale projects are therefore of particular interest. It is, however, more difficult to find investors or financiers for this. The three projects registered at the EB have been implemented either in international or bilateral cooperation. The following table summarizes our finding about the pipeline status of CDM projects in Tunisia

N° Project Project Status Expected Source emission reduction (1000 tCO2e/year) 1 Djebel Chekir Landfill Gas Recovery and Flaring Project – Registered on 06 Oct 369.7 UNFCCC Tunisia 2006 2 Landfill Gas Recovery and Flaring for 9 bundled landfills in Registered on 23 Nov 317.9 UNFCCC Tunisia 2006 3 Solar Water Heater Programme in Tunisia Registered on 02 Jul 7.2 UNFCCC 2011 4 Rural electrification and water supply by solar photovoltaic Under validation 1.8 UNFCCC (PV) project in Tunisia (AENOR) 5 Tunisia: Sidi Daoud Wind FarmProject Under validation 50.4 UNFCCC (AENOR) 6 Partial substitution of fossil fuels with biomass at "Les Under validation (RINA 65 UNFCCC Ciments Artificiels Tunisiens" cement plant, Tunis. Services S.p.A.)

61 Stock-taking report and assessment of CDM progress status in Tunisia

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N° Project Project Status Expected Source emission reduction (1000 tCO2e/year) 7 Tunis light rail transit project PDD finalized validation 290 Consultant to be launched soon 8 Landfill Gas Capture and Flaring in Zaghouan and Tozeur PDD under development 15.1 Consultant landfills Project 9 Mahdia Landfill Gas Capture and Power Generation PDD under development 15.6 Consultant Project 10 Installation of wind turbines for power production at PDD under development 21.2 www.cdmtunisia.tn SCG(Gabès Cement Company) 11 Installation of wind turbines for power production at the PDD under development 21.2 www.cdmtunisia.tn Cement plant of Oum Kélil (CIOK) 12 Integrated fuel switching Project at Industrial Facilities in PDD approved 28.8 www.cdmtunisia.tn Gafsa region 13 Solar phosphate drying project PDD under development 35.7 www.cdmtunisia.tn 14 Biomass Power Generation Project PDD under development 69.2 Consultant 15 Installation of a cogeneration system at a pasta making PDD under development 6.7 www.cdmtunisia.tn plant 16 190 MW wind farm project in Bizerte Call for tender for the 354 Consultant sale of CERs and project accompaniment launched recently PIN approved 17 Call for tender for the 12.8 Consultant Valorization of flared gas in "Sidi El Itayem" oil field sale of CERs and project accompaniment launched recently PIN approved 18 Energy efficiency improvement by Installation of voltage PIN approved 66.3 Consultant switch-regulators over the existing street lighting network in Tunisia 19 Substitution of petroleum products by natural gas in the PIN approved 41.6 www.cdmtunisia.tn industrial area of Jammel-Zeramdine 20 Substitution of petroleum products by natural gas in the PIN approved 24 www.cdmtunisia.tn industrial area of Menzel Hayett 21 Flare gas recovery project at Maamoura oilfield site PIN approved 380 www.cdmtunisia.tn 22 Flare gas recovery project at Djebel Grouz oilfield site PIN approved 80 www.cdmtunisia.tn 23 Installation of a cogeneration system at a paper industry PIN approved 15.6 www.cdmtunisia.tn 24 Installation of cogeneration systems at 5 enterprises of PIN approved 23.5 www.cdmtunisia.tn Poulina Group (SNA, Al Mazra, TEC T'PAP, STIBOIS, GIPA) 25 Installation of cogeneration systems at 5 enterprises of PIN approved 27.1 www.cdmtunisia.tn Poulina Group (Ceramique Sfax, Complexe Sidi Saleh, MDF, STIBOIS-Bir Kasaa, Couvoirs Cédria) 26 Installation of wind turbines for power production at PIN approved 21.6 www.cdmtunisia.tn Cimenterie de Jebel OuEst (CJO) 27 Vegetable Oil Recovery and biodiesel production project PIN approved 9.5 www.cdmtunisia.tn 28 Catalytic N2O destruction project in the nitric acid plant of Call for tender for the 454 www.cdmtunisia.tn the Tunisian Chemical Group at Gabes. sale of CERs launched in 18 January 2010 PIN approved 29 Distribution of 1 million CFLs to STEG consumers with 1 PIN approved 80.6 www.cdmtunisia.tn to 2 kVA capacity 30 Installation of a trigeneration system at Enfidha airport PIN approved 8 www.cdmtunisia.tn

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N° Project Project Status Expected Source emission reduction (1000 tCO2e/year) 31 Distribution of 1 million CFLs to STEG consumers which PIN approved 21.2 www.cdmtunisia.tn capacity is less than 1 kVA 32 Four WWTPs upgrade from anaerobic PIN approved 31.6 www.cdmtunisia.tn to aerobic activated sludge treatment system 33 Sludge anaerobic treatment and biogas use for PIN approved 83 www.cdmtunisia.tn cogeneration in 23 WWTPs 34 Grand Tunis residual sludge landfilling PIN approved 16 www.cdmtunisia.tn 35 Implementation of 10 Mono-Landfills in the domestic PIN approved 14.8 www.cdmtunisia.tn towns 36 Replacement of surface aeration systems by fine bubbles PIN approved 151.3 www.cdmtunisia.tn systems in 18 Waste water treatment stations 37 Plantation of an irrigated perimeter of Jatropha curcas PIN approved 136 www.cdmtunisia.tn (15000 Ha) 38 Afforestration of Stone Pine and Eucalyptus over an area PIN approved 400 www.cdmtunisia.tn of 15 440 ha 39 Installation of a 120 MW wind farm of electricity self- PIN approved 175.5 www.cdmtunisia.tn production by Large Electricity Consuming Companies 40 Tunisian cogeneration development programme (PoA) PIN approved 87.2 Consultant Additionality assessment in progress 41 Replacement of 400,000 old refrigerators by energy PDD under development - Consultant efficient refrigeration appliances “PROMO-REF” (PoA)

42 Development of roof thermal insulation (Promo-Isol) (PoA) PIN approved 138.6 Consultant 43 Development of Solar Water Heater market in the tertiary PIN approved 12.4 Consultant sector in Tunisia- Tertiary PROSOL (PoA) 44 Promotion of the decentralized electricity self-production PIN approved 11.5 Consultant by the solar photovoltaic energy in Tunisia (PoA) 45 Voluntary Dissemination of CFLs in Residential Sector in Prior Consideration of - UNFCCC Tunisia the CDM (Notification on 15 Jul 2011)

46 Organic wastes Recovery and Biogas Generation in the Prior Consideration of - UNFCCC Wholesale Market of Bir Kassaa - Tunisia the CDM (Notification on 24 Sep 2010)

Table 43: CDM project portfolio status in Tunisia. Source: UNFCCC, www.cdmtunisia.tn,consultant.

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IV.Analysis of the current CDM status in the country  CDM projects

 Rural electrification and water supply by solar photovoltaic (PV) project in Tunisia This project, carried out by the National Agency for Energy Conservation (ANME), is actually under validation by AENOR. Its purpose is to improve life quality standard of people in non-electrified rural areas in Tunisia by equipping them with individual photovoltaic kits to meet their basic energy needs and by installing photovoltaic pumping and desalination stations to satisfy drinking water needs for population and livestock. It includes 3 components:  Component 1: Rural electrification by individual PV systems (0.572 MWp)  Component 2: PV pumping systems installation (0.321 MWp)  Component 3: PV desalination systems installation (0.226 MWp) This project seems to face some difficulties in validation as the answers to the Validation Protocol sent by the DOE in January 2010 are still underway.  Tunisia: Sidi Daoud Wind Farm Project This project is a newly built wind farm located on the vicinity of the Sidi Daoud rural Commune, owned and will be operated by the “Société Tunisienne d’Electricité et de Gaz – STEG”, the public power utility of Tunisia.

The project comprises 26 wind turbines of 1,320 kW each, with a total installed capacity of 34.32 MW. The project also includes a transformation substation aimed at upgrading the power generated by the turbines to 90 kV, and the construction of a 22.5 km high voltage transmission line (90 kV) to link the wind farm to the nearest Central Transformation Station of Menzel Temime1 and connect it to the Tunisian interconnected Grid.

The proposed project is expected to generate approximately 95,000 MWh per year (Load factor: 32%), all of which is to be totally exported to the STEG Grid. As the STEG Grid is dominated by thermal power generation, mainly natural gas-based, the implementation

STEG has already signed an Emission Reductions Purchasing Agreement or ERPA on April 5, 2010 with the World Bank (Spanish Carbon Fund) for the sale of a portion of the total carbon credits generated by the 34 MW wind. This is the first CDM project developed in Tunisia in the wind power sector. The project is actually under validation by AENOR.

 Partial substitution of fossil fuels with biomass at "Les Ciments Artificiels Tunisiens" cement plant, Tunis The purpose of this project is to reduce the GHG emissions, mainly CO2 emissions, in the cement production process by partially replacing the use of fossil fuel (petcoke) of “Les Ciments Artificiels Tunisiens “(CAT) cement plant. The project will use alternative fuel, in particular olive residues as a replacement fuel. Depending on the availability of this type of biomass and technical performance, the petcoke substitution rate with alternative fuel could be up to approximately 30%.

The expected overall CO2 emission reduction is 649,700 tCO2e.

This project is currently under validation by RINA Services S.p.A. and its PDD was published on UNFCCC website for public comments during the period 15 July 2011- 13 August 2011.

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 Tunis light rail transit project The project aims at establishing and operating an efficient, safe, rapid, convenient, comfortable and effective modern mass transit system in Tunis, Tunisia. The objective of the new Mass Rapid Transit System (MRTS) is to maintain the share of public transit at 40%.

The project includes the establishment of 4 new lines totalling 62.1 km of new rail tracks. Construction of the first stretches of phase 1 has already started with full operations expected at the end of 2014.

Version 1 of the PDD is already available but some parts of the document are not completed, mainly additionality assessment, emission reduction calculation and some baseline surveys.

This project is supported by GIZ (CCC project) for the PDD development and the national stakeholder consultation organization.

 Mahdia Landfill Gas Capture and Power Generation Project Mahdia Landfill Gas Recovery Project for Electricity Generation is a landfill gas (LFG) collection and utilization project in the Communal Area of Ksour Essaf in the city of Mahdia. The purpose of this project is to collect the CH4 in landfill gas at the landfill site as renewable energy and to utilize CH4 for generating electricity. The proposed project involves the installation of a highly efficient collecting system, transmitting system, and 2 electricity generators. The 2 generators will be installed with a total capacity of 1.8 MWe. The generated electricity from this project is exported to the national grid. In terms of CO2 emission reductions, the estimated annual average reductions are 15,562 tons CO2 over the crediting period.

The PDD of this project is already developed. Still missing is the environmental impact analysis and the organization of the national stakeholder consultation.

This project is supported by GIZ (CCC project) for the PDD development and the validation process.

 Landfill Gas Capture and Flaring in Zaghouan and Tozeur landfills Project The objective of this small-scale project activity is to build, operate and maintain a landfill gas collection and flaring system on Zaghouan and Tozeur landfills in Tunisia. It is estimated that the project will achieve emissions reductions of more than 105,887tCO2eq over the first crediting period: 2013 – 2019. The PDD of this project is already developed. Still missing is the environmental impact analysis and the organization of the national stakeholder consultation.

This project is supported by GIZ (CCC project) for the PDD development and the validation process.

 Biomass Power Generation Project The proposed project envisages the erection and operation of a biomass power plant with an installed capacity of 20 MW in the region of Thyna, about 10 km from Sfax, Tunisia. The biomass feedstock for the new biomass plant will come from agro-industrial residues: olive oil residues (olive husks and dried olive mill waste), fruit tree pruning and almond shells. The input of biomass will reach nearly 119,172 tons of biomass mixture. The output of electricity is estimated to be 146,000 per year. The power generated by the BPG project will be supplied to the national grid and primarily sold to the industrial companies of the two main shareholder groups in the project. The remaining surplus of power (if accruing) will be sold to STEG through a Power Purchase Agreement (PPA). The estimated annual CO2 emission reductions compared to a business-as-usual are 69,175tCO2 per year.

The project is supported by the National Waste Management Agency (ANGed) and the CDM/JI Initiative project (BMU) for the PDD development and the project sponsoring in the international events.

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 Installation of wind turbines for power production at SCG(Gabès Cement Company) This project aims at installing a wind farm near the cement plant in Gabes with a self-generation capacity of 14 MW/h. The wind electricity will be used directly in the plant replacing 40% of electricity purchased from STEG. The plant manager is seeking for financial partner for the project development under the CDM. It seems that the PDD drafting of the project is expected to be started soon.

 Solar phosphate drying project The project consists in spreading the phosphate horizontally to a depth variable depending on the season, on large areas, instead of storing it vertically to allow solar drying, thus avoiding drying by artificial means (usual dryers), which use large quantities of energy. From its third year, the project will allow to dry 840 000 tons per year. The PDD of the project is still under development.  Installation of wind turbines for power production at the Cement plant of Oum Kélil (CIOK) The project consists of the implementation of a 14 MW wind farm near the site of Oum Kelil cement plant. The project aims at producing electricity from a renewable source, namely wind energy. The generated electricity will ensure about 30% of the cement plant electricity demand. This renewable energy will partially substitute the electricity currently provided to the plant by the Tunisian Electricity and Gas Society (STEG) through the national electricity grid. The PDD of the project is already elaborated but must be updated. The CDM/JI Initiative project (BMU) is supporting the project through namely the development of a wind comparative study and a business model taking into account the evolution of the regulatory framework in Tunisia since 2009.

 Integrated fuel switching Project at Industrial Facilities in Gafsa region The project consists in connecting Gafsa region and particularly the mining area to Natural gas network and substitution of fuel with Natural gas in GCT and CPG plants operating in this area. The national stakeholder consultation of the project was already organized and its PDD was approved by the DNA. The Development of this project in the CDM process is fully supported by GIZ/CCC project.  Installation of a cogeneration system at a pasta making plant This project envisages the implementation a natural-gas based cogeneration unit with a total electrical capacity of 3.8 MWe. The cogeneration unit will produce 30 GWh of electricity per year, which will ensure the major part of the electricity demand of the company, estimated at 17 GWh. The PDD drafting of this project has been initiated for quite a while. It seems that the project is actually suspended.  190 MW wind farm project in Bizerte The main objective of this project is to implement a 190 wind farm in the region of Bizerte within the framework the STEG wind development programme. The project also includes a transformation substations aimed at upgrading the power generated by the turbines to 90 kV, and the construction of high voltage transmission lines (90 kV) to link the wind farm to the nearest Central Transformation Station of Menzel Jemil and connect it to the Tunisian interconnected Grid. This transmission line will allow for exporting the total quantity of power generated by the project to the Tunisian interconnected Grid. Installation works onsite have already begun. Furthermore, STEG has launched recently an international call for tenders for the sale of CERs coming from the project and the accompaniment of the project till the registration. It is expected that the CERs purchase agreement will be signed in the next few days.

 Valorization of flared gas in "Sidi El Itayem" oil field This project consists of installing and running a power generation station fed with gas that would otherwise be flared. The power station will have 3600 kW of nominal capacity, composed of eighteen identical microturbines. The electricity produced by the station will feed CFTP (project holder) field and the surplus will be sold to the Public Utility (Tunisian company for electricity and gas, STEG). The microturbines are already purchased and delivered. The construction of the transformation station has already begun.

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Regarding the CDM status development, the PIN of this project is already approved by the DNA. Furthermore, an international call for tenders for the sale of CERs coming from the project and the accompaniment of the project till the registration was recently launched by the National Agency for Energy Conservation of Tunisia on behalf of the "Compagnie Franco-Tunisienne des pétroles".

 Program of Activities

In July 2011, the first Tunisian PoA has been registered by the EB after more than two years since the beginning of validation. Aside from this, 5 programmes were identified of which 2 PoAs have detailed PINs, already approved by the DNA.

 Tunisian cogeneration development programme (PoA) The main objective of this PoA is to roll-out a large programme for supporting the development of cogeneration in the industrial and tertiary sectors in Tunisia, in line with the Tunisian Solar Plan which aims at installing 114 MWe of natural gas-based cogeneration systems over the period 2010-2016.

The development of this PoA is supported by AFD and the CDM/JI Initiative in the MENA region from BMU and GIZ, which have agreed to assist ANME in the identification, the development and the registration of this PoA. A detailed Program Idea Note has been already prepared according to the KfW template and approved by the DNA. A Study for the financial analysis and additionality assessment of the programme is in progress. Moreover an international call for tenders has been launched for the development of the business model and the PoA CDM design documents of the programme.

 Development of roof thermal insulation (Promo-Isol) (PoA) This PoA aims at implementing a large programme for insulating roofs of private houses (new and existing buildings) in Tunisia to reduce the demand of fossil fuel for heating and fossil fuel based power generation for cooling in such premises. The PoA will target newly self-constructed and existing private buildings. The business model foresees to provide financial support to the initial investment of implementation of technology to the private owner of the house by providing a subsidy per m2 of insulated roof combined with a soft loan for the remaining costs.

KfW has supported the development of the PIN according to its template. The PIN outputs have shown that there are significant methodology and additionality risks from a CDM point of view. It is recommended that this programme be developed as a NAMA instead (see NAMA report).

 Development of Solar Water Heater market in the tertiary sector in Tunisia- Tertiary PROSOL (PoA) The programme Prosol in the tertiary sector promotes collective solar thermal systems through the establishment of an attractive financial mechanism. It aims at installing 30.000 m² of solar collectors over the period 2010-2016 in the tertiary sector.

The PIN and PDD drafting of the programme have been initiated and are supported by the Italian Ministry of Environment through MEDREC.

 Promotion of the decentralized electricity self-production by the solar photovoltaic energy in Tunisia (PoA) This programme aims at installing 15 MW of grid-connected photovoltaic systems on buildings in the residential sector. It is based on a financial mechanism previewing the grant of 40% subsidy (30% from the National Energy Conservation Fund and 10% from the Italian Ministry of Environment) and a 5 year credit to be paid on the electricity bill.

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The PIN and PDD development are supported by the Italian Ministry of Environment through MEDREC.

 Replacement of 400,000 old refrigerators by energy efficient refrigeration appliances “PROMO-REF” (PoA) The programme consists in the replacement of the refrigerators of less than 300 liters and older than 10 years with more energy efficient appliances. The objective of the project is to replace 400.000 refrigerators over the period 2009-2012, exclusively by subsidized appliances of class 1 and 2. Distributing firms will take back the old refrigerator and deliver to the consumer a more energy efficient one with a discount of 15% while a recycling firm will take back the collected old refrigerators to disassemble them and recycle the recovered raw material.

Regarding the CDM status of this programme, its PDD is already under development.

V.Portfolio of priority projects and programs

V.1. Prioritization

For the selection of the prioritized CDM projects and PoAs, the following criteria have been adopted in accordance with the ToRs: - Project maturity (CDM status) - Possibility of registration before end of 2012 - Project implementer (experience and competence with CDM issues) - Scale of the project - Mitigation potential - Additionally criteria

The process of identification of priority projects was based on the screening of the national CDM portfolio of Tunisia taking into account the above mentioned criteria, particularly the possibility of registration before 2012.

The following projects will not be assessed as either they are already supported by international organizations till at least validation stage or there is a possibility of CER sale later to these organizations: - Rural electrification and water supply by solar photovoltaic (PV) project in Tunisia (UNDP, accompaniment until registration) - Tunisia: Sidi Daoud Wind Farm Project (World bank, accompaniment until registration and possibility of CERs purchase) - Landfill Gas Capture and Flaring in Zaghouan and Tozeur landfills Project (GIZ/CCC project, accompaniment until registration) - Mahdia Landfill Gas Capture and Power Generation Project (GIZ/CCC project, accompaniment until registration) - Promotion of the decentralized electricity self-production by the solar photovoltaic energy in Tunisia (Italian Ministry of Environment, PDD elaboration and possibility of CERs purchase) - Development of Solar Water Heater market in the tertiary sector in Tunisia- Tertiary PROSOL (Italian Ministry of Environment, PDD elaboration and possibility of CERs purchase)

The following table presents the prioritization of the projects:

Project Probability to Project Project Scale of Mitigation Additionality be registered maturity implementer the project potential criteria before 2013

+++ : high +++ : high +++: Potential +: large +++ : high +++: easily probability maturity project - : small potential demonstrable implementer

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Project Probability to Project Project Scale of Mitigation Additionality be registered maturity implementer the project potential criteria before 2013

Partial substitution of fossil +++ +++ + + ++ ++ fuels with biomass at «Les Ciments Artificiels Tunisiens» cements plant, Tunis. Tunis light rail transit project ++ ++ + + ++ ++ Installation of wind turbines + + + - + + for power production at SCG(Gabès Cement Company)

Installation of wind turbines + + + - + + for power production at the Cement plant of Oum Kélil (CIOK) Integrated fuel switching + ++ + - + + Project at Industrial Facilities in Gafsa region Solar phosphate drying - - + - + + project Biomass Power Generation ++ ++ ++ + ++ + Project 190 MW wind farm project in - + ++ + ++ + Bizerte Installation of a cogeneration - - + - + - system at a pasta making plant Energy efficiency - - ++ - + + improvement by Installation of voltage switch-regulators over the existing street lighting network in Tunisia Substitution of petroleum - - ++ - + + products by natural gas in the industrial area of Jammel- Zeramdine Substitution of petroleum - - ++ - + + products by natural gas in the industrial area of Menzel Hayett Flare gas recovery project at - - - + ++ + Maamoura oilfield site Flare gas recovery project at - - - + ++ + Djebel Grouz oilfield site Installation of a cogeneration - - - - + - system at a paper industry Installation of cogeneration - - + - + + systems at 5 enterprises of Poulina Group (SNA, Al Mazra, TEC T'PAP, STIBOIS, GIPA) Installation of cogeneration - - + - + + systems at 5 enterprises of Poulina Group (Ceramique Sfax, Complexe Sidi Saleh, MDF, STIBOIS-Bir Kasaa, Couvoirs Cédria) Installation of wind turbines - - - - + + for power production at Cimenterie de Jebel OuEst

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Project Probability to Project Project Scale of Mitigation Additionality be registered maturity implementer the project potential criteria before 2013

(CJO) Vegetable Oil Recovery and - - - - + + biodiesel production project Catalytic N2O destruction - - + + +++ + project in the nitric acid plant of the Tunisian Chemical Group at Gabes Distribution of 1 million CFLs + + ++ + ++ + to STEG consumers with 1 to 2 kVA capacity Installation of a trigeneration - - + - - + system at Enfidha airport Distribution of 1 million CFLs - - ++ - + + to STEG consumers which capacity is less than 1 kVA Four WWTPs upgrade from - - + - + + anaerobic to aerobic activated sludge treatment system Sludge anaerobic treatment - - + + ++ + and biogas use for cogeneration in 23 WWTPs Grand Tunis residual sludge - - + - + + landfilling Implementation of 10 Mono- - - + - + + Landfills in the domestic towns Replacement of surface - - + + +++ + aeration systems by fine bubbles systems in 18 Waste water treatment stations Plantation of an irrigated - - - + +++ + perimeter of Jatropha curcas (15000 Ha) Afforestration of Stone Pine - - - + +++ + and Eucalyptus over an area of 15 440 ha Tunisian cogeneration + + ++ Unknown + + development programme (PoA) Development of roof thermal - - ++ - + - insulation (Promo-Isol) (PoA) Voluntary Dissemination of - - Unknown Unknown Unknown + CFLs in Residential Sector in Tunisia Replacement of 400,000 old + + ++ + + + refrigerators by energy efficient refrigeration appliances “PROMO-REF” (PoA) Organic wastes Recovery and - - Unknown Unknown Unknown + Biogas Generation in the Wholesale Market of Bir Kassaa - Tunisia

Valorization of flared gas in + + + + + + "Sidi El Itayem" oil field

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Project Probability to Project Project Scale of Mitigation Additionality be registered maturity implementer the project potential criteria before 2013

Installation of a 120 MW - - ++ + ++ + wind farm of electricity self- production by Large Electricity Consuming Companies Table 44: Prioritization of projects

V.2. Supportive actions to CDM projects and PoAs

According to the above analysis, five projects/PoAs look worth supporting in order to be registered before the end of 2012, as presented in the following table:

Annual Required support Project Emissions Project title Status Developer Reductions (ktCO2e) Partial substitution of fossil fuels with Colacem In validation 65 Coordinate with project biomass at "Les Ciments Artificiels S.p.A. implementer for identification of specific need for technical Tunisiens" cement plant, Tunis. assistance to accelerate the validation stage and later the registration Tunis light rail transit project Ministry of PDD finalized 290 - Assist the Ministry of transport validation to be transport in dealing with information gathering and launched soon PDD finalization issues - Recruit a DOE for the validation - Assistance for the registration process Biomass Power Generation Project BPG PDD under 69.2 - Technical assistance to finalization the project owner for PDD finalization and national stakeholder organization - Recruit a DOE for the validation - Assistance for the registration process Distribution of 1 million CFLs to STEG ANME PDD under 80.6 - Recruit a DOE for the consumers with 1 to 2 kVA capacity development validation - Assistance for the registration process Tunisian cogeneration development ANME Additionality 87.2 - Coordination with ANME programme (PoA) study in for any specific need of technical assistance for progress accelerating PDD development - Recruit a DOE for the validation - Assistance for the registration process Integrated fuel switching Project at STEG/GCT PDD approved 28.8 - Recruit a DOE for the Industrial Facilities in Gafsa region validation - Assistance for the registration process Valorization of flared gas in "Sidi El CFTP/ANME Call for tender 12.8 Coordinate with project Itayem" oil field for the sale of implementer for identification CERs and of specific need for technical project assistance to accelerate accompaniment PDD development, the launched validation stage and later the

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Annual Required support Project Emissions Project title Status Developer Reductions (ktCO2e) recently registration PIN approved 190 MW wind farm project in Bizerte STEG Call for tender 354 Coordinate with project for the sale of implementer for identification CERs and of specific need for technical project assistance to accelerate accompaniment PDD development, the launched validation stage and later the recently registration PIN approved Table 45: Prioritized projects and their specific needs

VI.Conclusion

The current CDM portfolio of Tunisia includes 18 projects in an advanced stage of the CDM project pipeline (have at least initiated PDD development): 3 projects are registered (of which 1 PoA), 3 projects are under validation and 12 projects are in PDD development stage.

In July 2011, the first Tunisian PoA has been registered by the EB after more than two years since the beginning of validation. Aside from this, 5 programmes were identified of which 2 PoAs have detailed PINs, already approved by the DNA.

From this portfolio, the following project/programmes were identified as prioritized: - Partial substitution of fossil fuels with biomass at «Les Ciments Artificiels Tunisiens» cements plant, Tunis - Tunis light rail transit project - Biomass Power Generation Project - Distribution of 1 million CFLs to STEG consumers with 1 to 2 kVA capacity - Tunisian cogeneration development programme (PoA) - Integrated fuel switching Project at Industrial Facilities in Gafsa region - Valorization of flared gas in "Sidi El Itayem" oil field - 190 MW wind farm project in Bizerte

VII.Bibliography

- Stock-taking report and assessment of CDM progress status in Tunisia, BMU, December 2008 - Development of roof thermal insulation (Promo-Isol) PoA PIN, KfW, September 2010 - www.cdmtunisia.tn - www.cdmbazaar.net

VIII. Contact details of the DNA

National Focal Points

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Annex 9 – Morocco country study

Contents I. Abbreviations 132 II. Background 133 III. The CDM in Morocco 134 IV. Analysis of the current CDM status in the country 139 V. Portfolio of priority projects and programs 146 VI. Conclusion 148 VII. Bibliography 149 VIII. Contact details of the DNA 149

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I. Abbreviations

- ADEREE: Agency of Renewable Energy and Energy Efficiency - AfDB: African Development Bank - BMU: German Ministry of Environment - CC: Climate Change - CCU: Climate Change Unit - CDM: Clean Development Mechanism - CDM NC: CDM National Council - CDM PS: Permanent Secretariat - CER: Certified Emission Reduction of GHG - CPA: Component of Program Activity - CSP: Concentrated Solar Plant - DOE: Designated Operational Entity - DNA: Designated National Authority - EE: Energy Efficiency - EIB: European Investment Bank - EU: European Union - FEC: Municipality Equipment Funds (Fonds d’Equipements Communal) - GDP: Gross Domestic Production - GEF: Global Environment Facility - GHG: Greenhouse Gas - GoM: Government of Morocco - GIZ: German Cooperation - KP: Kyoto Protocol - MAD: Morocco Dirham - MASEN: Morocco Agency of Solar Energy - MEMEE: Ministry of Mines, Energy, Environment and Water - MENA: Middle East and North Africa - Mtoe: Million of ton Oil Equivalent - NAMAs: Nationally Appropriate Mitigation Actions - PDD: Project Design Document - PNDM: National Household Waste Plan (Programme National de Déchets Ménagers) - PoA: Programme of Activities - SWH: Solar Water Heater

- tCO2e: Ton of carbon dioxide Equivalent - Toe: Ton of Oil Equivalent - UNFCCC: United Nations Framework Convention on Climate Change - UNDP: United Nation Development Program - WB: World Bank

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II. Background

Morocco is located on the west side of North Africa, with the Atlantic Ocean to the west and the Mediterranean Sea to the north, with a total coast line of about 3600 km. Morocco covers an area of around 447,000 m² and accounts around 31.9 million habitants (2010), among them 13.5 million living in rural areas62.

Figure 21. Geographic location of Morocco - MENA Figure 22. Map of Morocco. Region. Source: unicef.org Source: data.un.org

With a GDP per capita of 3,250 $ (current price 2010)63, Morocco is classified as an intermediary country. Morocco's market economy benefits from the country's relatively low labour costs and proximity to Europe, which aid key areas of the economy such as agriculture, light manufacturing, tourism, and remittances. The country is also the world's largest exporter of phosphate, which has long provided a source of export earnings and economic stability. Over the last decade, Morocco has witnessed significant changes in its development policy towards greater sustainability in terms of social and environmental requirements. Many ambitious programs have been launched in all strategic sectors such as water and energy reform, transportation infrastructure modernization, tourism development, rural development and agriculture, and sanitation infrastructure upgrading. Regarding the energy sector, primary energy demand grew at a rate of around 4% during the last 5 years, reaching more than 15 Mtoe in 2010. However, the country heavily depends on imports for its energy supply (more than 97%), which implys a heavy energy bill estimated at around 70 billion MAD64, or almost 6 billion Euros. Meanwhile, the subsidy for petroleum products reached in the same year around 2 billion Euros, which is a heavy burden on public finances65. According to the Ministry of Energy, Mines, Environment and Water (MEMEE), the demand for energy will almost double in 2020 and triple in 2030, suggesting not only major economic and social challenges but also further increases to the country’s reliance on energy imports. To address this situation, the Government of Morocco (GoM) has set up a new energy policy based on an ambitious energy efficiency and renewable development strategy. The medium-and long-term objectives of this strategy are as follows66:

62Haut-Commissariat au Plan 63World Bank 64 MEMEE 65 MEMEE 66 MEMEE

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 Reduce energy consumption in buildings, industry and transport by 12% by 2020 and 15% in 2030. The distribution of the expected savings by sector is 48% for industry, 23% for transport, 19% residential and 10% for the tertiary sector.  Raise the installed capacity of renewables to 42% (14% solar, wind 14% and 14% hydro) of the total electrical capacity by 2020. To reach these objectives, Morocco should achieve, by 2020, a total installed capacity of 6,100 MW including 2,000 MW of wind energy and 2,000 MW of CSP. The achievement of these programs will allow Morocco to reduce its energy imports, set a first step toward energy independance and save annually 2.5 million tons of oil equivalents in fossil fuel, thus avoiding the emission of nearly 7 million tons of carbon dioxide per year.

III. The CDM in Morocco

III.1. National CDM policy and regulation

Contributing to the efforts of the international community to address climate change, Morocco signed the UNFCCC at the Rio Earth Summit in 1992 and ratified it on 28 December 1995. As a non-Annex I party to UNFCCC, Morocco ratified the Kyoto Protocol on the 25th January 2002. Since then, Morocco has made significant efforts to ensure the implementation of the Kyoto Protocol by dynamically participating in the CDM. Thus, it established in 2002, by ministerial decree, a Designated National Authority for the CDM chaired by the Minister in charge of environment. Morocco also developed the Initial National Communication in 2001 and the Second National Communication in 2009. In these communications, strategic climate change axes have been developed and inventories of mitigation and adaptation projects have been carried out.

Milestones in Moroccan climate Policy Date Ratification of the Framework Convention on Climate Change 28 December 1995 Submission of the initial National Communication 1 November 2001 Ratification of the Kyoto Protocol 25 January 2002 Establishment of the CDM - DNA 18 September 2002 Issuance of National Plan against Global Warming (PNRC) November 2009 Submission of the second National Communication 3 November 2010 Table 46: Milestones in Morocco climate change policy. Source: Ministry of Environment

In 2009, Morocco developed also a National Program against Global warming (PNRC) including mitigation and adaptation strategy up to 2030. III.2. International cooperation on Mitigation

Morocco is benefiting from several capacity building support projects financed by international cooperation in the field of climate change and particularly in mitigation. The following table summarizes the identified projects and their status:

# Project Status Agency 1 Capacity building program on NAMAs and MRV in 10 countries On-going EU/UNDP including Morocco and Egypt. 2 Development of the 3rd National Communication Approved GEF/UNDP 3 CDM JI Initiative including Morocco, Tunisia, Algeria and Egypt On-going GIZ/BMU (Capacity building on Mitigation)

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4 Program of Management and Protection of Environment on-going GIZ (includes climate change component) 5 Assistance on climate change governance on-going WB 6 Development of 3 NAMAs for Morocco Solar, wind and solid pipeline WB waste program 7 Development of a CDM PoA for landfills on-going WB 8 African Adaptation Program (AAP) in 20 African countries Pipeline Japan/UNDP including Morocco 9 Arab Climate Resilience Initiative – ACRI on-going UNDP 10 Adaptation of forest policy to climate change in 6 MENA on-going GIZ countries including Morocco 11 Energy sector reform including EE and RE on-going EU 12 Energy Efficiency in building program on-going UNDP/GEF 13 Program of Promotion of Renewable Energy and Energy on-going GIZ Efficiency 14 CSP of 500 MW in Ouazazate on-going WB/EIB/AFD/AFDB 15 Tramway of Rabat on-going EIB/EU 16 Contribution to the Moroccan Carbon Fund on-going EIB 17 Assistance for the optimization and redynamization of the on-going GIZ Moroccan CDM portfolio Table 47: Current projects on climate change in Morocco. Source: from various sources

III.3. Main Institutional Stakeholders

 The Climate Change Unit (CCU) Climate change is mainly managed by the CCU administratively attached to Studies, Planning and Prospective Department (DEPP) within the Department of Environment. The unit remit relates primarily to the coordination and the management of the actions concerning the implementation of Morocco commitments within CCNUCC and Kyoto Protocol. It is in charge of administrative and financial management of the governmental activities relating to climate change.

The lack of human and financial means of this unit did not allow it to fully fill its role of management and follow-up of the numerous activities related to UNFCCC and the Kyoto Protocol. Along with the CCU, other specific structures were created during the end of the nineteenth, which are: - The National Committee for Climatic Change (CNCC), set up in 1996 and made up of representatives of ministerial Departments and national institutions involved in climate change issues, - The Information Centre on Sustainable Energy and Environment ( CIEDE) in 2000, - The National Scientific and Technical Committee ( CNST- CC), in 2001, made up of national experts and set up as a national equivalent to IPCC, In general, these institutions are not fully functioning or operational.

 The Designated National Authority (DNA) According to the decree establishing the Moroccan DNA, it is an authority that plays two roles: one is regulatory, laying down the rules and procedures of assessment and approval of CDM projects; the second is promotional, focusing on capacity building and marketing Morocco’s CDM potential. The Moroccan DNA represents the State in its relation with national and international agencies and operators in charge of the CDM. It issues the written approval, which confirms that the project has been

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undertaken voluntarily and is in line with the national criteria for Sustainable Development (SD). It consists of a CDM National Council (CDM NC) and a CDM Permanent Secretariat (CDM PS). The CDM NC members are senior officials from strategic sectors of the country involved in the CDM. It consists of some twenty members representing: - Departments directly concerned with the CDM, including those of Energy, Economy, Finance, Industry, Transport, Forestry, Agriculture, Housing and National Planning and development, Water and Environment; - General Confederation of Moroccan Companies (Confédération Générale des Entreprises du Maroc), the Professional Union of Moroccan Banks ( Groupement Professionnel des Banques du Maroc), The Moroccan Centre of Clean production ( le Centre Marocain de Production Propre) and the Agency of Renewable Energy Development and Energy Efficiency (ADEREE); and - Civil society representatives. The CDM NC is entrusted with examining and approving the projects which are submitted to this body, updating and monitoring the approval procedures, particularly the sustainable development national criteria, and promoting the CDM in Morocco in its various forms. Morocco’s CDM PS is housed in the department of Partnership, Communication and Cooperation (DPCC) of the Secretariat of State for Water and Environment/Ministry of Energy, Mining, Water and the Environment. It consists of three executives. The CDM PS undertakes the secretarial work of the CDM NC. It is a one-stop shop for CDM projects in Morocco. Its duties are to maintain permanent relations with the CDM Executive Board (EB) monitor the evolution of CDM rules and procedures at the international level and attract CDM investors interested in the generation and purchase of CERs. The CDM PS seeks to raise awareness, both nationally and internationally, of the national CDM procedures and framework, as well as promoting the Moroccan portfolio of CDM projects, notably through its website http://www.cdmmorocco.ma.

III.4. CDM national capacities

One of the first initiatives of Morocco concerning CDM was the completion of a study in 2000, conducted with the support of GTZ, on the institutional framework of the CDM in Morocco and the national SD criteria.

Since 2001, Morocco has launched, with the support of United Nations Development Programme (UNDP), programs to consolidate national capacities on various aspects related to climate change, including the CDM. Thus, Morocco has developed a strategy for CDM development and promotion for the period from 2003-2005. This strategy has been elaborated and implemented since April 2003 with the support of the UNDP-UNEP project on ‘CDM Capacity Building in Morocco’. This has mainly contributed to: - Undertaking studies on CDM in Morocco, developing training and communication programs on CDM and publishing brochures and guides about the CDM projects’ development; - Supporting the elaboration of PDDs for CDM pilot projects, their approval and validation. This has helped to promote the CDM among the national stakeholders; - Organizing dozens of seminars, workshops and forums on various aspects of the CDM since 2003, in particular on: - Technical aspects of CDM projects (methodology, additionality, elaboration of PINs and PDDs, CDM eligibility of projects, etc.); - Roles, responsibilities and functioning of the DNA; - CDM project types by sector: landfills and wastewater treatment plants, renewable energy, forestry; and financial aspect of the CDM and negotiations of sales contracts of CDM carbon credits (ERPAs); - Active participation of Morocco in various international workshops and fairs; - Active participation of Morocco in the negotiations on the CDM under the UNFCCC;

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- Signing of several direct memoranda of understanding with Annex I countries and organization of concerted actions on CDM with these countries; - Establishment of a permanent network of Moroccan stakeholders interested in the CDM.

Since 2006, Morocco has continued its efforts, with the support of UNDP and various bilateral partners with regards to national CDM capacity-building through: - The organization of seminars at the regional level (Agadir, Fez, Tangier, Oujda), focusing on the funding opportunities that can be provided by different types of CDM projects; - The completion of studies aimed at improving the institutional and technical framework of the CDM in Morocco and developing the Moroccan project portfolio by developing small-scale projects in new sectors such as solar power plants and rural electrification by renewable energy.

All efforts made to date by Morocco since 2001 in the field of CDM capacity building have contributed to: - The development of national expertise; - The creation of CDM units in large companies and concerned public administrations (ONE, OCP, High Commission for Water, Forests and the Fight against Desertification, CDER, COSUMAR, LAFARGE, Fonds d'Equipement Communal (FEC), CDG (Fonds Capital Carbone Maroc, etc); - An initial portfolio of over 65 CDM projects (requiring a detailed analysis to better optimise it) including 8 which are already registered by the CDM EB; - A dynamic bilateral cooperation: seven MOUs have been signed with the following countries: France, Austria, Italy, Japan, Spain, Canada, Denmark, Portugal (on-going negotiations); - A CDM strategy for the forest sector in Morocco; - A website devoted to the CDM with a wealth of information: www.cdmmorocco.ma; and - Ranking of Morocco by Point Carbon as the second most attractive African country to investors in terms of CDM. Morocco has been ranked among the top ten developing countries in this ranking since 2003.

III.5. Legal, financial and institutional barriers preventing CDM development and recommendations

As mentioned, Morocco has benefited from much support on CDM during the last 10 years. However, the results in terms of registered projects are very low compared to other countries such as those in Latin America and Asia. According the baseline study of the CDM/JI Initiative, the strengths and weaknesses of Morocco’s efforts to build national capacity in the CDM as well as the recommendations to further improve these capacities in the future are presented in the following table.

National CDM Strong points Weak points Recommendations Capacity Communication Existence of extensive Infrequent updates of Launch a process of regular updating of documentation this documentation all documentation of the DNA in French, (brochures, guides, (CDM process evolves English and Arabic. etc.) fast: methodologies, additionality, definition of small-scale projects, etc.). Morocco was one of Updating the website : There is a need to establish a continuous the first developing updating has become and active management of the website, CDM website countries to have less regular and which would promote greater involvement established a CDM systematic in recent of national CDM stakeholders and carbon website since 2003 years. buyers. The information provided on the website does for example not reflect the present status of the CDM pipeline, especially with regard to projects in the validation and registration phase. The

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National CDM Strong points Weak points Recommendations Capacity website should also include an open CDM forum to facilitate contacts between the DNA and the rest of the world. Seminars and Large number and Many of these There is a need for capacity building on training sessions diversity of training workshops were CDM with regards to finance and activities related to the devoted to raising negotiations of contracts, in particular for CDM awareness and project developers. Organize seminars technical capacities and training sessions in new sectors such with regards to as transport, construction (energy developing CDM efficiency and renewable energy), cement projects with all its industry, agriculture, biomass, small complexity, which has hydropower, wind, solar. created certain reluctance and fear among the trained stakeholders to engage in CDM activities. Background Morocco conducted These studies are Launch large-scale studies for the most studies various CDM studies insufficient and not up relevant sectors integrating energy audits that have contributed to to date anymore and to identify energy intensive areas and the identification of an therefore do not propose the potential for CDM projects on initial CDM portfolio in contribute to accurately this basis. The DNA could integrate these relevant sectors. A very identifying CDM types of studies in the framework of recent study for the projects in different international cooperation. The 2008 optimization of sectors energy policy in Morocco must be linked Morocco´s CDM to a national CDM strategy. A study in portfolio has identified this respect is also needed. Launch 17 projects which could sectoral studies on new CDM potentially be opportunities, notably: Transport, registered before 2013. construction, agriculture, biomass, small In addition to that, at hydropower, wind. least three large wind Follow the progress of individual CDM projects are scheduled projects with a mid-term review in the first trimester of 2012 in order to ensure their registration before 2013. Due to the exceptional wind potential of Morocco as well as ongoing wind projects – efforts could be pooled into a PoA. Table 48: Strengths, weaknesses and recommendations on Morocco’s national CDM capacity building efforts. Source: An analysis of the political framework for CDM projects and state of affairs of CDM development and implementation in Morocco, CDM/JI Initiative Country Study Morocco, GIZ, 2008

As the CDM future is compromised after 2012, Morocco has to prepare itself in order to be well positioned on the new carbon financing mechanism according to Copenhagen and Cancun agreements. For this, it is recommended to implement the following capacity building activities:

- Develop a PoA for wind power generation. If registered before the end of 2012, the PoA would allow the addition of wind capacity as a CDM project activity beyond 2012 without restrictions to the import of the generated CERs in the EUETS. Even in the absence of a continuation of the CDM or a failure to register the PoA before 2012, the PoA would provide a structure for the use of carbon finance in one Morocco´s most attractive project type for emission reductions. - Strengthening of the Moroccan institutional framework of climate change and promote a cross- sectoral approach. In fact, the CCU, because of lack of capacities and legitimacy, is showing some difficulties to mobilize the other sectors around a real climate change policy.

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- Capacity building in GHG inventories development. This will be an absolute need to set up reliable MRV system at national level but also to fulfil the new requirements towards the UNFCCC of developing the Inventory and the national communication each 2 years. This activity should have 3 main objectives: 1) develop sustainable GHG reporting system in all concerned sectors and especially the energy sector; 2) enhance the level of local expertise (public and private) for conducintg GHG inventories according to IPCC guidelines and tools; and 3) to deepen the inventory methodologies. - Mitigation action planning and prioritization within low carbon development strategies (LEDS). This will include the development of planning tools helping the country to build and analyse GHG emission scenarios, define mitigation objective, identify and prioritize mitigation options, and develop GHG reduction scenarios. - Develop and experiment approaches and methodologies for territorial climate plans in conjunction with territorial development plans and test their implementation on pilot operations. Under the new directives of the King Mohamed VI, greater power should be given to the regions in defining and implementing development policies. This will imply capacity building in this field and develop methodological guide to implement these new approaches. In the energy field, it will be necessary to develop regional energy planning tools including regional energy balance development in order to prepare the territorial inventories of GHG and mitigation options. - Capacity building in NAMAs and new carbon market mechanisms. In fact, Morocco hasn’t seized the opportunities offered by the CDM, mainly due to lack of capacities in the public and private sector. To avoid this situation, Morocco should prepare itself early for the new mechanisms currently under discussions, although they are still at a concept stage. This should include NAMA identification by carrying out sectoral screening based on objective criteria, NAMA formulation including cost assessment and funding source definition (unilateral, supported, crediting) and NAMA development and implementation. The idea is to build capacities around pilot NAMAs to be developed within the project, such as the current energy efficiency and RE programs of Morocco. - Capacity building in MRV. MRV is closely linked to NAMAs, since it will be required to follow up and report the impact of these NAMAs on GHG emission reduction. The first level of MRV will be at macro level and it will simply covered by the GHG inventories. However, it will be also required to develop MRV at sector and activity levels for which Morocco will need also to be assisted. One of the major sectors to be subject of MRV will be the energy sector, since it covers the most important potential of mitigation.

IV. Analysis of the current CDM status in the country

IV.1. National CDM potential

In Morocco, two key sectors represent the highest current and future CDM potential. These are the energy and waste sectors.  Energy Morocco elaborated a new energy strategy with the following main objectives: - Secure and diversify the forms of energy supply; - Generalize access to energy, optimize costs and preserve the environment; - Increase the contribution of renewable energy to 10% in the national energy balance by 2012 and up to 15% by 2020; - Reduce fossil energy use by up to 15% by 2020; and - Save 12 to 15% of energy by 2020 and 20% by 2030 by increasing energy efficiency.

This strategy provides great opportunities for saving fossil energy and developing renewable energy. These fields represent strong potential for emission reductions where CDM projects (i.e. traditional CDM projects or programmatic CDM projects) could particularly be mobilized. The strategy seeks to mobilize the energy producing industry and private electricity producers and direct them towards energy efficiency and renewable energy. In this respect:

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- A USD 1 billion dollar support fund for energy efficiency (EE) and RE was established; and - A new threshold for an electrical energy self-generation of 50 MW instead of the current 10 MW has been set.

 Wind energy Morocco enjoys one of the most attractive potentials for wind energy worldwide, with great mitigation prospects. In fact, the technical wind potential is estimated to around 25,000 MW. With an average wind speed exceeding 9m/s in several regions, the feasible wind energy potential by 2020 is estimated by the government to be between 4000 MW and 7000 MW with a required investment of 6 to 10 billion Euros.

The reductions in CO2 emissions that can be generated by the wind energy program could reach an average of 4 million tCO2 per year by 2012 and 13.5 million tCO2 per year by 2020. It should also be noted that beside its exceptional potential for wind power, Morocco also offers a large technical potential for grid-balancing, even with a high penetration of wind power. Indeed Morocco offers a large potential for pumped-storage hydropower in the Atlas mountains.

Figure 23: Wind energy atlas: Source: ONE

Currently, the Moroccan Wind program involves the installation of 2000 MW by 2020. This program will allow Morocco to reduce energy imports and save annually 1.5 million toe, thus avoiding the emission of nearly 4.5 million tons of carbon dioxide per year.

Around 1000 MW are already installed or comissioned and 1000 MW will be developed under an IPP approach in the near future. In turn, there is a good potential for scaling-up wind power generation beyond the 2,000 MW goal.

Target capacity by 2020 2,000 MW Installed farms 280 MW On-going projects 720 MW IPP projected wind farms 1,000 MW Generated electricity by 2020 6,660 GWh/year Total cost 3.5 billions $ Emission reduction 4.5 million t/yr Saved energy 1.5 million toe/an Table 49: Wind energy program in Morocco. Source: ONE

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Despite the quality of proposed wind sites in Morocco, the value of carbon credits remain a determining factor for the attractiveness of wind projects to investors. Indeed, almost all wind power projects in Morocco have been developed on the basis of a contribution from carbon finance to improve their economic viability. The sector is one of the most attractive for investments in emission reductions.

 Biomass In Morocco, biomass represents a significant energy potential. The feasible potential by 2020 is estimated at 950 MW with a required investment of 2 billion Euros. Such a program should lead to a reduction of 0.95 million tCO2/year by 2012 and 4.8 million tCO2/year by 2020.

It should be noted that the use of biomass as an alternative energy source has significantly developed in recent years, mainly in the sugar and olive oil industries. Such CDM projects are already included in Morocco’s CDM portfolio.

 Solar Energy In Morocco, the feasible potential for solar energy by 2020 is estimated at 1,080 MW in photovoltaic and 2 1,700,000 m in solar thermal energy with a required investment of 11.5 billion Euros. The reductions in CO2 emissions that can be generated by this program would reach an average of 0.49 million tCO2/year by 2012 and 2.43 million tCO2/year by 2020.

 Energy Efficiency In Morocco, the feasible potential for energy efficiency by 2020 is estimated at 1,820 MW with an investment of 1,028 million Euros, which would correspond to a reduction of 8.1 million tCO2/year. The building sector would contribute to 48 % of planned reductions by 2020 with a potential of 1,320 MW, followed by industry (30 %) and transport (22 %). By 2012, the emission reductions that can be expected could reach 1.4 million tCO2/year.

Taking into account these data, we can estimate that if Morocco’s energy strategy is implemented, various projects integrating a significant reduction of GHG emissions and potentially eligible for CDM can be developed. This would lead to a reduction of overall emissions in this sector estimated with 6.84 million tCO2/year by 2012 and more than 28 million tCO2/year by 2020.

Figure 24: Estimated annual CO2 reductions in the energy sector in Morocco by 2020 (in million tCO2). Source: Source: An analysis of the political framework for CDM projects and state of affairs of CDM development and implementation in Morocco, CDM/JI Initiative Country Study Morocco, GIZ, 2008

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 Waste management

 Landfills Until 2000, all landfills in Morocco were not controlled and were not compatible with biogas capture. In 2005, with the ratification of the Kyoto Protocol and the momentum given to the CDM globally, the biogas potential of Moroccan landfills came under the spotlight due to the fact that flaring could attract financing through the CDM. At this time, however, there were unrealistic expectations for CER generation from the disposal of waste in landfills.

To clarify the situation of Moroccan landfills with respect to biogas flaring and CDM funding opportunities, the Ministry of Interior entrusted Fonds d’Equipements Communal (FEC) with a mission in this respect in January 2007. In June 2007, an evaluation mission of biogas opportunities of 16 landfills located in 11 local authorities was conducted. The results of this mission revolved around three main points: - All the landfills provide biogas only in very small quantities, too little to make an individual CDM project viable; - The first controlled landfills in Morocco, in particular those of Fez, Agadir, Oujda, Oum Azza (Rabat, Témara and Salé) and El Jadida could generate interesting CDM opportunities if the developers carry out their job correctly (i.e. the registration of the project and especially the optimization and monitoring of biogas flaring); - If well designed at the level of the optimization of biogas and its flaring, future controlled landfills could represent an important potential for exploitation under the CDM. In order to keep transaction costs low, avoid repeated efforts and bring more certainty on the use of carbon finance, such projects should ideally be pooled into a national PoA

Consequently, the carbon unit housed in the FEC to monitor these aspects has managed to incorporate this CDM possibility in the National Household Waste Plan (PNDM). The Government of Morocco, with the support of the World Bank, is currently establishing a PoA for landfills in Morocco.

Landfills Reductions in KtCO2/year Oulja 32.4 Fez 98.8 Oujda 42 Agadir 26 Oum Azza 250 El jadida 17,6 Table 50: Landfills in Morocco with a significant biogas potential. Source: An analysis of the political framework for CDM projects and state of affairs of CDM development and implementation in Morocco, CDM/JI Initiative Country Study Morocco, GIZ, 2008

The work achieved so far by the FEC carbon unit has helped to highlight the potential of biogas from landfills, but more specifically: - Showed several shortcomings in waste management in Morocco and has contributed to create funds to support local communities in this field; and - Helped Morocco to establish an integrated and structured carbon process in the waste sector by opting for PoAs.

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PoA of the PNDM

Name of the PoA Program of collect and flaring and /or energy valorisation of Morocco landfill’s biogas. Coordination Entity Le Fonds d’Equipement Communal (FEC)  Biogas collect;  Biogas flaring and/or  Biogas valorisation of electricity generation for the own use and the sale to the grid CPA content  Valorisation of biogas for heat generation. Eligibility criteria of the CPA to the PoA • Flaring and energy valorisation project development • Availability of an Environmental Impact Assessment (EIA) in accordance with Moroccan law on EIA; • Signature by the Municipality and / or the private operator implementing the CPA, of a letter confirming their voluntary participation in the PoA; • Respect for the baseline and monitoring plan of the ACM 0001; • Demonstration of additionality of the CPA should be carried out according to the requirements of the 0001 ACM PoA period 28 years Table 51: PoA of the PNDM . Source: A. Lahbabi

 Wastewater treatment plants Lack or progress in the field of wastewater treatment in Morocco and the lack of standards and practices of non-treatment or primary treatment offers various possibilities with regards to CDM projects in this sector. In fact, a program for upgrading and building new wastewater treatment plants for the main cities of the Kingdom has been launched in the recent years. The flaring of biogas in these wastewater treatment plants and the use, in some cases, of biogas for electricity generation could provide further CDM opportunities. Several agencies have already been engaged in the CDM project development process of their liquid sanitation projects. It should be noted here that the new wastewater treatment plant of Fez initiated by RADEEF is developed as a CDM project, including the development of a new methodology.

Wastewater treatment plants Reductions in KtCO2/year Fez 32.4 Marrakech 98.8 Agadir 42 Table 52: Wastewater treatment plants in Morocco with a significant biogas potential. Source: An analysis of the political framework for CDM projects and state of affairs of CDM development and implementation in Morocco, CDM/JI Initiative Country Study Morocco, GIZ, 2008

Similar to the landfill sector, the wastewater treatment sector could greatly benefit from a structured PoA in order to capture at a low transaction cost much of the opportunities to reduce GHG emissions at multiple sites across the country.

IV.2. National CDM project portfolio Currently, there are 8 Moroccan CDM projects registered by the CDM Executive Board and 12 projects under validation according to the Point Carbon database (accessed 2 December 2011). According to the Moroccan Climate Change unit’s website, which is not up to date and therefore makes direct comparison difficult, this suggests a further 5 projects are approved by the DNA at the level of PDD (some are listed as approved, but yet to be confirmed), while 13 projects are the stage of PIN approved by the DNA and around 27 projects are in idea status. This suggests a total of 65 projects. CDM project status Number of Expected ER projects (1000 tCO2e /year) PIN approved by DNA 13 1,154 PDD approved by DNA but to be confirmed 3 123

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Idea status 27 2,985 PDD approved by DNA 2 92 Projects under validation 12 893 Registered projects 8 1020 Total 65 6268 Table 53: Morocco CDM portfolio in 2011. Source: Point Carbon database, UNFCCC database, Climate Change Unit, Morocco

Thus the majority of projects are either at the PIN or idea stage (roughly 60%). The renewable energy sector covers around the half of the portfolio (27 projects), followed by the energy efficiency (16 projects) and waste sectors (15). Among the registered projects, 7 are related to renewable energy sector (5 wind farms, one PV solar and one biomass) and only one concerns solid waste.

IV.3. Overview of current CDM projects and PoAs Taking into account the short time before the end of 2012, only the most promising projects are worth considering: this includes relatively advanced projects under validation and projects with already developed PDDs. The two tables below present an outlook of these projects:

 Projects under validation N° Project Parties involved Expected ER Starting (1000 tCO2e /year) date of validation 1 Jorf Lasfar heat recovery Office Chérifien des 83 December enhancement for power project. Phosphates 2005 2 Biogas recovery and electricity Régie Autonome Multi- 30.6 December generation from M’zar Wastewater Services 2008 treatment plant, 3 Greenhouse Gas Emission in the GIE Al Wahdaoui 4.8 April 2008. Fish Meal Industry in Morocco – Central Steam Production Plant 4 Fes New Landfill Gas Recovery Ecomed gestion de 90.5 August 2008 Reuse and Flaring Project – Fes dechets 5 SBBC Fuel Switch Project Briqueterie Bati Chaouia 41 March 2008 6 Foum El Wad Wind Farm NAREVA Holding 264 May 2010 7 Fuel oil to vegetable biomass Liseur Cristal 11 Dec 2010 switching at Lesieur Cristal Limited Corporation 8 Heat recovery and fuel switch Renault Tanger 10.5 May 2010 from natural gas to biomass Méditerranée (RTM); residues implemented at Renault Veolia Environment Tanger Méditerranée (RTM) plant – Melloussa, Morocco 9 Landfill gas (LFG) capture and Commune Urbaine de 35 August 2010 flaring or utilisation at the Oujda Oujda (CUO); Fonds landfill d’Equipement Communal (FEC)

10 Landfills gas capture, flaring and Fonds d’Equipement 142 August 2010 use program in Morocco - PoA Communal (FEC) 11 Marrakesh Wastewater Treatment Régie Autonome de 123 September Plant (WWTP) with biogas Distribution de l'Eau et 2010 recovery for cogeneration de l'Electricité de Marrakesh (RADEEMA) 12 Wind farm extension project for LAFARGE – Maroc 58 May 2009 Lafarge`s cement plant in Tetouan

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Table 54: Morocco CDM portfolio in 2011 – projects under validation. Source: UNFCCC database; Point Carbon database

Twelve CDM projects are listed as being under validation in Morocco with a total mitigation potential of over 890 ktCO2e per year. However, looking at the starting date of validation, it seems that several of these projects seem to have difficulties. The obstacles range from the lack of data, complexity of projects, lack of financing for the validation, difficulties to demonstrate additionality, lack of capacity of the projects holders to answer on time the clarification requests and questions asked by the validators.

 Projects with approved PDD by the DNA The following 5 CDM projects are listed by the DNA as being under development with an approved PDD (but not yet in validation), with a total mitigation potential of around 558 kTCO2e per year. N° Project Parties involved Expected emission reduction (1000 tCO2e /year) 1 10 Wind farm for water desalination in Tan Tan Office National de l’Eau 17 Potable 2 Landfill of Akreuch (Rabat) Commune Urbaine de Rabat 76 3 Electricity generation from biogas produced by Régie Autonome de 103 the waste water treatment station of Fes Distribution de l’Eau et de l’Electricité de Fès 4 Methane emission reduction in the waste water Cellulose du Maroc 18 treatment station of the paper factory of “ Cellulose du Maroc” 5 PV electricity supply in airports Office National des Aéroports 0.17 Table 55: Morocco CDM portfolio in 2011 - Projects with approved PDD by the DNA. Source: Climate Change Unit, Morocco

A number of issues have been identified for several of these projects in a recent study for GIZ by Perspectives Climate Change GmbH and Climate Kos (Michaelowa, A., Mueller, N., Agoumi, A, 2011):  10MW Tan Tan wind farm project: small size makes it less of a priority compared with other wind projects that have since been identified (see below); some concerns about prior and ongoing consideration of CDM have been noted.  Akreuch landfill project: some concerns about the remaining biogas potential, however, this project may become a CPA under the PNDM PoA and it therefore does not require further support.  Electricity generation from biogas in waste water treatment station of Fes: progressing, but supported needed to ensure on time.  Methane emissions reduction in waste water treatment at paper factory: Information on project is not well developed enough to allow for a good chance of registration prior to the end of 2012.  PV electricity supply in airports: very low emission reduction potential (the DNA website incorrectly lists the emissions reduction potential for this project. In addition to these projects, the GIZ report referred to earlier identified the following two wind projects with high potential for registration prior to the end of 2012: the Jbel Haouch Ben Kreaa Wind park (135 MW), and the Tanger-Tetouan Wind park (200 MW).

 Program of Activities

Apart from the PNDM PoA, there is no CDM Program of Activities in Morocco which is in an advanced stage. However, one PoA is seen as the most likely able to be registered before 2012: Wind power PoA. The latest report on the status of the CDM portfolio recommended the development of such a programme as the potential is very large and the project type is simple to implement. Many wind power plants in planning could benefit from such a programme. In addition to that, the programme could trigger the construction of

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more wind power plants not yet planned. Morocco is already on a good way of achieving its wind power target and could go beyond its objective. The mitigation of such a programme can be estimated at an additional 2,000 MW, or between 2 and 3 MtCO2e/year. While there is a strong desire from partners to achieve the registration of the programme before 2012, the chances of achieving it will mostly depend on the pace at which institutional actors will facilitate its development. Aside from this, there is also the potential for: Solar water PoA This PoA would cover a planned domestic solar water heater program. The objective of the new Moroccan strategy is to reach an installed capacity of 1.7 million m² of SWH collectors by 2020. This will mean to install around 1350 thousands of m² between 2012 and 2020. To reach this objective, ADEREE is seeking to set up an innovative financial mechanism including a public subsidy to the SWH price (about 20%) and a bank loan to the end user in order to overcome the first investment barrier. The mitigation potential of such program can be estimated at around 270 ktCO2e per year. Theoretically, this program can be registered as CDM PoA , like the PROSOL SWH program in Tunisia. However, the process for CDM registration of a PoA is in general very long (more than 2 years), so the chance for this PoA to be registered before 2012 is seen as low. The programme is therefore considered as one of the measures to be incoroporated into a building sector NAMA – see the NAMA report for more details.

V. Portfolio of priority projects and programs

V.1. Prioritization

For the selection of the priority CDM projects and PoAs, the following criteria have been adopted in accordance with the terms of reference:

- Project maturity (CDM status) - Quality of the project implementer - Scale of the project - Mitigation potential - Additionality criteria

The combination of these criteria informs the chance of registration of the identified projects before the end of 2012. The process of identification of priority projects was based on the screening of the PDD approved by the DNA within the national CDM portfolio, taking into account the above mentioned criteria, particularly the possibility of registration before 2012. The following table presents the prioritization of the projects according to their probability to be registered before 2012 and also suggests the kind of support to be provided to the projects to help them progress toward registration.

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N° Project Project Quality of the Project Mitigation Additio Probability to Kind of required support Maturity implementer scale potential nality be registered before 2012 1 10MW Wind farm for water +++ +++ Small High ++ ++ Needs to be supported for desalination in Tan Tan validation, but small scale means less of a priority. 2 Landfill of Akreuch (Rabat) +++ +++ Large High +++ +++ No need. Will be registered as CPA of the PNDM PoA 3 Landfill of Mediouna (Casablanca) ++ +++ Large High +++ ++ No need. can be registered as CPA of the PNDM PoA 4 Programme of activities for +++ +++ Large High +++ +++ No need for support, will be landfills – PNDM PoA registered soon 5 Extension of Tetoaun wind farm +++ +++ Large High +++ +++ No need for support, will be for the cement factory electricity registered soon supply 6 Jbel Haouch Ben Kreaa Wind ++ +++ Large High ++ ++ Review in Q1 2012 to assess park (135 MW) progress. Regular (quarterly) check with project proponent required to ensure registration. 7 Tanger-Tetouan Wind park (200 ++ +++ Large High ++ ++ Review in Q1 2012 to assess MW) progress. Regular (quarterly) check with project proponent required to ensure registration. 8 Programme of activities for wind + +++ Large High ++ ++ Needs full support to ensure power generation (for Tarfaya 300 the timely registration of the MW; Tanger-2 150 MW; Taza 100 project MW) 9 Electricity generation from biogas ++ +++ Large High +++ ++ Needs to be supported for produced by the waste water validation treatment station of Fes 10 Foum El Wad Wind Farm +++ +++ Large High +++ +++ No need for support, will be registered soon 11 Pumped storage hydropower of El + ++ tba tba tba + Need for support of the full Menzel and M´dez project cycle if the project is to be registered before 2012 +++: High, ++ Medium; + Low Table 56: Prioritization of the identified projects according to the above criteria

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V.2. Supportive actions for CDM projects and PoAs:

According to the above analysis, four projects look worth supporting in order to achieve registration before the end of 2012, as presented in the following table: N° Project Emission Kind of required support Total reduction Cost (€)

(k tCO2e /y) 1 Electricity generation 103 - Recruit an DOE for the validation 40,000 from biogas produced - Assistance for the registration process by the waste water treatment station of Fes 2 Jbel Haouch Ben Kreaa 284 - Monitor progress regularly (7,500*) Wind park (135 MW) - Technical support during validation (if required) - Financial contingency (if required) 3 Tanger-Tetouan Wind 429 - Monitor progress regularly (7,500*) park (200 MW) - Technical support during validation (if required) - Financial contingency (if required) 4 Wind PoA 1,200 - Full support required from DNA to 200,000 accelerate procedures - Full support to develop documents in time for validation and registration Total 2,016 240,000 Table 57: Estimation of the needed financial support to accelerate project registration in Morocco *indicates a contingency for EUR15,000 support if required.

The mitigation potential of these projects is estimated at around 2,000 ktCO2e per year. The estimated cost amounts to 240,000 Euros, not including a possible contingency for 7,500 Euros each for the two single wind projects. For the “Electricity generation from biogas produced by the waste water treatment station of Fes” project, and the “Programme of activities for wind power generation (Tarfaya 300 MW; Tanger-2 150 MW; Taza 100 MW)”, it is recommended that RCREEE cover the full cost of the validation and the assistance during the registration process. For the two single CDM wind projects, (“Jbel Hauch Ben Kreaa and Tanger- Tetouan”) it is recommended that progress be monitored closely in 2012 and technical and/or limited financial support be provided if necessary.

VI. Conclusion

Morocco is one of the most active countries in the region in the fields of climate change mitigation and adaptation. In addition to submitting its 1st and 2nd National Communications, Morocco developed in 2009 a National Climate Plan presenting the main options for mitigation and adaptation in the country. Eight CDM projects are already registered, with another 12 currently in validation. Many of these are wind farms connected to the grid, mostly being developed by strong international companies. Taking into account the well-advanced CDM status of these projects and the clear and simple CDM methodology for wind farms, many of these projects will be most probably registered before 2012. Of the 4 projects/PoAs that have been identified for support, three are wind farms (including one PoA) and one is biogas recovery from waste water treatment. These have an estimated total potential mitigation of over 2,000 ktCO2e per year. It is recommended that RCREEE supports the validation and registration process of these projects/PoA. The estimated cost of the financial requirement for the supporting activities is around 240,000 € assuming that the two single CDM wind projects do not require any financial support, and rises to around 255,000 € if they do. The PoA requires full support if it is to successfully achieve registration prior to the end of 2012 (estimated cost of up to 200,000EUR).

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VII. Bibliography

- Michaelowa, A., Mueller, N., Agoumi, A, 2011 : Redynamisation du portefeuille MDP marocain & Diagnostic des stratégies nationales marocaines par rapport à leur potentiel à devenir des projets MDP programmatiques et/ou MAANN. Réalisé grâce au soutien de la GIZ, pour le compte du Secrétariat d´Etat chargé de l´Eau et de l´Environnement. (October 2011) - National Energy Strategy, MEMEE, 2010. - National Program against Climate Change, Government of Morocco, 2009. - An analysis of the political framework for CDM projects and state of affairs of CDM development and implementation in Morocco, CDM/JI Initiative Country Study Morocco, 2008. - Energy Efficiency in Moroccan Manufacturing Sector Project Document, GEF/AfDB, ADEREE, 2011. - Study on mechanism of SWH market development in Morocco, ADEREE/GIZ (Rafik Missaoui & Sami Marrouki), 2011 - World Bank - Morocco study on the impact of climate change on the agricultural sector (Ver. 20091007) - Morocco, First National Communication United Nations Framework Convention On Climate Change (October 2001) - Morocco, Second National Communication United Nations Framework Convention On Climate Change (November 2010) - Morocco DNA website : www.cdmmorocco.ma - List of NAMA ideas submitted by Morocco to the UNFCCC, 2009 - Carbon Finance, annual report 2010, WB, 2011 - Country profile, preparation of a Regional Climate Change Project under the Regional Action Program, ENPI South, EU, 2011 - NAMAs documents for Morocco Solar Plan, Wind program and Household solid program, Department of Environment / WB, 2011.

VIII. Contact details of the DNA

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