CAPACITY DEVELOPMENT FOR THE CLEAN DEVELOPMENT MECHANISM PROJECT CYCLE IN THE PHILIPPINES

1. CAPACITY DEVELOPMENT FOR THE CLEAN DEVELOPMENT MECHANISM PROJECT CYCLE IN THE PHILIPPINES Roberto C. Yap, S.J., Ph.D. Climate Change Information Center Ateneo de Manila

2. Benefits of CDM • Assists developing countries (non-Annex I) in meeting their sustainable development objectives. • Host countries benefit in the form of investment, access to cleaner technology, and local sustainable development. • Enables developed countries (Annex I) to meet their emission reduction commitments in a flexible and cost-effective manner. • Investors benefit by obtaining GHG emission reduction credits (Certificate of Emission Reductions -- CER).

3. Capacity Development Task:Information Campaign and Awareness-Raising • Objective: Sensitize relevant stakeholders on the benefits of CDM and encourage their participation. • Indicator: Agreement by relevant stakeholders to participate in a CDM capacity building program.

4. Capacity Development Task:Information Campaign and Awareness-Raising Some proposed activities: • Information materials (e.g. primers, brochures, guidebooks) • Public briefings, roundtable discussions • Philippine CDM website

5. Capacity Development Task:Information Campaign and Awareness-Raising Examples of activities: • Orientation seminar on the Clean Development Mechanism, organized by the Inter-Agency Committee on Climate Change, 9th October 2002 • CDM Conference, sponsored by AIM Policy Center, DoE, DENR, 4th December 2002

6. Capacity Development Task:Capacity Development for Senior National Policy-Makers • Objective: Sensitize senior level policy makers on the benefits of CDM and generate their support for Philippine participation. • Indicators: Agreement by senior level government officials to participate in a CDM capacity building program; CDM Champions; existence of senior-level cross-departmental coordinating body.

7. Capacity Development Task:Capacity Development for Senior National Policy-Makers Need cabinet-level CDM Champions: • For Philippine ratification of Kyoto Protocol • For setting up CDM Operational Framework • For establishing CDM National Authority • For establishing CDM National Investments Promotion Office

8. Capacity Development Task:Capacity Development for Senior National Policy-Makers Some proposed activities: • Executive briefings for cabinet-level officials • Executive summaries of CDM benefits • Workshops on CDM Framework for cabinet-level officials

9. Capacity Development Task:Capacity Development for Senior National Policy-Makers Example of activity: • Executive briefing on CDM for Department of Energy senior officials, 11th October 2002

10. Capacity Development Task:Capacity Development for Mid-Level Policy-Makers • Objective: Develop the capacity among mid-level policy makers to formulate a regulatory (legal, financial, technical) framework for CDM. • Indicator: Existence of a cadre of mid-level policy makers and government representatives to support the CDM framework.

11. Capacity Development Task:Capacity Development for Mid-Level Policy-Makers Some proposed activities: • Capacity assessments of key departments & agencies • Training materials on regulatory, technical & legal requirements • Workshops for formulating CDM Operational Framework which is transparent, streamlined, fast-track, cost-effective

12. Capacity Development Task:Capacity Development for Mid-Level Policy-Makers Example of activities • Meetings of the Inter-Agency Committee on Climate Change (composed of DENR, PAGASA, DoE, DFA, DPWH, DTI-BOI, DoTC, NEDA, Phil. Network for Climate Change)

13. CDM Project Cycle Project Identification Project Formulation Baseline Definition CDM Validation Project Validated Project Financing and Financial Closure Project Financed Project Implementation and Operation ER Monitoring/Reporting ER Verification ER Certification CER

14. Project identification and formulation Decisions Relevant Issues Key Actors/Stakeholders Project developers ER Prospectors Green companies Green .NGOs National Development Agencies Bilaterial/Multilateral Development Agencies Project identification Project formulation • Rules for CDM • Country participation? • Project acceptance • Cost effectiveness • Risks / ER benefits Proposed CDM Project

15. Capacity Development Task:Capacity Development for Project Developers • Objective: Strengthen the capabilities of private and public sector, big and small scale project developers to identify, formulate, develop and implement CDM projects. • Indicators: Existence of private and public sector, big and small scale project developers who are committed to developing and implementing CDM projects; existence of CDM project brokers at the national level.

16. Capacity Development Task:Capacity Development for Project Developers Some proposed activities: • Public briefings on CDM Benefits • Seminars/Workshops: • CDM Operational Framework • Project Design Document • Baseline Formulation • GHG Accounting • Monitoring Plan Formulation • CDM Financial Packaging

17. Capacity Development Task:Investment Promotion for CDM Projects • Objective: Support the establishment of a national office that will promote investments in CDM projects. • Indicator: Existence of a functioning National CDM Investment Promotion Office that serves as a link among private, public and the financial sectors in the development and financing of CDM Projects.

18. Capacity Development Task: Investment Promotion for CDM Projects Some proposed activities: • Establish CDM Investment Promotions Office • CDM Investment Guide • CDM Market Forums (National & Asian) • Assistance for Feasibility Studies • CDM Investment Missions

19. Baseline Definition Relevant Issues Key Actors/Stakeholders Proposed CDM Project • Emissions additionality • Financial additionality • Baseline definition approach • Project specific • Technology matrix • Benchmarks CDM Executive Board National Planning Agency Sectoral Planning Agencies Project Developers Project Investors ER Buyers Technical/Emissions/Financial Baseline Definition CDM Validation

20. Capacity Development Task:Capacity Development for NGOs, Local Communities, Academe, Research Institutions • Objective: Strengthen the capabilities of NGOs, local communities, academe and research institutions to identify, formulate, develop and implement CDM projects. • Indicator: Existence of players who can assist and facilitate the process of identifying, developing and implementing CDM projects.

21. Capacity Development Task:Capacity Development for NGOs, Local Communities, Academe, Research Institutions Some proposed activities: • Consultations with local communities on Cleaner Technologies • Seminars/Workshops on: • Overview of CDM; CDM Project Cycle • Project Design Document • Baseline Formulation • GHG Accounting • Monitoring Plans

22. Capacity Development Task:Capacity Development for NGOs, Local Communities, Academe, Research Institutions Examples of activities: • Roundtable discussion on CDM, sponsored by the Philippine Network on Climate Change & WWF-Philippines, 17th September 2002 • Consultation on Entities which can validate, monitor, and certify CDM projects, sponsored by Climate Change Information Center, 12th November 2002

23. Validation of CDM Projects Key Actors/Stakeholders Relevant Issues Defined Baseline Meets National Objectives Contributes to Sustainable Development Real, Measurable and Long-Term Benefits Meets Additionality Criteria Acceptable Process for MRV Host Country National CDM Board Validation Agents Project Developers Project Investors ER Buyers CDM Project Validation Project Financing

24. Capacity Development Task:Capacity Development for CDM National Authority • Objective: Support the establishment of a national and institutional framework to assess and validate CDM projects; that also facilitates monitoring, verification and certification of emission reductions. • Indicator: Existence of a functioning CDM National Authority that validates CDM projects using national guidelines (e.g. on sustainable development) & international guidelines (e.g. on additionality, baselines).

25. Capacity Development Task:Capacity Development for CDM National Authority • Specific project on developing the institutional, operational and regulatory framework for CDM; including establishment of the CDM National Authority • Project conducted by the Inter-Agency Committee on Climate Change • Project sponsored by the UNDP and funded by the Dutch Government

26. Capacity Development Task:Capacity Development for CDM National Authority Some proposed activities: • Assist NA to define regulatory, legal, technical and financial guidelines for CDM projects • Assist NA to set clearly defined national, sectoral, project baseline parameters for CDM projects • Training Workshops for NA staff for validation, monitoring, verification and certification of emission reductions

27. Capacity Development Task: Creating a Pipeline of CDM-eligible Projects • Objective: Create a pipeline of CDM-eligible projects that are attractive to potential CDM investors and that are approved by the CDM National Authority. • Indicators: List of CDM-eligible projects that have been nationally endorsed and validated; number of investments made in CDM projects.

28. Capacity Development Task:Creating a Pipeline of CDM-eligible Projects • Developing an actual CDM project as the best way of building capacity. Some proposed activities: • Technical assistance to identify and develop CDM projects • Assistance to identify and source funding for CDM projects • Published national portfolios of validated CDM eligible projects

29. Financing and Implementation of CDM Project Relevant Issues Key Actors/Stakeholders ER Purchase Agreements Financial Recourse Legal Recourse Project Risks Flow of Funds/Revenues Project Validated Project Developers Equity Holders Investors Banks Buyers of Project Outputs Project Financing and Financial Closure Auditing/Monitoring Operational Data/Records ReportingRequirements Project Implementation and Operation Project Owners/Operators Generation of ERs

30. Capacity Development Task:Capacity Development for Project Financiers • Objective: Strengthen the capabilities of the financial sector to identify and provide financing for CDM projects. • Indicators: Existence of players from private and public financial institutions who are committed to the process of identifying and financing CDM projects; active market for CDM projects and their CERs; active financial brokers.

31. Capacity Development Task:Capacity Development for Project Financiers Some proposed activities: • Seminars on CDM opportunities for the financial sector • Forums on the range of funding sources for CDM projects • Forums on the range of financial schemes and packages for CDM projects

32. Capacity Development Task:Capacity Development for Project Financiers Examples of activities: • Executive briefing on CDM for DBP senior officials, 7th October 2002 • Seminars on CDM for DBP mid-level officials from head office, regional offices and branches; October - November 2002

33. Monitoring, Verification and Certification of Emission Reductions Relevant Issues Key Actors/Stakeholders Monitoring Rules/ Guidelines Approval of Agents Changes in Baselines Project Owners Host Countries Monitoring Agents ER Sellers ER Monitoring/Reporting Verification Rules/ Guidelines Approval of Agents Verification of Baselines Verification Agents Annex 1 Parties ER Buyers ER Verification ER Certification Certification Agents CDM Executive Board CER Registry CER Marketing Participants UNFCCC-COP Certification Rules/ Guidelines Costs of MRVC Registration and Tracking of CERs CDM Administrative Costs CER

34. Key Actors Decisions Relevant Issues Project Developers ER Prospectors Green Companies/NGOs ER Funds National Agencies Bilateral/Multilateral Development Agencies Project Identification Project Formulation • Rules for CDM ? • Country Participation? • Project Acceptance • Cost Effectiveness • Risks / ER Benefits Baseline Definition • Emissions additionality • Financial additionality • Technology matrix • Benchmarks • Project Specific CDM Validation Host Country CDM Agency Validation Agents Project Validated • National Objectives • Sustainable Development • Additionality Criteria • Registration of Validation • Estimate of ERs • ER Purchase Agreement • Legal Recourse • Project Risks • Flow of Funds Project Financing and Financial Closure Project Developers and Equity Holders Investors and Banks Project Financed Project Owners/Operators Project Implementation and Operation Host Countries Monitoring Agents ER Sellers • Monitoring Rules/Guidelines • Approval of Agents • Changes in Baseline Conditions ER Monitoring/Reporting Verification Agents Annex I Parties ER Buyers • Verification Rules/ Guidelines • Approval of Agents ER Verification Certification Agents CDM Executive Board CER Registry ER Certification • Certification Rules/Guidelines • Costs of MRVC • Other Costs CER Market Participants CER

35. Capacity Development Tasks • Information campaign & awareness raising • Capacity development for senior policy-makers • Capacity development for mid-level policy-makers • Establishment of the CDM National Authority • Capacity development for the CDM National Authority

36. Capacity Development Tasks • Capacity development for CDM project developers • Capacity development for CDM project financiers • Capacity development for NGOs, local communities, academe, research institutions • Investment promotion for CDM projects • Creating a pipeline of CDM-eligible projects

37. Capacity Development Tasks • Multi-year (2003-2005) Work Plan for Capacity Development for CDM in the Philippines • Work Plan to be implemented by the Inter-Agency Committee on Climate Change • Implementation of Work Plan to be managed by the Climate Change Information Center, Manila Observatory, Ateneo de Manila • Preparation and Implementation of Work Plan sponsored by the UNEP Collaborating Centre for Energy and Environment

38. Maraming Salamat! Roberto C. Yap, S.J., Ph.D. Environmental Economist Climate Change Information Center Manila Observatory Ateneo de Manila University Loyola Heights, Q.C. Tel +63 2 426-6144 Fax +63 2 426-6070 rcyapsj@observatory.ph