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Annex 1

CLEAN DEVELOPMENT MECHANISMVALIDATION AND VERIFICATION MANUAL

(Version 01.2)

CONTENTS

Paragraphs Page

ABBREVIATIONS ............................................................................. 3

I. INTRODUCTION................................................................................ 15 4

A. Updates to the Manual ............................................................ 6 4

II. TERMS FOR VALIDATING AND VERIFYING INFORMATIONPROVIDED BY PROJECT PARTICIPANTS .................................... 713 5

III. PRINCIPLES FOR VALIDATION AND VERIFICATION .............. 1423 5

IV. ADDITIONAL ROLES OF DESIGNATED OPERATIONALENTITIES ............................................................................................ 2425 6

V. CDM VALIDATION........................................................................... 26176 7

A. Objective of CDM validation.................................................. 2628 7

B. Validation approach ................................................................ 2932 7

C. Validation methods ................................................................. 3339 8

D. Stakeholder consultation process ............................................ 4042 9

E. Validation requirements based on paragraph 37 of the

CDM modalities and procedures............................................. 43133 9 F. Specific validation activities ................................................... 134171 26

G. Validation report ..................................................................... 172174 34

H. Validation opinion................................................................... 175176 35

VI. CDM VERIFICATION REQUIREMENTS BASED ONPARAGRAPH 62 OF THE CDM MODALITIES ANDPROCEDURES.................................................................................... 177224 36

A. Objective of verification ......................................................... 177178 36

B. Verification approach.............................................................. 179183 36

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C. Verification methods............................................................... 184194 37

D. Verification of specific requirements...................................... 195209 39

E. Additional verification activities............................................. 210219 43

F. Verification report................................................................... 220222 45

G. Certification Report................................................................. 223224 45

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Abbreviations

AE Applicant entityA/R Afforestation and reforestationCAR Corrective action requestCDM Clean development mechanismCDM EB CDM Executive BoardCER Certified emission reductionCL Clarification requestCMP Conference of the Parties serving as the Meeting of the Parties to the Kyoto ProtocolCPA CDM programme activityDOE Designated operational entityDNA Designated national authorityFAR Forward action requestGHG Greenhouse gas(es)IPCC Intergovernmental Panel on Climate ChangePoA Programme of activitiesPDD Project Design DocumentPP Project ParticipantUNFCCC United Nations Framework Convention on Climate Change

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I. Introduction1. The Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP)at its second session, through its decision 1/CMP.2 1 requested the Executive Board (hereinafter referredto as the CDM Executive Board) to develop guidance for designated operational entities on verificationand validation in order to promote quality and consistency in verification and validation reports. The CMP at its third session 2 requested the CDM Executive Board of the clean development mechanism toconclude, as its highest priority, the validation and verification manual as a standard for designatedoperational entities (DOEs). The CDM Executive Board, at its forty-fourth meeting, approved the cleandevelopment mechanism (CDM) validation and verification manual (hereinafter referred as the Manual)for DOEs for their validation and verification work.

2. The document provides requirements to DOEs for their validation and verification work and promotes quality and consistency in the preparation of their validations and verification reports.

3. In carrying out their validation and verification work, DOEs shall follow this Manual and shallintegrate its provisions into their quality management systems.

4. In carrying out their validation and verification work, DOEs shall ensure that each project activitymeets all applicable CDM requirements. The CDM requirements include the CDM modalities and

procedures and subsequent decisions by the CMP and documents released by the CDM Executive Boardand available on the UNFCCC CDM website (together referred to as CDM requirements).

5. Applicant entities (AEs) that apply for accreditation/designation as a Designated OperationalEntity shall follow relevant provisions of this Manual when carrying out activities that are witnessed forobtaining accreditation and shall integrate its provisions into their quality management systems.

A. Updates to the Manual

6. Taking into consideration the evolving nature of the CDM, the CDM Executive Board, at itsforty-ninth meeting agreed to the following approach to update the Manual:

(a) A review of the document on a six month basis would be undertaken in the future. Thescope of such a review would include the appropriate incorporation of evolving decisionsof the CDM Executive Board and also allow minor editorial consistency checks;

(b) A more comprehensive revision of the document would take place every two years. The

scope of this type of revision would allow the incorporation of all relevant decisions ofthe CDM Executive Board, undertake comprehensive editorial, technical and legalconsistency check as well as any other relevant changes to improve the user-friendlinessof the Manual.

1

See decision 1/CMP.2, Further guidance relating to the clean development mechanism.2 See decision 2/CMP.3, Further guidance relating to the clean development mechanism.

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II. Terms for validating and verifying information provided byproject participants

1. Accurate

7. Checking for accuracy means:

(a) For quantitative data and information: minimizing bias and uncertainty in themeasurement process and the processing of data;

(b) For non-quantitative information: minimizing bias in favour of a particular result.

2. Conservative

8. Information can be considered as conservative if the GHG emission reductions or removalenhancements of a project activity are not overestimated.

3. Relevant

9. Information can be considered relevant if it ensures compliance with the CDM requirements andthe quantification and reporting of emission reductions achieved by a project activity. Unnecessary dataand assumptions that do not have an impact on the emission reductions are not considered as relevant.

4. Credible

10. Information can be considered credible if it is authentic and is able to inspire belief or trust, andthe willingness of persons to accept the quality of evidence.

5. Reliable

11. Information can be considered reliable if the quality of evidence is accurate and credible and ableto yield the same results on a repeated basis.

6. Completeness

12. Completeness refers to inclusion of all relevant information for assessment of GHG emissionsreductions and the information supporting the methods applied as required.

7. Validation/verification opinion

13. Formal written declaration to the intended user that provides assurance on the opinion relating tothe GHG emission reductions or removal enhancements of a project activity.

III. Principles for validation and verification

14. DOEs shall apply the following principles in performing validation and verification and in preparing validation and verification reports.

1. Consistency

15. Consistency is achieved by:

(a) Applying uniform criteria to the requirements of the applicable approved methodologythroughout the crediting period(s);

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(b) Applying uniform criteria among project activities with similar characteristics such as asimilar application of the approved methodology, use of technology, time period orregion;

(c) Applying uniform criteria to expert judgements, over time and among projects.

16. The principle of consistency shall not prevent a DOE from applying the most recent decisions andguidance provided by the CDM Executive Board.

2. Transparency

17. Information in the validation and verification reports shall be presented in an open, clear, factual,neutral and coherent manner based on documentary evidence.

18. Transparency requires DOEs to:

(a) Clearly and explicitly state and document all assumptions;

(b) Clearly reference background material;

(c) Clearly identify changes made to documentation.

3. Impartiality, independence and safeguarding against conflicts of interest

19. DOEs shall remain independent of the project activity being validated or verified. They shall alsoremain free from bias and any real or potential conflict of interest.

20. Appendix A to the CDM modalities and procedures specifies that DOEs shall work in a credible,independent, non-discriminatory and transparent manner. The structure of the DOE shall safeguard theimpartiality of its operations. If the DOE is part of a larger organization, the DOE shall clearly define thelinks with other parts of the organization to demonstrate that no conflicts of interest exist. DOEs shallremain free of any commercial, financial or other processes that influence its judgement or endanger trustin its independence and integrity. 3

21. DOEs shall base their findings and conclusions upon objective evidence and shall conduct allactivities in connection with the validation and verification processes in accordance with the rules and

procedures of the COP/MOP and the CDM Executive Board.

22. In their reports, DOEs shall truthfully and accurately state their validation or verificationactivities, findings and conclusions.

4. Confidentiality

23. In accordance with the CDM requirements, DOEs shall safeguard the confidentiality of allinformation obtained or created during validation or verification. 4

3 See EB 31 report, paragraph 11, currently located at and EB 33report, paragraph 13, currently located at for the decision of theCDM Executive Board on the use of laboratories and calibration services for CDM projects by DOEs.

4

See decision 3/CMP.1, annex Modalities and procedures for a clean development mechanism, currently locatedat .

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IV. Additional roles of designated operational entities

24. The CDM Executive Board, has entrusted DOEs with the functions below in addition tovalidation and verification:

(a) Undertaking voluntary pre-assessment of new baseline and monitoring methodologies inaccordance with the EB 21 report, paragraph 14; 5

(b) Identifying and submitting requests for deviation in accordance with the EB 49 report,annexes 26 and 27. 6

25. In response to reviews of project activities associated with validation or verificationrequirements 7 and requests for clarification from the CDM Executive Board, DOEs shall provide a

response and where possible the additional information requested.

V. CDM validation

A. Objective of CDM validation

26. The purpose of validation is to ensure a thorough, independent assessment of proposed CDM project activities submitted for registration as a proposed CDM project activity against the applicableCDM requirements.

27. The DOE shall report the results of its assessment in a validation report. The DOE shall submitthis validation report, along with the supporting documents to the CDM Executive Board as part of therequest for registration of a project activity as a proposed CDM project activity.

28. The validation report shall include a positive validation opinion only if the proposed CDM project activity complies with the applicable CDM requirements.

B. Validation approach

29. The CDM is a rules-based mechanism. Therefore, it shall be the DOEs responsibility to ensurethat, in accordance with this Manual and CDM requirements, these rules are complied with for any

project activities requesting registration as a proposed CDM project activity.

30. During validation, the DOE shall assess whether the project design of the proposed CDM projectactivity meets the CDM requirements. For this, the DOE shall, using objective evidence, assess thecompleteness and accuracy of the claims and conservativeness of the assumptions made in the projectdesign document (PDD). The evidence used in this assessment shall not be limited to that provided bythe project participants.

31. In assessing evidence, the DOE shall not omit evidence that is likely to alter the validationopinion. In the assessment of evidence, the DOE shall use the acceptable approaches as specified inchapter V, section E below, and the DOE shall ensure that the project activity complies with the relevant

5 See the document currently located at .6 See the documents Procedures for requests for deviation prior to submitting request for issuance and Form for

submission of requests for deviation prior to submitting request for issuance F-CDM-DEV-ISS currently locatedat and .

7

See decision 4/CMP.1 relating to procedures for review as referred to the modalities and procedures of the cleandevelopment mechanism, paragraph 41.

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requirements set out in the CDM modalities and procedures, the applicability conditions of the selectedmethodology and guidance issued by the CDM Executive Board before submitting a request forregistration.

32. In case the validation report includes a negative validation opinion the DOE shall provide the project participants with the report and inform the CDM Executive Board of the outcome.

C. Validation methods

1. Means of validation

33. The DOE shall apply standard auditing techniques to assess the correctness of the information provided by the project participants, including, where appropriate, but not limited to:

(a) Document review, involving:

(i) A review of data and information to verify the correctness, credibility andinterpretation of presented information;

(ii) Cross checks between information provided in the PDD and information fromsources other than that used, if available, and if necessary independent

background investigations.

(b) Follow-up actions (e.g. on site visit and telephone or email interviews), including:

(i) Interviews with relevant stakeholders in the host country, personnel withknowledge of the project design and implementation;

(ii) Cross checks between information provided by interviewed personnel (i.e. bychecking sources or other interviews) to ensure that no relevant information has

been omitted from the validation.

(c) Reference to available information relating to projects or technologies similar to the proposed CDM project activity under validation;

(d) Review, based on the approved methodology being applied, of the appropriateness offormulae and correctness of calculations.

2. Clarification requests, corrective action requests and forward action requests

34. If, during the validation of a project activity, the DOE identifies issues that need to be furtherelaborated upon, researched or added to in order to confirm that the project activity meets the CDMrequirements and can achieve credible emission reductions, the DOE shall ensure that these issues arecorrectly identified, discussed and concluded in the validation report.

35. The DOE shall raise a corrective action request (CAR) if one of the following occurs:

(a) The project participants have made mistakes that will influence the ability of the projectactivity to achieve real, measurable additional emission reductions;

(b) The CDM requirements have not been met;

(c) There is a risk that emission reductions cannot be monitored or calculated.

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36. The DOE shall raise a clarification request (CL) if information is insufficient or not clear enoughto determine whether the applicable CDM requirements have been met.

37. The DOE shall raise a forward action request (FAR) during validation to highlight issues relatedto project implementation that require review during the first verification of the project activity. FARsshall not relate to the CDM requirements for registration.

38. The DOE shall resolve or close out CARs and CLs only if the project participants modify the project design, rectify the PDD or provide adequate additional explanations or evidence that satisfy theDOEs concerns. If this is not done, the DOE shall not recommend the project activity for registration tothe CDM Executive Board.

39. The DOE shall report on all CARs, CLs and FARs in its validation report. This reporting shall be

undertaken in a transparent and unambiguous manner that allows the reader to understand the nature ofthe issue raised, the nature of the responses provided by the project participants, the means of validationof such responses and clear reference to any resulting changes in the PDD or supporting annexes.

D. Stakeholder consultation process

40. The DOE shall make the PDD of the project activity under consideration publicly available inaccordance with the latest version of the Procedures for processing and reporting on validation CDM

project activities. 8

41. During the validation of the project activity, the DOE shall take into account the commentsreceived and the validation report shall include details of actions taken to take due account of thecomments during the validation process.

42. If comments are not sufficiently substantiated or if they indicate that the project activity does notcomply with the CDM requirements, then the DOE shall request further clarification from the entity

providing the comment. However, the DOE is not required to enter into a dialogue with Parties,stakeholders or NGOs that comment on the CDM requirements. If no additional information orsubstantiation is provided in response to a request for clarification, the DOE shall proceed to assess thecomments as originally provided.

E. Validation requirements based on paragraph 37 of the CDMmodalities and procedures

43. In carrying out its validation work, the DOE shall ensure that the project activity complies with

the requirements of paragraph 37 of the CDM modalities and procedures.1. Approval

(i) Requirement to be validated

44. All Parties involved have approved the project activity.

8 See the document currently located at .

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(ii) Means of validation

45. The DOE shall determine whether the DNA of each Party indicated as being involved in the proposed CDM project activity in section A.3 of the PDD has provided a written letter of approval. TheDOE shall determine whether each letter confirms that:

(a) The Party is a Party to the Kyoto Protocol;

(b) Participation is voluntary;

(c) In the case of the host Party, the proposed CDM project activity contributes to thesustainable development of the country;

(d) It refers to the precise proposed CDM project activity title in the PDD being submittedfor registration.

46. The DOE shall determine whether the letter(s) of approval is unconditional with respect to (a) to(d) above.

47. The DOE shall confirm that the letter(s) of approval has been issued by the respective Partysdesignated national authority (DNA) and is valid for the proposed CDM project activity under validation.A list of DNAs is available on the UNFCCC CDM website. 9

48. If the DOE doubts the authenticity of the letter of approval, the DOE shall verify with the DNAthat the letter of approval is authentic.

(iii) Reporting requirements

49. The validation report shall, for each Party involved:

(a) Indicate whether a letter of approval has been received, with clearly referencing the letteritself and any supporting documentation;

(b) Indicate whether the DOE received this letter from the project participants or directlyfrom the DNA;

(c) Indicate the means of validation employed to assess the authenticity if paragraph 48above applies;

(d) Contain a clear statement regarding whether the DOE considers the letters are inaccordance with paragraphs 4548 above.

50. If letters of approval contain additional specification of the project activity, such as the PDDversion number, then the request for registration shall be made on the basis of the documents specified inthe letter. If a letter of approval refers to a specific version of the validation report and the DOE thereforeis unable to submit this precise version of the validation report, the DOE shall take one of the followingoptions:

(a) Insert a statement in the validation report to indicate that the final letter of approval hasnot been received and that a request for registration will not be submitted until it has beenreceived;

9 See the list currently located at .

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(b) Update the validation report to reflect the receipt of the letter of approval. If this optionis chosen, validation report major number shall remain unchanged and the minor numbershall be increased. The validation report shall contain confirmation that this is the onlychange that has been made to the version referred to in the letter of approval.

2. Participation


51. All project participants have been listed in a consistent manner in the project documentation, andtheir participation in the project activity has been approved by a Party to the Kyoto Protocol. 10


52. The DOE shall confirm that the project participants are listed in tabular form in section A.3 of thePDD and that this information is consistent with the contact details provided in annex 1 of the PDD. TheDOE shall determine whether the participation of each project participant has been approved by at leastone Party involved, either in a letter of approval or in a separate letter specifically to approve

participation. The DOE shall confirm that no entities other than those approved as project participants areincluded in these sections of the PDD.

53. The DOE shall ensure that the approval of participation has been issued from the relevant DNAand if in doubt shall verify with the DNA that the approval of participation is valid for the proposed CDM

project participant.


54. The validation report shall, for each project participant:

(a) Indicate whether the participation has been approved by a Party to the Kyoto Protocol;

(b) Describe the means of validation employed to draw this conclusion.

3. Project design document


55. The PDD used as a basis for validation shall be prepared in accordance with the latest templateand guidance from the CDM Executive Board available on the UNFCCC CDM website. 11


56. The DOE shall determine whether the PDD is in accordance with the applicable CDMrequirements for completing PDDs. 12

10 See EB 50 report, paragraph 66, and its annex 48, paragraphs 7-9, currently located at and , forcontractual relationships between DOEs and PPs.

11

See forms currently located at .12 See guidelines currently located at .

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57. The validation report shall contain a statement regarding the compliance of the PDD with relevantforms and guidance. 13

4. Project description


58. The PDD shall contain a clear description of the project activity that provides the reader with aclear understanding of the precise nature of the project activity and the technical aspects of itsimplementation.


59. The DOE shall confirm that the description of the proposed CDM project activity as contained inthe PDD sufficiently covers all relevant elements, is accurate and that it provides the reader with a clearunderstanding of the nature of the proposed CDM project activity.

60. For proposed CDM project activities in existing facilities or utilizing existing equipments, theDOE shall conduct a physical site inspection to confirm that the description in the PDD reflects the

proposed CDM project activity for the following types of CDM project activities unless other means arespecified in the methodology:

(a) Large scale projects;

(b) Non-bundled small scale projects with emission reductions exceeding 15,000 tonnes peryear;

(c) Bundled small scale projects, each with emission reductions not exceeding 15,000 tonnes per year; in such case the number of physical site visits may however be based onsampling, if the sampling size is appropriately justified through statistical analysis.

61. For other individual proposed small scale CDM project activities with emission reductions notexceeding 15,000 tonnes per year the DOE may conduct a physical site visit as appropriate.

62. For all other proposed CDM project activities not referred to in paragraphs 5961, the DOE shallundertake the validation by reviewing available designs and feasibility studies and may conductcomparison analysis to equivalent projects, as appropriate. The DOE may conduct physical site visit to

assess the plan. For proposed CDM project activities for which the DOE does not undertake a physicalsite inspection this shall be appropriately justified.

63. If the proposed CDM project activity involves the alteration of an existing installation or process,the DOE shall ensure that the project description clearly states the differences resulting from the projectactivity compared to the pre-project situation.

13 See guidelines currently located at .

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64. The validation report shall:

(a) Describe the process undertaken to validate the accuracy and completeness of the projectdescription;

(b) Contain the DOEs opinion on the accuracy and completeness of the project description.

5. Baseline and monitoring methodology

(a) General requirement

65. The DOE shall ensure that the baseline and monitoring methodologies selected by the project

participants comply with the methodologies previously approved by the CDM Executive Board.14

66. To ensure that the project activity meets this general requirement, the DOE shall determinewhether:

(a) The selected methodology is applicable to the project activity;

(b) The PP has correctly applied the selected methodology.

67. The DOE shall ensure that the selected methodology applies to the project activity and has beencorrectly applied with respect to following:

(a) Project boundary;

(b) Baseline identification;

(c) Algorithms and/or formulae used to determine emission reductions;

(d) Additionality; 15

(e) Monitoring methodology. 16

(b) Applicability of the selected methodology to the project activity


68. The DOE shall validate that the selected baseline and monitoring methodology previously

approved by the CDM Executive Board is applicable to the project activity, including that the usedversion is valid. 17

14 See EB 52 report, paragraphs 34 and 35 and annexes 9 to 13, currently located at. If the DOE determines that project participants intend to use a new

baseline and monitoring methodology, it shall, before submitting a request for registration of the project activity,forward the proposed methodology, together with the draft PDD, to the CDM Executive Board for review, inaccordance with the latest procedure and related forms for submitting and considering proposed newmethodologies currently located at and.

15 See Chapter V, sections E6 below.16 See Chapter V, sections E7 below.17

See EB 54 report, paragraphs 22 and 23, currently located at, and its

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69. The DOE shall apply specific guidance provided by the CDM Executive Board in respect to anyapproved methodology.


70. The DOE shall determine whether the methodology is correctly quoted and applied by comparingit with the actual text of the applicable version of the methodology available on the UNFCCC CDMwebsite.

71. A selected approved methodology applies to the project activity if the applicability conditions ofthe methodology are met and the project activity is not expected to result in emissions other than thoseallowed by the methodology. The DOE shall determine whether the choice of methodology is justifiedand the project participants have shown that the project activity meets each of the applicability conditions

of the approved methodology or any tool or other methodology component referred to therein. This shall be done by validating the documentation referred to in the PDD and by verifying that its content iscorrectly quoted and interpreted in the PDD. If the DOE, based on local and sectoral knowledge, is awarethat comparable information is available from sources other than that used in the PDD, then the DOEshall cross check the PDD against the other sources to confirm that the project activity meets theapplicability conditions of the methodology.

72. If the DOE cannot make a determination regarding the applicability of the selected methodologyto the proposed CDM project activity then the DOE shall request clarification of the methodology inaccordance with the guidance provided by the CDM Executive Board. 18

73. If the DOE determines that the proposed CDM project activity does not comply with theapplicability conditions of the methodology the DOE may proceed by means of requesting revision to ordeviation from the methodology in accordance with the guidance provided by the CDM ExecutiveBoard. 19

74. If the DOE has requested clarification of, revision to or deviation from a methodology, the DOEshall not submit a request for registration until the CDM Executive Board has approved the proposeddeviation or revision.

75. Under no circumstance shall the DOE consider the submission of a request for registration as ameans of seeking clarification from the CDM Executive Board on the applicability of a methodology.

annex 2 Procedure for the submission and consideration of requests for revision of approved baseline andmonitoring methodologies and tools for large scale CDM project activities and annex 3 Procedure for thesubmission and consideration of requests for revision of approved baseline and monitoring methodologies andtools for A/R CDM project activities, currently located at and forsubmission and consideration procedures.

18 See EB 31, annex 12, Clarification for project participants on when to request a revision, clarification to anapproved methodology or deviation, currently located at , andEB 27, annex 10, Guidance on criteria for consolidations and revision of methodologies, currently located at.

19 See EB 31, annex 12, Clarification for project participants on when to request a revision, clarification to anapproved methodology or deviation, currently located at , and

EB 27, annex 10, Guidance on criteria for consolidations and revision of methodologies, currently located at.

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76. For each applicability condition listed in the approved methodology selected, the DOE shallclearly describe in the validation report the steps taken to assess the relevant information contained in thePDD against these criteria. The validation report shall include an unambiguous validation opinionregarding the applicability of the selected methodology to the proposed CDM project activity.

77. The validation report shall contain information regarding greenhouse gas emissions occurringwithin the proposed CDM project activity boundary as a result of the implementation of the proposedCDM project activity which are expected to contribute more than 1% of the overall expected averageannual emissions reductions, which are not addressed by the applied methodology.

(c) Project boundary


78. The PDD shall correctly describe the project boundary, including the physical delineation of the proposed CDM project activity included within the project boundary for the purpose of calculating project and baseline emissions for the proposed CDM project activity.


79. Based on documented evidence and corroborated by a site visit where required by paragraphs 59 62 above, the DOE shall determine whether the delineation in the PDD of the project boundary is correctand meets the requirements of the selected baseline methodology. The DOE also shall confirm that allsources and GHGs required by the methodology have been included within the project boundary. If the

methodology allows project participants to choose whether a source or gas is to be included within the project boundary, the DOE shall determine whether the project participants have justified that choice.The DOE shall confirm that the justification provided is reasonable, based on assessment of supportingdocumented evidence provided by the project participants and corroborated by observations if required.


80. In the validation report, the DOE shall describe how the validation of the project boundary has been performed, by detailing the documentation assessed (e.g. a commissioning report) and by describingits observations during any site visit undertaken in accordance with paragraphs 5962 above (i.e.observations of the physical site or equipment used in the process). The DOE shall provide a statementwhether the identified boundary and the selected sources and gases are justified for the project activity.

Should the DOE identify emission sources that will be affected by the project activity and are notaddressed by the selected approved methodology, the DOE shall request clarification of, revision to ordeviation from the methodology, as appropriate, as described in paragraph 73 above.

(d) Baseline identification


81. The PDD shall identify the baseline for the proposed CDM project activity, defined as thescenario that reasonably represents the anthropogenic emissions by sources of GHGs that would occur inthe absence of the proposed CDM project activity.

82. The DOE shall confirm that any procedure contained in the methodology to identify the most

reasonable baseline scenario, has been correctly applied. If the selected methodology requires use of tools

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(such as the Tool for the demonstration and assessment of additionality and the Combined tool toidentify the baseline scenario and demonstrate additionality) to establish the baseline scenario, the DOEshall consult the methodology on the application of these tools. In such cases, the guidance in themethodology shall supersede the tool. The DOE shall check each step in the procedure described in thePDD against the requirements of the methodology.


83. If the methodology requires several alternative scenarios to be considered in the identification ofthe most reasonable baseline scenario, the DOE shall, based on financial expertise and local and sectoralknowledge, determine whether all scenarios that are considered by the project participants and aresupplementary to those required by the methodology, are reasonable in the context of the proposed CDM

project activity and that no reasonable alternative scenario has been excluded.

84. The DOE shall determine whether the baseline scenario identified is reasonable by validating theassumptions, calculations and rationales used, as described in the PDD. It shall ensure that documentsand sources referred to in the PDD are correctly quoted and interpreted. The DOE shall cross check theinformation provided in the PDD with other verifiable and credible sources, such as local expert opinion,if available.

85. The DOE shall determine whether all applicable CDM requirements have been taken into accountin the identification of the baseline scenario for the proposed CDM project activity, including relevantnational and/or sectoral policies and circumstances. 20 Drawing on its knowledge of the sector and/oradvice from local experts, the DOE shall confirm that all relevant policies and circumstances have beenidentified and correctly considered in the PDD, in accordance with the guidance by the CDM Executive

Board.86. The DOE shall determine whether the PDD provides a verifiable description of the identified

baseline scenario, including a description of the technology that would be employed and/or the activitiesthat would take place in the absence of the proposed CDM project activity.


87. The DOE shall clearly describe in the validation report the steps taken to assess the requirementgiven in paragraphs 81 and 82 above and shall provide an opinion as to whether:

(a) All the assumptions and data used by the project participants are listed in the PDD,including their references and sources;

(b) All documentation used is relevant for establishing the baseline scenario and correctlyquoted and interpreted in the PDD;

(c) Assumptions and data used in the identification of the baseline scenario are justifiedappropriately, supported by evidence and can be deemed reasonable;

(d) Relevant national and/or sectoral policies and circumstances are considered and listed inthe PDD;

20 See decision 3/CMP.1, annex, paragraph 45, currently located at, and EB 22, annex 3, Clarifications on the

consideration of national and /or sectoral policies and circumstances in baseline scenarios, currently located at.

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(e) The approved baseline methodology has been correctly applied to identify the mostreasonable baseline scenario and the identified baseline scenario reasonably representswhat would occur in the absence of the proposed CDM project activity.

88. The validation report shall clearly describe other steps taken, and sources of information used, bythe DOE to cross check the information contained in the PDD on this matter.

(e) Algorithms and/or formulae used to determine emission reductions


89. The steps taken and equations applied to calculate project emissions, baseline emissions, leakageand emission reductions shall comply with the requirements of the selected baseline and monitoringmethodology.


90. The DOE shall determine whether the equations and parameters in the PDD have been correctlyapplied by comparing them to those in the selected approved methodology. If the methodology providesfor selection between different options for equations or parameters, the DOE shall confirm that adequate

justification has been provided (based on the choice of the baseline scenario, context of the proposedCDM project activity and other evidence provided) and that the correct equations and parameters have

been used, in accordance with the methodology selected.

91. The DOE shall verify the justification given in the PDD for the choice of data and parametersused in the equations. If data and parameters will not be monitored throughout the crediting period of the

proposed CDM project activity but have already been determined and will remain fixed throughout thecrediting period, the DOE shall assess that all data sources and assumptions are appropriate andcalculations are correct, applicable to the proposed CDM project activity and will result in a conservativeestimate of the emission reductions. If data and parameters will be monitored on implementation andhence become available only after validation of the project activity, the DOE shall confirm that theestimates provided in the PDD for these data and parameters are reasonable.


92. The DOE shall clearly describe in the validation report the steps taken to assess the requirementoutlined in paragraph 89 above and shall provide an opinion as to whether:

(a) All assumptions and data used by the project participants are listed in the PDD, includingtheir references and sources;

(b) All documentation used by project participants as the basis for assumptions and source ofdata is correctly quoted and interpreted in the PDD;

(c) All values used in the PDD are considered reasonable in the context of the proposedCDM project activity;

(d) The baseline methodology has been applied correctly to calculate project emissions, baseline emissions, leakage and emission reductions;

(e) All estimates of the baseline emissions can be replicated using the data and parametervalues provided in the PDD.

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93. The validation report shall clearly describe how the DOE has verified the data and parametersused in the equations, including references to any other data sources used.

6. Additionality of a project activity


94. The PDD shall describe how a proposed CDM project activity is additional. 21


95. The DOE shall assess and verify the reliability and credibility of all data, rationales, assumptions, justifications and documentation provided by project participants to support the demonstration ofadditionality. This requires the DOE to critically assess the presented evidence, using local knowledgeand sectoral and financial expertise.

96. The DOE shall consider tools and documents provided by the CDM Executive Board todemonstrate the additionality of proposed CDM project activities, as well as specific complementary oralternative requirements included in approved CDM methodology.


97. The validation report shall clearly describe all steps taken, and sources of information used, bythe DOE to cross-check the information contained in the PDD on this matter. The validation report shallcontain information regarding how the DOE has determined that the documentation assessed is authentic,where appropriate.

(a) Prior consideration of the clean development mechanism


98. If the project activity start date is prior to the date of publication of the PDD for stakeholdercomments it shall be demonstrated that the CDM benefits were considered necessary in the decision toundertake the project as a proposed CDM project activity.


99. The DOE shall confirm that the start date of the project activity, reported in the PDD, is inaccordance with the Glossary of CDM terms. 22 If the reported date is not in accordance with theglossary, the DOE shall raise a CAR to ensure that the start date is correctly reported in a revised PDD.In particular, for project activities that require construction, retrofit or other modifications, the date ofcommissioning cannot be considered the project activity start date.

21 In accordance with decision 3/CMP.1, annex, paragraph 43 A CDM project activity is additional ifanthropogenic emissions of greenhouse gases by sources are reduced below those that would have occurred in theabsence of the registered CDM project activity. Note that for A/R CDM project activities: An afforestation orreforestation project activity under the CDM is additional if the actual net greenhouse gas removals by sinks areincreased above the sum of the changes in carbon stocks in the carbon pools within the project boundary thatwould have occurred in the absence of the registered CDM afforestation or reforestation project activity (seedecision 5/CMP.1, annex, paragraph 18). While specific elements of the assessment of additionality are discussedin further detail in paragraphs 98121 below, not all elements discussed below will be applicable to all proposed

CDM project activities.22 See document currently located at .

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100. The DOE, in accordance with the guidance from the CDM Executive Board 23, shall determinewhether it is a new project activity (a project activity with a start date on or after 02 August 2008) or anexisting project activity (a project activity with a start date before 02 August 2008).

101. For a new project activity, for which PDD has not been published for global stakeholderconsultation or a new methodology proposed to the CDM Executive Board before the project activitystart date, the DOE shall ensure by means of confirmation from the UNFCCC secretariat that PPs hadinformed the host Party DNA and the UNFCCC secretariat in writing of the commencement of the projectactivity and of their intention to seek CDM status. 24 If such a notification has not been provided by the

project participants within six months of the project activity start date, the DOE shall determine that theCDM was not seriously considered in the decision to implement the project activity.

102. For an existing project activity, for which the start date is prior to the date of publication of the

PDD for global stakeholder consultation, the DOE shall assess the project participants priorconsideration of the CDM through document reviews and shall satisfy following requirements:

(a) Evidence that must indicate that awareness of the CDM prior to the project activity startdate, and that the benefits of the CDM were a decisive factor in the decision to proceedwith the project. Evidence to support this would include, inter alia, minutes and/or notesrelated to the consideration of the decision by the Board of Directors, or equivalent, ofthe project participant, to undertake the project as a proposed CDM project activity.

(b) Reliable evidence from project participants that must indicate that continuing and realactions were taken to secure CDM status for the project in parallel with itsimplementation. Evidence to support this should include, inter alia, contracts with

consultants for CDM/PDD/methodology services, Emission Reduction PurchaseAgreements or other documentation related to the sale of the potential CERs (includingcorrespondence with multilateral financial institutions or carbon funds), evidence ofagreements or negotiations with a DOE for validation services, submission of a newmethodology to the CDM Executive Board, publication in newspaper, interviews withDNA, earlier correspondence on the project with the DNA or the UNFCCC secretariat.

103. If evidence to support the serious prior consideration of the CDM as indicated above is notavailable the DOE shall determine that the CDM was not considered in the decision to implement the

project activity.



(a) Describe the DOEs validation of the project activity start date provided in the PDD;

(b) Describe the evidence for prior consideration of the CDM (if necessary) that wasassessed;

23 See EB 49 report, paragraph 47, currently located at , and its annex22, Guidelines on the demonstration and assessment or prior consideration of the CDM, currently located at for the guidelines.

24

See EB 48, annex 62, Prior consideration of the CDM form, currently located at, for the standardized form.

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(c) Provide a clear validation opinion regarding whether the proposed CDM project activitycomplies with the requirements of the latest version of the Guidance on priorconsideration of CDM.

(b) Identification of alternatives


105. The PDD shall identify credible alternatives to the project activity in order to determine the mostrealistic baseline scenario, unless the approved methodology that is selected by the proposed CDM

project activity prescribes the baseline scenario and no further analysis is required.


106. The DOE shall assess the list of alternatives given in the PDD and ensure that:

(a) The list of alternatives includes as one of the options that the project activity isundertaken without being registered as a proposed CDM project activity;

(b) The list contains all plausible alternatives that the DOE, on the basis of its local andsectoral knowledge, considers to be viable means of supplying the outputs or servicesthat are to be supplied by the proposed CDM project activity;

(c) The alternatives comply with all applicable and enforced legislation.


107. The validation report shall describe whether the DOE considers the listed alternatives to becredible and complete.

(c) Investment analysis


108. If investment analysis has been used to demonstrate the additionality of the proposed CDM project activity, the PDD shall provide evidence that the proposed CDM project activity would not be:

(a) The most economically or financially attractive alternative; or

(b) Economically or financially feasible, without the revenue from the sale of certified

emission reductions (CERs).109. Project participants can show this through one of the following approaches, by demonstratingthat: 25

(a) The proposed CDM project activity would produce no financial or economic benefitsother than CDM-related income. Document the costs associated with the proposed CDM

project activity and the alternatives identified and demonstrate that there is at least onealternative which is less costly than the proposed CDM project activity;

25 It should be noted that the EB 51 report, paragraph 77, currently located at and its annex 58 Guidance on the assessment of investment

analysis, currently located at and the requirements of specificmethodologies may preclude the use of one of these options in certain scenarios.

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(b) The proposed CDM project activity is less economically or financially attractive than atleast one other credible and realistic alternative;

(c) The financial returns of the proposed CDM project activity would be insufficient to justify the required investment.

110. The DOE shall comply with the latest version of the Guidance on the Assessment of InvestmentAnalysis as provided by the CDM Executive Board and with other relevant guidance including the latestguidelines on plant load factors guidelines for the reporting and validation of plant load factors. 26


111. To verify the accuracy of financial calculations carried out for any investment analysis, the DOEshall:

(a) Conduct a thorough assessment of all parameters and assumptions used in calculating therelevant financial indicator, and determine the accuracy and suitability of these

parameters using the available evidence and expertise in relevant accounting practices;

(b) Cross-check the parameters against third-party or publicly available sources, such asinvoices or price indices;

(c) Review feasibility reports, public announcements and annual financial reports related tothe proposed CDM project activity and the project participants;

(d) Assess the correctness of computations carried out and documented by the project

participants;(e) Assess the sensitivity analysis by the project participants to determine under what

conditions variations in the result would occur, and the likelihood of these conditions.

112. To confirm the suitability of any benchmark applied in the investment analysis, the DOE shall: 27

(a) Determine whether the type of benchmark applied is suitable for the type of financialindicator presented;

(b) Ensure that any risk premiums applied in determining the benchmark reflect the risksassociated with the project type or activity;

(c) Determine whether it is reasonable to assume that no investment would be made at a rateof return lower than the benchmark by, for example, assessing previous investmentdecisions by the project participants involved and determining whether the same

benchmark has been applied or if there are verifiable circumstances that have led to achange in the benchmark.

26 See EB 48 report, annex 11, currently located at .27 See EB 51 report, paragraph 78, currently located at , and its annex

59 Previous rulings related to the appropriateness of benchmarks for project activities utilizing waste heat/waste

gas for power generation, currently located at for furtherinformation.

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113. The CDM Executive Board clarified that in cases where project participants rely on values fromFeasibility Study Reports (FSR) 28 that are approved by national authorities for proposed CDM projectactivities, DOEs are required to ensure that:

(a) The FSR has been the basis of the decision to proceed with the investment in the project,i.e. that the period of time between the finalization of the FSR and the investmentdecision is sufficiently short for the DOE to confirm that it is unlikely in the context ofthe underlying project activity that the input values would have materially changed;

(b) The values used in the PDD and associated annexes are fully consistent with the FSR,and where inconsistencies occur the DOE should validate the appropriateness of thevalues;

(c) On the basis of its specific local and sectoral expertise, confirmation is provided, bycross-checking or other appropriate manner, that the input values from the FSR are validand applicable at the time of the investment decision.



(a) Describe in detail how the parameters used in any financial calculations have beenvalidated;

(b) Describe how the suitability of any benchmark applied has been assessed;

(c) Confirm whether the underlying assumptions are appropriate and the financialcalculations are correct.

(d) Barrier analysis 29


115. If barrier analysis has been used to demonstrate the additionality of the proposed CDM projectactivity, the PDD shall demonstrate that the proposed CDM project activity faces barriers that:

(a) Prevent the implementation of this type of proposed CDM project activity 30;

(b) Do not prevent the implementation of at least one of the alternatives.


116. Issues that have a clear direct impact 31 on the financial returns of the project activity cannot beconsidered barriers and shall be assessed by investment analysis. This does not refer to either:

28 See EB 38 report, paragraph 54, currently located at .29 Barriers are issues in project implementation that could prevent a potential investor from pursuing the

implementation of the proposed project activity. The identified barriers are only sufficient grounds fordemonstration of additionality if they would prevent potential project proponents from carrying out the proposed

project activity undertaken without being registered as a CDM project activity.30

See EB 50, annex 13, guidelines for objective demonstration and assessment of barriers, currently located at.

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(a) Risk related barriers, for example risk of technical failure, that could have negativeeffects on financial performance; or

(b) Barriers related to the unavailability of sources of finance for the project activity.

117. The DOE shall apply a two-step process to assessing the barrier analysis performed, as follows:

(a) Determine whether the barriers are real. The DOE shall assess the available evidenceand/or undertake interviews with relevant individuals (including members of industryassociations, government officials or local experts if necessary) to determine whether the

barriers listed in the PDD exist. The DOE shall ensure that existence of barriers issubstantiated by independent sources of data such as relevant national legislation, surveysof local conditions and national or international statistics. If existence of a barrier is

substantiated only by the opinions of the project participants, the DOE shall not considerthis barrier to be adequately substantiated. If the DOE considers, on the basis of itssectoral or local expertise, that a barrier is not real or is not supported by sufficientevidence, it shall raise a CAR to have reference to this barrier removed from the projectdocumentation;

(b) Determine whether the barriers prevent the implementation of the project activity but notthe implementation of at least one of the possible alternatives. Since not all barriers

present an insurmountable hurdle to a project activity being implemented, the DOE shallapply its local and sectoral expertise to judge whether a barrier or set of barriers would

prevent the implementation of the proposed CDM project activity and would not equally prevent implementation of at least one of the possible alternatives, in particular the

identified baseline scenario.(iii) Reporting requirements


(a) Provide an assessment of each barrier listed in the PDD, which describes how the DOEhas undertaken validation of the barrier;

(b) Provide an overall determination of the credibility of the barrier analysis performed.

(e) Common practice analysis


119. For proposed large-scale CDM project activities, unless the proposed project type is first-of-itskind, common practice analysis shall be carried out as a credibility check of the other available evidenceused by the project participants to demonstrate additionality. This is a test to complement the investmentanalysis (Step 2 of the additionality tool) or barrier analysis (Step 3 of the additionality tool) to confirmthat the project activity is not widely observed and commonly carried out in the region.

31

Defined in this context as those issues whose impacts can be expressed in monetary terms with reasonablecertainty.

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120. The DOE shall use its local and sectoral expertise to:

(a) Assess whether the geographical scope (e.g. the defined region) of the common practiceanalysis is appropriate for the assessment of common practice related to the projectactivitys technology or industry type. For certain technologies the relevant region forassessment will be local and for others it may be transnational/global. If a region otherthan the entire host country is chosen, the DOE shall assess the explanation why thisregion is more appropriate;

(b) Using official sources and local and industry expertise, determine to what extent similarand operational projects (e.g. using similar technology or practice), other than CDM

project activities, have been undertaken in the defined region;(c) If similar and operational projects, other than CDM project activities, are already widely

observed and commonly carried out in the defined region, assess whether there areessential distinctions between the proposed CDM project activity and the other similaractivities.


121. The validation report shall provide details regarding:

(a) How the geographical scope of the common practice analysis has been validated;

(b) How the DOE has undertaken an assessment of the existence of similar projects;(c) How the DOE has assessed the essential distinctions between the proposed CDM project

activity and any similar projects that are widely observed and commonly carried out;

(d) Confirmation by the DOE that the proposed CDM project activity is not common practice.

7. Monitoring plan


122. The PDD shall include a monitoring plan. This monitoring plan shall be based on the approvedmonitoring methodology applied to the proposed CDM project activity.


123. The DOE shall apply a two-step process to assessing compliance with this requirement, asfollows:

(a) Compliance of the monitoring plan with the approved methodology. The DOE shall:

(i) By means of document review, identify the list of parameters required by theselected approved methodology;

(ii) Confirm that the monitoring plan contains all necessary parameters, that they areclearly described and that the means of monitoring described in the plan complieswith the requirements of the methodology.

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(b) Implementation of the plan. The DOE shall, by means of review of the documented procedures, interviews with relevant personnel, project plans and any physical inspectionof the proposed CDM project activity site in accordance with paragraphs 5962, assesswhether:

(i) The monitoring arrangements described in the monitoring plan are feasiblewithin the project design;

(ii) The means of implementation of the monitoring plan, including the datamanagement and quality assurance and quality control procedures, are sufficientto ensure that the emission reductions achieved by/resulting from the proposedCDM project activity can be reported ex post and verified.

(iii) Reporting requirements124. The validation report shall:

(a) State the DOEs opinion of the compliance of the monitoring plan with the requirementsof the methodology;

(b) Describe the steps undertaken to assess whether the monitoring arrangements describedin the monitoring plan are feasible within the project design;

(c) State the DOEs opinion of the project participants ability to implement the monitoring plan.

8. Sustainable development(i) Requirement to be validated

125. CDM project activities shall assist Parties not included in Annex I to the Convention in achievingsustainable development.


126. The DOE shall determine whether the letter of approval by the DNA of the host Party confirmsthe contribution of the proposed CDM project activity to the sustainable development of the host Party.


127. The validation report shall state whether the host Partys DNA confirmed the contribution of the project to the sustainable development of the host Party. This may be reported together with the DOEsassessment of the validity of the host Partys approval (refer to paragraphs 49 and 50 above).

9. Local stakeholder consultation


128. Local stakeholders 32 shall be invited by the PPs to comment on the proposed CDM projectactivity prior to the publication of the PDD on the UNFCCC website.

32

See glossary of CDM terms, currently located at, for definition of stakeholders.

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129. The DOE shall, by means of document review and interviews with local stakeholders asappropriate, determine whether:

(a) Comments by local stakeholders that can reasonably be considered relevant for the proposed CDM project activity, have been invited;

(b) The summary of the comments received as provided in the PDD is complete;

(c) The project participants have taken due account of any comments received and havedescribed this process in the PDD.



(a) Describe the steps taken to assess the adequacy of the local stakeholder consultation;

(b) State the DOEs opinion on the adequacy of the local stakeholder consultation.

10. Environmental impacts


131. Project participants shall submit documentation to the DOE on the analysis of the environmentalimpacts of the project activity in accordance with paragraph 37(c) of the CDM modalities and procedures.


132. The DOE shall confirm, by means of a document review and/or using local official sources andexpertise, whether the project participants have undertaken an analysis of environmental impacts and, ifrequired by the host Party, an environmental impact assessment.


133. The validation report shall describe whether the project participants have undertaken an analysisof environmental impacts and, if required by the host Party, an environmental impact assessment inaccordance with procedures as required by the host Party.

F. Specific validation activities1. Background

134. Project participants may contract a DOE to undertake certain specific validation activities. Forsuch validation activities, the DOE shall apply the general means of validation and reporting requirementsdescribed above as well as those described below.

2. Project design of small-scale clean development mechanism project activities

135. The DOE shall determine whether a proposed small-scale CDM project activity meets therequirements of the simplified modalities and procedures for small-scale CDM project activities. 33

33 See decision 4/CMP.1, annex II.

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136. During its validation of a small-scale project activity, the DOE shall confirm that:

(a) The project activity qualifies within the thresholds of the three possible types of small-scale project activities. It may include more than one component; for example, a type IIImethane recovery component activity and a type I electricity component activity; 34

(b) The project activity conforms to one of the approved small-scale categories 35 and appliesthe relevant tool or methodology. The DOE shall confirm that the small-scalemethodologies are applied in conjunction with the general guidelines to SSC CDMmethodologies 36 37 , which provides guidelines on equipment capacity, equipment

performance/lifetime, baseline identification for type-II/III Greenfield project activities,sampling and other monitoring-related issues; 38

(c) The project activity is not a debundled component of a large-scale project, in accordancewith the rules defined in appendix C of the simplified modalities and procedures forsmall-scale CDM project activities; 39

(d) Whether an assessment of the environmental impacts of the proposed CDM projectactivity is required by the host Party.

137. In assessing the additionality of small scale CDM project activities, the DOE shall refer to thespecific requirements on demonstration of additionality for small scale project activities 40 41 together with

34 See EB 28 report, paragraphs 56 and 57, currently located at for

guidance on size limits for the components.35 Small-scale project activities that follow the simplified modalities and procedures for small-scale CDM projectactivities may not apply a large-scale approved methodology. However, a project activity that is within the small-scale project activity thresholds may apply a large-scale approved methodology if it follows the modalities and

procedures for large-scale project activities defined in footnote 1 above.36 See EB 54 report, paragraph 37, currently located at

and itsannex 14 General guidelines to SSC methodologies, currently located at for further clarification.

37 In the EB 44 report, paragraph 49, currently located at , Boardclarified that the header of SSC methodologies stating Project participants shall take into account the generalguidance to the methodologies, information on additionality, abbreviations and general guidance on leakage

provided at the same link mentioned above, which also implies attachment C of appendix B is to

be applied in conjunction with a SSC methodology mutatis mutandis .38 See EB 50 report, paragraph 51 and its annex 30, General guidelines for sampling and surveys for small-scale

CDM project activities, currently located at for samplingguidance. In accordance with the EB 44 report, paragraph 50, currently located at, leakage from equipment transfer from within to outside the project

boundary may be excluded from consideration in SSC methodologies.39 See EB 54 report, paragraph 36, currently located at

and itsannex 13 Guidelines on assessment of de-bundling for SSC project activities, currently located at for guidance, and EB 46 report,

paragraph 60, currently located at for further clarification on

determining the occurrence of debundling do not require the consideration of the start date of the proposed CDM project.

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the guidance in chapter V, section E, subsection 6 and the Non-binding best practice examples todemonstrate additionality for SSC project activities. 42

3. Afforestation or reforestation project activitiesunder the clean development mechanism

(a) General requirement

138. The guidance provided in chapter V, section E above also applies to the validation of A/R CDM project activities to the extent defined in modalities and procedures for afforestation and reforestation(A/R) CDM project activities 43 and relevant guidance by the CDM Executive Board. 44 45

139. In addition the DOE shall confirm that that specific requirements as defined in the modalities and procedures for A/R CDM project activities have been followed, including:

(a) Project boundary for A/R CDM project activities;

(b) Selection of carbon pools;

(c) Eligibility of land;

(d) Approach proposed to address non permanence;

(e) Timing of management activities, including harvesting cycles, and verifications;

40 See Attachment A to Appendix B of 4/CMP.1, annex II, currently located at.

41 For assessing additionality in the case of small scale renewable energy projects less than or equal to 5 MW andenergy efficiency projects with energy saving less than or equal to 20 GWH per year, see EB 54 report, paragraph38, currently located at and itsannex 15 Guidelines for demonstrating additionality of renewable energy projects =< 5 MW and energyefficiency projects with energy savings

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(f) Socio-economic and environmental impacts, including impacts on biodiversity andnatural ecosystems.

(b) Project boundary for A/R CDM project activities


140. The PDD shall contain a description of the project boundary that geographically delineates the proposed afforestation or reforestation CDM project activity under the control of the project participants.The proposed A/R CDM project activity may contain more than one discrete area of land.


141. The DOE shall confirm whether the PDD contains a description of the CDM project boundarythat encircles discrete areas of land planned for the proposed afforestation or reforestation CDM projectactivity under the control of the project participants.

142. The DOE shall, through document review and/or interviews, validate that the project participantsfor all areas of land planned for A/R CDM project activity:

(a) Have already established the control over afforestation or reforestation activities; or

(b) The control over afforestation or reforestation is expected to be established in accordanceto the guidance specified in the EB 44 report, annex 16. 46

The control has to include at minimum the exclusive right, defined in a way acceptable under the legalsystem of the host country, to perform the A/R activity with the aim of achieving net anthropogenic GHGremovals by sinks. If the total number of documents to be reviewed and persons/entities to beinterviewed is not less than ten, then the DOE may apply a sampling approach.


143. In the validation report, the DOE shall describe the documentation assessed and/or oralstatements delivered by persons interviewed (if any) and conclude on their acceptability under the legalsystem of the host country. In a case the DOE has applied a sampling approach, the validation reportshall additionally describe how many sites have been assessed and how these were selected.

(c) Selection of carbon pools


144. Proposed A/R CDM project activity may account for verifiable changes in the following carbon pools within the project boundary: above-ground biomass, below-ground biomass, litter, dead wood, andsoil organic carbon 47.


145. The DOE shall determine whether the PDD selected the carbon pools to be considered in the proposed A/R CDM project activity in accordance with the requirements of the selected approvedmethodology. If the approved methodology allows for an option to exclude certain carbon pools, the

46

See the document currently located at .47 See decision 5/CMP.1, annex, paragraph 1(a).

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DOE shall confirm that verifiable information has been provided to justify the exclusion. For this, theDOE shall ensure that all documents referred to in the PDD are correctly quoted and interpreted. Ifrelevant, the DOE shall cross check the information provided in the PDD with other available informationfrom public sources or local experts.


146. In the validation report, the DOE shall provide a statement whether the selection of carbon poolscomplies with the applied approved methodology, and if the methodology allows for the option toexclude certain pools and the option is selected by PPs, whether the exclusion is justified for the projectactivity.

(d) Eligibility of land


147. Project participants shall provide evidence that the land within the planned project boundary iseligible for a proposed A/R CDM project activity following the most recent version of the Procedures todemonstrate the eligibility of land for A/R CDM project activities 48.


148. The DOE shall validate, based on review of information that reliably discriminates between forestand non-forest land according to the particular thresholds adopted by the host country (exemplary sourcesare listed in the abovementioned procedures) and a site visit, that the area of land included within the

project boundary is eligible for afforestation or reforestation activity.


149. In the validation report, the DOE shall describe how the validation of the eligibility of the landhas been performed, by detailing the data sources assessed and by describing its observations during a sitevisit process. The DOE shall provide a statement whether the entire land within the project boundary iseligible for a proposed A/R CDM project activity.

(e) Conservative choice and application of default data


150. Project participants shall ensure that application of default data in estimation of the net

anthropogenic GHG removals by sinks results in conservative, but not overly conservative, estimates. Anacceptable method for satisfying the above-mentioned requirement is provided in the most recent versionof the Guidelines on conservative choice and application of default data in estimation of the netanthropogenic GHG removals by sinks. 49


151. The DOE shall review the PDD to ensure satisfactory application of Guidelines on conservativechoice and application of default data in estimation of the net anthropogenic GHG removals by sinks in

48 See EB 38 report, paragraph 28, currently located at.49 See EB 46 report, paragraphs 45 and 47, currently located at and EB

50 report, paragraph 41, currently located at for more guidance oncarbon stocks and biomass stocks.

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order to prevent any overestimation of reductions in anthropogenic emissions according to the provisionsof the modalities and procedures for afforestation and reforestation CDM project activities.


152. In the validation report, the DOE shall describe how the default data were selected and applied.The DOE shall provide a statement whether the use of the default data avoids any overestimation of thenet anthropogenic GHG removals by sinks.

(f) Approach proposed to address non-permanence


153. Project participants shall specify the approach selected to address non-permanence in accordancewith paragraph 38 of the modalities and procedures for afforestation and reforestation CDM projectactivities.


154. The DOE shall review the PDD to ensure an approach to address non-permanence is selectedaccording to the provisions of the modalities and procedures for afforestation and reforestation CDM

project activities.


155. The validation report shall describe the approach selected by the project participants to addressnon-permanence.

(g) Timing of management activities, including harvesting cycles, and verifications


156. Project participants shall plan management activities, including harvesting cycles, andverifications such that a systematic coincidence of verification and peaks in carbon stocks would beavoided.


157. The DOE shall review the forest management plan and the monitoring plan for the proposed A/RCDM project activity to ensure that a systematic coincidence of verification and peaks in carbon stocks isavoided.


158. The validation report shall describe how the project participants have ensured that a systematiccoincidence of verification and peaks in carbon stocks would be avoided.

(h) Socio-economic and environmental impacts, including impacts on biodiversity and naturalecosystems


159. Project participants shall submit to the DOE documentation on their analysis of the socio-

economic and environmental impacts, including impacts on biodiversity and natural ecosystems, and

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impacts outside the project boundary of the proposed afforestation or reforestation project activity underthe CDM. 50


160. The DOE shall confirm, by means of a document review and/or using local official sources andexpertise, that the project participants have undertaken an analysis of the socio-economic andenvironmental impacts, including impacts on biodiversity and natural ecosystems, and impacts outside the

project boundary.

161. Should the above-mentioned analysis lead to conclusion that any negative impact that may beconsidered significant by the project participants or the host Party was detected then the DOE shall, bymeans of document review, ascertain that a socio-economic impact assessment and/or an environmental

impact assessment has been undertaken in accordance with relevant host Party regulations and theoutcome of such impact assessment is summarized in the PDD. The DOE shall also ascertain that adescription of the planned monitoring and remedial measures to address the negative impacts has beenincluded in the PDD.


162. The validation report shall describe whether the project participants have undertaken an analysisof the socio-economic and environmental impacts and, if required by the host Party in view of paragraph161 above, a socio-economic impact assessment and/or an environmental impact assessment inaccordance with relevant host Party regulations. The validation report shall also mention whether theoutcome of such impact assessment has been summarized in the PDD and a description of the plannedmonitoring and remedial measures to address the negative impacts has been included in the PDD.

4. Project design of small-scale afforestation or reforestation project activities

163. Small-scale afforestation or reforestation CDM project activities shall be validated using therequirements for afforestation or reforestation CDM project activities as described in section 3 abovewhile taking into account the simplified modalities and procedures for small-scale afforestation andreforestation CDM project activities. 51

164. During its validation of a proposed small-scale A/R CDM project activity the DOE shalldetermine whether:

(a) The project activity complies with the thresholds for the small-scale A/R CDM project

activities; (b) The project activity complies with one of the types of small-scale A/R project activities

defined in appendix B of the annex to decision 6/CMP.1 and qualifies to apply one of theapproved simplified baseline and monitoring methodology for small-scale afforestationand reforestation project activities;

50 In accordance with decision 5/CMP.1, annex, paragraph 12 (c), if any negative impact is considered significant bythe project participants or the host Party, project participants shall undertake a socio-economic impact assessment

and/or an environmental impact assessment in accordance with the procedures required by the host Party.51 See decision 6/CMP.1, annex.

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(c) The proposed CDM project activity is not a part of a debundled large-scale A/R projectactivity, in accordance with the rules defined in appendix C of the annex to decision6/CMP.1;

(d) The proposed CDM project activity has been developed or implemented by low-incomecommunities and individuals as confirmed by the host Party.

5. Programme of activities

165. The CDM Executive Board has provided guidance and procedures for registering a programme ofactivities (PoA) as a single CDM project activity 52. In validating a PoA and any CDM programmeactivities (CPAs) proposed to be included in the PoA, the DOE shall, in general, apply the means ofvalidation and reporting requirements described in this Manual. However there are a number of

requirements unique to PoAs for which additional instructions are provided below, the precise extent ofvalidation required in each of these areas will need to be determined by the DOE based on the type orPoA being validated. 53

(a) Operational and management arrangements for the PoA

166. The DOE shall assess the operational and management arrangements which have been established by the coordinating/managing entity in order to determine whether these arrangements are suitable for thePoA being validated. The arrangements shall be sufficient to ensure that the coordinating/managingentity will have control of all records and information related to the implementation of individual CPAsand will be in a position to ensure each CPA is being operated in accordance with the specificrequirements of the programme. Where the DOE considers the arrangements to be unsatisfactory orinsufficient a CAR shall be raised and a request for registration shall not be submitted until the CAR has

been resolved to the satisfaction of the DOE.

(b) Eligibility criteria for CPAs

167. The DOE shall assess the specified eligibility criteria in the POA-DD in order to determinewhether or not these criteria are sufficient to ensure that all CPAs would comply with the CDMrequirements applicable to the PoA, these requirements will include inter alia the means of demonstratingthe additionality of the CPA and the applicability of the applied methodology. The eligibility criteriarepresent an essential element of ensuring the smooth functioning or programmatic CDM, therefore theDOE may raise CARs which ensure the ease of application of the eligibility criteria.

(c) Validation of CPAs

168. The DOE shall assess any proposed CPA, which a coordinating/managing entity wishes toinclude in the PoA, to determine whether or not it complies with the eligibility criteria specified in thePOA-DD. The means of validation to determine compliance with this requirement will be specific to thePoA. The DOE may consider a desk review of the documentation sufficient to determine compliance incertain instances and may also consider follow-up interviews and/or site visits necessary for other types ofPoA.

52 See EB 47 report, paragraphs 70 and 72, currently located at , forrevised guidance and procedures on programmes of activities.

53

See EB 53 report, paragraph 40, currently located at for furtherinformation.

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