cdm criteria & roadmap for cdm project development

Development Alternatives

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CDM Criteria & Roadmap for CDM Project Development

For Workshop

on

January 28th – 29th, 2005


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MITIGATION OPTIONS IN THE ENERGY SECTOR IDENTIFIED ARE :

Improvements in energy efficiency through upgrading currently employed technologies

Introduction of advanced technologies that are more efficient

Use of renewable energy sources wherever feasible to bring down the carbon content of the grid, to provide sustainable energy, and as a decentralised energy source at remote areas


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MITIGATION POTENTIAL

Greenhouse Gas

Mitigation Options MitigationPotential 2002-2012 (million

tons)

Long-term Marginal Cost ($/ton of carbon

equivalent)

Carbon Demand-side energy efficiency 45 0-15

Supply-side energy efficiency 32 0-12

Electricity transmission and distribution

12 5-30

Renewable electricity technologies

23 3-15

Fuel switching (gas for coal) 8 5-20

Forestry 18 5-10

Methane Enhanced cattle feed 0.66 5-30

Anaerobic manure digesters 0.38 3-10

Low methane rice varieties marginal 5-20

Cultivation practices marginal 0-20

Nitrous Oxide Improved fertilizer application marginal 0-20

Nitrification inhibitors marginal 20-40

Source: Based on modeling exercises reported in Rana, A. and Shukla, P.R. (2001), Ghosh et al.

(2001); Garg A. Shukla, P.R. (2002), and ALGAS (1998)


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What is CDM

Developed CountryT

otal

GH

G E

mis

sion

s } Emissions to be reduced

Developing Country

Tot

al G

HG

Em

issi

ons

No emission reduction

commitments

Investments

Carbon Credits


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CDM PROJECT ELIGIBILITY

Such activities should be Approved by the Govts. of the participating Parties be host country driven May involve private / or public entity Environmental integrity is a must Economic efficiency for cost effectiveness Equity

Implementation of such projects should result in social, environmental, economic and technological well-being - the four pillars

of sustainable development


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Types of CDM Projects

Energy

Renewables: Wind, solar, hydro, biomass, geothermal

Power Generation: Combined Cycle turbines, clean coal technology

Fuel Switching: Natural Gas, methane, biomass & biogas

Co-generation: Sugarcane, chemical processes


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Types of CDM Projects

Industry

Efficiency: Boilers. Motors, lighting

Cogeneration-chemical, metellurgy, paper

Retrofits

Production Process

Waste Fuel Recovery – including landfills


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PROJECT CONCEPTUALIZATION

IDENTIFICATION AND ORGANIZATIONTARGET BENEFICIARIES AND NETWORKING

PARTICIPATORY PROJECT DEVELOPMENT-identify stakeholder, position, interest

expected argument-choose appropriate technologies

PROJECT FUND SOURCING / FINANCING

PROJECT PLANNING-integrating sustainable development goals

of the region / site specific

PROJECT IMPLEMENTATION -an agreed time frame

-an agreed monitoring and verification arrangement;

the organization to monitor-establish emission baseline

PERIODIC MONITORING AND

EVALUATION-emission reduction

PR

OJE

CT

CY

CL

E

CDM PROJECT CYCLE

Project Idea Note (PIN) / Project Concept Note (PCN)

Host / Investor approval

PDD

Validation

Registration

Monitoring

Financing & Implementation

Verification Certification

DNA; Investor

PD/CCC

OE

EB

PD

PD

OE EB

Participation EIA

Baseline & ERM&V Plan

On-site Inspection Review MonitoringGHG Reductions Verification Report

PD/CCC

Implementing Agencies

Baseline & Additionality M&V Plan

EIA St. Consul Contracts

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CDM PROJECTSSome Important Aspects

Participation is voluntary, approved by each party involved

Additional to any that would occur in the absence of certified project activity

Project fulfills the criteria of financial additionality

Reduction of emissions should be real, measurable and should have long time benefits

Project should contribute to the sustainable development of the host country


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CDM PROJECT CYCLE


Host / Investor approvalDNA;

Investor

PD/CCC



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PIN/PCN

Name of the project

Ownership details of project sponsors

Project Description

Status of Project Clearances

Financing details of the projects

Total CDM contribution sought

IRR and DSCR with & without CDM revenue

Estimate of GHG abetment

Sustainable development criteria

Project Risks


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CDM PROJECT CYCLE



PDD

DNA; Investor

PD/CCC

PD/CCC





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PROJECT DESIGN DOCUMENT

Project Description

Promoter Details

Baseline

Additionality

Sustainable Development Criteria

Monitoring Plan

Financial Status


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CDM PROJECT CYCLE



PDD

Validation

Registration

DNA; Investor

PD/CCC

OE

EB

Participation EIA


PD/CCC





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Validation of CDM Projects Validation is a process of independent evaluation

of a project activity by a designated Operational Entity (OE) against the requirements of the CDM on the basis of the PDD.

Registration Registration is the formal acceptance of a

validated project as a CDM project by the Executive Board. Registration is the prerequisite for verification,

certification and issuance of the CERs


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CDM PROJECT CYCLE



PDD

Validation

Registration

Monitoring


DNA; Investor

PD/CCC

OE

EB

PD

PD

Participation EIA


PD/CCC





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MONITORING

Project Participants, as part of the PDD provide a monitoring plan:

Based on previously approved methodology/new methodology

Determined by DoE as appropriate to circumstances of the project activity

Reflects good monitoring practice

A monitoring report in accordance with monitoring plan is to be submitted to the DoE for verification


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CDM PROJECT CYCLE



PDD

Validation

Registration

Monitoring


Verification Certification

DNA; Investor

PD/CCC

OE

EB

PD

PD

OE EB

Participation EIA


On-site Inspection Review MonitoringGHG Reductions Verification Report

PD/CCC





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Verification Verification is the periodic independent review

and determination by DoE of the monitored reductions by sources of greenhouse gases that have occurred as a result of the CDM project activity

Certification Certification is the written assurance by the DoE

that the project activity achieved the reductions in anthropogenic emissions by sources of GHGs as verified


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ISSUANCE OF CERTIFIED EMISSION REDUCTIONS

Certification Report constitutes request to EB for issuance of CERs equal to verified amount of reductions of GHGs


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MINIMUM TRANSACTION COST ASSOCIATED WITH CDM PROJECT CYCLE

CDM project cycle stages where costs are incurred

Cost Estimates (Rupees)

Pre-operational phase design

PIN/PDD Preparation 6 lakhs

Validation (to be paid to DOE) 4-10 lakhs*

Registration (to be paid to CDM EB)

2.25 – 7.5 lakhs*

Operational phase Monitoring & Verification (to be paid to DOE)

10 lakhs *

Certification (to be paid to CDM EB)

2% of the CER value

Risk mitigation 1% - 3% of CER value


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Bundling

Effective way to reduce transaction costs

Several projects bundled together to share transaction costs and CER benefits

Projects should have:

Similar technology

Be in the same geographical area

Preferably have the same project owner, but not necessary


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cdm criteria & roadmap for cdm project development

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