1. OVERVIEW OF CDM GUIDELINES ON UNEP CDM Guidebook/E7 Guide Dr. Bahaa Mansour TIMS Dr. Mohamed Elewa TIMS Presented by: CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- Second National Workshop (Phase II) UNEP RISO / APEX

2. 2 Background CDM in COP3, Kyoto 1997 Marrakech Accords upon CDM procedures and modalities, 2007 The dual objectives of CDM: –Reducing global GHG emissions and, –Contributing to sustainable development in the host country Challenges that face CDM, related to definitions, procedures, Challenges encountered in the CDM project through implementation and life cycle The role of CDM Guidelines CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

3. 3 Concept of Guidelines The guidelines include definitions and rules for issues and procedures of CDM. Guidelines set out by the United Nations Framework Convention on Climate Change (UNFCCC) and its related Protocols and Accords. Guidelines set by entities working in CDM Differences between guidelines Concerns of Guidelines set by UNEP/Risoe: –Project cycle –Project Design Document, PDD –Sustainable Development Criteria Purpose of Guidelines set by e7 is depicting recommendations based on e7 project experience The present work is a brief to merging the UNDP/Risoe and e7 Guidelines CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

4. 4 Basic Issues: The Kyoto Mechanism for GHG abatement Sectors/Source Categories of CDM Emissions Reduction The Basic CDM project Conditions CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

5. 5 The Kyoto Mechanism for GHG abatement The Clean Development Mechanism, CDM, –By which Annex I Parties may create certified emission reduction units through the implementation of projects to reduce GHG emissions in the territories of non-Annex I Parties; Joint Implementation, JI –By which Annex I Parties may receive allocated emission reduction units through the implementation of projects to reduce GHG emissions or increase removals by sinks in the territories of other Annex I Parties, and Emissions Trading, where Annex I Parties may acquire assigned amount units from other Annex I Parties CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

6. 6 Sectors/Source Categories of CDM Emissions Reduction The CDM can include projects in the following sectors: –End-use energy efficiency improvement –Supply-side energy efficiency improvement –Renewable energy –Fuel switching –Agriculture –Industrial processes –Solvent and other product use –Waste management –Sinks (only afforestation and reforestation) CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

7. 7 The Basic CDM project Conditions The CDM project must realize the following two basic conditions: –Meet national sustainable development (SD) objectives. –Achieve GHG emissions reductions that are additional to the Business As Usual (BAU) scenario. Note: –The Sustainable Development concept definition and objectives are a property of each developing country. –The definition of the Business As Usual (BAU) scenario is based on each developing country stated plans. It also invokes the concepts of base-line definition and additionality as bases for project validation CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

8. 8 The CDM Project Cycle The CDM project cycle is governed by three key entities: –The Conference Of the Parties serving as the Meeting Of the Parties (COP/MOP) –The CDM Executive Board (EB) –The Designated Operational Entities (DOEs) Project design, Eligibility, and Documentation. Third party verification throughout the cycle, [2]. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

9. 9 CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

10. 10 Project Registration Two steps are required: 1. successful Documentation to prove: Contribution to sustainable development Additionality Baseline definition 2. Registration of a CDM project by the EB CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

11. 11 Sustainable Development The World Commission on Environment and Development (1987) defined sustainable development as: “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Indicators of sustainable development:  Environmental  Social  Economic CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

12. 12 CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX Examples of major sustainability indicators that can be used in relation to CDM projects

13. 13 CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

14. 14 CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

15. 15 CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX Illustrative example of qualitative assessment of the SD impacts of introducing a biogas plant to substitute woodfuel and kerosene consumption

16. 16 Additionality Additionality means that the project must provide: “reductions in emissions that are additional to any that would occur in the absence of the certified project activity.” (Art. 12.5, Kyoto protocol) The Marrakesh Accords define additionality in: “Reductions in greenhouse gas emissions” Note: A specific concern must be paid for the level of data that may0 affect the transaction costs. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

17. 17 Baseline Methodology The baseline methodology is key to the proof of additionality The baseline represents the reference scenario and must be defined as follows: –In accordance with the provisions for the use of approved or new methodologies, –In a transparent and conservative manner regarding the choice of approaches, assumptions, methodologies, parameters, data sources, key factors and additionality, taking into account uncertainty; –On a project-specific basis; and –Taking into account relevant national and/or sectoral policies and circumstances. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

18. 18 Illustrative examples of such tools include, but are not limited to: A flow-chart or series of questions that lead to a narrowing of potential baseline options; and/or A qualitative or quantitative assessment of different potential options and an indication of why the non- project option is more likely; and/or A qualitative or quantitative assessment of one or more barriers facing the proposed project activity, such as those laid out for small-scale CDM projects; and/or An indication that the project type is not common practice (i.e., occurs in less than [<x%] of similar cases) in the proposed area of implementation, and not required by recent/pending legislation/regulations. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

19. 19 Five steps are identified for the definition of an emissions baseline: 1. Set project boundary, 2. Define project conditions, 3. Discuss project barriers, 4. Select the most appropriate baseline methodology, 5. Calculate baseline emissions. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

20. 20 Project Design Document, (PDD) As defined by the Executive Board EB, Required Content of a Project Design Document (PDD) are: A. General description of project activity B. Baseline methodology C. Duration of the project activity/crediting period D. Monitoring methodology and plan E. Calculation of GHG emission by sources F. Environmental impacts G. Stakeholder comments CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

21. 21 PDD (Cont.) 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: Annex 3-5 are not necessary for the small-scale CDM and Annex 3-4 are expected The Website “ http://cdm.unfccc.int/Reference/Documents “ encounters the PDD for normal CDM projects and small- scale CDM projects.to be removed from the PDD and included in two separate stand-alone forms. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

22. 22 Third Party Verification Designated Operational Entity (DOE) has four key functions: –Validate and subsequently request registration of a proposed CDM project activity, –Verify emission reductions of a registered CDM project activity, –Certify as emission reductions, as appropriate, and, –Request the Board to issue Certified Emissions Reductions. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

23. 23 The EB’s present the following small-scale CDM project activity Categories: Type I: Renewable energy projects A. Electricity generation by the user B. Mechanical energy for the user C. Thermal energy for the user D. Renewable electricity generation for a grid CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

24. 24 Type II: Energy efficiency improvement projects A. Supply side energy efficiency improvements - transmission and distribution B. Supply side energy efficiency improvements - generation C. Demand-side energy efficiency programs for specific technologies D. Energy efficiency and fuel switching measures for industrial facilities E. Energy efficiency and fuel switching measures for buildings CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

25. 25 Type III: Other project activities A. Agriculture B. Switching fossil fuels C. Emission reductions by low-greenhouse gas emission vehicles D. Methane recovery and avoidance Note: If a new project belongs to none of the existing categories of small-scale projects, the project developer should propose a new category to the EB before submitting a project PDD. The proposal must include a description of how a simplified baseline and monitoring methodology would be applied to the new category. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

26. 26 Conclusions The current bureaucratic complications in the verification, validation and crediting process have the potential to weigh down the CDM process and discourage its use. The first CDM projects are important steps towards developing a realistic assessment of the CDM’s potential. CDM Guidelines Cairo, January 12-13, 2004 TIMS/EEAA CD4CDM- First National Workshop (Phase II) UNEP RISO / APEX

27. 27