Challenge

As stated in the Kyoto Protocol, CDM emission reductions must be real and measurable. However, in most cases the reductions obtained by a CDM project do not occur at the project site but elsewhere in the energy system. Therefore, when a number of CDM projects are implemented concurrently and other changes in the energy system take place over time, there is no way to measure the reductions obtained by individual projects. Because the emission reduction obtained is a property of the entire energy system, it cannot be estimated a priori on the basis of a project baseline alone. A baseline must refer to the national energy system of which the project is a part. The development of baselines requires also the development of GHG inventories and GHG projection capability.

Objective

Therefore it is the objective of the EU technical assistance project to develop and strengthen the technical capability for CDM projects, including knowledge of best available technologies (BAT) and mitigation technologies, GHG emission inventory and baseline calculations and projections as well as training-on-the-job, particularly by developing at least two CDM PINs and one CDM PDD in each of the four host countries. The experience of approved or not approved baseline and monitoring methodologies of the Executive Board (EB) will be taken into account, to be sure that the developed PDD will be in line with the EB requirements.

CDM Project Types

Identify CDM Projects and develop PDD

Within this task, the following sub-tasks will be carried out:

• Develop project pipeline;
• Define eligibility and priorisation criteria as well as weighting factors;
• Compile evaluation matrix and select candidate projects;
• Project idea notes (PIN, at least for two possible CDM projects in each host country);
• Project design document (PDD, at least for one possible CDM project in each host country);
• Market identified projects to potential investors.

Develop project pipeline

Within this project a so called project pipeline of potential CDM projects will be developed. Direct channels for information gathering include:

• Energy Efficiency Agencies and further institutions and stakeholders in the country
• In-house information of the Consultant
• In-house information of the beneficiaries

But complementary, to those direct channels, also a formal Call or Request for Proposal (RfP) process might be additionally initiated. By advertisement in a national newspaper, proposals for potential CDM projects can be requested. Potential investors or project developers can apply officially by this way.

For each of the candidate projects, a minimum set of data and information will be collected, which will include:

• Project title
• Location
• Investor (if already identified)
• Environmental benefits / GHG mitigation potential
• Investment estimate

Define eligibility and priorisation criteria, and weighting factors

For the selection of at least two CDM pilot projects in each host country, eligibility and priorisation criteria will be defined. A further criteria to be considered will be the stage of development of the project.

Compile evaluation matrix and select candidate projects

The project pipeline list will be evaluated against the eligibility and priorisation criteria in order to select suitable projects for further consideration.

Project Idea Note (PIN)

Basically a PIN will consist of approximately 5 pages providing indicative information on:

• the type and size of the project
• its location
• the anticipated total amount of Greenhouse Gas (GHG) reduction compared to the “business-as-usual” scenario (which will be elaborated in the baseline later on at Project Design Document [PDD] level)
• the suggested crediting life time
• the financial structuring (indicating which parties are expected to provide the project’s financing)
• the project’s other socio-economic or environmental effects/benefits

While every effort should be made to provide as complete and extensive information as possible, it is recognized that full information on every item listed above will not be available at all times for every project.

The general function of a PIN is to allow for a general assessment of CDM suitability already at an early stage within the project development cycle.

Project Design Document (PDD)

The project design document is a formal document which has to obtain:

• a technical description of the project;
• the proposed baseline methodology;
• the proposed method for calculating net emissions reductions
• an explanation of how the project activity meets additionality requirements;
• information on environmental impacts and possible impact assessments;
• sources of financing and a demonstration that the funding is additional;
• stakeholder comments;
• a monitoring plan.