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PDD and PIN preparation

Technical Workshop on CDMParamaribo, 18 June 2008

Adriaan Korthuis

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Contents

PIN– What and why– How

PDD– What and why– How

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Project development

PROJECT IDEA CONSTRUCTIONFINANCINGFEASIBILITY STUDY

MAKE PDD

OPERATION

REGISTERVALIDATE ISSUE CERsVERIFY

STAKEHOLDER COMMENTS

TEST ADDITIONALITY

USE OR MAKE METHODOLOGY

NEGOTIATE ERPASELECT BUYERPREPARE PIN and TERM SHEET DELIVER CERs

CDM / JI DEVELOPMENT

PHYSICAL PROJECT DEVELOPMENT

COMMERCIAL DEVELOPMENT

STAKEHOLDER COMMENTS

MONITOR

LETTER OF APPROVAL

GENERATE CERs SELECT BUYER SELL AND DELIVER

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PIN and PDD

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PIN – Key Elements Clear description of project activities and technologies

employed Identify project participants and arrangement for

implementation– Participants’ roles and their technical, financial capability to

undertake– Status of third party involvement if appropriate (e.g., PPA in case of

electricity generation project or agreement with municipality, private operator regarding ownership of waste in case of landfill project)

Eligibility outline: additionality and baseline scenario– Why the project should not happen on its own?– Sources of GHG emission reductions and total ER volume including

possible leakage Local, national, and global benefits Risks

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1. Project Financing– Bankability: sooner can achieve financial closure, better

the chances of selection – Project costs already determined and realistic– Idea of how carbon would impact implementation or

address expected financing gap

2. Credible baseline and adequate volume – Carbon credit volume should be sufficient to cover CDM

or VER transaction costs

– Suggested minimum threshold: 20 ktCO2 per year or 100 ktCO2 total before 2012.

What buyers look for (1)

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What buyers look for (2)

3. Commercially viable technology

4. Competent, credible counterparties• clear champion and institutional arrangements • sound legal arrangement -- who owns, who operates, what type

of agreement between project participants

5. Viable business + operation model

6. Demonstration of sustainability, safeguards• EIA and/or relevant environmental permits• Compliance with social + environmental safeguards plus relevance to sustainable criteria of host country

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Examples of PINs

Worldbank: www.carbonfinance.org

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Elements of the PDD A. General description of the small scale project

activity B. Application of a baseline and monitoring

methodology C. Duration of the project activity / crediting period D. Environmental impacts E. Stakeholders’ comments   Annexes Annex 1: Contact information on participants in the

proposed small scale project activity Annex 2: Information regarding public funding Annex 3: Baseline information Annex 4: Monitoring Information

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A. General project description

Project description, contribution to sustainable development

Project participants Technical description Location Summary of emission reductions

Relevance

Consistency

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B. Application of a baseline and monitoring methodology

Selection of methodology – justification and application

Description of project boundary, sources and gasses– Be complete and follow the methodology strictly

Identification of the baseline scenario– Support this by adequate evidence– Identify risks of the baseline, e.g. if the situation

continues over time– Take care of logic in the PDD

Demonstration of additionality– Be complete, convincing, tranparant, well documented etc

Inventory of data Ex-ante estimation of emission reductions Monitoring plan

Conservative-ness

Transparency

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C. Dates

Starting date: the day that construction starts Crediting period:

– Single period of 10 years OR– Renewable period of 3 * 7 years

• Check of validity of the baseline• Check of validity of assumptions (e.g. additionality)• Update the baseline

Accuracy

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D. Environmental impacts

Describe environmental impacts Carry out Environmental Impact Assessment if

required by local law, and if impacts are considered considerable

Add the EIA to the PDDComplete-

ness

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Stakeholder comments

Local stakeholders must be consulted– Following local procedures

Comments of stakeholders must be described– Who was invited and how– Who was there– What information was provided– How discussion was organised– Which comments were given and concerns were raised

Report on how these comments were taken into account.

Complete-ness

Transparency

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Examples of PDDs

UNFCCC-website: cdm.unfccc.int – Project activities

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Contact details

Adriaan Korthuis Phone +31 10 217 5993 E-mail a.korthuis @ climatefocus.com

www.climatefocus.com