UNFCCC secretariat

Karla Solís, Programme Officer

Introduction to current decisions:Recurring issues

Project and Entity Assessment Unit

CDM Registration Team

Bonn, 11 March 2011

Outline of the presentation

Assessment at registration stage:

Additionality: Prior consideration

Investment analysis

Baseline identification

Assessment at issuance stage:

Changes of PPD

Prior consideration issue: Real and continuing actions Registration

• Requirements:

VVM v1.2, paragraph 102.b

…(b) Reliable evidence from PPs that must indicate that continuing and real actions were

taken to secure CDM status for the project in parallel with its implementation. Evidence to

support this should include, inter alia, contracts with consultants for CDM services, ERPAs

or other documentation related to the sale of CERs, evidence of agreements or negotiations

with a DOE for validation services, submission of a new methodology to the CDM EB,

publication in newspaper, interviews with DNA, correspondence with the DNA/UNFCCC.

EB 49, Annex 22, paragraphs 7, 8. b:

…(b) the gap between documented evidence is greater than 2 years and less than 3

years, the DOE may validate that continuing and real actions were taken to secure

CDM status for the project activity and shall justify any positive or negative validation

opinion based on the context of the evidence and information assessed;…

• Example of an assessment:

The prior consideration was based on a CDM letter of intent between the PP and CDM

consultancy, 11 Sep 2004. The starting date is 21 October 2004 when the construction

contract was signed. The continuous actions were confirmed through the CDM

consultancy contract (3 Jun 2007) and validation started on 8 January 2008. The PDD/VR

do not show CDM actions after the project starting date and the start of the CDM

consultant.

It is not clear how the DOE validated the continuous and real actions taken to secure CDM

during the gap of almost 3 years between the project start date and the CDM consultancy

contract.

Prior consideration issue: Real and continuing actions Registration

• Requirement:

VVM, v1.2, paragraph 111

To verify the accuracy of financial calculations carried out for any investment analysis, the DOE shall:

(a) Conduct a thorough assessment of all parameters/assumptions used in calculating the relevant

financial indicator, and determine the accuracy and suitability of these parameters using the available

evidence and expertise in relevant accounting practices;

(b) Cross-check the parameters against third-party or publicly available sources, such as invoices or

price indices; …

• Example of an assessment:

The investment costs assumed in the IRR calculation is based on a feasibility report, finalised in April

2008. These costs are validated as follows:

The total investment costs of 30.4 million US$ (1,700 US$/kW, 21 MW hydro turbine) was compared to

three similar (20-36 MW capacity) registered CDM projects in the region with a range of 1,100-1,250

US$/kW. The DOE justified that the higher unit investment cost of the proposed project is because it

has a long dam (287.02m).

However the DOE did not cross-check the investment costs with a third party source.

Investment analysis: Input values Registration

Baseline identification: ACM0001 Registration

• Requirement:

VVM, v1.2, paragraph 85

The DOE shall determine whether all applicable CDM requirements have been taken into account

in the identification of the baseline scenario for the proposed CDM project activity, including relevant

national and/or sectoral policies and circumstances. Drawing on its knowledge of the sector and/or

advice from local experts, the DOE shall confirm that all relevant policies and circumstances have

been identified and correctly considered in the PDD, in accordance with the guidance by the CDM

Executive Board.

• Example of an assessment:

ACM0001: The baseline is continuation of venting the landfill gas. The DOE validated the

implementation of the existing regulation (introduced in January 2006) to flare landfill gas is not applied

in the country. The validation was carried out by a letter from the flaring technology supplier which

confirms that the regulation is not being implemented due to lack of monitoring/supervising procedures.

However, it is not clear if the approach of this validation is appropriate.

Project implementation as per the PDD Issuance

• Requirements:

VVM paragraph 195-197

The DOE shall identify any concerns related to the conformity of the actual project activity

and its operation with registered PDD”

The DOE shall verify by an on-site visit all physical features… and that the project

participants has operated the project activity as per the PDD…

In case of any changes, a notification or request for approval should be submitted to the

Board.

• Example of an assessment:

Changes of biomass used in the thermal plant can affect additionality due to price changes in biomass types. [AMS-I.C and ACM0006]

Changes of the capacity, number of units and configuration of equipments to be installed E.g. wind turbines

Plant load factor as compared to estimate in PDD. E.g. biomass plants.

References

• Prior consideration

http://cdm.unfccc.int/EB/049/eb49_repan22.pdf

• Additonality tool:

http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-01-v5.2.pdf

• Guidelines on investment analysis, v3:

https://cdm.unfccc.int/EB/051/eb51_repan58.pdf

• Guidelines on barrier analysis

https://cdm.unfccc.int/EB/050/eb50_repan13.pdf

• Validation and Verification Manual

http://cdm.unfccc.int/Reference/Manuals/index.html

• Methodologies:

https://cdm.unfccc.int/methodologies/PAmethodologies/approved.html

Discussion

Your questions?

Thank you for your attention !