CDM, EB Meating (11&12) & COP9

1. Overview of CDM, EB Meetings (11&12)
&
COP9
First Extended Regional Workshop CD4CDM Project
Siem Reap, Cambodia
24- 26 March 2004
Sami Kamel, PhD
UNEP RISOE Center, Denmark

2. 2
Kyoto Protocol:
Background
 Commitments:
 Binding GHG emission reduction targets for Annex I countries.
 5% below 1990 levels by 2008-2012.
 Targets based on net changes in emissions of 6 greenhouse gases
 CO2, CH4, Nitrous Oxide (N2O), Hydrofluorocarbons (HFCs),
Perfluorocarbons (PFCs), Sulphur Hexafluoride (SF6).
 Implementation:
 Domestic emission reduction through policies and measures.
 Flexibility mechanisms:
 Emissions Trading
 Clean Development Mechanism
 Joint Implementation

3. 3
Net GHG Reductions
in First Commitment
Period (2008-2012)
1990
Emissions
for EU
2008-2012
Emissions in
Business As Usual
Scenario
2008-2012
GHG
Emissions
Achieved through
domestic mitigation
measures (e.g. RET,
EE, Fuel Switching,
etc.), JI, and
Emissions Trading
(2008-2012), and
CDM (from year
2000).
8% average reduction by EU

4. 4
Kyoto Protocol: Ratification & Entry-into-force
 Entry into force requires 55 Parties to the Convention + Annex I Parties
accounting for 55% of 1990 CO2 emissions from that group to ratify.
 Possible combinations for entry into force:
 US + EU-15
 US + Russian Federation + one other major emitter
 EU + Russian Federation + Japan + Canada + Poland or Australia
 Already Ratified: European Union, Japan, & Canada (total less than 55%).
 Already Rejected: United States (36% of Annex I emissions) & Australia (2.2 %
of Annex I emissions).
 Undecided: Russia (17.4% of Annex I emissions).
 Non-Annex I countries (Developing countries):
 Many already ratified although GHG reduction is voluntary.

5. 5
CDM Concept
 CDM is to allow Annex I countries meet part of their emission reduction
requirements for first commitment period 2008-2012 at lower costs in
non-Annex I countries than could be done domestically.
 Annex I countries are allowed to acquire Certified Emission Reductions
(CERs) by implementing GHG mitigating CDM projects in non-Annex I
countries.
 ODA (Official Development Assistance) funds can not be used in CDM
investments.

6. 6
CDM Participation Requirements
 Participation in CDM is voluntary.
 Parties (Annex-I and non-Annex-I) participating in the CDM shall
designate a national authority for CDM (DNA).
 For host country to participate in a CDM project, it has to ratify the
Kyoto Protocol.

7. 7
 Kyoto Protocol specifies that GHG emission reduction in the form of CDM
projects can include the following examples:
 End-use energy efficiency improvement.
 Supply-side energy efficiency improvement.
 Renewable energy.
 Fuel switching.
 Agriculture.
 Industrial processes.
 Solvent and other product use.
 Waste management.
Negative List:
 Sinks (only afforestation and reforestation).
 No nuclear projects.

8. 8
Key CDM Project Eligibility Criteria
 Additionality
 Must prove that emission reductions are ADDITIONAL to those that
would have occurred in absence of CDM. Estimated emissions from
new project should be LESS than emissions of the business-as-usual,
non-CDM scenario.
 Sustainable Development
 How project contributes to job creation, poverty alleviation,
environment, etc., in host country.

9. 9
Benefits from CDM
 Can contribute to host country’s job creation, poverty alleviation, and
sustainable development.
 Technology transfer and in-flow of financial resources into host country.
 Add sustainable ways for energy production and increase energy
efficiency.
 Contribute to attracting FDI to the host country.

10. 10
Modalities & Procedures (M&P) for the CDM
 COP7 in Marrakech has outlined the modalities & procedures for CDM
projects (general rules).
 A special modalities & procedures were set for small-scale CDM in COP8.
 In their first 10 meetings, Executive Board developed more detailed rules
for CDM project cycle and for small-scale CDM projects.
 Modalities & procedures for LULUCF (afforestation & reforestation)
projects were finalized at COP9 in Milano.
 A special PDD is currently being developed by EB for LULUCF
projects.

11. 11
Responsibilities of the Conference of Parties (COP)
 Make decisions on the recommendations made by the Executive Board
on its rules of procedure.
 Review annual reports of the Executive Board.
 Review the regional and sub-regional distribution of DOEs and CDM
project activities.
 Assist in arranging funding of CDM project activities.

12. 12
Key Issues Adopted by COP 9
 Approved the modalities & procedures for Afforestation &
Reforestation CDM projects.
 A simplified set of rules & procedures for small-scale LULUCF
CDM projects also adopted.
 Rules & procedures for LULUCF available at UNFCCC’s CDM web
site.
 Requested Annex-I countries to provide increased capacity building
support to non-Annex-I countries in the area of CDM project
preparation and implementation.

13. 13
 Provided guidance on the establishment of a Special Climate Change
Fund.
 Fund to receive support from bilateral and multi-lateral donor
agencies.
 Will assist in implementation of CC adaptation projects in
developing countries.
 Will support capacity building & institutional support for planning
and management of disasters relating to CC (droughts, floods) in
areas prone to extreme weather events.

14. 14
EB 11th Meeting
 The Board agreed to approve the proposed new baseline and
monitoring methodologies contained in Annexes 3 & 4 of the PDDs
of the following projects:
 NovaGerar Landfill Gas-to-Energy Project.
 Durban Landfill Gas-to-Electricity project.
 Graneros Plant Fuel Switching Project.
 A.T.Biopower Rice Husk Power Project.
 The Board decided to monitor the cost of the process (accreditation
of DOEs, CDM project validation, registration and verification).

15. 15
EB 12th Meeting
 CDM Accreditation Panel announced decision to issue “Indicative Letters”
to four Applicant Entities (DOEs):
 Japan Quality Assurance Organization.
 Det Norske Veritas Certification.
 TUV.
 Tohmastsu Evaluation and Certification Organization.
 Approved new baseline and monitoring methodologies:
 Vale do Rosario Bagasse Cogeneration Project.
 A Landfill Gas Recovery Project.
 El Gallo Hydro-Electric Project.
 EB decided to continue evaluating various possible arrangements for the
CDM Registry, especially the MIS/IT system to be selected for the registry.

16. 16
Update on DOEs
 21 entities have applied for accreditation (Applicant Entities – AE):
19 from Annex I parties, 2 from non-Annex I countries, and none from
Africa or South Africa.
 EB7 approved “Procedures for Accreditation of Operational Entities for
CDM.” Procedure consists of:
 Desk review by an Accreditation Team (AT) (completed for 13 AEs).
 On-site assessment by AT (completed for 6 AEs).
 Witnessing activity by AT (completed for 4 AEs).
 No AE accredited by EB yet but four Applicant Entities received
“Indicative Letter” and expected to become Designated Operational
Entities this year.

17. 17
Name Country Status
Japan Quality Assurance (JQA) Japan Indicative letter
Japan Audit and Certification Organisation for Env. And Quality (JACO) Japan
Det Norske Veritas Certification Ltd (DNV Cert.) Norway Indicative letter
ChuoAoyama PWC Sustainability Research Institute Corporation (CHUO) Japan
TÜV Süddeutschland Bau und Betrieb GmbH Germany Indicative letter
Tohmatsu Evaluation and Certiification Organization (TECO) Japan Indicative letter
Japan Consulting Institute (JCI) Japan
Asahi & Co Japan
BVQI Holdings Ltd. UK
Société Générale de Surveillance (SGS UK Ltd.) UK
Korea Energy Management Corporation (KEMCO) S. Korea
PricewaterhouseCoopers Certification B.V.(PwC) Netherlands
TÜV Angelagentechnik GmbH Germany
KPMG Certification B.V. Netherlands
URS Verification Ltd. UK
ERM Certification and Verification Service Ltd. (ERM CVS) UK
Clouston Environmental Sdn.Bhd. Malaysia
British Standard Institution (BSI) UK
Nexant inc. US
Indicative lettter: After the Desk Review and the On-site assessment is completed successfull the CDM
Assessment Panel (CDM-AP) recommend that the EB accredit the Applicant Entity (AE) once the CDM-AP has
witnessed a CDM validation done by the AE. If this witnessing activity is successfull, the EB can consider
to register the validated CDM project.
Applicant Entities

18. 18
PDD Content’s Update
A. General description of project activity
B. Baseline methodology
C. Duration of the project activity
D. Monitoring methodology and plan
E. Calculation of GHG emission by sources
F. Environmental impacts
G. Stakeholder Comments
Annex 1. Contact information on project participants
Annex 2. Information regarding public funding
Annex 3. New baseline methodology
Annex 4. New monitoring methodology
Annex 5. Table of baseline data
Note 1: PDD for Small scale CDM contains same sections but only annexes 1 and 2
are required.
Note 2: Annexes 3 & 4 have been removed and will be done separately by project
developer only in case of a new methodology is being proposed. EB has just
released new guidelines on how to propose a new methodology.

19. 19
PDD Update
 EB will soon adopt a decision regarding Annex 3 (New Baseline
Methodology) and Annex 4 (New Monitoring Methodology).
 Both annexes will be submitted separately under a new format to
be provided by EB when proposing new methodologies.

20. 20
DNA Updates
 To date, 53 countries have informed the UNFCCC of their
establishment of DNAs (10 of which are Annex I countries).

21. 21
CDM Status Summary
 Approved baseline methodologies: 9 (could be used by other projects).
 Pending baseline methodologies: 21.
 Baseline methodologies recommended for approval: 3.
 Project Registry will be ready this year.
 Projects waiting for registration: 5.
 At EB12 it was decided to develop a Frequently Asked Question section
on the UNFCCC CDM web site.

22. 22
Continue: CDM Status Summary
 Accredited DOEs: None.
 Registered Projects: None.
 Host countries: None.
 Buyer countries: None.
 Issued CERs: None.
 CER price range 3-12 Euro/t CO2.

23. 23
Market Outlook
 Market outlook for 2004 (based on Point Carbon’s recent study):
 Estimated transactions volume in the carbon market will be around
100 million tonnes CO2-equivalents.
 Estimated carbon market value Euro 400 million year 2004.
 Above estimates based on observed market trends, numerous
interviews with market actors, and Point Carbon's assessments of
policy developments and their market impacts.