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How to make a project eligible for CDM Workshop on CDM project

VIEWS: 42 PAGES: 21

									How to make a project eligible for CDM
Workshop on CDM project possibilities Havana, Cuba, 17th March 2003

Haakon Vennemo
ECON Centre for Economic Analysis

CDM and Cuba bagasse
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The talk
 The project  Four easy steps to CDM
 

Key step to CDM-credits is “validation” Key points for validation are
– – – – Reliable emission reductions Monitoring plan Stakeholder comments “Host” and “visiting” party approval, including sustainability declaration by host

 Conclusions: how to proceed with the project
CDM and Cuba bagasse
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The project
 Small power plant based on bagasse and trash as fuel


Feasibility study being prepared

 Situated next to Antonio Guiteras sugar mill


11 500 tonnes of cane per day

 14.8 MW electricity to the grid, plus heat to the sugar mill
 Project will reduce dependency on oil, and should be eligible for CDM-credits. But how?
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Formal requirements
 Host country has ratified the Kyoto Protocol (Cuba: 30 April 2002)

 Host country has designated a national authority for the CDM (Cuba: CITMA)

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 The project  Four easy (?) steps to CDM
 

Key step to CDM-credits is “validation” Key points for validation are
– – – – Reliable emission reductions Monitoring plan Stakeholder comments “Host” and “visiting” party approval, including sustainability declaration by host

 Conclusions: how to proceed with the project
CDM and Cuba bagasse
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The two first steps
 Project owner meets investor and prepares for CDM-cofinancing




Antonio Guiteras: Feasibility study as vehicle to design project, obtain financing, obtain Cuban government approval, perform EIA etc. In addition: Estimated emission reduction, monitoring plans and other info required for approval.

 Send to CDM-auditor for approval, “validation”


The core step. Final approval rests with CDM Executive Board

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The two next steps
 Project Monitoring


For projects to produce “certified emission credits” CERs, performance must be monitored, data collected and reported to auditor

 Verification, Certification and Issuance of CERs


Emission reductions must be verified by auditor and certified by the Executive Board before CERs can be issued.  CERs awarded annually and retrospectively

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 The project  Four easy steps to CDM
 

Key step to CDM-credits is “validation” Key points for validation are
– – – – Reliable emission reductions Monitoring plan Stakeholder comments “Host” and “visiting” party approval, including sustainability declaration by host

 Conclusions: how to proceed with the project
CDM and Cuba bagasse
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Validation by “operational entity”

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Key points for approval
 Reliable emission reductions


The additionality question  The baseline question  The question of crediting period

 Monitoring methodology and plan

 Stakeholder comments and process
 Contribution to sustainable development

CDM and Cuba bagasse
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 The project  Four easy steps to CDM
 

Key step to CDM-credits is “validation” Key points for validation are
– – – – Reliable emission reductions Monitoring plan Stakeholder comments “Host” and “visiting” party approval, including sustainability declaration by host

 Conclusions: how to proceed with the project
CDM and Cuba bagasse
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www.econ.no

Is the project additional?
 Either project is more expensive than cheapest alternative


E.g., biomass plant more expensive than fossil

 Or project is cheapest alternative, but there are barriers against it


Technological risk  Not prevailing practice  Other (institutional barriers, managerial resources etc)

 Antonio Guiteras will be more expensive than cheapest alternative
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Emission Reduction Calculation
Baseline
kWh electricity generated at unit [kWh/yr]

X

Standardised Emission Factor [t CO2e/kWh]

=

CO2 Emissions from elec. [t/yr]

CDM Project Emission Reductions

Total biomass [TJ/yr]

X

Biomass Emission Factor [t/TJ]

=

CO2 Emissions [t/yr)

CO2 Emission Reductions

=

CO2 Emissions Baseline

-

CO2 Emissions CDM Project

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 The project  Four easy steps to CDM
 

Key step to CDM-credits is “validation” Key points for validation are
– – – – Reliable emission reductions Monitoring plan Stakeholder comments “Host” and “visiting” party approval, including sustainability declaration by host

 Conclusions: how to proceed with the project
CDM and Cuba bagasse
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No credits without monitoring
 Monitoring =
 

Systematic way to measure or record key project performance indicators Sets out procedures for tracking, monitoring, calculating GHG reductions

 Plan include:
 

Monitoring methodology Information on collection and archiving of data

 Monitoring at Antonio Guiteras should consist of “metering the electricity generated by the renewable technology” and “monitor(ing) the amount of biomass input and its energy content” (SSC-PDD Appendix B §30).


No problem, done anyway
www.econ.no

CDM and Cuba bagasse
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 The project  Four easy steps to CDM
 

Key step to CDM-credits is “validation” Key points for validation are
– – – – Reliable emission reductions Monitoring plan Stakeholder comments “Host” and “visiting” party approval, including sustainability declaration by host

 Conclusions: how to proceed with the project
CDM and Cuba bagasse
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Stakeholder voice is important!
 ”The designated operational entity shall…”  ”Receive, within 30 days, comments… from Parties, stakeholders and UNFCCC accredited NGOs and make them publicly available”  ”After the deadline for receipts of comments, make a determination as to whether, on the basis of the information provided and taking into account the comments received, the project activity should be validated” (Marrakesh agreement $40)  Being a biomass project Antonio Guiteras should have few or no problems with stakeholders/NGOs.
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 The project  Four easy steps to CDM
 

Key step to CDM-credits is “validation” Key points for validation are
– – – – Reliable emission reductions Monitoring plan Stakeholder comments “Host” and “visiting” party approval, including sustainability declaration by host

 Conclusions: how to proceed with the project
CDM and Cuba bagasse
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Sustainable development
 No international requirements, host countries decide  Many countries are identifying indicators

 

Senegal: Significant and quantifiable indicators based on UN Uganda: Based on national development goals Zambia: Indicators and policy goals on poverty reduction

 Requirements to vary by host country priorities and project type, but:
  

Environmental: air, water, soil, noice, natural resources Social: education, health, gender, equality Economic: poverty reduction, employment, economic growth

 Antonio Guiteras will reduce environmental burdens  And contribute to economic sustainability
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Conclusions
 Antonio Guiteras starting point: Feasibility study being performed, basis for communication with investors etc.  To be done: prepare project design document (PDD) and establish contact with auditor (”operational entity”)
 

Pay attention to additionality, baseline/emission reduction, monitoring plans And include statement by host government on sustainability

 Obtain certified emssion credits (CERs) annually and retrospectively  Trade CERs with investors according to some pricing scheme (e.g. predetermined price, or using market price as norm) taking risk into account
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Haakon Vennemo Senior Research Fellow ECON Centre for Economic Analysis
Email Haakon.Vennemo@econ.no

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