Development Alternatives 1 CDM Criteria & Roadmap for CDM Project Development For Workshop on January 28 th – 29 th, 2005

Development Alternatives 2 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

Development Alternatives 3 MITIGATION POTENTIAL Greenhouse Gas Mitigation OptionsMitigationPotential (million tons) Long-term Marginal Cost ($/ton of carbon equivalent) Carbon Demand-side energy efficiency Supply-side energy efficiency Electricity transmission and distribution Renewable electricity technologies Fuel switching (gas for coal)85-20 Forestry Methane Enhanced cattle feed Anaerobic manure digesters Low methane rice varietiesmarginal5-20 Cultivation practicesmarginal0-20 Nitrous Oxide Improved fertilizer applicationmarginal0-20 Nitrification inhibitorsmarginal20-40 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)

Development Alternatives 4 What is CDM Developed Country Total GHG Emissions } Emissions to be reduced Developing Country Total GHG Emissions No emission reduction commitments Investments Carbon Credits

Development Alternatives 5 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

Development Alternatives 6 Types of CDM Projects Energy  Renewables: Wind, solar, hydro, biomass, geothermal  Power Generation: Combined Cycle turbines, clean coal technology  Fuel Switching: Natural Gas, methane, biomass & biogas  Co-generation: Sugarcane, chemical processes

Development Alternatives 7 Types of CDM Projects Industry  Efficiency: Boilers. Motors, lighting  Cogeneration-chemical, metellurgy, paper  Retrofits  Production Process  Waste Fuel Recovery – including landfills

Development Alternatives 8 PROJECT CONCEPTUALIZATION IDENTIFICATION AND ORGANIZATION TARGET 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 PROJECT CYCLE

CDM PROJECT CYCLE Project Idea Note (PIN) / Project Concept Note (PCN) Host / Investor approval PDD Validation Registration Monitoring Financing & Implementation VerificationCertification DNA; Investor PD/CCC OE EB PD OE EB Participation EIA Baseline & ER M&V Plan On-site Inspection Review Monitoring GHG Reductions Verification Report PD/CCC Implementin g Agencies Baseline & Additionality M&V Plan EIA St. Consul Contracts 9

Development Alternatives 10 CDM PROJECTS Some 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

Development Alternatives 11 CDM PROJECT CYCLE Project Idea Note (PIN) / Project Concept Note (PCN) Host / Investor approval DNA; Investor PD/CCC Implementin g Agencies

Development Alternatives 12 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

Development Alternatives 13 CDM PROJECT CYCLE Project Idea Note (PIN) / Project Concept Note (PCN) Host / Investor approval PDD DNA; Investor PD/CCC Implementin g Agencies Baseline & Additionality M&V Plan EIA St. Consul Contracts

Development Alternatives 14 PROJECT DESIGN DOCUMENT  Project Description  Promoter Details  Baseline  Additionality  Sustainable Development Criteria  Monitoring Plan  Financial Status

Development Alternatives 15 CDM PROJECT CYCLE Project Idea Note (PIN) / Project Concept Note (PCN) Host / Investor approval PDD Validation Registration DNA; Investor PD/CCC OE EB Participation EIA Baseline & ER M&V Plan PD/CCC Implementin g Agencies Baseline & Additionality M&V Plan EIA St. Consul Contracts

Development Alternatives 16 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

Development Alternatives 17 CDM PROJECT CYCLE Project Idea Note (PIN) / Project Concept Note (PCN) Host / Investor approval PDD Validation Registration Monitoring Financing & Implementation DNA; Investor PD/CCC OE EB PD Participation EIA Baseline & ER M&V Plan PD/CCC Implementin g Agencies Baseline & Additionality M&V Plan EIA St. Consul Contracts

Development Alternatives 18 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

Development Alternatives 19 CDM PROJECT CYCLE Project Idea Note (PIN) / Project Concept Note (PCN) Host / Investor approval PDD Validation Registration Monitoring Financing & Implementation VerificationCertification DNA; Investor PD/CCC OE EB PD OE EB Participation EIA Baseline & ER M&V Plan On-site Inspection Review Monitoring GHG Reductions Verification Report PD/CCC Implementin g Agencies Baseline & Additionality M&V Plan EIA St. Consul Contracts

Development Alternatives 20 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

Development Alternatives 21 ISSUANCE OF CERTIFIED EMISSION REDUCTIONS  Certification Report constitutes request to EB for issuance of CERs equal to verified amount of reductions of GHGs

Development Alternatives 22 MINIMUM TRANSACTION COST ASSOCIATED WITH CDM PROJECT CYCLE CDM project cycle stages where costs are incurred Cost Estimates (Rupees) Pre-operational phase design PIN/PDD Preparation6 lakhs Validation (to be paid to DOE)4-10 lakhs* Registration (to be paid to CDM EB) 2.25 – 7.5 lakhs* Operational phase Monitoring & Verification (to be paid to DOE) 10 lakhs * Certification (to be paid to CDM EB) 2% of the CER value Risk mitigation1% - 3% of CER value

Development Alternatives 23 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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