CDM PROJECT CYCLE AND MAJOR
PLAYERS IN CDM PROJECTS
Ram M. Shrestha
Asian Institute of Technology
Thailand
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Introduction to CDM (1)
• CDM is a cooperative mechanism established under the
Kyoto Protocol (KP) to the United Nations Framework
convention on Climate Change (UNFCCC).
• The propose of CDM includes to assist:
Non-Annex I parties in achieving sustainable
development; and
Annex I countries in achieving their committed
emission reduction targets.
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Introduction to CDM (2)
Annex I countries
Australia
Austria
Belarus
Belgium
Bulgaria
Canada
Croatia
Czech Republic
Denmark
European Union
Estonia
Finland
France
Germany
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Greece
Hungary
Iceland
Ireland
Italy
Japan
Latvia a/
Liechtenstein*
Lithuania a/
Luxembourg
Monaco*
Netherlands
New Zealand
Norway
Poland a/
Portugal Romania a/
Russian Federation
Slovakia
Slovenia
Spain
Sweden
Switzerland
Turkey
Ukraine
United Kingdom of Great
Britain and Northern
Ireland
United States of America
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Introduction to CDM (3)
• CDM is subject to the authority and guidance of
Conference of the Parties serving as the meeting
of the parties COP/MOP to KP and be supervised
by Executive Board (EB).
• Annex to Decision 17/CP.7 contains Modalities &
Procedures for a CDM (M&PCDM) describing
modalities and procedures for implementing
CDM.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Introduction to CDM (4)
• Requirements for participation in the CDM:
-
Voluntary
DNA in Place
Ratification of KP
• Eligible Projects
-
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End-use energy efficiency improvements
Supply-side efficiency improvements
Renewable energy
Fuel switching
Agriculture ( CH4 and NO2 reduction projects )
Industrial process
Sinks projects (only afforestation and reforestation)
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Major Players Involved in CDM (1)
• Executive Board (EB)
•
Project Participants (PP)
•
Designated National Authority (DNA)
•
Designated Operational Entity (DOE)
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Major Players Involved in CDM (2)
Executive Board (EB)
• The responsibilities of EB include:
a) to supervise the CDM, under the authority and guidance of the
COP/MOP;
b) to make recommendation to the COP/MOP on further modalities &
procedures for the CDM, as appropriate;
c) to review and approve new methodologies related to baseline and
monitoring plan;
d) accreditation of operational entities;
e) to develop and maintain the CDM registry.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Major Players Involved in CDM (3)
Project participants (PP)
• PP include:
- Project developers
- Investors
• The Role of PP includes:
- to develop the CDM project activity;
- to implement/operate the CDM project;
- monitoring the CDM project activity.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Major Players Involved in CDM (4)
Designated National Authority (DNA)
• DNA:
- serves as a point of contact.
- determines the national criteria for project approval.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Major Players Involved in CDM (5)
Designated Operational Entity (DOE)
(§26-27)
• DOE is an independent organization accredited by EB to:
a) validate proposed CDM project;
b) verify the resulting emission reductions; and
c) certify those emission reductions as CERs.
• DOE for validation is different from DOE for verification
and certification (except in small-scale projects).
• A DOE could be a private company such as auditing and
accounting firm, consulting company, and law firm.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Major Players Involved in CDM (6)
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
11
CDM Project Cycle
(1)
• CDM project cycle includes different components of a
CDM project and role of major players involved.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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CDM Project Cycle (2)
Project Design &
Formulation
PP
Project Design Document
DNA
National
Approval
DOE
Validation/
Registration
Project financing
Monitoring
EB
Investors
PP
Monitoring Report
Verification/
certification
DOE
Verification report/ Certification report/
Requests for CERs
Issuance of
CERs
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EB/Registry
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (1)

Project participants have to prepare a CDM project
design document (CDM-PDD) containing following
information:







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General description of project activity
Baseline methodology
Crediting period
Monitoring methodology and plan
Calculation of GHG emission reductions by sources
Environmental impacts
Stakeholders comments
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (2)
Baseline
 The baseline for a CDM project activity is the scenario that
reasonably represents the anthropogenic emissions by
sources of GHGs that would occur in the absence of the
proposed project activity (§55).
 A CDM project activity is additional if anthropogenic
emissions of GHGs by sources are reduced below the
baseline.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (3)
Baseline
• A baseline
a) should be prepared on a project specific basis and in a
transparent and conservative manner.
b) should take into account project boundary, leakage
potential, and relevant national and/or sectoral policies and
circumstances such as sectoral reform initiatives, local fuel
availability, power sector expansion plans, and the
economic situation in the project sector
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (4)
Project boundary and Leakage
• project boundary shall encompass all anthropogenic
emissions by sources of greenhouse gases under the
control of the project participants that are significant and
reasonably attributable to the CDM project activity
• Project leakage is the net change of anthropogenic
emissions by sources of GHGs which occurs outside the
CDM project activity boundary, and that is measurable and
attributable to the CDM project activity.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (5)
Baseline Methodology
• Baseline must be developed according to an approved
methodology by EB or new methodology.
• If the baseline is based on a new methodology, the
methodology must be approved by EB.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (6)
Baseline Methodology
 Project Participants can select the most appropriate
baseline methodology from among the following
approaches:
(a) Existing actual or historical emissions, as applicable; or
(b) Emissions from a technology that represents an economically
attractive course of action, taking into account barriers to investment;
or
(c) Average emission of similar projects activities undertaken in the
previous 5 years, in similar circumstances, and whose performance is
among the top 20% of their category.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (7)
Crediting Period ( §49)
• Project Participants must choose a crediting period for the
project from one of the following alternative approaches:
a) A maximum of seven years which may be renewed at most two
times (maximum of 21 years); or
b) A maximum of ten years with no option for renewal.
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (8)
Monitoring Plan (MP) (§ 53-54)
• MP must be developed according to an approved
methodology by EB or new methodology
• If MP is based on a new methodology, the methodology
must be approved by EB.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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I. Project Design and Formulation (9)
Monitoring Plan (MP)
• MP should provide for information on collection and archiving of the
data to:
a) estimate or measure emissions occurring within the project boundary.
b) determine the baseline, as applicable
c) estimate leakage, where this needs to be considered
• MP should include the procedure for periodic calculation of the
reduction of anthropogenic emissions by sources by the project, and
for leakage effects.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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II. National Approval
• DNA screens CDM projects based on criteria involving SD
goals and policies.
• DNA certifies:
-Voluntarily participation in the project, and
-Project activity is assisting the country in achieving sustainable
development.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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III. Validation and Registration (1)
(§ 35-52)
• Validation is the process of independent evaluation of a
project activity against the requirements of the CDM, based
on PDD .
• Registration is the formal acceptance by the EB of a
Validated project.
• The validation is carried out by “designated Operational
Entity” (DOE).
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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III. Validation and Registration (2)
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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IV Project Financing
• Actual financing of the project to begin after the
registration.
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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V. Monitoring (1)
(§53-60)
• Monitoring by the Project Participants or by a specialized
agent.
• Monitoring report (including estimated CERs generated)
should be submitted to DOE for verification.
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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V. Monitoring (2)
• Examples:
1) In case of photovoltaic electricity generation plant,
monitoring can consist of metering the electricity
generation by the plant.
2) In the case of demand-side energy efficiency programs,
monitoring can consist of: (i) measuring the “power
consumption” and “operating hours” or the “energy use” of
the devices installed;
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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VI. Verification & Certification
(§61-63)
• Verification & certification by DOE .
• Verification is the periodic independent review and expost determination of the monitored reductions of
emissions by DOE.
• Certification is the written assurance by DOE that a
project achieved the reductions as verified.
• DOE submits a verification report and a certification
report to EB.
• Certification report constitutes a request to EB for
issuance of CERs.
AIT
National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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VII. Issuance of CERs
(§ 64-66)
• CDM registry Issues the CERs upon instruction by EB.
• Issuance is final 15 days after the date of receipt of request
request for issuance from DOE, unless a party involved in
the project or at least 3 members of EB request for a
review of the proposed issuance of CERs, on the ground of
fraud, malfeasance or incompetence of DOE .
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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References
•
Introduction to the CDM, UCCEE, August 2002.
•
Modalities and Procedures for a Clean
Development Mechanism, Annex Decision
17/CP.7.
•
UNFCCC CDM web site (http://unfccc.int/cdm/).
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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Thank you.
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National Workshop of CD4CDM Project, Phnom Penh, Cambodia
26-27 March 2003
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