Public Disclosure Authorized THE WORLD BANK CEMENT SECTOR PROGRAM IN SUB-SAHARAN AFRICA: BARRIERS ANALYSIS TO CDM AND SOLUTIONS Public Disclosure Authorized Public Disclosure Authorized FINAL REPORT - April 2009 - Public Disclosure Authorized World Bank/CF Assist Cement Sector Program in SSA: Barriers Analysis to CDM and Solutions Final Report ABBREVIATIONS AND ACRONYMS ACC Associated Cement Company ACEL Ambuja Cement Eastern Limited ACIL Ambuja Cement India Limited ACM Approved Consolidated Methodology AMS Approved Methodology for Small-Scale Project Activity APO Asian Productivity Organization ASSOCHAM Associated Chambers of Commerce and Industry of India BC Blended Cement BCSD Business Council for Sustainable Development BEE Bureau of Energy Efficiency BEE Black Economic Empowerment BHC British High Commission CAGR Compound Annual Growth Rate CASCADe Carbon Finance for Agriculture, Silviculture, Conservation and Action against Deforestation CD4CDM Capacity Development for the CDM CDCF Community Development Carbon Fund CDM Clean Development Mechanism CEB Electricity Community of Benin CER Certified Emission Reduction CF Carbon Finance CII Confederation of India Industry CMA Cement Manufacturers Association CMAN Cement Manufacturers Association of Nigeria CO2 Carbon Dioxide CPWD Central Public Works Department CSI Cement Sustainability Initiative DNA Designated National Authority DOE Designated Operational Entity DTI Department of Trade and Industry EACPA East Africa Cement Producers Association EAPCC East Africa Portland Cement Company EJ Exa joule (1018) EU ETS European Union Emission Trading System FCCI Federation of Indian Chambers of Commerce and Industry FFEM French Global Environment Fund GACL Gujarat Ambuja Cement Limited GERIAP Greenhouse Gas Emission Reduction from Industry in Asia and Pacific GHG Greenhouse Gas Econoler International i (REF: # 5430) World Bank/CF Assist Cement Sector Program in SSA: Barriers Analysis to CDM and Solutions Final Report GJ Giga joule (109) GTZ Gesellschaft für Technische Zusammenarbeit HFC HydroFluoroCarbures HFO Heavy Fuel Oil ICR International Cement Review IFC International Financial Corporation IREDA Indian Renewable Energy Development Agency Limited JI Joint Implementation LULUCF Land Use, Land-Use Change and Forestry MAN Manufacturers Association of Nigeria MDG Millennium Development Goals MSW Municipal Solid Waste Mt million tonne Mtpa Million tonne per annum NCAER National Council of Applied Economic Research NCBM National Cement and Building Materials NCPC National Cleaner Production Center NEDO New Energy and Industrial Technology Development Organization NF Nairobi Framework NO2 Nitrogen Dioxide NPC National Productivity Council OECD Organisation for Economic co-operation and Development OPC Ordinary Portland Cement PDD Project Design Document PIN Project Idea Note PPC Pozzolona Portland Cement PSC Portland Slag Cement R&D Research and Development SON Standards Organization of Nigeria SSA Sub-Saharan Africa UNDP United Nations Development Programme UNEP United Nations Environment Programme UNF United Nations Foundation UNFCCC United Nations Framework for Climate Change Conversion UNIDO United Nations Industrial Development Organization UNSD United Nations Statistics Division URC UNEP Risoe Centre USAID United States Agency for International Development WBCSD World Business Council for Sustainable Development Econoler International ii (REF: # 5430) World Bank/CF Assist Cement Sector Program in SSA: Barriers Analysis to CDM and Solutions Final Report TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS ............................................... I ACKNOWLEDGEMENTS ........................................................ VI EXECUTIVE SUMMARY ..................................................... VIII INTRODUCTION ............................................................. 1 1 METHODOLOGY.......................................................... 4 2 ANALYSIS OF THE SUCCESS STORIES OF INDIA............................. 6 2.1 Overview of the Indian cement sector.............................. 6 2.2 CDM Project Portfolio in India’s Cement Industry................. 12 2.3 CDM Lessons Learnt from the Approach in India.................... 20 3 ASSESSMENT OF BARRIERS TO CDM PROJECTS DEVELOPMENT IN SUB-SAHARAN AFRICA .................................................................. 27 3.1 Overview of the Sub-saharan African Cement Industry.............. 27 3.2 Barriers Analysis to CDM Projects in the SSA Cement Sector....... 37 3.3 Parallel between the Indian and SSA Cement Industries............ 42 4 CDM OPPORTUNITIES IN THE SSA CEMENT SECTOR.......................... 44 4.1 Review of CDM Projects Portfolio in Africa....................... 44 4.2 Ongoing CDM Initiatives in the SSA Cement Industry............... 49 4.3 Cement Manufacturing process and CDM Opportunities............... 51 4.4 Quantitative Analysis of Emissions Reduction Potential........... 56 5 RECOMMENDATIONS TO BOOST CDM PROJECTS IN THE SSA CEMENT SECTOR...... 73 APPENDIX 1 QUESTIONAIRE FOR CEMENT INDUSTRY’S STAKEHOLDERS IN INDIA APPENDIX 2 QUESTIONAIRE FOR CEMENT MANUFACTURERS IN INDIA APPENDIX 3 LIST OF ORGANIZATIONS CONTACTED IN INDIA APPENDIX 4 DATABASE OF THE INDIAN CDM PROJECTS IN THE CEMENT SECTOR APPENDIX 5 QUESTIONNAIRE FOR CEMENT MANUFACTURERS IN SSA COUNTRIES APPENDIX 6 LIST OF ORGANIZATION CONTACTED IN AFRICA APPENDIX 7 LIST OF CEMENT PLANTS IN SUB-SAHARAN AFRICA APPENDIX 8 CEMENT PRODUCTION IN SSA COUNTRIES BIBLIOGRAPHY LIST OF TABLES Table 1 : Process-wise reduction in Energy Consumption in Indian Cement Plants ............................10 Econoler International iii (REF: # 5430) World Bank/CF Assist Cement Sector Program in SSA: Barriers Analysis to CDM and Solutions Final Report Table 1: Number of Projects Submitted by Approved Methodology .....................................................14 Table 2: Cost of CO2 Reduced over the Crediting Period.....................................................................19 Table 3: Barriers to CDM in the Indian Cement Sector.........................................................................24 Table 4: List of Rejected Projects in India’s Cement Sector .................................................................25 Table 5: Baseline Benchmark for Selected Blended Cement Project in India ......................................26 Table 6: Top Three Cement Manufacturing Companies in SSA...........................................................28 Table 7: Breakdown of Cement Plants and Installed Capacity in SSA .................................................30 Table 8: Cement Retail Prices in Selected Countries ...........................................................................36 Table 9: Specific Energy Consumption in Selected Cement Plants in Sub-Saharan Africa .................37 Table 10: Parallel between Indian and SSA Cement Industries ...........................................................43 Table 11: CDM Projects Portfolio per Region as of January 1, 2009 ...................................................44 Table 12: CDM Projects at the PDD Stage in Africa (as of January 1, 2009).......................................45 Table 3 : CDM Projects Identified during Field Assessment in the SSA Cement Sector......................50 Table 14: CDM Projects Opportunities in the Cement Sector...............................................................55 Table 15: Assumptions for Energy Savings and Emission Reduction Estimate ...................................57 Table 16: Emission Reduction Potential for Fuel Savings in SSA Cement Kilns..................................58 Table 17: Emissions Reduction Potential for Electricity Savings in SSA Cement Facilities..................59 Table 18: Waste Heat Recovery for Power Generation in a Cement Factory56 ....................................62 Table 19: ER Potential for Waste Heat Recovery CDM Projects in SSA Cement Kilns .......................63 Table 20: Emissions Reduction for Typical Alternative Fuels ...............................................................66 Table 21: Emissions Reduction Potential for Fuel Substitution Projects in SSA Cement Kilns ............67 Table 22: Relation between Blend Increase and Emissions Reductions..............................................70 Table 23: CDM Opportunities: Shifting from OPC to Blended Cement Production in SSA...................71 LIST OF FIGURES Figure 1: Production and Consumption Trends in the Indian Cement Sector.........................................8 Figure 2: Historical Prices of Cement in India.........................................................................................9 Figure 3: Breakdown of Registered CDM Projects in the Cement Sector.............................................16 Figure 4: Number of Registered Projects in the Indian Cement Sector ................................................17 Figure 5: Number per Quarter of Indian Projects Posted for Comments and Registered.....................18 Figure 6: Cement Production Trends by Region (103 metric tonnes) ...................................................31 Figure 7: Cement Trade Balance for Selected Countries (103 tonnes).................................................33 Figure 8: Geographical Distribution of CDM Projects in Africa (as of January 1, 2009) .......................46 Figure 9: Number of CDM Projects Submitted for Validation per Year in Africa...................................47 Figure 10: Breakdown of CDM Project in Africa