UNIDO Vietnam Support for CDM projects in the Industrial sector: Pilot Project in Co-operation with the Austrian Industry Training Sessions on the Kyoto CDM Preparation of PINs & PDDs: Best Practices and ‘How to Guides’ Mike Bess Hanoi, Vietnam 26th and 27th June 2006 © ESD 2006

Summary PINs & PDDs – what they are What the PIN & PDD process is from start to finish Why good PDDs are important Who a PDD should be written for – the most important ‘judges’ for a PDD What a PDD should achieve Key steps in PDD preparation How to improve PDD’s chance of success Examples of good PDDs – key points © ESD 2006

PIN What a PIN should do: Start formal process for CDM project Record when the participant officially decided on CDM Provide government DNA with CDM project idea Allow government to suggest best way to proceed Help participant focus on key CDM project issues © ESD 2006

PIN PIN should cover: Project identification; Project participants; Host Country; General project information; Project organisation; Greenhouse gas emission reductions; (Additional) ecological, socio-economic and/or development effects; and Additionality and sustainability effects. © ESD 2006

PDD – what a PDD should do A PDD should: Define the baseline methodology used & justification for its use Provide the formal, step-by-step framework for validating the project Provide the framework for stakeholder consultation, & proof thereof Provide government DNA with basis to approve the project (e.g., ‘Letter of Approval’/LOA) © ESD 2006

PDD – what a PDD should do (cont) A PDD should: Provide the CDM EB with the full basis for registering the project Form the basis for a buyer to sign an Emissions Reduction Purchase Agreement (ERPA) Provide the participant with detailed CDM verification procedures post registration © ESD 2006

PDD Project Information Additionality Baseline & Monitoring Methodology EIA Stakeholder Consultation Buyer Information Review & QA Translation © ESD 2006

PDD – Project information Project description Project technology & any innovation Project innovation Project investors, participants What the project will achieve in greenhouse gas (GHG) emission reductions Project beneficiaries Project risks © ESD 2006

PDD – Additionality Define how project will reduce GHG emissions Define how much emission reductions can be expected (per year, per crediting period, life of project) Define what project achieves that is additional to a ‘business as usual’ project, including: –New technology –New technological process –New fuel sources –New area of investment in country, region, etc. © ESD 2006

PDD – Additionality (cont) Define how CDM credits (CERs) will help achieve additionality, e.g., by: Helping overcome risk of new technology, new markets, new techniques, etc. Helping to make the project financially viable by increasing IRR, return on equity, etc. Helping to gain local, government & other support to make the project happen. © ESD 2006

PDD – Baseline & Monitoring Methodology Select appropriate methodology (AM or ACM) if available – or, develop methodology if existing not appropriate Define the baseline (what would be if the CDM project did not happen) with specific reference to emissions over time Define the project’s emissions projection Define how much the project will reduce emissions relative to baseline Set out monitoring methodology © ESD 2006

PDD – EIA, licenses, permits, local approvals, etc. Ensure you have the appropriate, required environmental impact assessment (EIA) Ensure your project has all the appropriate licenses (e.g., electricity generation license) to operate Ensure your project has all necessary rights & permits to operate (e.g., land title, or leases, rights of access, etc.) Ensure your project has all approviate national, regional, local government approvals © ESD 2006

PDD – Stakeholder consultation KP requires that there be proper, full stakeholder consultation Requires participant/investor to identify all key stakeholders concerned with CDM project Requires participant/investor to hold structured consultations with records of such Requires period of public review for comments on project Requires proof that stakeholders have been consulted & any major issues raised by stakeholders are addressed © ESD 2006

PDD – Review & QA To ensure a project gets validated & registered it is necessary to have: Peer review, Review on any of particularly new or innovative technology or technical approaches Review of any new operational techniques Full quality assurance review to ensure that the PDD is top quality © ESD 2006

Project Approval Process © ESD 2006 PDD CER Placement & Term Sheet 2 Months Validation Host Government Approval Registration 2 Months 1-2 Months M&V ERPA DocumentsInvestor Government Approval Project Design Best timescale! Annual ?

CER Placement & ERPA PIN Preparation Sellers Requirements Marketing the Project Buyer Selection Term sheets & Due Diligence Negotiations ERPA / Supporting Documents © ESD 2006

Government Approval Designated National Authority (DNA) The Application Letter & Form Project Approvals Supporting Documents Review & QA DNA Pre-Meeting will help approval process PDD Amendment DNA Formal Meeting / LOA © ESD 2006

Validation Designated Operational Entity (DOE) Validator Selection Validation Meeting / Site Visit Supporting Documents & Evidence Draft Validation Report PDD Amendment Final Validation Report © ESD 2006

Registration DOE Submits PDD, Registration Form, LOA & any Requests for Deviation Pay Registration Fee (0.10$ $/tCO 2 e) Review by EB Registration (8 Weeks After Receipt) © ESD 2006

Monitoring and Verification The CDM Manual Company Procedures Data Monitoring & Management Annual Verification Reporting CER Issuance Data Archiving © ESD 2006

Current Vietnam CDM: Rang Dong Oil Field – UNFCCC © ESD 2006

Thank you! Mike Bess Director, International Division Energy for Sustainable Development Ltd © ESD 2006