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CDM Project Screening & PIN Development

CDM Project Screening & PIN Development. Glenn S. Hodes UNEP Risø Center. Contents. Project screening PINs: Purpose and Key Elements Buyers’ Perspective Preview of PDD How to get started?. Project Screening. Undertaken by seller and buyer to prioritize investments

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CDM Project Screening & PIN Development

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  1. CDM Project Screening & PIN Development Glenn S. Hodes UNEP Risø Center

  2. Contents • Project screening • PINs: Purpose and Key Elements • Buyers’ Perspective • Preview of PDD • How to get started?

  3. Project Screening • Undertaken by seller and buyer to prioritize investments • Cast the net widely at first, then narrow focus according to feasibility, profit, etc. • Fully use the process • to map out key risks, drivers, and uncertainties • to identify and engage project champions and affected stakeholders

  4. Purpose of Project Idea Note (PIN) • Communication tool used by project developers and investors early on in the process • Aids in the conceptualization, marketing, financing and screening/evaluation of projects • Prerequisite for more serious negotiations (e.g. Letter of Intent) • ‘Road map’ for formal CDM application/project document • DNA may require before issuing Letter of No Objection

  5. PIN – Key Elements • Clear description of project activities and technologies employed • Identify project participants and arrangement for implementation • Participants’ roles and their technical, financial capability to undertake • Status of third party involvement if appropriate (e.g., PPA in case of electricity generation project or agreement with municipality, private operator regarding ownership of waste in case of landfill project) • Eligibility outline: additionality and baseline scenario • Why the project should not happen on its own? • Sources of GHG emission reductions and total ER volume including possible leakage • Local, national, and global benefits • Risks

  6. What buyers look for (1) • Project Financing • Bankability: sooner can achieve financial closure, better the chances of selection • Project costs already determined and realistic • Idea of how carbon would impact implementation or address expected financing gap • Credible baseline and adequate volume • Carbon credit volume should be sufficient to cover CDM or VER transaction costs • Suggested minimum threshold: 20 ktCO2 per year or 100 ktCO2 total before 2012.

  7. What buyers look for (2) • Commercially viable technology • Competent, credible counterparties • clear champion and institutional arrangements • sound legal arrangement -- who owns, who operates, what type of agreement between project participants • Viable business + operation model • Demonstration of sustainability, safeguards • EIA and/or relevant environmental permits • Compliance with social + environmental safeguards plus • relevance to sustainable criteria of host country

  8. PIN Content • For national project approval: • See handout (India Example) • For buyers: • Most accept World Bank template, available at www.carbonfinance.org

  9. Preview: Purpose of PDD • Project DesignDocument • Part of formal CDM requirements (unlike PIN) • One of very few legal requirements for CDM eligibility • A detailed, well-substantiated document addressing key questions • How will project reduce GHG emissions? • Why is project eligible for CDM? • How will project risks be managed and shared by participants, and project impacts on stakeholders managed? • Conveys project information to the relevant stakeholders • potential investors, validator (DOE), DNA, and public at large

  10. Critical elements of PDD 1. Selection of most applicable, approved methodology: • Existing approved methodologies can be combined where appropriate. • If none exists, one can submit a new one or (minor) alteration of existing one, at own expense • Assessment & demonstration of additionality: • Most critical issue for project acceptance • Project will be refused if not proven • Articulation of Sustainable Development Benefits and Documentation of stakeholder consultations, permits, etc. • Sound monitoring plan – key for eventual verification

  11. PDD Content • General description of project activity • Application of a baseline methodology • Duration of the project activity / Crediting period • Choice of the crediting period (10 years, 7 x 1 and 7 x 2 years, 30 years for A/R activities) • (Application of) monitoring methodology and plan • Estimation of GHG emissions by sources • Environmental impacts • Stakeholders’ comments • Contact information on project participants

  12. How to get started (1) • Browse CD4CDM Project’s ‘CDM Project Pipeline’ Tracker Tool  http://www.cdmpipeline.org • Browse DVD/CD-ROM or UNFCCC CDM website: http://cdm.unfccc.int/Projects/pac/index.html

  13. Official homepage: http://cdm.unfccc.int/

  14. http://cdm.unfccc.int/  Reference • Decisions of CoP and CoP/MoP • e.g. Marrakesh Accords • Documents: • Guidelines • Templates • Reports • Modalities and Procedures • Forms • Procedures • Guidance/clarifications

  15. Thank you for your attention!

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