Clean Development Mechanism (CDM)
The United Nations Environment Programme plans a new type of CDM project for solar water heaters in Montenegro, with the purpose of reducing CDM transaction costs. This approach could serve as a role model for other countries of the Balkan peninsula, which are also part of the Balkan Renewable Energy Programme (BALREP).
The Division of Technology, Industry and Economics (DTIE) of the United Nations Environment Programme (UNEP) in Paris, France, can now provide an answer to the call of the Balkan Renewable Energy Programme (BALREP). BALREP was seeking proposals on how to implement financial mechanisms in the development of residential and collective solar water heater systems in Montenegro (see attached document). The answer to that provides a comprehensive study commissioned by the aforementioned UNEP DTIE, which has run the BALREP together with the Italian Ministry of the Environment (IMELS) since the beginning of 2009. A draft of the study has been available since mid-December; a final version is scheduled for February 2010.
The solar water heating (SWH) programme in Montenegro will be a Clean Development Mechanism (CDM) project. Why? Since more than 90 % of all Montenegrins use electricity to heat their water, the project’s aim will be to replace more than 1,000 standard electric boilers by SWHs. Based on calculations with 3 m2 of glazed flat plate collector area per solar system and household and a production of 150 litres of hot water per day, the programme could save up to 2,000 MWh of electricity per year. Other estimates show that the use of solar water heaters would reduce CO2 emissions by more than 11,000 t – the equivalent of a ten-year period. Annual savings in electricity costs would amount to EUR 220,000. The CDM project is going to cover nine municipalities. End users participating in the CDM project will receive low-interest loans to cover their investment costs.
The study itself states that, “this new type of CDM project was created with the purpose of reducing the CDM transaction costs and facilitating the Kyoto Protocol implementation in small developing countries, where the carbon credit potential is limited.” The present CDM project lists the following measures regarding its implementation:
• It does not have to focus on one single site, but can be implemented in several places throughout the country.
• The project may include an unlimited number of activities, all referring to one approved baseline and monitoring methodology;
• Its maximum duration is 28 years, although activities may have different starting periods.
The institution to implement the solar water heater programme in Montenegro is the Designated National Authority (DNA) founded in 2008. It consists of a Clean Development Mechanism Committee (CDM Committee), chaired by the Minister of Tourism and Environment, and a Technical Operational Body (TOB) which will be responsible for implementing the activities.
The story behind BALREP: The Italian Ministry of the Environment initiated umbrella programme Mediterranean Renewable Energy Programme (MEDREP) in 2004, in order to provide technical assistance to financial institutions in the Mediterranean area. This assistance included creating financial products to increase the installations of renewable energy systems and highlighting difficulties on the way to further develop the renewable sector. Following the model of MEDREP, the IMELS proposed BALREP at the beginning of 2009, as means to improve access to renewable energy systems in the major Balkan markets. BALREP focuses on three key elements:
1. creating financial programmes and mechanisms to support the various projects
2. improving policy frameworks
3. creating a better infrastructure in the private sector
Albania will be the second Balkan state in the focus of BALREP. There already are plans for a CDM project similar to the one established in Montenegro.
Text was written by communication specialist Hanna Schober based in South Africa. Schober@solrico.com