1. General Background The PECSME Project achieved its goals of curbing the annual growth rate of GHG emissions by addressing the technical capacity weaknesses and by improving the industrial process components in five selected SME sectors
- Brick-Making;
- Ceramic;
- Textile; Food-Processing, and
- Pulp & Paper. In addition to providing technical support to small- and medium-scale enterprises and Energy Efficiency Service Providers (EESP), the PECSME project includes a set of activities with the aim of proceeding to sustainable EC market transformation and speeding up the investment process in priority industrial sectors.
During the project design phase, the project team pointed out a major lack of collateral to back potential borrowers for the purpose of investing in energy efficient equipment and industrial process improvements. Among its 6 components, a LGF was implemented to overcome the barriers and fill the gap in terms of collateral by providing a guarantee to commercial banks willing to lend money for EC projects. The PECSME project will end in October 2010 and the UNDP and PMU intend to provide the energy efficiency sector with a sustainable financial mechanism to support EC activities in a number of GHG emission-intensive priority industrial sectors after the PECSME project will be over. The Clean Development Mechanism has been identified as a potential financial mechanism the PMU would like to explore. Avoided GHG Emissions as a Result of PECSME EC Project Implementation
In accordance with the PECSME objective, the whole project should result in a significant impact on GHG emissions reduction in priority industrial sectors (Textiles, Food Processing, Pulp & Paper, Brick- and Ceramic-Making). The cumulative impact of EC projects from 2006 to 2010 was estimated at about 600 ktons CO2 and it is estimated that most of the GHG emissions reduction will be generated by two priority sectors: 200 projects in the Brick sector and 150 projects in the Ceramic sector. In the event the PMU should reach its target of 200 completed projects in the Brick-Making sector by the end of 2010, the annual CO2 reduction for such a bundle of EC projects should be close to 200 ktons. Spread over a period 10 years (2010 to 2020), the cumulative CO2 emissions reduction should be 2,000 ktons. In the Ceramic-Making sector, where the target is 150 EC projects, the cumulative CO2 emissions reduction should be close to 800 ktons spread over the same period of 10 years. Problem Statement
As of July 2008 from whole Vietnam, PDDs for about 60 project activities were submitted to Vietnam’s DNA for approval, 44 of which were approved. In addition, the DNA also granted endorsement letters for 16 project idea notes (PINs). For the time being (based on data that was available in May 2009), only four projects were successfully registered with the CDM EB and one of them received a first CER issuance. The likely lack of capacity, especially in terms of CDM methodology, particular modalities and CDM project design has been pointed out as a significant cause of the slow pace of CDM development that should arguably result from energy conservation projects in the brick and ceramic making sectors. 2. Objectives of the Assignment
By the end of 2010, the PECSME project should have had a significant cumulative impact on GHG emissions reduction in priority industrial sectors. The target of 536 ktons (cumulative reduction from 2006 to 2010) should be reached in accordance with expectations. Most of the GHG emissions reduction will result from improvements in the Brick- and Ceramic-Making sectors.
At this point in time, about one year before the PECSME will be completed; the PMU intends to provide the stakeholders with a special training related to CDM methodology, Projects Bundling Modalities and Additionalities, GHG emissions Baseline, Monitoring and Verification Methodology, CER Issuance and cost-effectiveness calculation/analysis. In addition the training delivery must deal with issues of CDM Program Implementation Process: procedures and guidelines. The strategy the PMU would like to implement mainly consists in bringing together several small-scale GHG emissions reduction projects with the aim of creating a single CDM activity or portfolio in some selected priority sectors: brick-making and ceramic industrial facilities. |