>> Energy Efficient Projects 

Projects designed to improve the efficiency of energy related activities such as power generation and heating are sometimes more attractive to investors and may enjoy a marketing advantage over many other JI/CDM projects (eg forestry).

>> Swiss Pilot Program 

At a seminar presented in Basel, Switzerland over 21-22 October 1999 attended by representatives of governments, industry groups, The World Bank, UBS (Union bank of Switzerland) and private companies a consultant retained by the Swiss Government in relation to AIJ (Activities Implemented Jointly) pilot projects, presented a paper discussing four AIJ projects implemented by the Swiss Government in relation to mitigation projects (JI and CDM). Several other countries are also active in AIJ although emission reductions achieved during this pilot phase are not allowed to be used for compliance with climate policy regulations. Host countries include:

 1.  Latvia (24 projects);
 2.  Russian Federation (8);
 3.  Costa Rica (9);
 4.  Lithuania (9).

Sponsor countries include:

 1.  Australia;
 2.  Norway;
 3.  Sweden;
 4.  The Netherlands;
 5.  The US.

Of the four projects to be implemented, 2 are well advanced while the other 2 are in feasibility stages. The 2 most advanced projects are the Romanian thermal energy project and the Slovakian energy optimisation project. The remaining projects involve the reconstruction of 2 heating centres in Poland and the introductions of methane gas utilisation in a Russian waste water treatment plant.

The Romanian thermal energy project falls within energy efficiency category and involved the reconstruction of 2 district heating systems with new high efficiency boilers, burners and distribution systems.

The project lifetime is 15 years with heat production and distribution initially with existing low efficiency equipment for the first 8 years of the project for the purposes of establishing a base line then with new medium efficiency for the remaining 7 years with central coal based power generation throughout.

The project investment involved a total of US$6.4 million and is estimated result in 140,000 tonnes of carbon dioxide reduced costing US$8 per tonne of carbon dioxide (equivalent USD$32 per tonne carbon).

The success of the Swiss Romanian project to date can be pointed to in marketing JI/CDM projects identified as meeting in the Kyoto Mechanisms and Protocol. In particular, the heating sector seems well suited for the marketing of projects for the benefit of the host country for the following reasons:

• The operation is usually well established (ie a stable environment).
• The heating sector offers a huge replication potential and possibility to reduce transaction costs by standardising procedures such as technical planning, base line assessment and monitoring and report protocols.
• the existence of recognised energy efficiency measures at relatively low cost
• the monitoring of project performance is relatively simple (in comparison to carbon sinks, for example).

Some degree of local project funding where possible is beneficial in that there would be a perception by the investors of improved and increased motivation of the host. This can only increase the prospects of obtaining adequate funding from sources such as the World Bank Carbon Fund.

The attractiveness of energy efficiency projects over the more commonly considered forestry/ carbon sinks projects are readily apparent.

• Carbon sinks are more susceptible to risk ie. disease, pest, fire, local population influences;
• The establishment of base lines and monitoring is more difficult.
• The technology for reduction in the use of fossil fuels for heating is not complicated and may be merely more adequate heat loss prevention measures (insulation, carpeting etc) being introduced. Experts in these fields particularly have emerged and studies as to the benefits in terms of reduced fossil fuel use and associated carbon emission reduction be readily available.

Heating efficiency projects related to public buildings in highly urbanised, large population countries are well suited to these projects as:

• the “owner” of achieved carbon credits (ie the public authority or national government) is readily identifiable; and
• the volume of credits generated by each projects is likely to be large enough to interest large international investors.

Apart the financial benefits of trade in carbon credits arising from JI/CDM projects the host country could realise secondary benefits in the form of technology and know how transferred, energy efficiency improvements and/or energy savings.

At the initial stage of market development, governments in developing countries that have already established economic relationships with foreign investors will have a significant advantage in terms of attracting additional JI/CDM investment funds.