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CDM Basics Marcos Castro, World Bank Institute CFCB Sao Paulo Workshop São Paulo City Hall, 4 May 2010
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Sao Paulo Carbon Finance Workshop, April 26 2 212.10.2014 Financing Low Carbon Development in Cities The CDM Option
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Sao Paulo Carbon Finance Workshop, April 26 3 CDM survival kit for city officiers: 1. Baseline The 3 key points: 1. Baseline; 2. Additionality; 3. CDM Toolbox Reveals how much GHG can be saved and therefore demonstrates Carbon Financing potential (ex-post and market-dependent!) Carbon credits = emissions Carbon credits = emissions Greenhouse gas emissions Historical Trend Project start Time Baselin e Actual emissions
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Sao Paulo Carbon Finance Workshop, April 26 4 CDM survival kit for city officiers: 2. Additionality The 3 key points: 1. Baseline; 2. Additionality; 3. CDM Toolbox Proves that the targeted emmissions wouldn‘t be saved without CDM (precondition for every CDM project) Project without carbon revenue is profitable – but not sufficiently profitable compared with alternatives Project without carbon element Project with carbon element Carbon revenue makes the project attractive relative to investment alternatives Investment threshold Revenue / NPV / IRR
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Sao Paulo Carbon Finance Workshop, April 26 5 512.10.2014 Some examples of additionality Capturing methane from an urban landfill and flaring it Carbon credits represent the only source of income for undertaking this activity ? Capturing methane from an urban landfill and utilising it to generate electricity Project developer would have to demonstrate that the electricity revenue alone would not make this project attractive Building a large hydro project for the grid in Ethiopia Questionable additionality: there is already plenty of hydro activity in Ethiopia
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Sao Paulo Carbon Finance Workshop, April 26 6 The 3 key points: 1. Baseline; 2. Additionality; 3. CDM Toolbox The Carbon Finance add-on challenge! CDM survival kit for city officiers: 3. CDM Toolbox Project Recall: CDM Project Cycle Depicts the step-by-step approach to CDM as well as the key institutions 6 to 12 months1.5 months Crediting period of the project Project Developer DNA DOE CDM EB PIN PDD Host country approval Project validation Project registrati on CER issuance Project verificati on http://cdm.unfccc.int/methodologies/index.html Recall: CDM Methodologies Depict the approach for different project types CDM Cycle
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Sao Paulo Carbon Finance Workshop, April 26 7 712.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 8 812.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 9 912.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 10 12.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 11 12.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 12 12.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 13 12.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 14 12.10.2014 6 to 12 months1.5 monthsCrediting period of the project Project Developer DNA DOE CDM Executive Board Project feasibility assessment / PIN CDM project development / PDD Host country approval Project validation Project registration CER issuance Project verification The CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 15 Roles and timing for starting a CDM project in Cities Who Key points City officers/ Project teams Technical experts Timing 1. Baseline Collect basic dataFirst estimateBefore PIN 2. Additionality Announce project as under CDM Initial adoptionBefore official announcement/ project tender 3. Toolbox Refer to expert for choosing methodology Become project participant and work on a contract Plan project according to CDM project cycle Technical expertise, guiding through project cycle According to steps in CDM project cycle
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Sao Paulo Carbon Finance Workshop, April 26 16 Thank you very much for your attention! t. +44.(0)207.983.4627
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Sao Paulo Carbon Finance Workshop, April 26 17 References (amongst others) CFCB: www.lowcarboncities.infowww.lowcarboncities.info Carbon Finance Assist/Carbon Finance Unit, World Bank www.climatefinanceoptions.org (WB/ UNDP) t. +44.(0)207.983.4627
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