1. Methodological Approaches and Tools to Assess the Sustainability of CDM Projects Christoph Sutter, sutter@up.umnw.ethz.ch Indian cell: 98180 95366

2. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 2 CDM and Sustainable Development Contribution to Sustainable Development is explicit goal of the CDM "The purpose of the clean development mechanism shall be to assist Parties not included in Annex I in achieving sustainable development…“ (Kyoto Protocol, Art.12) Clear sovereignty of host country „... it is the host Party’s prerogative to confirm whether a clean development mechanism project activity assists it in achieving sustainable development“ FCCC/CP/2001/13/Add.2 Decision 17/CP.7 How to assess the projects? Evaluation / approval of the first CDM projects by non-Annex 1 countries already began…but clear procedures / methodologies are often lacking.

3. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 3 Finding the Balance Negotiated Targets Thresholds Guidelines Technology Lists (Weighted) Criteria Tools to assess Sustainability of CDM projects

4. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 4 Example: CERUPT Technology lists Technology Max. Price CER Renewable energy (excluding biomass) EUR 5.50 Energy production by using clean, sustainably grown biomass (excluding waste) EUR 4.40 Energy efficiency improvement EUR 4.40 Others, among which fossil fuel switch and methane recovery Source: Senter, 2001 EUR 3.30

5. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 5 Example: Colombian Wind Power Project, PCF Negotiated Targets  Well defined “Institutional and Communitary Strengthening Plan“. Indicators to be monitored.  Payment of a) Emission Reduction price AND b) premium if the Social Plan is implemented  “If the plan is not implemented, the project entity enters into default. In this case the project entity has a cure period, if the default is not cured, PCF can stop payments.” Source: C. Steck / K. Newcomb, October 2002

6. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 6 Example: Indian Guidelines Guidelines “The following aspects should be considered while designing CDM project activities: Social well-being: The CDM project activity should lead to alleviation of poverty by generating additional employment, removal of social disparities and contributing to provision of basic amenities to people leading to improvement in their quality of life …” Followed by statements covering ”Economic well-being”, “Environmental well-being” and “Technological well-being” Source: Indian Ministry of Environment and Forests, 2002

7. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 7 Example: The Carbon Label, WWF Thresholds  Does the project contribute to the mitigation of Global Climate Change?  Does the project contribute to local environmental sustainability  Does the project contribute to net employment generation?  Does the project contribute to the transfer of new skills? Source: WWF International, 2002

8. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 8 Example: Multi criteria decision tool, ETH Zurich (Weighted) Criteria

9. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 9 Sustainability Criteria: Objective tree SocialEnvironmentalEconomic Global Environment Local Environment Sustainable Development Stakeholder Participation Improved Service Availability Capacity Development Equal Distribution Energy / Mineral Resources Soil Resource Public Budget Local Economy Microeconomic Efficiency Employment Generation Sustainable Technology Transfer Water Resource Air Resource (Weighted) Criteria

10. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 10 Weighting of Criteria: Pairwise Comparison  Sustainability preferences of individuals x x x (Weighted) Criteria

11. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 11 Sustainability Weights: Survey South Africa (Weighted) Criteria

12. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 12 Comparison of approaches Low transaction cost ++--+ Flexibility --+++--+ Investor‘s certainty ++---++ Comprehensive approach ----++ Selected Thresholds Guidelines Technology lists (Weighted) criteria Negotiated Targets

13. ETH Zurichchristoph.sutter@up.umnw.ethz.ch 13 Next steps (Dec 02 - Jan 03) Sustainability mapping of Indian stakeholders Indian case study: Biomass project Discussions about the method and potential CO-OPERATION are most WELCOME!