This document outlines the process and requirements for Clean Development Mechanism (CDM) projects under the Kyoto Protocol. It discusses the types of CDM projects, how project baselines and additionality are determined, and the steps involved in developing, validating, registering, and operating a CDM project over its crediting period. The process involves developing documentation, undergoing validation and verification by a Designated Operational Entity, registering the project with the UNFCCC, monitoring emissions reductions, and receiving Certified Emission Reduction credits.

1. Approved CDM Methodologies, CDM Project Design Document (PDD) Lucas BelenkyACX Executive Climate Change and Carbon Trading CourseNovember 12th2012

2. •Contribute to Sustainable Development
•Local Stakeholder Consultation and EIA
•Approval from the Host Country
•Result in emission reductions that are additional
•Prior Consideration of the CDM
Requirements for Projects under the CDM

3. 1.Project Type
a)Type 1: Energy Generation
b)Type 2: Efficiency Measures
c)Type 3: All other types
2.Project Size
a)Large
b)Small
c)Micro
Categories of CDM Projects

4. Electrical Energy
Other Energy
Off-Grid Power
Bio Fuels
•Grid-connected renewable energy
•Renewable energy for mini- grid or captive use
•Electricity from biomass combustion
•Mechanicalenergy for the user
•Thermal energy production
•Solar water heaters
•Electricitygeneration by the user
•Biogas/biomass for thermal applications
•Biodiesel production
•Plant oil production and use for energy generation
Type 1 CDM Projects –Energy Generation

5. Supply-Side
Demand-Side
Fuel-Switching
•Generation
•Transmission and distribution
•Installation of co- generation or tri- generation systems
•Efficiency activities for lighting technologies
•Efficiency activities in new buildings
•Efficiency activities in hot water devices
•Efficiency application in the use of non- renewable biomass
•Switchesin buildings
•Switches in agricultural facilities
•Switches in industrial facilities
Type 2 CDM Projects –Energy Measures

6. GasAvoidance & Destruction
Transportation
Specific Technologies
Change in Practice
•Methane avoidance
•HFC Destruction
•Sulfur Hexafluoride destruction
•Masspublic transit systems
•Hybrid vehicles
•Fuel monitoring in commercial freight
•Water purificationsystems
•Solar LED lighting
•Renewable energy technologies in new residential buildings
•Shiftfrom high- to low-carbon fuel/energy
•Recovery and recycling of materials
•Recovery of waste gas in industrial facilities
Type 3 CDM Projects –Gas Destruction and Other

7. Type
Large
Small
Micro
EnergyGeneration
> 15 MW
5–15 MW
<5 MW
Efficiency Measures
> 60 MWhSaved
60 –20 MWhSaved
< 20 MWhSaved
Other Projects
>60,000 Credits
60,000 –20,000 Credits
< 20,000Credits
CDM Projects by Size

8. •Methodologies cover different project types and size. The describe how to determine the Baseline.
•Baseline:
•Describes what is happening in absence of the project
•Sets level of carbon emissions occurring now
•Commonly called the “business-as-usual” scenario
Determining Project Baselines

9. •Baseline established through surveys, historical data, or government data and published reports
•Emissions during the project activity monitoring throughout the project
•Emission reductions are calculated as the difference between the baseline and the project activity
Calculating Emission Reductions

10. 0
50
100
150
200
250
300
350
400
450
0
1
2
3
4
5
6
7
Carbon Dioxide Emissions (tonnes)
Project YearBaseline Emissions
Project activtyEmission Reductions
Example Emission Reductions from a Project

11. Definition: An activity is deemed additional if it results in real and measurable emission reductions that would not have occurred without carbon finance.
Each activity under the CDM must prove it is additional:
Examples
1.Renewable Energy
2.Diesel Generator
3.Landfill Gas Flaring
Additionality is relative to the baseline
Additionality of CDM Activities

12. Prove the proposed project activity is not:
a)The most economically or financially attractive; or
b)Economically or financially feasible, without the revenue from the sale of Certified Emission Reductions (CERs).
Simple Cost Analysis
Investment Analysis
Benchmark Analysis
Proving Additionality –Investment Analysis

13. Prove the proposed project activity faces barriers that:
a)Prevent the implementation of this type of proposed activity; and
b)Do not prevent the implementation of at least one of the alternatives.
“The identified barriers are only sufficient grounds for demonstration of additionality if they would prevent potential project proponents from carrying out the proposed project activity undertaken without being registered as a CDM project activity.”
Barrier due to Prevailing Practice
Investment Barriers
Technological Barriers
Project is a “First-of-its-kind”
Proving Additionality –Barrier Analysis

14. Micro-scale projects are automatically additional if:
•The technology is approved by the Host Country
•The activity serves households or SMEs
•The activity is in a Least Developed Country
Prior Consideration: Each proposed activity, regardless of size or type, must show that the pursuit of CERs was intended since inception of the project concept.
1.Letter of Prior Consideration
2.Restricted Project Start Date
Proving Additionality –Microscale Projects and Prior Consideration

15. Step 1. Identify Alternatives
Step 2. Investment Analysis
and/or
Step 3. Barrier Analysis
Step 4. Common Practice Analysis
If all are steps are satisfied, activity is additional.
The Process of Demonstrating Additionality

16. FeasibilityDocumentation
Validation
Registration
DOE
Project Proponent
UNFCCC
2 Weeks
8 Weeks
12 Weeks
8 Weeks
Complete Project Development: 30 Weeks
CDM Project Cycle: Project Development

17. Operation
Monitoring
Verification
Issuance
Repeat for 10 Years.
Repeat for 21 Years. Renew the Baseline every 7 Years.
Fixed
Renewable
Project Proponent
DOE
UNFCCC
Project Proponent
CDM Project Cycle: Project Life

18. •DataCollection on the project activity
•Select appropriate (or best) baseline and monitoring methodology
•Determine if the activity can be shown to be additional
•Estimate achievable emission reductions and future carbon credit revenue
1stStep: Project Feasibility Study

19. •Establish project baseline
•Write PoA-DD,CPA-DD, and CPA Template
•Prove Additionality
•Conduct LSC
•Perform EIA
2ndStep: Develop Project Documentation

20. •AppointDOE to perform project validation
•Address and correct CLs and CARs from the DOE
•Apply for LoAfrom Host Country
3rdStep: Validation of Project Documentation

21. •Submit project for registration
•Address and correct remaining CLs and CARs from the DOE
•Register the activity under the CDM
•Begin Crediting Period
4thStep: Registration of the Activity

22. •Operate project for 1 (or 2) year(s)
•Collect monitoring data(continuous or sampling)
•Prepare monitoring report with achieved emission reductions
Monitoring Emission Reductions of the Project

23. Appoint DOE to verifyMonitoring Report
DOE reviews report and recommends volume of CERs for issuance to the activity
Verification and Issuance
RequestedCERs are issued to the project proponentProject Proponent pays issuance fee Process repeats every year throughout the crediting period of the activity