Background

Project approval by the Host Country is one of the most important prerequisites established by the international regulations for potential CDM project registration by the CDM Executive Board.

The assessment of projects for the Host Country approval is the primary role of the Designated National Authority, which has the responsibility to decide whether a proposed CDM project activity makes contribution to achieving the country's sustainable development goals and whether the country participates in a project voluntarily.

With this regard, it is necessary that a country which is willing to host CDM projects establish a logical, clear and transparent procedure for projects submission, evaluation and approval. Availability of such a procedure is not only a necessary formality but also an important factor which provides protection of the rights and interests of the host country lowers risks for local and international project participants and raises attractiveness of the country from the point of view of CDM project realisation. The last factor is especially imperative for Armenia, since the country has a relatively small CDM potential. A well-developed and clear procedure would improve Armenia's competitiveness in the field of CDM and encourage local and international investors to participate in development of CDM projects in the country.

Currently, the formal procedure for CDM approval are being finalised for official adoption by the DNA. One of the reasons the procedures have not been approved yet is the lack of capacity on legal and financial aspects of CDM. In particular, the financing mechanism and the status of the DNA Secretariat have not been determined yet, and neither the DNA's supervisory functions at the project post-approval stage and the legal status of CERs, etc. are defined.

Nevertheless, Armenia became the first country in the post-Soviet space hosting a CDM project which has been registered by the CDM Executive Board. This circumstance resulted from the "learning by-doing" policy implemented by the Armenian DNA in a hope to promote CDM development in the country and build confidence in CDM among national stakeholders at both governmental and private levels, as well as among foreign investors.

At present, there are a number of CDM projects in the country at various stages of development. Three of those projects have already been  registered by the CDM EB. More than a dozen projects in the field of small-scale energy have potential for realisation in the framework of CDM.

To facilitate the project approval process and secure their sustainability the Ministry of Nature Protection of Republic of Armenia (DNA) has developed and submitted to the government of Armenia a draft governmental decision on "Implementation of Projects within the framework of the Clean Development Mechanism of the Kyoto Protocol under the United Nations Framework Convention on Climate Change", which was approved by the government and then ratified by the Armenia's President on July 19, 2006. This document determines formal functions of the Ministry as the DNA and entrusts the Minister of Nature Protection to develop and approve the Procedure for submission of project documents under the CDM.