| Abstract |
KenGen has registered three geothermal Clean Development Mechanism (CDM) projects with potential emission reduction of 1.4 million tCO2 /year. The registered projects are at different stages of monitoring, reporting and verification (MRV). KenGen is also implementing 560 MW of geothermal projects with a potential emission reduction of about 2.5 million tCO2 /year by 2019. The paper discusses status and the Company’s experience in geothermal carbon credit projects, including benefits, challenges and lessons learnt. The paper also discusses the current role of KenGen in the post-2012 new market mechanisms (NMM), bilateral trading options and the Voluntary Carbon Market prospects. The challenges include; project boundary with regard to steam supply/sharing between two geothermal fields, monitoring requirements with regard to frequency, staffing, data analysis instrument and as more carbon credit projects come online, access to third party data, delay in project registration and issuance (mostly caused by the choice of validator/verifier), delay in project construction due to financing and rigorous government procurement regulations, collapse of the carbon markets, type and structure of Emission Reduction Purchase Agreements (ERPA), and potential challenges for emission trading in the post-2012 era. Main benefits include; enhanced community benefits and sustainability of the projects with implications for the Millennium Development Goals, additional revenue streams, enhanced green energy supply and security, internal capacity in developing carbon credit projects etc. Lessons learnt are that there is need to clearly define the project boundary in the project design documents with regard to supply of steam from two or more geothermal fields, experience of a verifier is key to timely project registration and issuance, type and structure of the ERPA is important in guaranteeing carbon revenue, linking aspects of the monitoring plan to Power Purchase Agreement (PPA) and existing systems is important to avoid deviation in PDD post-registration, clear community benefits ensures project’s social bottom-line etc. However, ability to generate more carbon revenue from these projects will depend on access to financing, capacity building and technology transfer. The information provided in this paper reflects the status of the CDM projects as at May 2014. Several developments could have occurred by the time this paper is published. |