CDM Decision-Making Tool

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					Methodological Approaches and Tools
to Assess the Sustainability of
CDM Projects



Christoph Sutter, sutter@up.umnw.ethz.ch Indian cell: 98180 95366
  CDM and Sustainable Development

Contribution to Sustainable Development is explicit goal of the CDM
"The purpose of the clean development mechanism shall be to assist
Parties not included in Annex I in achieving sustainable development…“
                                                              (Kyoto Protocol, Art.12)



Clear sovereignty of host country
„... it is the host Party’s prerogative to confirm whether a clean development
mechanism project activity assists it in achieving sustainable development“
                                                     FCCC/CP/2001/13/Add.2 Decision 17/CP.7



How to assess the projects?

Evaluation / approval of the first CDM projects by non-Annex 1 countries
already began…but clear procedures / methodologies are often lacking.

 ETH Zurich   christoph.sutter@up.umnw.ethz.ch                                           2
Finding the Balance


                            Technology Lists

                          Negotiated Targets

                                 Guidelines

                                 Thresholds

                          (Weighted) Criteria

                                                Tools to assess
                                                Sustainability
                                                of CDM projects
ETH Zurich   christoph.sutter@up.umnw.ethz.ch                 3
Technology lists
                                    Example: CERUPT


  Technology                                          Max. Price CER

  Renewable energy (excluding biomass)                       EUR 5.50
  Energy production by using clean, sustainably              EUR 4.40
  grown biomass (excluding waste)
  Energy efficiency improvement                              EUR 4.40
  Others, among which fossil fuel switch and                 EUR 3.30
  methane recovery


  Source: Senter, 2001



    ETH Zurich    christoph.sutter@up.umnw.ethz.ch                     4
Negotiated Targets
                             Example: Colombian Wind Power Project , PCF


     Well defined “Institutional and Communitary Strengthening
      Plan“. Indicators to be monitored.

     Payment of a) Emission Reduction price AND b) premium if
      the Social Plan is implemented

     “If the plan is not implemented, the project entity enters into
      default. In this case the project entity has a cure period, if the
      default is not cured, PCF can stop payments.”

      Source: C. Steck / K. Newcomb, October 2002



      ETH Zurich   christoph.sutter@up.umnw.ethz.ch                        5
Guidelines
                                         Example: Indian Guidelines


  “The following aspects should be considered while designing
  CDM project activities:

  Social well-being: The CDM project activity should lead to
  alleviation of poverty by generating additional employment, removal
  of social disparities and contributing to provision of basic amenities to
  people leading to improvement in their quality of life …”

  Followed by statements covering ”Economic well-being”,
  “Environmental well-being” and “Technological well-being”



  Source: Indian Ministry of Environment and Forests, 2002

  ETH Zurich   christoph.sutter@up.umnw.ethz.ch                         6
Thresholds
                                      Example: The Carbon Label, WWF


 Does the project contribute to the mitigation of Global
  Climate Change?

 Does the project contribute to local environmental
  sustainability

 Does the project contribute to net employment generation?

 Does the project contribute to the transfer of new skills?

  Source: WWF International, 2002


  ETH Zurich   christoph.sutter@up.umnw.ethz.ch                        7
(Weighted) Criteria               Example:
                                  Multi criteria decision tool, ETH Zurich




     ETH Zurich   christoph.sutter@up.umnw.ethz.ch                           8
(Weighted) Criteria
                                    Sustainability Criteria: Objective tree

                                                    Sustainable
                                                    Development


                        Social                         Environmental                         Economic



                                                Global                       Local
                                              Environment                 Environment




     Stakeholder                            Energy / Mineral                        Soil                      Employment
     Participation                            Resources                           Resource                    Generation


         Improved                                                                                       Microeconomic
          Service                                    Water              Air
                                                                                                          Efficiency
         Availability                               Resource         Resource


                Capacity                                                                             Local
                                       Equal                Sustainable         Public Budget
              Development                                                                           Economy
                                    Distribution            Technology
                                                             Transfer

     ETH Zurich         christoph.sutter@up.umnw.ethz.ch                                                              9
(Weighted) Criteria
                                                                                              Weighting of Criteria: Pairwise Comparison

   AHP                                          Criterion A more important                                                             Criterion B more important
                                                                                                                                                                                                                                                       Level of uncertainty in
                                       9            8       7            6       5            4       3            2     1         2        3            4       5            6       7            8       9                                                  decision


                                   more important




                                                        more important




                                                                             more important




                                                                                                  more important




                                                                                                                                        more important




                                                                                                                                                             more important




                                                                                                                                                                                  more important




                                                                                                                                                                                                       more important
                                                                                                                                                                                                                                                     1= certain




                                                         very strongly




                                                                                                                                                                                   very strongly
                                     extremely




                                                                                                                                                                                                         extremely
                                                                                                                       important
                                                                                                                                                                                                                                                     2= slightly uncertain




                                                                                strongly




                                                                                                                                                                strongly
                                                                                                     slightly




                                                                                                                                           slightly
                                                                                                                        equally
         Criterion A                                                                                                                                                                                                         Criterion B             3= strongly uncertain
                                                                                                                                                                                                                                                     4= very uncertain
                                                                                                                                                                                                                                                     5= extremely uncertain



           Air Resource
                                                        x                                                                                                                                                                    Water Resource

           Air Resource
                                                                                                                                                             x                                                          Minersl / Energy Resources

         Water Resource

           Air Resource
                                                                                                                       x                                                                                                     Land Resource

                                                                                                                                                                                                                             Land Resource

         Water Resource                                                                                                                                                                                                 Minersl / Energy Resources

          Land Resource                                                                                                                                                                                                 Minersl / Energy Resources


    Effects on local environment                                                                                                                                                                                          Global climate change




    Sustainability preferences of individuals


        ETH Zurich                         christoph.sutter@up.umnw.ethz.ch                                                                                                                                                                                               10
(Weighted) Criteria
                                     Sustainability Weights: Survey South Africa


                                                         All


     Sustainable Technology Transfer
            Employment Generation
           Microeconomic Efficiency
                   Regional Economy
                      Land Resource
                       Water Quality
                           Air Quality
        Minerals / Energy Resources
              Capacity Development
                    Equal Distribution
         Improved Service Availability
            Stakeholder Participation

                                         0%     5%       10%   15%   20%   25%   30%   35%



      ETH Zurich      christoph.sutter@up.umnw.ethz.ch                                  11
  Comparison of approaches




                                                                                               Selected Thresholds
                                                             Negotiated Targets




                                                                                                                     (Weighted) criteria
                                          Technology lists




                                                                                  Guidelines
Low transaction cost                     ++                    --                 +                                     --
Flexibility                               --                 ++                   +            --                        +
Investor‘s certainty                     ++                        -              --           +                         +
Comprehensive approach                    -                    --                                 -                  ++



 ETH Zurich   christoph.sutter@up.umnw.ethz.ch                                                                                             12
 Next steps (Dec 02 - Jan 03)



Sustainability mapping of Indian stakeholders

Indian case study: Biomass project




               Discussions about the method and potential
               CO-OPERATION are most WELCOME!


 ETH Zurich   christoph.sutter@up.umnw.ethz.ch              13

				
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