How to invest in CDM-projects in Thailand

Trading with carbon credit is big business. It is like a stock. Buy a carbon credit and sell it to a higher price  and we are talking billions of dollars.
Danish companies can get a share of the carbon credits through investments in Thai companies that are reducing green house gas emissions.
Actually, what many people don’t know is that Denmark is one of the leading players on the Thai market. The company Danish Energy Management which has been appointed by the Danish government is the link between Denmark and Thailand.
They make sure that projects are developed and implemented in Thailand so Denmark can get access to the valuable CO2-credits.


Denmark in front
The history of carbon trading started in Kyoto in Japan in 1997. It was here the members of the United Nations agreed on the Kyoto Protocol, which is an international agreement linked to the United Nations Framework Convention on Climate Change. The members acknowledged the fact that we humans are all contributing to the increasing emissions of industrial gasses into the atmosphere – and which is believed to result in global warming, one of the hottest topics in the world right now.
So, the members signed the Kyoto Protocol which is a binding agreement that the industrialized countries will reduce their collective emissions of greenhouse gases by 5% compared to the year 1990 over a five-year period from 2008-12 – also called the first commitment period. It was then up to the individual countries who subsequently ratified the protocol to find out how much they would reduce at the national level.
“Of course Denmark was  the good boy in school class so they agreed to reduce with 21 percent which is the highest along with Germany,” explains Karsten Holm, Chief Advisor for Danish Energy Management in Thailand.
Within the European Union a linking directive has been established. This involves a Carbon credit trading system as well as an allocation plan where the member gets ‘allowances’ which can also be translated into “their right to discharge a maximum amount of CO2”.
In Denmark we have around 370 companies which are emitting a lot and which are included in the  Danish allocation plan. It is big industries like power plants. The Danish state gives each of them a ratio of allowance, ex. 10.000 tonnes CO2 per year that they have to keep under. Eventually, if they only emit half of their quota they can sell the rest of their allowance to other companies that may have emitted more than their limit. However, if they have used more than they are allowed, they have to buy CO2 credits from other  companies or pay a fine which at present is 100 Euros per 1 tonne extra CO2 emitted.
When a country gets carbon-credits they can either use it for own benefit or sell to other countries which need it.

There are different ways to get those extra carbon-credits:
Emission trading (a new commodity). The term that is used in this general context is: Assigned Amount Units: You can buy credits from other industrial countries that have signed the Koyto Protocol. It means if Germany has discharged more, they have to buy credits from countries that have extra or a surplus.


Joint implementation: Projects. A company in Denmark can cooperate with a company in Czech Republic and help or invest in the Czech company to reduce CO2 emissions. It could be making their power plant more efficient. Then, the Danish Company reserves the rights of the generated carbon credit and can save it for own use or sell.


CDM: Relevant in Thailand. A company from an industrial/ developed country can help a developing country, like Thailand. It means that a Danish business can support and help a Thai company with measures that will reduce CO2 emissions and get first priority to buy their credits that they have helped them to generate.


Danish Energy Management has an office in Bangkok and they make sure that Danish companies can invest in Thai companies. Chief Advisor Karsten Holm explains:


Who are the buyers?
• Traders who are buying cheap and sell for a higher price. It can be a private company.
• Those nations who are obligated to reduce because of the Kyoto-protocol commitments, like Denmark
• Private or public companies, like DONG ENERGY or Nordjysk El-handel. Not because they need it for their own company but they can get it for others.
• Non-profit organisations and NGO’s which have a ‘green’ profile and want to signal that they are carbon neutral, ex. to ‘cover’ flights for their employees, etc.
• Organisations which buy credits to ‘remove’ them from the market so they can’t be traded. They don’t like the idea of trading and making money on our global environment.


Who are selling?
• Companies that develop projects ex. in Thailand and use a lot of power or emit a green house gas. Many palm oil mills which make CDM-projects and generates CO2 credits. Pig farms, starch plants, cement plants, power plants, distilleries.
• Companies in Thailand that invest and reduce their CO2 emissions.


Danish dominance
Danish Energy Management is a private consulting company with offices in Thailand, Malaysia and Indonesia. They help national companies in different countries and they get support from the Danish government to set up projects in the developing countries and generate carbon credit for Denmark. In the Bangkok office there are four employees.
“We are the only ones from Denmark and we are dominant on the market and may soon be the country in Thailand with most CDM-projects,” Karsten Holm explains. He is the Chief advisor in Thailand.
Danish Energy Management is currently helping the Danish government with 19 projects in Thailand. Three of the projects are pig farms.
“Pig farms are generating waste water which normally would be treated in large open lagoons. This practise results in emission of Methane which is a green house gas that has a potential green house effect that is 21 times higher than CO2. We a suggesting to the Thai farms to installing biogas plants which instead will capture the methane. The waste water will hence no longer run directly to the open lagoons but be treated in the biogas system which will produce a biogas that can be used as fuel in a gas engine / generator that produces  green electricity. That way, a pig farm with 120.000 pigs will reduce Green house gas emission that is equivalent to 32.000 tonnes CO2 per year. Those emission reductions can be converted into Carbon Credits which they sell to the Danish government,” Karsten Holm explains.


Free of charge
Not every Danish company with a good idea can realize a project.  A CDM-project has to be ‘additional’ which means it has to be proven that the proposed project could not be materialised unless it obtains the extra bonus from selling the CO2 credit. In Thailand, four employees from Danish Energy Management are going through every possible project.
“It requires a lot of efforts to provide evidence for the additionality of a proposed project. In some cases nearly 100 different documents for one project is required. Our job is to find projects for the Danish government. For example, if companies turn to us we will free of charge look at the project, analyse the potentials and present it to the Danish Embassy and ask them if they are interested in buying the credits,” Karsten Holm explains.
If the Danish embassy agrees Danish Energy Management will continue the work of developing the documentation for the proposed project until its registration with the United Nations. If not, the company can leave it or chose to hire Karsten’s team privately.
Right now, three of the registered projects are generating carbon credits and hopefully some other 13 projects will soon be generating credits.
“My estimation is that up until 2012 we will have assisted in developing projects in Thailand which will result in an emissions reduction of 1,2 million tonnes CO2,” Karsten Holm says.
Since the trading of credits started the prices have jumped a lot up and down. Right now, the price per tonne at the European Treading System is around 13 Euros which, with the estimates of around 1.2 millions tonnes emission reductions means an amount around 100 million Danish kroner. Not bad for the Danish company in Thailand. Chief Advisor for Danish Energy Management, Karsten Holm gets also inquiries from Dancham business members and is planning to arrange a breakfast meeting on this topic.


Different types of possible CDM-projects in Thailand:
Energy generation & usage
Biomass power generation
Renewable energy
Energy efficiency
Energy conservation
Fuel switching
Environment & Energy
Waste water treatment and biogas generation
MSW – biogas
Transportation
Alternative fuels
Efficiency improvements
Industrial Processes
Changes or alternative industrial processes resulting in GHG emission reduction



Contact:
Karsten M. Holm
Country Manager / Chief Consultant
Danish Energy Management
Project Office – Thailand
Ploenchit Center / Elite Office – Suite 9
Sukhumvit Soi 2, Klongteoy, BKK 10110
Mob. + 66 (0) 8 1734 5490
Phone: +66 (0) 2305 6606
Fax: +66 (0) 2305 6607
Skype: holmibkk
Head Office
Danish Management Group A/S
Vestre Kongevej 4- 6, 8260 Viby J
– Denmark
Phone: + 4587 340 600,
Fax: +45 87 340 601
Web: www.danishmanagement.dk


 

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