CDM Decision-Making Tool

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					Methodological Approaches and Tools
to Assess the Sustainability of
CDM Projects

Christoph Sutter, 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                                           2
Finding the Balance

                            Technology Lists

                          Negotiated Targets



                          (Weighted) Criteria

                                                Tools to assess
                                                of CDM projects
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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

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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

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                                         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

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                                      Example: The Carbon Label, WWF

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

 Does the project contribute to local environmental

 Does the project contribute to net employment generation?

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

  Source: WWF International, 2002

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(Weighted) Criteria               Example:
                                  Multi criteria decision tool, ETH Zurich

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(Weighted) Criteria
                                    Sustainability Criteria: Objective tree


                        Social                         Environmental                         Economic

                                                Global                       Local
                                              Environment                 Environment

     Stakeholder                            Energy / Mineral                        Soil                      Employment
     Participation                            Resources                           Resource                    Generation

         Improved                                                                                       Microeconomic
          Service                                    Water              Air
         Availability                               Resource         Resource

                Capacity                                                                             Local
                                       Equal                Sustainable         Public Budget
              Development                                                                           Economy
                                    Distribution            Technology

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(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

                                                                                                                                                                                                                                                     2= slightly uncertain



         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                                                                                                                                                                                                              10
(Weighted) Criteria
                                     Sustainability Weights: Survey South Africa


     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                                  11
  Comparison of approaches

                                                                                               Selected Thresholds
                                                             Negotiated Targets

                                                                                                                     (Weighted) criteria
                                          Technology lists

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

 ETH Zurich                                                                                             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              13

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