CDM Project Cycle & Project Design Document Project Design Document First Extended & Regional Workshops CD4CDM Project Siem Reap, Cambodia March 2004 Sami Kamel, PhD UNEP RISOE Center, Denmark

2 Outline Roles & Responsibilities of key players in a CDM project. Roles & Responsibilities of key players in a CDM project. Steps to follow when preparing a CDM project. Steps to follow when preparing a CDM project. Description of the Project Design Document (PDD). Description of the Project Design Document (PDD). Small-scale CDM project. Small-scale CDM project.

3 Key Participants of a CDM Project Implementation Process CDM Executive Board (EB). CDM Executive Board (EB). Designated Operational Entities (DOE). Designated Operational Entities (DOE). Designated National Authorities (DNA). Designated National Authorities (DNA). CDM Project Developer/Investor. CDM Project Developer/Investor.

4 Designated National Authority Designated Operational Entity A DNA/Project Participants Executive Board Designated Operational Entity B

5 CDM Executive Board (EB) Ten members (fixed) and ten alternating all with specialized technical expertise. Key responsibilities: Ten members (fixed) and ten alternating all with specialized technical expertise. Key responsibilities: Review & approve new methodologies related to baseline and monitoring plans. (methodologies approved by EB could be used for other future projects). Review & approve new methodologies related to baseline and monitoring plans. (methodologies approved by EB could be used for other future projects). Provision of simplified procedures for small scale CDM. Provision of simplified procedures for small scale CDM. Accreditation of Designated Operational Entities (DOEs). Accreditation of Designated Operational Entities (DOEs). Develop and maintain a CDM Project Registry. Develop and maintain a CDM Project Registry. Establish Panels (Accreditation Panel and Methodologies Panel). Establish Panels (Accreditation Panel and Methodologies Panel). Issue CERs. Issue CERs.

6 Designated Operational Entities (DOE) Independent third party assigned by EB. Project developers choose the DOE they wish to deal with. Key responsibilities: Independent third party assigned by EB. Project developers choose the DOE they wish to deal with. Key responsibilities: Validate proposed CDM projects on basis of set criteria. Validate proposed CDM projects on basis of set criteria. Verify and certify reduction in GHG from CDM projects through monitoring of project management and transparency. Verify and certify reduction in GHG from CDM projects through monitoring of project management and transparency. Maintain publicly available list of all approved and on-going CDM projects and the amount of CERs approved for each project. Maintain publicly available list of all approved and on-going CDM projects and the amount of CERs approved for each project. Will post the PDD for 30 days for comment before final approval. Will post the PDD for 30 days for comment before final approval.

7 Designated National Authority (DNA) A country-level focal point for CDM, based in Ministry of Environment, Energy, or other relevant institution. Responsibilities include: A country-level focal point for CDM, based in Ministry of Environment, Energy, or other relevant institution. Responsibilities include: Issue the Letter of Approval confirming CDM project contributes to sustainable development in the host country. Issue the Letter of Approval confirming CDM project contributes to sustainable development in the host country. DNA of investor’s country will send similar letter to DOE in support of the project. DNA of investor’s country will send similar letter to DOE in support of the project. Link between international CDM investors and potential projects in the country. Link between international CDM investors and potential projects in the country. May be involved in marketing of CDM project pipeline. May be involved in marketing of CDM project pipeline. Will establish national CDM regulations, strategy, and criteria for sustainability and approval. Will establish national CDM regulations, strategy, and criteria for sustainability and approval. Monitor CDM sector in the country. Monitor CDM sector in the country.

8 CDM Investor/Project Developer Key responsibilities: Key responsibilities: Prepare Project Design Document (PDD). Prepare Project Design Document (PDD). Propose baseline methodology and ensure additionality criteria. Propose baseline methodology and ensure additionality criteria. Calculate expected GHG reductions and CERs. Calculate expected GHG reductions and CERs. Obtain all permits and approvals from DNA. Obtain all permits and approvals from DNA. Secure project financing. Secure project financing.

9 CDM Project Cycle: The Process Project Developer identifies a potential CDM project: Project Developer identifies a potential CDM project: Identify project sector (e.g. grid-connected renewables, energy efficiency). Identify project sector (e.g. grid-connected renewables, energy efficiency). Decide whether small-scale CDM. Decide whether small-scale CDM. Inform DNA of the host country (e.g. using PIN). Inform DNA of the host country (e.g. using PIN). Prepare a Project Design Document (PDD): Prepare a Project Design Document (PDD): Select baseline methodology (new or approved). Select baseline methodology (new or approved). Select/design monitoring plan. Select/design monitoring plan. Select project crediting period (10 or 3x7). Select project crediting period (10 or 3x7). Collect data from relevant national authorities. Collect data from relevant national authorities. Calculate emission reductions and expected CERs. Calculate emission reductions and expected CERs. EIA for the project. EIA for the project. Discuss & explain project to local stakeholders and secure their support. Discuss & explain project to local stakeholders and secure their support. Project developer identifies and commit project sources of funding (core financing and carbon financing). Project developer identifies and commit project sources of funding (core financing and carbon financing).

10 PDD Contents Note 1: PDD for Small scale CDM contains same sections but only annexes 1 and 2 are required. Note 2: Annexes 3 & 4 have been removed and will be done separately by project developer only in case of a new methodology is being proposed.

11 Project developer identifies & contracts an appropriate DOE for which the PDD will be forwarded: Project developer identifies & contracts an appropriate DOE for which the PDD will be forwarded: If new baseline methodology is proposed, DOE will forward it to EB for approval. If new baseline methodology is proposed, DOE will forward it to EB for approval. If an already approved baseline methodology is used, DOE will conduct a CDM project validation: If an already approved baseline methodology is used, DOE will conduct a CDM project validation: Ensure PDD and whole project in compliance with rules & modalities for CDM set by Executive Board. Ensure PDD and whole project in compliance with rules & modalities for CDM set by Executive Board. DOE will request Letter of Approval from DNA of Host Country and the Annex I country: DOE will request Letter of Approval from DNA of Host Country and the Annex I country: Statement of voluntary participation in this CDM project. Statement of voluntary participation in this CDM project. Project complies with Sustainable Development. Project complies with Sustainable Development. DOE will receive within 30 (45 for LULUCF) days comments on the validation from NGOs and other stakeholders. Then will forward the project to EB for registration. DOE will receive within 30 (45 for LULUCF) days comments on the validation from NGOs and other stakeholders. Then will forward the project to EB for registration.

12 Procedure for Approving a NEW baseline methodology

13 During project implementation, project participants will perform project monitoring based on the submitted monitoring plan: During project implementation, project participants will perform project monitoring based on the submitted monitoring plan: Collection and archiving of data necessary for measuring the actual net GHG reductions. Collection and archiving of data necessary for measuring the actual net GHG reductions. For verification and certification, project participants contract a second DOE. For verification and certification, project participants contract a second DOE. Verification is an independent review and the ex post determination of the net GHG reductions. Verification is an independent review and the ex post determination of the net GHG reductions. Verification leads to certification of CERs and a request for EB to issue CERs. Verification leads to certification of CERs and a request for EB to issue CERs. CDM Registry at EB will keep a public, global track of all CER ownership and transfer. CDM Registry at EB will keep a public, global track of all CER ownership and transfer.

14 Small-scale CDM Projects EB approved simplified modalities and procedures for small-scale CDM projects with objective of reducing project preparation’s transaction cost. EB approved simplified modalities and procedures for small-scale CDM projects with objective of reducing project preparation’s transaction cost. PDD has less Annexes (only 1&2) but same core sections. PDD has less Annexes (only 1&2) but same core sections. Indicative baseline methodologies are already provided by EB based on type of project. Indicative baseline methodologies are already provided by EB based on type of project. Three main types listed: Three main types listed: Type I: Renewable Energy Projects (less than 15 MW). Type I: Renewable Energy Projects (less than 15 MW). Type II: Energy Efficiency Improvement (less than 15 GWh). Type II: Energy Efficiency Improvement (less than 15 GWh). Type III: Other project activities (less than 15 ktCO2). Type III: Other project activities (less than 15 ktCO2).

15 Present eligible small-scale CDM project categories

16 Registration of CDM Projects  At the EB6, the following fees were decided for the registration of a CDM project. The fee for small-scale CDM projects has been reduced to U$5,000:

17 DNA DOE 1 DOE 2 EB

18 The UNFCCC-CDM homepage

19 For More information on CDM and Climate Change