OPEC embraces Greenhouse cleanup


Great potential for CDM projects but short supply of CERs: Seiichiro Nishida, Mitsubishi UFJ Securities, in discussing public and private investments and the CDM project prospective, noted the great potential for CDM projects in the Middle East and the short supply of certified emission reductions (CERs) as compared to the high demand.

Better to wait till issuing stage before finalising CER prices: Noting the incorporation of qualification and registration risks into CER prices, he suggested that it is often better to wait until a project has reached the issuing stage to avoid qualification risks.

Need to increase profitability of CDM projects: Identifying “finance-related issues” as a key barrier to success, he highlighted the need to increase the profitability and fund-raising capacity of CDM projects.

Need for supplemental mechanisms emphasised: On raising project profitability, he emphasized the need to monetize the environmental contribution to augment returns and that this requires supplemental mechanisms to the CDM, such as tax credits.

CERs are form of foreign investment: Rachad Itani, Xenel-Balderrie Project Finance & Advisory, discussed his experience with CDM-enhanced projects in Saudi Arabia and the Middle East. He suggested that CERs are a form of inward foreign investment and that CDM-enhanced finance can provide a significant boost to the internal rate of return.

CDM projects can reduce operating costs: He noted that of the six greenhouse gases (GHGs) covered by the Kyoto Protocol, carbon dioxide, methane and nitrous oxide provide the greatest value and, after outlining present and future projects, he noted that CDM projects are not simply ends in themselves but also means to reduce long-term operating costs.

Reference: Summary of the First International Conference on the Clean Development Mechanism in Saudi Arabia and the EU-OPEC Roundtable on Carbon Dioxide Capture and Storage: 19-21 September 2006, http://www.iisd.ca

Erisk Net, 24/9/2006

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