Harnessing the carbon market to sustain ecosystems and alleviate poverty Project Cycle and Project Design Document Project Cycle and Project Design Document BioCarbon Fund Training Seminar, February 5 – 8, 2008

Project Cycle 1. Project identification PIN submission PIN acceptance and fund allocation 2. Carbon asset due diligence New Methodology/ Approved Methodology Project Design DocumentProject Design Document Monitoring Plan Operational Manual 3. Project due diligence (e.g., environmental and social safeguards) 4. Validation 4. Validation 5. Negotiate Emission Reductions Purchase Agreement (ERPA) 6. Registration 7. Start of the Project 8. Verification 9. Certification and Issuance 9. Certification and Issuance 10. End of commitment period (2012 / 2017)

Project Design Document

Project Boundary “Project boundary” geographically delineates the A/R CDM project activity under the control of project participants. The A/R CDM project activity may contain more than one discrete area of land. If it contains more than one discrete area of land, then: Each discrete area of land should have an unique geographical identification; and The boundary should be defined for each discrete area and should not include areas in between the discrete areas of land. Project participants shall justify that each discrete area of land is expected to be subject to an afforestation or reforestation project Project participants shall describe the legal title to the land, rights of access to the carbon, current land tenure, and land use for each discrete area of land.

Forest Definition Project participants shall follow the definition for “forest” selected by the host Party, which specifies: A single minimum tree crown cover value between 10 and 30 percent; A single minimum land area value between 0.05 and 1 hectare; and A single minimum tree height value between 2 and 5 meters. Designated National Authority communicates the forest definition of a Party to the UNFCCC. The definition reported by Designated National Authority would be available at the UNFCCC CDM website. For countries that did not report forest definition, project participants should request the DNA to communicate to the UNFCCC

Technology Major elements of project technology should be described in the PDD Barriers to technology adoption shall be presented with relevant evidence to demonstrate additionality Project technology should compared with the technology used in the region, and first of a kind technology is highlighted in common practice analysis to demonstrate additionaity, e.g., clonal methods in nursery technology, use of improved provenances, siliviculture treatments, etc.

Land Eligibility Land eligibility tool (version 01, EB22) is mandatory in the PDD Land eligibility would need to be demonstrated using: – Aerial photographs or satellite imagery complemented by ground reference data; or – Ground surveys (land use permits, land use plans or information from local registers such as cadastre, owners register, land use or land management register); Written testimony from long-term local residents using participatory rural appraisal methods.

Non-permanence Non-permanence refers to re-emission of CO 2 due to human actions or natural events such as wildfires Credits are reissued/renewed after each verification to address non-permanence. Two types of CERs tCER is valid for the commitment period. It expires at the end of the following commitment period in which it was issued. A tCER issued during would expire at the end of the next commitment period, lCER is valid for the crediting period. The lCER must be replaced as soon as verification shows that the carbon stock has decreased, or if no verification has occurred for a period of five years.

Project Start Date Crediting period shall begin at the start of the A/R CDM project activity. Crediting period starts at the same date as that of the starting date of the project activity. Early start projects can accrue credits from 2000 onwards. A CDM A/R project activity starting after 1 January 2000 could be validated and registered after 31 December 2005, as long as the first verification of the project occurs after its date of registration.

Crediting Period Crediting period defines the length of the project over which credits would be accumulated Fixed crediting period – 30 years Renewable crediting period – 20 years with one renewal (40 years), two renewals (60 years) For projects with renewable crediting period, baseline is reviewed at the end of each crediting period

Choice of Methodology Project should confirm to the applicability conditions of methodology Specific version of an approved methodology is the basis for project validation and registration Leakage is a major determinant in the choice of methodology Revision of an approved methodology or development of new methodology needs to be undertaken if no suitable approved methodology exists. Time for revising an approved methodology or for developing a new methodology ranges between 6 and 12 months.

Carbon Pools Project participants may choose not to account for one or more carbon pools… subject to the provision that the choice will not increase the expected net anthropogenic GHG removals by sinks. Project developers can choose to exclude carbon pools as long as it can reasonably be shown that the pool will not be smaller in the project than in the baseline.

Stratification and Sample Frame Stratification reduces uncertainty and project costs Strata are defined based on one or more variables such as site factors (soil type, elevation, slope), species, age class (planting schedule), initial vegetation (e.g. cleared or scattered trees) etc. Reconciling ex ante vs. ex post stratification would need to be done as part of project monitoring. Sample size for monitoring would need to be specified with a precision and confidence interval (95% CI)

Baseline Baseline approach 22 (a) or 22(b) or 22(c) forms the basis for baseline identification. Baseline is identified using a baseline study or EB approved combined tool Baseline is validated and “frozen” for the crediting period or is “monitored”. All methodologies approved so far support a baseline that is frozen The advantage of a “frozen” baseline is the certainty in emission reductions from a project. The frozen baseline option is used by all projects implemented to date

Additionality AR project is additional if the actual net GHG removals by sinks are increase above the sum of the changes in carbon stocks in the carbon pools in the project boundary that would have occurred in the absence of the project activity. Establishment of additionality is a major step in CDM projects Two non-mandatory tools to establish additionality AR additionality tool Combined AR tool for identification of the baseline and demonstration of the additionality Common practice analysis is recently introduced as step 4 of additionality tool and combined tool (EB35)

Leakage Leakage is an increase in GHG emissions due to displacement of of activities outside the project boundary, e.g., fuelwood collection, displacement of grazing to areas outside the project boundary It could be minimized with good project design and with the inclusion of leakage prevention activities in the project

Environmental Impacts Assessment should include water quality, fire risk, erosion risk, air quality, fertilizer run-off and endangered species. If there are any negative impacts, mitigation efforts would need to be designed and to be approved by the local authority. Designated National Authority would need to be consulted to determine the host country regulation on environmental impact assessment.

Socio-economic Impacts Assessment should include impacts on local and indigenous communities, employment, food production, access to sites and forest products. Designated Operational Entity could request documentary evidence to show that the project will not have negative- socioeconomic impacts. Compliance with local laws and regulation to be ensured.

Stakeholder Consultations Stakeholders comments are solicited and consultations are conducted prior to project registration. PDD should describe the process used in stakeholder consultation and a summary of the comments received should be reported. Documentation of stakeholder consultations would need to be made available to the DOE at validation.

Uncertainty Assessment Project design and location will influence the risks (e.g., fire, flood, leakage and other human impacts). Involving local community and providing alternative livelihoods will reduce risks such as grazing, poaching, illegal felling etc. Natural risks can be lowered by planting strategies, but if risks are large then additional credits should be kept as reserve against losses. Uncertainty assessment should include precision level and 95% confidence intervals for ER estimates

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