development alternatives 1 cdm criteria & roadmap for cdm project development for orientation...

Development Alternatives

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CDM Criteria & Roadmap for CDM Project Development

For Orientation Workshop

on

March 25th – 26th, 2004


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MITIGATION OPTIONS IN THE ENERGY SECTOR IDENTIFIED ARE :

Improvements in energy efficiency through upgrading currently employed technologies

Introduction of advanced technologies that are more efficient

Use of renewable energy sources wherever feasible to bring down the carbon content of the grid, to provide sustainable energy, and as a decentralised energy source at remote areas


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MITIGATION POTENTIAL

Greenhouse Gas

Mitigation Options MitigationPotential 2002-2012 (million

tons)

Long-term Marginal Cost ($/ton of carbon

equivalent)

Carbon Demand-side energy efficiency 45 0-15

Supply-side energy efficiency 32 0-12

Electricity transmission and distribution

12 5-30

Renewable electricity technologies

23 3-15

Fuel switching (gas for coal) 8 5-20

Forestry 18 5-10

Methane Enhanced cattle feed 0.66 5-30

Anaerobic manure digesters 0.38 3-10

Low methane rice varieties marginal 5-20

Cultivation practices marginal 0-20

Nitrous Oxide Improved fertilizer application marginal 0-20

Nitrification inhibitors marginal 20-40

Source: Based on modeling exercises reported in Rana, A. and Shukla, P.R. (2001), Ghosh et al.

(2001); Garg A. Shukla, P.R. (2002), and ALGAS (1998)


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CDM PROJECT ELIGIBILITY

Such activities should be Approved by the Govts. of the participating Parties be host country driven May involve private / or public entity Environmental integrity is a must Economic efficiency for cost effectiveness Equity

Implementation of such projects should result in social, environmental, economic and technological well-being - the four pillars

of sustainable development


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PROJECT CONCEPTUALIZATION

IDENTIFICATION AND ORGANIZATIONTARGET BENEFICIARIES AND NETWORKING

PARTICIPATORY PROJECT DEVELOPMENT-identify stakeholder, position, interest

expected argument-choose appropriate technologies

PROJECT FUND SOURCING / FINANCING

PROJECT PLANNING-integrating sustainable development goals

of the region / site specific

PROJECT IMPLEMENTATION -an agreed time frame

-an agreed monitoring and verification arrangement;

the organization to monitor-establish emission baseline

PERIODIC MONITORING AND

EVALUATION-emission reduction

PR

OJE

CT

CY

CL

E

CDM PROJECT CYCLE

Project Idea Note (PIN) / Project Concept Note (PCN)

Host / Investor approval

PDD

Validation

Registration

Monitoring

Financing & Implementation

Verification Certification

DNA; Investor

PD/CCC

OE

EB

PD

PD

OE EB

Participation EIA

Baseline & ERM&V Plan

On-site Inspection Review MonitoringGHG Reductions Verification Report

PD/CCC

Implementing Agencies

Baseline & Additionality M&V Plan

EIA St. Consul Contracts

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CDM PROJECTSSome Important Aspects

Participation is voluntary, approved by each party involved

Additional to any that would occur in the absence of certified project activity

Project fulfills the criteria of financial additionality

Reduction of emissions should be real, measurable and should have long time benefits

Project should contribute to the sustainable development of the host country


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CDM PROJECT CYCLE


Host / Investor approvalDNA;

Investor

PD/CCC



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PIN/PCN

Name of the project

Ownership details of project sponsors

Project Description

Status of Project Clearances

Financing details of the projects

Total CDM contribution sought

IRR and DSCR with & without CDM revenue

Estimate of GHG abetment

Sustainable development criteria

Project Risks


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CDM PROJECT CYCLE



PDD

DNA; Investor

PD/CCC

PD/CCC





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PROJECT DESIGN DOCUMENT

Project Description

Promoter Details

Baseline

Additionality

Sustainable Development Criteria

Monitoring Plan

Financial Status


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CDM PROJECT CYCLE



PDD

Validation

Registration

DNA; Investor

PD/CCC

OE

EB

Participation EIA


PD/CCC





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Validation of CDM Projects Validation is a process of independent evaluation

of a project activity by a designated Operational Entity (OE) against the requirements of the CDM on the basis of the PDD.

Registration Registration is the formal acceptance of a

validated project as a CDM project by the Executive Board. Registration is the prerequisite for verification,

certification and issuance of the CERs


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CDM PROJECT CYCLE



PDD

Validation

Registration

Monitoring


DNA; Investor

PD/CCC

OE

EB

PD

PD

Participation EIA


PD/CCC





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MONITORING

Project Participants, as part of the PDD provide a monitoring plan:

Based on previously approved methodology/new methodology

Determined by DoE as appropriate to circumstances of the project activity

Reflects good monitoring practice

A monitoring report in accordance with monitoring plan is to be submitted to the DoE for verification


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CDM PROJECT CYCLE



PDD

Validation

Registration

Monitoring


Verification Certification

DNA; Investor

PD/CCC

OE

EB

PD

PD

OE EB

Participation EIA


On-site Inspection Review MonitoringGHG Reductions Verification Report

PD/CCC





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Verification Verification is the periodic independent review

and determination by DoE of the monitored reductions by sources of greenhouse gases that have occurred as a result of the CDM project activity

Certification Certification is the written assurance by the DoE

that the project activity achieved the reductions in anthropogenic emissions by sources of GHGs as verified


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ISSUANCE OF CERTIFIED EMISSION REDUCTIONS

Certification Report constitutes request to EB for issuance of CERs equal to verified amount of reductions of GHGs


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MINIMUM TRANSACTION COST ASSOCIATED WITH CDM PROJECT CYCLE(from literature survey)

CDM project cycle stages where costs are incurred

Cost Estimates (Pound sterling)

Pre-operational phase design

Baseline study 12,000 – 15,000

Monitoring plan 5,000 – 10,000

Environmental assessment Time & uncertainty

Stakeholder consultation Time & uncertainty

Approval Time & uncertainty

Validation 10,000 – 20,000

Legal and contractual arrangements 15,000 – 25,000

Operational phase

Sale of CERs 5% -15% of CER value.

Adaptation levy 2% of the CER value

Risk mitigation 1% - 3% of CER value

Verification 5,000 per audit


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Bundling

Effective way to reduce transaction costs

Several projects bundled together to share transaction costs and CER benefits

Projects should have:

Similar technology

Be in the same geographical area

Preferably have the same project owner, but not necessary


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Validation, Verification and Certification of CDM Projects

Validation is the process of independent evaluation of a project activity by a DOE against requirements of CDM in Article 12 of the Kyoto Protocol and on the basis of the project design document

Verification is the periodic review and ex-post determination by a DOE of the monitored reductions in anthropogenic emissions by sources of greenhouse gases that have occurred as a result of a registered CDM project during the verification period

Certification is the written assurance by the DOE that during a specified time period, a project activity achieved the reductions in anthropogenic emissions


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Development Alternatives as a Designated Operational Entity

DESIGNATED OPERATIONAL

ENTITY

Validation & Registration

Verification & Certification

Validate Verify, Certify

SD Goal achievement

Participation Requirements

Analysis Environmental Impact

Reduction in GHG emissions through a baseline as determined by project participants

Periodic review and expert determination of the monitored reductions in GHGs

Conduct on-site inspection

Review monitoring results

Based on its verification results, certify CERS

Determine the GHG reductions Provide verification results to project participants, the Parties involved and the EB, and make publicly available

Validation of Monitoring Plan submitted by Project Participants

Finally the validation of the Project activity by the OE and sends validation report to EB for registration


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MonitoringMonitoring

Project participants are required to include as part of the Project Design Document (PDD) a monitoring plan that provides for :

a. Collection and archiving of all relevant data necessary for estimating or measuring anthropogenic emissions by sources of GHGs occuring within the project boundary during the crediting period.

b. Collection and archiving of all relevant data necessary for determining the baseline of anthropogenic emissions by sources of GHGs within the project boundary during the crediting period.


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c. Identification of all potential sources of, and the collection and archiving of data on, increased anthropogenic emissions by sources of GHGs outside the project boundary that are significant and reasonably attributable to the project activity during the crediting period.

d. Collection and archiving of information on the analysis of the environmental impact. If there impacts are considered significant by the project participants or the host Party environment impact assessment is to be undertaken in accordance with procedures by the host Party.


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e. Quality assurance and control procedures for the monitoring process.

f. Procedures for the periodic calculation of the reductions of anthropogenic emissions by sources by the proposed CDM project activity and for leakage effects.

g. A paper documentation


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A monitoring plan shall be based on a previously approved monitoring methodology

Determined by DOE as appropriate to the circumstances of the proposed activity and has been successfully applied elsewhere

Reflects good monitoring practice appropriate to the type of project activity

For small scale CDM project activities, simplified modalites may be followed.


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Based on the monitoring and reporting of reductrions in anthropogenic

emissions, CERs resulting from a CDM project activity will be

calculated applying registered methodology by sustainable the actual

anthropogenic emissions

by sources from baseline emissions and

adjusting for leakage.


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Criteria that must be met by a CDM project for CERs

• Participation should be voluntary and approved by each Party involved

• Project should be certified by competent authority

• Emission reductions :

- real

- measurable

- provide long term benefits to the mitigation of Climate Change

• Emission reduction should be additional to any that would occur in the absence of the certified project activity

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Elements of a CDM Project proposal

1. Briefly describe proposed project

• objective of the project • technologies involved

- current status in India- current status in the world

• approach to be pursued (i.e, emission avoidance, reduction or sequestration

• target group

- existing industrial uses

• potential partners (including third party validators and verifiers if possible)

• project feasibility, technology transfer, specific performance or design standards for

transferred technologies

• typical application of the project in the country

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Elements (Contd..)

2. Discuss barriers to the project (i.e. why has the project not been undertaken previously),and how the project proposes to surmount these barriers (e.g., the CDM will provide additional financing not previously available)

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Elements (contd..)

3. Project implementation plans in phases

- work plan

- monitoring and evaluation plan- certification of ERs

4. Quantify the ghgs reduction to be achieved through the project

- develop a project reference case or baseline that accounts for what would have happened at the project site without the proposed project activities

- identify ghg sources and sinks at the site included in the emission baseline / reference and

- describe all measures to be` taken as part of the project to avoid, reduce or sequester ghg emissions

- quantify the emission reductions to be achieved through each such measure and for the project as a whole

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Elements (Contd..)

5. Workout project economic costs and benefits

- economic cost of the project

- economic benefit of the project

- cost benefit ratio

- customer benefits

- host partner benefits

- investing partner benefits

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Elements (Contd..)

6. Workout other benefits of the project :

- sustainable developments and other benefits to the host country

- social benefits

- economic benefits

- environmental benefits

- global

- local

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Elements (Contd..)

7. Estimate the cost per metric tonne of ghg avoided, reduced or sequestered

- provide other informations relevant to cost such as anticipated pay-back period on investment

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Elements (Contd..)

8. Identify any potential sources of leakage (i.e. activities not directly related to the project that could result in loss or reversal of accrued ghg benefits) and describe steps to be taken to reduce the risk of such potential leakage

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Elements (Contd..)

9. Provide a description of how the project could contribute to the advancement of scientific knowledge especially regarding options to mitigate climate change

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Elements (Contd..)

10. Highlight innovations / unique approaches incorporated in the proposal

11. Discuss the replicability and transferability potential of the project

12. Discuss other benefits

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development alternatives 1 cdm criteria & roadmap for cdm project development for orientation...

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development alternatives

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cdm project eligibility

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