Validation and Verification of CDM projects

1. Validation and Verification of CDM projects SGS Climate Change Programme Gareth Phillips Global Product Manager

2. Contents • Brief introduction to SGS • Track record in the CDM • Key steps in the validation and verification process • Approved methodology (and impact of review of methodologies) • Draft PDD • Final PDD and letters of Authorisation and Approval • Unilateral CDM • Request for Registration • Requests for review • Initial (preliminary) verification (optional) • Annual (periodic) verification • Conclusions

3. Introduction to SGS • Worlds largest inspection, verification, testing and certification organisation • 30,000 employees in 140 countries • Including offices in Egypt, Morocco, Tunisia, Algeria, Syria, Lebanon, Yemen • Offer a very wide range of services designed to facilitate trade. • Independent. No manufacturing, trading or financial interests. No consulting services. • Accredited UK ETS, EU ETS, CCAR, CCX……. • Provisional DOE for CDM in scopes 4,5,6,9,10,11 and 12. Witnessing for Scope 13 underway. Project for Scopes 1,2 and 3 in the pipeline. • Submitted the first request for registration of a CDM projects

4. Track Record in CDM • Gujarat Fluorochemicals Ltd project in India submitted for registration on 1/9/4. Registration due 27/10/4 • Very large project - 3 million CERs/year * 10 years • Involved site visit in order to verify historic emissions and confirm compliance with local regulations • Undertaken by Lead Assessor from Europe, Local Assessor from India • Undertaken validation of approx. 30 CDM / JI projects • Currently delayed by lack of approved meths • Initial verification of 4 potential CDM projects (3* Brazil; 1 Guatemala) - experience from UK and EU ETS verification

5. Key steps in the validation process - Methodologies • Use of approved baseline and monitoring methodologies • Work is proceeding slowly largely because the CDM EB chose a bottom-up approach • Currently, AM0001 is suspended pending review • Review may have an impact upon other methodologies as well (check outcome of EB 16) • If you can use one of the the consolidated methodologies (renewable electricity to grid or landfill gas capture), or another approved one, please do so • Submitting your own methodology is slow, costly (time in particular), uncertain • Consolidated methodologies are not complete yet, because the consolidated tool for demonstration of additionality is not yet complete (check EB 16 for progress)

6. PDD and Validation • Prepare draft PDD (using new template - version 2) • Follow the guidance closely • Submit for validation • Following validation, address findings and submit final list of project participants, with letters of Approval AND Authorisation from Parties • Further guidance on contents of letters is expected - check EB16 and review the letters from other projects • Validator must give an affirmative statement of validation outcome e.g.

8. Request for registration • DOE submits the a request for registration to CDM EB through a web-interface (only two projects to date) • Request accepted when proof of payment is provided • Project undergoes 8 week review period. If there is no request for review, it is automatically registered. • Review is triggered by 3 requests from EB members or Parties involved. • If there is a request for review…… not sure how this will be addressed. • Restart 8 week review? • Repeat international SHC? • Retrospective application of revisions to methodologies?

9. Project implementation and initial verification Assuming the project is now registered…. • Implement project and monitoring plan • Initial verification is not mandatory, but is recommended - checks that the monitoring system is operational and will gather the required information • May also be used for project commissioning • Includes work that is otherwise required during the first verification • Initial verification is built into the IETA CDM ERPA • Also required for World Bank / PCF / CFB projects • Result is an opinion that the project is ready to generate CERs

10. Periodic (annual) verification • First verification is more demanding than the rest (unless initial verification has been undertaken) • Verification can be as frequent as desired - un-verified CERs represent unsold stock - cash flow implications • Also, important to ensure that necessary information continues to be collected • Beware - Accuracy / uncertainty is not addressed in methodologies - we expect measurement regimes to reflect best practice and calibration records must be available to confirm this!

11. Conclusions • CDM is slowly gaining momentum • Most of the learning has been done • Prices for carbon are increasing - EU ETS is creating some demand • DOEs are increasing in number and scope of accreditation • CDM EB is at an important cross-roads - EB16 and 17 will be quite important meetings • Bring projects forward for registration • Make sure your meters are calibrated

12. Thank you for your attention. For further information on SGS: email: climatechange@sgs.com www.climatechange@sgs.com Gphillips@sgs.com Also brochures available