Legal Aspects of Adaptation Finance under the UNFCCC Regime with Special Reference to the Adaptation Fund

This article addresses the legal aspects of the financing of adaptation to climate change, with special consideration given to one of the climate funds – the Adaptation Fund (AF). In the complex structure of climate finance, the AF attracts attention as it differs from other funds in several aspects. As an exception from other United Nations (UNs) climate funds, AF has not been recognised as an operating entity of the Financial Mechanism of the Convention. AF is also an unprecedented example under the Convention of a fund serving in parallel two decision-making bodies (CMP and CMA) under two agreements (Kyoto Protocol and Paris Agreement) ratified by non-overlapping sets of parties; with a Fund Board elected by both bodies collectively. AFs funding source is specific, it was designed to be financed from shares of the proceeds of sales of certified emission reduction units (CERs) generated by Clean Development Mechanism (CDM) projects but since 2012 there is a limited possibility of offsetting the emissions with CERs under the EU emissions trading system (ETS). For several years Parties were unable to agree the operating principles and procedures of a new mechanism established in article 6(4) of the Paris Agreement, which will resemble CDM, and would constitute a source of funding for the AF. Once this source of funding is available, the AF would cease to serve the Kyoto Protocol. Despite the above problems, AF was seen as a good example of how future climate funding can be designed. We examine the evolution of the above legal problems, including the most recent decisions and conclusions adopted during Conference of Parties (COP)25 in Madrid.

Analisis Teknis-Ekonomi Pembangkit Listrik Tenaga Hybrid Solar PV/Biogas off Grid System

ABSTRACTReliability of the electric power system and fulfil the certification of sustainable industries in the palm oil industry are offered by utilizing the potential of renewable energy sources as power plants. This research is aimed to analyze the technical and economic aspects of the Solar PV-Biogas power plant at PT. TBS. The method used in this research is hybrid parallel with the off grid network system. In manual calculations showed an optimal generating system consisting of an anaerobic digester with a lagoon capacity of 28,934.81 m3, 1,560 kW biogas generator, 4,040.22 kWp PV array, 2000 kW bidirectional inverter, and 10,125 units of batteries with capacity of 1,547Ah. Then the system is evaluated using HOMER Pro software with project lifetime of 20 years, and the total electricity production obtained during the life of the project is able to supply loads continuously with an average excess electricity about 25.23%/years of total production. Meanwhile, in the economic analysis of hybrid power plants require an initial investment (NPC) of Rp.233,553,169,589.30, with total CO2 emissions of POME 44,073.75 tons/year, then the cost of Certified Emission Reduction is obtained about Rp.6,611,062,500/year. The calculation of economic feasibility results in a Net Present Value of Rp.136.266.578.753, Payback Period of 13,8 years, and an Internal Rate of Return of 9,41%. Based on the result of techno-economic analysis in the research, it can be concluded that this hybrid generating system has the potential to be developed for study that is more detailed if it is to be implemented.Keywords: HOMER Pro, Off-grid, PT. TBS, Solar PV/Biogas, Techno-economic.

Accounting for certified emission reductions (CERs) in India

Purpose The purpose of this paper is to analyse the certified emission reduction (CERs) disclosure and reporting practices followed by Indian firms. Design/methodology/approach The study is based on all 131 Indian firms who received the CERs under the CDM of UNFCCC. The content analysis is being used to examine the recognition, measurement, presentation and disclosure of CERs within the financial statements. Findings The study found that there is generally no uniformity of accounting for CERs. The firms adopted a diversity of accounting practices. More specifically, majority of companies (40.46 per cent) recognised CERs as the other income; a very high non-disclosure rate (91.60 per cent) for valuation of CERs inventories was found as only four companies (3.05 per cent) provided accounting treatment for CERs inventories at lower of cost or net realisable value followed by three companies (2.29 per cent) accounted for these inventories at Net realisable value at the end of the reporting period; similarly, a very high non-disclosure rate (92.36 per cent) for how companies account for expenses incurred in earning these credits was found. Research limitations/implications The study will be useful for a wide array of audiences ranging from accounting standard setter to the auditors. The present analysis is based on secondary data, as we examined only annual reports of the sample companies to know how they recognise their earned CERs within the financial statements. So, we did not cover the opinions of various key persons of companies like an accountant, auditors etc. which could be a limitation of this study in validating CERs disclosure practices followed by the Indian firms. Originality/value To the best of the author's knowledge, the present study is a first of its kind to analyse the carbon credit disclosure practices in the context of a developing country.

The Multi-Period Dynamic Optimization with Carbon Emissions Reduction under Cap-and-Trade

Under low carbon environment, a multi-period emissions reduction problem for manufacturer is investigated in the paper, where we assume that the government sets mandatory carbon emissions limit to all the enterprises by free of charge and allows the carbon emission quota to be traded or banked inter-temporally in the carbon trading market. Using discrete-time optimal control theory, the optimal emission reduction strategies for each period are firstly explored for maximizing the sum of net profit under cap-and-trade. The optimal carbon emissions, permit trading quantity, and the number of buying Certified Emission Reduction (CER) are obtained in each period. Furthermore, the effects of carbon price and initial carbon quota given by the government on the firm’s emission reduction strategies are discussed. Finally, numerical examples are illustrated to verify the proposed model, and some managerial inferences for a multi-period emission reduction are provided in conclusions.

Certified Emission Reduction credits and the role of investments

Purpose This study aims to investigate the cross-sectional and time-series dynamics of realized Certified Emission Reduction (CER) credits issued and the role of investments for a seminal sample of China’s Clean Development Mechanism (CDM) projects specializing in the wind sector. Design/methodology/approach The study investigates the dynamics of realized CER credits issued and the role of investments using traditional cross-sectional and time-series regression analysis. Findings The study results find that the level of investment per megawatt (MW) of power generation is an important predictor for the expected number of realized CER credits issued in the cross-section of China’s wind CDM projects. Additionally, the study finds evidence of time trends and seasonality when examining the time series of realized monthly CER credits: CER credits issued are lower in the summer and higher in the winter. Originality/value The study results highlight the importance of financing CDM projects and suggest guidelines in which investors are able to better assess how much to invest based on the anticipated CER credits in the Project Design Document. Additionally, the results suggest opportunities for the CDM Executive Board surrounding the Project Design Document and the anticipated CER credits contained therein. The present study contributes to the literature on strategic tools for addressing climate change and offer insights that narrow the gap between empirical finance and sustainable business practice in the context of CDM projects.

PENGURANGAN GAS RUMAH KACA DARI LIMBAH CAIR DI PABRIK KELAPA SAWIT PT PERUSAHAAN NUSANTARA, RIAU

Waste water utilization in palm oil mills (POMs) in Indonesia is limited only for land application and in some palm oil mills the waste water is unutilized and it is only discharged to a river. The technology of methane gas utilization produced from waste water have been developed, unfortunately economical barrier is a big problem to implement it in the POMs. Since Clean Development Mechanism (CDM) have been being introducing in Indonesia, many foreign investors who looking for Certified Emission Reduction (CER) visit and investigate potential reductions in Indonesia. Using CDM Mechanism, it will change feasibility of an activity of methane gas capture. An income from selling CER makes theeconomical feasibility of methane gas capture increase. The purpose of this study is to investigate the potential methane gas produced in waste water pond in all POM owned by PTPN V, located in Riau Province. Area of own plantation, amount of processed (Fresh Fruit Bunch (FFB) and distance of the location are proposed as a consideration for selecting candidate locations. The potentialmethane gas captured was calculated. It was known that four POMs have a potential methane gas amount produced from waste water pond, and the investment in those locations were feasible based on the NPV calculation result. Utilization of captured methane gas as a fuel for power generation is inconsiderate, because negotiation is predicted will be takes a long time.Key words: green house gasses, palm oil mill, empty fruit bunch, fresh fruit bunch, palm mill oil effluent, clean development mechanism

PEMANASAN GLOBAL DAN PELAKSANAAN MEKANISME PEMBANGUNAN BERSIH SEKTOR ENERGI DI INDONESIA

At this time global warming became an environmental issue that most often discussed. At the same time, as a trigger of green house gasses business, the issue of carbon trading business became an interesting discussion, because it has an impact to improve the feasibility of the project. This paper discussed the causes of global warming, the mechanism of global warming and the efforts to reduce green house gasses using Clean Development Mechanism. In addition, carbon price fl uctuation and the procedures of carbon trading are described also. Finally, potentialClean Development Mechanism projects in energy sector and implemented Clean Development Mechanism projects in Indonesia are discussed.Key Words : Global warming, Clean Development Mechanism (CDM), CDM project, Certified Emission Reduction (CER), Carbon Trading