70654 FINAL REPORT - June 2007 - THE WORLD BANK USING CARBON FINANCE TO PROMOTE SUSTAINABLE DEVELOPMENT IN ALBANIA AND MACEDONIA The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS .................................................................................................. II EXECUTIVE SUMMARY ....................................................................................................................... 3 1. INTRODUCTION .......................................................................................................................... 5 2. PROJECT METHODOLOGY ....................................................................................................... 7 3. PINS PROPOSED TO WORLD BANK ...................................................................................... 10 4. POTENTIAL PIN DEVELOPMENT FOR ALBANIA (PRIORITY#2).......................................... 12 5. POTENTIAL PIN DEVELOPMENT FOR MACEDONIA (PRIORITY#2) .................................... 14 6. CONCLUSION............................................................................................................................ 18 ANNEX 1- LIST OF CONTACTS ........................................................................................................ 19 i Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report ABBREVIATIONS AND ACRONYMS CDM Clean Development Mechanism CER Certified Emission Reduction CFU Carbon Finance Unit CHP Combined Heat and Power CO2E Carbon Dioxide Equivalent EE Energy Efficiency EII Econoler International inc. ER Emission reduction GHG Greenhouse Gas LFG Landfill Gas PDD Project Design Document PIN Project Idea Note RE Renewable Energy TCO2E Metric Tonne of Carbon Dioxide Equivalent TOR Terms of Reference UNFCCC United Nations Framework Convention on Climate Change VER Verified Emission Reduction ii The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal EXECUTIVE SUMMARY Econoler International Inc. (EII) has received the mandate to support the Carbon Finance Unit in building capacity of the two targeted ECA countries Albania and Macedonia and in the same time identify potential Clean Development Mechanism (CDM) projects that could meet the criteria set by World Bank. The interest of project promoters and developers in each country effectively reflects their particular situation. In Macedonia, most of the project sponsors are interested in receiving financial support to move from project ideas into implementation. In Albania, project sponsors welcomed the technical assistance offered by World Bank, since CDM is relatively new in the country and very little expertise exists. Nevertheless, several projects in the two countries are pending upon a CDM contribution and most of the developers are willing to collaborate with the Carbon Finance Unit in the pursuit of support even following the PIN steps. During the project portfolio identification phase, several projects were actually identified, …in Macedonia and …in Albania. Each project was evaluated using the selection criteria established for this purpose: high probability of meeting the sustainability and additionality criteria, prefeasibility and feasibility studies nearly completed, financing almost finalized in principle pending agreements with financial institutions, need for up-front financing in return for some exclusivity on the sale of credits, and minimum project size of an anticipated 50,000 tonnes/year of Emission Reduction (ER). The second phase was dedicated to the development of PINs after the WB/CFU’s initial approval. Nine projects were considered by EII in this phase. During this phase, the preselected project list was modified based on the forsaking by some project proponents and new project insertions in the pipeline. This report presents the CDM projects under development in Albania and Macedonia. These projects represent … technologies, 2 economic sectors, and spread through the entire two countries. Project Idea Notes have been developed for the 6 following projects in Macedonia: Total GHG Emission Project Project Name Reduction until 2012 sponsor/activity (TCO2e) St. Petka Hydro Power Plant (also known ELEM/Power 240,240 as Matka II) generation TE-TO AD/District CCPP Skopje heating 3,640,000 Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report Total GHG Emission Project Project Name Reduction until 2012 sponsor/activity (TCO2e) Kumanovo Gas Distribution Project Kumanovo Gas/Gas 1,075,800 distribution Rehabilitation of 6 HPP in Republic of ELEM/Power 183,900 Macedonia - phase II Generation Capacity Increase at Spilje Hydro Power ELEM/Power 103,500 Plant generation ELEM/Power Hydro Storage Lukovo Pole 93,730 generation Project Idea Notes have been developed for the 2 following projects in Albania: Total GHG Emission Project Project Name Reduction until 2012 sponsor/activity (TCO2e) Energy Efficiency Program in the Albanian Ministry of 460,000 Hospital System Health/Medical 42.3-MW Bundled Run-of-River Small Private/Power 368,000 Hydropower Capacity Addition in Albania generation All retained projects will be submitted to CFU review committee. In the case of Macedonia, the project portfolio includes three technologies in two economic sectors. The estimated total GHG emission reduction for the project portfolio in Macedonia up to 2012 is about 5.3 M tCO2e. The total investment costs of the portfolio are evaluated more than US$ 400M including US$ 172 M for the CCPP Skopja only. In the case of Albania, the project portfolio includes two different technologies in two economic sectors. The portfolio in Albania translates into emission reductions that will provide a volume of 0.8M tCO2e CER up to 2012. The cumulative costs of all projects in the Albanian portfolio are estimated at US$ 52 M. Due to time and budget constraints, it was not possible to bring more opportunities identified in the two countries into real CDM projects. The present Report has two chapters detailing these opportunities for future consideration by World Bank/Carbon Finance Unit. 4 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal 1. INTRODUCTION The World Bank is making a special concerted effort to develop CDM projects in developing countries which may have been bypassed by the global carbon finance market or that have not yet had an opportunity to participate. The purpose of the present project is to support the respective stakeholders with the development of successful Project Idea Notes (PINs) in 2 ECA countries: FYR Macedonia and Albania; and to support the Bank in building capacity in these countries. Certain asset classes, in particular, are very suitable for carbon finance, for example power and gas sector projects, energy efficiency and waste management projects. Renewable energy projects in biogas, wind, solar, and small hydro are particularly suitable for smaller community development carbon fund projects (CDCF) because they are generally at household level and have good community benefits. What is essential is a long-term carbon-finance contract that can provide a revenue stream to make such projects viable. The CDM is often not understood by its most likely beneficiaries. Most local groups that could be developing CDM projects do not understand the cumbersome UNFCCC process and are not familiar with the strict guidelines that determine additionality, the design of baselines, and monitoring methodologies. For these reasons, the World Bank contracted Econoler International (EII), one of the international knowledgable consulting firms with technical expertise to develop such challenging assignement. EII contracted two local consultants in FYR Macedonia (Ms. Natasa Markovska) and in Albania (Mr. Besim Islami) to assist it in developing trustable relationship with project sponsors. The World Bank led a series of workshops to introduce key stakeholders to CF opportunities in FYR Macedonia and Albania. The activities have targeted towards sectors where there were significant potential for generating Emission Reductions. Based on previous experience in the South Caucasus, stakeholders often seek technical support from the World Bank to (i) review concepts; (ii) assess additionality; (iii) support development of PINs; and (iv) the preparation of a financial analysis. EII used the CDM project identification and preparation process to help develop a number of PINs and supported the Bank in building the capacity of relevant CDM stakeholders to design and submit their own CDM projects. Albania and Macedonia have been identified among the countries with large latent and untapped potential supply of carbon credits from CDM projects, and are among World Bank’s highest priorities for CDM cooperation. The market for ERs in these countries is yet to be developed in the coming years. The Kyoto Protocol was ratified by Albania in April 2005 and by Macedonia in July 2004. It should be noted that the CDM situation in Albania and Macedonia while different have several similarities. Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report Macedonia looks attractive from business point of view in terms of CDM. Its DNA is well established. However, not too much projects are in the pipeline. Albania is more or less still structuring its CDM activities, with a recently established DNA and one project in the pipeline pending for several months. Additional projects will improve the operating of the DNA as it will bring diversity in the projects allowing moving forward several ones. With the coming 1st period of committement of the Kyoto Protocol at the end of 2012, many of the barriers to CDM project development in the two selected countries will have to be eliminated. The interest of project promoters and developers in each country effectively reflects their particular situation. In Albania, most of the project developers need additional capacity to develop PINs and Project Design Documents (PDDs) by themselves, without outside technical support; they are more interested in receiving financial support. In Macedonia, project developers welcomed the technical assistance offered by WB, since CDM is relatively new in the country and very little expertise exists. Nevertheless, several projects in the two countries are pending upon a CDM contribution and most of the sponsors are willing to collaborate with the World Bank in the pursuit of support even following the PIN steps. The objective of the present project is to increase the number of CDM projects available for World Bank/CFU participation and the potential purchase of carbon credits by CFU. In order to gain entry to this challenging market, it is imperative to focus on areas where up-front financing and facilitation is clearly required to remove existing barriers. This would include projects being developed by organizations that are unwilling to make financial commitments in an area that they do not fully understand or by organizations that do not have the technical or financial capacity to develop projects on their own. Therefore, the strategy applied by the Bank is to finance the outsourcing for the development of PINs to EII. This report presents the activities performed by the Bank and EII for the development of the PINs for projects in Albania and Macedonia. The most common barriers to date relate to additionality, sustainability and methodology issues. These issues significantly increase the delivery risk for buyers.This project portfolio will help CFU in the prescreening of future projects to minimize the risks in advance. The projects are classified in 3 priorities: Priority #1: Projects for which PINs are already developed under the present assignement Priority #2: Projects with high CDM potential Priority #3: Projects proposed but with low immediate CDM potential 6 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal 2. PROJECT METHODOLOGY World Bank organized an inception mission in December 2006 for scoping the capacity building activities to be undertaken under this project. The local consultants participated to that mission. The second milestone for the project was the Workshops organized in FYR of Macedonia and Albania in February-March 2007. The participants to the workshops were identified by Econoler International in collaboration with the World Bank, the formal invitation was sent by the World Bank, in order to have a bigger impact on the invited people. The third milestone was the 2nd and last mission organized between the WB/CFU staff and EII in May 2007 to complete the remaining data and finalize the selected project sponsors participation to the CDM activities. Activity 1: inception mission In December 2006, an initial mission covering both countries was organized and conducted by the World Bank, in collaboration with the local consultants selected for each country. The inception mission of 4 working-days in each country focused on the following objectives: • Meeting of the main stakeholders of each countries related to the development and implementation of CDM projects • Identification of the status of CDM in each country • Preliminary identification of potential promoters and potential projects • Definition of the agenda and the schedule for the upcoming capacity building workshops and technical support to be given In order to simplify the PINs development and the World Bank approval process, only potential projects that could use existing methodologies were selected during the initial evaluation phase. On the other hand, a special attention was given to projects that have a community development component, as they could be of interest for some dedicated World Bank funds such as the Carbon Development Community Fund (CDCF). Activity 2: Support to World Bank workshop In February-March 2007, World Bank initiated a first 1 day workshop to introduce CF opportunities to key stakeholders in each country. The purpose of this capacity building activity was to illustrate the benefits of CDM and how it can leverage additional finance. Each of these workshops focused on the following elements: (i) Review of the concepts (ii) Assess additionality Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report (iii) Support development of PINs (iv) Preparation of a financial analysis. World Bank experts from CF-Assist led the training at these events. EII experts supported the Bank experts by building hands-on and participatory-based workshops through the provision of: a. operational knowledge of project development b. case studies from relevant sectors Additional support activities were conducted in each country, in order to help project developers in the development of their PINs. Activity 3: Supporting Key Stakeholders Following the workshop mission in each country, EII, at the request of the local stakeholders, provided technical assistance to help local stakeholders to develop their PINs in order to bring viable project concepts to the World Bank. All submitted PINs had to comply with World Bank carbon fund (and where relevant CDCF) criteria, World Bank policies, and UNFCCC and CDM Executive Board criteria. ƒ Preference will be given to projects with approved or pre-approved CDM project baseline methodologies. ƒ Projects that meet the definition of "small-scale" by the CDM Executive Board were encouraged. Small projects that are programmatic and scalable in nature were particularly attractive because of lower transaction costs and because they typically allow greater ER volume generation while maintaining a community dimension. ƒ Projects had to meet the minimum size of 50,000 tCO2e per year. ƒ Bundled projects were to be presented as one PIN and must have the ability to be processed by the World Bank as one transaction, i.e. one ERPA, one counter-party, and one due diligence process. ƒ Hydropower projects must have a maximum installed capacity threshold of 20 MW. Bundles of such mini-hydros, which in aggregate exceed the 20MW threshold, were also acceptable as long as each single plant in the bundle is within the 20MW limit. ƒ Proposals that concern carbon sequestration activities were not being accepted at this time. 8 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal ƒ Community benefits: CDCF projects must demonstrate delivery of defined and measurable community benefits. Such benefits are normally inherent to the project (e.g. provision of electricity to the rural poor). In cases where the project in itself does not benefit the poor, a benefit program (e.g. schools, health centers, or basic infrastructure such as water, irrigation, or local roads) had to be created targeting needs identified by communities in the vicinity of the project, and funded through a premium paid by the CDCF for the ERs. To make sure that no time will be spent supporting the development of projects that are not of interest to the World bank EII presented preliminary concepts to the World Bank for approval before investing time and efforts in supporting the development of the PINs. EII’s support provided to the project sponsors was given in different forms: • Through direct meetings with local experts of the EII team • Distance support through e-mail and conference calls • Meetings with EII international expert during the workshop missions to provide additional project development support to project developers Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report 3. PINS PROPOSED TO WORLD BANK All the projects that have been approved for the PIN phase are presented in the following tables. Table 1 and Table 2 respectively show the two potential CDM projects for Albania and the six for Macedonia. Each project is presented in terms of total GHG emission reductions, total project costs and carbon revenues up to 2012. Table 1: Calculation of the Estimated Total GHG Emission Reduction of the Albanian Project Portfolio Total GHG Annual GHG Total Carbon GHG Emission Emission Investment Revenues until Project Name ER until Reduction Reduction Costs 2012 2012 Rank (tCO2e/year) (US$ million) (US$ million) (tCO2e) Energy Efficiency Program in the 1 114,000 460,000 33.7 3.6 Albanian Hospital System 42.3-MW Bundled Run-of-River Small 2 Hydropower 92,000 368,000 49.5 3.0 Capacity Addition in Albania CDM projects for TOTAL 206,000 828,000 83.2 6.6 Albania The estimated total GHG emission reduction for the project portfolio in Albania is about 0.8M tCO2e. The total investment costs of the portfolio are evaluated at US$83.2M. The estimated carbon revenues resulting from CER sales are about US$6.6M for the first commitment period. The indicative sale price considered is US$8 per CER. 10 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal Table 2: Calculation of the Estimated Total GHG Emission Reduction of the Macedonian Project Portfolio Carbon GHG Total Total GHG Revenues Emissio Investme Annual GHG Emission ER until until 2012 n Project Name nt Costs Reduction (tCO2e/year) 2012 (US$ Reducti (US$ (tCO2e) million) on Rank million) *** St. Petka Hydro Power 1 Plant (also known as 60,060 240,240 88.3 1.9 Matka II) CCPP Skopje 2 808,650 3,640,000 172.2* 29.1 Kumanovo Gas Distribution 3 Project 303,000 1,075,800 12.3** 8.5 Rehabilitation of 6 4 HPP in Republic of 61,300 183,900 40.3 14.7 Macedonia - phase II Capacity Increase at 5 Spilje Hydro Power 41,400 103,500 45.5 0.8 Plant Hydro Storage Lukovo 6 93,730 93,730 41.1 0.8 Pole CDM projects for TOTAL 1,368,140 5,337,170 399.7 55.8 Macedonia * These investment costs have to be reviewed during the PDD phase since the scale is not the same for the same types of technology. ** For gas network only. The cost estimate for the equipments modifications is not included. *** Assuming US$ 8/tCO2e. This does not represent what project developers are expecting. The project portfolio in Macedonia translates into emission reductions will provide a volume of 5.34M tCO2e CER. The cumulative costs of all projects of the Macedonian portfolio are estimated at US$399.7M and the carbon revenues are evaluated at US$55.8M. The indicative sale price is US$8 per CER. This price will be subject to negotiation. The three PINs of Macedonian ELEM related to the rehabilitation of HPPs have been splitted in three according to WB request. Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report 4. POTENTIAL PIN DEVELOPMENT FOR ALBANIA (PRIORITY#2) In spite of the fact that only 2 project PINs could be developed, there is a real interest in CDM projects in Albania. The potential is tremendous and opportunities do exist for carbon finance purchase. Due to the limited time allotted to establishing the initial portfolio, only projects meeting all the selection criteria in the identification phase were retained for the PIN step. There are several project developers who would be interested in the support of the Bank to develop PINs but, because of the lack of time, they were unable to provide the information required to include their projects in the portfolio. For example, in Albania, the following potential projects should be noted: Small Hydro-power Project (SHPP) developers Despite that a draft PIN was prepared by Econoler International for 5 potential project developers, several other may also apply when the results of the actual tendering will be known. The project is a bundling of SHHPs which are part of an ongoing tendering process for SHPP by the Government of Albania. The tendering process in which the project developers are participating will close on June 20, 2007 and decisions on concession awards are scheduled to be made by July 20, 2007. Most of the SHPPS have an expected commissioning date around August 2009, but more detailed information of this, as well as financing for each SHPP, will be available once the bidding process has been finalized. Part of the bidding evaluation criteria is project implementation time and project financing. One additional issue which should be taken into account is the process for issuing water licenses since this currently not part of the tendering process. An updated PIN will be submitted to the Carbon Finance Unit for review. KESH (Environment and Energy Efficiency Department) KESH present large potential for projects eligible under CDM. The projects can be classified in 3 categories: ƒ Demand side management projects: An efficient lighting program targeting the residential and commercial sectors was identified. Albania has an ongoing pilot awareness campaign funded through UNDP-GEF targeting three energy efficiency technologies: efficient lighting (Compact Fluorescent Lamps - CFLs), thermal insulation, and household electrical appliances. A 12 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal potential scheme would be to have KESH acting as bundling agency for a CDM programmatic approach, and handle the billing and registering of the CFL bulbs through its current billing system. The CFL bulb distributors could create marketing outlets near KESH billing points and operate the registration system for the CFLs. ƒ Technical loss reductions: KESH is implementing several loss reduction projects funded by the World Bank and other donors. None of them are currently considering CDM. Projects with high technical loss reductions are eligible under CDM. KESH and the local consultant will work together to assess these projects within the context of the investment plan for KESH for 2007- 2012. ƒ Hydro power rehabilitation: A program for rehabilitation of large hydro-power plants already exists in Albania. However, the program does not include medium sized units like: Ulza (25 MW built with Russian technology 1957), Shkopeti (25 MW built with Russian technology 1959, safety rehabilitation done partially) and Lanabregas (5 MW built with Russian technology 1948). The 3 potential projects are part of the master plan for KESH. One of the identified barriers is financing. In that regard the team emphasized the possible financial benefits from CDM for these projects. Bankers Petroleum Ltd Bankers is petroleum exploration firm very active in Albania. Several opportunities were discussed but could not be completed considering the ongoing bidding process for privatization of the Albanian refinery. The projects discussed are listed below: ƒ Recovery and utilization of gas from oil wells: The project conststs of the capture of flared gas in the 600 actual and future wells for LPG production and for new heat cogeneration of 25 MW (AM009). ƒ Carbon sequestration: There are a couple of methodologies for CCS that have been proposed (NM0167 and NM0168) but these have not been reviewed by the CDM Executive Board yet since these activities are not yet even eligible in principle. Only, reforestation/afforestation sequestration projects are eligible under CDM at the moment. ƒ Reduction of low quality fuel: the project was discussed during mission 1. With the option to buy the Albanian refinery that is presently producing low quality fuel-oil, Bankers intends to Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report stop its activity and thus will help Albania to replace low quality fuel-oil by imported good quality one. The actual Albanian plans are to replace it in 2011 and if this option is empowered there will be additional benefits for CDM starting from 2007-2008 till 2011. On the methodology side there is no applicable methodology, and WB/CF will have to access the benefits vs. costs of developing a new methodology. The methodology must be submitted for approval to the CDM Executive Board, which has developed standard formats for submission of both methodologies. The timeframe to develop such new methodology may vary from 6 months to 1 year. In making this assessment more details on aspects like the project size, project implementation schedule, etc. would be important to know. FK cement Discussions were held with the Development Director of FK cement. Several projects with approved methodologies are available and sent to the project sponsor. It was noted that the owner did recently large investments in the two factories. The two following projects were discussed: ƒ Partial replacement of diesel generator of 24 MW by hydro power unit in Fushkruje ƒ Energy Efficiency project in the Old Cement Plant Group EdilCentro The project sponsor has Italian partners interested to develop activities beneficial for the climate change and in more general in the Environment field. The following two projects were discussed: ƒ Grid-connected power and steam generation unit of 10 MW using 700 tpd solid wastes ƒ Methane recovery for displacing LPG used in 2 bricks and tiles plants 5. POTENTIAL PIN DEVELOPMENT FOR MACEDONIA (PRIORITY#2) The Macedonian projects that would benefit from World Bank support for PIN development are listed below: MEPSO: 14 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal MEPSO is experimenting financial difficulties due to its duties to fulfill the electricity transmission requirements and the lack of availability of electricity locally and by Macedonian neighbouring countries to sell at acceptable rates. CDM would help it to improve its financial situation. The following projects were identified: ƒ Technical loss reductions following the new interconnections with Serbia and with Kosovo: MEPSO indicated that they completed feasibility studies for loss reduction for these two interconnections (2 options are evaluated for Serbia project). Financing of these projects is under consideration by WB and EBRD. MEPSO shared the summary of the feasibility studies with the mission team by email. The project can potentially be combined with SF6 recovery (estimated potential: 12,000 tCO2/year). Implementation for both projects is planned in 2008- 2009. The Kosovo project is agreed by the two countries but the decision to start the implementation is still pending. Econoler will evaluate the potential from a CDM point of view based on the studies and calculations made available by MEPSO. ƒ Technical loss reduction following the projected interconnections Macedonia-Albania-Italy (part of the connection between Bulgaria-Italy) through submarine cable: This project involves several countries and its implementation will not be before 2011. ƒ SF6 recovery project: This project is too small on its own to be interesting to the Carbon Finance Unit as it would generate less than 50,000 tCO2. It could, however, be included if one of the loss reduction projects are developed. ƒ ESCO project (part of the on-going GEF Sustainable Energy project): All the parties agree that the start-up of the project will be slow considering the lack of experience of the new ESCO team. Additionally, any projects in the first one to two years are likely to be small. Discussions may be continued around December 2007 when the new ESCO created last month by MEPSO is expected to be operational. ƒ Power factor compensation: MEPSO indicated that they have a project for power factor compensation. The study will be finalized next year. ELEM: Despite several PINs developed for ELEM, other potential projects were discussed from a CDM point of view: ƒ EE for Bitola thermal Plant: Energy efficiency project for the existing Bitola 675 MW thermal plant: No data or pre-feasibility study is available at this time. Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report ƒ Energetica natural gas combined cycle power plant: Energetica is a separate entity owned 100% by ELEM. A summary of a pre-feasibility study for the project was provided by Energetica. Energetica indicates that existing services and equipment are sized for the new project and reduce the investments by about 30%. Energetica is operating a district heating system of 35 MWth and steam is provided to the metallurgy industries neighboring the plant. A new extension for 20 MWth is under construction. The capacity of the existing natural gas pipeline to support this project could be an issue if Toplifikacija implement its combined heat and power (CHP) project and other ditributors implement natural gas network (see Kumanovo Gas meeting below). The investment decision is expected to be taken soon. Toplifikacija: ƒ Hot water loss reduction: The district heating system operated by Toplifikacja (contract ending on 2008) is the property of Skopje City. The network is old and requires large rehabilitation due to 40% hot water loss. The project can be launched when the new concession will be given. CFU can even cooperate with the City of Skopje to develop a scheme based on CDM benefits included in the tendering process. OKTA Crude oil Refinary AD Skopje: OKTA proposed a list of projects during the mission of March 2007. Follow-ups were done by Econoler but answers were not obtained as a result of technical difficulties with their internal emailing system. Comments and information of the proposed projects were reviewed during mission #2. The list of projects is preliminary and the investments are not fully assessed at this point. A general decision on whether to engage in CDM projects has to be taken by Hellenic Petroleum (the mother- company). The CDM potential of the different projects may create interest from Hellenic Petroleum (this would generally take at least one month). However, this assessment cannot be completed before OKTA finalizes the data collection as per the Consultant’s list of questions related to each project. The project which preliminarily looked most promising from a CDM perspective is methane loss reduction from storage tanks, but substantial information still needs to be provided by the project developer. EKO- SOLAR: EKO-SOLAR indicated that they intend to develop an energy efficiency project for 500 buildings in 10 Municipalities. The project will include technologies for solar water heating (basic activity of EKO- SOLAR) and biomass efficient boilers to replace electricity and fuel-oil consumption in these buildings. Initial estimates show that the project will save approximately 55,000 tCO2/year. The project developer has developed a draft of PIN and will send it by email with additional information (actual energy consumption of the buildings, heated surface, age). Financing of the entire program may be 16 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal problematic and the project developer is interested in performing a pilot project before scaling up their activities. The desire to access some kind of WB grant funding to undertake the pilot project was brought up. The timing of this project with respect to CDM might be an issue. EVN MACEDONIA: EVN an Austrian utility bought 90% of ESM, the electricity distribution company of Macedonia, one year ago. The results from the first year of operation include a reduction of the distribution losses from 32% to 18% and a substantial improvement of the collection. EVN-Macedonia is developing several Demand Side Management projects like: an efficient lighting program, increase of hydro power generation, and a distribution loss reduction project. It was also discussed that EVN intends to be involved in several partnership for underground piping network upgrade including a new natural gas distribution network, rehabilitation of the drinkable water network, and new and modern electrical distribution network. This new natural gas distribution network might at the moment be the most interesting from a CDM perspective, but the project is only expected to be fully implemented in 2-5 years so the timing becomes on issue. A continued dialogue with EVN Macedonia would be fruitful though. Projects details will be sent by EVN and it was offered to create a working group to assess the feasibility of these projects where the World Bank can bring its knowledge of CDM as an additional input. Ministry of Agriculture, Forestry, and Water Economy: The possibilities for accessing CDM revenues for projects implemented under the IPARD program was discussed at a general level. There might be a potential to include a CDM component for project dealing with animal waste management but more details would be needed on the exact measures planned. Activities in the forestry sector are currently not planned in the first phase of the IPARD program. It was agreed that the Ministry will provide further information on the measures included in the draft IPARD plan under preparation and that the World Bank will provide information on specific CDM projects undertaken in the animal waste management sector as well as on CDM projects and procedures generally. Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report 6. CONCLUSION This report presents 8 Project Idea Notes developed by Econoler International for Albania and Macedonia. In the case of Macedonia, the project portfolio includes three technologies in two economic sectors. The estimated total GHG emission reduction for the project portfolio in Macedonia up to 2012 is about 5.3 M tCO2e. The total investment costs of the portfolio are evaluated more than US$ 400M including US$ 172 M for the CCPP Skopja only. In the case of Albania, the project portfolio includes two different technologies in two economic sectors. The portfolio in Albania translates into emission reductions that will provide a volume of 0.8M tCO2e CER up to 2012. The cumulative costs of all projects in the Albanian portfolio are estimated at US$ 52 M. Due to time and budget constraints, it was not possible to bring more opportunities identified in the two countries into real CDM projects. Several projects detailed in the present Report can be developed within the coming 3 to 6 months for future consideration by World Bank/Carbon Finance Unit. 18 The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal ANNEX 1- LIST OF CONTACTS a) Macedonia : Institution Contact person Tel E-mail 1 ELEM Nikolov Igor +389 2 3149 114 igor.nikolov@elem.com.mk 2 ELEM Elena Bucevska +389 2 3149 166 elena.bucevska.ognjanovska@elem.co Ognjanovska m.mk 3 ELEM Daniela Mladenovska +389 2 3287 774 daniela.mladenovska@elem.com.mk Nevenka Jakimova +389 2 3149 166 Nevenka.jakimova,Filipovska@elem.co Filipovska m.mk 4 ESM-EVN Gunther Ofner +389 2 3214 752 Guenther.ofner@evn.at +43 676 810 32 386 (mob) 5 MEPSO Anita Jovanova +389 2 3149 695 anitaveb@mepso.com.mk 6 MEPSO Elizabeta Siljanovska +389 2 3149 096 betas@mepso.com.mk 7 MEPSO Branka Stanojevska +389 2 3149 072 brankas@mepso.com.mk 8 TOPLIFIKACIJA AD. - Skopje Ivica Sekovanich +389 2 3063 614 ext.: iseko@toplif.com.mk 320 9 TOPLIFIKACIJA - Bitola Nadica Lokvenec +389 2 3133 107/3229 Nadica.lokvenec@toplifi.com.mk Pejkovska 619 10 OKTA AD Ice Rikaloski +389 2 2532 246 i.m.rikalovski@hellenic-peroleum.gr Suzana Crnenkova oktacabinet@hellenic-peroleum.gr 11 Municipality of Kocani Janev Ljubomir 033/274-001 gradonacalnik@kocani.gov.mk 12 ECO SOLAR Zoran Trajkov 032/303-147, 075/462- solar@mk20.com 473 Econoler International 19 The World Bank Using Carbon Finance to Promote Sustainable Development in Albania and Macedonia Final Report 13 MACEF (Macedonian Center for EE) Dimitrova Kapac +389 2 3099 432/ jasminka.kapac@macef.org.mk; Jasminka; Kostadin 70 38 37 38 macef@mf.ukim.edu.mk Dimitrov 14 Kumanovo-Gas Goran Stojkovik 00389/71 208 787 kumanovogas@mt.net.mk Olgina Dimitrijevska (mob.) 00389/71 260 423 (mob.) b) Albania : Institution Contact person Tel E-mail 1 Ministry of Health Sokol Dedja +355 4 376 194 sdedja@moh.gov.al 2 KESH, Albanian Power Corporation Romeo Hanxhari +355 4 228 434 hanxharir@kesh.com.al +355 69 20 74 907 (mob.) 3 IPP#1: SHPP Gezim Selimollari + 355 68 22 30 786 4 IPP$2: SHPP Lutfi Saqe +355 4 373 361 lufisaqe@yahoo.de +355 69 20 88 124 (mob.) 5 IPP#3: SHPP Teodori +355 4 346 899 Teodori2003@albnet.net +355 68 20 23 892 (mob.) 6 IPP#4: SHPP Zguri 7 IPP#5: SHPP Mehmeti 8 Gruppo Edil Centro Vahid Ruli +355 4 356 620 Vahid.ruli@gruppoedilcentro.com +355 68 20 20 595 9 Aferdita Tafaj +355 4 362 645 A_tafaj@yahoo.com Mother Tereza Hospital Mirlinda Tase +355 69 21 43 703 (mob.) 10 Fushe-Kruje Cement factory SH.P.K. Joe El-Chemor +355 48 300 800/1/2 joe@fkcementfactory.com +355 69 20 89 679 (mob.) 20 Econoler International The World Bank Using Carbon Finance to Promote Sustainable Development in ECA Technical Proposal 11 Ministry of Education Arta Tani 12 Bankers Petroleum Ltd. Art Agolli +403 513 2699 aagolli@bankerspetroleum.com Econoler International 21 160, rue Saint-Paul, bureau 200, Québec (Québec) G1K 3W1 Canada Tél. : +1 (418) 692.2592 Fax : +1 (418) 692.4899 www.econolerint.com