National Workshop of CD4CDM Project, Phnom Penh, Cambodia

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CDM PROJECT CYCLE AND MAJOR PLAYERS IN CDM
PROJECTS
Ram M. Shrestha Asian Institute of
Technology Thailand
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Introduction to CDM (1)

• CDM is a cooperative mechanism established under
  the Kyoto Protocol (KP) to the United Nations
  Framework convention on Climate Change (UNFCCC).
• The propose of CDM includes to assist
• - Non-Annex I parties in achieving sustainable
  development and
• - Annex I countries in achieving their committed
  emission reduction targets.

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Introduction to CDM (2) Annex I countries
AustraliaAustriaBelarus BelgiumBulgaria CanadaCroatia Czech Republic DenmarkEuropean UnionEstonia FinlandFranceGermany GreeceHungary IcelandIrelandItalyJapanLatvia a/LiechtensteinLithuania a/LuxembourgMonacoNetherlandsNew ZealandNorway Poland a/Portugal Romania a/Russian Federation Slovakia Slovenia SpainSwedenSwitzerlandTurkeyUkraine United Kingdom of GreatBritain and Northern IrelandUnited States of America
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Introduction to CDM (3)

• CDM is subject to the authority and guidance of
  Conference of the Parties serving as the meeting
  of the parties COP/MOP to KP and be supervised by
  Executive Board (EB).
• Annex to Decision 17/CP.7 contains Modalities
  Procedures for a CDM (MPCDM) describing
  modalities and procedures for implementing CDM.

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Introduction to CDM (4)

• Requirements for participation in the CDM
• - Voluntary
• - DNA in Place
• - Ratification of KP
• Eligible Projects
• - End-use energy efficiency improvements
• - Supply-side efficiency improvements
• - Renewable energy
• - Fuel switching
• - Agriculture ( CH4 and NO2 reduction projects )
• - Industrial process
• - Sinks projects (only afforestation and
  reforestation)

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Major Players Involved in CDM (1)

• Executive Board (EB)
• Project Participants (PP)
• Designated National Authority (DNA)
• Designated Operational Entity (DOE)

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Major Players Involved in CDM (2)

• Executive Board (EB)
• The responsibilities of EB include
• a) to supervise the CDM, under the authority and
  guidance of the COP/MOP
• b) to make recommendation to the COP/MOP on
  further modalities procedures for the CDM, as
  appropriate
• c) to review and approve new methodologies
  related to baseline and monitoring plan
• d) accreditation of operational entities
• e) to develop and maintain the CDM registry.

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Major Players Involved in CDM (3)

• Project participants (PP)
• PP include
• - Project developers
• - Investors
• The Role of PP includes
• - to develop the CDM project activity
• - to implement/operate the CDM project
• - monitoring the CDM project activity.

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Major Players Involved in CDM (4)

• Designated National Authority (DNA)
• DNA
• - serves as a point of contact.
• - determines the national criteria for project
  approval.

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Major Players Involved in CDM (5)

• Designated Operational Entity (DOE)
• (26-27)
• DOE is an independent organization accredited by
  EB to
• a) validate proposed CDM project
• b) verify the resulting emission reductions and
• c) certify those emission reductions as CERs.
• DOE for validation is different from DOE for
  verification and certification (except in
  small-scale projects).
• A DOE could be a private company such as auditing
  and accounting firm, consulting company, and law
  firm.

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Major Players Involved in CDM (6)
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CDM Project Cycle (1)

• CDM project cycle includes different components
  of a CDM project and role of major players
  involved.

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CDM Project Cycle (2)
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I. Project Design and Formulation (1)

•     Project participants have to prepare a CDM
  project design document (CDM-PDD) containing
  following information
• Ø      General description of project activity
• Ø      Baseline methodology
• Ø      Crediting period
• Ø      Monitoring methodology and plan
• Ø      Calculation of GHG emission reductions by
  sources
• Ø      Environmental impacts
• Ø      Stakeholders comments

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I. Project Design and Formulation (2)

• Baseline
• The baseline for a CDM project activity is the
  scenario that reasonably represents the
  anthropogenic emissions by sources of GHGs that
  would occur in the absence of the proposed
  project activity (55).
• A CDM project activity is additional if
  anthropogenic emissions of GHGs by sources are
  reduced below the baseline.

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I. Project Design and Formulation (3)

• Baseline
• A baseline
• a) should be prepared on a project specific
  basis and in a transparent and conservative
  manner.
• b) should take into account project boundary,
  leakage potential, and relevant national and/or
  sectoral policies and circumstances such as
  sectoral reform initiatives, local fuel
  availability, power sector expansion plans, and
  the economic situation in the project sector

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I. Project Design and Formulation (4)

• Project boundary and Leakage
• project boundary shall encompass all
  anthropogenic emissions by sources of greenhouse
  gases under the control of the project
  participants that are significant and reasonably
  attributable to the CDM project activity
• Project leakage is the net change of
  anthropogenic emissions by sources of GHGs which
  occurs outside the CDM project activity boundary,
  and that is measurable and attributable to the
  CDM project activity.

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I. Project Design and Formulation (5)

• Baseline Methodology
• Baseline must be developed according to an
  approved methodology by EB or new methodology.
• If the baseline is based on a new methodology,
  the methodology must be approved by EB.

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I. Project Design and Formulation (6)

• Baseline Methodology
• Project Participants can select the most
  appropriate baseline methodology from among the
  following approaches
• (a) Existing actual or historical emissions, as
  applicable or
• (b) Emissions from a technology that represents
  an economically attractive course of action,
  taking into account barriers to investment or
• (c) Average emission of similar projects
  activities undertaken in the previous 5 years, in
  similar circumstances, and whose performance is
  among the top 20 of their category.

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I. Project Design and Formulation (7)

• Crediting Period ( 49)
• Project Participants must choose a crediting
  period for the project from one of the following
  alternative approaches
• a) A maximum of seven years which may be renewed
  at most two times (maximum of 21 years) or
• b) A maximum of ten years with no option for
  renewal.

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I. Project Design and Formulation (8)

• Monitoring Plan (MP) ( 53-54)
• MP must be developed according to an approved
  methodology by EB or new methodology
• If MP is based on a new methodology, the
  methodology must be approved by EB.

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I. Project Design and Formulation (9)

• Monitoring Plan (MP)
• MP should provide for information on collection
  and archiving of the data to
• a) estimate or measure emissions occurring
  within the project boundary.
• b) determine the baseline, as applicable
• c) estimate leakage, where this needs to be
  considered
• MP should include the procedure for periodic
  calculation of the reduction of anthropogenic
  emissions by sources by the project, and for
  leakage effects.

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II. National Approval

• DNA screens CDM projects based on criteria
  involving SD goals and policies.
• DNA certifies
• -Voluntarily participation in the project, and
• -Project activity is assisting the country in
  achieving sustainable development.

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III. Validation and Registration (1)( 35-52)

• Validation is the process of independent
  evaluation of a project activity against the
  requirements of the CDM, based on PDD .
• Registration is the formal acceptance by the EB
  of a Validated project.
• The validation is carried out by designated
  Operational Entity (DOE).

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III. Validation and Registration (2)
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IV Project Financing

• Actual financing of the project to begin after
  the registration.

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V. Monitoring (1) (53-60)

• Monitoring by the Project Participants or by a
  specialized agent.
• Monitoring report (including estimated CERs
  generated) should be submitted to DOE for
  verification.

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V. Monitoring (2)

• Examples
• 1) In case of photovoltaic electricity
  generation plant, monitoring can consist of
  metering the electricity generation by the plant.
  
• 2) In the case of demand-side energy efficiency
  programs, monitoring can consist of (i)
  measuring the power consumption and operating
  hours or the energy use of the devices
  installed

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VI. Verification Certification (61-63)

• Verification certification by DOE .
• Verification is the periodic independent review
  and ex-post determination of the monitored
  reductions of emissions by DOE.
• Certification is the written assurance by DOE
  that a project achieved the reductions as
  verified.
• DOE submits a verification report and a
  certification report to EB.
• Certification report constitutes a request to EB
  for issuance of CERs.

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VII. Issuance of CERs( 64-66)

• CDM registry Issues the CERs upon instruction by
  EB.
• Issuance is final 15 days after the date of
  receipt of request request for issuance from DOE,
  unless a party involved in the project or at
  least 3 members of EB request for a review of the
  proposed issuance of CERs, on the ground of
  fraud, malfeasance or incompetence of DOE .

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References

• Introduction to the CDM, UCCEE, August 2002.
• Modalities and Procedures for a Clean
  Development Mechanism, Annex Decision 17/CP.7.
• UNFCCC CDM web site (http//unfccc.int/cdm/).

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Thank you.