1. Determination / Verification under JI - Challenges and Pitfalls
Bonn - UNFCCC, February 13th, 2007
Technical Workshop on Joint Implementation
Thomas Kleiser
TÜV SÜD Industrie Service GmbH

2. Agenda Short Overview TÜV SÜD and Carbon Management Services
General Remarks: Validation and Verification, the role of AIEs
Determination and Verification of JI-projects: Challenges and Pitfalls
4. Resumee and Expectations

3. TÜV SÜD and Carbon Management Services
Overview:
TÜV SÜD and Carbon Management Services

4. Certification Testing Training
What TÜV SÜD Does
Certification Testing Training
on behalf of industry, trade and commerce, public institutions and private individuals
Overview on the entire company:
- > employees
- founded more than 140 years ago
offices in more than 60 countries
- 1 bn. € in sales
(per business area: 47% industry, 39% mobility, 14% people)

5. TÜV SÜD Industrie Service and CMS
Department Carbon Management Service (CMS)
Founded end of 1999
The team of the Department Carbon Management Service (CMS) maintains a team of around 16 professionals in its HQ in Munich. Globally about 55 local auditors are active for CMS in the field of CDM and JI in more than 40 countries.
A key asset of CMS is the high level of technical expertise present in-house.
Validation/Determination and Verification of more than 350 CDM and JI projects
Accreditation for all scopes under CDM

6. CMS - Activities and Experiences under JI
TÜV SÜD - Activities and experiences under JI
determinations started end of 2002
(Pre-) Determination of more than 45 JI projects in almost all countries in Eastern Europe as well as projects in some EU-15 countries
among these: 14 JI-projects in Ukraine and 12 JI-projects in Russia
verification started for around 10 JI projects
more than 15 projects published on JI-SC website for Global Stakeholder Consultation Process (GSP) currently
1 (the first) project submitted to JI-SC for final approval

7. Validation, Verification and the role of AIEs
2. General Remarks:
Validation, Verification and the role of AIEs

8. Reminder: JI Process of Determination and Verification
Project Design PDD
Proj.Part.
ERUs
DFP Host Country LoE
Determination Det.-Report
AIE
Acceptance of Verification
DFPs LoAs
Initial and Periodic Verification Verification Report
AIE
DFP Host Country
Project- Registration JISC
Implementation of Project and
Monitoring System
Monitoring Report

9. Reminder: Role of AIEs
Determination and Verification of JI track 2 projects
Carrying out the Global Stakeholder Process (GSP) via JISC website
Assessment and approval of project specific baseline and monitoring methodologies
Assessment of compliance with national regulations and procedures
Initiating of approval of JI track 2 projects (on behalf of Annex I host country) by uploading final reports and LoA s (!) to JISC.

10. Timing of Determination/Verification
2 ½ - 6 month depending on project and PDD quality
Additional issue: in case the validation period can be kept short the risk to adjust the PDD according to new rules/regulations can be minimized.
Verification:
No predefined period, but can be decided by the PP.
Advisable: once per year as this complies with fiscal year and other reporting formats
An Initial Verification after project implementation makes always sense at least in complex projects

11. Decisive parameters in determination/verification process
Decisive parameters for determination/verification
complexity of the project (small scale/large scale/bundle of sites and methodologies, technology)
applied methodology (CDM or project-specific)
location of the project
availability of local auditors
country specific requirements
quality of submitted documents

12. Assistance for project developers - VVM Guidelines
Validation and Verification Guidelines for CDM and JI Projects
See:
The VVM is an initiative of World Bank, IETA and all Applicant Entities, which aims to harmonize the process and quality of all GHG assessments.
At the same time the VVM gives guidance for PDD developers regarding requirements in the validation and verification process.

13. CDM Validation Protocol
Structure of the VVM
Part One:
Generic Guidelines
Part Two:
CDM
Validation
Part Three:
Small Scale CDM
Validation
Part Four: JI
Determination
Part Five:
Initial Verification
Part Six:
Periodic Verification
Guideline
CDM Validation Report Template
Report Template
JI Determination
Report Template
Initial Verification
Report Template
Verification
Report Template
Protocol
CDM Validation Protocol
Small Scale CDM
Validation Protocol
JI Determination
Protocol
Initial Verification
Checklist
Verification
Checklist

14. Determination and Verification of JI Projects: Challenges and Pitfalls

15. Determination Process – Different Steps
Different steps of Determination:
Pre-check of the project documentation
Desk review of PDD, baseline study, monitoring plan as well as further documents such as Business Plan, Technical Study etc.
On-site visit/audits: visit of the project location, audits/discussions with project owner and investors, consultation of local authorities, contacts to local stakeholders, identification of national requirements (stakeholder process, EIA), assessment of approval process (licenses, permits, ownership etc.), assessment of the additionality of the project
Starting of GSP (parallel to 2-3) via JI-SC website
Draft determination protocol (+ report)
Issuing of the final determination report with information reference list and determination protocol
Submission to the JISC for approval

16. Determination Process - main topics
Main topics of the assessment:
Project documentation – project history – project motivation
Additionality (additionality tool for CDM projects), business plan, barriers, risks etc.
Crediting period/project lifetime
Applied technology and technological issues
Baseline study – correctness of scenario and assumptions (proof of information given in the PDD)
Monitoring Plan – concept, responsibilities, maintenance, calibration, emergency case, internal reviews, trainings etc.
Environmental Impact Assessment
Local Stakeholder Process
Results of the Global Stakeholder Process

17. 3a. Experiences of Determination

18. Experiences from Determination of JI-Projects
In general: Our experiences are positive!
most PDDs are well-developed already in the initial phase of determination
less revisions of PDDs in comparison to CDM
in most cases good data basis
high standard in technical planning and technical solutions
well-developed monitoring concepts in most PDDs
Difficulties:
in most cases development of a project-specific methodology and/or bundling of (CDM-) methodologies
very complex projects (bundle of a number of measures in one project)

19. Experiences from determination of JI projects
Observed Problems (1):
In some cases limited understanding of “additionality”
Missing experiences with “additionality tool”/how to proof additionality
Mixture of business-as-usual measures and additional measures
Project start without clear evidence for JI-consideration at the beginning
International accepted default values not always applied / proof for applied national values are sometimes not sufficient
Problems in defining project boundaries correctly/ not all sources and emissions included
Receipt of LoA

20. Experiences from Determination of JI-Projects
Observed Problems (2):
- Changes of project measures/technical solutions during project lifetime
Change in project boundaries during the lifetime of the project
Changes in the monitoring plan (missing sensibility what a JI project means)
Limited Environmental Impact Assessment
Limited local stakeholder process
Not all “JI-documents” in English available

21. Pitfalls: Project description
The description of the project history and motivation is too limited.
The description of the technical equipment to be applied in the project is not detailed enough or even missing.
The management structure of the project and the corresponding responsibilities are not clearly described or missing.
Risk management tools in case of unintended developments affecting the projects’ success but also the generation of carbon credits is not defined clearly enough.

22. Pitfalls: Application of Methodologies
Expectations are partly too high regarding the contribution of the AIE to the application of already available methodologies (CDM) and the acceptance of project-specific methodologies
Not all solutions are acceptable under JI! The project developer needs to develop the project-specific methodology!
Applied methodologies are in some cases insufficiently described.
Conditions and consequences of the application of the methodologies are sometimes unknown!
A lot of projects use a mix of different methodologies – sometimes a confusion in the description of the methodologies emerges.
Old CDM-methodology versions are applied.

23. Pitfalls: Monitoring
Monitoring plans are sometimes not sufficiently detailed (in technical issues) and comprehensive enough in the stage of PDD presentation for determination
Quality assurance due to national standards, but differences in standards
Routines and procedures are well performed by a motivated project team, but mostly not documented in a management system (risk for the future)
No project specific manual (work instructions, organization) available

24. Pitfalls: Environmental Impact Assessment
EIA: Elaboration often limited
National and international requirements unknown (EU Accession)
Only partial aspects of the environmental impacts are considered
Frequently the only comment: project is per se environmental additional
Limited information on social aspects of the project
Consequence: problems with the “Letter of Approval”

25. Pitfalls: Local Stakeholder Process
The project should be presented not only to local authorities but the actual local stakeholders.
Appropriate media should be used.
Otherwise the local stakeholder process is not very elaborated and limited to support from local and regional authorities.
In order to consider comments stakeholder process should take place early in advance.

26. Experiences: Global Stakeholder Process
Stakeholders and Parties contribute rarely to the global stakeholder process but the number of comments is increasing since JI Guidelines are available and publishing via JI-SC website is possible.
The chance to comment on projects is mainly only taken by accredited observer organisations as environmental NGOs.
Some comments come from competitors.
Most comments given are negative. The number of comments for JI projects is lower than for CDM projects.
TÜV SÜD welcomes all comments and takes them in its conclusion into account.

27. 3b. Experiences of Verification

28. Solutions for monitoring
use of “best practice” in monitoring and quality assurance
reference to accepted standards - norms, - metering equipment, - Third Parties for external services
maintenance of a project-specific QM System
inclusion of the determination of data uncertainty into MP
consideration of conservativeness
development of prepared (e.g.) spreadsheets for later use

29. Advantage: Initial Verification
necessity depends on the size of the project (transaction costs) and the requirements of the involved parties
latest a first verification at the end of the first year always makes sense
an independent assessment of the monitoring plan before starting the project is helpful
delivers initial input for interim reports and internal reviews

30. Experiences from Verification
Observed Problems (1):
Project Implementation
unexpected problems with applicability of methodolgy
interpretable descriptions of monitoring method
missing approvals or licenses
inconsistencies of external data sources
use of accuracy indication given by equipment manufacturers
no availability of local support (e.g. accredited laboratories)

31. Experiences from Verification
Observed Problems (2):
Data Management
consistency in time over reporting period
data transfer between multiple computerized systems
time demand for consolidating data
verifiability of data processing (software codes, excel spreadsheets)
missing documentations
„private Know-How“ of single employees

32. Experiences from Verification
Observed Problems (3):
Quality Management
missing description of procedures and processes
availability of proofs (e.g. calibration documents)
missing investigation on representativity of samples (problems with confidence intervals)
missing calibration
access to plausibility parameter, which can deliver required level of assurance

33. 4. Resumee and Expectations

34. Resumee
Nearly all JI projects determined by us can or could run under Track 2 and are able to fulfil the requirements set up by the JI-SC
Knowledge of additionality needs to be improved
In some cases major adjustments of the projects will be necessary; also experiences from CDM should be considered in the baseline concept and monitoring plan.
deficits in monitoring plans cause problems in verification in some cases
Problem: Early projects

35. Expectations Expectations in regard to JI-SC:
Periodic meetings between JI-SC, AIEs, DFPs and project developers would be helpful
Additional guidance necessary:
a.) grid factors (conservative approach)
b.) use of a project-specific methodologies in case a CDM methodology is available
c.) use of outdated CDM methodologies
Trust in independent entities must be justified by qualified work!

36. Thank you for your attention!
Thomas Kleiser
Tel – 11 86

37. TÜV Süd Industrie Service GmbH Carbon Management Service
Thomas Kleiser
Tel – 11 86