In October 2009, the United Nations Industrial Development Organisation (UNIDO) contracted Camco to explore the feasibility of Clean Development Mechanism (CDM) for heat recovery power generation (HRPG) technology within China’s Coal Gangue Brick (CGB) sector and identify mitigation measures to key barriers restricting access to carbon financing. China is the world’s largest producer and consumer of building materials. The Chinese clay brick sector consumes around one billion tonnes of clay per year. Recent policies aim to limit the manufacture of clay bricks and encourage the use of industrial waste materials instead, in particular coal-gangue. In 2006, Chinese CGB production reached 1.42 billion bricks. HRPG technology is widely used in China in the cement and iron and steel industries, recovering waste heat as an effective measure to reduce GHG emissions. The same technology can be used recovering waste heat emitted from the brick kilns, and converting this into usable electricity, reducing the amount of power drawn from the grid. Under the China Climate Change Partnership Framework, UNIDO is co-funding two HRPG pilot projects. HRPG is not yet used within China’s CGB sector due to technical and financial uncertainties that have made the technology marginal, but Camco estimates that it has the potential to reduce emissions at site level by between 8 to 15%. The report is the result of our study into the potential of the CDM to finance CGB HRPG. Camco conducted a study using a detailed cash flow model to analyse CDM potential for the CGB sector and in particular, at the two pilot sites, applying a range of carbon price scenarios for different CDM development approaches (single project, bundled projects and programmatic CDM). The report was completed in February 2010 and recommends further work to overcome the barriers to CDM and wider HRPG deployment including detailed research into the technical and financial parameters of HRPG technology at different scales and increasing market profile of the coal-gangue and standard brick making sector in China which is vital to improve understanding of the CDM and emission reduction potential for HRPG technology within this sector. The level of uncertainty in the currently available data prohibits the pursuit of private financing and makes the additionality tests uncertain. Programmatic CDM development could help reduce development and transaction costs significantly and make small scale projects commercially viable for CDM developers. As yet, no CDM programme is registered in China and none involving energy efficiency or waste heat recovery is being developed. By co-funding the development of a programme for HRPG in the CGB sector, UNIDO could help remove the uncertainty and risks associated with CDM in order to attract private sector involvement.This project utilised expertise from across Camco’s advisory, carbon, investments and policy support teams in China and the UK, to help unlock the potential of CDM.Quotes/facts: China is currently the world’s largest producer and consumer of building materials. The Chinese clay brick sector consumes around one billion tonnes of clay per annum and is responsible for 30% of combined CO2 and SO2 emissions in China’s construction materials industry.Click here to view the final report UNIDO-Camco-Coal-gangue-China-CDM-Potential-March-2010.pdf (508k)Size: 508k
Type: pdf